Press Release



Chief Secretary for Administration's speech at National Press Club in Canberra


Following is the speech (English only) by the Chief Secretary for Administration, Mrs Anson Chan, at the National Press Club in Canberra, Australia, today (Wednesday):

Mr Monaghan, ladies and gentlemen,

I am very grateful to you all for coming today when I suspect that most of the town is out to greet the Wallabies, especially those star players from Canberra.

I am delighted to be back in Australia after an absence of three years. The change of mood in that time is quite remarkable. I get the distinct impression that Australia, and Australians, are all on a roll. And why not? Your economy is tremendously strong and showing the way to many others in the region. There is a real sense of optimism and purpose in the air. Your sporting teams appear to be sweeping all before them. Australian history has a habit of producing famous partnerships: Burke and Wells, Blaxland, Wentworth and Lawson. Now you have Gilchrist and Langer! And I felt the pulse quickening these last few days when I was in Sydney as the countdown to the Millennium Olympics ticks over impatiently.

The Australian body politic also appears to be in rude good health. It is not for me as an outsider to comment on the interesting outcome of your referendum. I would only observe that we in Hong Kong recently severed our links with the British Crown, but, of course, under entirely different circumstances. I do hope this statement is politically correct.

As the distinguished American diplomat Robert Strauss was known to warn on occasions such as this, before I deliver my speech, I have something to say.

Firstly, I want to emphatically state that the transition from British colony to Special Administrative Region of the People's Republic of China has been a resounding success. This is particularly so set against some of the more apocalyptic predictions made in advance of the Handover on July 1, 1997. The Central Government in Beijing has kept scrupulously to its promises to maintain Hong Kong's freedoms and capitalist way of life. We might have been battered by the fallout from the Asian financial crisis, but that had nothing to do with our change of sovereignty.

Secondly, I want to tackle the question of the rule of law. Those of you who know Hong Kong will understand that Hong Kong people treasure the rule of law - our common law system and a fiercely independent judiciary - as the bedrock of our freedoms and liberties. The Economist a few months back wrote that if Hong Kong people have a defining philosophy, it is the rule of law. Not surprising when you consider how our post-war community grew up in the shadow of the political events which shook the Mainland even up to 20 years ago.

So I understand the concerns expressed at home and by our friends abroad about the future of the rule of law when issues arise which touch at its very heart. I refer in particular to our referral of a Court of Final Appeal decision affecting right of abode in Hong Kong to the Standing Committee of the National People's Congress in Beijing.

This was a legally sound and constitutionally correct course of action. More importantly, it needs to be seen in the context of our constitution, the Basic Law which is, above all, a national law of the PRC. The Basic Law gives the National People's Congress Standing Committee, not the courts of Hong Kong, the power of final interpretation of the Basic Law.

That is why there was no constitutional crisis, or anything like it, at the time although that did not of itself stand in the way of a wholly healthy and impassioned public debate about the ramifications of our decision. I hope we never again have to make a similar referral.

I do however wish to heavily underline one point: the National People's Congress Standing Committee's power of interpretation relates only to provisions in the Basic Law itself. It has no power to interpret common law principles, or provisions in legislation enacted in Hong Kong by the Hong Kong legislature. The vast majority of legal disputes, and cases coming before our courts, do not involve any interpretation of the Basic Law, but relate to the common law or domestic statutory provisions. The National People's Congress Standing Committee therefore has no conceivable role to play in respect of those disputes. These are strictly matters for the courts of Hong Kong.

That is how I can say with some confidence that the rule of law has not been undermined in Hong Kong. And, as two senior judges who retired recently have publicly attested, there is certainly no question that the independence of the judiciary has been undermined. With two distinguished Australian jurists sitting on our Court of Final Appeal - Sir Anthony Mason and Sir Daryl Dawson - you would hardly expect otherwise.

I have chosen to deal with these particular issues upfront because they affect the fundamental values which have made Hong Kong the place that it is. They are the fundamentals which must be preserved and nourished if the essence of "One Country, Two Systems" is to be maintained.

These values also underpin our free market economy which is now showing clear signs of recovery after going through the first recession we have recorded in recent decades. Although the severity of the regional crisis originally caught us by surprise, I believe we rallied quickly to obviate its worst effects. We seized the opportunity of the downturn to assemble a series of strategic policy co-ordinates to restructure our economy. We are now much better geared to meet the challenges of globalisation and the explosion of high technology in the next century.

For the moment, there are enough signs to support the assessment in the Sydney Morning Herald that Hong Kong is a resurgent economy. Consider some of the signals as follows:

- After five successive quarters in the red, our economy has now returned to positive growth. We recorded 0.7% growth in the second quarter as against 5.1% negative in the same quarter last year. We are now forecasting growth of 0.5% for this year. Our recovery may be slower than one or two others in the region, but we do so with our currency and substantial fiscal and foreign currency reserves intact.

- China's accession to the WTO is a real shot in the arm for the world economy, and especially for Hong Kong. Hong Kong will benefit from the conga line of large Chinese companies seeking access to the international capital markets and the foreign companies which will come to Hong Kong to plug into the Mainland market. We have the skills, the software and a relationship to the Mainland that cannot be replicated by any other Chinese city. I refer to our sophisticated financial services; our vast international network of contacts; our abundance of professional talent and managerial know-how; our deeply-rooted and trusted legal system where business can be confident that contracts can be enforced; and a growing importance as an arbitration centre.

I have no doubt many more foreign companies, particularly the small and medium-sized, will come to Hong Kong to leverage these assets in shaping deals with the Mainland. The simple fact is that doing business with the Mainland has always been complicated. In the words of one of our more prescient analysts Hong Kong has "a tremendous store of knowledge and wisdom about the pitfalls of doing business in China". There were always powerful reasons for using Hong Kong to do business with China. China's entry to the WTO simply makes them more compelling.

- We have recently signed an agreement with the Walt Disney Company to locate their third international theme park in a beautiful cove called Penny's Bay on Lantau Island, close to our new award-winning airport. It is a lovely location, and we have earmarked it for long-term development of other major leisure and tourist attractions which inevitably follow in Disney's wake.

I have of course heard suggestions that we have paid more than we should for the privilege of providing a home for Mickey and Minnie. In response, I will simply make the point that in clinching the deal we gave no free land, no cash grants from the taxpayers' pockets, and no tax concessions to Disney. With great respect to Peter Beattie, it would have been goofy to do so.

Hong Kong Disneyland will be the driver for all kinds of collateral local and overseas investment. It will form a critical part of our plans to re-invigorate and re-position our traditionally strong tourism industry. Further, we estimate that the project will boost our economy over the next four decades by AUD30 billion at today's prices.

- The Hong Kong Tracker Fund, which was established to dispose of the stocks we acquired when we were forced to defend our currency against predatory hedge funds in August 1998, was oversubscribed nearly five times by retail and institutional investors when it was launched two weeks ago in Hong Kong. We took this as a warmly encouraging sign of community confidence in the recovery process.

As the world's most externally-oriented economy - trade accounts for some 250% of our GDP - Hong Kong is more aware than most of the swings and roundabouts of globalisation. But nobody can afford to sit on the sidelines, and we are in the process of reshaping our economy to stay ahead of the game.

We are weaning ourselves off our long-standing dependence on property. This has already reduced costs and sharpened our competitiveness. We have focussed our energies on the hardware and software we need to become a centre for innovation and technology. We are creating a Cyberport to attract the best brains and the smartest chips. We are building a Science Park to provide the R&D. We have established a AUD1 billion Innovation and Technology Fund to finance specific projects which will contribute to the upgrading of our value-added manufacturing industry and services sector.

Reforms in the financial services sector will have resonance in Australia. We are merging and demutualising our Stock and Futures Markets and their four clearing houses. In parallel with all of this, we are working to upgrade our financial infrastructure technology to put in place an open, scripless straight-through processing environment for Hong Kong, with a unified clearing arrangement. We are further liberalising our powerful banking sector to provide even more opportunities for foreign banks. There are already 147 foreign banks established in Hong Kong.

I am aware that Australia has ambitions to become Asia's premier financial centre outside of Japan, a position Hong Kong currently occupies. We acknowledge your claim. We are ready for the challenge.

We know also that in meeting that and other challenges we need to provide more than just the advantages of the world's freest economy where salaries tax is capped at 15% and corporate tax at 16%. Where there is no capital gains tax, or sales tax. In Hong Kong, most people would imagine GST to be some kind of fuel additive.

We know that we have to provide a decent quality of life to match the excitement of our free-wheeling business environment. We have announced a wide-ranging programme to clean up our air and water pollution. We have plans for a new world-class performing arts venue on the harbour at Kowloon. We have started the process of bidding for the 2006 Asian Games. We have identified Aberdeen - the former fishing village that was the original Fragrant Harbour from which Hong Kong takes its name - as the potential site for a Darling Harbour style development.

I visited the Olympic site at Homebush yesterday, and I will take home some interesting ideas with me. I believe Australian excellence and expertise in the fields of environmental protection and information technology will be highly competitive in Hong Kong in the coming years as we ourselves move more deeply into these growth areas.

I hope you have not found this list of initiatives, reforms and plans too tedious or, even worse, fanciful. One big lesson to be learned from the regional crisis is that we need to see more of the traditional Asian characteristic of humility, and less hubris.

I wanted to mention them simply to illustrate that they have not come about by accident. They are not silver bullets fired hopefully from the hip. They are part of a strategy laid out in the three post-transition annual policy addresses by our Chief Executive and fleshed out in the following budgets presented by our Financial Secretary. And we can afford them. Decades of prudent financial management assures us of the means.

Like you in Australia, we also have a vision. Ours is to become the World City of Asia. We aim to be to this region what New York is to the Americas and London is to Europe.

We have a base from which to launch this dream. History has bequeathed to us a multi-cultural, bi-lingual society. Geography has blessed us with location, location, location - at the gateway to China and at the very hub of the wheel that is the Pacific Rim. We have long been the meeting place for East and West. Our two official languages remain Chinese and English. We are worried about a decline in the standards of English in Hong Kong. We have programmes to improve them. One of them has involved the recruitment of second-language specialist teachers from the English-speaking countries - one third of them come from Australia.

We have probably the world's best established and extensive international school system. There are 44 international schools in Hong Kong teaching a veritable mini-United Nations of students from every corner of the globe. There is a fine Australian school in Hong Kong which is growing in size and reputation.

We have a long tradition of welcoming outside expertise and liberal immigration policies to encourage it. There are now more expatriates living and working in Hong Kong than there were before the Handover. That includes an estimated 45,000 Australians. There are 500 Australian-owned companies operating in Hong Kong employing more than 200,000 people. That's more than six percent of our workforce. There's plenty of room for more of this Australian get-up-and-go.

Ladies and gentlemen, when I last addressed this distinguished forum just over three years ago, Hong Kong was still a British colony on the eve of a historic transfer of sovereignty. There was a good deal of nervousness and skepticism that this great experiment to return the world's most capitalist society to the bosom of the world's last great communist state simply would not work. I did my best then to make a case that it would, but I was conscious of the fact that I had by no means convinced all of my listeners. The jury was decidedly out.

I believe the evidence of the last two and a half years shows that the pre-Handover fears were unfounded. We have made the transition. We have seen the future, and it works.

That is not to say we can relax and switch the controls to automatic pilot. The fact remains that we are engaged in an extraordinary constitutional experiment that has no precedents, no ready-to-hand guidebook on how to be a Special Administrative Region enjoying a high degree of autonomy from our sovereign. There will be twists and turns on the way. We have already had to manoeuvre our way through one or two - witness the controversy surrounding the referral to the National People's Congress Standing Committee of the Court of Final Appeal decision on the right of abode.

It is because of the highly unusual nature of the experiment - I could with some justification invoke that over-used and over-abused word unique - it is because of this that some highly unusual problems will occur. That is not, and need not be, a cause for alarm. It certainly should not produce a pre-conditioned jerk of the knee and invitations to a doleful wake to bid us farewell as we slide down the slippery slope.

We want our friends to take a keen interest in our affairs, but we also want them to keep in mind the context of our contract for continuity with China. We are a dynamic community that has always thrived on change. The Basic Law promises us continuity, not stagnation. It allows us room to mature economically and to move on politically, to find our own way towards a greater democracy.

Precisely how we do this is one of the most important decisions we as a community will need to make over the next few years. Hong Kong people are renowned for their entrepreneurial flair, but they are also increasingly politically aware. They are vigilant about their rights and freedoms. You only have to measure the decibel levels when there is any perception, rightly or wrongly, that the rule of law, press freedom or other liberties are at risk. We are not short of whistle blowers in Hong Kong, even though occasionally, if you will allow me to mix metaphors, they cry wolf.

I have covered a lot of territory in a short time. Much has happened since I was last here and as I am due to retire in two and a half years, I cannot be sure that I'll be back, at least in my official capacity. I do want to leave you with the thought that Australia's links with Hong Kong go back a very long way. Australians have always played a big part in our life from business, to civil aviation -- Cathay Pacific was co-founded by an Australian -- to the civil service, to the sporting field, to journalism. Dick Hughes was a Hong Kong icon. The only Chinese to edit the South China Morning Post was Harry Ching, who came from Queensland.

I am here to say, as did C H Tung when he visited last year and Donald Tsang the year before, how much we value your support and friendship. From Hong Kong, we see Australia as an important part of Asia. We could not be more different in size, but we are very much alike in the way shared values shape our respective communities. We want to build on the success of our partnership.

As I have tried to demonstrate today, the platform is there and the timing is right.

- The transition has gone remarkably well. "One Country, Two Systems" is a reality. Hong Kong enjoys economic, political, social and currency stability. 1997 was a comma, not a full stop.

- The HK-Australia relationship has never been stronger. I can think of no better place than Hong Kong for Australians to make their presence felt in Asia. After all, we are only five hours flying time to half the world's population. Australian business men and women and professionals are well-established, well-liked and always welcomed in Hong Kong.

- Hong Kong is emerging from the regional recession in better shape and with a sharper focus on the demands of the knowledge-based economy. Not for the first time, Hong Kong is in the process of re-inventing itself. That means greater opportunities for Australia. And with China's accession to the WTO now assured, Hong Kong's deeply-entrenched role as the lynchpin to the China market is enhanced, not diminished. Given the depth and strength of our partnership, Australia is positioned better than most to capitalise on that.

Ladies and gentlemen, thank you for your time and patience.

Photo: The Chief Secretary for Administration, Mrs Anson Chan, gives a keynote address at the National Press Club in Canberra.

End/Wednesday, November 24, 1999