Hong Kong's embattled Chief Executive, Tung Chee-Hwa, has shelved the draft anti-subversion bill that prompted the city's record political protests in July.
After first postponing the so-called Article 23 legislation and removing three of its most draconian clauses, Mr Tung finally gave in to pressure yesterday and said the bill would be dropped. "The community still has concerns about the content of the bill. To give the public more time to understand the bill, we have decided to withdraw it," Mr Tung said.
The government did not set a timetable for its reintroduction but it could take several years, which would give pro-Beijing legislators a better chance in next year's elections.
Critics said the law was drafted to curb basic freedoms and that the laws inherited from the British were adequate to contain any threats. Mr Tung had argued he was obliged to introduce the legislation under article 23 of the Basic Law, Hong Kong's mini-constitution.
About 500,000 people took to the streets on 1 July and other demonstrations followed when Mr Tung refused to withdraw the bill. Only a change of heart by a pro-government legislator, James Tien, of the Liberal Party, forced Mr Tung to delay a vote in the Legislative Council. Mr Tung then fired two of his closest allies, including Regina Ip, the security minister who promoted the bill.
Mr Tung's critics are preparing a fresh campaign to force his resignation but have been met by a counter attack. On Thursday, Emily Lau, Hong Kong's most outspoken opposition legislator, found the door of her district office smeared with faeces. Ms Lau has also been attacked in vitriolic editorials in China Daily, Wen Wei Pao and other Communist Party newspapers. She was called a "traitor" and a threat to national security who broke her promise to defend the "one country, two systems" principle by speaking at a seminar hosted by a pro-Taiwan independence think-tank.
"I am flabbergasted and very angry. It is like the Cultural Revolution all over again," she said. She was one of 20 Hong Kong figures at the Taipei conference on the "One country, two systems formula" under which China has absorbed Hong Kong and now wants to extend to Taiwan. "All I said is that the future is up to the people of Taiwan," Ms Lau said.
With other pro-democracy politicians, she has been banned from the mainland for the past ten years. Since 1989, when more than a million Hong Kongers turned out in sympathy after the crackdown against the Tiananmen Square protesters, Beijing has feared the Special Administrative Region could be a base for subversion. Before July the democrats had largely been written off but the scale of the anger against Mr Tung has transformed their aspirations.
Chinese officials are concerned that problems in Hong Kong could allow Taiwan's President, Chen Shui-bian, to cling to power in the presidential elections in March. He is the first pro-independence leader to rule Taiwan and since August has been neck and neck in the polls with KMT candidates, Lien Chan and James Soong, who favour closer ties with Beijing. If the KMT regains its 50-year control over the island, it may quickly open the "three links", allowing direct flights between Taiwan and the mainland that will add to Hong Kong's economic woes by ending its role as a middleman.
If Mr Chen is re-elected, he intends to hold a referendum on independence. That could embarrass Beijing, which insists only a tiny minority favours independence.
The massive turnout in the Hong Kong protests caught Beijing by surprise and discredited the officials staffing the mainland's Hong Kong Liaison Office, which clearly misled Beijing on the scale of feeling against Mr Tung.
Legislator Margaret Ng, a barrister and leading democracy advocate, blames the hardline left-wingers in the Liaison Office for orchestrating the attacks on Ms Lau and mismanaging the situation since 1997. "They keep blaming a few individuals for misleading people, but the real problem is Tung," Ms Ng said. "People are fed up with him."
Mr Tung has unveiled measures to turn the economy around but most doubt the economy can rebound quickly enough to restore faith in Mr Tung or his allies. Since Britain handed over the territory in 1997, property prices are down by 70 per cent, public finances are at record deficits and unemployment is 8.7 per cent.
Beijing now seems more alarmed by the prospect of democratic politicians winning control over the Legislative Council at the 2004 polls.
Under the timetable laid out in the Basic Law, Hong Kong's mini-constitution, half the 60 seats in the chamber will be directly elected and this must rise further in the 2008 elections.
Ms Lau is also heading a coalition that wants Mr Tung to step down before his second term ends in 2007 and to introduce direct elections for the post of chief executive.
Mr Tung, a shipping magnate, was twice elected by an electoral college of 800, handpicked by Beijing and dominated by big business interests.
Under the Basic Law the voting system must be reviewed before 2007 - with a majority in the Legislative Council - but the democrats hope to force Beijing into introducing universal suffrage by mounting fresh demonstrations on 1 January.
If Hong Kong did follow Taiwan into holding direct elections, this could have serious implications for the mainland.
Mr Tung was appointed by Jiang Zemin, the former Communist Party leader who stepped down last year but retains a powerful say as head of the military. Some democrats fear that Mr Tung cannot be ousted as long as Mr Jiang remains in power. Others suggest that his successor, Hu Jintao, who is trying to modernise the Party and push through constitutional reforms, could use the issue to challenge Mr Jiang's judgement.Reuse content