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Situation Analysis : Five Years After Hong Kong's Handover (Dec 2002)

■ Political operations remain stable, the international community continues to be concerned over the situation in Hong Kong.

■ No obvious recovery in economy, unemployment continues to rise.

■ The Mainland and Hong Kong are further integrated, and the maintenance of Hong Kong's individuality becomes more important.

■ Gradual improvements in exchanges between Taiwan and Hong Kong, but a formal communication mechanism is still lacking.

■ 143 reported controversies challenged the Mainland’s promise regarding maintaining the system unchanged for 50 years.

I. General Evaluation
Five years after the handover of Hong Kong, political operations remain stable. However, the economic environment since the financial crisis in October 1997 has been gloomy with unemployment rate reaching new heights, deflation persisting for more than three years, economic growth becoming negative, and the public’s confidence in the economy continuing to fall. The development of democracy in Hong Kong and its autonomy are facing challenges, and judicial independence and press freedom also need to be concerned. Generally speaking, five years after the handover, there have been 143 cases of controversies involving freedom, human rights and the rule of law. The international community has been greatly concerned over a number of major issues. Closer interactions and integrations between Hong Kong and the Mainland have made the issue of how to maintain Hong Kong's individuality gradually emerging. Mutual exchanges between Taiwan and Hong Kong have been improving, but if a formal communication mechanism could be established, a more effective and better service would be provided to residents of both sides. The followings are the general analysis of situations last year.

(1) Political operations are stable, and the effects of the cabinet accountability system remain to be seen.

Last year, the general political environment in Hong Kong remained relatively stable, but incidents of controversy were still aplenty. For example, the press questioned Beijing's control over the election of the Chief Executive; the Hong Kong SAR Government charged Falun Gong practitioners with criminal offences; serious conflicts blowed up between the Police and the ICAC, and civil servants planned to sue the Government for a reduction of salaries. These controversies not only damaged the rule of the Hong Kong SAR Government, but also made it difficult for the Chief Executive to raise his popularity rating in public opinion surveys.

As Mr. Tung Chee-Hwa continued his second term on July 1st, the Hong Kong Government lent impetus to the implementation of the "cabinet accountability system," which represents the establishment of a government cabinet consisting those of high-ranking officials who are loyal to Tung and will be taking full responsibilities for any policy effects. Although the press had criticized the Government for a lack of openness and thorough consideration in implementing the system, for its not respecting the deliberation powers of the Legislative Council, and for its not fully reflecting the views of the public. The international community also questioned the new system's effectiveness in terms of promoting democracy in Hong Kong; however, the system is certain to be implemented as scheduled. As the new system will change the operational model of Hong Kong's system bureaucracy established in Hong Kong for more than one hundred years, its impact on the future development of Hong Kong will be significant. The ensuing development of the actual operation of the new system deserves to be concerned.

(2) The future of Hong Kong's pro-democracy forces is uncertain.

The development of democratic reform movements is one of the indexes available for observation of whether freedom, human rights and the rule of law in Hong Kong can be maintained after the handover. However, since the decline of votes for pro-democracy parties in the recent Legislative Council elections, such democratic reform forces have encountered various problems: (1) According to several opinion polls, public support for pro-democracy parties has decreased, and the support of the Democratic Party (DP) falls behind that of pro-government parties, and barely higher than the pro-democracy “The Frontier” and “April 5th Action Group.” (2) A former vice-chairman of the Democratic Party has organized his own political discussion group, with members drawn primarily from the same party. (3) Some former members of the DP accused it of abandoning “street tactics” and defected to the Frontier. Also, according to press analyses, in order to win seats at the District Council elections next year, another wave of withdrawals from the DP may take place, all of which are hurting the support of the DP and the pro-democracy forces.

After the handover, the changes of internal and external environment have changed the social conditions in Hong Kong. It is believed that the pro-democracy forces have failed to put forth substantial policies to solve domestic problems. In addition, poor coordination amongst various factions has made it difficult to attract popular support in the face of other well-organized parties competing with more resources to run field operations. Whether this wave of changes within the pro-democracy forces camp will lead to more splits or reorganization or even integrations remains to be seen. If the pro-democracy forces fail to regain public support, the development of democracy in Hong Kong will be even more difficult.

(3) The future of the judicial independence of Hong Kong is worrisome.

Over the past five years, controversies about the judicial independence have frequently flared up, such as the case of the right of abode of the children of Hong Kong people in the Mainland. The NPC in the Mainland interpreted the Basic Law to overrule the judgment of the Court of Final Appeal in Hong Kong, weakening the credibility of an independent judiciary in Hong Kong. It raises questions on whether Hong Kong courts will, in cases involving Mainland-Hong Kong relations, seek to avoid direct clashes with the Mainland over judicial powers, and abandon the protection of “autonomy” and “human rights” as enshrined in common law. It also creates doubts over whether the similar cases happen in the future will be interpreted by the NPC as well. Such a lack of confidence deeply affects the judicial credibility of Hong Kong's legal system. Whether Mainland factors will influence the enforcement of law by the Hong Kong authorities also threatens its judicial independence. For example, the Hong Kong Police prosecuted Falun Gong followers protesting outside the Mainland “Liaison Office” earlier this year for traffic obstruction charges, which results in the press questioning whether the Hong Kong SAR Government will follow Beijing's orders to crack down on dissident groups after the Falun Gong has been branded a cult by the Mainland.

An open and fair legal system has been seen as one of those major reasons behind for the stability and prosperity of Hong Kong. The above controversies inevitably worry the local people and the international community for the future of the independent judiciary in Hong Kong.

(4) The “self-censorship” of the press has weakened the credibility of the media.

Generally speaking, since the handover, the press in Hong Kong continues to enjoy freedom of the press. However, the cases of "self-censorship" frequently appear, especially in areas involving the news reports on the speeches by Mainland leaders, and those news the Mainland perceives as damaging Hong Kong's stability, such as the activities of political dissidents, the Falun Gong, and political news involving Taiwan, Xinjiang and Tibet.

Over the last year, controversies relating to media included the South China Morning Post’s laying its ex-editor-in-chief, features editor and China editor off, with its series of personnel changes (including the sacking of its Beijing bureau chief after he refused to adhere to the new China editor’s instructions to “follow official lines”) causing concern over whether its previously independent viewpoint is shifting. Following the suspension for six months of the RTHK political commentary show “Headline News” two years ago over election comments, the “warning” issued by the Hong Kong Government over RTHK's sarcastic comments on Chief Executive (CE) Tung Chee-hwa’s policy address; and the changes of personnel with strong connections to Mainland high-ranking officials and communists background assigned in the managing post of Asia Television raising concerns on whether the station has stood by its press freedom. In fact, the public opinion surveys by the Hong Kong University on press credibility and satisfaction of press freedom had reached a high of 6.5 on credibility after 1997, but kept on falling since then; the public’s satisfaction of press freedom had also fallen from 78% in the beginning of 1997 to 68% today. These events will result in more press self-censorship, affecting the trust of the public towards the media in Hong Kong, and negatively affects the maintenance and development of press freedom in Hong Kong.

(5) The Hong Kong Government tightens the social control, doing no good to the development of human rights and freedom.

The Hong Kong Government has taken compulsory actions in recent years to curb any factors that may cause the social unstability, such as breaking into the homes to arrest overstaying Mainlanders who are unlikely to run away; handcuffing and keeping in custody local reporters who are reporting the clashes between the police and the public; refusing to allow Mainland dissident Harry Wu to enter Hong Kong; tightening up the approvals for any June-4th related activities; using the “Public Order Ordinance” to arrest social campaigners on various issues, charging them of assisting to organize an “unauthorized assembly.” Local news commentators believe that to prevent any protests out of control during the visit by Mainland leaders to participate activities in celebrations of the handover anniversary, the Government is attempting to create the impression of a strong leadership, and the local police appear to be testing public support for tough tactics towards protestors. However, many situation observations or human rights reports from the international community are concerned about the abuse of police power in the exercise of their duty. Hong Kong’s Legislative Councilors and the media also believe that any tightening measures by the Hong Kong Government on protests and demonstrations will affect the development of human rights and freedom in Hong Kong, and they urge the HKSAR Government to be cautious. Hong Kong’s Chief Secretary responded by insisting that the freedom of speech and assembly are key values and the basis of a free economy, and the Government did not intend to tighten restrictions on these areas. Whether the aforementioned incidents are special cases or an omen for further control of freedom remains to be seen.

(6) The economy of Hong Kong makes no obvious recovery, and the unemployment rate continues to rise.

After the financial crisis in South East Asia, the Hong Kong economy has fallen into recession, and the confidence of the people towards the economy has also been shaken. Generally speaking, the economic growth was slower than last year, with the unemployment rate rising, and commodity prices falling.

From statistics of the Government, the growth rate of the Hong Kong economy was 0.1% last year, and the unemployment rate was 5.1%. As compared with the 10.5% growth and 4.9% unemployment rate in the year 2000, the last year's economy was a drastic fall. The Government, in its 2002-2003 Budget, pointed out that major economies worldwide, including the US, the EU and Japan, had all slowed down, and the structure of the HK economy was also undergoing transformation, deeply affecting the performance of the Hong Kong economy.

While the general public believe that the trends of Hong Kong industries towards high value-added activities, a recovery in the EU and US economies, and the high economic growth rate of the Mainland will probably facilitate an economic recovery this year; however, the unemployment rate continues to rise to a record-breaking level, and the deflation still has no signs of improvement. The Government estimates that the unemployment rate has reached 7.1% in May, a highest level since the Eighties, and the deflation has continued for 42 month, with the Consumer Price Index in April falling by 3.1%, the biggest drop during the past six months.

(7) The interactions between the Mainland and Hong Kong are more frequent, and the integration of both sides is deeper.

Since the handover, there has been deeper integration between Hong Kong and the Mainland in the areas of exchange of visits, economic and trade cooperation, connection of infrastructure and social development. According to data published by the Hong Kong Government, there were 1,152 official visits from Hong Kong to the Mainland in 1997, but there were already 1,065 such visits between January and September in 2001. At the same time, while there were 836 official visits from the Mainland to Hong Kong in 1997, there were already 952 such visits in the first nine months of 2001. As the Mainland has joined WTO, both sides are aggressively looking forward to creating a “Closer Economic Partnership Arrangement,” making Hong Kong a part of the Mainland’s economic development plans. At the same time, in order to improve the economy of Hong Kong, both sides are loosening travel restrictions, such as lifting Mainlander's quota limits for Hong Kong tours, issuing multiple short-term entry permits for Mainlanders to visit Hong Kong, implementing the system of “Collocation of Boundary Facilities,” etc. According to the report of 30-year population policy research of the Hong Kong SAR Government, if the current policy of having 150 Mainlanders migrate to Hong Kong everyday continues, in 30 years, 8 out of 10 immigrants to Hong Kong will be Mainlanders, showing an deepening integration between Hong Kong and the Mainland.

As the US Consul-General in Hong Kong pointed out, Hong Kong is in a dilemma of maintaining its political, cultural and economic individuality in the face of increasing dependence on the Mainland economy. With the closer relations between the Mainland and Hong Kong, and the worries over the development of Hong Kong being dragged down by the possibility of the collapse of Mainland owing to her political and economic weakness, there is already an appeal in Hong Kong for a firewall established between the Mainland and Hong Kong. It is more important that the commander of the PLA in Hong Kong, Hong Ji-Ren, warned that there are many political organizations in Hong Kong with differing viewpoints, some of them are “waiting for the right time to corrupt the stationed troops”, showing that with time goes by after handover, it will become more remarkable to seek a balance between the integration of Mainland and Hong Kong and the maintenance of the individuality of Hong Kong.

(8) The international community is still concerned about the situations in Hong Kong, and Hong Kong continues to improve its external relations.

The international community continues to be concerned about Hong Kong’s implementation of “One Country, Two Systems.” The US still provides reports specified in the “U.S.-Hong Kong Policy Act.” From relevant reports of the US, the UK and international organizations, the international community continues to hold on the observation on the democratic process in Hong Kong, and remain to be concerned on issues of the commercial environment, press freedom, judicial independence, the police's abuse of power, interpretation of the Basic Law by the NPC, and the handling of the Falun Gong in Hong Kong.

In addition, on a practical level, Hong Kong’s external relations continues to develop. There is more acceptance of the HKSAR passport in the international community with a total of 121 countries or territories allowing visa-free access to HKSAR passport holders by this May.

(9) The mutual exchanges between Taiwan and Hong Kong have been improved gradually, but a formal communication mechanism is still lacking.

Generally speaking, over the past five years, there were some breakthroughs in the relationships between Taiwan and Hong Kong. In terms of mutual exchanges, there were 2.13 million visits by the Taiwanese to Hong Kong last year, an increase of 3.28% compared to the year before last; more than 320,000 visits were made by the people of Hong Kong to Taiwan, an increase of 22.16% compared to that of the year before last. In terms of trade volume, over the past five years, total trade volume between both sides exceeded US$26 billion each year, and Hong Kong is Taiwan's second largest export market after the US.

To further strengthen Taiwan-Hong Kong relations, the Government of the Republic of China published the policy white paper entitled “Holism and Pragmatism –Policy Towards Hong Kong and Macao.” Based on the "spirit of goodwill, active cooperation, and permanent peace,” our government is devoted to improve Taiwan-Hong Kong relations, and actively seeks to improve entry measures for the people of Hong Kong to visit Taiwan. Under these principles, through efforts on both sides, we were permitted to establish an office in Hong Kong international airport in July last year, which started to operate this May, allowing Mainland visitors transiting via Hong Kong to change for a entry permit to Taiwan in a more convenient manner. After we started to allow those Hong Kong residents who have previously visited Taiwan to apply for a temporary entry permit and stay for 14 days from August last year (usually referred to as the landing visa,) the scope of the scheme was expanded to allow locally-born Hong Kong and Macao residents who are visiting Taiwan for tourism for the first time to enjoy the landing visa arrangement. The Immigration Department of the Hong Kong SAR Government also pushed forth with an E-Permit measure for our travelers, making interactions between Taiwan and Hong Kong more prospering.

Based on the spirits of goodwill, pragmatism and service, when the China Airlines flight 611 crashed at about 3:30pm on May 25 on the way to Hong Kong, in order to offer assistance for victims and their relatives that came from Hong Kong, Macao and the Mainland, Mainland Affairs Council (MAC) and Straits Exchange Foundation immediately form a task force to effectively provide relevant services. MAC provided liaison and consultation services for victims' relatives from Hong Kong and Macao, and worked with volunteer workers of China Airlines to facilitate relevant immigration matters. The relatives of victims of Hong Kong, Macao and Mainland were generally satisfied with the service provided by MAC and Straits Exchange Foundation. The press of Hong Kong and Macao also gave prominent coverage to this incident, and factually reflected on the active involvement in coordination and service provided by MAC and Straits Exchange Foundation. On review of the handling of the disaster, however, if the Hong Kong Government had established a mechanism to liaise with us, or had set up an office in Taiwan, such emergencies involving Hong Kong residents in Taiwan could have been dealt with faster, and better assistance and service offered to victims and families through the cooperation and liaison between the two Governments.