Hong Kong leader extends economic olive branch after veto

HONG KONG/BEIJING (REUTERS) - Hong Kong's leader extended an olive branch of economic stimulus to the city a day after lawmakers vetoed a Beijing-backed electoral reform package, a move economists warned could undermine business in the Asian financial hub.

Chief Executive Leung Chun-ying said he would bring a series of economic initiatives to lawmakers next week, and called for their support.

Democratic lawmakers had been filibustering all budget items during the city's pro-democracy protests, holding up funding for a variety of slated projects. Mr Leung said that a continuation of such actions would hurt the community.

"It's time for all of us to move on," Mr Leung told reporters. "We should try to forge consensus on various economic and livelihood issues."

Lawmakers on Thursday ended a long-running debate on political reform in the city with a veto, a rare instance of the former British colony voting against a proposal endorsed by China's central legislature.

Economists at ANZ had warned that such a move could cause political instability and hurt business as foreign investors might put their China headquarters in Shanghai or Shenzhen instead of Hong Kong.

Fitch Ratings said that Hong Kong's economic concerns were significant from a sovereign credit perspective. It also needed to pay attention to its growing exposure to mainland China's financial system and to United States monetary tightening, as well as an ageing population, housing and infrastructure and social inequality.

Mr Leung said his economic proposals would include better pay for civil servants, more homes for the elderly and additional funding for recycling and small and medium businesses.

Hong Kong opposition are 'destroyers'

Even as Mr Leung began shifting the debate to economics, China's Foreign Ministry and Chinese state media lashed out at Hong Kong's opposition pro-democracy lawmakers.

"Certain people, whose aim was to hobble the development of democracy in Hong Kong, voted against the bill in the legislature," Foreign Ministry spokesman Hong Lei told reporters. "They will bear the responsibility of history for this."

The official People's Daily was even more direct.

"The conduct and deeds of the opposition faction show that they are disturbers and destroyers in the process of the democratisation of Hong Kong," it wrote in a commentary in its overseas edition.

"The goal of their veto of the universal suffrage bill is to contest the governance of Hong Kong by the central government, conspiring to turn Hong Kong into an independent political entity," it wrote, referring to the 28 lawmakers who voted against the proposal.

Hong Kong's pro-democracy opposition calls Beijing's proposal a "fake" democratic model.

"All those who voted against the blueprint might be cocky today, but they will face the judgment of history and shoulder the responsibility eventually," influential tabloid The Global Times, published by the People's Daily, said in an editorial in its English-language edition.

"We are concerned that a Pandora's box is being opened in Hong Kong and various devils are released to ruin the region's future," it said, warning that Hong Kong could "degenerate from the capital of finance and fashion to a total mess".

Beijing had pressured and cajoled the city's pro-democracy lawmakers to back the blueprint that would have allowed a direct vote for the city's next chief executive in 2017, but only among pre-screened, pro-Beijing candidates.

It had been feared before the vote there could be a repeat of pro-democracy protests that shut down key areas of the city late last year in what became one of the biggest political challenges Communist Party leaders had faced in decades.

Hong Kong returned to China under a "one country, two systems" formula that gives it a separate legal system and greater freedoms than the party-ruled mainland - and the promise of eventual universal suffrage.

Thousands of pro-democracy activists blockaded major roads across Hong Kong for 79 days late last year, defying tear gas and pepper spray.