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Economy + Finance
Home sales plunge 65pc: HK home transactions slumped for the sixth consecutive month in December, falling 65.1% year-on-year. Overall, property prices fell 22.4% last year after financial turmoil battered sentiment in the second half.
2m lose jobs as 4,800 toy firms collapse: The number of toy factories on the mainland has shrunk by more than half over the past year as the global financial crisis devastated the sector, according to official statistics. The closure of about 4,800 toy factories, mostly HK-owned, has led to the loss of 2 million jobs. Over the past year, the number of toy factories on the mainland has dropped to 3,200 from 8,000. Most of them are in Guangdong province. Correspondingly, the number of workers employed by HK firms in the toy and related industries had shrunk to 1 million from 3 million, said Samson Chan, a former president of the Toy Manufacturers Association of HK.
Minibond saga sparks rethink of bank rules: Financial Secretary John Tsang ordered "an immediate review" of HK's financial regulatory structure after both the Securities and Futures Commission and the Monetary Authority issued reports on last year's Lehman Brothers minibond fiasco. The government will first focus on "administrative measures" to improve existing regulations and better protect investors.
Monetary Authority chief defends regulatory system: The head of the Monetary Authority defended the city's financial regulatory system, saying there was no need for "major surgery", after the financial secretary called for an "immediate review" of the way institutions are supervised. Financial Secretary John Tsang had ordered a review of the regulatory system. He was responding to reports submitted by the HKMA and the Securities and Futures Commission on last year's Lehman Brothers minibond fiasco. However, HKMA chief executive Joseph Yam said the city's financial regulatory framework was not the cause of the Lehman minibond scandal and there was no need for "major surgery". "I haven't seen any foreign regulatory system that's better than HK's amid the global financial tsunami," he said.
HK continues reign as world's freest economy: HK has been named the world's freest economy for the 15th straight year thanks to its low tax rates, but a competition law and a minimum wage could give it a lower score in future, US think-tank The Heritage Foundation says. The city scored 90 out of 100 in its 2009 Index of Economic Freedom, up three-tenths of a point from last year. Singapore came second of 183 states and territories, with 87.1 points. Macau, which was ranked for the first time, came 21st, with 72 points.
HSI heading for 10,000, says Citi: The Hang Seng Index is heading toward 10,000 points in the first half of the year as the recent bear market rally is over and corporate earnings may be poorer than estimated, according to Citi analysts. "Earnings estimates remain too high, in our view, and we believe the bulls should be prepared to sit out a cold winter before thinking about coming out in the second half of 2009," said Citi head of HK research Anil Daswani in a report.
Tsang warns of economic woes and job losses: HK would face twin economic challenges this year as the economy shrank while the jobless rate rose to more than 4%, as the impact of the global financial crisis bit deeper, Chief Executive Donald Tsang warned. Mr Tsang painted a gloomy picture at a Legislative Council question-and-answer session, predicting waves of layoffs and business closures after the Lunar New Year and a further rise in unemployment. Describing the economic trend as worrying, Mr Tsang said the worst scenario was expected for the first half of the year, with possibly no recovery until the last quarter.
HK container shipment growth slows to seven-year low of 1pc: HK's container volume grew just 1% last year, its worst performance in seven years, and some experts believe shipments will decline this year at the steepest rate in at least 18 years.
Firms expect downturn to last two years: Companies in HK expect the economic turmoil to last about two years, according to an American Chamber of Commerce business outlook survey. To help weather the financial crisis, half of the 155 respondents said they were freezing salary increases or bonus payments, while almost a third had shed jobs. "The economic outlook, both short-term and long-term, is likely to be materially impacted," chamber chairman David Cunningham said.
Bankruptcy petitions up 84.5pc; situation expected to worsen: Bankruptcy petitions last month were up 84.5% from a year earlier, at 1,334, official figures show -and a lawyer specialising in the field expects the figure to go a lot higher in the months to come.
Jobless rate reaches 16-month high and likely to get worse: Unemployment jumped to a 16-month high in the last quarter of last year as the city's labour force continued to expand faster than the number of jobs. The Census and Statistics Department said that HK's seasonally adjusted jobless rate climbed to 4.1% during the last three months of the year, from 3.8% between September and November. It was the first time since August 2007 that the rate had exceeded 4%.
New attempt to enable firms to survive crisis: The government is to resume stalled legislative work to enact a corporate rescue law to offer a cooling-off period for troubled companies to restructure and survive the financial crisis. Chief Executive Donald Tsang said such a law could prevent some local companies with viable long-term business prospects from going bankrupt unnecessarily. Speaking after the meeting of the Taskforce on Economic Challenges, he said the introduction of a corporate rescue procedure could provide an opportunity for companies in short-term financial difficulties to turn around or restructure.
Residential construction at lowest level since 1997: Construction and completion of private residential units in HK last year slumped to the lowest since records began in 1997, underscoring the severe impact the global economic decline is having on the property market. The latest figures from the Transport and Housing Bureau show only 8,000 units were being built by the end of last year, 38% fewer than the 12,900 units a year earlier. Prices are expected to continue to drop as the economy flounders.
HK exports see worst drop in value since 9/11: HK's exports fell by 11.4% cent in value last month year on year, the worst decline since the terrorist attacks in the US on September 11, 2001, and more than double the 5.3% slip recorded in November. A significant decline was also reported in import values, which fell by 16.2% year on year in December, the worst in nearly five years.

Domestic politics
Union leader attacks Tsang jobs plan: The chief executive's HK$40 billion scheme to create more jobs through new projects was slammed by the HK Confederation of Trade Unions lawmaker Lee Cheuk-yan. "These projects last only a few months and cannot satisfy current employment needs," he said. Lee was among a group of construction workers at Central Government Offices demanding long-term projects after denouncing relief measures as too little, too late.
Tsang delays consultation on poll reform: Public consultation on electoral reforms for 2012 will be put off until later this year to allow the government to focus on the economy, Chief Executive Donald Tsang announced. He admitted delaying the consultation would disappoint some people, but said there was a need to avoid adding to the public's anxieties amid the global financial crisis. However, observers believe the consultation is being postponed because neither the government nor Beijing want complications in a year with several key political events.
Suffrage debate to be heard at UN: HK's continuing debate on the introduction of universal suffrage and the abolition of functional constituencies will be given an international platform next month, when non­governmental organisations visit the United Nations in Geneva. The UN Human Rights Council will host its first Universal Periodic Review for China and HK -a new system which allows for a broad review of issues rather than focusing specifically on certain rights. Two local non-governmental organisations have submitted reports which deal with democratic development as their first topic, criticising what is perceived as a delay in initiating full elections, and denying people the right to political participation.
Tsang unveils five new cabinet members: The chief executive announced long-awaited changes to his cabinet, naming five new members, but the appointments failed to increase his bargaining power in the legislature as none were from political parties. Donald Tsang said the new Executive Council line-up would help him tackle the financial crisis, as all the new appointees had a deep knowledge of mainland affairs.
Crisis may delay more policies: The consultation on political reform may not be the only policy to be postponed, as all government initiatives should now be assessed in light of the economic situation, the chief secretary said. Henry Tang said that with every policy the government would consider whether, under the current circumstances, it was appropriate to proceed.

Relations HK -Mainland China
HK exporters travel north to lobby for friendlier, more stable policies: Representatives of HK's battered exporters will embark on a three-day trip to Beijing in escalated efforts to lobby for a more investor­friendly and stable policy regime. The Federation of HK Industries, one of the city's largest trade organisations, will lead a 30-member delegation to meet top policymakers such as state councillor Liu Yandong and senior officials at the Ministry of Commerce, Administration of Customs, Taxation, and the HK and Macau Affairs Office of the State Council. Issues to be brought up included the implementation of recent policy changes on exports, measures for HK investors to tap the domestic consumer market, relaxing the controversial labour contract law and barriers hindering HK firms from obtaining yuan loans, the federation's deputy chairman, Stanley Lau, said.
9 in 10 HKers confident about China: More than 90% of HK people are confident about the future of the country, a record high since the handover, a survey has found. The poll, conducted by the public opinion programme of the University of HK, found that 91% of 1,022 respondents had confidence in China's future, up 7 percentage points from the previous poll, which was carried out in October.
Central bank chief warns of political crisis: China's central bank governor Zhou Xiaochuan has warned HK leaders of possible political strife if the financial crisis is not properly handled. Zhou was speaking in Shenzhen as central government officials met HK and Macau deputies to the National People's Congress and the Chinese People's Political Consultative Conference. He said the financial crisis has had an impact on HK and Macau's economies and affected people's confidence. "The political stability of HK and Macau has been threatened. Amid the economic slowdown and fragile confidence, any unexpected incident not properly handled could lead to a political crisis," Zhou warned.

Transborder affairs
12-year plan for innovative delta: The central government has unveiled a 12-year master plan to transform the Pearl River Delta from a manufacturing base into an international creative industry base. But in the State Council's National Development and Reform Commission's 57-page report yesterday, only three pages were dedicated to cooperation with HK and Macau, although it reaffirmed HK's international financial status.
HK seeks clarity on roles of airports: The HK government said it would look for a clearer division of roles among airports in the Pearl River Delta region after the central government said the region should become a regional hub for international logistics. The National Development and Reform Commission said that the region would develop a modern service structure that accommodated the needs of HK, and become a centre for international shipping, logistics, trade, conferences, exhibitions and tourism. The HK government said it would work with neighbouring cities to ensure a clear division of roles for ports and airports in the region.
Delta team to promote financial co-operation: HK and Guangdong agreed to set up a taskforce to promote monetary co-operation after years of discussions, in an attempt to facilitate cross-border capital flow. Making the announcement after meeting Guangdong Vice-Governor Wan Qingliang, Chief Secretary Henry Tang said: "The taskforce will work on a number of projects; in the long run, financial resources will be able to move freely in the Pearl River Delta." A total of 21 taskforces, ranging from environment to transport, have been formed under the Guangdong-HK Joint Co-operation Conference. But none of them have dealt with financial co-operation despite years of discussions.

Tamiflu backup to be maintained: HK will continue to maintain a backup stock of 1 million doses of Tamiflu oral solution even though they could go to waste, the Centre for Health Protection said. It was explaining why 1,003,910 doses of Tamiflu oral solution had expired without being used. Another 501,120 doses will expire by the next financial year. "We keep it as backup so if there is a flu pandemic or large outbreak, we can consider using them after testing them," said a spokeswoman for the centre.
New fears arise over avian flu outbreak: A mutation of the H5N1 virus and the possibility of silent carriers in the fowl population are among the latest fears to arise from the four bird flu cases that resulted in two deaths in the mainland over the past month. Secretary for Food and Health York Chow said these fears arose as there had been no outbreaks of avian flu among the poultry in the areas where the human victims were found.

Air pollution danger days rise in 2008: Despite clearer skies and government efforts to switch vehicles to cleaner fuel, the air was dirtier than ever across much of the city last year, according to air pollution index data. The figures prompted a warning from a university expert of the long-term health effects on residents. But the government insisted air quality was in fact improving, saying the API as now calculated did not give the full picture -a response that raised questions from an environmental group about why it is still being used.
One in five say they may leave over pollution: Air pollution has the potential to cause an exodus from HK bigger than the brain drain prompted by pre-handover jitters in the 1990s, a survey has indicated. One in five residents, according to the poll, are considering leaving the city to escape the contaminated air, while one in 10 are seriously considering such a move or already have plans to go because of health fears. That could mean an exodus of 700,000 to 1.4 million people, eclipsing the pre-handover brain drain, during which 450,000 people are estimated to have left.

Culture and education
Schools using Chinese set to be given chance to teach in English: Up to 80 schools using Chinese as their medium of instruction would be allowed to teach in English under a government proposal submitted to lawmakers. The legislators will discuss the plans to relax the limits on teaching in English, which have been drawn up after consultation with the education sector. The proposals, which would affect junior secondary classes, are aimed at boosting education in English.
Voices raised on use of English in classrooms: Dissenting voices marked a Legislative Council panel meeting on teaching language reforms designed to introduce more English into the classroom. Secretary for Education Michael Suen defended the new policy, saying it would allow Chinese-medium schools to teach up to 25% of classes in English.

Vice-president tells Macau to stay united and see opportunity in crisis: Vice-President Xi Jinping encouraged Macau's people to remain staunch in the face of the global economic crisis, as he concluded his two-day visit. But the state leader left without referring to two issues important to the city: the coming chief executive race and whether travel restrictions on mainlanders would be relaxed. "There are difficulties. There are solutions. There are hopes," he said as he left the city. "Under the impact of the international financial crisis, Macau has encountered temporary difficulties with regards to economic development and people's livelihoods. But the SAR government has taken a series of forceful, orderly and effective measures."
Protesters kept out of Macau as vice-president enjoys city's charm: Harmony seemed to be in the air wherever Vice-President Xi Jinping went on his Macau visit, with HK protesters shut out of the city and pre­arranged happy "tourists" appearing in his way. Mr Xi hammered away at the importance of harmony in his two-day visit, saying it was a prerequisite for economic growth. But as the state leader continued his trip, HK legislator Leung Kwok-hung and other members of the League of Social Democrats were denied entry for a planned protest in Macau against the Article 23 national security legislation.
Casino stocks plunge on dashed hopes on visits: Macau stocks dived 10 to 20% after a visit to the casino enclave by Vice-President Xi Jinping failed to yield a much-awaited relaxation of travel restrictions. Since October, mainlanders travelling independent of tour groups have only been able to visit Macau once every three months, down from twice a month before June 1 last year. But hopes for a speedy relaxation of travel policy were dashed, as Mr Xi instead urged Macau to diversify its gaming-driven economy.
Blue skies may turn grey for Macau tourism after record year: More than 30 million people visited Macau last year, a record, but the number is unlikely to grow much this year and may fall amid the global financial crisis, its tourism chief says. "At the end of 2009, if we have the same number as in 2008, that'll be a good result," said João Manuel Costa Antunes, director of the Macau Government Tourist Office. Still, he said people should not be too pessimistic about tourism prospects.
Macau casino revenue drops 30pc in January: Macau casino revenue has fallen for the fourth month in five this month, plunging by an unprecedented 30% from January last year to 7.2 billion patacas. Preliminary figures suggest the dramatic slowdown in Macau's once-booming gaming industry is worsening in the face of the financial crisis and Beijing's crackdown on mainland visitation to the city.

More strikes on the horizon, say unionists: Unionist lawmakers have warned of the likelihood of more strikes and industrial action this year as workers seek to defend their interests amid the economic downturn. Lee Cheuk-yan, lawmaker of the Confederation of Trade Unions, predicted that the year would be marked by labour problems. "Workers will not be as tolerant as they were during the Sars outbreak if big entrepreneurs continue to lay off staff. Further sackings may be strongly opposed," the lawmaker said.
One million live in poverty in wealthy HK: HK has the greatest rich-poor divide of any developed country with more than 1 million people living in relative poverty, a political leader claimed. Democratic Party leader Albert Ho called the divide between the rich and poor in the wealthy city of 6.9 million "an embarrassment to our society" and called on HK leader Donald Tsang to act.
Opening up harborfront to take 10 years: About 70% of harborfront land would become accessible open space for public enjoyment, but the whole plan would probably take at least 10 years to achieve, the government said. The plan would take time because a lot of harborfront sites were privately owned, Secretary for Development Carrie Lam told a Legislative Council subcommittee on harborfront planning. The government's ultimate objective was to construct continuous promenades around most parts of Victoria Harbour, she said.
Murders double but cops say city is safe: One person was murdered every 10 days in 2008 -double the number of homicides in 2007. But HK remains a safe city, Police Commissioner Tang King-shing insisted. Last year's tally of 36 murders was not alarming because 2007 was an exceptionally low year and the average number of murders annually before then was 49, he said. More than half of last year's cases involved family disputes, and five were sex workers.

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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