Business and Economics Growth Related Questions
Committee that votes on the Chief Executive is made up of approximately 800 Hong Kong residents from four constituency groups: commercial, industrial, and financial interests; professionals; labor, social services, and religious interests; and the legislature, the Chinese People's Political Consultative Conference, and the P.R.C. National People's Congress.
In December 2006, supporters of pro-democracy Civic Party legislator Alan Leong won 134 seats in the Election Committee, enabling Leong to challenge incumbent Chief Executive Tsang's bid for a new five-year term in 2007. Tsang, with solid support from the pro- government and pro-business sectors, won the March 25, 2007 Election Committee vote with 649 of the 795 votes. Leong garnered 123 votes.
In July 2002, the Hong Kong Government implemented the Principal Officials Accountability System, which was designed to make the government more responsive to public concerns. Eleven political appointees, directly responsible to the Chief Executive, were added to run the 11 policy bureaus. Three other senior civil service positions--the Chief Secretary, Financial Secretary, and Justice Secretary--also were converted to political appointments.
While Hong Kong remains a free and open society where human rights are respected, courts are independent, and there is well-established respect for the rule of law, residents are limited in their ability to change their government, and the legislature is limited in its power to affect government policies. The September 12, 2004 Legislative Council elections were seen as generally free, open, and widely contested, although Hong Kong groups have alleged voter intimidation, manipulation, or pressure in connection with them.
In April 2004, the P.R.C. National People's Congress Standing Committee issued a decision on the scope and pace of constitutional reform, which laid out certain conditions for the process of democratic development. This decision precluded major changes to the electoral systems for the 2007 Chief Executive and 2008 Legislative Council elections, with the result that no significant reform of the electoral systems can be realized until the Chief Executive and Legislative Council elections scheduled for 2012.
In December 2005 the Legislative Council rejected a Hong Kong Government-proposed package of incremental reforms to the mechanisms for choosing the Chief Executive in 2007 and forming the Legislative Council in 2008. In mid-2007, the Hong Kong Government's Commission on Strategic Development is scheduled to issue new proposals to reform the Chief Executive and Legislative Council electoral mechanisms, with the "ultimate aim" of universal suffrage as prescribed by the Basic Law.
Principal Government Officials Chief Executive--Donald Tsang Chief Secretary for Administration--Henry Tang Financial Secretary--John Tsang Secretary for Justice--Wong Yan Lung, SC Secretary for Education--Michael Suen Secretary for Commerce and Economic Development--Frederick Ma Secretary for Constitutional and Mainland Affairs--Stephen Lam Secretary for Security--Ambrose Lee Secretary for Food and Health--York Chow Secretary for the Civil Service--Denise Yue Secretary for Home Affairs--Tsang Tak-sing Secretary for Labour and Welfare--Matthew Cheung Secretary for Financial Services and the Treasury--K C Chan Secretary for Development--Carrie Lam Secretary for the Environment--Edward Yau Secretary for Transport and Housing--Eva Cheng
ECONOMY Hong Kong is one of the world's most open and dynamic economies. Hong Kong per capita GDP is comparable to other developed countries. Real GDP expanded by 6.8% in 2006 year- on-year, driven by thriving exports, vibrant inbound tourism and strong consumer spending. Severe acute respiratory syndrome (SARS) caused the Hong Kong economy to shrink during the first half of 2003, and property prices had fallen 66% from their late 1997 peak, but have since rebounded by about 59% from that lower base. The unemployment rate declined to
Page 3 of 6Hong Kong (07/07)
07/13/07http://www.state.gov/r/pa/ei/bgn/2747.htm
4.3% in December 2006-February 2007, the lowest level since mid-1998. The surplus for fiscal year 2006-07 was $7.1 billion or 3.7% of GDP, attributed to the robust economy, increased corporate profits and salaries, the buoyant stock market, and a stable property market.
Hong Kong enjoys a number of economic strengths, including accumulated public and private wealth from decades of unprecedented growth, a sound banking system, virtually no public debt, a strong legal system, and an able and rigorously enforced anti-corruption regime. The need for economic restructuring poses difficult challenges and choices for the government. Hong Kong is endeavoring to improve its attractiveness as a commercial and trading center, especially after China's entry into the World Trade Organization (WTO), and continues to refine its financial architecture. The government is deepening its economic interaction with the Pearl River Delta in an effort to maintain Hong Kong's position as a gateway to China. These efforts include the conclusion of a free trade agreement with China, the Closer Economic Partnership Arrangement (CEPA), which applies zero tariffs to all Hong Kong- origin goods and preferential treatment in 27 service sectors. Hong Kong, along with the Macau SAR, is also participating in a new pan-Pearl River Delta trade block with nine Chinese provinces, which aims to lower trade barriers among members, standardize regulations, and improve infrastructure. U.S. companies have a generally favorable view of Hong Kong's business environment, including its legal system and the free flow of information, low taxation, and infrastructure. The American Chamber of Commerce's annual business confidence survey, released in December 2006, showed 100% of respondents had a "good" or "satisfactory" outlook for 2007. Survey results indicated a positive economic outlook through 2009.
On the international front, Hong Kong is a separate and active member of the WTO and the Asia Pacific Economic Cooperation (APEC) forum, where it is an articulate and effective champion of free markets and the reduction of trade barriers. Hong Kong residents across the political spectrum supported China's accession to the WTO, believing this would open new opportunities on the mainland for local firms and stabilize relations between Hong Kong's two most important trade and investment partners, the United States and China.
FOREIGN RELATIONS Hong Kong's foreign relations and defense are the responsibility of China. Hong Kong is an independent customs territory and economic entity separate from the rest of China and is able to enter into international agreements on its own behalf in commercial and economic matters. Hong Kong, independently of China, participates as a full member of numerous international economic organizations including the World Trade Organization (WTO), the Asia Pacific Economic Cooperation forum (APEC), and the Financial Action Task Force (FATF).
U.S.-HONG KONG RELATIONS U.S. policy toward Hong Kong, grounded in a determination to promote Hong Kong's prosperity, autonomy, and way of life, is stated in the U.S.-Hong Kong Policy Act of 1992. The United States maintains substantial economic and political interests in Hong Kong. The United States supports Hong Kong's autonomy by concluding and implementing bilateral agreements; promoting trade and investment; arranging high-level visits; broadening law enforcement cooperation; bolstering educational, academic, and cultural links; and supporting the large community of U.S. citizens and visitors.
Hong Kong is an active member of the global coalition against terrorism. Hong Kong has joined the Container Security Initiative and remains an important partner with regard to eliminating funding for terrorist networks and combating money laundering. Hong Kong has passed legislation designed to bring Hong Kong into compliance with applicable UN anti- terror resolutions and Financial Action Task Force recommendations.
The United States has substantial economic and social ties with Hong Kong. There are some 1,100 U.S. firms, including 889 regional operations (295 regional headquarters and 594 regional offices), and about 54,000 American residents in Hong Kong. According to U.S. Government statistics, U.S. exports to Hong Kong totaled $17.8 billion in 2006. U.S. direct investment in Hong Kong at the end of 2005 totaled about $37.9 billion, making the United States one of Hong Kong's largest investors, along with China, Japan, and the Netherlands.
The United States and Hong Kong signed a civil aviation agreement in October 2002, which
Page 4 of 6Hong Kong (07/07)
07/13/07http://www.state.gov/r/pa/ei/bgn/2747.htm