Speeches and Articles by Former Consul General Richard A. Boucher

Continuity and Change in Hong Kong

Remarks by Consul General Richard A. Boucher to the Hong Kong General Chamber of Commerce
Conrad Hotel, September 4, 1997

(As prepared for Delivery)

We've spent many years now analyzing the prospects of political change in Hong Kong, always emphasizing that things should stay the same. That is indeed the basic outlook for many of us. But, keeping things the same is too low a standard for Hong Kong; Hong Kong is a dynamic city which needs to develop. We all know that the one constant in Hong Kong's past has been change; indeed, rather than suffering from changes elsewhere Hong Kong has often been the agent of change for others. Thus, I thought it would be a good time today to look at the relationship between the United States and Hong Kong and to talk in more detail about what kind of changes we should expect, and what we shouldn't. The transition ceremony is over, but the dynamism continues.

The need for further development is clear within Hong Kong in economic, social and political spheres, it is clear in Hong Kong's relations with the outside world, and it is clear in the many relationships my country has with the people and institutions of Hong Kong. We stand at the opening of a new era. I'm sure many of you are familiar with the great closing scene in the 1942 classic film, "Casablanca," where Humphrey Bogart and Claude Rains walk off into the future arm in arm. To paraphrase Bogey, I'm tempted to say that this is the renewal of a beautiful friendship.

Let's look for example at the role that Hong Kong has played in US China relations. How things go in Hong Kong over the long run will be a crucial bellwether of China's commitment to the "one country, two systems" principle and, by extension, of Chinese leaders' intention and ability to keep other international commitments. Because of this, the entire international community has assigned to Hong Kong a degree of importance which would otherwise be unusual for a small territory of six million souls. How the rapidly unfolding new relationship develops between China and Hong Kong, with new precedents being set every day, is certainly the most important factor in determining the long term outlook for Hong Kong.

Similarly, Hong Kong's contribution to US China trade, the services it provides to exporters and investors are a dynamic contribution to U.S. relations with China, and also to the economic growth in China. Hong Kong is still the gateway for half of China's exports and for almost 60% of the investment in China.

In thinking about Hong Kong's future, we should also consider its contribution to the rest of China. This is an historic moment in Chinese history. As the fifteenth Communist Party Conference approaches, the first since the passing of Deng Xiaoping, there is a mood of positive anticipation in the air. Many expect decisions to be taken at this Conference which will determine the shape of China's future for a long time to come.

That future is certain to include, in the economic sector, a continuing push for reform, further opening, and modernization. Hong Kong is uniquely positioned to help with that effort. Hong Kong's contribution of expertise and capital to support China's modernization is certainly a dynamic factor in the region. Without Hong Kong's help, China's modernization could never have achieved so much, so quickly. As Hong Kong is an important catalyst for Chinese economic reform, it is also a catalyst for U.S.-China trade and investment.

Hong Kong continues to be an important international hub and a base for the development of international trading institutions. Americans come here to be your partners and in some cases to be your competitors. I might note that American interests in Hong Kong are essentially the same today as they were before July 1: economic and commercial involvement, law enforcement cooperation, U.S. Navy port calls, and cultural and educational ties -- only more so. If anything, our interests have grown in recent months. Revised estimates indicate that about 50,000 U.S. citizens now live in Hong Kong. That means the American community here has doubled over the past five years. Investment is also up. The U.S. Department of Commerce has revised the 1995 figures for cumulative U.S. direct investment here upwards to 14.2 billion U.S. dollars. Preliminary figures for 1996 show a 13-percent increase, to 16 billion U.S. dollars.

In a few days, Chief Executive C. H. Tung will be leaving for the U.S., and the important talks he will have at the highest levels of our government will solidify the pattern and pace of our future relationship. Officials in Washington welcome his visit and look forward to discussing the numerous issues which influence the ties between Hong Kong and the United States. I feel confident that those talks will establish a friendly and solid working relationship that will carry us into the twenty-first century. This is a relationship built upon years of trust, common values and shared interests for the future. Indeed, as I look at the US-Hong Kong agenda, it is so varied and broad that I can only summarize by saying that Americans in both the public and private sectors hope to cooperate with Hong Kong partners on every possible front. On the official level that I represent, the foundations of this renewed friendship are all in place. Our Consulate General is operating in a newly renovated building, which was rededicated on July 1 by Secretary of State Madeleine Albright. We are working with you in all the areas we have worked with you in the past. We are also successfully coordinating U.S. Navy port calls with the Chinese Ministry of Foreign Affairs, and expect the same number of ships calling here, and the same number of sailors and Marines who enjoy shore leave here. We continue to enjoy a close partnership with Hong Kong authorities through our judicial agreements and by carrying out law enforcement cooperation, and unfortunately we will always find new areas of law enforcement cooperation we need to engage in. We are working under a new agreement on civil aviation, and continue to work closely with our counterparts in the government of the Special Administrative Region in other areas crucial to economic development and prosperity.

We would like to expand our areas of cooperation. There are some issues of practical concern, for example, where we can help each other. Two that come to mind are balancing economic development with the protection of the environment, and promoting the principles of free and fair trade worldwide. First, we can work together to expand our environmental cooperation and deal with some of the problems which affect us all in this region. The US-Asia Environmental Partnership office at the Consulate General looks forward to expanding its activities here in Hong Kong. On the trade side, as we cooperate in the Asia Pacific Economic Cooperation forum and the World Trade Organization, the United States and Hong Kong have been consistent and clear voices pressing for tariff reductions, more access to markets, and eliminating regulations. That will continue. In addition, we both have a big stake in seeing China reform its economy, adopt world trading standards and accede to full membership in the World Trade Organization. Each in our own way we can continue to encourage and work on this process.

There are also existing issues where we hope to redouble our efforts. We will respect Hong Kong's autonomy and the principle of Hong Kong people governing Hong Kong. Indeed, that aspect is what we most welcome of the transition so far. At the same time, we have had disputes, but as we resolve them we put our relations on a more stable footing, for it is in our common interest to deal with problems, and unfortunately in this world, problems always keep arriving.

We have seen considerable success in Hong Kong's efforts against illegal textile transshipment, a practice which undermines the integrity of the Hong Kong label and hollows out Hong Kong industry. We are looking for equal success in fighting the theft of intellectual property. Software and video piracy not only harms American exporters but steals from the legitimate earnings of Hong Kong creative artists and singers and sets back Hong Kong's aspirations to become a high technology center. It must stop. We offer our advice and expertise, but ultimately the matter is in your hands. While we welcome the increased efforts being made by the Hong Kong government, it is also obvious to all that the problem persists.

There are other areas as well where we look to do more together and pursue our common interests: protecting sensitive technology and ensuring that Hong Kong's excellent facilities are not used to broker the exchange of weapons. We also want to engage Hong Kong in the international fight against money laundering, a crime which is naturally attracted to one of the world's great financial centers. In all these areas, our relationship can be strengthened. Continuing our cooperation means pushing resolutely into new areas; exercising Hong Kong's autonomy means Hong Kong tackling emerging problems.

Similarly, as we talk about preserving what has made this city great, we always cite a few fundamental factors: the rule of law; an open environment of free and easy access to information; a clean and efficient government. But, none of these areas is fixed or static. For example, when it comes to information, traders and brokers look for new and even broader sources of uncensored information to develop in Hong Kong. How does the flow of information expand as more and more mainland companies are listed in the Hong Kong markets? To cite but one area, capital markets that finance more and more investment inside China will also need more and more information --not less and less information-- about what is going on inside China.

We watch with interest as we see the new programs and efforts of the Independent Commission against Corruption to educate and prevent the degradation of standards or as we see the Hong Kong Securities and Futures Commission develop measures to properly regulate new listings in an even more complex regulatory environment. We are especially interested in how Hong Kong's democratic institutions develop, because they determine the overall legal environment in which all of us, including the Americans here in Hong Kong, can live and work. These institutions, including a fairly-elected and representative legislature, make a vital contribution to ensuring the integrity of the system and ensuring that change follows the wishes of the people of Hong Kong. We look forward to an early, open and fair election. We want to see that the direction and pace of democratization are maintained. That is why we question how you reconcile returning to earlier methods of voting which reduce the numbers of voters for functional constituencies. Will all points of view be welcome and represented fairly? These questions have a bearing on whether the commitment to democratic change, as laid out in the Joint Declaration and Basic Law, will be maintained, or even speed up. They have a bearing on Hong Kong's future political, social and economic environment.

We will also take a great interest in proposals on housing, education, and competitiveness. These directly affect the convenience and the cost of doing business here. The availability of trained, English speaking professionals and managers at present makes Hong Kong an attractive location for regional business. Without them, businesses couldn't operate here as regional centers and design and service providers. However, the high cost of housing directly affects corporations' ability to maintain and expand offices here. Let me remind you of the last American Chamber of Commerce survey, showing that U.S. business people here were overwhelmingly optimistic about Hong Kong's commercial future. At the same time, they were concerned about the rule of law, the free flow of information, and the cost of doing business. We hope Hong Kong will make further improvements in these areas, which can have such a significant effect, for good or ill, on the business climate here. Improvements in Hong Kong's social environment and quality of life can only enhance Hong Kong's vital role in international business.

So what are we really saying when we repeat again and again that we hope Hong Kong will remain Hong Kong, that things won't change here? In fact, we are saying that we hope Hong Kong will remain the dynamic, flexible catalyst for change which it has been in the past. That it will continue to change in the direction that Hong Kong people have set for themselves, within the excellent framework of the Basic Law and the Joint Declaration. The standing joke is that Hong Kong will be a great city, if they ever finish it. Constant construction may be the hallmark of Hong Kong property developers; it's the hallmark of Hong Kong society and government as well. We hope that Hong Kong will continuously improve its clean and efficient governing environment, will continue to protect and expand the free flow of information, that it will continue on its path to democratization and that it will continue to improve business conditions. The direction, the dynamic and the determination that have characterized Hong Kong are what we hope to see continue. And above all, we know that continued progress in all these areas will be matched by continued progress in Hong Kong's relationship with the United States and with US business.

As we embark on this renewed friendship with the people of Hong Kong, I am optimistic that Hong Kong people will indeed invest their diligence and energy in these areas, because it is in their own interest to do so, not just in the interest of foreign business people. I can assure you that, in maintaining Hong Kong's dynamic and fulfilling way of life, you will find a strong and reliable partner in the United States. We look forward to helping you build the stable but flexible environment that will carry us all into a bright future. Now that the party's over, we have a lot of work to do. I think we can all look forward to doing that work together.

Thank you very much.