Partial and largely symbolic elections in Hong Kong in September take place in the context of waves of public and pro-democracy demonstrations in the 6.8 million population of the special Chinese administrative zone and former British colony.

Much of the future political and economic stability of the city and its international reputation as a business and financial centre could be at stake in the managing of this test of strengths. The first public debate and outcry by the demonstrators in 2003 resulted in the withdrawal of a proposed law incorporating a number of security measures potentially constraining democratic freedoms and expression of opinion. But the further demands that the city’s leadership and consultative institutions be democratically elected in 2007 and 2008 were initially ignored, rejected or criticised by the pro-Beijing city leadership and national authorities in the Chinese capital.

However, in the aftermath economic sweeteners and concession by the central government, in favour of Hong Kong in the form of a free-trade agreement, liberalised visa rules and others, seemed to have little impact in cooling the ardour of the pro-democracy movement which returned to the streets in July 2004. Their aim was said to campaign for massive participation in the September elections and support for their candidates to form a strong voice in the city legislature. The mainland has sought to emphasise that the demonstrators and pro-democracy spokesmen represent only a vocal minority of the city residents. But a strong outpouring of votes for these forces and their elections in the legislature could implant the seeds of a permanent opposition so feared by the leadership in Beijing.

Such a result would add to the discomfort of the city’s Beijing appointed leader Tung-Chee hwa and of the concept of absolute authority of the Chinese Communist Party there and in the mainland itself. Although the city’s economic situation has improved, with unemployment dropping and growth climbing to an expected 6%, the leadership of Tung was regarded as remaining without deep public support.

The agitation also coincided with a crucial attempt by the city authorities to promote the international acceptance of its first sovereign government bond in a decade of over $5 billion to finance a reduction of its budget deficit and fund needed infrastructure undertakings. But much of the interest in this bond issue was expected to come from banks and other investors in the PRC itself.