THE CONSULATE GENERAL OF SWITZERLAND IN HONG KONG

 

  Hongkong Economic Report 2013 (May 14, 2014)
(pdf, 14 p.)
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Occupy Central
Riot police pull out but Occupy Central protesters in HK are unmoved: The government's decision to withdraw riot police from the streets helped lower tensions but tens of thousands of Occupy Central supporters continued their protest against Beijing's decision to set strict limits on HK's electoral process. Sit-ins being staged in Central, Admiralty, Wan Chai, Causeway Bay and Mong Kok took on a sometimes festive atmosphere. Business and financial markets were impacted on the first working day of the civil disobedience movement. Several main roads on HK Island were closed to traffic. Many shops in the affected districts, particularly those selling jewellery and luxury goods, closed for the day and dozens of bank branches were also shut. The huge public backlash put the government on the defensive. Chief Secretary Carrie Lam strongly hinted that the government would postpone the next round of public consultation on the 2017 chief executive election, which was scheduled to start next month. 
A spokeswoman for the foreign ministry said Beijing was firmly opposed to "all illegal activities that undermine rule of law and jeopardise social harmony". She also reminded foreign governments not to interfere in HK's affairs. The White House said the US government was closely watching the situation in HK and urged the authorities to show restraint and protesters to be peaceful. The British Foreign Office expressed concern about the situation in its former colony and said it was monitoring the events. "It is Britain's long-standing position, as a co-signatory of the Sino-British Joint Declaration, that HK's prosperity and security are underpinned by its fundamental rights and freedoms, including the right to demonstrate," the office said. The rare confrontation in the normally peaceful city grabbed headlines around the world. Australia, Italy and Britain issued travel advisories for people visiting HK. 
No immediate solution to the deadlock was in sight. Protesters continued to demand the resignation of Chief Executive Leung Chun-ying and for Beijing to retract its decision on the 2017 chief executive poll, which would restrict the number of candidates to two or three approved by a 1,200-strong nominating committee. Executive councillor Fanny Law called for calm. "The National People's Congress Standing Committee has set the framework for the 2017 chief executive election and it's not realistic to expect it to change," she said. "We should set aside our differences to achieve universal suffrage for 2017 within the framework."
Police fire tear gas and baton charge thousands of Occupy Central protesters: The streets of Central and Admiralty descended into chaos on Sept. 28 after police in riot gear fired tear gas at protesters as the Occupy Central campaign, a movement that promised "peace and love", escalated. Thousands of protesters, despite police use of pepper spray, batons and tear gas, occupied the main roads outside the government headquarters complex in Admiralty. Many joined in after hearing of the confrontation from the media, and a smaller blockade began late in Causeway Bay, while hundreds occupied a section of Nathan Road in Mong Kok. But Occupy co-organiser Dr Chan Kin-man urged the protesters to retreat. "It is a matter of life and death … Retreating does not mean giving up … Occupy Central has succeeded as long as the spirit of democracy never dies." Images of officers carrying shotguns, wearing gas masks and chasing protesters in the streets of one of the world's safest metropolises shocked millions watching around the world. Protesters vowed to escalate their action and student leaders urged workers to strike and shops to close. They said they would boycott classes until Chief Executive Leung Chun-ying resigned and Beijing gave "genuine universal suffrage" to HK. The Professional Teachers' Union, which has 90,000 members, and the pro-democracy Confederation of Trade Unions echoed the call for strikes. On the other side, the authorities in HK and Beijing condemned the protests as illegal and promised firm action.
Occupy Central is on: Benny Tai rides wave of student protest to launch movement: Occupy Central co-organizer Benny Tai made the surprise announcement on Sept. 28, riding on a wave of protest and class boycott by students. The first step of the movement was to occupy the government headquarters, he said: “Students and people who support democracy has begun a new era of civil disobedience.” Occupy Central is making two demands: for the National People’s Congress to retract its decision on HK's electoral system made on August 31; and to relaunch the political reform process. Co-organiser Dr Chan Kin-man stressed supporters should uphold the principle of non-violence and not to confront the police. Police used pepper spray to disperse protesters nearby before arresting the 61 students for breaking into government premises and unlawful assembly on Sept. 26.
Market volatility spikes as investors assess impact of Occupy Central: Local stocks and the HK dollar fell to their lowest levels in recent months and ratings agencies expressed concern for the city's long-term credit rating as the scale of the demonstrations and the controversial police response took investors by surprise. "The Occupy Central protest will inevitably cause short-term fluctuation in the markets," said Charles Li, the chief executive of HK Exchanges and Clearing, the stock market's operator. The HK Monetary Authority said it would keep the interbank market and the city's currency board mechanism operating as usual. "The HKMA will also inject liquidity into the banking system as and when necessary under the established mechanism," it said in a statement. 
Fitch rules out ratings impact on HK: Fitch Ratings says the Occupy Central movement that spilled on Sept. 28 does not significantly affect HK’s ratings. They don’t expect the protests to have a rating impact in the short term. It would be negative if the protests are on a wide enough scale and last long enough to have a material effect on the economy or financial stability, but they do not currently see this as very likely.
‘Global Solidarity with HK’ rallies planned worldwide as Facebook turns yellow in support of protestors: Rallies in support of HK protesters who took to the street to call for greater democracy have been held in multiple cities around the world, with more planned in the coming days. As well as protests, Hongkongers around the world have been organising petitions and writing open letters criticising police handling of the protests and calling on the international community to speak up for the demonstrators. A petition on the White House’s official website has attracted more than 178,000 signatures, well over the 100,000 limit, meaning that the US government will have to issue a response. In an unrelated statement released on Sept. 29, the US consulate in HK said Washington supports freedoms of peaceful assembly and expression in HK, but stressed its neutrality in local politics.

Domestic politics
Take it or leave it, NPC tells city as it endorses framework for 2017 poll: The nation's top legislature endorsed a tougher-than-expected framework for HK's first "one man, one vote" chief executive election in 2017 - sparking condemnation from pan-democrats and an Occupy Central vow to go ahead with its civil disobedience campaign. The framework, approved unanimously by the National People's Congress Standing Committee, allows only two or three candidates to run. They will need approval from a majority of a 1,200-strong nominating committee. Methods for electing the committee, its composition and size will be "in accordance with" those of the election committee that decided the 2012 poll. It will be divided between four sectors and largely chosen by about 250,000 individual and corporate voters in dozens of subsectors. The focus now moves to HK, where officials will fight to win over the five pan-democratic lawmakers they need to win a two-thirds majority for the package in the Legislative Council. But all 27 pan-democrats said they would vote against any plan based on Beijing's framework, and Occupy Central leaders said they would put into motion a series of protests culminating with 10,000 activists blocking streets in the heart of the city.
Barristers question legality of Beijing's model for reform: Mainland officials have failed to convince HK's barristers that its model for universal suffrage in the city is in line with international law, the Bar Association chairman says. Paul Shieh said he put his concerns to Li Fei, chairman of the Basic Law Committee under the National People's Congress, in talks. "It is seriously arguable that there are unreasonable restrictions [on the right to be elected] in the model," Shieh told the media. "While Li reiterated [Beijing's] stance about national security, we told him that we were not convinced."
Pan-democrats abandon ‘pointless’ negotiations over HK electoral reform: Pan-democratic lawmakers say they are done with negotiating with the central and local governments on political reform and will boycott "deceptive" consultation exercises unless Beijing allows an open chief executive election in 2017. Democratic Party chairwoman Emily Lau said it would be pointless to engage in any further discussion with HK or Beijing officials after the central government ruled out the possibility of a genuine choice for the city's next leader. All 27 pan-democratic lawmakers have promised to veto the local government's plan for the election, which will have to conform to Beijing's rules.
Hundreds of academics protest Beijing's 'undemocratic' reform plan: Hundreds of academics from more than 20 tertiary institutions across the city have made a united stand against Beijing's "undemocratic" framework for universal suffrage in 2017. In a joint statement signed by 520 scholars, researchers and administrators, they vowed to strive for true democracy and support student class boycotts. The scholars lashed out at the national legislature's decision last month, which made it possible for an "undemocratically constituted nominating committee to manipulate and control who can become a candidate" for the chief executive.
One in five Hongkongers 'considering emigration' as pessimism hangs over city: More than one in five Hongkongers are so pessimistic about the city's political future that they are thinking of leaving for good, a Chinese University poll found. About 53.7 per cent said the Legislative Council should veto electoral reform proposals if people holding different political views to Beijing were not allowed to run. Some 46.3 per cent did not support the Occupy Central protests, while 31.1 per cent indicated their backing for the civil disobedience movement.

Economy + Finance
SFC launches legal action against Citic to demand compensation for investors: The Securities and Futures Commission (SFC) filed a court order against state-backed conglomerate Citic and five former directors, including chairman Larry Yung, seeking a total of HK$1.9 billion in compensation for 4,500 investors whom the regulator says suffered losses due to the firm's failure to report massive forex trading losses in 2008. The SFC alleges the firm and the five former executives breached sections 277 or 298 of the Securities and Futures Ordinance (SFO) which ban any company or person from distributing "materially false or misleading information that is likely to induce another person to subscribe for or buy securities".
Retail rents cut as landlords fight to keep tenants: Landlords of HK retail properties have been making substantial concessions in asking rents as sales of luxury products, including fashion, watches and jewellery, continue to cool, according to property consultants. Rents of shops in prime shopping areas could see a modest decline this year following strong increases in the past decade, while rents second- and third-tier streets could see double-digit declines, said Kevin Lam, DTZ's head of business space, HK. Total retail sales declined for a sixth consecutive month in July with a year-on-year drop of 3.1 per cent. The mainland's anti-corruption campaign and the changing spending patterns of mainland tourists have dampened demand for luxury goods in HK. 
Russian hot money flows into HK after West slaps sanctions on Moscow: Russian money is flowing into HK as investors look for a safe haven from Western sanctions – but investors are running into obstacles with banks, which are nervous about money laundering, analysts say. In the first seven months of this year, there has been a net outflow of US$28 billion from Russia, in contrast to net inflows of US$36 billion for the whole of last year. "A number of banks in HK have been unwilling to provide financing to certain Russian individuals and corporate entities over the last six months, who failed to pass the banks' anti-money-laundering procedures," said Hugo Williamson, managing director of IPSA International, a global risk consultancy.
Financial Secretary John Tsang eyes law reform to attract capital to HK: Financial Secretary John Tsang  said HK was amending its laws to become a more attractive financial hub, which analysts said would enable the city to compete against rivals such as Singapore. HK is developing regulations to give greater flexibility to investment funds and lure them to the city, Tsang said. HK is also preparing laws to extend the profits tax exemption to offshore private equity funds and waive the stamp duty for exchange-traded funds. The HK government has amended its trust law to promote the territory as a trust domicile, Tsang said. "Settlers are now able to establish perpetual trusts in HK, giving us a competitive edge over other major common law jurisdictions," Tsang declared. Tsang expressed the hope that HK will pass a law by 2016 to enable the automatic exchange of tax information under the Common Reporting Standard, which is adopted by 65 other jurisdictions including the mainland. HK's first automatic exchange of information under this standard is expected to begin by the end of 2018, Tsang added. The Common Reporting Standard seeks to combat cross-border tax evasion.

Relations HK - Mainland China
Beijing to take a more active role in HK's affairs, hints Xi Jinping: President Xi Jinping has reiterated that the central government's policies towards HK will remain unchanged but hinted that Beijing would play a more active role in the city's affairs. Speaking to a delegation of senior figures from the city's business and professional sectors, Xi said the implementation of "one man, one vote" in HK must be tailored to the specific situation of the country and the city. Xi also vowed to support the HK government in the face of any activities that destroy social order, an implicit reference to the upcoming Occupy Central protest. The delegation, which comprises more than 70 of the city's elite and Beijing loyalists from the commercial, industrial and professional sectors, was led by former chief executive Tung Chee-hwa, who is now a vice-chairman of the Chinese People's Political Consultative Conference.
Distrust of Beijing hits post-handover high: The release of an opinion poll by the University of HK showing that Hongkongers' distrust of the central government had reached its highest level since June 1995. The survey also found the proportion of respondents who lack confidence in the "one country, two systems" formula is at its highest since the poll began in 1993. "The latest changes in the survey figures are no doubt related to political reform, for reasons there's no need to mention," said Robert Chung, director of the programme. Some 52 per cent of the 1,000 people interviewed by telephone between September 4 and 11 said they did not trust the central government, while only 30 per cent expressed trust. Some 53 per cent said they had no confidence in the "one country, two systems" formula, compared with 37 per cent who held the opposite opinion.

International relations
China warns Britain that ties are at risk if UK parliamentary inquiry continues: The National People's Congress has written to British lawmakers telling them ties between the two nations are at risk unless they stay out of HK's affairs. The foreign ministry in Beijing confirmed the warning, as the lawmaker heading a British inquiry on HK said the central government may have breached the terms of the 1984 Sino-British Joint Declaration when it set rules for democratic elections in 2017. But the lawmaker, Richard Ottaway, admitted Britain was in a "weak" position when it came to admonishing China for a breach of the deal that settled HK's future and paved the way for the 1997 handover.
Beijing official in HK hits back at US diplomats' comments on 2017 reform: Beijing has hit back at US government officials who say democratic development in HK has "further to go". Jiang Yu, the foreign ministry's deputy commissioner in HK, said Beijing would "absolutely not tolerate" external interference and that foreign countries should refrain from commenting on HK's political reform. Jiang declined to comment on South China Morning Post report that the United Nations Human Rights Committee would look into universal suffrage in HK at a meeting next month.

Legal affairs and human rights
HK's graft-busters a model for Asia Pacific, says US official: HK's 40-year-old anti-graft agency can be a model for members of the Asia-Pacific Economic Cooperation forum, a visiting US senior official says. But it was also vital for the city to uphold its judicial independence, said Robert Wang, senior US State Department official for the regional bloc. "HK is a real model in terms of what the Independent Commission Against Corruption has been able to do," Wang said. "Clearly, HK's major advantage is that it has its rule of law, and it has a great tradition in terms of combating corruption," he said. "Certainly we hope this will continue."

Health
HK bans Taiwan firm's 'gutter oil' products; 300 businesses involved: The government banned the import, sale and supply of all lard and lard products made after March 1 by the Taiwanese firm at the centre of the "gutter oil" scandal. The ban also covers all food products made by the lard oil supplied by Chang Guann. Six local importers and some 300 distributors and retailers will have to recall and seal all affected food products within 14 days or face a fine of up to HK$100,000 and up to 12 months in jail. Police are investigating a HK trading company for allegedly exporting industrial lard oil labelled for human consumption to Chang Guann.  
Hospital chiefs aim to improve misconduct complaints system: Hospital chiefs are acting to beef up their complaints system against misconduct by doctors after receiving a sharp rebuke from the medical watchdog for not referring cases to it. But the Hospital Authority still plans to retain its power to investigate suspected misconduct rather than hand the cases over to the Medical Council or a central system. A source from the authority said it planned to standardise its misconduct investigations, and after a probe had been completed it would be up to the hospital involved to suggest to patients or their relatives whether the case would be referred to the council.

Environment
Runway plan set to get OK from green advisers: The government's environmental advisers are prepared to approve the third runway at Chek Lap Kok after the airport operator offered new and additional plans to protect the marine ecology. The plans will cover a period before and during construction and include efforts to protect the endangered Chinese white dolphin that may extend across the border, the advisers say. Other questions remain over the runway - not least how it will be funded.
New plan for Tuen Mun landfill extension fails to satisfy councillors: The environment minister has been told to come up with a better offer if he wants to stand a chance of winning over local politicians resisting a landfill extension plan in Tuen Mun. Besides the Tuen Mun plan, Wong is also preparing to retable as early as next month multibillion-dollar waste infrastructure plans at the Legislative Council that recommend two other landfill extensions and a waste incinerator. He has spoken of the urgency to expand the city's waste infrastructure.

Culture and Education
HK universities decline across the board in global ranking list: Seven local universities fell in the latest edition of a world university ranking table. Compilers of the latest QS World University Rankings expected the drop to be temporary as it followed a restructuring which saw local universities switch to offering degrees over four years instead of three. Three of HK's seven publicly funded universities are ranked among the list's top 50.

Macau
Macau's Fernando Chui re-elected chief executive in unopposed poll: Dr Fernando Chui was re-elected uncontested as Macau's chief executive in a choreographed exercise that prompted thousands of residents to demand universal suffrage. Chui was selected by a 400-strong election committee made up mainly of pro-Beijing elites and politicians. Unlike HK's Basic Law, Macau's mini-constitution makes no mention of universal suffrage as a goal. But calls for democracy have been growing. Chui said he would focus on economic diversification away from the gambling sector - an industry that generates more income in the former Portuguese enclave than anywhere else in the world.

Varia
Plans for HK$110b expansion of HK rail network unveiled: Plans for seven new rail projects, which will be built in phases from 2018 to 2026 and cost an estimated HK$110 billion, have been unveiled by the government. The proposals come as the city faces delays of up to two years and cost overruns in at least three ongoing projects by the MTR Corporation, including a cross-border link to Guangzhou. As well as delays, there is the question of whether the city has enough construction workers to build the lines, with one industry insider saying there is a shortage of 8,000 to 10,000 workers.

Press articles related to Switzerland and Swiss matters
Japan overtakes HK in competitiveness rankings (SCMP, Sept. 3): The beleaguered Japanese economy overtook HK to rank sixth on the World Economic Forum’s list of the most competitive economies. HK stayed in seventh place. Switzerland again topped the table, followed by Singapore, while the United States leapfrogged into third place. Switzerland’s slick efficiency, innovation and macroeconomic stability kept it on top for the sixth consecutive year, although it was marked down for the difficulty of finding qualified workers. “A potential threat to Switzerland’s competitive edge might be the increasing difficulties faced by businesses and research institutions in finding the talent they need to preserve their outstanding capacity to innovate,” the report said.

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.

30.9.2014

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