THE CONSULATE GENERAL OF SWITZERLAND IN HONG KONG

 

  Hongkong Economic Report 2013 (May 14, 2014)
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Economy + Finance
HK year-on-year retail sales show 4.1 per cent drop for May: HK's retail sales fell 4.1 per cent year on year in May, the third straight month of shrinking consumer spending as the impact of poor jewellery sales persisted. Still, the government figures showed the fall in retail sales was less severe than April's 9.8 per cent slump - the sharpest drop in five years. Sarah Quinlan, head of market insights for Mastercard, said the impact of the jewellery downturn was being felt across the market as the sector made up 23 per cent of retail sales.
Landlords forced to lower asking rents as mainland tourist spending falls: Property investors who bulked up their retail portfolios in recent years have found themselves on the wrong end of a bet on mainland shoppers driving a sustained boom in sales. With retail sales falling in HK, as mainland visitors tighten the purse strings, owners of shops in core districts are cutting asking rents by up to 40 per cent. "International luxury brands, in particular jewellery and watches retailer, are no longer expanding aggressively as they did before," said Joe Lin, executive director of retail services at property consultancy CBRE.
Mortgage loan curbs to stay until home prices fall, HKMA chief Norman Chan says: Six rounds of mortgage tightening by the HK Monetary Authority since 2009 have reduced lending but not reined in prices, the latest figures show. The average loan-to-value ratio of new residential mortgage loans has dropped to 55 per cent, from 64 per cent in September 2009 before the first round of measures was introduced, HK Monetary Authority chief executive Norman Chan said. But the Centa-City Leading Index, which tracks secondary market prices at major housing estates, shows home prices rose 66.8 per cent between the start of September 2009 and the end of last month. The measures would remain in place until property prices fell, Chan said. 
Homebuyers warned: don't rush into market: The city's finance chief has warned prospective homebuyers to be aware of the market risks amid signs the lower end of the housing market is picking up. Financial Secretary John Tsang said there were indications the market was "heating up", especially for low-cost homes - those in the region of HK$4 million. He was worried about buyers rushing in without considering long-term affordability and a potential rise in interest rates.
Occupy Central 'may hurt Beijing's confidence in HK as financial centre': Beijing's confidence in HK as a financial centre could be shattered if the Occupy Central protests spiral out of control, the former head of the Monetary Authority Joseph Yam warned. Joseph Yam, who led the de facto central bank from 1993 to 2009, stopped short of saying state leaders would give up on the city should Occupy go ahead with its plan to block streets if the government fails to offer "genuine" democracy. But he said it was "natural" for Beijing to work on a "Plan B", such as bolstering its drive to make Shanghai a financial hub. 
Every penny of HK$3 trillion Exchange Fund needed for ‘crises’, says HKMA chief: The head of HK’s de facto central bank has rejected calls from some lawmakers to use part of the city’s HK$3 trillion Exchange Fund to pay for infrastructure projects or social welfare. Norman Chan, the chief executive of the Monetary Authority, said the fund needs every penny to cope with unexpected financial crises. Chan said the experience of the global financial crisis in 2008 showed that the government should be ready for every eventuality. The government decided to provide a full guarantee for HK$5.8 trillion of deposits in 2008.

Domestic politics
Annual march biggest in recent years, with the focus democracy in 2017: Hundreds of thousands took to the streets to demand "genuine" democracy in 2017 and express their anger at Beijing's declaration of its authority over HK in the biggest July 1 protest in recent years. Organiser the Civil Human Rights Front put the turnout at 510,000, while police said 92,000 started the march in Victoria Park. In both cases, the figure was the highest since 2005. The march was another key test of support for the democracy movement, after 800,000 people voted in a 10-day unofficial referendum on models for the 2017 chief executive election. Civil Human Rights Front convenor Johnson Yeung said: "The massive turnout shows HK people want genuine universal suffrage. The government must respect public opinion." However, Beijing's top man in HK, liaison office director Zhang Xiaoming, said neither the march or the referendum would affect the central government's determination to implement universal suffrage "in accordance with the law". The HK government said it respected residents' rights to free expression, but said allowing the public to nominate candidates for chief executive in 2017 was "unlikely" due to "legal, political and operational" issues.
Police called to Legco after glass thrown towards CY Leung amid pan-democrat walkout: For the first time since the handover, the Chief Executive's Office called the police into the Legislative Council chamber on July 3. The move came after independent Wong Yuk-man hurled a glass in the direction of Chief Executive Leung Chun-ying. Other pan-democrats staged an unprecedented walkout at the start of the meeting. "Genuine universal suffrage without screening. … Listen to the people's voice, 689," the lawmakers called, mocking the number of votes Leung had receive to lead the city from the Election Committee's nearly 1,200 members. Responding to a lawmaker's question, Leung ruled out stepping down as HK's chief executive.
Mainstream opinion key to electoral reform in HK, CY Leung tells NPC: "Mainstream opinion" in HK holds that only a nominating committee should have the power to put forward chief executive candidates and that such power must not be "undermined or bypassed", the chief executive has told Beijing. In his report to the National People's Congress Standing Committee - the first step of a long march towards universal suffrage in 2017 - Leung Chun-ying said the public "generally agreed" that the chief executive had to be a person who "loves the country and loves HK". Further suggesting that the public backs the government line, he said it would also agree that reform proposals should be drawn up in accordance with the Basic Law and the decisions of the Standing Committee. Leung made vague references to Occupy Central's unofficial plebiscite and the mass rally on July 1, both backing the right of voters to nominate candidates, as well as the Bar Association's statement in April saying this would not comply with the Basic Law. Some Beijing-loyalist lawmakers questioned why officials appeared hesitant in dismissing public or "civic" nomination, while pan-democrats condemned the report for ignoring public demands for "genuine" universal suffrage. Pan-democrats also criticised the report for concluding that society "generally agreed" there was no need to amend the Basic Law in preparing for the Legislative Council election in 2016 - which means functional constituencies would continue to make up half the 70-strong legislature.
NPC chairman tells CY Leung HK must 'strictly follow' basic law in electoral reform: A top Beijing official told HK officials they must "strictly follow" the Basic Law in working out their electoral reform proposal when he unexpectedly summoned them for talks in Shenzhen on July 19. Chief Executive Leung Chun-ying revealed he and three senior colleagues had met Zhang Dejiang, chairman of the National People's Congress, four days after Leung submitted a report on reform to the NPC. Asked what Zhang thought about public nomination, Leung said: "Zhang reiterated the long-standing position … We have to strictly follow the provisions of the Basic Law and also the stipulations of the NPC Standing Committee's decisions." Beijing and its supporters insist only a nominating committee will be allowed to pick candidates. Pan-democrats fear the committee will be stacked with Beijing loyalists and "filter out" critical but popular candidates.
HK's 2017 election is not the end of reform, hints NPC's Zhang Dejiang: NPC Standing Committee member Rita Fan, who met Zhang in Shenzhen, quoted him as saying democratic development in other countries went step by step. She said she understood from Zhang that HK's democratic development would move forward after the city achieved "one man, one vote" in 2017. Zhang's reminder that the 2017 chief executive election is not the endgame of democratic development in the city is seen as Beijing's latest strategy to win over moderate pan-democrats. The Standing Committee will decide on HK's political reform when it meets at the end of next month. HK officials in charge of constitutional development have also been using the same argument to lobby moderate pan-democrats to compromise on reform. The government has to win the support of at least five pan-democrats to secure a two-thirds majority in the Legislative Council for its reform plan.
Pan-democrats call for talks with Beijing to break reform deadlock: Pan-democrats want to meet Beijing officials in charge of HK affairs in a bid to break the deadlock on political reform before the National People's Congress Standing Committee makes a ruling next month. The lawmakers issued their plea on July 23 during a meeting with Chief Secretary Carrie Lam and constitutional affairs chief Raymond Tam. A key issue will be whether the public is allowed to nominate candidates for chief executive in 2017. The pan-democratic camp appears to be softening its line on the issue to set up the meeting and forge consensus.
Business chambers liken Occupy Central to Thai protests, say tourism will plummet: The five leading business chambers formed a united front to oppose Occupy Central, warning that the pro-democracy civil disobedience movement might inflict damage on the city's economy like that caused by the political protests in Thailand. But the civil disobedience movement rejected comparison with the Thailand protests, saying it was advocating political reform, not trying to overthrow a government.
Leung Chun-ying defends decision to sign anti-Occupy Central petition: Chief Executive Leung Chun-ying  announced on July 26 he will sign a high-profile petition against Occupy Central, a decision pan-democrats fear will further polarise the city. Leung's remarks came just one day after the alliance said it had so far got more than 800,000 signatures, compared with the 793,000 people who voted last month in Occupy Central's unofficial reform referendum.
Carrie Lam to Occupy Central: democracy ‘will never be achieved’ through civil disobedience: The government and Occupy Central remain poles apart over political reform after their first meeting on July 29 at which Hong Kong's No 2 official told the movement's organisers their goal would not be achieved through civil disobedience. Chief Secretary Carrie Lam urged the Occupy organisers to give up their plan to block roads in Central if the government fails to come up with a satisfactory plan for a democratic election for chief executive in 2017. But Occupy leaders stuck to their guns, urging the government to respect the views expressed in last month's unofficial referendum, in which almost 700,000 of the near-800,000 voters urged lawmakers to veto reforms that did not meet international standards.
Lawmakers will face committee over donations: The five pan-democratic lawmakers who allegedly failed to declare donations from media tycoon Jimmy Lai will be asked to respond to the accusations within two weeks before a Legislative Council committee, which will then decide whether to launch a probe. The lawmakers caught up in the storm included Democrat James To, Claudia Mo and Alan Leong of the Civic Party, the Labour Party's Lee Cheuk-yan, and Leung Kwok-hung of the League of Social Democrats. The committee will meet again in mid-August. Lai has maintained he did nothing wrong in donating millions of dollars to the pan-democrats in the past two years.

International relations
UK will mobilise global community if China breaches ‘one country, two systems’: Britain will honour its 1984 pledge to "mobilise the international community and pursue every legal and other avenue available" if China breaches the agreement vowing "one country, two systems" for HK. Deputy Prime Minister Nick Clegg was quoted as telling ex-chief Secretary Anson Chan and Democratic Party founding chairman Martin Lee during their current visit to the UK. A press release issued by Chan's think tank Hong Kong 2020 said Clegg had told the pair he was aware of the anxiety caused by Beijing's white paper on HK last month. The meeting drew a strong rebuke from the Ministry of Foreign Affairs in Beijing, with China issuing a complaint to Britain. "The Chinese side urges the British side to truly respect China's position and concern [and] ... immediately stop its interference in HK's affairs," spokesman Hong Lei said. The white paper, which emphasised Beijing's "comprehensive jurisdiction" over HK, was viewed by critics as going against the promise of a high degree of autonomy in the Sino-British Joint Declaration.

Health
High alert for Ebola needed in HK, health minister says: HK's health authorities stepped up surveillance against the deadly Ebola virus on July 30 as a HK woman who fell ill after visiting Kenya tested negative for the disease. HK should remain "highly alert" for Ebola, health minister Dr Ko Wing-man said after leading an emergency meeting with experts to discuss contingency plans in the event of an outbreak. "There are no direct flights from West Africa to HK, but infectors could still be coming to the city by plane," Ko said. Public hospitals would begin to report and test all those who developed fever after travelling to three affected countries in Africa within 21 days.
Queen Mary Hospital to get HK$1.6b overhaul as Legco says 'yes' in dying seconds of meeting: A HK$1.6 billion request for funds to redevelop Queen Mary Hospital received unanimous support from lawmakers, passing in the final minute of the Legislative Council Finance Committee's final meeting before the summer break. The HK$1.6 billion would cover only the first phase of the hospital's redevelopment. "Historical problems [at the hospital] mean equipment and space are inadequate to meet its needs," Secretary for Food and Health Dr Ko Wing-man said. "I think all residents would share the hope that it can be rebuilt as soon as possible, and this is also a very strong hope among our health-care workers."
HK eyes new food-import regulations after 'rotten meat' scandal: The government will review the regulation of cooked-meat imports after the "rotten meat" scandal that has engulfed McDonald's in HK and a mainland supplier. Under current law, importation of cooked meat does not require a permit. But traders have to keep proper records and provide them when asked. For raw meat, traders need import permits with a record of the place of origin and supplier. The government's move follows a scandal over the discovery that the McDonald's fast food chain in HK had bought meat from the Shanghai factory of supplier Husi, which is under investigation for reprocessing rotten meat and selling it. The government told lawmakers 110 tonnes of meat products imported from Husi by McDonald's would be discarded.
Concern groups push for urgent action to limit milk powder advertisements: Unicef and other groups advocating breastfeeding urged the health minister to introduce immediate regulations on baby formula marketing in the face of what he termed "quite severe" opposition. Food and Health Secretary Dr Ko Wing-man said the opposition delayed the process of sorting out opinions after the consultation ended last year. Ko said the opposition mainly came from formula manufacturers and a minority of professionals, particularly on the proposal that formula milk for children up to three years old should not be advertised. Reasons for opposition included concerns the guidelines would hinder freedom of expression and information, he said.
Private hospitals may be forced to reveal fee details: Private hospitals would no longer be able to treat patient charges and statistics as business secrets under reforms proposed by the government. They would also be required to maintain a database of their prices for common treatments so patients could budget for the payments, a government source said. The plan would require all private health care institutions to disclose most of their charges and would impose penalties on those that did not. Private patients have often complained about hidden charges and unclear bills.

Environment
Ozone pollution in HK at worst level in a decade: Ozone pollution is at its worst in nearly a decade, indicating deteriorating regional air quality, an environmental group found. This was despite a slight improvement in levels of nitrogen dioxide, sulphur dioxide and particulate matters in the first six months of the year compared with the same period last year, the group Clean Air Network said. From January to June, average annual concentrations of the pollutant hit 43 micrograms per cubic metre, nearly double WHO's annual recommended concentration level of 23.5mcg per cubic metre. Network chief executive Kwong Sum-yin said ozone was a secondary pollutant that indicated worsening air quality.
HK to study increasing use of biodiesel: The HK government will commission a study and consult the biodiesel industry about widening the use of the clean fuel, including its mandatory blending into fossil diesel. The study would look at such issues as the cost and benefits of using biodiesel and whether and how to ensure it came from sustainable sources, said the undersecretary for the environment, Christine Loh. The study was targeted to be completed in the second quarter of next year and biodiesel makers, importers and major users in the transport, logistics and construction sectors would be consulted, she said. Any mandatory adoption would be years away.

Culture and Education
CityU meeting fails to throw light on college's fate: City University students who met the institute's leaders to discuss the potential sale of its community college say they emerged none the wiser about the college's fate. CityU has neither dispelled the rumours that surfaced last month, nor divulged details about its plan to sell the college, which could affect as many as 7,000 students and 200 staff members. It has offered only verbal promises that any changes would not affect current students, the curriculum and the degrees offered in the college. The student representatives said the meeting with the university failed to throw light on whether the college would indeed be sold.
Call for 'arts lovers' only to serve on board of West Kowloon Cultural District: The board of the West Kowloon Cultural District should be thoroughly reviewed and chaired by an independent figure instead of the chief secretary. This is the view of critics and board members including veteran artist Danny Yung, who called for someone with vision to chair the board. Current Chief Secretary Carrie Lam, they said, was too busy handling hot potatoes such as political reform. Members were also frustrated by the bureaucratic structure of the cultural district and said the composition of the board was aimed more at balancing power among vested interests than at managing the project well.

Macau
Macau's leader Fernando Chui 'happy to let Beijing know public's views on democracy': Dr Fernando Chui, chief executive of Macau, said he would be "happy" to let Beijing know what the city's residents think about democracy, as he launched his campaign for re-election as chief executive, an exercise all too likely to be a one-man race. Local democrats noted Chui made no attempt in his campaign platform to introduce a road map to full democracy. Unlike HK's Basic Law, Macau's mini-constitution does not list universal suffrage as a goal. If re-elected for a second five-year term, his focus would instead be on housing supply and administrative reforms, he said. He declined to say whether a cabinet reshuffle or the creation of new positions was on the cards.

Press articles related to Switzerland and Swiss matters
Deals put Switzerland on path to becoming a yuan hub (SCMP, July 22): Switzerland stepped closer to becoming an offshore yuan hub after it signed a bilateral currency swap agreement with the People's Bank of China and obtained a quota to invest in China's interbank bond market. The swap agreement enables yuan and Swiss francs to be directly purchased and repurchased between the Swiss National Bank and the PBOC, up to a limit of 150 billion yuan (HK$187.2 billion). The SNB also obtained a yuan investment quota, with which it could invest a part of its foreign exchange reserves in the Chinese bond market, the Swiss central bank said. The SNB flagged its ambition to build an offshore yuan hub in its announcement, saying the swap agreement was "a key prerequisite for the development of a [yuan] market in Switzerland". The PBOC described the swap as a tool to "provide liquidity support for bilateral economic and trade exchanges and help maintain financial stability".

This is a review of the Hong Kong media and does not necessarly represent the opinion of the Consulate General of Switzerland. The Consulate General of Switzerland in Hong Kong does not bear any responsibility for the topicality, correctness, completeness or quality of the information provided. Liability claims regarding damage caused by the use of any information provided, including any kind of information which might be incomplete or incorrect, will therefore be rejected.

31.7.2014

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