The following is a speech by the Chief Secretary for Administration, Mr Donald Tsang, at a Business Luncheon in New York today (September 17, New York time):
Ambassador Wang Guangya, Ambassador Liu Biwei, Ladies and Gentlemen,
I have been visiting your great city regularly over the past twenty-five years. Each time I discover new stimulus and on this occasion it has aroused deeper emotion.
Of course, I am mindful of how much the world has changed since the last time I was here. I flew from New York to Washington D.C. just an hour before those terrible events of September 11, two years ago.
From my Washington hotel I saw the column of smoke rising from the Pentagon and heard about the attacks in New York. Like you, I was stunned by the enormity of the tragedies.
We in Hong Kong and the entire civilised world sympathised completely with the anguish you went through and understood the anger that swept through the American people.
We still do, and we admire the efforts you have made to overcome the tragedy and resume your lives. We admire the great strength and resilience of the American people, and especially of you here in New York.
It is a spirit we espouse in Hong Kong. Resilience has long been an ingrained feature of our lives. In the past half-century we have experienced war, civil upheaval, economic crises and outbreaks of disease and we have overcome them all.
Earlier this year we were at the mercy of a previously unknown disease, of unknown cause, unknown toxicity and with no known treatment.
Within weeks, Hong Kong's world-class medical researchers performed world-grade science in our own laboratories and gave the demon a name. They also found a treatment that works.
The SARS virus dealt a heavy blow to our economy as business activities almost came to a halt. In the thick of things, hotels and restaurants were almost empty, as were shops and aeroplanes.
However, I am glad to report that our recovery is quite stunning by comparison with the dire forecasts of only a few months ago.
GDP figures issued only a fortnight ago are further indications of Hong Kong's recovery. They show that SARS affected Hong Kong from mid-March, causing GDP in the second quarter of this year to slacken to a 0.5 per cent decline in real terms over a year earlier. This paled into insignificance, set against the solid growth of 4.5 per cent in the first quarter of this year.
The blow to inbound tourism and the travel-related sectors was unprecedented, particularly in April and May, but it too is making a remarkable recovery. Our hotels are now operating at 80 to 100 per cent occupancy.
Still, on the brighter side, SARS appeared to have little effect on the total exports of goods, which sustained double-digit growth all through the second quarter.
And business life went on. Nearly 3,800 new companies were registered in Hong Kong during the month of July this year. This was an increase of 17 per cent compared with June 2003.
Throughout the SARS outbreak, overseas companies continued to show their faith in Hong Kong's advantages: 364 overseas companies registered during the first six months of 2003, representing an increase of 9.31 per cent compared with the first six months of 2002. We had 6,853 foreign registered companies in Hong Kong at the end of June 2003.
All other indicators also show a dramatically quick recovery - one that has caught everyone by surprise - and it is beginning to look as though SARS will have had a minimal net economic impact on Hong Kong in the long run.
If there was any good thing about the outbreak, it was that it galvanised Hong Kong people into building a better city for all to live and work. Just as New York has re-launched itself after 9-11, the Hong Kong government has embarked on a multi-million-dollar programme to show that Hong Kong is once again safe to visit. We are now cleaner, healthier and more hospitable. And we have strengthened our medical institutions and preventive mechanisms to guard against, God forbid, future outbreaks of a similar kind.
While we tackled the short-term impact of the SARS crisis, we continued to build on our strengths and have not lost our long-term vision. We are a leading international business and financial centre, a transport and logistics hub, and geographically we are ideally located to service the mainland of China and the rest of Asia.
It remains true, whether speaking in a physical sense, cultural sense or metaphorically, that Hong Kong is your bridge to the mainland of China - and the region.
Proposals are rapidly firming up for a 30-kilometre bridge across the mouth of the Pearl River, from Hong Kong in the east to Macau and Zhuhai, on the western side of the river mouth.
We have also begun to build an elevated five-kilometre expressway from north-west Hong Kong across Deep Bay to Shekou of Shenzhen on the Chinese Mainland. It is known as the Hong Kong-Shenzhen Western Corridor and will be our fourth vehicular boundary crossing.
A total of 3.2 kilometres of the expressway will be built in Hong Kong waters at an estimated cost of US$281 million (HK$2.188 billion) and it is scheduled for completion in 2005.
It is estimated that Hong Kong's trade with the Mainland will double over the next five to eight years as a result of this and other massive improvements to our infrastructure, which will link us even more concretely to the Pearl River Delta's combined population of about 40 million consumers.
Considered as a single economic entity, the Greater PRD region already has a GDP equivalent to that of Switzerland, larger than Belgium's and twice that of Israel.
Greatly enhanced cooperation with the Mainland and stable trade relations with the rest of the world are the two major factors underpinning our economic recovery. The signing of the Closer Economic Partnership Arrangement - CEPA - between Hong Kong and the Central People's Government recently signalled a new phase of economic cooperation with the Mainland of China.
This landmark free trade agreement will provide a completely new launching stage for businesses wishing to tap the vast potential of our Mainland market. It gives companies in Hong Kong a good head start on the competition and in some important areas they are above and beyond WTO commitments.
Since the signing of CEPA, our economic and trade offices overseas have received a surge of enquiries. Companies around the world are keenly seeking new ways to take advantages of this new platform, which of course means more investments in Hong Kong.
Some important details remain to be sorted out, of course, but the signing of CEPA is also breathing new life to our industrial sector, which plays a significant role in our economy.
Tariff-free treatment and better intellectual property protection, will make it much more attractive for manufacturers of high value-added products to establish their plants in Hong Kong. American firms can be a part of this.
Other benefits from CEPA will include better cooperation on customs clearance, a higher degree of transparency on laws and regulations, and a streamlined licensing and accreditation regime. Trade will flow even more readily between Hong Kong and the Mainland, further strengthening our role as a premium two-way business platform for the Mainland.
This is made strikingly clear by the fact that the United States and China are our two largest trading partners. Trade between the US and the Mainland of China routed through HK amounted to US$40.6 billion, which was almost 42 percent of the total trade between the US and the Mainland of China.
Of course, many of your countrymen - among them, perhaps, your competitors - have realised the importance of having a Hong Kong presence.
Our link with the US dollar has survived many financial crises since we instituted it 20 years ago. It is a major symbol of economic stability and confidence in Hong Kong as a major international and financial centre. The Hong Kong-US dollar linked rate enhances the confidence you can have in dealing with Hong Kong.
As at June 1st 2002, 233 US companies had regional headquarters in Hong Kong, while 437 had regional offices and another 272 had local offices in HK. This is the highest national representation of the United States in any other territory and the American Chamber of Commerce in Hong Kong is the largest outside the US.
A crucial factor in their decision is that, while seeing the benefits of closer links with the Mainland, Hong Kong remains unique and distinct from the rest of China. We have retained and exercised the high degree of autonomy conferred under our constitutional mandate, the Basic Law, after Hong Kong returned to China six years ago. Hong Kong remains a separate customs territory, with separate membership in the WTO, and autonomy in external commercial relations. Hong Kong has preserved its unique characteristics of being a capitalist economy practicing Common Law within the nation of China.
Over the years, we have developed the expertise that will help potential investors achieve the best results. Our society operates under the rule of law which remains supreme, on a level playing field in a fair, open and transparent manner.
Freedom of speech and a free flow of information are equally important. This is not just "freedom of the press". Freedom must extend to most business activities as well, since it is impossible to plan confidently when information is deliberately withheld from the market.
We have found that this is the most reliable way to attract investment and run an economy. That means the freedom to do business, protected by fair and equitable laws, and in an open market.
These activities take place under and within a civil administration that is honest, efficient, and getting leaner as we work towards the minimum practicable size. Our civil service is generally untainted by corruption and we work hard to keep it that way.
For those who wrote off Hong Kong's chances post-1997 or those who predicted Hong Kong's death or the passing of any of our traditional rights and freedoms, just look at the protest march in Hong Kong on July 1.
On that hot summer day, half a million of our residents turned out on the streets to demonstrate against the government. Despite the passion and the heat, there was not a single arrest or public incident, not a stone was thrown. It was living proof of Hong Kong's continuing freedom of speech.
There might be a number of intricate reasons for the protest. But the flash point was no doubt the proposed legislation on national security. A sensitive subject which I believe must also be close to your hearts. Under the terms of the Basic Law, Article 23, Hong Kong has a constitutional duty to enact "on its own" laws against treason, subversion, sedition and so on. This is an obligation regarding national security that we will have to meet in due course through laws passed by our Legislative Council.
While most people in Hong Kong generally understand the need to legislate to protect national security of our country, they are equally eager to defend the values that they hold dear and will not tolerate any threat or perceived threat to the freedoms they enjoy. Like all of them, I certainly do not tolerate any of our existing freedoms being taken away. No legislation enacted in Hong Kong should ever do that. But I deeply understand that our people have concerns in this regard. We must respect their feelings.
Following the July 1st protests, the draft legislation was withdrawn. There is no timetable for the passage of this law and we are conducting fresh consultations all over again. Debates on national security laws are heard in many free societies around the civilized world as such laws attempt to balance individual freedoms and obligations. Hong Kong can be no exception. Before we put this proposed law on our legislative agenda, we are determined to secure the broad support and consensus among Hong Kong people on the key provisions.
Ladies and gentlemen, you may have noticed in the news that the strongest typhoon for 20 years passed through Hong Kong a fortnight ago, blasting us with winds of more than 65 miles an hour.
Hong Kong weathered that storm well, just as it has coped with a period of unsettled economic weather. The outlook is improving. Our currency is as stable as ever. The economy looks to be on the rebound. The Heritage Foundation in Washington has again listed us as the world's freest economy - for the ninth straight year.
And the United Nations Commission on Trade and Development has again declared Hong Kong to be Asia's most-effective economy.
So there it is - we believe southern China is an economic powerhouse driving some of the greatest economic and social changes in history. Hong Kong is the best location to take part in that change and share the benefits that will surely accrue. Our position as a friendly world city is as strong as ever.
As always, the best opinion is well informed. Come and see for yourselves, and form your own views. I am certain you will find it very rewarding.
Thank you very much.
End/Thursday, September 18, 2003