Hong Kong Celebrates 10th Anniversary of Return to China

Chinese leader Hu Jintao, center, sings with other performers during the variety show in Hong Kong, 30 Jun 2007

Chinese President Hu Jintao is leading celebrations in Hong Kong to mark the 10th anniversary of its reunification with China. The Chinese leader says democracy is growing in the territory but did not specify when the city would have universal suffrage. VOA's Heda Bayron reports from Hong Kong.

The territory kicked off July 1 with a flag-raising ceremony at the site of the historic change of sovereignty 10 years ago.

Hong Kong is celebrating with colorful parades, variety shows, and fireworks.

But alongside the grand government-organized celebrations, tens of thousands of Hong Kong residents are expected to march for democracy Sunday. As in the last four years, the protesters demand the right to directly elect their leaders.

In his speech Sunday morning, Chinese President Hu Jintao says democracy in Hong Kong is growing in an orderly way.

But he did not mention any timetable for universal suffrage.

Mr. Hu says the central government will remain committed to the principle of "one country, two systems" and a high degree of autonomy for Hong Kong.

The "one country, two systems" arrangement lets Hong Kong keep its capitalist economy and Western-style courts and civil liberties. China's ruling Communist Party has say over the city's political structure.

The city's top leader, the chief executive, is selected by about 800 voters approved by Beijing, and half the city's legislature is directly elected by the public.

A new Hong Kong cabinet was also sworn in Sunday.

Hong Kong Chief Executive Donald Tsang says his government will be "more open" and more democratic". Tsang, who originally took office two years ago after his predecessor resigned, promised to introduce proposals on a democracy roadmap during his term.

He also promised to do more to address concerns of a growing income gap, worsening pollution and heritage preservation.

Until the handover to China in 1997, Britain ruled Hong Kong for 156 years.

Hong Kong Bird Market Closed After Discovery of Avian Flu

Hong Kong's government has temporarily closed the city's famous pet bird market after a bird for sale there was found to be carrying the H5N1 avian flu virus. Authorities say they will step up measures to combat bird flu, including a crackdown on the smuggling of birds into Hong Kong. Claudia Blume reports.

Hong Kong's famous Bird Garden in the city's busy Mongkok district usually bustles with residents bargaining for exotic birds as pets and with tourists who love the market's lively, colorful atmosphere. Now, a grim-looking guard at the entrance of the market makes sure no one enters.

The shutters of most of the 70 shops are down. A few, mostly elderly, vendors sit around with nothing to do.

They have put up a banner that sums up their feelings.

One of the vendors reads aloud, "This tourist spot has been turned into a ruin."

This woman says that her life is very hard right now. She says she does not have any customers and cannot earn any money.

Hong Kong's health officials closed the bird market about two weeks ago after a starling there was found to be carrying the H5N1 avian flu virus. All birds in that shop were removed and the market vendors were asked to thoroughly clean and disinfect their stalls. Hong Kong's agriculture and fisheries department has been collecting and testing samples from bird stalls to test for avian flu viruses.

Eric Tai, a veterinarian working for the department, said "Our last batch of samples for this exercise was collected earlier this week and if things go well, when everything is negative, showing there is no virus around, when that result comes out, then we will be opening the market again." 

When the market opens, the department will introduce stricter regulations to ensure that all birds on sale are from approved sources, have valid health certificates and have been legally imported into Hong Kong. Tai says the agricultural department will step up its cooperation with customs officials.

"With these few methods we hope that the origin of the bird will be safe, and that we will be able to trace the source and that there will be no birds from unknown sources entering our licensed premises," he added.

Chinese children handle ducks at a market in Loudi, central China's Hunan province, 10 June 2007 file photo

The starling carrying the bird flu virus had no health certificate, raising suspicion it might have been smuggled into Hong Kong.

Hong Kong aggressively tests for bird flu after an outbreak in 1997 jumped to humans and killed six people, the first human cases ever recorded from the virus. More than 12 wild birds have died from avian flu in the territory this year.

The H5N1 virus has spread throughout Asia and into Africa and Europe. More than 150 people have died from the disease; most caught the virus after handling sick birds. While human infections are rare, many scientists fear the virus could mutate so it can spread easily among humans, causing a pandemic

Hong Kong Marks Decade Under 'One Country, Two Systems'

Hong Kong this week prepares to celebrate the 10th anniversary of its return to Chinese sovereignty, July 1. Ten years ago, many feared Beijing would renege on its pledge to allow Hong Kong to retain its capitalist system and its autonomy. But those fears did not materialize. VOA's Heda Bayron in Hong Kong looks back at the first decade under the "one country, two systems" arrangement and the challenges ahead.

China's People's Liberation Army (PLA) soldiers line up during rehearsal on eve of parade to be staged in run-up to 10th anniversary of the city's return to Chinese rule, 25 Jun 2007

When the British flag was lowered in Hong Kong on July 1, 1997, the former colony was anxious about its future under communist China.

Yet for most people, little has changed. Under China's "one country, two systems" policy, Hong Kong remains a capitalist economy. It retains its political autonomy and its people continue to enjoy wide-ranging freedoms not found in the rest of China.

But Hong Kong's fortunes did change after its return to China. The Asian financial crisis, which began in July 1997, sent the city into a long recession.

Then in December 1997, Hong Kong recorded the world's first human deaths from bird flu, leading the government to slaughter all poultry in the territory. Six years later, the outbreak of Severe Acute Respiratory Syndrome (SARS) killed almost 300 people in the city and further crippled the economy.

Ming Chan, a Hong Kong expert at the Hoover Institution at Stanford University, says the problems did not arise from Chinese control.

Ming Chan

"Hong Kong's worst fears did not materialize," Chan says." Hong Kong survived the initial shock of a shift to a different system. But then Hong Kong's challenge did not come from the functional area, did not come from the political attack but rather from the economic downturn."

Those events proved daunting for the government of Tung Chee-hwa, the city's chief executive, handpicked by Beijing. Many considered Mr. Tung, an industrialist with no political experience, an indecisive leader out of touch with ordinary citizens.

Political analysts say Beijing took a loose approach on Hong Kong in the first few years after the handover. They say Beijing was afraid too much control would kill its "one country, two systems" policy, which is meant to be a model for Taiwan's eventual peaceful reunification with China.

But some analysts say giving Mr. Tung too much of a free hand led to headaches for Beijing.

On July 1, 2003, half a million Hong Kong residents, already angry over Mr. Tung's handling of the SARS outbreak and the economy, rallied to protest a proposed law that could have curtailed civil liberties. The demonstrators demanded the right to directly elect their leader.

Only a group of 800 largely pro-Beijing business and political leaders are allowed to vote for Hong Kong's chief executive. Only half the legislature is directly elected.

Ma Ngok, a politics professor at the Chinese University of Hong Kong, says the protest was a turning point in Beijing's administration.

"After the July 1 march, they (Beijing) adopted a more proactive attitude both economically and politically to handle the affairs of Hong Kong," Ma notes.

China tried to boost the economy by adopting a free trade pact with Hong Kong, allowing Hong Kong banks to do Chinese currency transactions, and allowing more Chinese tourists to visit.

But the pressure on Mr. Tung continued and he stepped down in 2005. Donald Tsang, the city's well-regarded top civil servant, took over.

Since then, Hong Kong has snapped out of its slump. The economy has recovered and this year, the government posted a budget surplus, enabling it to cut taxes.

But prosperity has not eased public demands for a greater say in their government. This man says economic health is not enough for the city.

"I'm a little bit disappointed about political reform. I think we need more democracy, universal suffrage," he says.

But China has ruled out direct elections for the next several years, even though the concept is enshrined in Hong Kong's Basic Law.

On July 1, while local and mainland officials celebrate the unification anniversary, activists are expected to march again to demand universal suffrage.

Albert Ho

Albert Ho, chairman of the opposition Democratic Party, says the prospect of achieving democracy is "very, very difficult". But he says without democracy, Hong Kong people could easily lose the freedoms and rights they are enjoying now.

"The rule of law tradition as well as the system of independence of judiciary can be very fragile," says Ho. " The high degree of autonomy and rule of law in Hong Kong can be eroded very quickly and can even be taken away overnight."

Democracy advocates say a greater public voice in the city's government will only help Hong Kong face any new challenges that may come in the next decade.

Hong Kong's Democrats Meet to Review Progress Before Handover Anniversary

The leaders of Hong Kong's democratic movement have met to take stock of their progress and assess their relationship with China's Communist government, ahead of the 10th anniversary of the handover of Hong Kong from British to Chinese sovereignty. Joseph Popiolkowski reports from Hong Kong that the pro-democracy activists put out a call to action.

Cardinal Joseph Zen

The call from Cardinal Joseph Zen was loud and clear: Hong Kong's leaders must promote social justice and individual rights to achieve a peaceful society.

Zen was one of several leading advocates for multi-party politics and universal suffrage who attended a seminar Saturday led by Hong Kong's Democratic Party. They met three weeks ahead of the 10th anniversary of Hong Kong's handover from British to Chinese rule.

Martin Lee, founder of Hong Kong's Democratic Party, stressed the importance of the "one country, two systems" concept in guaranteeing Hong Kong's autonomy as a Special Administrative Region (SAR). He said this structure is in danger of collapsing if Beijing continues to reinterpret it.

Martin Lee, founder of Hong Kong's Democratic Party

"What I'm afraid of is they will redefine 'one country, two systems,'" he said.  "They will move the goalposts. But if that were to happen, if that were to happen, it's an admission to the whole world and to our compatriots in Taiwan that 'one country, two systems' has failed."

The speakers took issue with remarks made this week by Wu Bangguo, head of the National People's Congress, China's parliament. He appeared to place limits on Hong Kong's autonomy by saying the only freedoms Hong Kong had were those granted by Beijing.

In response, the Democratic Party circulated a statement by Graham Watson, leader of the European Parliament's Alliance of Liberals and Democrats, in which he warned China against making such "unhelpful and divisive" claims.

He said China should not upset the applecart of international opinion - a point taken up by Gloria Fung, vice president of Canada-Hong Kong Link, a community organization in Canada, where many Hong Kong people have settled.

"Instead of remaining silent about the adverse changes taking place in Hong Kong SAR, we have chosen to take a proactive approach to express our concerns and make our voices heard both within Canada as well as to the governments of Hong Kong and China," she said.

Hong Kong's democratic movement hopes to mark the July 1 anniversary of the change in sovereignty with a march to rival that of July 1, 2003. Then, half a million people protested against proposed security legislation, and for more democracy. Since then, Hong Kong has received a new chief executive, but no further progress on democratic reforms.

Beckett Calls For Universal Suffrage in Hong Kong 'As Soon As Possible'

British Foreign Secretary Margaret Beckett has ended her week-long trip to China by calling for the soonest implementation of universal suffrage in Hong Kong. VOA's Heda Bayron reports from Hong Kong.

Margaret Beckett, left, attends a press conference at a hotel in Hong Kong after her trip to mainland China, 21 May 2007

British Foreign Secretary Margaret Beckett, visiting Hong Kong 10 years after it was handed from British to Chinese rule, said she thought the process for Hong Kong was "so far, so good."

She credited the Chinese government for the relative success of the "one country, two systems" formula that allowed Hong Kong to retain its capitalist economic system and a high level of autonomy after the handover.

But Beckett also pressed for the introduction of universal suffrage in Hong Kong "as soon as possible". She told business and political leaders that democracy should be the foundation of a thriving and stable Hong Kong.

British participation in the 10th anniversary celebrations has been low key, prompting Beckett to brush aside reports that Britain has been snubbed from participating in the affair.

"There is no suggestion of the U.K. being excluded from something, in fact we are planning a series of events during the year as part of the Hong Kong government's program," Beckett said.

The right to directly elect Hong Kong's leaders is set in the Basic Law but China has so far refused to set a timetable for that to happen.

Beckett came to Hong Kong after spending six days in Beijing, where she discussed bilateral issues and climate change.

On Monday she told reporters that climate change threatens the country's economic prosperity.

"China has made substantial strides in reducing the intensity of energy usage but of course they want to, and we all need them to make still more progress," Beckett says.

China's rapid economic growth makes it hungry for energy, and it relies heavily on polluting coal-fired plants. Experts say China will soon overtake the United States as the world's top emitter of greenhouse gases.

Beckett called on Hong Kong investors in the mainland - one of the biggest group of investors there - to do their part in fighting climate change by making investments in low carbon and energy efficient technologies.

Hong Kong has been battling worsening air pollution in recent years, largely coming from power plant emissions from the southern China region.

The Hong Kong Dollar is dieing away? --- The incredible shrinking currency

Ten years after political control of Hong Kong was returned to China, the island state's currency is facing a sea change of its own.

As the yuan, bolstered by China's hypergrowth, gathers strength against the once-dominant Hong Kong dollar, residents are being forced to make painful choices.
How best should inhabitants and investors alike try to preserve their wealth in the face of their incredible shrinking currency?
Looking at currency markets today, we seem to be at a polar opposite from a decade ago. Then when Thailand tipped off an Asian financial crisis, the Hong Kong dollar withstood intense gravitational pull to decline. Bow-tied Chief Executive Donald Tsang at the time was at the helm as financial secretary who audaciously spent HK$120 billion buying equities to stave off hedge funds attacking the currency.
Today just about all Asian currencies appear to be heading north, bar the HK dollar with its peg to the weakening greenback. This is having some unusual effects that portend change to come.
Significantly, as China has moved to allow a gradual appreciation of the yuan, it has now overtaken the HK dollar as it crawls upwards. It now takes 7.81 HK dollars to buy one greenback but just 7.72 yuan. Further moves upward are widely expected and being called for.
For many years the currencies had assumed a de facto peg to the HK dollar within a dual currency regime. But now it appears the HK dollar is being shunned.
The South China Morning Post recently ran stories that mainlanders over the immediate border no longer want the HK currency. Not just taxi drivers but Starbucks in Shenzhen are turning their noses up at it and the US dollar -- both of which were previously freely acceptable.
And in Hong Kong some shops are refusing to accept physical coins, due to higher bank charges for handling this depreciating tender.
Nomura Securities, in a recent strategy note, highlighted these anecdotal events to question if we could be seeing the demise of the HK dollar.
In a situation where people can opt for two currencies, according to Gresham's Law, bad money forces good money out of circulation. It may be early days, yet in January the Hong Kong Monetary Authority (HKMA) reported the biggest jump in yuan deposits since accounts were launched two years ago, rising to 24.2 billion, up from 22.7 billion in January. Nomura strategist Sean Darby notes "the perception that one currency will appreciate over another is enough to cause a self perpetuating cycle of appreciation."
For Hong Kong, one very noticeable impact is building inflationary pressures from being tied to a depreciating US dollar. This is likely to be further fanned as even goods from low cost China begin to cost more.
Money supply growth has been in the high teens this year and bank lending to deposit ratios are at record lows, leading banks to further cut mortgage rates below prime. The rapid creation of money has flowed into financial assets; bad if you are on fixed HK dollar wage and renting property, but it has been good for physical property and equities.
Today the peg is taking the strain of adjustment in reverse to 1997-1998. Then, while asset prices plummeted 60% or more in some cases, if you kept your job, avoided a wage cut and were renting rather than a property owner it was actually pretty good. Rents were cheaper, so were holidays with the baht at 50 to the dollar.
Borrowing in a weak HK dollar with funding rates below U.S. Libor makes the Hong Kong currency arguably one of the best funding vehicles for global currency traders, say Nomura.
Of course that prognosis still rests on the HK's peg to the U.S. dollar remaining intact as the currency of its largest trading partner powers ahead.
HKMA chief Joseph Yam said recently Hong Kong would retain its currency even if the yuan was stronger, although you would expect nothing else.
In private, you do begin to hear comments from economists that the HK dollar has at most five years to go and will be folded into yuan -- the HK yuan.
Of course for now the yuan is not a convertible currency and China has considerable work to do to clean up its financial system before that can change.
Arguably, the drift in the currency mirrors political drift as it becomes more apparent ultimate decision making always rests in Beijing. As Hong Kong's erstwhile competitor, Singapore sets out to attract regional corporates and expatriates with a vision for the future, the difference is starkly brought home. Politically, Hong Kong cannot really control its future; immigration for one is limited under an agreed policy of 100 Chinese a day never mind the lack of commitment to elections. And the pillars of its economy -- a cyclical property market and a venue for mainland companies listing overseas, both look vulnerable to China's own development.
Under the Donald Tsang government, Hong Kong is likely to stick to the past -- it was he who defended the peg last time around.
But if more Hong Kong inhabitants vote with their pocketbooks for the yuan, the HK dollar may well end up being little more than a relic from colonial times gone by. Much like Mr. Tsang and his bow ties.