HONG KONG — When Hong Kong returned to Chinese rule two decades ago, the city was seen as a model of what China might one day become: prosperous, modern, international, with the broad protections of the rule of law.
There was anxiety about how such a place could survive in authoritarian China. But even after Beijing began encroaching on this former British colony’s freedoms, its reputation as one of the best-managed cities in Asia endured.
The trains ran on time. Crime and taxes were low. The skyline dazzled with ever taller buildings.
Those are still true. Yet as the 20th anniversary of the handover approaches on Saturday, the perception of Hong Kong as something special — a vibrant crossroads of East and West that China may want to emulate — is fading fast.
Never-ending disputes between the city’s Beijing-backed leadership and the pro-democracy opposition have crippled the government’s ability to make difficult decisions and complete important construction projects.
Caught between rival modes of rule — Beijing’s dictates and the demands of local residents — the authorities have allowed problems to fester, including an affordable-housing crisis, a troubled education system and a delayed high-speed rail line.
Many say the fight over Hong Kong’s political future has paralyzed it, and perhaps doomed it to decline. As a result, the city is increasingly held up not as a model of China’s future but as a cautionary tale — for Beijing and its allies, of the perils of democracy, and for the opposition, of the perils of authoritarianism.
“More and more, there is a sense of futility,” said Anson Chan, the second-highest official in the Hong Kong government in the years before and after the handover to Chinese rule. She blames Beijing’s interference for the city’s woes. “We have this enormous giant at our doorstep,” she said, “and the rest of the world does not seem to question whatever the enormous giant does.”
Others spread the blame more broadly. They point to the opposition’s reluctance to compromise and policies that weaken political parties, including multiseat legislative districts that allow radical candidates to win with a minority of votes.
“This kind of a political atmosphere will disrupt many of the initiatives that may come along,” said Anna Wu, a member of the territory’s executive council, or cabinet.
A high-speed rail station planned for Hong Kong is a half-finished shell — years after every other major city in China has been linked by bullet trains.
Hong Kong ranks only after New York and London as a center of global finance, but it has no world-class museums. After 15 years of delays, construction of a cultural district intended to rival Lincoln Center has started, but funding from the legislature could be disrupted in the coming days.
Widespread complaints about test-obsessed schools leaving students ill equipped to compete against those in mainland China have not led to education reform. Nor has the government found a way to address simmering public anger over skyrocketing rents and housing prices.
Hong Kong was once known for the speed and efficiency with which it built huge planned communities with ample public housing every several years. But it has not managed to do so since Britain returned it to Chinese rule on July 1, 1997.
Hong Kong is still a gem in many ways, a place that is hard not to love, and for its 7.4 million residents, hard to leave.
Narrow ribbons of oceanfront skyscrapers are backed by wooded hillsides protected as country parks. Just 10 minutes uphill from the majestic Victoria Harbor and financial district are breathtaking views of the South China Sea. Steel and concrete fade into sylvan trails that wind past lakes and waterfalls, all of it not too far from the city’s cavernous and efficient airport, part of a renowned transport network of subways, buses, trams and ferries.
But the airport was built by the British before they left. So were the institutions that really distinguish the city: the independent courts, the widely respected civil service, the freewheeling press.
Those were preserved under the “one country, two systems,” formula that promised Hong Kong a high degree of autonomy when Britain returned it to China. But they have been weakened as the Communist Party increasingly meddles in the city’s affairs, intimidating and even abducting people seen as challenging its interests.
The Umbrella Movement demanding free elections that seized control of downtown streets for 11 weeks in late 2014 is just a distant memory. But sullen resentment of mainland China has spread as Hong Kong’s democratic evolution has stalled.
Her predecessors tiptoed around tough issues, wary of both offending the Chinese leadership and provoking the public. At the same time, critics say, limited public accountability has allowed incompetence and even graft to spread among officials. The top two government officials from a previous administration have been tried on corruption charges.
Beijing’s allies have a majority in the legislature because half the 70 seats are selected by interest groups mostly loyal to the mainland government. But the other half is elected, and lawmakers who favor greater democracy have won a majority of those seats. The result is gridlock.
There has also been a generational shift in the pro-democracy camp. Voters have replaced older, more pragmatic politicians with younger candidates more stridently opposed to the Communist authorities and willing to engage in all-out resistance. Late last year, Beijing intervened to prevent the seating of two pro-independence politicians who had altered their oath of office to protest Chinese rule.
The legislature’s rules allow any three members to stall action for months with filibusters. In the last two years, various groups in the pro-democracy camp have repeatedly used that tool as leverage, causing a backlog of legislation that has delayed even projects that are not contentious, like a cleanup plan for the harbor.
Both sides agree that the city will become ungovernable without some kind of political change. But they cannot agree on what to do.
The democrats want a clear road map to universal suffrage — which Beijing promised in 2007 “may be implemented” in 2017 — starting with direct elections for the chief executive. Only when the government is accountable to the public will it have a mandate to tackle the challenges facing the city, they say.
But supporters of Beijing say the problem is too much democracy, not too little.
Shiu Sin-por, the departing head of the local government’s agenda-setting Central Policy Unit, said pro-Beijing lawmakers must break with tradition and get tough on filibusters.
He also wants to eliminate civil service protections for many senior officials and put them on renewable, short-term contracts — which would make them more accountable to Beijing.
“You have a lot of deadbeats and layabouts who drag it out until they retire,” he said. “Would elections change this? No.”
Mr. Shiu, a longtime power broker with close ties to the Beijing government, warned that if Hong Kong remained politically paralyzed, it could slip from the ranks of the world’s great cities and end up like Monaco, a tax haven for the wealthy with few industries beyond financial services and retail.
In an interview, Mrs. Lam, who will be sworn in on Saturday, acknowledged “a certain degree of truth” in the argument that the lack of a political overhaul was making it more difficult to address issues like housing, education and infrastructure.
But she added: “If we were to have universal suffrage tomorrow, would all these problems disappear? I don’t think so.”
In many ways, Hong Kong as a city has fared better than its people. Since the handover, more than one million mainland Chinese have moved here, contributing their energy and talents to the territory’s economic development. But the newcomers’ success has sometimes come at the expense of those with deeper roots.
Big international companies and banks now aggressively recruit mainland Chinese instead of local residents, who speak Cantonese instead of the Mandarin used on the mainland and who often lack the connections to win deals and thrive there.
The language issue is a challenge for Hong Kong’s education system, which tries to teach three of them — English, as well as Mandarin and Cantonese. This produces many graduates with weaker English and Mandarin than those from the mainland’s top schools.
But efforts to address the problem get caught in the city’s fractious politics, with suspicions that Beijing wants to undermine local identity or limit the West’s influence.
At the same time, the government has resisted proposals to ease the culture of high-pressure testing, a source of much public dissatisfaction. Instead, it tried to introduce “patriotic” material into the curriculum, appeasing Beijing while angering parents and students.
The influx of mainland Chinese has also contributed to a historic run-up in housing prices, making Hong Kong one of the world’s most expensive places to live. A single parking space recently sold for $ 664,000.
Soaring prices and rents have squeezed middle-class families and younger residents in particular, fueling resentment against the mainland Chinese who have poured money into the market. Government measures to limit speculation have not deterred those investors, many of whom are looking for a safe way to get their money out of the mainland.
The underlying problem is limited supply. Land disputes have nearly halted plans to build big residential areas in the rural sections of northern Hong Kong.
Under a policy dating from the colonial era, families in traditional villages there are awarded long-term grants of land, producing suburban sprawl and making it difficult to put together a large parcel for development. The government could force families to sell but is worried about setting off protests, in part because the leaders of those communities have generally supported Beijing.
Plans to build elsewhere have also stalled. Efforts to rezone the fringes of country parks for apartment buildings have been blocked by environmentalists, while the government has been leery of the cost of controversial proposals by developers to subsidize land reclamation and build thousands of acres of artificial islands.
“There’s land in Hong Kong, but what we lack is developable land,” said Anthony Cheung, the transport and housing secretary, noting that everyone wanted more housing but no one wanted it built next door. “We still need to seek local community support.”
Gaining such support is difficult, though, given deep distrust of the government. Lawsuits by neighborhoods and environmental groups have delayed a range of infrastructure projects that require much less land than housing developments.
The planned high-speed rail line, for example, is being built underground the entire 16 miles to the border partly because of the political challenge of obtaining land. That has driven up the project’s cost many times over. Even the tunneling effort required the removal of a village of scarcely 100 people, though, and democracy activists joined them in protests that slowed the initiative.
The proposed deployment of Chinese immigration officers at the downtown rail station under construction is also contentious. Critics are objecting to an expanded mainland security presence in the heart of the city. They point to several recent cases in which Chinese officers appeared to abduct people — booksellers peddling salacious tales about mainland officials, or a tycoon with rare insight into the finances of the Communist Party elite — and whisk them to the mainland without legal authority.
“It will be used as an excuse to create a serious loophole to allow mainland officers to implement mainland laws in Hong Kong’s territory,” said Eddie Chu, a pro-democracy member of the legislature.
As the political wrangling in Hong Kong is drawn out, some people are leaving. One popular destination is Taiwan, a flourishing Chinese democracy with more affordable real estate and news outlets that have not been cowed by Beijing, as many of those in Hong Kong have.
Pat Yeung, 43, an entrepreneur, said she moved to Taiwan this summer after a friend emigrated to get her children out of the high-pressure schools, and after she met another couple who relocated in search of cheaper housing.
In Hong Kong, with its relentless business competition and darkening political climate, Ms. Yeung said, “the pressure is too, too much.”
Three years ago, Beijing presented Hong Kong with a proposal to allow residents to elect the chief executive, but only from a slate of candidates approved by a nomination committee under its control. The pro-democracy forces rejected the offer, holding out for free elections without such a limit, and Beijing’s refusal to budge prompted the Umbrella Movement protests.
It was a pivotal moment for Hong Kong, with all sides letting a chance at compromise slip by and digging in for what has been a prolonged stalemate.
The pro-democracy camp’s biggest mistake may have been believing that President Xi Jinping, who at the time had been in office for almost two years, intended to guide China toward a more pluralistic future.
Martin Lee, the founding chairman of the Democratic Party, said that he harbored such hopes because he had met Mr. Xi’s father, a senior Communist leader considered more open-minded than most of Mao’s generals.
Others noted Mr. Xi’s record as a leader in the eastern provinces of Fujian and Zhejiang, where he adopted a moderate tone while trying to attract Hong Kong investors, said Joseph Cheng, another longtime democracy advocate.
Zhang Dejiang, a member of the powerful Politburo Standing Committee, took the lead on policy toward Hong Kong, and some wondered at the time if his hard-line stance reflected Mr. Xi’s views.
But there is little doubt now that Mr. Xi calls the shots. After nearly five years in power, he has proved to be a committed authoritarian who considers political liberalization a threat.
There seems little hope that Beijing will make Hong Kong an offer better than the one it put forward three years ago. Jasper Tsang, the recently retired president of the legislature and a longtime ally of Beijing, said the attitudes of the Chinese leadership toward the city had hardened.
“People are telling me there won’t be a second chance,” he said.
Last month, Mr. Zhang visited Macau, the former Portuguese colony that is now a Chinese gambling hub, and praised it in terms that suggested he saw it as a model for Hong Kong.
People here were stunned because Macau has a reputation for obsequious obedience to Beijing as well as chronic corruption, organized crime and limited tolerance for labor unions and other independent organizations.
The worry now is that Mr. Xi may share that vision of Hong Kong’s future. “If the idea came from him,” Mr. Lee said, “we are finished.”