Hong Kong chief executive Carrie Lam is set to withdraw the controversial extradition bill that sparked three months of fierce protests in the city, according to multiple people familiar with the matter.

The bill was spearheaded by Ms Lam and would have allowed criminal suspects to be transferred to mainland China for the first time. Its introduction triggered weeks of demonstrations that have plunged the city into its worst political crisis since the handover from British to Chinese rule two decades ago.

Ms Lam had previously suspended the bill and pronounced it “dead”, but protesters have continued to demand its full withdrawal.

She will meet pro-Beijing lawmakers this afternoon, according to two people familiar with the matter, where it is believed she will announce the decision.

Ms Lam will also announce the parameters of a panel under the auspices of the Independent Police Complaints Council of Hong Kong to investigate the root causes of the protests.

The committee will be modelled on a board set up after violent rioting flared through London in the summer of 2011. The role of the UK group, known as the riot communities and victims panel, was to explore the causes of the aggression and look at how the areas affected could be more socially and economically resilient in future. The public were asked to contribute views on the motivation of rioters and the role of public services and policing in maintaining order.

The UK is expected to contribute at least one expert member to the Hong Kong riots panel, according to a personal familiar with the matter.

Online chat forums popular among the protesters began circulating screen grabs from Winter on Fire, a documentary film about the 2015 Ukraine protests that is popular among the Hong Kong demonstrators. The screen grabs read: “If we accept the government’s conditions, our friends who have died won’t forgive us.”

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Joshua Wong, leader of pro-democracy group Demosisto and face of the 2014 Umbrella Movement, rejected Ms Lam’s moves. “Too little too late,” he wrote on Twitter. “Carrie Lam’s repeated failure in understanding the situation has made this announcement completely out of touch — She needs to address ALL Five Demands.”

Hong Kong stocks gained sharply on Wednesday afternoon following local media reports of her decision, with the Hang Seng index closing up almost 4 per cent, its best day in 10 months. The gains erased its losses for the year to date, after spending weeks as the only developed market stock index tracked by Bloomberg in negative territory for 2019.

Separately, John Slosar, chairman of Cathay Pacific, Hong Kong’s flagship airline, had resigned. Mr Slosar said he had retired but his departure comes as the company has come under intense pressure from Beijing over failing to rein in employees who supported the protests. The company’s two top executives resigned last month, including chief executive Rupert Hogg, and has sacked a number of employees.

Mr Slosar will be succeeded by Patrick Healy, managing director of Swire Coca-Cola, a unit of the parent group of Cathay.

Shares in Cathay closed up 7.2 per cent.

Hong Kong has been governed under the “one country, two systems” framework since the 1997 handover, under which it has operated with a high degree of autonomy and a separate legal system to the mainland. But many Hong Kongers have become increasingly anxious about the gradual erosion of those freedoms.

The demonstrations have evolved to include demands for an independent investigation into allegations of police brutality and universal suffrage in the Chinese territory.

The city’s economy has been hit by the protests, with a drop in consumer confidence and a sharp fall in tourism. The IHS Markit Hong Kong purchasing managers’ index, which tracks private sector activity in the Asian financial hub, fell to 40.8 in August, down from 43.8 in the previous month, according to data published on Tuesday. The value was the lowest recorded since the financial crisis in 2009.

Christy Tan, head of markets strategy and research for Asia at NAB, said the full withdrawal of the bill was at the top of protesters’ list of five key demands and “is probably a step in the right direction . . . to ensure that the situation does not get worse”.

“I think markets are probably just happy that at least one out of five demands has been met, and as we go forward if protesters still feel that they want more of their demands to be met immediately, we may still see a sustained level of uncertainty for investors,” she added.

Reporting by Alice Woodhouse, Nicolle Liu and Hudson Lockett in Hong Kong, Tom Mitchell in Beijing and Helen Warrell in London

Via Financial Times