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2015 Policy Address by Chief Executive (2)

II. Constitutional Development

13. The relationship between the Sino-British Joint Declaration and universal suffrage has been mentioned in recent discussions on constitutional development.  The relevant provisions of the Sino-British Joint Declaration state that:

     "The chief executive will be appointed by the Central People's Government on the basis of the results of elections or consultations to be held locally.  Principal officials will be nominated by the chief executive of the Hong Kong Special Administrative Region for appointment by the Central People's Government."

     "The above-stated basic policies of the People's Republic of China regarding Hong Kong and the elaboration of them in Annex I to this Joint Declaration will be stipulated, in a Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China, by the National People's Congress of the People's Republic of China, and they will remain unchanged for 50 years."

14. Universal suffrage for the Chief Executive election was stipulated for the first time in the Basic Law, and not the Sino-British Joint Declaration.  Article 45 of the Basic Law provides that "the method for selecting the Chief Executive shall be specified in the light of the actual situation in the Hong Kong Special Administrative Region and in accordance with the principle of gradual and orderly progress.  The ultimate aim is the selection of the Chief Executive by universal suffrage upon nomination by a broadly representative nominating committee in accordance with democratic procedures.  The specific method for selecting the Chief Executive is prescribed in Annex I: 'Method for the Selection of the Chief Executive of the Hong Kong Special Administrative Region'."  Annex I of the Basic Law further states that "if there is a need to amend the method for selecting the Chief Executives for the terms subsequent to the year 2007, such amendments must be made with the endorsement of a two-thirds majority of all the members of the Legislative Council and the consent of the Chief Executive, and they shall be reported to the Standing Committee of the National People's Congress for approval".

15. Therefore, the substantive power to decide on constitutional development rests with the Central Authorities.  The Decision of the NPCSC has irrefutable legal status and is legally valid.  The slogan of "Hong Kong shall resolve Hong Kong's problems" does not conform with our constitutional arrangements.  The Basic Law clearly stipulates that the power to nominate candidates of the Chief Executive election rests only with the nominating committee.  Over the past year, the Central Authorities and the HKSAR Government have repeatedly pointed out that "civic nomination" does not comply with the Basic Law.

16. Last Wednesday, the Government announced the launch of the second round public consultation on the method for selecting the Chief Executive by universal suffrage.  I sincerely hope the community will make good use of the two-month consultation period to discuss the issues rationally and pragmatically within the framework of the Basic Law and the relevant Interpretation and Decisions of the NPCSC, respect the rule of law and forge consensus.  By so doing, five million eligible electors in Hong Kong can select the Chief Executive through "one person, one vote" in 2017.  The incidents in the past few months show that Hong Kong people will not agree to means of expression that deny others of their rights, and will not condone any unlawful acts.

III. Economy

17. Trading, financial services, shipping, tourism and professional services are Hong Kong's pillar industries.  Apart from them, many emerging industries of a small scale but with great potential deserve the community's attention and government support.

18. Industries in Hong Kong, regardless of scale, share a common advantage; that is, Hong Kong is an important link and a "super-connector" between the Mainland and the rest of the world.  To promote economic development, Hong Kong should put emphasis on building economic ties with both the Mainland and overseas countries.  At present, more than 7 500 overseas and Mainland enterprises have offices in Hong Kong of which about half are regional headquarters or regional offices.

19. Hong Kong was the world's eighth largest trading entity in goods in 2013.  The overall trade volume between Hong Kong and the Mainland accounted for more than half of Hong Kong's total trade value.  The import and export trading sector and the wholesale industry, had the largest number of employees in Hong Kong, with about 500 000 persons.

20. The HKSAR Government will continue to assist Hong Kong enterprises to develop the Mainland market by brand building, upgrading and restructuring operations, and exploring domestic sales, through the $1 billion dedicated fund.  As to fostering and facilitating international trade, apart from active participation in the World Trade Organization's multilateral and plurilateral negotiations, the HKSAR Government seeks to negotiate and conclude free trade agreements with individual countries or regions.  Last July, the HKSAR Government commenced formal negotiations with the 10 countries of the Association of Southeast Asian Nations for a free trade agreement.

21. The service sector accounts for more than 90% of our Gross Domestic Product (GDP) and is a very important component of the economy.  In December 2014, the HKSAR Government and the Ministry of Commerce signed the Agreement between the Mainland and Hong Kong on Achieving Basic Liberalization of Trade in Services in Guangdong, ushering in the basic liberalisation of trade in services between Guangdong and Hong Kong.  We will continue our earnest efforts to seek further market liberalisation in the Mainland with a view to achieving basic liberalisation of trade in services between the entire Mainland and Hong Kong by the end of this year.

22. The HKSAR Government has submitted its proposals for the National 13th Five-Year Plan to the Central Government.

23. The Central Government announced last December that, in addition to the Shanghai Pilot Free Trade Zone (FTZ), three more pilot FTZs will be established on 1 March 2015.  The Guangdong Pilot FTZ, covering new areas of Nansha, Qianhai and Hengqin, can leverage Hong Kong's edge to promote in-depth co-operation between Guangdong and Hong Kong.  Qianhai is adjacent to Hong Kong and Nansha is the largest of the three areas.  The room for business and development for people and enterprises of Hong Kong will be vastly expanded.  The HKSAR Government will maintain close collaboration with the Guangdong Provincial Government throughout the planning and development of the three new areas to actively pursue new modes of co-operation, the most favourable treatment and the biggest development opportunity for Hong Kong people and enterprises.

24. At present, Hong Kong has a number of offices in the Mainland and abroad, serving as channels for promotion and networking.  We have 11 overseas Economic and Trade Offices (ETOs).  In the light of the shift of the global economic balance towards the east, Hong Kong needs to increase the number of offices in the Asian region.

25. With the establishment of the Wuhan ETO last April, the HKSAR Government has a more comprehensive network in the Mainland.  To further improve this network, we set up a liaison unit in Liaoning Province in December 2014.  Another liaison unit in Shandong Province will be set up in the first half of this year.  Upon full operation of the Wuhan ETO, one more liaison unit will be set up in the central region.


26. Hong Kong is a major international financial centre as well as China's leading global financial centre.  We have to capitalise on this dual identity.  There is room to further diversify financial services in Hong Kong.  The Financial Services Development Council has recommended specific proposals raised by the financial sector to leverage our advantages and promote diversification.

27. The significance of the Shanghai-Hong Kong Stock Connect can be best appreciated when seen in the broader context of the well-defined plan of our country for financial liberalisation.  The Stock Connect links the Mainland market with international markets and enhances Hong Kong's role as a connector on the financial front.  By increasing liquidity in the offshore Renminbi (RMB) market and by providing a wider choice of RMB investment products in Hong Kong, the Stock Connect contributes to the continuous growth of our financial sector.

28. The Government introduced the Insurance Companies (Amendment) Bill to this Council last April and proposed the establishment of an independent Insurance Authority.  The Government will allocate $500 million to the Insurance Authority to meet part of its initial operating expenses and for use as contingency reserve.

Professional Services

29. With high per capita incomes, professional services play an integral part in Hong Kong's economy.  In recent years, the industry has actively expanded its presence in the Mainland market.

30. The development of professional services has been gaining momentum.  Take legal, accountancy, auditing, architecture and engineering services as an example.  The average annual growth of their value added was 9.9% from 2007 to 2012, far exceeding the overall economic growth of 4.6% over the same period.  In 2012, professional services contributed as much as 4.7% of our GDP, equivalent to the contribution of the whole tourism industry, and provided nearly 200 000 job opportunities.  At present, through the Mainland and Hong Kong Closer Economic Partnership Arrangement, many professional services sectors can enjoy preferential access to the Mainland market.  We will continue to foster the development of professional services.

(To be continued)

Ends/Wednesday, January 14, 2015
Issued at HKT 11:29


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