Unpopular Hong Kong leader Tung resigns - newspapers

HONG KONG - Embattled Hong Kong chief executive Tung Chee-hwa, whose unpopular leadership spawned the city's biggest pro-democracy movement in history, has resigned for personal reasons, local newspapers reported on Wednesday.

When asked to confirm if he had stepped down, a government spokesman said: "We don't comment on speculative reports", and Tung only said good morning to reporters and ignored their questions when he arrived at his office early in the day.

Citing unidentified sources, most reports said Tung's right hand man, chief secretary Donald Tsang, would be made acting chief executive after Tung's departure.

The Standard newspaper said Tung handed in his resignation before the Lunar New Year, which started on February 9. It was approved after an emergency meeting of the politburo in Beijing.

Tung, 67, said his health had been deteriorating, the newspaper said.

Reports of Tung's resignation come just weeks after the former shipping tycoon was reprimanded in public by Chinese president Hu Jintao for his poor performance.

Rumours of Tung's departure have swirled since he was made a member of the top advisory body to China's parliament on Monday, which analysts saw as a precursor to his being elevated to vice-chairman of the body -- a rank equivalent to that of a national leader.

Such a promotion would pave the way for a graceful exit for Tung, they added.

The resignation has sparked intense debate in Beijing over how to handle the leadership succession, The Standard said. Tung's present term is not supposed to end until mid-2007.

Tung, a businessman with little political experience, was handpicked by Beijing to be Hong Kong's first chief executive after the former British colony returned to Chinese rule in 1997.

But his tenure has been a stormy one, marked by major policy gaffes, resignations and scandals involving key lieutenants and three economic recessions.

Widespread anger with his leadership spurred growing calls for full voting rights and massive street protests, alarming China's communist leaders.

But calls for more democracy have moderated since last April, when Beijing flatly rejected universal suffrage for the territory for at least the next few years. A recent protest drew only a few thousand people compared to a half million protesters who took to the streets for rallies in 2003 and 2004.

Some political analysts were sceptical about the resignation reports, noting Tung had repeatedly rejected calls for him to step down in the past.

"It's hard to believe, it is a shock to Hong Kong. Afterall, Beijing has done a lot to try to prop up his governance and people had been expecting him to last out his term uneventfully," said Andy Ho, a political commentator.

Other analysts saw Tung's promotion as a way to smooth his relations with senior officials on the mainland and give him greater authority over Hong Kong affairs.

Tung's resignation sets a "bad precedent" for the political future of Hong Kong and confirms Beijing's desire to run the territory according to its own whims, leader democratic politician Martin Lee was quoted as saying.

"This is the end of Hong Kong people running Hong Kong," The Standard quoted Lee as saying.

"They (Beijing) got rid of Hong Kong democracy and now they want another leader. This new chief executive will do everything he is intructed to do," Lee said.

Traders expected little impact on the city's financial markets until Beijing clearly signalled who will fill the chief executive post.

"We have been waiting for this for so long. But what is realy shows is the black hand behind the government, which is the central government. It deals a blow to the confidence of Hong Kong," said Francis Lun of Fulbright Securities.

"The impact on the markets will be limited, in fact, people think Donald Tsang would make a better leader," said a strategist working with a foreign bank in Hong Kong.

According to Hong Kong's constitution, the territory's leader must resign when he or she loses the ability to discharge their duties as a result of serious illness or other reasons.

It also states that when the post becomes vacant, a new chief executive shall be selected within six months.

- REUTERS