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Economy + Finance
Direct links across strait may cost city HK$192m per year: HK stands to lose about HK$192 million a year when about 1.11 million people travelling between the mainland and Taiwan bypass the city as a result of full direct cross-strait flights, says the HK Tourism Board. The direct flights will be between five airports on the mainland and eight in Taiwan. Executive Council convenor Leung Chun has warned against underestimating the challenges for HK brought by the "three direct links" between Taiwan and the mainland. He called on the government to step up bilateral exchanges with Taiwan to cope with the new economic and political situation arising from direct trade, transport and communications links across the Taiwan Strait.
Closer links will pay off within three years, analyst says: HK will be able to see economic benefits in two or three years brought by closer cross-strait ties, a government analyst says. Ruby Zhu Dan said high value-adding sectors would benefit from the so-called three direct links between the mainland and Taiwan. Ms Zhu said a more open cross-strait market would increase demand for the city's financial services, because of the absence of capital controls in the city. But she said the local aviation industry would suffer due to the introduction of direct cross-strait flights.
Vice-president reveals new boost for HK business: Services companies in HK can look forward to additional measures giving them preferential access to the mainland market, with a deal to be signed soon, Vice-President Xi Jinping said. The state leader said: „the Ministry of Commerce and the SAR government will soon sign a document on the arrangement to facilitate entry of HK service providers to the mainland, particularly Guangdong". He hoped the arrangement would provide new opportunities for the development of the services sector in HK.
City earns high marks on credit rating from international agency: The city earned good grades for its creditworthiness, according to an annual assessment by Fitch Ratings, an international credit rating agency. "The overall financial position for HK remains strong for 2008, even 2009 and 2010." The agency based its grades on the city's external and public finances, its linked exchange rate, its banking system and its political and social environment. While Fitch anticipated that HK's economic growth would slow down this year due to global and mainland market conditions, there was no cause for alarm.
InvestHK sees tiny rise in set-ups, fewer jobs: There was a slight rise in companies setting up or expanding operations in HK recorded in the first six months of this year although fewer jobs were created in a sign of corporate belt-tightening, InvestHK director general Mike Rowse said. InvestHK completed 148 projects in the first half, just one more than the 147 projects recorded in the last six months of last year. The companies are expected to create about 4,800 jobs in the next two years, down from last year's estimate of 5,300.
HK's unemployment rate stays at 3.3 per cent: HK's unemployment rate for the three months to June stayed at 3.3%, the same as in the previous two periods, official figures showed. HK's secretary for labour Matthew Cheung welcomed the figures, but said he was wary of a global economic slowdown. “Although our employment situation has been steadily improving, there is no room for complacency given the uncertainties in the external economic environment and the local skills mismatch problem,” he said.
Prices climb 6.1pc, marking biggest rise in 11 years: Consumer prices in HK jumped 6.1% last month, the highest rate of increase in almost 11 years, the government said. Inflation averaged 5.1% in the first half of this year. A government spokesman said HK's economy remained strong – but rising food and energy costs were driving inflationary pressures.
Growth tipped to slow to 4.9pc: HK's economic growth is forecast to ease to 4.9% this year from an estimated 5.4%, a report by the Asian Development Bank says. The local economy grew 6.3% last year. The slower growth projection, in line with the government's forecast of between 4 and 5%, mirrors the bank's cautious outlook for much of the region.
40b yuan to help HK firms in Guangdong: As much as 40 billion yuan has been earmarked to help HK enterprises move their operations to the remote parts of Guangdong, where they will receive concessions on electricity, water charges and government fees, Guangdong Party Secretary Wang Yang said. Mr Wang expressed confidence that increased transport costs would be offset by concessions on utility charges. Rising production costs and the appreciation of the yuan have forced many labour-intensive factories in the Peal River Delta to shut down or move to inland provinces. About 35,000 companies cancelled their registration in Guangdong between January and May this year, up 35.7% year on year.
HK factories not fleeing Dongguan: The Dongguan party secretary denied the city had seen an exodus of HK factories because of the unfavourable business environment created by the yuan's rise, a new labour law which has added to their costs, and environmental charges. Liu Zhigeng also denied suggestions that the authorities were forcing labour intensive, low-tech and highly polluting industries to leave. He said the number of new factories and the number of those either closing or moving was consistent with previous years. "Over the years, there are always about 4,000 new factories setting up in Dongguan and some 700 either closing down or moving out," he said. "The number in the first half year is consistent with previous years. It is natural, businesses moving in and out."
New Cepa pact set for signing: The mainland and HK will sign a new pact under the Closer Economic Partnership Arrangement (Cepa), including measures that will start in Guangdong. "Our discussion with the central government and the Guangdong provincial authorities has reached a mature stage. The fifth phase of Cepa will be signed in HK on July 29," CE Donald Tsang said. "There will be some special clauses that specify measures to be carried out in Guangdong first, apart from those implemented nationwide."
Nestle threatens to leave the city if strike continues, workers say: The Nestle workers' strike continued after more than 100 workers protested outside the company's Yuen Long headquarters. Workers claimed Nestle had threatened to leave HK if the strike continued. Nestle management said in a statement that it was striving to reach a resolution of the issue. The strike is the third this month, following industrial action by workers from Vitasoy and Watsons Water – also seeking better pay and benefits. This year, the cost of living in HK has risen considerably – particularly higher food and energy prices.

Domestic politics
March takes diverse demands to streets: Protesters packed streets between Causeway Bay and Central for the annual July 1 march that attracted a smaller turnout than last year but showcased a broad range of protest issues. Despite a lack of major political controversy, organisers of the march, which coincided with the 11th anniversary of HK's reunification with the mainland, said the turnout highlighted the need for officials to be more responsive to public demands. The Civil Human Rights Front, which organised the protest, said more than 47,000 took part in the three-hour event, less than the 58,000 claimed by the organisers last year.
Departing Legco president warns officials to respect legislature: The president of the Legco has fired a parting shot at officials as the legislative term closes this week, warning them against keeping lawmakers in the dark and snubbing representatives of the public. Rita Fan also said her fellow lawmakers should improve communication with the government. Stressing she was not specifying the target of her comments, Mrs Fan criticised officials for giving an impression they disrespected Legco, especially when the government tried to push through controversial bills or policies.
Pan-democrats facing a stiff challenge to hold seats in functional constituencies: Pan-democrat incumbents in functional constituencies are expected to face stronger challenges in this election, with progovernment candidates consolidating support rather than seeing it diluted among allies. Observers said that while the rise of the Civic Party, with its image as a new force to represent professionals, would benefit some like-minded candidates, there would not be a repeat of the 2004 race when pan-democrats rode the tide of the "July 1 effect" to break new ground.
CE sees his approval hit new low: The chief executive's approval rating fell to a new low in the latest public opinion survey, although there were signs of a recovery after he announced the HK$11 billion inflation-relief package recently. CE's popularity, which has fallen from 63% in May, has suffered a serious setback in recent months because of rising inflation and the controversy over the government's political appointees.
Cardinal urges action: Catholic Cardinal Joseph Zen has called on followers to actively participate in the next Legislative Council term, saying he hopes the "power of democracy" can be maintained. Speaking at the Book Fair, Cardinal Zen said: "We do not take a stance on any particular parties for the Legco election. We help no one with election campaigning." But the leader of the HK Catholic diocese said he hoped the power of democracy could be maintained. Last year, he urged people not to give up hope for the speedy introduction of full democracy, but added that they had to actively struggle for it.

Relations HK - Mainland China
Sichuan delegation to include some barred pan-democrats: Pan-democrat lawmakers who have been barred from crossing the border will get another chance to visit the mainland, after the legislature decided to appoint the 20-member delegation to Sichuan according to the number of seats the various parties hold. With critics describing the trip as a "political show" designed to salvage the government's sliding popularity, Chief Executive Donald Tsang said it would improve communication between legislators and Beijing.
Vice-president pledges Beijing support for city: Vice-President Xi Jinping arrived for his first visit to HK since he assumed the position, laying out his expectations for the Olympic and Paralympic equestrian events in the city. While the main purpose of his trip was to inspect Games preparations, Mr Xi, who since late last year has been overseeing HK affairs, also addressed pressing issues facing residents and pledged the central government's continued support for the special administrative region.
Vice-president tells CE to 'govern sensibly': Vice-President Xi Jinping urged Chief Executive Donald Tsang and his team to govern HK "sensibly and reasonably", in order to implement "stable and efficient" policies and overcome "current difficulties". Observers see his remarks, on the second day of his visit to the city, as an indirect dressing-down for the administration, which has recently seen its popularity fall amid the row over the new political appointees and rampant inflation. It is the first time a state leader has publicly made such blunt statements towards the government since 2004, when President Hu Jintao told former chief executive Tung Chee-hwa, months before his resignation, to "identify inadequacies".
Mainland looks to HK help over next 30 years: HK will play an ever increasing role in the mainland's continuing development, Chief Executive Donald Tsang said. Boao Forum for Asia secretary-general Long Yongtu agreed, saying HK could use its cohesive and influential power to help China build a "fair and righteous" society. Long, the former vice minister and chief representative for trade negotiations of the Ministry of Foreign Trade and Economic Cooperation, recalled that in 1998 during the days of World Trade Organization discussions about China's financial market opening up, Beijing maintained a "too cautious" stance.

Transborder affairs
Shenzhen Mayor wants hi-tech industry, not homes, at border zone: Hi-tech industry, not real estate, is Shenzhen's preferred solution to developing the Lok Ma Chau Loop, Xu Zongheng, Shenzhen's mayor said. He ruled out property projects for the loop and reiterated the city's preferred vision - a zone for high-end, hi-tech, green industries. The loop is under HK's administration, but according to a State Council order issued in 1997, Shenzhen authorities own the land.
HK 'in league of its own' as finance hub: Guangdong's party boss Wang Yang declared that Guangzhou and Shenzhen were not in competition with HK as an international financial hub. "Guangdong and its cities should not weaken HK's status as an international financial centre," Mr Wang said. "Indeed neither Shenzhen nor Guangzhou have the ability to replace HK." He also pledged that Guangdong would be right behind HK in consolidating its finance hub status. "Only if HK's status is consolidated can Guangdong better develop its economy," he said.
Delta bridge design wins ministerial approval: The design of the long-awaited HK-Zhuhai-Macau Bridge has been approved by the Ministry of Transport, an official said. Song Dexing, director general of the ministry's water transport department, said the bridge would strengthen HK's status as a world shipping centre. The high-profile project has been under discussion for several years. The governments of HK, Guangdong and Macau endorsed the financing scheme for the bridge this year.

Legal affairs and human rights
HK amends bribery ordinance: The Prevention of Bribery Ordinance was amended to help reduce the potential risk of bribery and corruption in regard to the office of chief executive, a government spokesman said. The amendment will strengthen the existing law to make it harder for HK's most senior government official to take bribes or receive generous gifts and favours. The spokesman also said that the revision of the ordinance would address a thorough and comprehensive anti-corruption system in HK.
Legco unites to ban racial discrimination: HK finally has a law making racial discrimination an offence. Following a dramatic victory over the government, lawmakers were unanimous in supporting the bill. The vote stripped the bill of a clause that would have given a wide range of public services and private businesses blanket protection against being sued for language discrimination. The government later issued a statement stressing it planned to enact the law.
Employers open to minimum wage law: Employers say they are more ready to accept a universal minimum wage law but insist it should be set at a level sufficient to support just an individual worker, not his or her family. They want welfare measures introduced at the same time, to provide support for the families of those on the minimum wage, and say it should apply to all types of workers, not just cleaners and security guards as covered by the present voluntary system.
Minimum wage could harm HK, warns chamber: Implementing regulatory policies such as the competition law or minimum wage could undermine HK's economic growth, the chairman of the HK General Chamber of Commerce has warned. Andrew Brandler also told The Standard he thought the government's HK$11 billion inflation relief package was linked to the upcoming Legislative Council election and disagreed with the prediction of Chief Executive Donald Tsang Yam-kuen that inflationary pressures would cease once the government's infrastructure projects were in full swing in 2010. But Brandler held out hope, saying an economic downturn on the scale of that seen 10 years ago is unlikely.

Live chickens must be banned at markets, academic warns as vaccine loses efficacy: The bird flu vaccine used for local chickens is gradually losing its effectiveness, and total failure is not too far away, a leading microbiologist warned. This is happening because the H5 virus, which causes bird flu, is shifting further away from the so-called Fujian strain against which the vaccine was originally effective, the University of HK's head of microbiology, Yuen Kwok-yung said. Professor Yuen, who is part of a team investigating the H5N1 virus found in four wet markets last month, said the city must get rid of all live chickens in markets before the vaccine becomes completely ineffective.
HK lowers alert level for avian flu: The government has lowered the avian flu warning from the “serious response level” to the "alert response level", Secretary for Food and Health York Chow said. The government had raised the response level to "serious" after the detection of H5N1 avian influenza in samples collected from the chickens from poultry stalls in Po On Road Market, Sham Shui Po, on June 7.

Air pollution bill passes, but lawmakers are still unhappy: Lawmakers endorsed cross-border emissions trading and gave legal backing to caps on power firms' emissions of pollutants. They demanded unanimously that officials set out a framework for handling the city's "carbon footprint", which was excluded from the measure passed because officials say they need more time. The measure also spells out the way caps on emissions of three major air pollutants will be determined beyond 2010. Cross-border emissions trading will give power firms leeway to meet emissions caps by means other than reducing the pollution their chimneys spew into the air. A majority of lawmakers voted in favour of the Air Pollution Control (Amendment) Bill 2008. However, the legislators were unhappy that it has not put HK's efforts on a par with other countries in the fight against climate change.
Blackest day yet for air pollution: HK was hit by its worst-ever air pollution amid exceptionally hot weather yesterday (28.7.2008), raising fears that similar conditions could affect competitors and spectators at next month's Olympic equestrian events.

Culture and education
HK$21.6b approved to bankroll arts hub: The proposed West Kowloon cultural hub moved beyond the drawing board when the Legislative Council approved a one-off HK$21.6 billion payout to fund its development. During debate, lawmakers questioned whether there would be adequate oversight as the money was spent by the yet-to-be-appointed arts hub authority. But Secretary for Home Affairs Tsang Taksing said the authority would be assessed by the Audit Commission, ensuring taxpayers' money was spent properly.

Casino town to top HK for visitors: Macau will race ahead of HK this year in terms of tourist numbers, a leading hotel investment firm predicted yesterday. Jones Lang LaSalle Hotels expects 30.6 million tourists to visit Macau in 2008, against 30.4 million for HK. But the reasons for trips to HK and Macau are somewhat different, the firm's executive vice president, Chee Hok Yean, said.

Terrorist threat to HK events still 'moderate': The risk of a terrorist attack in HK remained "moderate", despite threats from a mainland separatist group that it will attack the Olympic Games next month. The government said that there was no information indicating that HK would be a terrorist target during the Games.
Government intervention must be done with care: The government appears to be tackling inequalities in society increasingly through legislation and market intervention, which could have unintended consequences, the HK General Chamber of Commerce chairman says. Andrew Brandler said: "The government has a tendency to look to intervene a little bit more proactively than it would have done in the past. The competition law is a classic example. Minimum wage is another example of the government looking to intervene, with perhaps good objectives, but again there could be unforeseen consequences of that."
Killings up sharply but overall crime rate down: Homicides surged in the first six months of this year compared to last year, but the rate is still below the average of the past 10 years. There were 21 homicides from January to June, up from an unusually low eight in the same period last year. But the overall crime rate dropped by 3%, and police said HK was still one of the safest cities in the world.


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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