THE CONSULATE GENERAL OF SWITZERLAND IN HONG KONG

 

  Hongkong Economic Report 2013 (May 14, 2014)
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Economy + Finance
HK ranked ‘world's freest economy' for 21st year in a row: HK has been ranked the world's freest economy for the 21st year in a row – but the city is weighed down by perceived corruption and eroding public trust, according to the US think tank Heritage Foundation. Singapore was ranked second, followed by New Zealand, Australia and Switzerland in the overall rankings.
HKU report sees GDP rising 2.9 per cent this year amid global recovery: The city's economy will see better growth this year, at about 2.9 per cent, according to a University of HK forecast. "Despite the prolonged duration of the Occupy Movement (79 days), its impact on measurable economic activities (real GDP) appears negligible," the institute said. But the changing external environment appeared to be a bigger worry for the economy than Occupy, it added.
HK-Shenzhen stock connect next, says Li Keqiang: A Shenzhen-HK stocks through-train scheme is on the cards, Premier Li Keqiang said in Shenzhen. Li is the highest-ranking official to hint at a cross-border stock trading arrangement involving Shenzhen, a development widely anticipated in both markets since November's launch of the Shanghai-HK Stock Connect scheme. Christopher Cheung, the legislator representing the financial services sector, said Li's comment would boost the market. He said that despite a slow start, the HK-Shanghai scheme had been operating smoothly.
Li Ka-shing business empire shifts base from HK to Cayman Islands: Li Ka-shing added fresh grist to rumours about his waning interest in HK as he unveiled a sweeping restructuring of his business empire, switching its base of incorporation to the Cayman Islands from HK. Li - the chairman of Cheung Kong (Holdings) and its subsidiary Hutchison Whampoa, which together have a total market capitalisation of HK$661.68 billion. Li, however, rejected suggestions that the proposed reorganisation is a sign of his withdrawal from the city.
HK needs to diversify economy and capitalise on technology trend to help young people, study says: More young Hongkongers are grappling with downward social mobility, taking lower-paid jobs and finding themselves unable to afford a home as property prices soar but their earnings growth slows, a Legislative Council study has found. Researchers believe that a narrow economy, which has been relying mainly on the real estate and finance sectors for the past three decades, has led to "restrained earnings growth and social mobility". They propose that the government capitalise on the current global trend of technology and innovation and restructure the city's economy by developing creative industries and investing more in vocational training and research and development.
Job growth in HK financial services sector to rise 15 per cent: Job growth in HK's highly paid financial services sector is set to jump 15 per cent in the next few years and foreigners will dominate the new hires, a new report from the government's Financial Services Development Council (FSDC) concludes. Poor English language skills and the unwillingness of graduates to take jobs in the fast-growing area of back-office compliance are locking Hongkongers out of one of the must lucrative sectors of the city's economy.
HK tourist arrivals jump 12pc despite Occupy uncertainty: Tourist arrivals in HK increased 12 per cent to 60.8 million last year - up on an estimate made last February that there would be 59 million visitors and despite uncertainty created by the Occupy protests. The total included 47.2 million from the mainland, an increase of 16 per cent from the year before, according to preliminary Tourism Board figures. The growth in mainland figures was driven by Shenzhen permanent residents who used their HK multiple-entry permits to make more trips to the city.
HK home prices rise for seventh straight month: HK home prices rose for the seventh straight month in November, albeit at a slower pace. The Rating and Valuation Department's monthly price index for private homes climbed to a record 274 in November, 1.37 per cent higher than in October. It rose 11.8 per cent in the first 11 months of last year.

Domestic politics
Investor visas scrapped, constitution tops agenda in HK leader's speech: Chief Executive Leung Chun-ying announced the suspension of a controversial investment visa scheme as part of a litany of measures to address pressing social needs - and sought to clarify the city's place in the nation's constitutional framework on Jan. 14. Leung also used his annual speech to the Legislative Council to launch a stinging attack on calls for self-determination by some students, and urged political figures close to them to advise against putting forward such "fallacies". Housing and boosting the city's competitiveness were at the forefront of Leung's third policy address. He also earmarked HK$50 billion for retirement protection, with the way forward to be decided after a consultation that will start later this year. One unexpected announcement was the suspension of the Capital Investment Entrant Scheme.
HK government submits report surrounding Occupy protests to Beijing: The government report supposedly reflecting Hongkongers' sentiments on Beijing's rulings on political reform has been dismissed by pan-democrats as "economical with the truth". The report, which is mainly a summary of events and protests related to the August 31 ruling, was submitted to the HK and Macau Affairs Office on Jan. 6 and was also made available online. The compilation of the report was promised by Chief Secretary Carrie Lam at a meeting in October with activists from the Federation of Students, which had led the 79-day Occupy Central protests that ended on December 15.
Prospects for political reform in HK fade as pan-democrats vow to block plan: The prospects for political reform diminished when the government's second consultation paper on how the city's next leader is elected was published on Jan. 7 without any apparent concessions to the pan-democrats. The 60-page document was condemned by political and legal experts for failing to explore the albeit limited room within Beijing's framework for the chief executive election in 2017. Pan-democrats, who account for 27 of the 70 Legislative Council members, have vowed to veto any proposal based on this framework, but the government needs two-thirds of support in Legco to enact its election bill.  
National security laws have place in HK, says former chief executive Tung Chee-hwa: Beijing had the power to introduce mainland laws into HK, but whether it would do so was another matter, said Tung Chee-hwa, the city's first chief executive and now vice-chairman of the Chinese People's Political Consultative Conference, the nation's top advisory body. He was responding to a suggestion by Stanley Ng, a local deputy to the national legislature, to apply the mainland's tough security laws to the city. But Chief Executive Leung Chun-ying reiterated his government had no plan to enact national security legislation.
Beijing 'won't be swayed' on HK's political reform even if Albert Ho triggers by-election: "Super seat" lawmaker Albert Ho is on a mission impossible if he thinks he can hold Beijing to ransom by triggering a citywide vote aimed at reflecting public sentiment on its rules for the 2017 chief executive race, top government officials say. Beijing was unlikely to withdraw its strict electoral framework or relaunch the whole political reform debate just because of the by-election expected to stem from Ho's planned exit from the legislature, Chief Secretary Carrie Lam and Secretary for Constitutional and Mainland Affairs Raymond Tam said.

Relations HK - Mainland China
HK's relations with Beijing 'will suffer if political reform is vetoed': Relations between Beijing and HK will get frostier if a political reform package is vetoed by lawmakers this summer, Chief Secretary Carrie Lam warned. Lam said a Legislative Council veto would also deepen discontent in the city and make governance harder. Pan-democrats have vowed to deny the reforms a two-thirds majority in Legco if the government sticks to a framework set by Beijing. Lam, who reiterated that she would not run in 2017, said relations were at risk if Beijing came to believe the city was "resorting to confrontation and threats to demand … concessions". That would "challenge the basis for mutual trust" and "might … affect the central government's policy".

International relations
‘It's better than nothing': British Foreign Office backs Beijing's reform framework for HK: Britain's Foreign Office says it believes Beijing's framework for electoral reform offers a "genuine choice" in the 2017 chief executive election. Britain's welcoming of a "genuine choice" of candidates shows London is throwing its full weight behind the current reform proposals, in its clearest attempt yet to heal a diplomatic rift with Beijing over HK. Veteran HK democracy advocate Martin Lee expressed disappointment with London's stance.
British diplomats fuming over HK's snub of Hugo Swire: British diplomats have expressed outrage and frustration over a snub delivered to their most senior official on HK during a visit to the city earlier this month for key discussions over political reform. It has emerged that British Foreign Office minister Hugo Swire - the UK's top official on HK and China affairs - was denied meetings with Chief Executive Leung Chun-ying and Chief Secretary Carrie Lam, in a protocol breach that has left diplomats of the former colonial power fuming.
CY Leung repeats claim of ‘external forces' influencing Occupy - but provides no evidence: Chief Executive Leung Chun-ying claimed there was significant information indicating that foreign powers were behind the organisation of the Occupy Central movement, but he did not provide substantial evidence to support the claim on Jan. 13. Those "external forces" included foreign governments, their subsidiary organisations or foreign-based non-governmental organisations, Leung said.
HK added to Beijing's list of 'core interests' amid post-Occupy unease: HK has been named publicly as one of China's "core interests and key concerns" in a veiled warning from Beijing to Washington over territorial issues. The rare reference surfaced in a military-to-military meeting in Beijing on Jan. 27 between PLA deputy chief of general staff Sun Jianguo and US undersecretary of defence for intelligence Michael Vickers, the PLA Daily reported. Mainland analysts and HK politicians said the remarks signalled higher concern in the capital about US interference in HK since the Occupy Central protests.

Legal affairs and human rights
HK to handle arbitration cases in deal with international court: HK will begin to hold arbitration for disputes involving states and private and public companies, after China and the city signed agreements with an international court. The agreement with the Permanent Court of Arbitration, based in The Hague, Netherlands, means HK could handle many of its outstanding cases involving Asian parties. Deputy Foreign Minister Liu Zhenmin signed the Host Country Agreement with the PCA in Beijing, while HK's Secretary for Justice Rimsky Yuen signed a related memorandum that would let the city conduct the hearing of such disputes.
HK's legal big guns tussle over rule of law: The HK government was accused of feeding the public a misleading explanation of the rule of law - moments after the secretary for justice accused the pro-democracy movement of blatantly challenging the rule of law and after the city's top judge insisted respect for the principle remained undimmed. The fierce debate over the rule of law - that began in earnest when tens of thousands took to the streets in late September and stayed there for 79 days - spilled over into annual gathering to launch the start of the new legal year. Paul Shiehi, outgoing chairman of the Bar Association, slammed officials' explanations of what constituted the rule of law. "There was an increasing tendency on the part of the executive … to emphasise the 'obey the law' aspect," he said. He said rule of law also covered respect for individuals' rights and liberty. He went on to say that Beijing's framework on HK's political reform was "unreasonably restrictive" but did not justify breaking the law.
Planned HK-Macau extradition pact may cover current fugitives: An upcoming extradition treaty between HK and Macau may apply to cases predating the agreement even if no specific retroactive clause is written into it, the South China Morning Post has learned. Under the treaty, fugitives who take refuge in one city to avoid punishment in the other will be sent back, a government source close to the talks says. However, the agreement has yet to be finalised in a way that would fit both jurisdictions - a task of "significant difficulty", according to the source. HK and Macau inherited the British and Portuguese legal systems - exercising common law and continental law - respectively.
‘Sense of lawlessness' spreading in HK says top cop, but crime stats suggest a different story: A "sense of lawlessness" is spreading in post-Occupy HK according to Police Commissioner Andy Tsang, despite the city recording its lowest annual crime rate since 1973. But Occupy Central co-founder Dr Chan Kin-man accused Tsang of deliberately confusing the concept of committing a crime and breaking the law in order to vilify the pro-democracy movement. HK's crime rate dropped by 7.1 per cent in 2014 from the previous year - marking a 41-year low - with the overall crime rate dropping to 936 cases per 100,000 people, Tsang said.

Health
HK could ban live poultry sales amid H7N9 bird flu scare, says top health official: Live poultry sales could be banned in the city if wholesalers do not conform to strict controls to curb the spread of bird flu, Secretary for Food and Health Dr Ko Wing-man said. He said the government had hired consultants to study whether live poultry supplies should be stopped. His remarks came as wholesalers argued with the government over delivery arrangements for local live poultry, following the culling of 19,000 birds at Cheung Sha Wan wholesale market and a three-week embargo on imported birds. The action was taken after samples from a farm in Huizhou, Guangdong, tested positive for the deadly H7N9 strain of the virus.
HK eyes ban on unproven health claims printed on milk formula tins: The city is seeking to regulate nutritional and health claims made over milk formula and baby food in a new public consultation that the government hopes will lead to laws safeguarding the health of children under the age of three. Coming under closer scrutiny in the three-month exercise are purported benefits printed on product packaging and touted in advertisements. The city has legislation controlling food labelling and advertising, but none specifically on claims made over milk formula and food for young children. In the new consultation, the government suggests banning nutritional claims on milk formulas meant for babies under six months - as the labelling carries a full nutrition list anyway.
HK's deadly flu season claims five more as lawmaker urges expanded free vaccines: Five more people died of the flu on Jan. 28, pushing this month's death toll to 64, as a Civic Party lawmaker Dr Kwok Ka-ki called on the government to expand the availability of free flu vaccines. The strain is not the main target of the flu vaccine as the World Health Organisation got its prediction of the prevalent strain wrong this year, so the jab offers only limited protection. Almost 80 per cent of infections and 90 per cent of deaths have involved people aged 65 and above. The government provides free flu vaccines to specific sectors of the population, including health-care workers, those who handle raw poultry and those receiving welfare.

Environment
HK's air improving but ozone hits record highs: Air quality improved slightly in the city's streets last year despite ozone levels hitting record highs in some areas, a concern group report has found. The Clean Air Network attributed much of the slight improvement to "end-of-pipe solutions" such as a plan to phase out 68,000 old polluting diesel commercial vehicles and a selective catalytic converter replacement plan for taxis and minibuses, both of which came into effect last year. And pollution from ozone remains a major threat. The Clean Air Network said emission reduction targets set between Guangdong and HK for 2015 and 2020 would help reduce precursor pollutants of ozone and directly help control regional ozone and smog.
Anti-light pollution rule for housing may apply to offices: Light pollution in the city looks set to lessen as the government floats the possibility of extending an upcoming cap on the reflectiveness of glass walls in new residential buildings to commercial properties. A guideline requiring glazed portions of housing blocks to reflect no more than 20 per cent of daylight was to go into effect in April, the department noted, saying it would consider applying the cap to commercial buildings.

Culture and Education
HK must consider national interest in education policy, says top Beijing adviser: China's national interest must be considered when HK formulates education policies, a key adviser to Beijing said, as he gave a stern reminder that the city's top official in charge of schooling was “under the supervision of the central government”. Chen Zuoer, head of a semi-official think tank and a former deputy director of the State Council's HK and Macau Affairs Office, said the government should take into account national sovereignty, safety and other interests when it makes education plans, including curriculum design.  
Education Bureau wants all subsidised university places to go to local students: All government-subsidised university places should go to local students from the 2016-17 academic year, the Education Bureau has proposed to lawmakers. The University Grants Committee (UGC), which allocates government money to eight universities, funds 15,000 first-year undergraduate-degree places every year. Under the existing system, 600 - or 4 per cent - of those places can be allocated to non-local students, including those from the mainland. Under the proposed new policy, all 15,000 UGC-funded places would be for local students.
HK needs to respect the arts, architect Jacques Herzog says in West Kowloon: A world-famous architect in charge of the design of the West Kowloon arts hub museum M+ slammed HK's failure to recognise the role of art in society, as politics delays work on the museum. Jacques Herzog, a partner in the Pritzker Prize-winning Swiss architecture firm Herzog & de Meuron, said arts and cultural institutions made important contributions to cities, and the building of M+ would add a key cultural element to HK. Herzog expressed hope that politicians could commit to "funding this project that will make HK proud".
West Kowloon will pay HK$300m towards basement costs for arts hub: The West Kowloon Cultural District Authority will pay HK$304.5 million from its own funds for advance construction and design on a portion of the arts hub's basement after the government's funding application was delayed in the Legislative Council. West Kowloon said it would put up the money for advance work on part of the basement to prevent delays to work on two of the site's facilities.

Macau
Chips down for Macau casinos with first decline in gaming revenue in more than a decade: Casino revenue in Macau fell 2.6 per cent in 2014 to 351.5 billion patacas (HK$332.7 billion), after a record 30.4 per cent monthly decline in December, according to the city's Gaming Inspection and Coordination Bureau. Last year's drop in revenue - which came amid an anti-graft drive and a slowing economy on the mainland - was the first since the territory liberalised the gaming industry in 2001.

Varia
HK falls out of top 30 in annual liveability rankings: HK has slipped out of a league table of the world's top 30 most liveable cities amid tense political disputes over the city's upcoming electoral reforms. The city ranked 33rd in the world this year, a plunge of 16 places from 17th last year, according to findings released by human resources consultancy ECA International. The agency attributed HK's fall mainly to the Occupy protests, which paralysed traffic in several parts of downtown areas for 79 days. Poor air quality in the city was also a concern, it said.

Press articles related to Switzerland and Swiss matters
Swiss central bank shocks European financial markets with currency ‘tsunami' (SCMP, Jan. 16): The Swiss National Bank (SNB) shocked financial markets on Jan. 15 by scrapping a three-year-old cap on the franc, sending the safe-haven currency soaring through the 1.20 per euro limit and stoking fears about the export-reliant Swiss economy. The euro sank by as much as 30 per cent, past the 1.20 francs per euro cap to 0.8052 francs within minutes of the SNB's announcement. As it removed the upper limit on the currency, the SNB sought to dissuade new flows into Swiss francs by lowering a key interest rate, which was already negative, by 0.5 percentage points to -0.75 per cent. The SNB vowed to “remain active in the foreign exchange market to influence monetary conditions”. Ed Parker, managing director, sovereigns at Fitch ratings agency, said the move would not affect Switzerland's AAA rating as a very strong credit.
Jolt from Swiss franc confirms HK should keep dollar peg: finance chief (SCMP, Jan. 19): The shock delivered by the Swiss franc is a good reminder why HK must not ditch its peg to the US dollar, the city's finance chief said in his weekly blog. The Swiss central bank's move to abandon the franc's peg with the euro was like a "tsunami" and had important lessons for HK, wrote Financial Secretary John Tsang. The turmoil that followed the Swiss decision undermined "investor confidence" and "credibility" in the landlocked nation, he wrote, comparing HK's own currency policy to a mythical talisman with the power to control tempests. "Central banks take a long time to establish credibility. The sharp appreciation of the Swiss franc will weaken the Swiss economy's overall competitiveness … and may even lead to an economic slowdown and deflation," Tsang wrote.
Don't worry about China's slowing economic growth, Li Keqiang tells Davos (SCMP, Jan. 22): China's economy will still face large downward pressures this year but it will avoid a hard landing. In a keynote speech at the World Economic Forum in Davos, Li said China would not face systemic financial risks and the government aimed to improve the quality of growth to ensure an appropriate pace of expansion.

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.

2.2.2015

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