european union - hong kong yearbook 2014 · yearbook 2014 eu-hong kong: the year in pictures....

European Union Officeto Hong Kong and Macao

EUROPEAN UNION - HONG KONG

Yearbook 2014

EU-Hong Kong: The Year in Pictures

EU-Hong Kong Quick Facts

The EU consists of 28 Member States

1957 Belgium, France, Germany, Italy,

LuxembourgandtheNetherlands

1973 Denmark, Ireland and the United

Kingdom

1981 Greece

1986 PortugalandSpain

1995 Austria,FinlandandSweden

2004 Cyprus, theCzechRepublic,Estonia,

Hungary, Latvia, Lithuania, Malta,

Poland,SlovakiaandSlovenia

2007 BulgariaandRomania

2013 Croatia

EUROPEAN UNION - HONG KONG2014YEARBOOK

28 Member States

7 Percent of world population

20 Percent of Global GDP

55Combined Worldwide Official

Development Assistance

508Million

Combined population of the EU Member States

About the EU Office to Hong Kong and Macao

TheEuropeanUnionOfficetoHongKongand

Macaowasestablished in 1993.TheEUOffice

mission is to represent the EU political and

economic interests inHongKongandMacao.

TheEUOfficecontinuestoincreaseknowledge

andinformationaboutEUpoliciesthroughpublic

diplomacyefforts,dialogue

meetingsanddevelopment

ofacademicexchangesand

people-to-peoplecontacts.

TheHeadof theEuropean

UnionOffice toHongKong

andMacaoisVincentPiket.

About the EU Relations with Hong Kong

Bilateralrelationsandcooperationbetweenthe

EuropeanUnionandHongKongcontinue to

developandstrengthen.HongKongremainsan

importanteconomicplayerfortheEUandakey

conduitfortwo-waytradeandinvestmentflows

betweentheEUandmainlandChina.TheEUalso

maintainsactivepolicyexchangeswithHong

Konginareasofmutualinterests.Thishappens

intheannualStructuredDialogue,atthe level

ofseniorofficials.Prioritytopicsarefinancial

services, customs matters and intellectual

propertyrights,aswellasthereinforcementof

educationandresearchties.

Trade Relations

TheEU retained itspositionasHongKong’s

second largesttradingpartneraftermainland

Chinain2013.EUbusinessesareactiveinawide

varietyof sectors,mainly financial services,

trading, logistics,

construct ion and

retailing.

Bi lateral trade in

goodsbetween the

EUandHongKongrecordedagrowthof3.9%to

reach€46billionin2013,withtheEUenjoyinga

growingtradesurplus.Theinvestmentrelations

between theEUandHongKonghavegrown

significantly in recentyears:HongKongFDI

stockheldbytheEUrosefrom€90billion in

2009to€133billion in2012.Conversely, inthe

sameperiod,FDIstockintheEUalmostdoubled:

from€27billionto€50billionin2012.

TheEUbusinesscommunityprizesHongKong’s

respect for theruleof law,highstandardsof

transparency, freedomof informationandof

media, preferential access to the mainland

Chinamarketandtheavailabilityofhigh-quality

serviceproviders.

Education

http://ec.europa.eu/dgs/education_culture/

index_en.htm

The EU and Hong Kong are increasingly

cooperating in the fieldofhighereducation.

ThroughtheErasmusPlusprogramme,Hong

Kong students and PhD candidates receive

mobilityandfundingopportunitiestostudy in

variousEuropeanuniversities.

TheannualEuropean

HigherEducationFair

inHongKongisaprime

exhibitionofEuropean

universitiesandstudy

opportunities.

Culture

TheEuropeanUnionFilmFestival

is held annually to offer the

HongKongaudiencea tasteof

Europeanculturebyshowcasing

award-winningfilmsfromdifferentEUcountries.

Everyyear,theEUHongKongofficeinviteslocal

studentsfromprimaryandsecondaryschoolsto

takepart inthe“EUCalendar

DrawingCompetition”.The 12

winningpicturesarepublished

intheannualdesktopcalendar

which isdistributed to3,000

recipients.

November 2013: The European Union Office to

Hong Kong and Macao celebrated its 20th

anniversary

The20th anniversary of theEuropean Union

Office toHongKongandMacaowasmarked

by thevisitof thePresidentof theEuropean

CommissionJoséManuelBarrosoon22and23

November2013.Theceremonywasattendedby

the Honourable

CarrieLam,Chief

S e c re ta r y fo r

Administrationof

HongKongSAR

government.

SincethehandoverofHongKongtothePeople’s

RepublicofChina in 1997,theEuropeanUnion

and itsMemberStateshaveclosely followed

political and economic developments in the

HongKongSpecialAdministrativeRegion(SAR)

underthe‘onecountry,twosystems’principle.In

linewiththecommitmentgiventotheEuropean

Parliamentin1997,anannualreportisissuedon

developmentsinHongKong.Thisisthe16thsuch

report,coveringdevelopmentsin2013.

The EU believes that the principle of ‘one

country, twosystems’,enshrined in theSino-

BritishDeclarationandtheBasicLawofHong

Kong,continuedtoworkwellin2013.Therights

and fundamental freedoms of the people of

HongKongcontinuedtoberespected,therule

oflawwasmaintainedandthemarketeconomy

andbusinessenvironmentwaspreserved.

Bilateral relationsbetween theEUandHong

Kongcontinuedtodeepen,withavisittoHong

Kong in November by the President of the

EuropeanCommission,JoséManuelBarroso.

Tradeandeconomicrelationsdevelopedwell

The European Union Annual Report on Hong Kong 2013*

Summary

EUROPEAN UNION - HONG KONG2014YEARBOOK 01

and the EU and Hong Kong continued and

expandeddialogueandcooperation inmany

areas of mutual interest, including financial

services,customs, theenvironment, research,

educationandculture.

The EU attaches great importance to Hong

Kong’s stability, economic prosperity and

democraticdevelopment. Itbelieves thatan

accountablegovernmentcontributestostability

andprosperityandhelpsmaintainHongKong’s

positionasakeyinternationalbusinesscentre.

The EU continues to support substantial

progress towards thegoalof theHongKong

governmentand theStandingCommitteeof

theNationalPeople’sCongressofachieving

universalsuffrageby2017fortheelectionofthe

ChiefExecutiveandby2020fortheelectionof

theLegislativeCouncil, inaccordancewiththe

BasicLawoftheHongKongSARandthewishes

ofthepeopleofHongKong.

* Thereport isofficiallyadoptedbytheEuropeanCommissionandEuropeanExternalActionServiceon8May2014.

Inhisfirstpolicyaddress inJanuary2013,the

ChiefExecutiveChun-yingLeungsetouthis

long-termblueprintandobjectives forHong

Kongunderthemotto ‘seekchange,maintain

stability,servethepeoplewithpragmatism’.He

promisedtoupholdHongKong’scorevalues,

implement the ‘one country, two systems’

principle inaccordancewiththeBasicLawand

properlymanagetherelationshipbetweenHong

Kongandthemainland.

H e s a i d t h a t , a s

an SAR of Ch ina ,

HongKongreceived

strongandsteadfast

support from the

centralgovernment.

He bel ieved that,

capitalising on the

advantagesof the ‘onecountry, twosystems’

principle,HongKonghadnotonlyopenedupthe

vastmainlandmarketasitseconomichinterland,

butalsoenhancedHongKong’s statusasan

internationalhub.

Key policy initiatives focused on fostering

e co n o m i c d eve l o p m e n t by, i n te r a l i a ,

st rengthening economic re lat ions wi th

the Mainland and developing Hong Kong’s

financial services,businessandprofessional

services, internationalshipping, innovationand

testing; increasing land supply and offering

subsidised housing in the short to medium

Political Developments

02 EUROPEAN UNION - HONG KONG2014YEARBOOK

term;introducingmeasurestoalleviatepoverty,

improve care for the elderly, improve the

positionofwomenandethnicminoritiesand

further develop labour policy, and ensuring

environmental protection and conservation

by improvingairquality,managingwasteand

encouragingtheconstructionofgreenbuildings.

Asin2012,relationsbetweentheexecutiveand

thelegislatureweredifficultin2013.Legislators

blockedordelayedanumberof initiatives.The

executiveandlegislaturewerenotabletoreach

finalagreementonmattersofvital interestfor

HongKong,suchassolidwastemanagement,

particularlylandfills.Asin2012,afewlegislators

of theLegislativeCouncilused filibusters to

achieve theirgoals.Thedebateon the2013

budgetwasparticularlyaffectedby thisasa

smallnumberoflegislatorsproposedmorethan

700amendmentstothe2013AppropriationBill.

ThePresidentoftheLegislativeCouncil,Jasper

Tsang, suggestedastructural reason for the

poorrelationshipbetweentheexecutiveandthe

legislature,notingthatthecurrentgovernance

system did not provide the executive with

strong,reliablemajoritysupport intheCouncil.

He also noted that both the legislative and

executivebrancheshadtorespectandconsider

publicviews.Thechoiceofelectoralsystemfor

HongKong’sChiefExecutiveandLegislative

CouncilshouldmakeHongKong’sgovernance

moreefficient.

EUROPEAN UNION - HONG KONG2014YEARBOOK 03

Hong Kong maintained its commitment to

integrity and the Independent Commission

Against Corruption (ICAC) works with the

communitytofightcorruptionthrougheffective

lawenforcement,educationandprevention.

In2013, the ICAC received2,652corruption

complaints,adropof33%comparedtothe3,932

complaintsreceived in2012,withthenumber

ofpursuablecomplaintsdownbyby41%.The

exact reasons for this decrease are hard to

establish.TheChairoftheAdvisoryCommittee

onCorruptionsuggestedthatonefactormight

be greater public awareness of corruption

prevention,asaresultofthe ICAC’s increased

efforts inpreventiveeducation.Anotherfactor

mayhavebeenreducedpublicconfidenceinthe

ICAC,followingtherecentcontroversyregarding

overspendingonofficialentertainmentbythe

former ICAC Commissioner. An Independent

Review Committee on ICAC’s Regulatory

SystemsandProcedures forHandlingOfficial

Entertainment,GiftsandDutyVisits,appointed

bytheChiefExecutive,andthePublicAccounts

CommitteeoftheLegislativeCouncildealtwith

thematter.The ICACsaid itwould implement

all therecommendationsthetwocommittees

made.

Political discussions throughout 2013 were

dominated by the debate on introducing

universalsuffrageforthe2017ChiefExecutive

election. Avariety of initiatives in this area

werelaunchedbyacademicgroups,civilsociety,

businessorganisationsandpoliticalparties.

Mostofthemaimedtomakethefuturesystem

fornominatingcandidatesmoredemocratic.

Oneinitiative, Occupy Central, launched a

campaign forademocraticelectoral system,

announcing it would occupy Hong Kong’s

centralbusinessdistrict iftheHongKongSAR

government’s reform proposal fell short of

internationalstandards.

Membersof theHongKongSARgovernment

and thedirectorof theLiaisonOfficeof the

Central People’s Government in Hong Kong

joinedthepublicdebateaboutelectoralreform.

Thedirectorof theLiaisonOfficehighlighted

thelegalbasisforreformintheBasicLawand

thedecisionsoftheStandingCommitteeofthe

NationalPeople’sCongressonthemethodsfor

selectingtheChiefExecutiveandformingthe

LegislativeCouncil.Healso said thecentral

government expected the future electoral

system to ensure that only candidates who

‘lovethecountryandloveHongKong’wouldbe

electedandappointed.

On17October2013,ChiefExecutiveannounced

thesettingupofaTaskForceonConstitutional

Development,headedbytheChiefSecretaryfor

Administration, theSecretary forJusticeand

theSecretaryforConstitutionalandMainland

Affairs.On4December, theHongKongSAR

government launchedapublicconsultationon

electoral reformfor the2017ChiefExecutive

election and the 2016 Legislative Council

election.Theconsultationdocument1 invited

membersofthepublictosendtheirviewstothe

ConstitutionalandMainlandAffairsBureauby3

May2014.

The launch of the public consultation gave

more structure and direction to the debate

onelectoral reform.Viewsdivergedgreatly,

especially on the procedure for nominating

candidates.Thepositionstakenonthismatter

by theHongKongSARgovernmentand the

centralgovernmentontheonehand,andpan-

democracy parties and sympathisers on the

other, continued tobemutuallyexclusive. In

2015,acompromisewillneedtobefoundonthis

keytopic,andotherimportantissues,toensure

thatelectoralreformcanbeconcludedintime

for the2016LegislativeCouncilelectionand

the2017ChiefExecutiveelection,vital forthe

efficientgovernanceofHongKong.

ThemaintenanceofHongKong’shighstandards

ontheruleof lawandtheindependenceofthe

judiciarycontinued tobeasubjectofpublic

debate.Attheceremonial2013openingofthe

legal year, theChiefJusticeof theCourtof

FinalAppeal,theHonourableGeoffreyMaTao-

li,stressedtheneedforintegrityofthelawand

the importance of theconstitutional roleof

judgesandtransparencyinthejudicialprocess.

ChiefJusticeMaexpressedstrongconfidencein

thecontinuingindependenceofthejudiciaryin

HongKong.

TworulingsoftheCourtofFinalAppealin2013

bear out the Chief Justice’s view that high

standards for the rule of law in Hong Kong

continuetobeupheld.Oneconfirmedtheright

oftranssexualpeoplewhohadcompletedsex-

reassignmentsurgery tomarryanddeclared

thatanexisting legal impediment to thiswas

unconstitutional.Theotherdeclared that the

government’spolicyof limitingComprehensive

SocialSecurityAssistanceto thosewhohave

lived in Hong Kong for at least seven years

wasunconstitutional.Some legalprovisions,

suchasprovisionsfor legalaidfor low-income

individuals,couldbeimproved.

EuropeanfirmsbasedinHongKongcontinued

tocitetheruleoflawandthehighqualityofthe

judiciaryasoneofthekeyreasonsforsettingup

theirChinaorAsiaheadquartersthere.Based

on its rule-of-law credentials, the Secretary

for Justice, Mr Rimsky Yuen, continued to

promote Hong Kong as a regional hub for

international arbitration and legal services.

The China Maritime Arbitration Commission

announced itwouldsetupabranchoffice in

HongKong,andarrangementsarebeingmade

tofacilitatearbitrationhearings inHongKong

by thePermanentCourtofArbitration,with

headquartersintheHague.

Tobettermeetthechangingneedsofsociety,

theSecretaryforJustice, inhiscapacityasthe

ChairmanoftheLawReformCommission,also

undertooktostudypossible lawreforminthe

areasofarchiveslaw,accesstoinformationand

third-partyfundingforarbitration.

HongKongresidentscontinuedtoexercisethe

rightof freedomof speechandassociation.

Theannual4Juneand 1Julymarches took

place in2013,asdid twoother largepolitical

demonstrat ions. The Chair of the Equal

Opportunities Commission addressed the

annualgayprideparade,andnumeroussmaller

demonstrationsonpoliticalorsocio-economic

issues,relatingtoHongKongandthemainland,

were held throughout the year. The great

majorityofdemonstrationswerepeacefulandin

generalthepoliceactedproportionately.

Themedia,includingthedigitalmedia,continued

tobefreeandtogivevoicetoarangeofviews.

Nevertheless, therewasagrowing impression,

recordedintheannualreportoftheHongKong

JournalistsAssociation,thatboththeprintand

theelectronicmediaexercisedself-censorship,

especially when covering affairs concerning

mainlandChina.Basedon2013trends,the2014

PressFreedom Index fromReporterswithout

BordersdowngradedHongKongbythreeplaces

to61stplace,citingself-censorshipandagrowing

influenceexertedbythecentralgovernment’s

LiaisonOffice.Thecontinued functioningof

the ‘onecountry, twosystems’principle,and

HongKong’sreputationasaterritorywherethe

businessenvironmentbenefitsfromfreeflows

ofinformation,willcontinuetodependonmedia

freedom.StatementsbytheChiefExecutive in

supportofmediafreedomwerethereforevery

welcome.

HongKong’srelationswiththemainlanddrew

much public debate and media attention.

Occasionally, the fast-growingeconomicand

people-to-peoplelinks,includingtourism,caused

socialdisquiet inHongKongandposedpolicy

problems for theauthorities.These included

04 EUROPEAN UNION - HONG KONG2014YEARBOOK EUROPEAN UNION - HONG KONG2014YEARBOOK 05

1 ‘ConsultationDocumentontheMethodsforSelectingtheChiefExecutivein2017andforFormingtheLegislativeCouncil in2016.’ThisdocumentrelatestoformingtheLegislativeCouncil in2016,notin2020.

issuessuchas increaseddemandfrompeople

fromthemainland forhousingandplaces in

primary and secondary schools (especially

closetotheborderbetweenHongKongandthe

mainland), jobs formainland jobseekers, the

increasedpressureonpublic transportdueto

fastrisingnumbersofmainlandChinesetourists

(from35million in2012to41million in20132),

andrisingdemandforcertainconsumergoods,

includingbabymilkformula,whichoccasionally

causedscarcityinHongKong.


Economic Developments

global surveysmeasuringeconomic freedom

and competitiveness3. Despite its economic

achievements, Hong Kong also faces new

competitive challenges from the economic

liberalisation of China and the rise of other

economiccentres in the region. Itseconomy

recordedsteadygrowthof2.9%inreal terms

in2013.Domesticdemandwasthekeygrowth

driver,while theperformanceof theexternal

sector remainedmodestdue toweakglobal

economicconditions.Employment levelswere

healthy,withtheunemploymentratehovering

around3.3%formostof theyear.Consumer

pricesroseby4.3%4.

With thesupportof thecentralgovernment,

HongKongcontinuedtobethelargestoffshore

renminbi (RMB)centre in theworld. Ithosted

the largestpoolof renminbidepositsoutside

MainlandChina,atmorethanRMB1trillion5as

attheendof2013. Itcontinuedtomaintainits

competitiveedgeoverotherfinancialcentresin

termsofmarketinfrastructureandliquidity,with

agoodrangeofRMBinvestmentproducts.The

“CNHHongKongInterbankOfferedRatefixing

(CNH HIBOR fixing)” was officially launched

on24June2013,settingbenchmarkratesfor

offshorelendingandfacilitatingthecreationof

morehedgingoptions.

The mutual recognition of fund products

betweenmainlandChinaandHongKongisseen

asthenextstep inestablishingHongKongas

theAsianhubforfundmanagement.Regulators

onthemainlandandinHongKonghavelaidout

plansfortheupcoming launchofthescheme,

whichwouldallow internationalmanagers to

sell fundproductsonthemainlandandallow

mainlandfundstobesoldinHongKong.

At the same time,China increased thepace

ofrenminbi internationalisation,withLondon,

3 HongKongwasrankedastheworld’ssecondmostbusiness-friendlyplaceafterSingapore in theDoingBusiness2014reportbytheWorldBankGroup.AccordingtoUNCTAD’sWorldInvestmentReport2013,HongKongwasthethird largestFDIrecipient intheworld(US$75billion),andthethirdlargestsourceofFDIinAsia(US$84billion)in2012.

4 AlleconomicindicatorspertainingtotheHongKongeconomyareofficialstatisticsreleasedbytheHongKongCensusandStatisticsDepartment.

5 AccordingtotheHongKongMonetaryAuthority,totalRMBdepositsandoutstandingcertificatesofRMBdepositsamountedtoCNH1053billionattheendof2013.TotalRMBdepositsandoutstandingcertificatesofRMBdepositasattheendof2012stoodatCNH720billion.2 Source:HongKongTourismBoard.

HongKongremainsoneoftheworld’s leading

financial centresand tradinghubs.The four

main industries in Hong Kong (f inancial

services, trading and logistics, tourism, and

professionalandproducerservices)havebeen

the driving force of Hong Kong’s economic

growth,providing the impetus forgrowth in

othersectorsandcreatingemployment.Riding

onChina’seconomicboom, thecityplaysan

importantroleintradeandinvestmentwiththe

mainland.HongKonghasbeenabletoprosper

onthebackofitscorevalues—theruleoflaw,

thefreeflowof information,transparencyand

itsstanceagainstcorruption.

In2013,HongKongperformedwelleconomically

andcontinuedtoscorehighlyonmanyofthe

Thegovernmentintroducedvariousmeasuresto

safeguardtheinterestsofHongKongresidents

andstabilisethemarketagainstfastrisingprices

andshortages.Suchmeasures,however,didnot

halt therise in thenumberofexpressionsof

anti-mainlandsentimentinthemedia(including

onsocialmedia)andtheemergenceofa few

radicalanti-mainlandgroups.

19,788

30,767

10,979

23,079

33,664

10,585

25,493

35,736

10,243

2011 2012 2013

Unit:€Million

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

EU-Hong Kong Bilateral Trade in Goods 2011-2013

Source:Eurostat

EUImportsfromHK

EUExportstoHK

TradeBalance

1,610

9,817

8,207

2,112

10,872

8,760

1,808

10,684

8,876

2011 2012 2013

Unit:€Million

12,000

10,000

8,000

6,000

4,000

2,000

0

EU-Hong Kong Bilateral Trade in Services 2011-2013

Source:Eurostat

EUImportsfromHK

EUExportstoHK

TradeBalance


Paris,Frankfurt,SingaporeandTaipeiallnow

able to develop as hubs for offshore RMB

business.HongKongwasquicktoforgealliances

withotheroffshoremarkets.InDecember2013,

theHongKongandSingaporestockexchanges

signed a cooperation pact on developing

renminbi investmentproducts.Nevertheless,

externalcompetitionisexpectedtoincreaseas

newmarketplayersemerge.China’seconomic

reformscreatedopportunitiesandchallenges

forHongKong.Beijing’splantocreateapilot

free trade zone in Shanghai sparked strong

reactions inHongKong.Thepolicymeasures

neededtoallowShanghai’snewzonetopilot

wider convertibility of the RMB and freer,

market-oriented interestratesattractedmuch

speculationfromthemediaandbusiness.Some

fear that liberalisation in theseareaswould

threatenHongKong’spositionasAsia’s leading

financialcentre.Theconsensusinthebusiness

community was that Hong Kong needed to

sharpen its edge in order to maintain its

competitiveness.

EconomictiesbetweenHongKongandmainland

Chinawerefurtherstrengthenedbyexpanding

thescopeofservicescoveredbytheirfreetrade

agreement. On 29 August 2013, Hong Kong

andMainlandChinasignedSupplementX to

theCloserEconomicPartnershipArrangement

(CEPA).Bothpartieshavepubliclystatedthat

the scope and depth of liberalisation under

theCEPAgoesbeyondanyFTAthatMainland

Chinahasconcludedwithotherpartners. In

totaltherearenow403liberalisationmeasures

for trade in services under the CEPA. The

central government has pledged to achieve

liberalisationoftrade inservicesbetweenthe

mainlandandHongKongthroughtheCEPAby

late2015,i.e.beforetheendofthe12thFive-Year

Plan.TheGuangdongprovincialgovernment

launcheditsproposaltobringGuangdong,Hong

KongandMacaotogetherinafreetradezone,

aiming for liberalisation of trade in services

betweenGuangdongprovinceandHongKongby

theendof2014.

ThegovernmentsofHongKongandGuangdong

have jointly invested in large infrastructure

pro jec ts , c reat ing new t ranspor t l i nks

betweenHongKongandthePearlRiverDelta.

ConstructionoftheGuangzhou-Shenzhen-Hong

Kong Express Rail Link and the Hong Kong-

Zhuhai-MacaoBridge, started in2010and is

makingsteadyprogress.

In response to calls from the local business

community, Hong Kong has become more

active in regional andplurilateral initiatives

tomaintain itscompetitivenessasa regional

trading / services hub. Hong Kong initially

planned to join theAssociationofSoutheast

AsianNations(ASEAN)–Chinafreetradearea

buteventuallyacceptedASEAN’sproposal to

negotiateabilateralagreement. InMay2013,

Hong Kong announced that it would take

part innegotiations for theTrade inServices

Agreement (TiSA) involving 23 World Trade

Organisationmembers.InadditiontotheCEPA,

HongKonghassignedfreetradeagreements

with New Zealand, the European Free Trade

AssociationandChile.

Domestically, addressing the overheated

property market was a key priority for the

government in 2013. A series of measures

6 Thenumberofagreementsforpurchaseofresidentialpropertydeclinedto50,676 in2013from81,333 in2012,accordingtotheHongKongSARgovernment.

wererolledout todampendemand, including

sizeablestampdutiesonpropertytransactions

and tightening up mortgage lending rules.

Thegovernmentalsoabolisheda 14-year-old

applicationlistmechanismandresumedthelead

insellinggovernmentsites intheannualLand

SaleProgrammethroughgovernment-initiated

landsale.Housepricesstabilisednoticeablyasa

resultandthevolumeofsalesplungedby37.7%6

in2013.Facedwiththeriskofanassetbubblein

anextremelylowinterestrateenvironment,the

governmentrepeatedlyvoiceditsdetermination

tokeepthesestringentfiscalmeasuresinplace,

despitepressure fromthe realestatesector.

ChiefExecutiveLeungalsopledgedtoincrease

thehousingsupplytotacklethesoaringhouse

prices that were pushing home ownership

outofreachofthegeneralpublicandfuelling

socialdiscontent.Thegovernmentannounced

asupply-ledhousingstrategywithatargetof

creating470,000newhousingunitsover the

comingdecade,ofwhich60%wouldbepublic

housing.

The government stepped up its efforts to

addressthewidening incomeandwealthgaps.

Amajormovewasthepublication,forthefirst

time,ofanofficialpoverty lineforHongKong

in September 2013 which was set at half of

medianmonthlyhousehold income.Analysis


trade,cateringandcareconsistentlysuffered

fromlabourshortages.Theissuemaygenerate

heated debates between labour unions,

legislatorsandbusiness leaders inthefuture.

Againstabackdropoffavourablelabourmarket

conditions, wages increased considerably

in2013.Lower-skilledworkersalso received

significant wage increases, reflecting the

generally tight labourmarketconditions.The

statutoryminimumwagewas increased from

HKD28toHKD30inMay2013.

The government rolled out two important

environmentalpolicyplans in 2013: ‘A clean

airplan forHongKong’and ‘Sustainableuse

of resources2013–22’. Italso replaced itsair

pollution index with a new health-based air

qualityindexprovidingpeopleinHongKongwith

informationontheshort-termhealthriskbased

on real time readingsofairpollution levels.

Withatargetofreducingsolidwasteby40%

withintenyears, theactionplanonresources

includes a possible waste-charging scheme,

expandingtheexisting landfillsandbuildinga

new incinerator,encouragingmore recycling

andwaste reductionat source.Thepublic is

increasingly concernedby and interested in

issuesrelatingtotheenvironment.Implementing

thesegovernmentplanswouldrequireastrong

political commitment, public engagement,

supportfromthecommunityatlargeandcross-

bordercooperationwithinthePearlRiverDelta,

particularlyforcleanairinitiatives.

of the situation in 2012 showed that before

intervention, therewere541,000households

witha totalof 1,312,000people fallingbelow

the lineandthepovertyratewas19.6%.After

intervention,aroundonemillionpeople lived

belowthepoverty line,representingapoverty

rateof15.2%.Thepublicationofthepovertyline

hasraisedexpectations that thegovernment

wouldputmoreeffectivemeasures inplaceto

alleviatepoverty.

The government launched a four-month

consultationonHongKong’spopulationpolicyin

October2013,withaviewtoforgingaconsensus

andformulatingsustainablepolicymeasures.

It isestimatedthatthe labourforcewillstart

declining from2018.Alleviatingpovertyand

helpingtheageingpopulationwillbothbekey

longtermfiscalchallenges.Thegovernmentwill

need tomanageacomplexandcontroversial

policyagenda in thecomingyears, including:

increasing productivity; attracting talent;

importinglabour;assimilatingnewimmigrants;

socialwelfare;elderlycare;fiscalsustainability;

managingeconomicgrowthwhilemaintaininga

balancedandharmonioussociety.

Hong Kong’s business community was vocal

onthe issueofmanpowershortage,callingfor

relaxationof the labour import regime. The

Hong Kong General Chamber of Commerce

claimedthattherewereupto 110,000unfilled

vacancies(asofJuly2013),closetothehistoric

highof 122,000 in 1989.Construction, retail

European Union-Hong Kong Relations and Cooperation

In 2013, bilateral relations and cooperation

betweentheEuropeanUnionandHongKong

continuedtodevelopandstrengthen.HongKong

remainsan importantplayer intheregionand

akeyconduitfortwo-waytradeandinvestment

flowsbetweentheEUandmainlandChina.

TheEU retained itspositionasHongKong’s

second largesttradingpartneraftermainland

China7.Bilateral trade ingoodsbetween the

EUandHongKong recordedgrowthof3.9%

to reachEUR46billion in2013,with theEU

enjoyingagrowingtradesurplus8.

TheEUwasthelargestsource

offoreigncompaniesinHong

Kong, with a total of 1921

companies, comprising452

regionalheadquarters,725

regionalofficesand744local

offices (as of June 2013)9.

EUbusinessesareactive inawidevarietyof

sectors,mainlyfinancialandbusinessservices,

trading, logistics, constructionand retailing.

EUcompaniesarekeyplayers inHongKong’s

banking, insuranceandsecuritiessectors.As

hometooneofthebiggestEuropeanbusiness

communities inAsia, itcontinuestoattracta

considerablenumberofEuropeancitizenstolive

andworkthere.

Investment relations between the EU and

HongKonghavestrengthenedsignificantly in

recentyears.EUforeigndirectinvestment(FDI)

outflows toHongKongquadrupled fromEUR

3.7billion in2009toEUR 15billion in201210,

reflectingEUbusiness’ sustained interest in

HongKongasan investmenthub.FDI inflows

fromHongKongtotheEUrecordedanannual

averageamountofEUR5.3billionoverthesame

period.FDIstockheldbytheEUinHongKong

rosefrom€90billionin2009to€133billionin

2012.Conversely,FDIstockheldbyHongKongin

theEUalmostdoubledfrom€27.5billionto€50

billionduringthesameperiod.

TheEUbusinesscommunityprizesHongKong’s

respect for theruleof law, itshighstandards

of transparency, its freedom of information

andofthemedia, itspreferentialaccesstothe

mainlandChinesemarketandtheavailabilityof

high-qualityserviceproviders.TheEUconsiders

these factors essential for Hong Kong’s

continuedprosperityand formaintaining its

strengthasaregionalandinternationalbusiness

centre.

7 TherankingisbasedonthetradestatisticsreleasedbytheHongKongCensusandStatisticsDepartment.

8 Source:Eurostat:Comextdatabase.

9 Source:HongKongCensusandStatisticsDepartment.

10 FDIdataretrievedfromEurostaton16December2013.


The seventh structured dialogue meeting

between the European Union and the Hong

KongSARgovernmenttookplaceinHongKong

on14November2013.Thestructureddialogue

isaneffectiveplatformthatallowstheEUand

HongKongtodiscussissuesofmutual interest

andidentifyareasforfuturecooperation.Atthe

2013meeting,bothsidesagreedtostrengthen

collaboration and exchanges in relation to

education, innovation, the environment and

competition law. The EU appreciated Hong

Kong’sefforts toupdate its financialservices

regulationsand itsactiveengagementagainst

moneylaunderingactivitiesandthefinancingof

terrorism.TheEUexpresseditswishtoengage

HongKong in technicaldiscussionsabout the

automaticexchangeof tax informationtaking

intoaccount internationaldevelopments inthe

fieldof cooperationbetween taxauthorities

andtoseeswiftprogressonupdatingtheair

servicesagreementsbetweentheEUMember

StatesandHongKongso that theirbilateral

air servicesagreementscomplywith theEU

designationclause.TheEUalsoexpressedthe

wishtointensifyregulatorydialogueinthearea

ofinvestmentfunds.

2013sawanumberofhigh-levelvisitsfromthe

EuropeanUnion institutionstotheHongKong

SAR.Themosthigh-profile visit was thatof

EuropeanCommission

PresidentJoséManuel

Barroso in November,

during which he met

with the Hong Kong

Chief Executive and

the President of the

Legis lat ive Counci l .

PresidentBarrosospokeataneventmarking

the 20th anniversary of the European Union

Office toHongKongandMacao,underlining

thelongstandingtiesbetweentheEUandHong

KongandtheEU’scommitmentatthehighest

leveltocontinuingtodevelopthisrelationship.

Anotherhigh-levelvisitwasthatoftheChairof

theEuropeanBankingAuthority,AndreaEnria,

inMarch.Regularvisitsbyseniorofficialshave

ensuredexchangesinareasofcommoninterest

includingEuropeanUnionexternal relations,

financialservicesregulation,macroeconomic

issues,tradeandinvestment,productandfood

safetyandtheenvironmentandcompetition.

Fourdelegationsof theEuropeanParliament

alsovisitedHongKongandhelpedto further

improvebilateralrelationsandcooperationwith

theLegislativeCouncil.

Europeanbusiness inHongKong isprimarily

represented by the European Chamber of

Commerce, which carr ied out a number

of activities to facilitate dialogue with the

governmentandenhanced theprofileofEU

business and industry in 2013. Some of the

Chamber’s activities during the year were

carriedout inpartnershipwiththeHongKong

EUAcademic Programme (EUAP) which was

launchedon1September2012.EUAPcomprises

a consortium led by the Hong Kong Baptist

University, including the Chinese University

of Hong Kong, the University of Hong Kong

andLingnanUniversity. Itpromotesacademic

research, develops outreach activities to

enhancethevisibilityoftheEUandstrengthens

academiccooperationwithEUhighereducation

institutions.

To further strengthen ties with Hong Kong,

diplomaticmissionsfromtheEUanditsMember

Statescontinued topursuepublicdiplomacy

effortstoraisetheEU’sprofile inHongKong,

increaseknowledgeofEUpoliciesandprovide

more informationabout them.Thesepolicies

includetradeandregulatorypolicies,energyand

climatechange, financial servicesregulation,

customs matters, gender equality policies,

interculturaldialogue,academicmattersandthe

EU’sroleintheworld.Akeyvehicleforthishas

beenthefruitfulseriesofmeetingsbetweenthe

EUHeadsofMissions,seniormembersof the

HongKongGovernmentandLegislativeCouncil

andotherleadingfigures.

14 EUROPEAN UNION - HONG KONG2014YEARBOOK

The EU diplomatic missions also worked

togethertoenhancepeople-to-peoplecontacts

andpromoteacademicexchanges,with joint

activitiessuchastheEUHigherEducationFair,

theEUFilmFestivalandthe‘ModelEU’initiative.

TheEUwillcontinuetonurtureitsrelationship

with Hong Kong, increase economic, trade

and investment links, furthercooperationwith

businessandcivilsocietyandpromotemobility

andexchangeswiththepeopleofHongKong.

Keyprioritiesfor2014include:financialservices

regulation and taxation; customs matters;

intellectualpropertyrightsenforcement;further

developing education, research, trade and

investmentties.

ZagrebC R O A T I A

U N I T E D K I N G D O MIRELAND

NETHERLANDS

BELGIUM

LUXEMBOURG

D E N M A R K

G E R M A N Y

CZECH REPUBLIC

SLOVAKIA

P O L A N D

A U S T R I AF R A N C E

S W E D E N F I N L A N D

LITHUANIA

LATVIA

ESTONIA

ROMANIA

H U N G A R Y

SLOVENIA

G R E E C E

BULGARIA

CYPRUS

I T A L Y

S P A I N

PORTUGAL

MALTA

Berlin

Nicosia

Helsinki

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London

Rome

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Bratislava

Valletta

Copenhagen

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Ljubljana

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Budapest

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Prague

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Paris

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NORTH SEA

IONIAN SEA

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BARENTS SEA

GULF OF LION

BAY OF BISCAY

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M E D I T E R R A N E A N S E A

E N G L I S H C H A N N E L

European Union Office to Hong Kong and Macao

N O R W EG

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EA

Map of the European Union 2014

European Union Office to Hong Kong and Macao19/F, St. John’s Building, 33 Garden Road, Central, Hong Kong

Tel: (852) 2537 6083 I Fax: (852) 2522 1302

Email: [email protected]

Like us at: www.facebook.com/EUOfficeHongKongMacao

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