HONG KONG - Hong Kong faces a prolonged political impasse after pro-democratic lawmakers rejected a China-backed plan for its political future and scuttled the Asian financial hub's first leadership election.
Twenty-eight of 70 lawmakers voted against the Bill, denying Chief Executive Leung Chun Ying the two-thirds majority needed to pass legislation setting up the citywide election. The result was cheered by democracy advocates, who argued the plan would have let China's Communist Party screen out candidates before they reached a popular vote.
The defeat provides a consolation prize to the Occupy Central protesters who seized city streets for almost three months last year in a failed effort to pressure President Xi Jinping to drop the candidate vetting.
While the result is an embarrassment for China, it also means the next Chief Executive will be selected by the same panel of elites that has consistently chosen pro-Beijing leaders since Britain handed over the former colony in 1997. Failure to resolve the debate will let fester a major source of tension in last year's protests: the belief that China is encroaching on the "high degree of autonomy" promised to Hong Kong and altering its economic, legal and political systems.
"It will mean more governance problems because the public is seeing more Beijing interference in Hong Kong," said Mr Michael Davis, a constitutional law professor at the University of Hong Kong.
"The Occupy movement is not just about democracy, it is about autonomy and the rule of law."
The defeated proposal would have allowed five million people to vote for a Chief Executive from candidates selected by a panel of 1,200 tycoons, lawmakers and industry representatives. Opponents argued the committee would be stacked with Beijing loyalists and people who benefit from the city's yawning wealth gap and soaring property prices.
Democracy advocates complain about China's creeping influence over the media, schools and courts since the handover. Surging wealth on the mainland has flowed across the border, driving up the cost of everything from housing to consumer goods, while wages stagnate.
About half of Hong Kong workers earn less than HK$14,000 (S$2,400) a month, and 7.7 per cent less than HK$5,000, according to government figures. They live in the most expensive housing market out of 378 markets tracked by the consultant Demographia.
Investors have been unperturbed by the civic turmoil. Since China outlined the voting guidelines that triggered the protests on Aug 31, the benchmark Hang Seng Index has climbed 8 per cent, outstripping the MSCI Asia Pacific Index, which has fallen 1 per cent in the period.
"The medium-term threat isn't that Shanghai will suddenly be able to do what Hong Kong is today far better at," said Mr Paul Serfaty, a director of Asian Capital Partners Group, an investment bank.
"It's that the vital spirit of Hong Kong people - driven first by their refugee status and later by their hunger for success - will be suppressed as young people grow to believe that the cards are stacked against them."