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Even with Beijing's backing, Hong Kong's new leader faces big challenges

ARI SHAPIRO, HOST:

Hong Kong has a new chief executive. John Lee is a former cop who got the job with the full endorsement of the Chinese leadership. Beijing sees him as loyal and a safe pair of hands who has overseen a crackdown on dissent in the former British colony. But as NPR's John Ruwitch reports, even with that backing, Lee faces challenges, and none perhaps more immediate than the economy.

JOHN RUWITCH, BYLINE: About a mile and a half from the border with China is a town on the Hong Kong side called Sheung Shui. Wen Jik-fong has worked in a restaurant in town for more than two decades.

WEN JIK-FONG: (Through interpreter) This street used to be crowded. There were at least three to four times more people than there are now. We had to be careful when walking.

RUWITCH: Wen has never seen things quite this anemic.

So that place is closed. The place next to them is closed. That place is closed. What were these businesses?

WEN: (Speaking Cantonese).

RUWITCH: He says they were drugstores that sold things like cosmetics and baby formula to traders from the mainland, mostly. They used to flock here daily to buy goods to sell back in China. But the border has been effectively closed since the earliest days of the pandemic. The border trading is dead. Businesses have gone bust. Rents have collapsed.

Sheung Shui is just a tiny piece of Hong Kong's economy. But economics professor Thomas Yuen of Shue Yuen University says it highlights a big problem.

THOMAS YUEN: Hong Kong is an international city. We know that. We need to get the border open.

RUWITCH: Since Britain seized Hong Kong in the mid-1800s and made it a global city, it's always been dependent on the world beyond its borders. But that came to a crashing halt in 2020, and its economy is sputtering. Sandwiched between China, which aims to keep COVID-19 out, and the rest of the world, which is learning to live with the virus, Hong Kong has been stuck.

YUEN: If we follow all the policy in mainland China in controlling the COVID, of course we can get the border from China open, but it will take a lot of time.

RUWITCH: It's been more than two years already. And it's meant the city has not been able to fully open to the rest of the world.

FREDERIK GOLLOB: The last two years have really taken a huge toll on families, and the frustration is immense.

RUWITCH: Frederik Gollob is head of the European Chamber of Commerce in Hong Kong. He says the policies also create uncertainty and hurt businesses. Outgoing chief executive Carrie Lam said in recent weeks there isn't much hope for a swift opening with the mainland.

GOLLOB: And I think that puts pressure on John Lee to actually prioritize easing restrictions for travelers coming from the rest of the world as the business pressure is not only mounting - it's simply gigantic.

RUWITCH: But that may be impossible for a man who needs to show loyalty to Beijing. In the meantime, many people are voting with their feet. Some are even quietly reconsidering the city's long-term allure as a regional business hub. The closed border is an immediate factor, but the backdrop includes political unrest and China's increasingly heavy hand in Hong Kong's affairs, including a 2020 national security law. Beijing says it's helped restore stability. Critics fear, though, that Hong Kong's vaunted fundamentals, like freedom of speech and rule of law, are vanishing.

Back in Sheung Shui, 37-year-old Tracy Leung's story is emblematic of the challenges people are facing.

(SOUNDBITE OF PLASTIC WRAPPER CRINKLING)

RUWITCH: She used to run a beauty salon, but it was forced to close early in the pandemic. Now she sells dime store household goods out of a storefront where a pharmacy used to be.

TRACY LEUNG: The rent is cheap now, yeah.

RUWITCH: The items were originally bound for Europe but couldn't ship out because of the pandemic. While she's glad some things have worked out in her favor, she says this is not how she dreamt of making a living.

LEUNG: I'm thinking about other options, of course, yeah, because I don't think I can do this for the rest of my life.

RUWITCH: But for now, she says she does not feel comfortable starting a new business. The future is too uncertain.

LEUNG: Because the government is, like, a mess. Yeah. Hong Kong government is a mess, actually.

RUWITCH: A mess that it's now down to John Lee to address.

John Ruwitch, NPR News, Hong Kong. Transcript provided by NPR, Copyright NPR.

John Ruwitch is a correspondent with NPR's international desk. He covers Chinese affairs.