Speeches and Articles by Former Consul General Richard A. Boucher

Returning to Hong Kong - Where are the Prophets Now?

Remarks by U.S. Consul General Richard A. Boucher
to the Hong Kong Business Community
Friday, September 20, 1996

(As Prepared for Delivery)

Thank you, Doug, for that introduction. I appreciate Amcham's inviting me to be with you today and to make what will be my first public remarks since I arrived here a few weeks ago. I already know many of you from previous Asian incarnations, and it's good to see so many friends who are accomplishing great things for the economies both of Hong Kong and the United States. As I've told some of you, if you had asked me 10 years ago where I wanted to be in 1996 and 1997, I would have said I wanted to be in Hong Kong. And now that it's happened, I'm truly thrilled to be in this wonderful place among such impressive people.

Many of you know firsthand how dramatic the changes have been over the last decade or so. My only virtue is that I've been gone and can look at the situation from a fresh vantage point. In many ways, the transformations are truly stunning. Professional and other services now form the bulk of Hong Kong's economy. Hong Kong's harbor is almost small enough to throw a silver dollar across. China has become the fastest growing economy in the world. Shenzhen is no longer just a mud field, but rather a mud field with tall buildings. We're all a bit older, but many of you are a lot richer than when I last met you.

And now we look forward to further transformations in Hong Kong. I firmly believe that the American business community in Hong Kong has an extremely influential role to play through next year's political transition. The United States has a number of unique and identifiable interests in Hong Kong, and many of those interests center on the business community, or are affected by it.

Let me quickly review what those interests are. I'll begin with the most obvious aspect, and perhaps the one dearest to most of your hearts -- the commercial relationship. Most of you know the figures better than I do. U.S. exports to Hong Kong last year came to over $14 billion U.S. dollars, and U.S. companies have almost another $14 billion dollars invested here. Hong Kong is the eighth largest market worldwide for our agricultural exports. Astonishingly, our one thousand resident U.S. companies employ almost 10 percent of Hong Kong's total work force. Any adverse change in business conditions here would have a tremendous effect on American business people and the important role you play as partners with Hong Kong business.

Another important area in our relationship with Hong Kong is that of law enforcement cooperation. Many U.S. Government law enforcement agencies maintain offices within the Consulate General. Their focus is Hong Kong. Their combined efforts with Hong Kong crime fighters have made a significant contribution to our battle against drug trafficking, illegal alien smuggling, organized crime, counterfeiting, and proliferation of weapons.

Another important bridge between Hong Kong and the United States is our large and complex network of educational and cultural exchanges. In any given year, about 14,000 Hong Kong students are studying in U.S. schools, colleges and universities. There are tens of thousands of U.S. university graduates here -- just check out the diplomas on your doctors' and dentists' walls, or look at the credentials of leading academics here. All Hong Kong tertiary institutions have exchange activities with the United States. Many of our visiting American scholars wind up speaking to your membership, so I know you are already aware of their endeavors.

On the cultural side, a stream of visual artists, directors, choreographers and performers exhibit their works and talents in each other's galleries, concert halls and theaters. All this activity reflects America's cultural interest in Hong Kong.

Besides academics and artists, many Americans come to Hong Kong as tourists or to do business; Hong Kong people go to the United States to do the same. We issued nearly 120,000 new business and tourist visas to Hong Kong residents in 1995, and over 700,000 U.S. citizens traveled to Hong Kong during that same year. We might add to this number the more than 50,000 American sailors who visit Hong Kong each year on 70 or 80 naval vessels for rest and relaxation. The money they spend in Hong Kong, combined with what the U.S. Navy spends to support their visits here, is estimated at more than $50 million U.S. dollars annually. So many Americans -- not just the 37,000 of us who live here year round -- have come to know Hong Kong's vibrant society and to care personally about its future. I am one who certainly does.

I last left East Asia in 1986. I thought I would take some time today to look back at the predictions for Hong Kong that were in the air at the time, and then compare them to the Hong Kong we know today. If the dire predictions of 1986 had been correct, many of you wouldn't be here: investors were going to pull their money out of Hong Kong and put it elsewhere because no one would trust the future. Few investments were going to be made after 1992 or so because an investment had to pay off in five or six years to be viable. Of course, those of us here would be living in cheap apartments because the property market was going to crash when everyone moved out. Skyscrapers would stand hollow and empty. All the rich and middle managers would move, leaving only manual laborers whose jobs would be to transfer goods to and from China. Regional business would leave. Hong Kong was going to be a ghost town while the financial and commercial heart of Asia would beat in Singapore.

Now, not all the predictions were so dire. The people who made those predictions ten years ago were not stupid. I made some of them. There were many people who knew a lot about Hong Kong, about China, and about how business decisions are made. In spite of that, none of these forecasts has come to pass. Why?

As I look about me in this city, and when I go to talk to its decision-makers in government and business, I sense energy, initiative, and confidence. Not the confidence of pollyannas who insist everything is going to be smooth and perfect, but the confidence of people who believe that they can meet the challenge of change that we all know lies ahead of us. They believe this because they defied those predictions pf the past and they have met other challenges in other areas many times before.

The continuing vibrancy of Hong Kong is a tribute to the resilience and adaptability of the people of Hong Kong. These are people who have paid attention to changing world trends and transformed their economy accordingly. Hong Kong today, ten months before reversion, is the world's eighth largest trading economy. It has become the engine of South China's economy and the channel for investment throughout China. Its per capita GDP surpasses that of the United Kingdom, Canada or Australia. Its favorable tax structure, abundance of foreign exchange reserves, highly educated and motivated work force, all contribute to its prosperity and to its having been rated the freest economy in the world two years in a row by the Heritage Foundation.

Hong Kong's economic and political transformation was achieved under a system which -- though colonial in origin, and late in liberalizing its control of society -- did provide certain conditions that were conducive to prosperity and democratization. I am thinking now of factors like a civil service based on merit; transparency and openness of decision-making; a level of corruption far below that of the territory's neighbors; and the freedoms of press, association, religion, and speech.

Hong Kong people have forged ahead in the political arena, a fact which I believe is inextricably tied to their economic success -- and yours. Over the past ten years, their political progress has been marked by their support for a sheaf of political parties with widely varying philosophies; by their electing a dedicated and vocal legislative body; and by their growing interest in and debating of grassroots issues that affect the everyday lives of ordinary people.

Any of you who have tried to do business in a society where bribery, kickbacks, political influence and other forms of corruption are tolerated or even indulged in by the government know what a difference Hong Kong's serious attitude toward law enforcement makes, both to your bottom line and to the sense of security with which you can live and raise your families here. Hong Kong's independent civil service, its active legislative oversight and, a truly unique institution, the Independent Commission Against Corruption, all help make this a clean and straightforward place to do business.

These are the very factors that helped Hong Kong defy the predictions and which can take Hong Kong into a successful future. Some commentators have expressed doubts about whether these conditions and institutions will continue to exist after July 1, 1997. I believe they will.

We should never forget that the Joint Declaration and the Basic Law do indeed guarantee that Hong Kong's way of life will not change when sovereignty changes. One thing in which the Beijing government has always taken tremendous pride is its track record in living up to its formal agreements. I think all of us have every right to expect them to honor their commitments with regard to Hong Kong.

Let's take a look at what some of those commitments are. In the Joint Declaration, Beijing promises to take "account of the history of Hong Kong and its realities." It pledges to uphold a high degree of autonomy in the Hong Kong Special Administrative Region, and that "the laws currently in force in Hong Kong will remain basically unchanged. Rights and freedoms, including those of the person, of speech, of the press, of assembly, of association, of travel, of movement, of correspondence, of strike, of choice of belief will be ensured by law... Private property, ownership of enterprises, legitimate right of inheritance and foreign investment will be protected by law." The Basic Law specifically states that the provisions of the International Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights, and international labor conventions as applied to Hong Kong shall remain in force.

With further regard to Hong Kong's economy, according to the Joint Declaration, Hong Kong will maintain current monetary and financial systems and Hong Kong "will retain the status of a free port and a separate customs territory." The free flow of capital is to be protected, and China will levy no taxes here. Likewise, Hong Kong's status as an international and regional financial, shipping and aviation center will be maintained.

Both the Joint Declaration and the Basic Law state that the government of the Region will be in the hands of Hong Kong people. The Basic Law goes so far to say with regard to the post of Chief Executive that "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". Similarly, the ultimate aim with regard to the Legislative Council is that all its members be elected by universal suffrage. The courts, the Basic Law says, "shall exercise judicial power independently, free from any interference."

The Joint Declaration gives responsibility for the maintenance of public order to the government of the Hong Kong Special Region. With regard to the civil service, the Joint Declaration says that "the appointment and promotion of public servants shall be on the basis of qualifications, experience and ability", and the existing government personnel system will be maintained.

You are all familiar with these commitments. I repeat them because it is vital that we not lose sight of them, nor neglect their sweeping importance. These are indeed high standards. They are high standards the Chinese have set for themselves. They are standards we should all expect the Chinese to meet.

Many of you here today -- perhaps most of you -- have business interests in the People's Republic. Your Chinese associates and the Chinese leaders with whom you deal should know what your hopes are for Hong Kong. Let them know you are counting on their country's adherence to the commitments of the Joint Declaration and Basic Law, and that the more clearly Beijing signals its intention to abide by these commitments, the more likely it is that the transition will be the smooth one that all Hong Kong's friends desire. Above all, tell them why you're here in Hong Kong. Explain, as only you in business can, how important a free and open Hong Kong is to China's own future.

The Joint Declaration and Basic Law spell out the commitments for Hong Kong's future. Hong Kong people will govern Hong Kong. The underpinnings of society here will continue. China will become Hong Kong's sovereign, and we should support that. But we must all respect the direct and crucial link between economic prosperity and personal freedoms in a society like this one. This is an area where the implementation of the One Country, Two Systems approach is vital. Economic prosperity and the openness and freedom of Hong Kong cannot be separated, and if they are separated, the result will not be good.

In closing, I want to assure you that the United States Government will continue to support efforts to preserve Hong Kong's way of life through the change in sovereignty. As Assistant Secretary of State Winston Lord promised in his recent testimony to Congress, we will encourage both Britain and China to deal sensitively and flexibly with the difficult transitional issues which remain. We will maintain a continuing dialogue with all those who are involved, to provide our perspective and point out any pitfalls we may perceive. We do this as a nation and a people -- one of many -- which has a genuine and benign interest in Hong Kong and wishes only the best for its fine, industrious, and intelligent people.

As we join in recognizing the historical importance of letting Hong Kong be part of China, we also say let Hong Kong be Hong Kong. If these principles are respected, then Hong Kong people -- foreign and Chinese -- will once again defy all the dire predictions and continue their important role in a wonderful and vibrant city.

Thank you.

*     *     *     *     *