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Overview Reunification on July 1, 1997, went extremely well. A smooth transition for Hong Kong and its administration. The Hong Kong SAR exercised the 'high degree of autonomy' promised in the Basic Law. The Central People's Government (CPG) was very supportive, stressing time and again that Hong Kong people would be responsible for running their own affairs, except for defence and foreign affairs. The Civil Service had a remarkably smooth and stable transition-total wastage remained low at 4%, while loss at the top management level was below 3%. The Administration retained its unique cosmopolitan nature: while the Basic Law states that all Principal Officials must be Chinese citizens, one in four department heads were expatriates. The Court of Final Appeal (CFA), the SAR's highest appellate court was set up on July 1, 1997. It heard its first application for leave to appeal in September 1997 and its first substantive appeal in December 1997. Judges from other common law jurisdictions have sat on the CFA's full bench of five judges. Important court cases over the past year included those dealing with the legality of the Provisional Legislative Council, the survival of the common law as part of the laws of the SAR and the right of abode of Mainland-born children with a Hong Kong parent. l The World Bank/International Monetary Fund annual meetings were held in Hong Kong in September 1997. Finance Ministers, financial market leaders and journalists from around the globe saw first-hand how well Hong Kong was operating after reunification. Chief Executive Tung Chee Hwa delivered his first policy address in October 1997, setting out his vision for the future of the Hong Kong SAR. Emphasis was on education, housing, high-tech industry, information technology and making Hong Kong more competitive. Hong Kong economy hit by fallout from Asian financial crisis. GDP declined by around 2% in the first quarter of 1998, the lowest figure since 1985. GDP grew by 5.3% in 1997. Stock market capitalisation down by 46% at the end of May compared with the peak in August 1997. Residential property prices down by 28% in April 1998, compared with the peak in October 1997. Interest rates pushed higher and will remain high in the short-term. Hong Kong Dollar remained firm in face of massive speculative attacks in October. IMF fully supported Hong Kong's actions. Business and investors provided with a haven of currency stability within a region in turmoil. Tourism hit. Arrivals in 1997 down 11.1% over 1996; down about 24% in the first four months of 1998 compared to the same period in 1997. However, with 10.4 million arrivals in 1997, Hong Kong was still the most popular tourist destination in Asia (excluding the Mainland). Initiatives launched by the government and Hong Kong Tourist Association to lure back visitors. Unemployment and under-employment rates edged up. Major efforts underway to retrain displaced workers. Top-level Task Force on Employment set up to look at job creation. Media continued to question and criticise government decisions with as much vigour and openness as before the Handover, and freely discussed sensitive issues such as Tibet, Taiwan and Mainland dissidents. Controversial films such as Seven Years in Tibet, which was critical of the Mainland, continued to be screened in Hong Kong. Political protest alive and well. More than 1 400 demonstrations -140 a month compared to 87 a month one month before the Handover - have taken place from July 1 until the end of April. Police have not refused a single application for a march permit. Annual Tiananmen Square vigil held peacefully and without incident on June 4. New strain of avian flu virus detected for the first time in humans in August led to the deaths of six people and the reported infection of another 12. Government ordered slaughter of about 1.5 million chickens over three days from December 29 to contain spread of virus. No new cases detected since December 28, prompting world health experts and the World Health Organisation to say Hong Kong's actions had prevented a global outbreak. First Budget of the HKSAR delivered in February 1998. Biggest tax cuts ever announced would see 99% of salary earners paying less tax. Corporate profits tax cut plus a wide range of business-friendly incentives announced. New spending on housing and infrastructure; increased spending on economic development, education, health, social welfare. Promotion of mother tongue teaching (i.e. in Cantonese) in secondary schools caused controversy but would lead to better overall results, including higher English standards. More resources for English teaching to include recruitment of up to 750 additional native-speaking English teachers. In March and April 1998 a bloom of marine algae - known as 'red tide' and found in other parts of the world - killed a large proportion of the sea fish farmed in Hong Kong waters. However, the loss accounted for only some 1% of all marine fish consumed annually in Hong Kong. Records tumble in the first Legislative Council (LegCo) election of the HKSAR on May 24. Record number of candidates (166), record number of voters (1.49 million), record turnout rate (53%), record voter registration (2.8 million). All 60 LegCo seats returned by elections. Hong Kong's new state-of-the-art airport ready to open on July 6. The airport and related road, rail and reclamation projects cost US$20 billion over the past eight years. New road, rail and port projects forged ahead to maintain Hong Kong's position as a regional transport hub and pre-eminent gateway to the Mainland. Over the next five years, more than $235 billion (US$30 billion) to be spent - 50% more than on the Airport Core Programme. Thousands of jobs to be created. High-powered Hong Kong Guangdong Joint Co-operation Conference set up to comprehensively strengthen co-operation with Guangdong Province and to improve co-ordination in a range of issues such as trade and economics, infrastructure develop-ment, transport links and passenger flows. SAR maintained its global outlook - member in its own right of international organisations such as the WTO, APEC, the WCO. Also took part in activities of international organisations limited to states such as the IMF, ICAO and WIPO as part of the PRC delegation. Concluded agreements on air services, surrender of fugitive offenders, transfer of sentenced prisoners, mutual legal assistance and visa abolition. Since July 1, 1997, has taken part in more than 500 international meetings not limited to states using the name 'Hong Kong, China'. Hong Kong remained one of the world's safest cities. Law and order situation very good. Crime rate in 1997 was the lowest for 24 years. Downward trend continued in the first four months of 1998. Concerted efforts to stamp out piracy of intellectual property rights. Up to end of May, more than $1.2 billion (US$154 million) worth of pirated goods and equipment confiscated. Despite these efforts and tough new laws, Hong Kong, disappointingly, remains on the US piracy 'watch list'. The Independent Commission Against Corruption maintained its stringent world-renowned vigil against corruption in the private and public sectors. Pre-Handover jitters of a sharp rise in corruption cases unfounded-corruption remained under control. Emigration down 23% in 1997 to 30 900 compared to 40 300 in 1996 and a peak of 66 200 in 1992. Net inflow of Hong Kong residents doubled in 1997 to 127 000, compared to 63 900 in 1996. Steady increase in expatriate population (excluding foreign domestic helpers) rising from 200 000 at the end of 1993 to 335 000 at the end of 1997. Vietnamese Migrant issue close to an end. Port of first asylum policy scrapped in early 1998. At the end of May 1998, only 1 160 Vietnamese Refugees and 660 Vietnamese Migrants remained in Hong Kong. Chief Executive Tung Chee Hwa, Chief Secretary for Administration Anson Chan and Financial Secretary Donald Tsang embarked on a series of high-profile visits to the United States, Canada, Europe, Southeast Asia, Japan, South America, Australia and New Zealand to explain how well Hong Kong was operating under the concepts of 'One Country, Two Systems' and to boost trade and investment ties.
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