HONG KONG (Reuters Breakingviews) - Hong Kong’s leader has finally caved. Chief Executive Carrie Lam has formally withdrawn an extradition bill that triggered months of anti-government protests. Investors cheered, and the territory’s stock market, including battered brands like airline Cathay Pacific, promptly rallied on the news. It will take more to appease protesters.
Lam has been under pressure since June over a proposed amendment that would have allowed suspects from the territory to be sent to mainland China to face trial. Last week, according to a leaked audio recording of a meeting with local businessmen, she had admitted to causing “unforgivable havoc” with the bill, adding she would step down if she had a choice. She later denied offering to resign, but it was an uncomfortable reminder of Beijing’s control.
Wednesday’s decision is both remarkable and humiliating for Lam, who has resisted for months. Her tone-deaf statements, comparing protesters to errant children, for example, have only fed outrage and pushed the financial centre deeper into political and economic turmoil. A ham-fisted attempt in July suspended work on the bill, but did not formally withdraw it.
For the market, Lam’s announcement was the first piece of good news in months. The benchmark Hang Seng Index, already hit by slowing growth in China and a trade war with the United States, closed up 3.9%. Shares of the city’s $5 billion carrier, Cathay Pacific, whose top brass were forced out after attracting Beijing’s ire over protesting employees, surged. Hopes that shoppers and tourists would soon return to Hong Kong’s glitzy malls lifted shares of global retailers, including Gucci parent Kering and LVMH.
Unfortunately, while killing the bill would have cooled tempers in the early days, demands have broadened dramatically. Protesters now also want an independent commission to investigate allegations of police brutality, the release of the over-1,000 arrested demonstrators, universal suffrage and more. Proposed research into the causes of social unrest is hardly enough to cover that.
Lam’s concession is a welcome first step. The time for a quick and easy fix, though, has already passed.
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