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Economy + Finance
HK economy 'on knife edge': HK finds itself caught between two powerful and opposing forces. On one hand is China with its 'hot' economy and rising inflation concerns, while on the other the United States is heading for a possible recession and interest rate cuts that may spike inflation in HK. "HK is on the knife's edge" between either overheating or slowing down with "growing signs of inflationary pressures," said Robert Subbaraman, chief economist Asia ex-Japan at Lehman Brothers. The snowstorms in China "will exacerbate the already accelerating inflation, by pushing up food prices further in January and February. Stronger inflation pressure, especially coupled with rising inflation expectation, may force further tightening of macro policy and thus hurt growth," said Jun Ma, chief economist Greater China at Deutsche Bank.
IMF sees HK growth slowing to 4.6%: The International Monetary Fund has predicted HK economic growth will moderate to 4.6% year from an estimated 6% in 2007 amid weakening demand in the United States and Europe. "Looking ahead, growth is expected to slow to below 5% in 2008, largely due to a moderation in global demand," the IMF said in a report. "The biggest risk to this outlook is a more-than-expected deterioration in external demand, especially in the United States and Europe, and potentially further financial turbulence, both internationally as well as domestically."
Factory fallout: Up to 14,000 HK-owned factories in the Pearl River Delta may be forced to close over the next few months partly due to the snowstorms that have crippled the mainland's infrastructure, according to the Federation of HK Industries.
Delta factories brace for new blow: The wave of factories going bust across the border is set to escalate in the lead-up to a new labour law that threatens to expose manufacturers to greater salary and compensation claims from their workers. The rules, to be implemented on May 1, will set a framework for resolving disputes and follows the controversial contract law that triggered the demise of at least 10,000 smaller factories in the Pearl River Delta. The arbitration bill, being finalised by the cabinet, could open the floodgates on disputes and threaten manufacturers with claims over pay, working hours, holidays, insurance, collective contracts, medical fees, compensation and pensions. Mainland manufacturers have been hit by a series of austerity measures, some of which are designed to discourage cheaply manufactured goods that contribute to growing pollution problems.

Domestic politics (Budget)
The original Budget Speech of 27 February 2008 by the Financial Secretary can be downloaded from the internet:
Finance chief cautious despite huge surplus: While the government's finances were enjoying a “substantial surplus”, fiscal caution was still necessary, Financial Secretary John Tsang explained. Delivering the budget in the Legislative Council, Mr. Tsang said a strong economic performance last year had brought in higher revenue for the government. He noted that despite “external volatilities” such as the United States subprime mortgage crisis, HK's economy had performed well in 2007. Our GDP still grew by 6.3%, higher than the trend growth for the past 10 years. HK's economy was in good shape to withstand international pressures. In the past year, HK's exports grew notably by 7.9%. Domestic private consumption spending was buoyant, registering growth of 7.8%, the highest since 1993, Mr. Tsang said. He admitted, however, that rising inflation was a problem.
The great giveaway: The finance chief rolled out a please-all maiden budget, with a HK$125 billion package of tax cuts, subsidies and investment that will take the government balance sheet into deficit in the coming financial year. Digging deeper than the record HK$115.6 billion surplus forecast for this year, John Tsang offered one-off "goodies" for almost everyone, while pledging long-term spending in key areas under the guiding principles of "commitment, sustainability and pragmatism".
A big surplus won't occur every year: (…) A government official said the most difficult aspect of formulating this year's budget proposals was meeting public expectations and balancing different groups' aspirations, which had been set high partly because of this year's election and partly because of an expected high surplus.
Alcohol tax wiped out: Financial Secretary John Tsang announced he would exempt alcoholic beverages, including wine, from tax duties immediately. Consumers can expect average savings of 10 to 15% on the price of alcoholic drinks as HK took a major step towards becoming a fine-wine hub with the decision to eliminate the duty on all alcohol except spirits.

Domestic politics (other matters)
Albert Ho seeks fairness in politics and commerce: Democratic Party chairman Albert Ho has urged the business sector to accept greater democracy and a level playing field. Ho said that he was worried there will not be greater democracy even though the National People's Congress Standing Committee has set 2017 as the date for electing the chief executive and 2020 for Legislative Council polls based on universal suffrage. He believed that political groups, including the Democratic Alliance for the Betterment and Progress of HK and the Liberal Party, might change their minds about supporting greater democracy, meaning it would not get the backing of two-thirds of Legco representatives.
Albert Ho warns over suffrage: People should not be misled into thinking the question of universal suffrage had been resolved now that Beijing had laid down a timetable, Democratic Party chairman Albert Ho said. Speaking on RTHK's Letter to HK, Mr Ho said the decisions taken allowing universal suffrage for the chief executive in 2017 and for the Legislative Council in 2020 did not provide much comfort. This was because the nominating procedure might screen out chief executive candidates with dissenting views, he said. "The election may be subject to a screening process to ensure there will be no real competition between politicians holding alternative platforms, and hence no meaningful choice for the voters".
Call for broader talks on suffrage: Pan-democrats want the government to widen the scope of discussion in a new group set up to suggest ways of electing the chief executive and legislature by universal suffrage in 2012. Their call came as the government announced the appointment of 30 unofficial members to the group on constitutional development under the Commission on Strategic Development.

Transborder affairs
Deal struck for bridge over delta, says Beijing: Twenty years after it was first proposed, the HK-Macau-Zhuhai-bridge is about to become a reality. The HK, Macau and Guangdong governments had reached preliminary agreement on financing for the project, Bi Jingquan, vice-chairman of the National Development and Reform Commission (NDRC), was quoted as saying. The bridge, which is expected to cost HK$60 billion, had been listed as a national infrastructure project, Sir Gordon Wu quoted Mr Bi as telling a closed-door briefing for HK delegates to the nation's parliament and its top political advisory body. Tendering for construction of the bridge across the Pearl River Delta would begin soon, said Sir Gordon, who came up with the idea for the bridge in the 1980s and has championed the project relentlessly.
HK, Macau ties a top priority for Guangdong: Guangdong's relationship with HK and Macau was the province's top priority and provincial leaders were working on details of future co-operation, a senior Guangdong official said. Zhu Xiaodan, Guangzhou party secretary, said the province and its capital had never discounted their relationship with the two neighbouring cities and were planning to take this relationship to a higher level.
Cross-delta bridge given green light: The green light has finally been given to a bridge linking HK, Macau and Zhuhai, 25 years after the idea was first proposed. The three governments agreed on funding arrangements to cover any shortfall between construction costs and investment by the private developer that wins the bid to build the bridge. HK would cover 50.2% of the shortfall, Guangdong 35.1% and Macau 14.7%.

Legal affairs and human rights
Money-laundering fight 'difficult': Money laundering in HK can be difficult to detect and combat despite efforts by the Financial Action Task Force to cast a wider net. Albert Au, president of the HK Institute of Certified Public Accountants, said the taskforce recommendations requiring accountants to report any suspicious transactions, including those not committed in HK, were difficult to carry out. With money-laundering methods always changing and evolving, authorities were constantly trying to play catch-up, Mr. Au said.
SAR can wash hands off refugees: The government is not obliged by international law to screen refugee claims, the High Court ruled. In handing down judgment, the court rejected a judicial review by six refugees who argued the responsibility to assess refugee claims fell on the government rather than the United Nations High Commissioner for Refugees. Although international law includes non-refoulement - that is, not sending a person back to a place where he or she may be persecuted - it could not supersede HK's domestic law, Justice Michael Hartmann said. "By consistent and long-standing objection, HK has refused to accede to the rule - and the rule, being contrary to HK's laws, has not been incorporated into its domestic law," the judge said.
Group turns to UN for race bill help: Representatives from human rights groups are to fly to Geneva to express their dissatisfaction with the HK government's Race Discrimination Bill before a United Nations committee. HK Human Rights Monitor director Law Yuk-kai, who is a member of the HK delegation, said the group was taking the issue to the UN since the government had failed to respond to a request in August by the UN Committee on the Elimination of All Forms of Racial Discrimination for a further explanation. The delegation hopes that in making the trip the government will be spurred into introducing an amendment to the bill before the end of the legislative session. The bill has been heavily criticized by concern groups for its wide range of exemptions for the government and public authorities.
Law sought to boost rights of consumers: The Consumer Council has proposed wide-ranging new legislation to protect the public against unfair, misleading or deceptive conduct in the marketplace. The new laws would cover areas such as false descriptions of goods, misleading advertisements, aggressive or high-pressure tactics, and unfair terms in contracts. Consumers would be allowed to sue and have better access to redress, either through a new consumer tribunal or expanded legal aid funds.

Police alarmed over rising juvenile drug arrests: Police are worried over the increasing number of drug-related juvenile arrests that include youths going on drug-taking tours in the mainland. Police Commissioner Tang King-shing told lawmakers the number of youths arrested for taking drugs doubled from 454 in 2006 to 922 last year. Over 90% of the arrests, he said, were connected to psychotropic drugs.
HK at center of global drugs scam: HK is at the center of a scam channelling counterfeit drugs from the mainland abroad, according to an industry insider. Counterfeiters have moved from lifestyle drugs including impotence, sleeping and slimming pills and antifungal shampoos to medicines for severe and chronic conditions such as diabetes, cholesterol, and liver and heart problems, a source in the local pharmacy industry revealed. "We are aware the drugs are mainly from China and some have been sent through HK to different countries. HK is a free port, making it vulnerable to illicit activities," the source said.
Medical reform plans set to be made public: The long-delayed reforms of medical financing, which may include a mandatory savings and insurance scheme, are expected to be released for public consultation next month. It is understood options to be included in the document could include raising taxes, voluntary medical insurance or a mandatory savings and insurance scheme. As many as six options are expected to be released, but the government will not put forward a favoured option. It is expected to simply list the pros and cons of each of the options for the public to consider. The second stage of consultation is expected after the Legislative Council election in September.

Polluters relocate, take bad practices inland: Growing public protest over air and water pollution in China and greater corporate transparency have forced multinational and HK manufacturers in the Pearl River Delta to clean up. But some companies are moving inland to avoid scrutiny and the costs of improving their environmental standards, according to Ma Jun, director of the Institute of Public and Environmental Affairs, a pioneering campaign group in China.

Culture and Education
Donald Tsang seeks co-operation between art and commercial life: Chief Executive Donald Tsang has asked for closer co-operation between the art and commercial sectors to achieve what he believes the ideal stage of art in life. Mr Tsang, in an article entitled "Art Re-visited" posted on his blog, urged private enterprise to play a more active role in integrating elements of art into daily life. "That is not only about donations by enterprises, but also about deeper co-operation. Artists can co-operate with the commercial sector and inject artistic elements into products and services," Mr Tsang wrote in his blog.
HK students 'shallow and narrow-minded': HK students are too narrow-minded and lack interest in current affairs, a university chief says. "HK's youngsters are very practical and narrow-minded. Compared with students from the mainland and overseas, local students don't pay attention to international affairs," said Roland Chin, vice-president of the HK University of Science and Technology. "They tend to read only entertainment news." He said students needed a wider range of skills for the modern working environment.
HK film festival tipped to draw its biggest crowds yet: The 32nd HK International Film Festival may break its attendance record next month with its 300 films from 55 countries, including some nominated for the Oscars. Festival chairman Wilfred Wong hopes attendance will exceed 120,000, with more screenings than last year.

Macau facing judiciary meltdown: A massive backlog is straining Macau's legal system, with hundreds of trials being delayed for months or even years. The crisis has prompted calls for judges to be imported from Portugal, the city's former ruler. Critics have warned that if nothing is done, the build-up of cases might paralyse Macau's judiciary. But there are concerns that Beijing may frown upon the idea of having too many Portuguese judges. The Court of First Instance handles most trials, commercial and criminal, in the city of half a million people. The number of criminal cases before the court rose from 4,973 in 2002 to 12,697 last year, while the number of unfinished cases at year-end soared sevenfold from 969 to 6,807 over the same period. Meanwhile, the number of judges and prosecutors dropped from 52 in 2002 to 48 last September. There are currently only 29 judges in Macau.

Successor will follow my path to justice, says Zen: The next leader of HK's Catholics will help the church in its mission to promote social justice, people's well-being and democratisation, Cardinal Joseph Zen said. He also expressed the hope that Coadjutor Bishop John Tong, who was appointed his successor by Pope Benedict, would strengthen the diocese's ties with Catholics across the border.
Bishop seeks closer mainland ties: The newly appointed coadjutor bishop of HK offered an olive branch to the mainland church, saying he would like to help in seeking closer ties with Catholics in both the state-controlled and underground church communities. Bishop John Tong said he would like to be a "bridge" between the Holy See and Beijing. He would be prepared to be flexible but would stick to Vatican principles.
Share city's wealth with needy, marchers urge chief executive: Welfare groups used the festive occasion to remind Chief Executive Donald Tsang that it was time to give more attention to the underprivileged as the government's coffers fill up with a multibillion-dollar surplus. About 100 families and representatives of the Society for Community Organisation marched to protest against inadequate childcare support for working mothers. More than 1.3 million people were living below the poverty line, including 800,000 who were not on the dole. But the government provided only about 5,000 childcare places, said Sze Lai-shan, the society's community organiser.
HK to bid for 2011 IOC meeting: The government is seeking Legislative Council approval for HK$135 million to host the 2011 International Olympic Committee session. In a paper submitted to legislators for discussion, the administration said HK's tourist, hospitality and exhibition sectors will benefit from the conference. The 10,000 delegates are expected to spend between HK$80 million and HK$110 million.
City sees the most births in 13 years: The number of births in HK hit a 13-year high last year, with 69,600 babies born to residents and non-residents. The population was 6.96 million at the end of last year, up 0.8% from a year ago, according to Census and Statistics Department figures. Last year's births figure was 6% more than in 2006.

Press articles related to Switzerland and Swiss matters
$1.3b masters stolen in raid: Three armed men in ski masks stole paintings by Cezanne, Degas, van Gogh and Monet worth 180 million Swiss francs (HK$1.3 billion) from a Zurich museum, police said, calling it a "spectacular art robbery." The robbers, who are still at large, stole the paintings from the EG Buehrle Collection, one of Europe's finest private museums for Impressionist and post-Impressionist art. It was the largest art robbery in Switzerland's history and one of the biggest in Europe, said Marco Cortese, spokesman for the Zurich police. He compared its magnitude with the theft in 2004 of Edvard Munch's The Scream and Madonna from the Munch Museum in Norway.
UBS posts record loss after US$13.7b in write-downs: UBS posted the biggest loss by a bank in the fourth quarter after US$13.7 billion in write-downs and did not say whether it would bounce back into profit in the current quarter. Europe's largest bank by assets had a net loss of 12.5 billion Swiss francs compared with a profit of 3.4 billion francs a year earlier, the company said.
Credit Suisse writes down US$2.85b, reports pricing errors: Credit Suisse has written US$2.85 billion off the value of its asset-backed investments and says it found mismarking and pricing errors on its books, sending its shares tumbling. The bank said the write-downs would wipe US$1 billion from its first-quarter net income, but still expected to stay in profit in the quarter, despite the charge.
Liechtenstein tax row may hit Swiss banking: Germany's tax spat with Liechtenstein sparked fears the heat may shift to Swiss banks, but Berne's record of co-operating with other countries makes a scandal of similar proportions unlikely. The standoff between two of Switzerland's neighbours flared last week when German prosecutors said they were probing hundreds of prominent people who might have hidden their wealth in Liechtenstein.

Press articles related to Liechtenstein
Prince flays data buy: Liechtenstein's Crown Prince Alois has criticized German authorities for a tax evasion investigation into funds that were channelled to the principality. "If media reports are to be believed, German authorities paid a criminal to obtain stolen data," Alois said. "We reject this action." German authorities had said that the country's Federal Intelligence Service received an "unsolicited" offer by an informant, which led to the probe. They paid up to 5 million euros (HK$57.5 million) for a disk holding data. "Germany won't solve the problems of its tax system with this attack in Liechtenstein," Alois said.
Berlin turns up heat on Liechtenstein in tax-evasion probe: Germany threatened to "tighten the thumb screws more" on Liechtenstein if the two countries could not reach a voluntary agreement to stem illegal cash flows as the tax-evasion investigation linked to the principality spread to the United States. Germany was considering requiring banks to report transfers to Liechtenstein or automatically taxing the transactions at their source, German Finance Minister Peer Steinbrueck said. US Senator Carl Levin said he was opening an investigation into whether American citizens were hiding assets in Liechtenstein banks to evade taxes. German authorities are investigating hundreds of people suspected of failing to declare money deposited in Liechtenstein and have widened their probe to at least five of the country's states.


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.


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