×

Hong Kong's CY Leung delivers swansong address as leadership race develops

As Hong Kong Chief Executive Leung Chun-ying, aka CY Leung, delivers his swansong policy address on Wednesday, focus will turn to how his replacement deals with an increasingly assertive China.

Leung isn't expected to announce any grand measures at his annual speech, which began around 11am local time, now that he won't be seeking re-election when his term expires in March 2017. In the first half-hour of his address, the 62-year old said economic development was the key to improving people's livelihoods and stressed that there was "absolutely no room for independence or any form of separation" from the mainland.

Leung Chun-ying, Hong Kong's chief executive
Justin Chin / Bloomberg / Getty Images
Leung Chun-ying, Hong Kong's chief executive

Leung is deeply unpopular among Hong Kongers for various reasons, including his implication in a multi-million dollar scandal involving Australian firm UGL, the construction of illegal structures in his home, as well as his stance on the 2015 case of missing booksellers. A survey by the University of Hong Kong released this week showed Leung's popularity hit a new low of 37.5, well below the survey's warning level of 45.

Sinking ratings likely cost him China's endorsement and the race is now on to find a leader who can still cater to Beijing and maintain respect among locals. But that's easier said than done, political pundits say.

"It's almost an impossible job to do and remain popular," Danny Gittings, associate law professor at the Hong Kong University, told CNBC on Wednesday. "Whoever becomes chief executive is going to be under very tight constraints as China get more closely involved in decisions made by chief executives."

As a special administrative region of the mainland, Hong Kong is unable to democratically elect its own leaders,. The post of chief executive, the city's top position, must first be elected through an Election Committee and then officially appointed by China's government. Hong Kongers are able to elect members to the Election Committee but only a select few—six percent of the total electorate—are allowed to cast ballots.

Hong Kong is meant to enjoy high levels of autonomy from China under a principle known as 'One Country, Two Systems,' but a spate of recent episodes, including Beijing's interpretation of Hong Kong Basic Law in November, reflect increasing mainland interference in domestic affairs.

Candidates can be popular when they are chosen as chief executive but they rapidly lose that popularity once the job starts, Gittings noted, referring to the tricky balancing act between Chinese and Hong Kong interests required by the role.

So far, a number of Hong Kong politicians are in the leadership race, including retired judge Woo Kwok-hing, former security chief Regina Ip, former president of the Legislature Jasper Tsang and two officials from Leung's administration: Carrie Lam and John Tsang. Lam left her post of chief secretary last week while John Tsang stepped down as financial secretary last month; both resignations were approved by Beijing on Monday.

There is some concern about the number of people running as Beijing has previously said it did not wish to see more than three candidates, flagged Gittings.

For now, Lam seems to be at the forefront given her popularity in the city's pro-Beijing camp. "Hong Kong people are pragmatic. When they see someone who is not too unpopular and clearly China's preferred choice, they gravitate towards that," Gittings said.

—Follow CNBC International on Twitter and Facebook.