Cash-Rich Hong Kong Prepares For Handover Cash Rich

Hong Kong is speeding towards its destiny as part of China cushioned by a windfall surplus of HK$15.1 billion ($1.95 billion) but financial secretary Donald Tsang resisted temptation to indulge in a give-away budget.

Mindful of the historic significance of the occasion, Tsang kicked off the annual budget speech on Wednesday by reminding Hong Kong and the international community that capitalism and not communism would prevail when the territory becomes a Special Administrative Region of China on July 1.

Tsang revealed a bumper surplus which exceeded by far the modest HK$1.6 billion he forecast a year earlier for the fiscal year 1997-98 covering the handover to China.

 

The speech, titled Contin -uity in a Time of Change, was widely tipped to be a conservative one in light of the monumental political changes confronting the wealthy community of 6.4 million people. Tsang offered little in the way of tax breaks for Hong Kongs wealthy population which now enjoys a per capita Gross Domestic Product (GDP) of US$24,500 higher than its ruler Britain. More than 150 years of colonial rule end when Hong Kong reverts to China at midnight on June 30, 1997, now just 111 days away.

Tsang increased personal allowances but left Hong Kongs salaries tax rate at 15 per cent and the corporate rate at 16.5 per cent. Tsang told the Legislative Council the budget was designed specially to meet the circumstances of 1997.

He called it a model of cooperation with China but served warning that Hong Kong would march to its own autonomous financial beat after the handover.

As it is a transitional budget, the British and Chinese sides needed to go through a process of consultation in order to achieve a unified budget for the whole financial year, he said. Tsang, who will continue to serve as the financial chief under Hong Kongs post-colonial leader Tung Chee-hwa, said all future budgets would be handled by Hong Kong alone.

(The Chinese side) had made clear that after June 30 the preparation of the annual budget will be a matter entirely for the Special Administrative Region and its goverment in accordance with the Basic Law, Tsang said.

He also served notice that democratic freedoms remain the cornerstone of Hong Kongs prosperity. Tsang had earlier spoken out against Chinas plans to roll back some of Hong Kongs human rights laws after the handover.

The free flow of information is the lifeblood of a modern service economy, Tsang said.

It leads to transparency and accountability in both the private and public sectors. It is the best protection against corruption and abuse of power not only by government but in the business world as well.

Tsang said the rule of law, a level-playing field, a corruption-free government and the free flow of information were the four pillars of wisdom guiding Hong Kong into the twentieth century.