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FY 1999: Hong Kong |
CHAPTER III. POLITICAL ENVIRONMENTA. Nature of Bilateral Relationship with the U.S.
The U.S. and Hong Kong maintain close and cooperative relations. Hong Kong is our fifteenth-largest trading partner. According to preliminary data from the US Department of Commerce, U.S. direct investment in Hong Kong through 1997 totaled US$19.1 billion on a historic cost basis. The U.S. maintains a wide number of cultural and educational exchanges with Hong Kong, and enjoys excellent cooperation in law enforcement matters. Over 50,000 American citizens reside in Hong Kong and over 1,100 U.S. companies have offices in Hong Kong.
B. Major Political Issues Affecting Business Climate
Hong Kong became a "Special Administrative Region" (HKSAR) of the People's Republic of China on July 1, 1997. The Sino-British Joint Declaration, signed in 1984, and the Basic Law of the HKSAR, passed by China's National People's Congress in 1990, form the legal basis for China's "One Country, Two Systems" guarantees for Hong Kong. The HKSAR has a high degree of autonomy, and is enjoys independent executive, legislative and judicial power. China has promised that the social and economic systems, life- style, and rights and freedoms currently enjoyed by Hong Kong people will remain unchanged for at least 50 years. The HKSAR Government negotiates bilateral agreements (then "confirmed" by Beijing), and makes major economic decisions, on its own. The central government in Beijing is responsible only for foreign affairs and defense of the HKSAR.
In June 1995, Chinese and British negotiators reached agreement on the establishment of a Court of Final Appeal (CFA), which replaced the British Privy Council as the highest appeal body on July 1, 1997. This development was widely seen as a step forward in assuring the continuity of the rule of law, which has been fundamental to Hong Kong's success as an international business and financial center. In May 1997, Andrew Li, a widely respected British educated barrister, was nominated to be Chief Justice of the CFA.
C. Political System, Elections, Orientation of Major Political Parties
When Hong Kong became a Special Administrative Region of China in July 1997, the Basic Law guaranteed the continuation of the rights and freedoms that Hong Kong residents already enjoyed: in essence, the continued rule of law, and the maintenance of Hong Kong's capitalist system for 50 years. In fact, the HKSAR has maintained its capitalist economic and trade systems, retained the status of a free port and continued a free trade policy with free movement of goods and capital. It retains its status as an international financial center, as can be seen in its active participation in efforts to address the Asian financial crisis. It formulates, on its own, monetary and financial policies and safeguards the free operation of business and financial markets. The Basic Law states that the HKSAR will maintain its own currency and use revenues exclusively for its own purposes. The Hong Kong Dollar continues to be freely convertible and foreign exchange, gold and securities markets continue to operate as before. Systems currently in place, including Hong Kong's regulatory and supervisory framework, have remained unchanged. Hong Kong's legal system, including the independence of the judiciary and obligation of the executive authorities to abide by the law, has also continued. Beijing is only responsible for foreign affairs and defense of the HKSAR.
Hong Kong is a free society with legally protected rights. Until June 30, 1997, Hong Kong's constitutional arrangements were defined by the Letters Patent and Royal Instructions issued by the United Kingdom; thereafter, Hong Kong became a Special Administrative Region of the People's Republic of China as pre- scribed by the 1985 Sino-British Joint Declaration and the Basic Law, a "mini-constitution" approved in 1990 by China's National People's Congress. Executive powers are vested in the Chief Executive, C.H. Tung, who was selected by a 400-person Selection Committee. The judiciary is an independent body which operates according to the precepts of the Common Law, with certain variations. The Basic Law (article 8) stipulates that the laws in force in Hong Kong before reversion, except for any which contravene the Basic Law, remain in force. The Court of Appeal (CFA) was also established on July 1, 1997 to replace the British Privy Council as the final arbiter of cases brought in Hong Kong courts. Legislative power rests in the hands of Hong Kong's Legislative Council.
Prior to 1985, members of the Legislative Council were not elected. Between 1985 and 1995, legislative seats appointed by the Governor were eliminated and an increasing number of legislators were elected either directly from geographic constituencies or by professional, business, and labor groups, called functional constituencies. The first elected legislature under the SAR Government was elected on May 24, 1998 and sworn in on July 2, 1998. Based on the Basic Law formula of 20 geographic seats, 30 seats from "functional" con- stituencies representing the professions, business sectors, and labor, and 10 seats from an electoral committee, the methods used to elect the legislature limited "pro-democracy" candidates to about twenty out of sixty seats, despite the fact that they received about two- thirds of the popular vote. The most popular political party, which only has 600-800 members, is the Democratic Party, which received 43 percent of the vote in the May 1998 election. The left-wing labor union affiliated and generally pro-China DAB (Democratic Alliance for the Betterment of Hong Kong) is the second most popular political party with about 25 percent support.
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