Well before Hong Kong returned to mainland China in 1997, the city’s tight group of property developers were Beijing’s main political allies.

China’s preoccupation, as the handover approached, was to ensure the city’s continued stability and that meant retaining the confidence of the business community.

“Winning the support of major property developers was its top priority,” said Anthony Cheung Bing-leung, a political scientist and former secretary for transport and housing. The post-handover political system was in fact designed to protect the interests of the business sector, he added.

The colony’s richest man, tycoon Li Ka-shing, was said to have helped shipping magnate Tung Chee-hwa land the job of Hong Kong’s first chief executive. The Post learned that in late 1995, Chinese president Jiang Zemin received a letter recommending Tung for the role. It was penned by Li and Beijing princeling Larry Yung Chi-kin, head of Citic Pacific, one of the first mainland companies to set up in Hong Kong.

Yung’s father, Rong Yiren, was China’s vice-president and had been on good terms with the late paramount leader Deng Xiaoping.

A source close to Beijing who revealed to this author the existence of the letter said that Jiang had viewed its contents positively. In January 1996, the Chinese leader set off a storm of speculation when he crossed a crowded room at the Great Hall of the People, where a handover preparatory meeting was taking place, to shake Tung’s hand. Exactly 11 months later, Tung was picked for Hong Kong’s top job.

That Li so confidently offered his view to Jiang revealed how close Hong Kong’s tycoons were to the Beijing elite at the time. In the years after the handover, the city’s property giants thrived and massively expanded their wealth, all while remaining firm supporters of both the central and city governments.

Dominating the city’s property scene are four families, each running a sprawling conglomerate involved in everything from housing to transport, education, retail, telecommunications and utilities. Aside from Li’s Cheung Kong Asset Holdings, there are the Lees of Henderson Land Development, the Kwoks of Sun Hung Kai Properties (SHKP), and the Chengs of New World Development.

In 2020, for the first time in decades, Henderson Land’s Lee Shau-kee, 92, was listed by Forbes as Hong Kong’s richest man after his wealth rose 3 per cent to US$30.4 billion (HK$235.7 billion). That put him HK$1 billion ahead of Li, long the city’s wealthiest billionaire used to the media limelight and the attention of powerful visitors to the city.

The third-richest man, Henry Cheng Kar-shun, 73, is chairman of New World Development and the Chow Tai Fook Jewellery chain, while SHKP is run by brothers Raymond Kwok Ping-luen and Thomas Kwok Ping-kwong.

Strains in the tycoons’ close relationship with Beijing appeared during the pro-democracy Occupy protests that shut down parts of Hong Kong for 79 days in 2014. At first, most of the city’s wealthiest men remained silent. Then, on October 25, 2014, the official Xinhua news agency issued an English-language report at noon, pointing out that many Hong Kong tycoons had stayed “mute” on the Occupy movement.

It named four – Cheung Kong chairman Li, Henderson Land’s Lee, Wharf Holdings chairman Peter Woo Kwong-ching and Malaysian billionaire and retired founder of the Kerry group, Robert Kuok Hock Nien – and said they were “reluctant to take sides” over the protests.

Xinhua noted that Li had issued a statement on October 15 urging the protesters to go home, but added: “Asia’s wealthiest man did not make it clear whether he agrees with the appeals of the protesters.”

Seven hours after it appeared, the Xinhua report was retracted mysteriously, with no explanation. But it clearly had done its job of reminding Hong Kong’s rich and powerful of what Beijing expected.

One by one, the city’s billionaires spoke up, stressing the need for stability to ensure Hong Kong’s continued prosperity.

A second-generation tycoon, speaking on condition of anonymity, said it was clear that some Beijing officials were frustrated at the time with “big families” in Hong Kong who made the bulk of their fortune from the property sector. “Beijing had many avenues and channels to influence behaviour, such as this critical Xinhua report that was retracted hours later,” the source said.

The tension between Beijing and the tycoons was on display again in 2019, as the extradition bill protests which broke out in June evolved into an anti-government, even anti-Beijing movement. Not a single tycoon spoke up in the first two months of the protests, and they remained silent even after clashes between protesters and police turned violent.

It was only in August that they went public, again one by one, to condemn the chaos and violence. If Beijing had once looked to the tycoons to help keep Hong Kong stable, it now appeared to believe that they had failed to deliver. China’s state media criticised the city’s developers who owned massive land banks, even as Hongkongers found property prices unaffordable. On the mainland, Hong Kong’s very high property prices appeared to be a key reason for the protests.

Li found himself in hot water in September when he urged those in power to “provide a way out” for young protesters, and said that on political issues, justice might have to be tempered with mercy. He was accused of suggesting leniency for lawbreakers and condoning crime.

Around this time, articles published by Xinhua, the official People’s Daily and the nationalistic tabloid Global Times began to single out unaffordable housing as a root cause of the protests.

The message seemed clear – the tycoons ought to play ball and back the chief executive and government policies, or risk unstated consequences. Soon enough, the Democratic Alliance for the Betterment and Progress of Hong Kong (DAB), the city’s largest pro-Beijing party, proposed that city leader Carrie Lam Cheng Yuet-ngor invoke the Lands Resumption Ordinance and acquire from developers large swathes of unused rural land to tackle the city’s dire housing problem.

The idea won immediate backing in state media. A Xinhua commentary accused unnamed groups with vested interests of obstructing the Hong Kong government’s attempts to boost land supply, by either hoarding or raising prices. A People’s Daily commentary went further, saying: “For the sake of the public interest, it is time developers show their utmost sincerity instead of minding their own business, hoarding land for profit and earning the last penny.”

A person familiar with Beijing’s views on Hong Kong said the central government was unprepared to make concessions to Hongkongers’ calls for greater democracy and preferred to focus instead on alleviating social ills, or the housing shortage, deeming these as legitimate concerns of the city as well.

The second-generation tycoon believed that Beijing had singled out the city’s developers and was blaming them for skyrocketing property prices and the severe shortage of affordable public housing.

When state media attacked the property tycoons, it gave Beijing the opportunity to show Hongkongers that it had identified the bogeymen, and that the central government cared. “Perhaps Beijing calculated that this could take some steam out of the situation,” he said.

A source close to the city’s developers believed that Beijing’s liaison office in Hong Kong was behind the DAB call to seize land. “Many developers know that Beijing can’t offer meaningful solutions to political issues in Hong Kong,” the source said. “So it is shifting the focus to deep-seated problems like housing. The developers feel helpless as they can’t do much, given Beijing’s growing assertiveness.”

In September, New World Development, whose portfolio included the Rosewood luxury hotel and shopping centres, said it would donate nearly a fifth of its farmland reserves to the Hong Kong government and to non-profit organisations to build public housing. Executive vice-chairman Adrian Cheng Chi-kong announced that it would hand over 3 million sq ft (27.8 hectares), and said: “We are very concerned about the housing problem in society.”

By year-end, Henderson Land Development and Wheelock Properties had stepped forward too. Henderson Land gave 428,000 sq ft, while Wheelock loaned three plots of land, with a total area of 500,000 sq ft, for a nominal HK$1 each to the Hong Kong Council of Social Service and the Lok Sin Tong charity for eight years.

“It was too coincidental for all three developers to do that at the same time,” said the second-generation tycoon. “They were reacting to the media pressure, the tense social atmosphere in Hong Kong.”

Pointing out that the developers’ donations did not significantly increase the supply of land for housing, the tycoon added: “The question is, has it changed anything? Has it bolstered support for the central government and the Hong Kong government?”

The tycoon noted that Beijing had shown over the past decade that it wanted Hong Kong’s business community, especially the major families running property firms, to toe the Communist Party line and close ranks around the Hong Kong government. It might have hoped that that would happen when protests broke out against the extradition bill, but there were wide differences of opinion over the issue.

“In Hong Kong where there is a competitive flow of information, do you think there would have been no riots if the tycoons came out to support the government? To hold high hopes that a bunch of compliant tycoons can change public opinion in Hong Kong, reflects a basic misunderstanding of how information flows and how Hong Kong works,” the tycoon said.

As far as land ownership in Hong Kong was concerned, the “Big Four” major developers – SHKP, Henderson Land, CK Asset Holdings and New World Development – held a total of 83 million sq ft as of 2019, according to their annual reports. A Bank of America Merrill Lynch report said they also held a total of 107.3 million sq ft of farmland in the New Territories. Henderson Land owned 46 million sq ft, followed by SHKP with 31 million sq ft, New World Development with 17 million sq ft, and CK Assets with 13 million sq ft.

A mainland expert familiar with Hong Kong affairs pointed to the developers’ dominance across various sectors of Hong Kong’s economy and said: “The government badly needs to tackle deep-rooted problems like unaffordable housing and the lack of social mobility for the young people.”

Noting the way protesters vandalised MTR stations and trashed shops, banks and businesses with mainland links or considered Beijing-friendly, the expert said: “You can sense the frustration of the rioters who vandalised shops and public facilities. They think they have no stake in society and couldn’t care less.”

However, housing and property prices did not figure as a chief concern among younger Hongkongers who were polled in August 2019 by the Hong Kong Public Opinion Research Institute to find out the reasons for their discontent. Only 58 per cent of respondents aged 14 to 29 ticked off housing problems, compared with 91 per cent who blamed distrust of Beijing, 84 per cent who distrusted city leader Lam, and 84 per cent who were moved by the “pursuit of democracy”.

Protesters interviewed by the Post over the course of 2019 indicated that a combination of factors drove them onto the street, including a long-simmering sense of social and political injustice. Aside from astronomical property prices, they listed insufficient help for the underprivileged, inadequate medical services, the stressful education system, the influx of mainland visitors, the difficulty of moving up the social ladder, and the gnawing feeling that Hong Kong’s freedoms were under threat.

Muk Lam, 26, a doctor in a public hospital earning HK$970,000 a year said: “The narrative in the mainland media is that those taking part in the protests are fai cing,” she said, using a term that means “rubbish teenagers”, youngsters with no hope. “But Hong Kong’s unemployment rate is only about 3 per cent. Are high property prices a reason for the unrest? We cannot blame this entirely on the economy.”

However, Edmund Cheng Wai, a political scientist at City University, felt that housing woes did affect some protesters, particularly those born after 1990. Referring to these younger protesters, who made up nearly half of over 6,100 protesters interviewed by a research team including him and others from Chinese and Lingnan universities since June 2019, he said: “Many suffer from lower social mobility and their career prospects can’t compare with those of older generations.”

The question that remained was whether the Chinese state media attacks on Hong Kong’s wealthiest tycoons signalled that a 40-year honeymoon could be coming to an end. The developers have long enjoyed considerable political clout, wielding considerable influence in the process to elect the city’s leader.

They were represented strongly in the Election Committee, comprising the business elite, professionals, unionists and politicians, that picked the city leader. Checks by the Post found that the 1,194-strong Election Committee which chose Lam in 2017 included 96 members directly representing developers and their business associates. Forty-three of those 96 were directors, employees or business associates of six major developers – SHKP, CK Asset Holding, Henderson Land Development, New World Development, Wharf Holdings and Sino Land.

Many others with indirect connections to the property giants were to be found in the committee’s subsector groups for transport, hotels, finance, wholesale and retail. This reflected the developers’ dominant role in Hong Kong’s economy, with their conglomerates involved in everything from telecommunications to public utilities and supermarkets.

Ray Yep Kin-man, a professor with City University’s department of public policy, does not believe that the tycoons’ cup of goodwill with Beijing is at risk of running dry. “Beijing just wants to rally their support in putting an end to the violence in the city,” he said.

But others point out that ties between Beijing and the tycoons had been cooling ever since Xi Jinping became president in 2013, well before the protests in Hong Kong. It is noteworthy that Beijing leaders held fewer meetings with Hong Kong tycoons when visiting the city compared to the past, to avoid criticism that they cared only about the rich. In the past, Li Ka-shing’s close ties with Jiang Zemin were well-known. Li played host to the former president during his visits to Hong Kong in 1997, 1998 and 2001.

Despite that cooling off, the property developers remained Beijing’s indispensable allies. It would be unlikely that the central government would want to alienate them, especially with the Legislative Council elections due in September 2020, and the selection of the chief executive in 2022, the second-generation tycoon said.

Analysts and key figures within the pro-establishment camp expect candidates from the bloc to be punished at the Legco polls, as they were at the district council elections in November 2019. Seventy Legco seats are for the taking. In the 2016 Legco elections, pro-establishment candidates secured 40 seats while pan-democrats and localists won 30.

Some analysts expect opposition politicians to win 34 seats or more in 2020, which would make it more difficult for the government to get its bills and policy initiatives passed in the legislature.

“In an ideal world, Beijing would want to diversify the political power base in Hong Kong. That would mean making it not so concentrated in the business community,” the second-generation tycoon said. “But that is much easier said than done.”

Hong Kong’s tycoons may have less influence in Beijing than in the 1980s and 1990s, but they remain a force the central government cannot ignore. “Beijing must realise that the four big property families are at most only part of the problem in Hong Kong,” the tycoon said.

“What would it cost Beijing to no longer cooperate with the business community? If the cost is less than the benefit, they should do it. But is it?”