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Chinese President Xi Jinping told Hong Kong leader Carrie Lam the city is developing in a good direction, days after an election installed a legislature of Beijing loyalists in the Asian financial hub.

Xi added that he fully recognized the work of her government, as the pair met in Beijing on Wednesday. Lam’s annual trip to brief China’s state leaders on social, political and economic issues in the city comes as speculation mounts over whether she’ll seek a second, five-year term next year.

“Hong Kong has been restored from the chaotic condition and is developing in a good direction,” Xi said. “The central government fully recognizes your work.”

Xi last granted an in-person audience with a leader from outside mainland China when he saw Pakistan’s president in Beijing in March 2020. He hasn’t left his country since the early days of the pandemic, as China pursues a COVID-zero strategy of trying to eliminate the virus within its borders.

Lam’s visit, which wraps up Thursday, will be closely watched for signs she has Beijing’s backing to run in the March 27 vote for Hong Kong’s next chief executive. No candidates have yet declared their intention to run.

When Lam last met Xi in 2019 he said the central government recognized “the courage and responsibility” she’d demonstrated during anti-government unrest, a rare display of effusive praise from China’s president.

Chinese and Hong Kong authorities have yet to announce the highly anticipated start date for cross-border quarantine-free travel amid the global spread of omicron.

Chinese President Xi Jinping speaking at a light show marking the centenary of the Chinese Community Party and the anniversary of Hong Kong's return to Chinese rule at Tamar Park in Hong Kong on July 1. | BLOOMBERG
Chinese President Xi Jinping speaking at a light show marking the centenary of the Chinese Community Party and the anniversary of Hong Kong’s return to Chinese rule at Tamar Park in Hong Kong on July 1. | BLOOMBERG

Earlier in the day, Lam sat down with Premier Li Keqiang, who praised her government’s handling of COVID-19 and urged greater integration with China.

“Since the beginning of this year, you have led the Hong Kong government to exercise prudent governance, effectively controlling the epidemic and facilitating economic recovery,” Li said.

His comments come after Hong Kong installed a legislature of Communist Party loyalists under a new electoral system revamped by Beijing. That overhaul — including cutting the share of directly elected seats — was prompted by Xi’s announcement during Lam’s last annual report to China, conducted via video conference in January, that Hong Kong must be governed by “patriots.”

Group of Seven nations expressed “grave concern” over Sunday’s election, which drew the city’s lowest ever turnout. China followed it with a white paper on democracy saying the city’s electoral system had improved.

Li added that Hong Kong should “directly connect” its development strategy to that of the mainland, while stressing that Beijing was committed to the 50-year “one country, two systems” agreement brokered before the U.K. handed the city back to Chinese rule in 1997.

China’s policies have roiled Hong Kong’s stock market in recent months. The city’s benchmark stock gauge was among the worst-performing major indexes this year, hurt by worries about debt in China’s property sector, weak retail spending and Beijing’s corporate crackdowns. The Hang Seng Index’s 15% slump was its biggest in a decade.

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