THE CONSULATE GENERAL OF SWITZERLAND IN HONG KONG

Economy + Finance
HK must be ready for competition from Shanghai Free-trade zone: Shanghai's new free-trade zone (FTZ) does not pose an immediate threat to HK, Secretary for Financial Services and the Treasury Chan Ka-keung said, but urged local firms to prepare for competition. "If the FTZ in Shanghai succeeds, China will copy and set up more FTZs around the country," Chan said. "There will also be more relaxation and opening-up policies and capital account liberalisation. When such reforms happen, it will add both opportunities and competition for HK firms and that is why we have to introduce new services and products to compete."
Peg shift would mean pay cuts, deflation: Pay cuts and deflation would sweep across HK if the peg to the US dollar was abandoned and switched to the yuan, HK Monetary Authority chief executive Norman Chan said. "If the HK dollar were pegged to the [yuan], HK's exports and the overall competitiveness of the economy would substantially weaken," Chan wrote in an article in the South China Morning Post analysing the peg's 30 years of operation. "We would have to go through the pain of pay cuts and deflation before our competitiveness could be restored." Chan insists the preconditions for a peg to the yuan still do not exist. "It is too early to consider the use of the [yuan] as our anchor currency while it is not yet freely convertible and the capital account of the mainland is still not fully liberalised," Chan wrote.
Property price curbs could lead to government deficit next year, warns economist: Measures to cool the housing market could result in a serious deficit for the government in the next financial year by slashing one of its main income sources - stamp duty on property sales - a university economist says. Ho Lok-sang said a dramatic drop in transactions had already been noted since the introduction of a special stamp duty and a 15 per cent duty on overseas and corporate buyers on top of stamp duty. He said the measures could also shake the confidence of potential property buyers and foreign investors that might have a snowball effect in areas beyond the property market. "All these would result in a huge impact on government income," he said.
China's central bank likely to lift yuan conversion limit for Hongkongers: The People's Bank of China is likely to scrap the 20,000 yuan-a-day limit on currency conversion for HK people, HK Monetary Authority chief executive Norman Chan says. The central bank had been actively considering such a move, which would boost the development of yuan-denominated investment products in HK, Chan said in Beijing after meeting officials from the central bank and the State Administration of Foreign Exchange. While the limit on converting yuan into HK dollars and vice versa would be scrapped for individuals, the daily remittance limit of 80,000 yuan (HK$102,000) - which affects money transferred through banks across the border - would not change. The pool of offshore yuan funds in HK, including yuan deposits and certificates of deposit, stood at about 900 billion yuan, sufficient to support the increase in currency conversion, Chan said.
HKEx mulls consultation on shareholding structures: HK's stock exchange is edging closer to a consultation that could lead to a revision of its listing rules, following mainland e-commerce giant Alibaba's abandonment of an initial public offering. Alibaba failed to convince HK regulators to waive rules and allow the unique partnership structure it wanted, which would have given 28 partners - mainly founders and senior executives, who own about 10 per cent of the company - the power to nominate a majority of its board members. The Securities and Futures Commission said giving partners that much voting power would cut across the one-share, one-vote principle that underpins HK' securities law. HKEx chief executive Charles Li said that consideration should be given to non-standard shareholding structures for "innovative companies". Jack Ma, a founder of Alibaba, said he had read Li's article and thought it an "active and positive" message.
HK workers can expect 4.7% salary increase this year, study shows: HK wage-earners can expect to make up to 4.7 per cent more next year, according to a recent survey. Salaries increased by about 4 per cent from July 2012 to June 2013, slightly below inflation and last year's projection of 4.1 per cent to 4.5 per cent. Felix Yip, senior lecturer at HK Baptist University's department of management, said the rise in pay was "conservative". Yip said low unemployment and inflation were the reasons for the optimistic outlook. "Right now, the unemployment rate is 3.3 per cent," he said. "We have to move salaries up if we want to [attract new hires]."

Domestic politics
Public to be consulted this year on Hong Kong's 2017 polls: The public will be consulted this year on arrangements for the next chief executive and Legislative Council elections, the government said. Chief Executive Leung Chun-ying told lawmakers that a task force of three ministers, led by Chief Secretary Carrie Lam, would work on proposals. The ministers promised ample time for the public to express its views. However, they remained cautious about the possibility of including the pan-democrats' idea of "public nomination", under which some or all registered voters would be able to put forward chief executive candidates. Lam said the city must strictly follow the Basic Law and the decisions of the National People's Congress Standing Committee to elect its next chief by universal suffrage in 2017.
Decisions on party politics 'inevitable': Beijing and HK will not be able to avoid party politics in 2017, when decisions about universal suffrage must be made, according to Legislative Council president Jasper Tsang. Tsang said the 16 years of administrative problems after the handover was strong proof that a chief executive had to be affiliated to a political party. The legislature chief said the central government's of different parties taking charge. "When there is party politics there is no way you can rule out party alternation," Tsang said. "But it is not feasible to exclude all political parties from governing HK."
Thousands protest to 'defend HK's core values' after failed HKTV licence bid: Tens of thousands of protesters in black T-shirts marched to the government headquarters in Admiralty on Oct. 20 claiming that the decision to deny HK Television Networks (HKTV) a free-to-air TV licence was a threat to the city's core values. HKTV chairman Ricky Wong said the issue was no longer about giving viewers more choice but whether the authorities respected people's needs and whether Hong Kong was still governed by the rule of law. Some protesters called on the government and Executive Council to explain the rationale behind the issuing of licences as documents leaked to the media revealed there were no reasons not to issue three. When the government decided to open the TV market in 1998 it said there would be no cap on licence numbers. Members of the public accused the government of crushing the city's core values. The Commerce and Economic Development Bureau repeated that no political considerations or desire to protect existing market players were involved.
Governance is at stake in TV licensing fallout, observers warn: The storm over free-television licensing may leave a more far-reaching impact on Chief Executive Leung Chun-ying's governance than any of his administration's previous crises, as many pro-government allies distance themselves from the decision, observers say. The announcement (on Oct. 15) denying Hong Kong Television Network a free-to-air broadcasting licence sparked a protest rally at government headquarters. Joseph Wong, former secretary for commerce, industry and technology, said he believed most of the marchers on Oct. 20 were originally politically neutral or even pro-government. Their opposition to the decision signalled the potential for a crisis of governance, he said. The controversy has moved from the initial perceived unfairness of leaving high-profile HKTV owner Ricky Wong out of the market, to raising questions over the secrecy of Executive Council deliberations, to allegations that the city's core values are under threat. Liberal Party leader James Tien, who used to sit on Exco, said Leung's standing as leader would "definitely" be hit, including from a business viewpoint, if the government stuck to its guns not to offer a clearer explanation.
Occupy Central's attempt to register as a company hits a roadblock: An application to set up a company to run the affairs of the Occupy Central pro-democracy campaign has dragged on for over five months, with the Companies Registry questioning whether the business was being set up for a "lawful purpose". Campaign organisers say the government is using executive measures to obstruct lawful activities. 
Business groups ‘worried’ by Occupy co-founder’s meeting in Taiwan: Eight business groups issued a statement on Oct. 28 condemning the Occupy Central movement's alleged connection with Taiwanese independence advocate Shih Ming-teh and its plan to blockade the finance district, saying such a "reckless act" could harm "one country, two systems" in HK. "The business sector is deeply worried about the external influence brought to the Occupy Central plan, which could harm 'one country, two systems' and HK's economic prosperity," the statement read. "It is a reckless … act, which we oppose." University of HK law professor Benny Tai insisted he did not support Taiwanese independence. It was Tai who first mooted the idea of 10,000 protesters blocking the roads in Central next summer if there was no satisfactory plan for full democracy for the 2017 chief executive election. "Maybe we are not [politically] sensitive enough," he said. Pro-establishment lawmakers issued a joint statement on Oct. 23 attacking Chu Yiu-ming, Lee Cheuk-yan and Joseph Cheng for meeting Shih.
Law society condemns Occupy Central plan: The city's largest lawyers' group joined the chorus condemning the Occupy Central civil disobedience plan, with its president saying the action was without legal grounds and the notion of "peaceful violence" was just "beautiful rhetoric". And the State Council's Taiwan Affairs Office warned against "a confluence" of the plan and Taiwanese independence, after a controversial meeting between a key Occupy Central organiser and a former leader of Taiwan's Democratic Progressive Party. Law Society president Ambrose Lam said he did not support any civil disobedience action, and insisted the concept of civil disobedience "was not a legal principle".

Relations HK - Mainland China
Xi Jinping tells HK to stick to Basic Law on reform: After a closed-door meeting in Bali, where President Xi Jinping and Chief Executive Leung Chun-ying are attending the Asia-Pacific Economic Co-operation summit, Leung said: "President Xi gave a clear view on political reform. " All issues related to political reform must be in accordance with the stipulations of the Basic Law and the decisions of the NPC Standing Committee. In addition, as HK is a society that upholds the rule of law, the SAR government and the whole of society should act in accordance with the law." Veteran analyst Johnny Lau said Xi's remarks indicated Beijing was standing firm on reform and would not make concessions easily.
Adapt to a changing order, says CY Leung in National Day speech: Hongkongers need to adapt to the changing regional and world order and identify new ways in which the city can contribute to the nation's development, Chief Executive Leung Chun-ying said in a speech to mark National Day. Leung called on the city's residents to "contribute to the progress of China" while working for the prosperity of HK. He said his government "attaches great importance" to boosting co-operation with the mainland, but that a new emerging regional and global order would bring both opportunities for competition and co-operation.
Beijing is sincere about universal suffrage in 2017, says CY Leung: The central government "sincerely" hopes to see HK elect its chief executive in 2017 by universal suffrage, Chief Executive Leung Chun-ying said after meeting a top Beijing official. But head of HK affairs Zhang Dejiang reiterated the long-standing conditions: it must comply with the Basic Law and the NPC Standing Committee's rulings, Leung said. Civic Party lawmaker Ronny Tong said the recent debate on political reform had given an impression that the 2017 election might be subject to a screening mechanism and that genuine universal suffrage might not be realised. Leung said the city's financial and economic developments were a major topic in the meeting with Zhang. In particular, Leung hoped Beijing would maintain the city as an asset-management centre and an offshore yuan trading hub.
People's Daily says mainland migrants needed for HK's development: Mainland migrants are needed for HK's development, according to a Communist Party mouthpiece that described them as "new Hongkongers"."Most of [the new migrants] earn their own living rather than relying on social security. Some of them are absorbed to become the city's new elites," the article read. The article concluded by quoting Chief Secretary Carrie Lam saying that mainland migrants were an important source of HK's population growth. Dr Richard Wong, a professor of economics at the University of HK, said mainland migrants were coming to HK "overwhelmingly" for family reunion reasons. And since people "who marry spouses across the border tend to be less educated and less skilled … the quality of the population has gone down since the 1990s".

International relations
Li pressures Aquino to resolve the bus hostage row: Premier Li Keqiang has urged Philippine President Benigno Aquino to resolve the row over the Manila bus hostage crisis as soon as possible, taking the impasse to a new diplomatic level. The conversations between Li and Aquino took place after Chief Executive Leung Chun-ying told Aquino during a 40-minute meeting on Oct. 7 that unless the matter was resolved properly it would continue to stand in the way of normal relations between HK and the Philippines. Aquino agreed that ministerial meetings should take place as soon as possible to discuss how to follow up the matter, but refused to apologise. The hostage tragedy happened in August 2010 when policeman Rolando Mendoza took 22 Hongkongers hostage on a tour bus and shot eight dead before being killed himself.
'Wide gap' in compensation proposal: The Manila city government's compensation plan differs from the expectations of families bereaved by the 2010 bus hostage tragedy by "a wide gap", the relatives' representative says. The remark came after the first meeting in three years between a Manila official and the families' representative. "The gap is quite wide," said Democrat lawmaker James To, who spoke on the families' behalf with Manila councillor Bernardito Ang, who is Manila Mayor Joseph Estrada's representative on Oct. 29. He called the meeting a "very frank" exchange, but said the biggest difference lay in compensation and an apology for the 10-hour hostage drama that left eight Hongkongers dead and seven injured. Estrada, who will visit Beijing and HK next month, is expected to deliver a long-awaited apology.

Legal affairs and human rights
HK law chiefs knew of meddling by Berlusconi ally: Justice officials have admitted for the first time that they knew a political ally of disgraced Italian ex-premier Silvio Berlusconi was trying to interfere with evidence in a money laundering case. Former Italian senator De Gregorio says he asked a senior HK government official, Duncan Pescod, to stop the transfer to Italy of evidence seized in HK in 2007 after a request by Italian prosecutors. Pescod was the city's representative to Europe at the time and was based in Brussels. In return, De Gregorio promised to help arrange a private audience with Pope Benedict XVI for then chief executive Donald Tsang. In his statement, Secretary for Justice Rimsky Yuen defended the city's legal system and said it was "in the public interest" to disclose the results of an internal Department of Justice inquiry into the allegations. But he said the department had "not taken into account any attempt to arrange a meeting with the Pope". He said: "The entire process in respect of the handling of the letter of request [from Italian prosecutors] has never been compromised in any way, nor have any irrelevant considerations been taken into account."

Health
HK viral infection figures soaring: The number of cases of hand, foot and mouth disease rose dramatically in the first nine months of this year and more adults are getting sick. More than 4,200 cases of the disease were reported in the city, overtaking the total of the previous two years combined. The viral infection mainly affects children, but doctors have recently been seeing more cases in adults. Academy of Medicine president Dr Donald Li said the large number of outbreaks might be related to humid weather and a low overall immunity in the population. The disease is mostly self-limiting and sufferers recover within a week. Severe cases may develop complications like viral meningitis or encephalitis which could lead to death.
Government insurance plan may cost 10pc more: The government's voluntary health insurance scheme looks set to cost subscribers 10 per cent more than current private schemes, but it would have wider coverage and there may be tax incentives, the health minister Ko Wing-man said. "The government will consider whether to offer tax discounts … to provide incentives to the middle class to buy the voluntary private medical insurance and reduce their use of public medical services," he said.

Environment
HK to collaborate with WHO to measure success in pollution fight: HK is to be the focus of a "globally important" link-up with the World Health Organisation to monitor the success of clean air policies in the city. The aim is to develop a mechanism to measure changes in air quality and the public's health. The idea comes as the city plans to introduce what could be the world's biggest diesel vehicle replacement scheme to improve roadside pollution at a cost of nearly HK$12 billion. It is one of a series of measures included in a comprehensive seven-year blueprint to tackle HK's environmental problems that was launched in March. Dr Carlos Dora, a co-ordinator at the WHO's Department of Public Health and Environment, said: "We are interested in documenting what policy measures are introduced and what follows in terms of changes in air quality.” Dora said the clean air plan rolled out by the government was a "very good" one as it clearly identified problems.
Energy policy will be transparent, says CLP chief Richard Lancaster: HK's energy future will rely on an "open and transparent" public consultation that will tell people the implications of their choices in favouring a particular energy mix, says the chief of the city's largest power firm. Richard Lancaster, chief executive officer of CLP Holdings, said all relevant information, from energy security and environmental performance to costs, would be made available. Environment Secretary Wong Kam-sing said the consultation aimed to find out the most acceptable energy mix in terms of the proportion of coal, gas, renewable and nuclear in electricity generation by the power firms. Any decision on the future mix will have significant bearing not just on cost, but also the environment and reliability.

Culture and Education
HK universities 'face bigger challenge from mainland campuses': HK universities have been warned to prepare for stiffer challenges from elite mainland institutions that have more money and bigger pools of talent. The vice chancellor of the University of Science and Technology, Tony Chan, said the likes of Peking University and Tsinghua University were working hard to raise their standards. Chan said HK's universities cannot compete with the mainland on money or talent. Chan said HK must play to its unique strengths: free flow of information and a robust rule of law.
New HKU head ready to move forward: Professor Peter Mathieson, the new vice chancellor of the University of HK, knows he has his work cut out to appease his critics and achieve his vision for HKU. But the 54-year-old academic, whose appointment has caused some controversy, said he respected those who criticised him and vowed to defend the academic freedom and core values of the university. The Briton came under fire when his name emerged as being the sole candidate for the job, with some senior academics at the institution saying they were dissatisfied by the appointment of an academic and clinician with a lack of Hong Kong and China experience. 
Avoid schools panic with better tracking of mainland babies: A population specialist has called for a comprehensive tracking study of babies born in HK to mainland parents so that schools can prepare to meet their education needs. Paul Yip said a lack of data on how many such children would come to HK to study had caused panic among local parents as long queues formed for registration at northern kindergartens. Yip, a professor in the University of HK's department of social work and social administration, warned that without accurate data, the panic could spread to primary schools later. While the government said it did not know how many of the cross-border students were born to mainland parents, these children are likely to return to the city for education as they are not entitled to the benefits of a mainland citizen.
Discrimination watchdog presses for action on schooling for minorities: Chief Executive Leung Chun-ying has to iron out unfair education policies affecting ethnic-minority and disabled pupils in his second policy address, or the government may face a formal investigation, the discrimination watchdog has warned. The ultimatum came from Equal Opportunities Commission chairperson Dr York Chow, who said the body could invoke its utmost power should Leung fail to tackle the issues in his January speech. He urged Leung to spell out ways he intended to get rid of "de facto" ethnically segregated schools, a situation that the UN Committee on the Rights of the Child had condemned as discrimination. Help for schools could include providing resources and teacher training so they could assist the children to integrate culturally and in terms of language, and offering a second-language curriculum for Chinese, he said.

Varia
Public consultation on ageing population slammed by experts: A proposed five-pronged approach to managing challenges arising from HK's ageing population came under fire on Oct. 24 for being too vague, as a public consultation to look for solutions began. The five strategies suggested by government advisers seek a more proactive response to the city's shrinking workforce before problems worsen in the future. Ideas include ways to tap into the inactive population such as housewives and retirees to encourage them to return to the workplace. Professor Nelson Chow of the University of HK, who is leading a study on pension schemes, described the exercise as a "failure" even as it had only just started. "It lacks direction and a target for us to see what the government wants to achieve by drafting population policies," he said. "We do not propose measures right away because we want to see if the public will agree on these directions," said Chief Secretary Carrie Lam, who leads the steering committee on population policy, adding that concrete measures would follow.

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