September 14, 2010
“(International) business must be conducted in a place that has all the financial hardware and software, and the legal system, and the freedoms that those require. Those assets can only be found in Hong Kong.”
– Donald Tsang, 2007
Hong Kong is famed for its glitzy skyline lining Victoria Harbor, not to mention its appeal as a hotspot for shoppers and treasure hunters. But little is known about Donald Tsang, the Chief Executive of Hong Kong. As the man who has played a central role in Hong Kong’s development over the years, he is most well-known for steering Hong Kong safely through the stormy waters of the Asian Financial Crisis in the 1990s.
Today, the 65-year old Tsang, notorious for his colorful bow-ties and penchant for opera, is rejoicing after his democracy package was recently passed by Hong Kong’s Legislative Council members. The new change will expand the size of the lawmaking body from the current ten seats to 70. “This is the most major adjustment to the constitution since 1997,” says Christine Loh, chief executive of Civic Exchange a public policy think tank in Hong Kong.
But Tsang has not always been a civil servant. His working life began as a salesman with Pfizer in 1965. At the urging of his wife, he joined the civil services ranks, changing hats over the next three decades between administrative, finance, trade and policymaking roles. The turning point in Tsang’s career came when he became the Financial Secretary of Hong Kong in 1995, the first ethnic Chinese to attain that position.
With the onset of the Asian Financial crisis, Tsang’s mettle was tested almost immediately. Hong Kong was one of the many Asian economies that had to cope with fleeing investors fearful of the stability of their currencies. The Hong Kong Monetary Authority (HKMA) tried raising interest rates to inject confidence in the U.S. dollar, but this resulted in the stock market plunging, lining speculators’ pockets with profits. Tsang, a public administration postgraduate from Harvard University, swung into action. Putting his head together with the then HKMA chief Joseph Yam, Tsang intervened and bought over $15 billion in Hong Kong stock. Tsang’s idea was to defend Hong Kong’s exchange-rate, which was pegged to the dollar, and to make the government the biggest shareholder in many blue chip firms. It worked.
Tsang, who was knighted for his exemplary contributions hours before Britain’s historic handover of Hong Kong in 1997, continued to build upon his success. He ushered in changes to the territory’s financial structure, fostering Hong Kong’s public spending. Unemployment fell to its lowest in seven years.
Tsang’s deft handling of the economic crisis and the strategies that shaped the Hong Kong economy in its aftermath earned him much praise. When elections came round in 2005, Tsang was a shoo-in to win the top slot, his victory eased by the relative unpopularity of the then Chief Executive Tung Chee Hwa.
Tsang’s popularity recently witnessed a high after his handling of the
Manila hostage crisis, in which eight Hong Kong tourists were killed last
Hitting the ground running, he mapped out a five-year plan for Hong Kong’s economic development and growth, mainly through the promotion of large scale infrastructure projects. Turning to social reforms, Tsang focus on education resulted in the extension of free education from nine to 12 years. The alarming levels of environmental pollution were also addressed, with his government responding with a pledge to use cleaner fuel and reduce energy intensity by 25% by 2030. When a food safety crisis involving contaminated fish from mainland China surfaced in 2007, Tsang ensured that the appropriate remediation protected the public.
Yet, Tsang’s next big test came with the onset of the global financial meltdown. Tsang’s government was quick in introducing a series of measures to stabilize the Hong Kong economy. Loan guarantee schemes were presented to anchor thousands of enterprises and more than 240,000 jobs. The government’s relief measures cost more than $11.1 billion, which was around 5.2% of the country’s GDP.
Tsang’s remedial measures bore fruit as exports and retail spending gained strength in the fourth quarter of 2009. With this, the government shifted its focus from cushioning the impact of the global slowdown to forming visions for long term growth. Though risks remained, the economy is expected to grow between 4% and 5% this year. Already in May 2010, Hong Kong’s economy regained some of its former swagger, expanding 8.2% in the first quarter, its fastest pace in four years.
Tsang’s slogan for the 2007 election campaign was “I’ll get the job done.” After all, Hong Kong’s last British governor, Chris Patten, had remarked that Tsang is, “a man with an extremely good mind, a tough and honest and honorable negotiator, who’ll always do his best for the people of Hong Kong.” So far, it looks like he has been quite successful.
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