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HONG-KONG UP-DATE 1999
by Sir David Aker-Jones
I volunteered to come here tonight to give an update on what I have said for the last two years. After I volunteered, I was filled with misgiving because it is not an easy time in which to share my experiences.
The size of Hong Kong is easy to remember. It is approximately 1000 kilometres, or 300 sq. miles. Hong Kong had a population of five and a half million, it was rich and prosperous, a centre for foreign trade and investment, a source of hard currency for China. Its language was Cantonese and English. Its people enjoyed complete freedom within the law, and the law which permeated the whole society was the Common Law, a law which is more than just the administration of justice based upon precedent cases and judgements, but a system of Law which had been left behind wherever British Colonies had previously existed. Hong Kong spoke the legal language of a large part of the world.
Five years after the two governments had agreed in 1990, a Law embodying these detailed principles was agrees by the people of Hong Kong and representatives of the People's Government of China. This is known as the Basic Law of the Hong Kong SAR and this, too, is a comprehensive document describing the many aspects of the life of Hong Kong.
So that, when you land at our new airport, it is built with Hong Kong money under our economic system. When you check through immigration and Customs, they are our officials and you are being checked against our legislation. When you register at the hotel, take a taxi, ride in a lift, buy goods in our shops, read our newspapers, you are embraced by the invisible laws of Hong Kong passed by our own legislature whose legality finds its origin in the Basic Law, and before that, in the agreement between Hong Kong and China. And yet you are already in China!
The Hong Kong SAR Government's crisis management and Chief Executive have been put to a totally unexpected test and a succession of bizarre happenings. Mishaps in the delivery of medical services; bird flu leading to the order of slaughter of more than a million chickens; RedTide algae killing all the fish in the fish farms; vegetables coming from the mainland, polluted by pesticides; even the repercussions of mad cow disease reached our shores. People were joking that there was nothing much left to eat.
The Transfer took place in pouring rain on 30 June 1997. The very next day, beginning in Thailand, the economies of the region began to go down like skittles. Hong Kong, which had linked its dollar to the US$ in 1983 because of a crisis of confidence over the future of Hong Kong, now found itself stuck at a high point, when all around us, other currencies were plummeting. The number of tourists to Hong Kong dropped dramatically; hotels were strangely quiet, tables were empty in restaurants; tourist shops were boarded up.
Property and construction account for between 40% and 50% of our GDP. In 1996 and 1997 demand which had been building up, fuelled by speculation, led to an absurd surge in property prices. Property prices have now dropped by 40% to 50%. There is a surplus of commercial property. The stockmarket also dropped, but did not crash. We became a target for currency speculators.
The Government has successfully warded off attacks on our link with the US$. Interest rates have been raised and our reserves of US$ 100 billion have been used to defend the currency, at one time by buying stocks in the market to maintain their price. Now a combination of high interest rates, fallen property prices, the steep decline in tourism have led to forecast an economy which has contracted.
But Hong Kong is strong and does not share the difficulties of the countries of the region:
Throughout the Region, from Indonesia to South Korea, more and more people are out of work. Hong Kong is no exception. Our rate of unemployment borders on 6%. The problem of unemployment is complicated by the daily immigration of people from China which adds over 50,000 to our population each year. Two weeks ago our Court of Final Appeal allowed the appeal of all those in China and elsewhere in the world whose parents have the Right of Abode in Hong Kong, to come and live in Hong Kong Ü 400,000!
We can't look to industrial employment for relief. Over the past 20 years Hong Kong's industry has emigrated to China so that our manufacturing base has declined. The link between the HK$ and US$ means, of course, that Hong Kong will continue to be a relatively high cost economy but to let the currency float or to change the peg in present circumstances would create more problems than it solved.
The link, or peg, will be defended. Hong Kong has the reserves to do it, and this policy has been supported by a panel of international advisers.
Nevertheless, a drop in demand has meant that residential property prices have halved and commercial property prices, as a result of over-supply, have also come down dramatically. The property market has stabilised. It is cheaper to do business in Hong Kong. It is cheaper to stay in our hotels and prices are lower in the shops. Tourists are coming back and the hotels are gradually filling up.
The airport, after a week of crisis when it opened last July, is now fully operational and is much admired.
The government's plan to build an average of 50,000 apartment for public housing a year to replace old housing stock and to relieve overcrowding is on course.
This year will see the start of several new railway lines being constructed, which will create 150,000 new jobs in the construction industry. Over the next five years, expenditure on infrastructure will amount to US$90 billion.
Our Legislative Council of 60 members Ü by no means a rubber stamp Ü and together with the media keeps up a vigorous and running critical commentary of every action of the government. We have at least one demonstration a day
Activists abroad and at home press for a faster pace toward a fully directly elected assembly. The Basic Law permits this question to be addresses in the year 2007.
Above all, there is a vitality and entrepreneurship among the Hong Kong people. We have survived many crises and there is a strong and growing feeling that we will survive this one. There will be adjustments to be made but the amount of soul searching going on in Chambers of Commerce, Universities, professional institutions, and everyday in the media, reveals a people determined and confident that they will find a way out of the present trough.
Closer links are being forged with the Chinese economy which, despite systemic problems, is continuing to grow, and as it grows, so too, will the Hong Kong economy benefit indirectly.
People ask if Shanghai isn't ahead of Hong Kong. I answer that Hong Kong systems are miles ahead.
If I looked further into the future, I would see Hong Kong as developing a role analogous to that of the other great regional cities, London, New York, Frankfurts. Hong Kong will be serving the whole Southern Half of China which has a population bigger than the United States.
If I may end with some words From Shakespeare "Sweet are the uses of adversity".
Created: 01 February 2007 3:32pm
Last Modified: 18 February 2011 12:09pm
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