By  on June 30, 2017
Chinese President Xi Jinping is in Hong Kong for a three-day trip to commemorate the 20th anniversary of the city's return to China.

HONG KONG — Chinese President Xi Jinping is midway through a tour of Hong Kong to mark 20 years since the British returned the city to Chinese rule. While meant to be a celebratory occasion, he arrives at a time when the general mood here is less than buoyant as Hong Kong struggles with an increasing wealth gap, a weak retail sector and disgruntlement over Beijing's crackdown on civil liberties.So far, Xi has inspected the military and met with youths, and on Saturday, he will swear in a new Hong Kong administration. But the trip is not viewed as sparking a significant improvement in the city's retail fortunes."Hong Kong’s economy is at a turning point in search for the next growth poles," Credit Suisse analysts Vincent Chan and Hu Shen said. "We do not see another big policy scheme like the [Closer Economic Partnership Agreement] unfolding," they added, referring to the first free trade zone Beijing launched with the city.After the SARS epidemic in 2003, Beijing approved the Individual Visit Scheme, or IVS, which allowed mainland Chinese to visit Hong Kong sans tour groups, sending the city's tourism and retail into overdrive."Quinquennial anniversaries do not guarantee big policy announcements," they added. "Many powerful measures were announced in 'ordinary' years, when there was strong consensus that they would be reciprocal [the IVS for instance] or after studied arrangement [like the CEPA discussed for 1.5 years]."Xi has offered general statements of encouragement on this trip. On his first day, he said "in the past 20 years, the central government has always been a strong supporter of Hong Kong, the government will continue as in the past to support Hong Kong's development and to improve the welfare of the people."At a Friday night keynote speech, he continued with more platitudes, asking the populace to "believe in yourself, believe in Hong Kong, and believe in the country."A loud contingent do not. Various rallies have been staged around town foreshadowing a main pro-democracy march on Saturday, which organizers expect to draw hundreds of thousands of people. On Wednesday, Joshua Wong, who led the 2014 Occupy movement, and 25 other activists were arrested as they protested the arrival of Xi.[caption id="attachment_10934036" align="aligncenter" width="600"]Joshua Wong, the leader of the Occupy 2014 movement, was arrested Wednesday protesting the arrival of President Xi. Joshua Wong, the leader of the Occupy 2014 movement, was arrested Wednesday protesting the arrival of President Xi.[/caption]RELATED: The Dalai Lama Dilemma and Other China Pitfalls Brands Should Know >>Authorities have gone to great lengths to ensure that Xi does not encounter any signs of political dissent. Much of Wanchai, where the president is staying, has been shut off by a security cordon with armed officers and a heavy wall of barricades.On Thursday, newly released government data showed that Hong Kong retail sales eked out 0.5 percent year-over-year growth. After two years of decline, which provided a low comparative base, sales finally turned a corner in March, rising 3.1 percent year-over-year. April saw just 0.1 percent growth.Hong Kong's retail success has hinged on attracting mainland Chinese tourist shoppers to the city. Mainland Chinese tourist spending accounted for roughly 8 percent of Hong Kong's GDP, research from Natixis showed.In 2016, mainland Chinese visitors accounted for 76 percent of total visitor arrivals into Hong Kong, for a total of 42.8 million. But that was a drop of 6.7 percent from the year before and resulted in a significant negative impact on Hong Kong retail sales, which fell by 8 percent year-on-year.The outlook is not as dire as it once was, but it's still sluggish. Last month, mainland Chinese visitation grew by 1.8 percent year-over-year, which was below growth from visitors from other countries, which grew 2.2 percent.Looking ahead, the Hong Kong Retail Management Association said it hopes the city will manage to hit 1 percent in annual sales growth.[caption id="attachment_10934984" align="aligncenter" width="600"]Several pro-democracy protests have been planned during the Chinese president's visit including a main rally on Saturday, expected to draw hundreds of thousands. Several pro-democracy protests have been planned during the Chinese president's visit including a main rally on Saturday, expected to draw hundreds of thousands.[/caption]

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