RUMORS INTENSIFY OVER NEW CHIEF SECRETARY; SOME

C O N F I D E N T I A L SECTION 01 OF 02 HONG KONG 002399

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DEPT FOR EAP AND EAP/CM
NSC FOR DENNIS WILDER

E.O. 12958: DECL: 06/09/2031
TAGS: PGOV PHUM PINR PREL HK CH
SUBJECT: RUMORS INTENSIFY OVER NEW CHIEF SECRETARY; SOME
SPECULATE RAFAEL HUI WILL STAY

Classified By: E/P Chief Simon Schuchat. Reasons: 1.4(b,d).


1. (C) Summary: The Chief Executive (CE) election is more
than nine months away, but press speculation about
behind-the-scenes jockeying for the Chief Secretary (CS) and
other ministerial positions has already begun. Many had
predicted that John Tsang Chun-wah, Director of the CE's
Office and close personal friend of the CE, would be promoted
to Chief Secretary after Rafael Hui stepped down in June

2007. However, the "South China Morning Post (SCMP)"
reported on June 8 that Donald Tsang had asked Hui to stay on
as CS for the first two years of his next term, because
Beijing was unenthusiastic about John Tsang, the CE's first
choice. One pro-Beijing interlocutor told us that John
Tsang's background as Governor Chris Patten's private

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secretary from 1995-1997 might make Beijing wary of him.

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Liberal Party Chief James Tien and legislator Albert Cheng
told us that Beijing wanted Hui to stay on the job for an
additional two years to act as a counterweight to Donald
Tsang. SCMP Editor-at-large Chris Yeung said the situation

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remained fluid, and he was doubtful that at this early date
John Tsang was out of the running for the CS job or that the
CE had asked Hui to stay on. Yeung added that the intense
interest in who might be the next CS stemmed from the belief
that whoever secured that job would be well-placed to run for
CE in 2012. End Summary.

Jockeying for New Leadership Team Begins
--------------


2. (C) Although the Chief Executive (CE) election is more
than nine months away, press speculation about jockeying for
the Chief Secretary (CS) and other ministerial positions
already has begun. Most observers presume that Donald Tsang,
who has the clear backing of Beijing, will win the CE
election in March and begin his second term in June of next
year. However, Tsang has yet to announce his choice to fill
the number two position, that of CS, in his next
administration. Rafael Hui, who came out of retirement to
serve as Chief Secretary last year at the request of Tsang,
has repeatedly said that he does not intend to serve beyond
the CE's current term. When John Tsang Chun-wah, a close
personal friend of the CE, moved from Secretary for Commerce,
Industry, and Technology to become Director of the CE's
Office in January, many observers took it as an indication
that he would be promoted to CS after Hui stepped down. On
June 8, however, the "South ChinaMorning Post (SCMP)"
repored that Donald Tsang had asked Hui to stay on as Chief
Secretary for the first two years of the next CE term.

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According to the "SCMP," Beijing was unenthusiastic about
Tsang's first choice, John Tsang. Similar rumors have

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surfaced in the Chinese language press as analysts try to
predict Donald Tsang's new leadership team. Thus far the
CE's Office has refused comment.

Rafael Hui: Counterweight to Donald Tsang
--------------


3. (C) On June 8, Liberal Party Chairman James Tien opined to
the Consul General that the "SCMP" story -- that Beijing
preferred to have Hui remain as CS for an additional two
years -- was accurate. In Tien's view, the central
government believed that Hui serves as a useful counterweight
to Donald Tsang. Acknowledging that Hui has not indicated
whether he would be willing to stay on for two more years,
Tien noted that if he did so it would be due to his
"patriotism." Tien added that Donald Tsang would not fight
for John Tsang's candidacy and was more focused on holding on
to his own job.


4. (C) Legislator and independent democrat Albert Cheng, also
a close personal friend of CE Donald Tsang's, told us on June
8 that he also had heard that Beijing wanted a CS who was not
too close to Donald Tsang and could act as a check on his
power. While Hui could stay on if he wanted, he clearly
would prefer to retire after his current term. Moreover,
according to Cheng, Donald Tsang was unhappy with the current
situation, feeling that Hui had too much power -- "he's a
strong man" -- and diluted Donald Tsang's authority. If Hui
declined to serve another term, there would likely be two
candidates to replace him, Financial Secretary Henry Tang or
John Tsang. While John Tsang is Donald Tsang's preferred
choice and Donald "wouldn't be happy with Tang," Cheng said
that "Henry is the one who really wants the job." That said,
Cheng believes that having Tang as CS might actually be good
for Donald Tsang because "Henry is incompetent." This would
create a situation similar to that under former CE C.H. Tung,
when there was no CS and all the ministers reported directly

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to the CE. Such a scenario would increase Donald Tsang's
power, said Cheng. In any event, "once the election is over
and Donald Tsang names his new cabinet, we'll know whether he
really has the full blessing of Beijing," (i.e. whether John
Tsang is named CS).

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John Tsang: Colonial Baggage
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5. (C) On June 8, Felix Fong, Standing Committee member of
the Democratic Alliance for the Betterment and Progress of
Hong Kong (DAB),opined that John Tsang's background as
Governor Chris Patten's private secretary from 1995-1997
might make Beijing wary of him. And unlike Donald Tsang,
John Tsang had not done enough to "win back the hearts of
Beijing." (Note: So mentioned Donald Tsang's numerous trips
to the mainland over the past few years as evidence of the
CE's attempts to curry favor with Beijing. End Note.) So
said that he "quite liked John Tsang" and that he seemed very
qualified for the job, but that "in this type of personnel
matter" the final decision would be up to the CE and Beijing.

"Kingmaker"
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6. (C) On June 8, "SCMP" Editor-at-large Chris Yeung
expressed doubt that John Tsang was out of the running as a
CS candidate or that the CE had asked Hui to stay on more
than nine months before Donald Tsang had even won the CE
election. "The situation is still fluid," said Yeung.
Nonetheless, some groups don't want Donald Tsang to be so
powerful and therefore don't want him to have a close
colleague such as John Tsang in the number two position,
opined Yeung. Others have speculated that Beijing preferred
Hui because he could be a counterweight to Donald Tsang and
"keep an eye on" him. Yeung said that talk about the next CS
had likely intensified in recent weeks because middlemen from
the Central Government had been floating names such as Henry
Tang and Secretary for Education and Manpower Arthur Li as
possible candidates for the CS job to gauge reaction. There
was intense interest in who might be the next CS because of
the belief that whoever secured that job would be well-placed
to run as CE in the 2012 election. Naturally, said Yeung,
Beijing, the CE, and the pro-business lobby were all busy
promoting their preferred candidates, because everyone wanted
to be "kingmaker."
Cunningham