THE CONSULATE GENERAL OF SWITZERLAND IN HONG KONG

Introduction
August saw robust economic growth and a proposed ice-breaking trip for democrat legislators (barred since 1989) to Mainland. However, there were increasing concerns on the food safety in HK.

Domestic politics
New talent plan meets opposition: Chief Executive Donald Tsang is likely to shelve his plan to appoint assistants to ministers in the face of opposition from senior civil servants and officials. Chief Executive attempted to groom talent from political parties, civil service and wider community.
No timetable for universal suffrage: Top policy adviser to HK Government said HK people should concentrate on the economy rather than constitutional reform. The latest government assessment showed that the public's highest priority was stability, not a political reform plan. Chief Executive Donald Tsang called on the pro-democracy parties to soften their demand for universal suffrage or risk facing standstill over elections. He said that there would be no timetable for universal suffrage and the HK Government had no power to act without the consent of Beijing Government.
Executive order issued to regulate the use of covert surveillance: Chief Executive Donald Tsang issued a rare executive order (second one since 1997) to regulate the use of covert surveillance by law enforcement authorities. The decree followed by rulings by two courts that such clandestine means by the Independent Commission against Corruption breached the Basic Law. The HKSAR Government argued that the executive order would make the process of covert surveillance more transparent and give a clearer legal backing to law enforcement officers. Also, it would only be an interim measure as the Government would introduce legislation to govern covert surveillance. However, the Bar Association, some members of the Legislative Council and critics accused the chief executive of overstepping his powers by issuing a constitutionally dubious executive order on covert surveillance. They were very disappointed that Donald Tsang bypassed the Legislative Council and did not seek to address the problem with legislation.
Chief Executive popularity dropped: Public support for Chief Executive Donald Tsang has slipped for the second time in two months in an university poll due to the controversy surrounding his Executive Order regulating covert surveillance and the recent spate of food scares.
Chief Executive defended unannounced visit by Chief Secretary to Beijing: Chief Executive Donald Tsang stated that government ministers would continue to pay frequent visits to Beijing and meet state officials. But he promised that such future visits would be announced in advance, after Chief Secretary Rafael Hui was found to have made a secret visit to meet Beijing officials.
HK legislators, including those barred from Mainland, invited to Guangdong: Beijing has invited all 60 HK legislators, including the democrats barred from entering the main land, for a two-day official trip to Guangdong.

International affairs
European Commission (EC) Annual Report on democratisation in HK: The EC report raised concerns about democratisation in HK that Beijing produced a ruling allowing for only minor changes to the electoral system in 2007-08. It was inconsistent with the high level of autonomy granted to HK under the Basic Law. The EC hoped for significant progress in the implementation of universal suffrage. The HKSAR Government responded that these comments reflected a misunderstanding of HK's constitutional development.
Japan's envoy on a damage-control mission: Following the recent violent anti-Japanese protests in China many business and leisure travellers from Japan have avoided HK which is seen as part of China. Realizing the need to clarify the situation, the Japanese Consul General has held a number of talks with officials and media from his country stressing HK's uniqueness as a mature and law abiding society distinct from the Mainland.
Hospitals on full alert for WTO conference: Public hospitals will be on their highest alert since Sars for emergencies - including a terrorist attack - when HK hosts the World Trade Organisation ministerial conference in December. Staff in key service areas have been asked not to take leave during the conference from December 13 to 18.
Terror threat lingers ahead of WTO talks: HK's international role as financial hub puts it at risk. HK has a moderate chance of being struck by terrorists in the lead up to the WTO meeting in December, police believe. "This threat assessment is based on our contact with international intelligence services," said Chief Superintendent Alfred Ma Wai-Luk.
Victoria jail could hold 700 WTO protesters: Victoria prison could hold up to 700 protesters if trouble flares during the WTO ministerial meeting in December, the security chief said.

Transborderaffairs
New air-services agreement with China: HK has signed a new air-services agreement with China to increase the number of passenger flights between HK and 12 second-tier Mainland cities such as Nanjing, Hangzhou and Changsha. The agreement allows for an immediate 57% capacity increase on all routes.
Funding problem for delta bridge: An academic and advisor in Mainland said that the reluctance of the Macau and Guangdong governments to put money into the bridge project (which will link HK, Macau and Zhuhai) could delay or threaten its construction. The proposed 28km cross-delta link (cost at US$3.8 billion) is unlikely to start this year.
Growing pains for some Pan Pearl River Delta provinces: It was heralded as a way of sharing prosperity in Southern China, but one year after the Pan Pearl River Delta Economic Zone was established, some inland provinces are still waiting to see its first benefits. It seems that for the moment Guangdong has been the biggest beneficiary, receiving power from Guizhou and Yunnan to keep its factories running while inland provinces are yet to receive the promised industries migrating from the Pearl River Delta and investments from HK.
Move to clarify benefits-fund rules: A new regulation requiring HK, Macau and Taiwanese residents working on the Mainland to contribute to the national social security fund will only cover those who have signed Mainland employment contracts, according to a labour official. However, human resources specialists said the regulation would still affect most HK people working on the Mainland, who were required to sign employment contracts with the foreign-invested enterprises and joint ventures they worked with.
Cross-border deliveries hit by fuel shortage: The fuel shortage on the Mainland is beginning to affect HK's cross-border delivery business, with some drivers being forced to abandon their vehicles in Guangdong and turn down orders from their customers.

Legal Affairs and human rights
Free-speech protesters to air their views: Almost 1,000 protesters demonstrated in support of sacked radio talk-show host Wong Yuk-man and freedom of speech. They called on the government to open more radio frequencies so that the public could set up their own stations.
Journalist Ching Cheong charged with spying for Taiwan: HK-based journalist Ching Cheong (Singapore Straits Times correspondent) was charged by Beijing with spying for Taiwan. Local and international journalists' groups, human right activists and democrats as well as the US Government expressed great concern over the case declaring that freedom of the press is a fundamental and internationally recognized right. Chief Executive Donald Tsang said that his approach was to work hard behind the scenes for the interest of Ching Cheong but he knew it was a difficult case.

Economy
More companies incorporated in HK: Increased business optimism saw more than 37,000 firms set up in HK in the first half of this year, about 18% more than a year earlier. The net increase of about 5,600 new local companies has more than made up for a 25% drop in the number of overseas companies setting up in HK.
Mainlanders prefer to buy in HK: HK has benefited as more Mainland tourists have been shopping in HK after China eased travel rules in mid-2003. Many Chinese prefer to buy in HK because they know they are not being sold counterfeits. It is also cheaper by 10-20% as China imposes import tax on foreign-made goods and 17% value-added tax.
Retailers upbeat by relaxed policy: Local retailers are upbeat as the Central government has relaxed limits of money Mainlanders can take out when they travel abroad. Some credit cards limits are scrapped as well. Given the opening of Disneyland in September, they see the retail market heating up.
Growth of retail sales in Jan-June: Total retail sales increased by 8% in value or 7% in volume for the first half of 2005 over the same period a year earlier. Consumer demand continued to hold up well, along with the increasingly entrenched economic recovery.
HK to develop watch component industry: More than $100 million will be invested to develop a watch component industry, paving the way for the first wholly "Made in HK" wristwatch that could be ready in three years. The plan would also allow domestic watch manufacturers to export their wares to the Mainland tariff-free under the Closer Economic Partnership Arrangement (CEPA). Under CEPA, at least 30 per cent of a watch's total cost must originate in HK to avoid paying 12.5 per cent in Mainland tariffs. HK is far behind Switzerland and Japan in making mechanical watch components and may bring in experts from these two countries.
Unemployment statistics: Unemployment rate stood at 5.7% in May - July 2005, same as that in April - June 2005. The unemployment rate had not fallen because of the number of fresh graduates and school leavers joining the labour force. Total employment recorded a new high of 3.37 million in July 2005.
Mainland automobile maker considers to build cars in HK: A Mainland automobile maker is prepared to commit HK1.44 billion to build cars in HK. The HK Government will donate up to HKD350 million to set up a research and development centre for auto components, and that a made-in-HK car will enter the Mainland duty-free under the Closer Economic Partnership Arrangement. It is estimated that 800 jobs will be created in this project.
Consumer Price Indices (CPI): According to the Composite CPI, overall consumer prices rose by 1.3% in July 2005 over a year earlier. This essentially was the natural phenomenon of the economic upturn. Inflation is expected to climb up further along with the gradual rise-back in unit labour, rental costs and higher oil prices.
External Merchandise Trade Statistics: For Jan-July 2005, total exports of goods rose by 11.0% to HKD 1,232 billion over the same period in 2004. Re-exports increased by 12.1% to HKD 1,168 billion, while domestic exports decreased by 5.3% to HKD 64 billion. Concurrently, imports of goods increased by 8.7% to 1,286 billion. The near-term outlook for exports remains fairly positive, as economic growth in the US and the Mainland is still relatively robust. However, soaring oil prices and protectionist sentiment in the US and the EU against Mainland's products are sources of uncertainty to the trading environment.
GDP Growth: GDP grew by 6.8% in real terms in the second quarter of 2005, following a 6.2% growth in the preceding quarter. GDP has expanded for the eighth straight quarter. However, according to Financial Secretary Henry Tang, rising trend in interest rates and increase in oil prices may impose a dampening effect on the economic growth.
Heavyweight powers HSI past 15,000: Global banking giant HSBC's buoyant interim results pushed the Hang Seng Index above 15,000 points for the first time in more than four years, with brokers expecting more good times ahead. The benchmark index rallied 158.2 points, or 1.06 per cent, finishing the day at 15,137.08 - its highest close since February 26, 2001.

Health
Butcher catches pig disease: Supermarket butcher yesterday became the third local victim of the pig-borne disease Streptococcus suis in a month, bringing the number infected this year to nine and sparking calls for an extension of the government's ban on Mainland pork imports.
Crisis talks in Beijing over safety of HK food: Secretary for Health, Welfare and Food York Chow is flying to Beijing for crisis talks on food safety with senior Mainland officials. His surprise trip comes after HK officials admitted the Mainland had been slow alerting them to Guangdong's recall of eel products from three provinces over their suspected contamination by the cancer-causing chemical malachite green.
New rules on imports to restore faith in fish: The HK and central governments moved to boost confidence in Mainland fish with an agreement to immediately restrict exports to approved fish farms and improve communication on food safety incidents. The new fish regulatory system will be similar to the system of accredited farms and processing plants for poultry, pig, cattle and vegetables.
Soaring suicide rate spurs WHO to seek action: HK is to come under pressure from the WHO to do more to bring down the city's soaring suicide rate, now more than three a day. The WHO is calling for a unified public health approach to suicide prevention, a policy the city's government has so far resisted.
Cautious HK welcome for bird flu vaccine: HK's Disease Control Centre says it is encouraged by the development of an H5N1 bird flu vaccine, amid reports that mass production could begin next month. "When the vaccine is proven safe and effective and is available, we will bring relevant information to the attention of the [Health Department's] scientific committee on vaccine-preventable diseases for consideration," it said. The comments came a day after US government scientists said they had been successful in human tests on a French-developed vaccine on humans that they believe could protect against the H5N1 flu strain spreading among birds in Southeast Asia and Russia.

Environment
Emission caps for power plants: The HK Government has imposed emission caps fort he first time as a condition of renewing power plant's license. Power plants are the source of 92% of all sulphur dioxides, 58% of nitrogen dioxide and 46% of respirable suspended particulates found in the air.
Cross-border emission trading scheme: According to Environmental Protection Department, Asia's first cross-border emission trading scheme, proposed between HK and Guangdong, is the most cost-effective way of improving air quality of the Pearl River Delta. Emission trading is a market-based tool used to reduce air pollution by providing economic incentives for reducing emission.

Varia
All systems go for electronic tags at Chek Lap Kok: The Airport Authority, backed by an extensive series of tests, has completed the roll-out of Asia's single largest deployment of radio frequency identification (RFID) technology at HK International Airport. The $ 50 Million, RFID-enabled airport baggage-handling system - which uses electronic tags to track luggage - started full operations, accelerating the replacement of bar code-scanning facilities at the airport.
Comic fair draws record crowds and cash for happy exhibitors: Record-breaking crowds at the Comic Festival helped turn the annual fair into a paradise for exhibitors, who registered sales increases of up to 100 per cent. A total of 421,000 visitors attended the five-day fair, compared with 380,000 last year.
HK to push Tokyo from top spot on office costs: HK will soon overtake Tokyo as the most expensive office location in Asia, with a supply shortage likely to drive rents significantly higher over the next 12 months, property analysts say.

Press articles related to Switzerland
South China Morning Post (SCMP), 1 August 2005: 12-page supplement of the National Day of Switzerland included an interview with Consul General, general information about Switzerland, bilateral trade and investment statistics, editorial reports on finance, exports, food, travel, Swiss companies in various business lines and advertisements.
South China Morning Post (SCMP), 23 August 2005: Switzerland and Malaysia are two destinations on the China National Tourism Administration's watch list after recent reports of theft and robberies committed against Chinese visitors. The Ministry of Foreign Affairs in Beijing issued a warning about thefts targeting Chinese tourists in Switzerland, especially Geneva.
South China Morning Post (SCMP), 25 August 2005: Technology reduces canine lifesavers to museum pieces: With the advent of heat sensors and helicopters the St Bernard dogs have become obsolete as life savers.
Various press, 27 August 2005: Johnson Electric bids to buy out Swiss firm Saia-Burgess: Johnson Electric, the world's second-largest micro motor maker in HK, has offered to buy out Swiss firm Saia-Burgess for CHF 700 million. The board of Saia-Burgess has approved the acquisition proposal and would recommend their shareholders to accept it.

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