Speeches and Articles by Former Consul General Richard A. Boucher

The U.S. - A Partner in Hong Kong's Future

Remarks by U.S. Consul General Richard A. Boucher
Hong Kong International School
April 15, 1997

(As Prepared for Delivery)

I appreciate this opportunity to speak to you today as we stand at the threshold of Hong Kong's historic return to Chinese sovereignty. In a few months, we'll know the answers to many of the questions we've been speculating about for many years. Therefore, it's a good time to review what our interests are and how they can be promoted during and after the transition.

The United States' involvement with Hong Kong can be seen first and foremost in the many business relationships and the many personal relationships we have here. There are currently over 37,000 Americans in Hong Kong and 1,200 American firms, with over 450 basing a regional headquarters here.

Many of you here know because of your own professional experience the many advantages of doing business here. As I have said before, Hong Kong shows us the ways of the future. You have seen how Hong Kong entrepreneurs base their operations on communications, flexibility, quick response, innovative marketing and trendy designs. Much of what the American business community has found attractive about Hong Kong -- efficiency, excellent management, quick markets, and especially openness in information -- put Hong Kong on the cutting edge in marketing, manufacturing and services. Transparency and the rule of law make Hong Kong the favored location for contracts. And, information flows freely as the lifeblood of markets and deals here.

The impact of Hong Kong's expertise on the economies of Asia is well-evident. Its influence has been particularly obvious in China. The hundreds of investments by Hong Kong entrepreneurs in China have helped fuel economic reform. In the past 15 years, Hong Kong investment in Guangdong has single-handedly transformed an agricultural economy into an industrial power center.

Here in Hong Kong, U.S. firms are at the cutting edge of the cutting edge in the form of regional businesses with high technology operations. They bring together the finance, the technology, the communications, the transport, the engineering and the marketing expertise that produce everything from the toys at McDonalds to power for the rapidly industrializing Asian powerhouses.

Another important interest of ours, and one which you might not hear about as much as it deserves, is in the area of law enforcement cooperation. Hong Kong crime fighters routinely work with U.S. law enforcement agencies to combat drug trafficking, illegal alien smuggling, organized crime, counterfeiting, credit card fraud, and proliferation of weapons. What we do here in Hong Kong in cooperation with Hong Kong police can significantly affect Americans' safety and security.

In addition, Hong Kong hosts an average of 65 visits each year by ships of the U.S. Navy. Our ships, sailors and marines contribute about 50 million dollars to Hong Kong's economy annually. Hong Kong is a perfect place for servicemen and women, and their families who fly down to visit, to enjoy shore leave in an environment famed for its opportunities for shopping and good dining.

Finally, we shouldn't overlook the personal aspect of U.S. relations with Hong Kong. Each year, about 14,000 Hong Kong students are enrolled in U.S. schools, colleges and universities. There are many government and private linkages between Hong Kong and U.S. institutions of higher learning. In the wider cultural sphere, Hong Kong and U.S. visual and performing artists visit each other's stages, galleries and concert halls on a regular basis. There are many, many family ties and personal visits between us. In 1996, the U.S. Consulate General issued over 170,000 business and tourist visas to Hong Kong residents. No less than 700,000 U.S. travelers visited Hong Kong last year.

As we draw nearer to the handover, Hong Kong has achieved a higher profile in U.S. foreign policy considerations. It is a major factor in U.S.- China relations. Since January, President Clinton, the Vice President, Secretary of State Albright and House Speaker Newt Gingrich have all addressed the question in public as well as private talks with Chinese leaders.

As we all know, Hong Kong will be returned to the sovereignty of China at midnight on June 30 this year. That much is fairly straightforward and simple to understand. How this is really going to work, how a series of unique pledges is going to be implemented, and what it means for all of us is understandably murky. Some of the most popular assumptions won't necessarily prove true. Indeed, many of the predictions about Hong Kong which I remember from my time in China 10 or 15 years ago have proven very wrong. Remember? Hong Kong was supposed to be a ghost town with no industry, no people, and low property prices.

Most often the question I'm asked is: am I confident that Hong Kong after the handover will really continue to be a stable, prosperous and free society? Basically, I am, but we need to look carefully at a number of factors to get a full picture. I will also say clearly that we have some serious concerns about a few key areas.

When I consider what has made Hong Kong into one of the world's most modern cities, there are ten factors which seem most important:

• the legal and institutional framework,
• the economic environment,
• social stability,
• the civil service,
• anti-corruption efforts,
• a free press,
• an active legislature,
• an independent judiciary,
• the international framework
• and finally the international environment.

Let's examine the factors and see how they look at this point two months before transition to see how they might shape Hong Kong's future.

First, the basic legal framework at this point is constituted by China's commitments in the Joint Declaration of 1984 and the Basic Law passed in 1990. Hong Kong is not going to become a part of China in the same sense that cities like Shanghai or Guangzhou are parts of China. It is going to become a Special Administrative Region that retains a high degree of autonomy in all matters except foreign affairs and defense. There is still going to be a tightly controlled border between Hong Kong and China. The Chinese Ministry of Foreign Affairs and the People's Liberation Army will have representatives in Hong Kong to handle the foreign affairs and defense matters which are reserved to the Central government in Beijing. But all other issues -- housing, education, welfare, commerce and foreign trade, judicial matters, shipping, law enforcement, aviation, immigration, visas, money supply, foreign exchange reserves, and the things that affect the everyday lives of people -- are going to be decided by Hong Kong people.

These commitments are good ones. If they are upheld, we all believe, Hong Kong, US and indeed Chinese interests here will continue to flourish.

Second, Hong Kong's economic indicators are all in good shape. While the stock exchange and property market go up and down, their trends are clearly positive. Projections of 5.5% growth this year look attainable.

Third, society is stable and the business climate is good. The crime rate is low, about like Singapore's. As President Clinton observed, Hong Kong today is almost the perfect open market. The Heritage Foundation rates Hong Kong the freest economy in the world.

Fourth, Hong Kong has an exemplary civil service. The men and women who carry out the work of the Hong Kong government are widely admired for their ability and impartiality. In the Special Administrative Region, they will continue to be chosen and promoted on merit and from Hong Kong. The new Chief Executive's decision to keep all the eligible current policy Secretaries in place through the transition was particularly welcomed here.

Fifth, as Hong Kong approaches the handover, one factor often cited as a key point of concern is the encroachment of corruption. At one time, Hong Kong did have a very serious corruption problem, but it has been tightly reined in, largely through the activities of a unique organization, the Independent Commission Against Corruption. Under the incoming Special Administrative Region government, the Commission will continue to have full powers to maintain a Hong Kong free from rampant bribery, graft, and abuse, and in March the new Chief Executive named a Commissioner who has extensive prior experience in the Commission.

Sixth, we come to the question of a free press. Here, I cannot be so optimistic. Both the Joint Declaration and the Basic Law guarantee freedom of the press, along with other basic liberties. In reality, though, freedom of the press in Hong Kong has already been limited by self-censorship in some quarters. Still, Hong Kong's journalists by and large are active, competitive, and determined. The presence in Hong Kong of a large corps of unbiased foreign media encourages an open information environment. So, Hong Kong's free press is not a thing of the past, but a factor to keep an eye on in the future. We'll have to see.

Seventh, Hong Kong at present has a free and active legislature, able to investigate and ensure that no one can get away with any shenanigans. I'm afraid there's a lot to be concerned about here. As most of you are probably already aware, the present elected Legislative Council will come to an end at midnight on June 30, to be replaced by a provisional legislature. For as long as the provisional legislature exists, Hong Kong will have a legislature which was not elected by, and therefore is not fully responsible to, the people of Hong Kong. There is in the end a commitment to an elected legislature, a promise that an open election will be held within a year, and a promise that the legislature will have full powers to legislate and investigate. But, until that happens, we see a disconcerting picture.

Eighth comes rule of law. Most observers cite maintenance of the rule of law as the crucial factor if Hong Kong's way of life is truly to continue. Hong Kong's judicial system is guaranteed continuation under the Joint Declaration and the Basic Law. It will remain separate from the PRC judiciary and continue the common law tradition. Some in Hong Kong worry about loopholes in the independence of the Hong Kong judiciary, and we are all concerned by steps which might water down civil liberties in Hong Kong. Overall, however, the present judiciary and the common law legal system will continue as positive factors.

Ninth, we should look at Hong Kong's autonomous status in relation to a wide variety of international agreements and arrangements. After the handover, Hong Kong, as a separate Customs territory, is to maintain its separate identity in such bodies as the World Trade Organization and the Asia-Pacific Economic Cooperation Forum. Hong Kong is bound by many international standards and practices, and reciprocal arrangements with other governments, all of which help to preserve the present way of life.

The tenth and last factor to consider is the overall international environment. Here the signs are good. Asia is peaceful and prospering. Relations between the major powers, especially the United States and China, are improving. Hong Kong, often caught in the middle of our disputes, benefits from this benign environment as well as from the trade which it generates.

For China itself, Hong Kong is a big challenge and a big opportunity. It is an opportunity to show the international community and the international media that it does understand the commitments it has made and how to live up to them. It is an opportunity to show the people on Taiwan that it respects its pledges of "one country, two systems."

If you look at what we know so far about these ten areas, you'll see a basically positive picture with some important issues unresolved. And that's our basic view -- many things are going well at this crucial and confusing time, but we have serious reservations about some key elements. Hopefully those concerns will be resolved over time by the continuation of an active press and the election of a new, representative legislature as early as possible.

Let me add a few words about what the United States government is doing to contribute to a successful transition and future for Hong Kong.

First of all, we make our interest in Hong Kong's future clear. We do this in private discussions and negotiations, but we also do it in public statements, at levels all the way up to the President. The Department of State regularly reports formally to Congress on the progress of Hong Kong's transition. Today in fact, we put our most recent report on the Internet. The series of reports which have been issued over the years cover all the areas of U.S. interest and cite both positive and negative movements toward the handover.

Second, with the recent signing during Vice President Gore's visit to China of our post-transition Consular Agreement, we will maintain an active Consulate presence, encompassing all the areas of economics, business and trade promotion, visa and passport services, law enforcement and ship visits which we handle now. We as a government intend to act as a responsible and full partner to the government of the Special Administrative Region of Hong Kong in all the areas of its responsibility. We're not pulling the plug on Hong Kong.

Third, we have also demonstrated our confidence in Hong Kong's future and our intentions of cooperation by concluding bilateral agreements for the period after the handover, which assume Hong Kong's continued autonomy and establish standards for our future cooperation. Today, I signed a Mutual Legal Assistance Agreement and a Prisoner Transfer Agreement. We also have an Extradition Treaty, signed last November, a Civil Aviation Agreement signed last month, and an agreement for the protection of investments which we are still negotiating. Together they constitute the bridges and pathways of our future cooperation with Hong Kong.

Finally, the U.S. government also encourages and supports the continued development of the democratic institutions of Hong Kong, as we do around the world. We do this by organizing government exchanges and facilitating private ones, by providing a wealth of information about democratic institutions in the United States.

We do all of these things to ensure that we play a positive role in the transition for the people of Hong Kong, and to ensure that U.S. interests are preserved through the transition of sovereignty. We don't ignore the difficulties of the transition, the unprecedented nature of the undertaking, and the problems which have already arisen, nor do we underestimate the historic importance of Hong Kong's return to China. At the same time, we don't neglect Hong Kong's strengths. Hong Kong is a unique and wonderful place, whose people have demonstrated again and again their tremendous resilience. We believe Hong Kong is a unique city and can, if it continues along its present path, set an example of openness, farsightedness, flexibility, and endurance. We intend to be part of its future.

Thank you very much.

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