Hong Kong's Progress Toward Reversion: Implications for the US - Assistant Secretary for East Asian and Pacific Affairs Winston Lord describes US policy toward the return of Hong Kong to China - Transcript

US Department of State Dispatch, July 22, 1996

We strongly believe that Hong Kong's best interests are served by faithful attention to the letter and spirit of the Joint Declaration. In it, China made an extraordinary series of pledges about Hong Kong's future. On paper, the Joint Declaration establishes a framework that can, if honored and effectively implemented, assure that Hong Kong remains the vibrant and attractive place it is today. Among other things, the Joint Declaration provides that:

* Hong Kong will have independent courts, with ultimate judicial authority resting in a Court of Final Appeal;

* Hong Kong residents, not non-Hong Kong P.R.C. citizens, will occupy all important government and civil service positions;

* Hong Kong laws, not P.R.C. laws, will apply;

* Hong Kong's finances will be independent of China, and no tax revenues will be collected for or sent to Beijing;

* Hong Kong will continue to maintain its own currency, the Hong Kong dollar, which will be freely convertible;

* Hong Kong police will maintain public order;

* Hong Kong will be empowered to enter into international agreements in a wide range of areas; and

* Hong Kong people will elect the legislature.

The key question, of course, is whether China will honor this impressive set of commitments. The world does not yet know the answer. China has repeatedly stated its intention to stand by its pledges and preserve Hong Kong's high degree of autonomy. The international community, which has a substantial stake in Hong Kong, will be watching and expecting this to happen. More important, the people of Hong Kong will make their own decisions about the future--primarily by assessing the degree of sensitivity to local concerns Beijing brings to the important decisions it makes. For this reason, clear, positive signals from Beijing will be increasingly important to ensure Hong Kong's stability and prosperity under the Joint Declaration principles.

In general, Chinese statements and actions have been reassuring about its commitment to Hong Kong's future prosperity and preservation of its dynamic capitalist system. As China has become Hong Kong's largest investor and set up numerous companies in Hong Kong, it has demonstrated respect for the economic system. It has made clear its intention to maintain Hong Kong's own currency linked to the U.S. dollar and to preserve Hong Kong's substantial foreign exchange reserves. P.R.C. companies so far seem interested in gaining a share of the lucrative contracts tendered in Hong Kong rather than undermining the process itself. Negotiations between the U.K. and China on the new airport, the world's largest infrastructure project, were successfully concluded last year. Chinese officials have proclaimed an even greater commitment to fiscal discipline than the Hong Kong Government, voicing opposition to new government spending plans and expressing fear about the impact of proposed social welfare programs on Hong Kong's traditional budget surpluses. The preservation of Hong Kong's strong economic system assumes, of course, that it is not infiltrated by corruption, rigging of the tendering process, influence-peddling by the P.R.C. Government and institutions, or other factors that will test the vigilance of investors or Hong Kong Government officials.