Select Committee on Foreign Affairs Memoranda

Memorandum submitted by Foreign and Commonwealth Office (Hong Kong and Macau)

I  INTRODUCTION

  1.  This memorandum outlines major developments in Hong Kong since the Foreign Affairs Committee's 1998 report on Hong Kong (HC 710), and the Government's two responses to that report, delivered in November 1998 (Cm 4156) and April 1999 (Cm 4331). It draws on the reports on Hong Kong presented by the Secretary of State for Foreign and Commonwealth Affairs to Parliament every six months since the handover, and takes account of developments since the latest report, covering the period from July to December 1999. The next six monthly report will be published in July 2000.

II  IMPLEMENTATION OF THE JOINT DECLARATION

  2.  Britain has a moral and political obligation to do its utmost to ensure that China respects its obligations under the Sino-British Joint Declaration (JD). The Sino-British Joint Liaison Group, which was the main body for detailed planning of the transfer of sovereignty, and which thereafter provided a forum in which Britain and China could continue to discuss the implementation of the JD, ended its work in December 1999 (as agreed in the JD). However this does not signal the end of Britain's interest in Hong Kong. We will continue to watch developments in Hong Kong closely and, as co-signatory of the JD, will comment on how the values of the JD are protected and observed by the Chinese Government and the Government of the Hong Kong Special Administrative Region (SAR). We will also continue to report regularly to Parliament on Hong Kong.

  3.  While we have some concerns about certain developments in Hong Kong, we continue to believe that, on the whole, the Chinese and SAR Governments remain committed to safeguarding Hong Kong's systems and way of life under the principle of "One Country, Two Systems". Overall, the experience of Hong Kong since 1997 augurs well for the future of the SAR.

III  THE ELECTORAL SYSTEM AND PROGRESS TO DIRECT ELECTIONS

  4.  The next elections for the Hong Kong Legislative Council (LegCo) will take place in September 2000. The electoral framework will be similar to that for the last LegCo elections in May 1998. However, in accordance with the Basic Law, the number of members directly elected in geographical constituencies will rise from 20 to 24; while the number elected by an Election Committee will fall from 10 to six. The number in functional constituencies representing certain professional and business sectors will remain unchanged at 30.

  5.  The Government's views on the current electoral framework were set out in the second six-monthly report (Cm 3831). Our concerns centre around the much more restrictive franchise in the functional constituencies compared to the arrangements used in 1995, in addition to a return to the use of corporate voting. We have said publicly that we hope the SAR Government will work towards the early realisation of the goal of universal suffrage, at a pace in step with the wishes of the local community. Local interest in the question of Hong Kong's democratic development is growing, focussing not only on the electoral system but also on the SAR Government's relationship with, and accountability to, LegCo. SAR Government officials have indicated that they will begin looking at options for political development after the September 2000 LegCo elections. The Chief Executive has reiterated the need for steady progress in accordance with the Basic Law.

  6.  The SAR Government has reformed Hong Kong's system of local government, abolishing the Urban and Regional Councils and replacing the old District Boards with 18 new District Councils with effect from 1 January 2000. Concerns have been expressed in Hong Kong about the high proportion of appointed seats on the District Councils.

IV.  THE RULE OF LAW

  7.  As foreshadowed in Cm 4331, there was significant controversy in 1999 after the Court of Final Appeal (CFA) struck down certain provisions of Hong Kong's immigration law as being incompatible with the Basic Law's provisions on the right of abode in Hong Kong. Details of the case are set out in the six monthly reports for 1999 (Cm 4415 and Cm 4594). The CFA's interpretation of the Basic Law opened the way for a substantial wave of immigration from the mainland. The SAR Government took the view that this would represent an intolerable burden. They considered seeking an amendment to the Basic Law to restrict eligibility to right of abode. This option was supported by the Hong Kong Bar Association and many legislators as the most natural and acceptable solution in a common law jurisdiction. However, the SAR Government was concerned that this would take too long and that the National People's Congress (NPC) in Beijing might not be prepared to make an amendment. They therefore decided to seek an interpretation of the Basic Law's right of abode provisions from the Standing Committee of the NPC.

  8.  While some welcomed the SAR Government's action as the most appropriate way to resolve the immigration challenge, others sharply criticised it as undermining the authority of the CFA and the rule of law. The SAR Government has emphasised the unusual circumstances in which it found itself and the exceptional nature of its decision to request an interpretation. We believe that the procedure by which the SAR Government sought the interpretation should remain exceptional. We would not want to see confidence in the rule of law undermined by its repetition.

  9.  The right of abode issue returned to the CFA in December. In its judgment, the CFA affirmed the power of the NPC Standing Committee to interpret all parts of the Basic Law, and the duty of the Hong Kong courts to follow such an interpretation.

  10.  In December 1999, the CFA overturned a ruling by the Court of Appeal that the provisions of the National and Regional Flag Ordinances which created the offence of desecration of flags were unconstitutional. We recognise that this is a difficult constitutional issue and fully respect the judgment of the CFA.

  11.  Interest has continued to focus on the lack of formal arrangements for the rendition of fugitive offenders between Hong Kong and the mainland. The issue has been the subject of talks between SAR and mainland officials, most recently in March 2000. We have made clear to the Chinese and SAR Governments our view that any arrangements must be acceptable to all concerned.

V.  BASIC RIGHTS AND FREEDOMS

  12.  We continue to attach the highest importance to the rights and freedoms of Hong Kong people, and to follow closely the SAR Government's commitment to uphold and protect those rights. Although our overall assessment is positive, we continue to take note of issues of concern.

  13.  One of Hong Kong's major strengths is its diverse and open media. We welcome the fact that controversial issues continue to be discussed and debated in Hong Kong. We were therefore very concerned at comments made in April 2000 by the Deputy Director of the Chinese Government Liaison Office in Hong Kong, Wang Fengchao, that the Hong Kong media should not report views advocating the independence of Taiwan. We issued a statement expressing our concerns and welcoming a statement by the SAR Acting Chief Executive which reaffirmed that the Hong Kong media remain free to report and comment on all matters of current interest. We raised our concerns with the Chinese Government, who replied that press freedom was guaranteed by the Basic Law, but that it was inappropriate to disseminate views about Taiwan's independence in Hong Kong. The Chinese also stated that foreign countries should not interfere in what the CPG regarded as the internal affairs of China. We in turn have made clear our right to remain engaged on matters relating to the implementation of the JD, to which we are a co-signatory.

  14.  Many believe that a degree of self-censorship, particularly in respect of events on the mainland, has existed in the press and electronic media since before the handover. There are still varying assessments as to whether the situation has deteriorated since 1997. During 1999, renewed concerns were expressed about the editorial independence of Radio Television Hong Kong (RTHK), following the departure of the Director of Broadcasting. We have noted the commitment of the new Director to maintain the editorial independence of RTHK.

  15.  The freedom to demonstrate is a fundamental right in a free society. We welcome the fact that peaceful and orderly public demonstrations, including the annual commemoration of the 1989 Tianamen crack-down, have continued to take place in Hong Kong. We note practitioners of Falun Gong and other groups branded in the mainland as "evil cults" have been permitted to hold demonstrations in the SAR in accordance with the law, even though the organisations have been declared illegal in the mainland. This is clearly in accordance with "One Country, Two Systems".

  16.  A number of pro-democracy politicians have continued to face difficulties in travelling to the mainland. These include members of the Democratic party such as Martin Lee, as well as other outspoken legislators such as Emily Lau. Most recently, in September 1999, legislator Margaret Ng was refused entry to the mainland to attend a legal seminar, raising concerns in Hong Kong and internationally. The Chief Executive reiterated his commitment to safeguarding the rights and freedoms set out in the Basic Law, but said that he believed the decision had been made in accordance with mainland laws. We have raised this issue on several occasions with the SAR Government and the Chinese Government.

  17.  Reports on Hong Kong under the International Covenant on Civil and Political Rights (ICCPR) and the International Covenant on Economic, Social and Cultural Rights (ICESCR) were submitted to the UN Human Rights Committee (HRC) in January and June 1999 respectively. The HRC hearing on the report under the ICCPR took place in November. This was a significant event, as it was the first time Hong Kong's record had been examined by the UN since the handover. We understand that the report was drafted entirely by the SAR Government, without subsequent amendment by the Chinese Government. We welcomed the fact that SAR Government officials conducted the main business of defending the report at the HRC hearing; and that Hong Kong NGOs were able to give an informal briefing to the HRC before the hearing. The HRC, while praising the quality of the Hong Kong report, raised a number of concerns. We have taken note of the HRC's detailed comments. Overall, this process has demonstrated the vibrancy and autonomy of the process in Hong Kong. We look forward to the same active discussion when the hearing on the ICESCR report takes place.

  18.  A highly sensitive issue remains the enacting of legislation under Article 23 of the Basic Law to prohibit any act of treason, secession, sedition, subversion against the Central People's Government, theft of state secrets and to regulate the activities of foreign political organisations in Hong Kong. The SAR Government has not yet brought forward legislative proposals. In April 2000, the Deputy Director of the Chinese Government Liaison Office, in his remarks on the Hong Kong media, called for the legislation to be speeded up.

  The SAR Acting Chief Executive reiterated that the SAR Government had made no decisions as to the timing or content of such legislation; that they will consult Beijing and that full public consultation would be carried out before any final decisions were made; and that legislation on this matter could not be in conflict with the provisions of the Basic Law. We have previously welcomed SAR Government assurances on public consultation.

VI.  ECONOMIC POLICY-MAKING

  19.  The impact on Hong Kong of the regional economic crisis in the late 1990s presented the SAR Government with significant challenges in the area of economic and financial decision making, where it has full autonomy. However, the Hong Kong economy is now recovering strongly from the recession triggered by the crisis. The SAR Government is projecting real GDP growth of 5 per cent in 2000. The budget deficit for 2000-01 was substantially lower than expected, and no new taxes were introduced. The SAR Government has however, announced a review of public finances which will explore options for widening the tax base.

  20.  The Chinese Government has continued to avoid involvement in Hong Kong's economic affairs. However, there have been suggestions that the Chinese Government encouraged the Hong Kong company Pacific Century CyberWorks in its recent bid for Cable and Wireless Hong Kong Telecom. In the event, Cable and Wireless decided to support a merger with Pacific Century CyberWorks bid in preference to the deal offered by SingTel (of Singapore). The SAR Government's stated position was that the deal was a purely commercial matter for the companies concerned.

VII.  XINHUA

  21.  In January 2000, the Chinese Government announced that the Hong Kong branch of the Xinhua News Agency would be renamed the Liaison Office of the Central People's Government (CPG) in the Hong Kong SAR, and listed the Office's functions. The change was welcomed by the SAR Chief Executive and many took the view that it would increase transparency. However, others were concerned about the possibility of greater involvement in local affairs by the Liaison Office.

VIII.  BILATERAL RELATIONS

  22.  The British Consulate-General in Hong Kong has a staff of 147 working in its Political and Economic, Commercial, Consular, Passport, Visa and Management Sections, of whom 40 are UK-based.

  23.  The Government has continued to nurture links with the SAR Government on a wide range of issues including economic policy, law enforcement, the environment, civil service reform, cultural affairs and IT. For example, in June 1999, during his visit to Hong Kong, the Secretary of State for Trade and Industry signed a Memorandum of Understanding with the SAR Government on IT and telecommunications. There is active co-operation between the Home Office and the SAR Department of Justice on the surrender of fugitive offenders. We also maintain a regular dialogue with the SAR Government on issues related to strategic trade. We continue to treat Hong Kong separately from the mainland for export control purposes, and have confidence in the strength of the SAR's control regime.

  24.  The regular flow of high-level visits in both directions has helped develop the bilateral relationship. Since the Committee's report in July 1998, there have been visits to Hong Kong by the Prime Minister, the Deputy Prime Minister, the Lord Chancellor, the Secretary of State for Trade and Industry and the Secretary of State for Culture, Media and Sport as well as the Foreign Secretary, the late Derek Fatchett and, on two occasions, John Battle (Minister of State at the Foreign and Commonwealth Office responsible for Hong Kong affairs).

  25.  The FCO operates a sponsored visits programme under which leading Hong Kong figures are invited for working visits to the UK. The British Chevening Scholarships Scheme has operated in Hong Kong since 1996, giving young people with leadership potential the opportunity to develop their academic and management skills in the UK. Around 45 scholarships are offered annually, a total of 166 in the first five years of the scheme's application to Hong Kong.

  26.  We continue to support actively the SAR Government's efforts to widen visa-free access for SAR passport holders. As at mid-April 2000, 71 countries or territories world-wide offered such access. Currently 85 countries offer visa-free access to holders of BN(O) passports and we continue to seek opportunities to widen this field.

  27.  Economically, Britain and Hong Kong remain major trading partners. Hong Kong is Britain's second largest export market in Asia after Japan, taking well over £2,000 million of British exports a year. Some 35 per cent of British exports to mainland China also pass through Hong Kong. Capital flows between Britain and Hong Kong are worth about £20,000 million a year. Total British investment in Hong Kong is estimated at some £14,000 million. Hong Kong is a priority market for British Trade International, which is submitting a separate memorandum.

  28.  Due to the strong links with the UK, Hong Kong has been a long-term investor in the UK, with around 80 per cent of their European investment in the UK. There is a mix of investment from ports, telecomms, textiles, boat manufacture, property and computer peripherals. Although inward investment from Hong Kong has been lower over the last two years, primarily due to the economic environment, there are signs that Hong Kong companies are again becoming more active overseas.

  29.  Hong Kong remains an important centre of activity for the British Council, which provided English language courses to 40,000 students in Hong Kong in 1999. Further details of the Council's activities in Hong Kong are covered in the Council's separate memorandum. The British Consulate-General works very closely with the British Council in promoting better awareness of the UK's creativity, its cultural diversity and its recent achievements, and in challenging outmoded stereotypes.

IX.  CONSULAR WORK IN HONG KONG

  30.  There are about 3.5 million British passport holders in Hong Kong, of which the majority are British National (Overseas) (BN(O)). There are some 3.44 million BN(O) passport holders worldwide and most still reside in Hong Kong. There is also a large expatriate community of about 24,000. Hong Kong is thus a busy post for passport and consular work. The Consulate General operates the largest passport issuing facility outside the United Kingdom. It also has an important role to play with regard to distressed British nationals in Hong Kong.

  31.  However, as most BN(O) passport holders are of ethnic Chinese origin and are eligible for the Hong Kong Special Administrative Region passport, we are unable to give formal consular assistance to BN(O) passport holders in Hong Kong and mainland China. But we regularly provide consular assistance to BN(O) passport holders in third countries throughout the world and, as a consequence, our consular staff in Hong Kong are in frequent contact with their families.

  32.  There are currently 10 British nationals (not BN(O)s) in prison in Hong Kong and receive regular visits from our consular staff. In addition Cantonese-speaking staff at the British Consulate-General pay periodic visits to the 80 or so BN(O)s who are in prison in Thailand.

  33.  Some 4,370 members of Hong Kong's ethnic minorities holding BN(O) status have registered as British citizens under the British Nationality (Hong Kong) Act 1997. The Consulate-General continues to accept new applications on behalf of the Home Office and to handle residual enquiries. Many of the applications from minors of Pakistani origin which were outstanding at the time of the Committee's third report on Hong Kong, have now been resolved. The Pakistani Government confirmed in September 1999 that those minors born outside Pakistan, whose fathers were Pakistani by birth, have retained Pakistani citizenship. Therefore they do not qualify for British citizenship under the 1997 Act.

X  MACAU

  34.  China resumed sovereignty over Macau on 20 December 1999 in accordance with the 1987 Sino-Portuguese Joint Declaration. Macau's Basic Law, which is closely modelled on Hong Kong's, guarantees that Macau's way of life and capitalist system will remain unchanged for 50 years under the principle of "One Country, Two Systems". The Macau Special Administrative Region, like the Hong Kong SARG, has a high degree of autonomy.

  35.  The British Consul-General in Hong Kong and a number of his staff are jointly accredited to Macau, and make regular visits there. They maintain links between the UK and Macao on a range of consular, commercial, political and economic issues. There is also an Honorary Consul based in Macau.

Foreign and Commonwealth Office

17 May 2000

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Prepared 30 October 2000