An artist's impression of the proposed artificial island for housing off Hong Kong's Lantau. Photo: Handout
Beijing and Hong Kong's government want to reclaim land from the sea to quench city's thirst for land and housing. Photo: Twitter

One hundred days have passed since Beijing imposed a catch-all national security law on Hong Kong on July 1, the 23rd anniversary of the return of the former British territory to Beijing’s rule.

Since then, the protests that convulsed the Asian financial hub for the better part of 2019 have petered out, to the extent that local police have reputedly downsized their riot squad.

Now Beijing is pivoting to Hong Kong’s perennial housing woes, applying its expertise and experience gained from building an archipelago of artificial, militarized islands across the South China Sea. 

A mammoth reclamation project is being floated as a once-and-for-all solution to Hong Kong’s land shortage and cramped housing, and all the social and political problems they bring. 

The plan to create 60-100 square kilometers of land in the northern approaches to the South China Sea may also, according to observers, help Beijing wrest more control from the city’s business sector and pave way for the “ultimate absorption” of Hong Kong, now that Li Ka-shing and other local tycoons’ amicable ties with the central authorities have soured. 

Beijing has been testing the water, via pro-establishment parties in the city, for a proposal to reclaim large chunks of land in mainland waters south of Hong Kong to house people and businesses priced out of one of the world’s most expensive realty markets. 

The Democratic Alliance for the Betterment and Progress of Hong Kong, the city’s leading pro-Beijing outfit that controls the most seats in the legislature, has already teased the market with a new “Hong Kong town” off the Guishan Island that is under the jurisdiction of the neighboring Guangdong province.

The plots will, under Beijing’s auspices, be leased to Hong Kong mainly for public housing where its common laws will apply. 

Believed to be channeling Beijing’s will, the party says the Guishan project holds the key for Hong Kong to tackle its housing crisis. The proposed reclamation site is less than three nautical miles south of Hong Kong’s Lantau Island, which houses the city’s airport.  

The proposed site for reclamation is near the Guishan Island, under the jurisdiction of Guangdong province in the northern approaches to the South China Sea.

Wang Xinchun, a former chief researcher with the Hong Kong government’s Central Policy Unit who is now a senior policy analyst with Bank of China Hong Kong, told Asia Times that his sources in Beijing indicated the initial reclamation scale could be 60 square kilometers, and the new land would be leased to Hong Kong at “a reasonable, lump-sum rent.”

A policy report from the Hong Kong Realty Federation laid out more details about the project. The 60 square kilometers would be reclaimed over two decades to provide space for about 280,000 homes and 700,000 Hongkongers. 

The Yazhou Zhoukan (Asia Weekly) magazine revealed that the Chinese State Council’s Hong Kong and Macau Affairs Office had solicited policy recommendations from the city’s media and academia and drafted a report for top policymakers in Beijing to weigh options to reach a decision. 

The project’s other key proponents include Tung Chee-hwa, Hong Kong’s first post-handover leader who served between 1997 and 2005 and now a deputy chair of the Chinese People’s Political Consultative Conference. Tung has thrown his weight behind the Guishan plan via his Our Hong Kong Foundation. 

The foundation’s head of public policy research Stephen Wong is quoted by the China News Service as saying that a new mainland-built new town for Hong Kong could guarantee ample land supply in the next few decades. If the plan were to materialize, it could alter the course of Hong Kong’s economic and commercial development to prepare for 2047, the year Beijing’s pledge of a high degree of autonomy officially expires.

A young couple stands in front of a tower block after going to a protest in Tsuen Wan in Hong Kong. The city has some of the world’s highest home prices as officials have done little to create cheap housing. Photo: Anthony Wallace / AFP

A debate is thus heating up in Hong Kong, with the opposition and many who are skeptical of Beijing’s motives mustering efforts to oppose the proposal. Some allege that Beijing is conspiring to grab more control from the city’s government and the business community, who may have little input during the consultation and construction of the project, which lies outside the city’s jurisdiction. 

Opponents also say local developers may be turfed out in future land sales when Chinese firms carve up plots and Hongkongers could even be subject to political and background checks before being allowed to move into homes on the island that lies in the mainland’s waters.

Also, if the project is greenlighted despite all the odds, the artificial island will be among the largest of its kind in the South China Sea and both Hong Kong and the mainland will have to fork out hundreds of billions of yuan for reclamation as well as peripheral projects such as tunnels and bridges. 

Several Chinese state-owned contractors, whose fleet of barges and bulldozers are at work across the South China Sea to expand reefs and islets into bases for the military, could be set to be awarded fat contracts for the project. 

Leading beneficiaries are expected to include China Communications Construction, China State Shipbuilding and several of their subsidiaries. They and others were recently sanctioned by the United States for aiding the People’s Liberation Army’s “predatory expansions” in the disputed waters.  

A satellite image from 2015 shows runway construction work on an emerging artificial island at Mischief Reef in the South China Sea, according to Washington think tank Center for Strategic and International Studies. Photo: AFP/EyePress/Digital Globe

These state-owned builders have never made public their costs of land reclamation projects for the PLA. Observers in Hong Kong are concerned about the Guishan project’s potentially prohibitive bills and cost overruns that may drain the city’s fiscal reserves to the advantage of these SOEs. 

The Hong Kong government, meanwhile, has yet to voice its support for the project. Reckoning with ever-growing waiting times for public housing as more than 270,000 applications are piling on its desk, the city’s government previously suggested a separate reclamation project in the city’s own waters.

Delaying tactics at the legislature and blowback from green groups, meanwhile, may also threaten to scupper the plan.