THE CONSULATE GENERAL OF SWITZERLAND IN HONG KONG

Special : Economic Report 2004
(English/French, pdf, 17 p., 133 kb)

Introduction
Hong Kong has a new Chief of Administration. Yuan revaluation sets stage for boom in HK.

Domestic politics
Tsang sent condolences to Britain: Chief Executive Donald Tsang Yam-kuen expressed his condolences for victims of the London bombings, saying he was deeply shocked and saddened by the attacks.
New chief of administration: Raphael Hui, a veteran civil servant and former Secretary for Financial Services has been appointed as Chief Secretary to the HK government. The new No. 2 of HK is known to be close to the chief executive and to business circles. In his first press interview he said his main tasks would be electoral reforms for the 2007-2008 elections, resolving the West Kowloon controversy and finding new blood for HK politics.
Weak attendance at July 1st march: Only 21'000 (barely 4% of 2003 500'000) participated in the traditional protest march prompting Beijing to say that the event had lost its popularity. Democracy and universal suffrage were just two items on the marchers' growing wish list which also included labour and gay rights. With the resignation of Tung, the shelving of Article 23 and an economy on the rebound most highly contentious issues have faded. Pro-Beijing organizations also staged a morning parade with also about 30'000 people clanging cymbals and singing patriotic songs to mark the handover. One newspaper ironically mentioned that on the same day that more than 200'000 people went to see an exhibit featuring dinosaurs in a shopping mall.
Colonial era comes back into fashion: There are several signs that HK is coming to terms with its colonial heritage. Its new leader with his bow tie, British knighthood and decades of service for the colonial power provides a very personal connection with the past. He has also decided to live in Government House, the former residence of British governors.
Legco seeks rethink of arts hub project: A Legco subcommittee issued its first report on the West Kowloon Cultural Hub stating Exco and Legco had been bypassed on the issue and asking the government to scrap the single developer approach and to make extensive consultations of the public. The handling of the cultural hub is seen as a test of Tsang's election pledges to pursue a more inclusive style of governance.
Pressure grows to clip ICAC powers: An Independent Commission Against Corruption (ICAC) bribery case came to a spectacular end when a judge declared that the agency had illegally taped privileged legal conversations between a suspect and his lawyer in a manner that was a degradation of the justice system. This recent collapse has sharpened decade's long calls to curb ICAC's sweeping powers especially its ability to conduct covert surveillance without court permission. It was followed by the sudden resignation of a top official prompting rumours about orders from Beijing to rein in the powerful agency and about the three “dirty” jobs the central government supposedly has asked Donald Tsang to perform as test of loyalty: curbing the powers of ICAC, keeping a closer watch on political dissent by re-establishing the police special branch and limiting Radio Television Hong Kong's (RTHK) autonomy. The chief executive quickly dismissed these allegations as nonsense. However, as stated in one editorial, many Hongkongers consider the ICAC along with RTHK, another beleaguered public body, the conscience of society. Any cloud over its name and future should be promptly dispelled.
Union gets political: The HK Federation of Trade Unions, biggest Beijing backed trade union, which has four legislators, plans to form a new political labour party to defend the rights of those who are deprived.
Top court clears way for autumn Link sale: The government's privatization of $30 billion in housing estates shops and car parks can finally proceed after the Court of Final Appeal rejected a legal challenge to the Link Reit's listing. A public housing tenant had argued that the sale violated the authority's statutory duty towards tenants. Some fear the consequences of the eight months delay on the sale price. Observers have stressed that the privatization policy was sound but its execution by the administration flawed especially by pressures on courts in order to keep the listing on schedule. It ended in the suspension of the process which has been acknowledged as one of the elements having contributed to the former chief executive's decision to resign.

International affairs
WTO's logistical and security concerns: An interministerial high level committee chaired by the Chief Secretary was formed to coordinate actions by the various departments involved in the preparation of the December WTO conference. More than 10'000 protesters, 6'000 delegates, 3'000 media representatives and 2'000 NGO's representatives are expected.
Hui to head planning for WTO date: Chief Secretary Rafael Hui Si-yan will head a committee of top government officials to plan and co-ordinate preparations for the World Trade Organisation's ministerial meeting in December.
Visit of José Manuel Barroso: The President of the European Commission paid a visit to HK.

Transborderaffairs
Pan-Pearl River Delta (PPRD): (grouping of Guangdong, Fujian, Jiangxi, Hunan, Guangxi, Guizhou, Yunnan, Sichuan and Hainan, HK and Macau or named 9+2) at a co-operation and Development Forum: Chief Executive Donald Tsang urged fellow leaders in the PPRD region to avoid duplicating infrastructure projects which would cause unnecessary competition and waste of resources. As well as calling for a speeding up of transport projects and cross-border projects such as the bridge to link HK, Macau and Zhuhai, he called for the sweeping away of trade barriers and for wider use of HK as a financial centre. More than HK$ 30 billion had been raised by mainland companies in HK in 2004, compared with HK$ 50 billion between 1993 - 2004.

Legal Affairs and human rights
Court of Final Appeal’s guidelines on public protests: The highest court in HK has issued some details on the protest banning legal mechanism. Marches can be banned or restricted if the police consider it necessary for reasons of national security or public order but protests are only to be interfered with when it is absolutely necessary. The court stressed the importance attached to the right to protest peacefully because demonstrations are closely linked to the freedom of expression and help resolve conflicts and tensions in the community.
Vigil marks erosion of press freedom: Pro-democracy legislators staged a candle light vigil to protest the slow erosion of press freedom in HK after the recent sacking of a popular commercial radio host. They also protested against the chief executive’s remark that public radio should spend more time explaining government policies. One of the participants, a member of the Art. 45 Concern Group said: “Press freedom is the remaining pillar of our free society as we do not have an elected government. We cannot afford to lose it.”
HK should have its own asylum policy says UN official: Janet Lim, UNHCR Director for Asia and the Pacific, urged HK to establish policies and procedures to deal with asylum seekers. Today immigration officers direct asylum seekers to the UNHCR office for refugee status determination, not satisfactory. There are currently 725 asylum seekers in HK and 105 recognized refugees awaiting resettlement elsewhere.

Economy
Yuan revalued 2.1pc, Beijing’s move a mixed bag for HK: The HK$’s link to the US dollar will not be dropped, despite Beijing’s scrapping of the Yuan’s peg to the American currency. Three refinements to HK’s 21-year peg announced in May, allow the local currency to trade within a band. Acting Financial Secretary Stephen Ip Shu-kwan pointed out that the revaluation was likely to bring benefits to the local economy, as mainland holidaymakers and businessmen visiting HK would automatically see their purchasing power in the city rise by 2.1%. It would provide greater incentive for mainlanders to spend in the city, which would be a relief for job seekers. HK General Chamber of Commerce chief executive Eden Woon Yi-teng said local companies selling services through the closer Economic Partnership Arrangement would enjoy more competitive prices, but warned of an import inflation risk as items entering HK from the mainland would be more expensive. The HK Trade Department Council viewed that the stronger Yuan would boost consumer price by a mild 0,270. According to an expert rising import prices would affect foreign trade.
Double taxation treaty in negotiation with the mainland: HK is seeking a comprehensive double taxation treaty with the mainland that will reduce the tax burden for many companies, but could also open the way for both governments to share tax data.
HK moves to boost maritime trade: The Government wants to lower port charges and build five new anchorages near Lantau Island to boost maritime trade in HK, which is losing out to competitors in the region. HK lost its place as the world’s busiest container port to Singapore in the first quarter this year.
Foreign Direct Investments: The Census and Statistics Department reported Foreign Direct Investments (FDI) inflows of HK$93.3 billion (US$12 billion) during the first quarter of 2005. The preliminary total FDI for all of 2004 is HK$265.1 billion (US$34 billion). The facilitation policy of the Ministry of Commerce, Beijing for Mainland enterprises to invest in HK has encouraged these companies to use HK as the preferred base from which to expand overseas. According to the Ministry of Commerce Beijing, in the first quarter of 2005 a total of 55 Mainland enterprises were granted approval for coming to invest in HK, involving an investment amount of HK$2.18 billion (US$280 million). On the other hand, InvestHK conducted a survey out of their 144 completed investment projects in the first half of 2005 and found that HK's attractiveness to foreign investors was further strengthened with the implementation of the second phase of CEPA in 2005.
The Greater Pearl River Delta Business Council (BC) on HK/Guangdong co-operation: BC said competition between economic zones was likely to prevail. The integration between HK and Guangdong has been mutually rewarding and reinforcing. HK-Guangdong partnership has developed beyond the sphere of manufacturing for export. The scope of co-operation covers economic and trade linkage, people and cargo flow, infrastructure, environmental protection, technology, education, tourism, culture, sports and other aspects.
External Merchandise Trade Statistics: For the first half of 2005, the value of total exports of goods rose by 11.6% to HK$ 1,034 billion over the same period in 2004. Concurrently the value of imports of goods increased by 9.1% to HK$ 1,085 billion.

Health
Qinghai bird flu cases controversy: A controversy has started about the supposed leak of state secrets by HK researcher during a recent investigation of avian flu outburst in Qinghai. The Mainland has tightened its regulations governing the release of data on bird flu. According to an editorial it is understood that a HK Professor was warned by officials from the Mainland's Ministry of Agriculture (MOA) he could be leacking state secrets by conducting research on the H5N1 outbreak among wild birds at the ecologically sensitive Qinghai Lake “without prior approval” from authorities. The release of his studies, made in collaboration with other professors from HK and from the Mainland, in the internationally respected Nature and Science journals did not go well down with the MOA officials.
HK's fight against bird flu achieves “perfect results”: Strategy should serve as model for rest of Asia, say experts. HK's bird flu strategy is being held up as a model for the rest of Asia. The city's tough measures to combat the spread of H5N1 will be a key plank in an international blueprint being unveiled for halting its advance through East Asia.

Environment
HK’s beaches being swamped by a tide rubbish: An investigation is under way to identify the source of the pollution.

Varia
HK to host Olympic equestrian events: International Olympic Committee decided to move the Equestrian events for the 2008 Beijing Olympic Games to HK due to uncertainties with equine diseases and difficulties in establishing a disease-free zone in Beijing. HK Jockey Club would spend HK$700-800 million to build the needed facilities and it was estimated the events would generate HK$100-300 million for the economy, mainly from tourists.
Macau on UNESCO World Heritage List: It is the only site nominated by China in 2005.

Press articles related to Switzerland
Switzerland no longer tax haven for stashed fortunes, South China Morning Post (SCMP), 1 July 2005. From today, banks in Switzerland – which is not a member of the European Union – will begin taxing their savings accounts on behalf of their governments, implementing an accord that Bern and Brussels reached after years of talks.
Envoys for Dalai Lama hold talks in Switzerland, South China Morning Post (SCMP), 2 July 2005. Envoys of the Dalai Lama and Chinese representatives ended two days of negotiations in Switzerland yesterday in their first meeting outside the mainland, the Dalai Lama office said.
South China Morning Post (SCMP), 27 July 2005: Johanna Spyri’s tale of Heidi has been brought to life 100 years after the author’s death: Heidi, as brochures proclaim, is Switzerland’s most famous girl, and she comes alive in Maienfeld, where Spyri set her most famous book translated in more than 50 languages. Heidiland was opened in the early 1990s.

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