Leung tests the waters on mainland tourist cut

May 27, 2014 15:45
Hong Kong's leader Leung Chun-ying doesn't have an easy choice with regard to curbs on mainland tourists. Photo: Bloomberg

Chief Executive Leung Chun-ying was quick Tuesday to play down an idea to slash the number of mainland visitors to Hong Kong by 20 percent, after apparently discussing the proposal at a meeting of a top-level government advisory body the previous day. He told reporters Tuesday morning that the reduction was not a policy recommendation, but "one of the discussion items".

Leung insisted that the administration was currently consulting different sectors, including tourism, but there were no formal proposals.

Despite the swift clarification, media reports of a possible cut in the number of mainland visitors under the individual travel scheme have taken a toll on retail plays traded on the Hong Kong bourse. In morning trading, Chow Tai Fok Jewelry and Luk Fook Jewelry saw their share prices drop two percent and one percent respectively. Wharf (Holdings), which runs shopping malls in tourist districts, saw its stock shed almost three percent.

The burning issue of the massive influx of mainland visitors came up at a meeting of the Commission on Strategic Development on Monday as conflicts between locals and mainlanders have escalated in recent months.

There has been simmering discontent among Hong Kong people over the lack of regulation and coordination with regard to mainland visitors. A massive surge in the number of mainland visitors since restrictions were gradually lifted in 2003, in particular in recent years, has put enormous pressure on locals' daily lives.

Complaints about congested commuter trains have soared. Incidents such as the urinating of a mainland child in a street in Mong Kok last month have whipped up storms of criticism in local online forums, followed by a sharp exchange of words between netizens across the border.

Meanwhile, the shopping spree of residents from the neighboring Shenzhen who make frequent trips to Hong Kong for items ranging from shampoo to infant formula has become a perennial source of grievance among ordinary residents.

Despite mounting pressure for the government to curb the number of mainland visitors, the Leung administration has been reluctant to do so. Officials have maintained that the way to resolve the mainland tourism problem is to boost tourism capacity such as transport and accommodation, not to "close the door for business". They fear negative publicity if the city were to restrict visitors. 

Retail and tourism sectors, meanwhile, have also voiced out opposition against putting curbs on the number of mainland visitors.

Official figures show more than 27 million mainland visitors traveled to Hong Kong on individual visitor arrangement in 2013. Secretary for Commerce and Economic Development Greg So said over 90 percent of mainland visitors who traveled on multiple-visit permit did not stay overnight in the city.

Leung said Tuesday that the government could consider regulating the number of mainland visitors until the city's capacity to cope with the inflow increases. He indicated all options would be examined. These include slowing down and suspension of the pace of growth, or even reduction of the number of mainland visitors.

The slight softening of the government’s stance, at least in rhetoric, followed a high-profile announcement by Zhang Dejiang, a Communist Party Politburo Standing Committee member, in March that the central government would look into the adverse impact of mainland tourism on Hong Kong.

Zhang, chairman of the National People's Congress, made the pledge when meeting with Hong Kong deputies of the Chinese People's Political Consultative Conference. Disappointed with the officials' reluctance, verging on culture of denial, in handling the mainland tourism issue, some delegates have urged Beijing to step in.

Regina Ip Lau Suk-yee, who sits on both the executive and legislative councils, said Leung was merely "testing the water" by floating the idea of a 20 percent cut.

Greg So has cautioned that the potential impact on the economy must be carefully taken into account when considering curbs on tourism.

A recent study conducted by the Legislative Council's research unit found one-third of the city's retail business came from individual mainland visitors.

The finding raised polarized conclusions. Those who call for curbs say the heavy reliance on mainland visitors has reached a dangerous level that should be corrected. Others fear limiting the number of mainland visitors would deal a blow to the retail sector and may result in a loss of jobs.

Aside from the conflicting interests of different stakeholders, Leung is faced with an even more difficult dilemma, trying to find a balance between the political imperative of promoting the notion of "one country" and the populist "Hong Kong first" governance approach in his policy towards mainland tourism.

He may prefer a band-aid approach to pacify public discontent to avoid upsetting the vested interests in the city and causing fresh waves in mainland-Hong Kong relations. The risk is obvious, however. When cosmetic measures are proved to be inadequate in solving the problem, discontent will turn into anger, further fueling tensions in mainland-Hong Kong relations.

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He was editor-at-large at the South China Morning Post and, more recently, deputy chief editor of the Hong Kong Economic Journal.