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Handover 10th Anniversary

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Hong Kong Beats U.K. in Wealth, Singapore in Taxes
By William Mellor

May 9 (Bloomberg) -- Tim Freshwater, Asia vice chairman of Goldman Sachs Group Inc., gazes across the Hong Kong skyline from his 68th-floor window toward a rectangular building that houses the barracks of China's People's Liberation Army.

"Remember all that fuss about the PLA marching in?" says Freshwater, 62, recalling the dawn scenes on July 1, 1997, when 4,000 Chinese troops rolled across the border hours after Britain handed sovereignty back to Beijing, ending 156 years of colonial rule. "There was all sorts of drama about what might happen to the war memorial."

Ten years later, Britain's memorial to the war dead remains undisturbed. The PLA's soldiers are mostly confined to barracks, surrounded by a growing army of bankers, fund managers, lawyers and accountants. The newcomers pay as much as US$17.50 a square foot a month -- rivaling London and New York -- to lease the glass-and-steel offices that now tower over the beige, 28-story symbol of Chinese military power.

When mainland Chinese leaders fly down from Beijing to celebrate the handover anniversary on July 1, they will find that the teeming, 450-square-mile (1,165-square-kilometer) enclave on the Pearl River delta has even stronger capitalist characteristics than it did in its colonial days.

Hong Kong is now home to the world's sixth-biggest stock market (up from eighth in 1997), and last year it overtook New York to become the biggest market after London for initial public offerings.

Its island-studded harbor, overlooked by the gravity-defying apartment blocks that cling to the slopes of Victoria Peak, was last year the world's second-busiest container port.

World's Freest Economy

In January, Hong Kong was named the world's freest economy for the 13th year by the Heritage Foundation, a Washington-based advocacy group, which cited its low taxes, openness to investment and lack of tariffs. Hong Kong's corporate tax rate is 17.5 percent, compared with a top corporate rate of 20 percent for Singapore. "Our main target is to turn Hong Kong into a New York or London of the East Asia time zone," says Donald Tsang, Hong Kong's Beijing-sanctioned chief executive.

Not all of the changes since the handover have been for the better. The city today is swathed in pollution, with air quality so poor that the government advised people with asthma or cardiovascular disease to stay indoors on 41 days last year.

The city is facing increased competition from Shanghai and other locations such as Singapore. Hong Kong's leaders are struggling to deliver on promised democratic reforms, while the gap between rich and poor is growing.

`Just So-So'

"We have a split economy," says Marc Faber, 61, who oversees $300 million at Marc Faber Ltd. in Hong Kong and has managed money in the city for 34 years. "The super-rich, the money shufflers and lawyers, are doing exceedingly well. However, the lower and middle classes are doing just so-so. Hong Kong today is extremely dependent on the financial sector, and it could suffer rather badly in a downturn."

Under the arrangement known as "one country, two systems," the city in 1997 became a Special Administrative Region of the People's Republic, with Beijing guaranteeing it autonomy over its own affairs, except over defense and foreign policy, for 50 years.

China's communist leaders pledged not to tamper with Hong Kong's way of life and its laissez-faire economy. It would retain its own currency -- the Hong Kong dollar, which is pegged to the U.S. dollar -- and its British common law system, administered by judges in horsehair wigs.

Beijing also agreed to let Hong Kong keep other forms of economic and legal independence, including separate membership in the World Trade Organization.

Move to Bermuda

Unconvinced, 545,000 people -- one-twelfth of Hong Kong's population -- mostly refugees or the children of refugees from communism, emigrated between 1984 and 1997.

The oldest British-owned company, Jardine Matheson Holdings Ltd., moved its headquarters to Bermuda and its stock listing to Singapore. Fortune magazine ran a cover story titled "The Death of Hong Kong." Milton Friedman, the late U.S. Nobel Prize-winning economist, predicted that within two years of the handover, Beijing would impose capital controls and do away with the Hong Kong dollar.

Instead, China stuck to the deal, says Chris Pratt, chairman of Swire Pacific Ltd., a British-owned company that opened its first office in Hong Kong 137 years ago. Swire controls Cathay Pacific Airways Ltd., the world's eighth-largest airline by market value, which in 1997 did not fly to the mainland.

Flights to Mainland

Today, Cathay has 400 flights a week to the mainland --more than any foreign-owned carrier -- most through its Dragonair subsidiary. Cathay bought the 82.2 percent of Dragonair it didn't already own last year for $1.1 billion and doubled its stake in Air China Ltd., the mainland carrier, to 17.5 percent.

"We took the view China meant what it said about Hong Kong," says Pratt, 50.

Hong Kong's history has been marked by boom-and-bust cycles. London started calling the shots in 1841, when it seized Hong Kong island, whose name means "fragrant harbor" in Chinese, a 26- square-mile chunk of granite one mile off the South China coast, after a war sparked by Britain's illicit trade in opium. In 1860, China ceded the tip of the adjacent Kowloon peninsula as well.

Then in 1898, Britain more than doubled the size of Hong Kong's territory by acquiring another chunk of mainland, known as the New Territories, on a 99-year lease.


British companies that set up there were known as hongs, or trading companies, and the men in charge were taipans, which means great managers in Cantonese. Four of the hongs grew into global companies.

In addition to Swire, they are: HSBC Holdings Plc, founded in Hong Kong in 1865, and now the world's fourth-biggest bank by market value; Hutchison Whampoa Ltd., now owned by billionaire Li Ka-shing, and the world's biggest port operator; and Jardine Matheson, once known as the Princely Hong and controlled by the Keswick family, descendants of William Jardine, which operates the Mandarin Oriental hotel chain.

During World War II, British Prime Minister Winston Churchill considered Hong Kong indefensible. He was proved right. On Dec. 8, 1941, a day after the Japanese bombed Pearl Harbor, they attacked Hong Kong. Defense forces strung across the New Territories, known as the Gin Drinkers' Line, fell within a day.

Hong Kong island surrendered on Christmas Day after barely a week of fighting. Three years and eight months later, the British survivors emerged from their prison camps to find Hong Kong in ruins and the population reduced to 600,000 from 1.6 million before the war.

Boom and Bust

That was soon swelled by the arrival of millions of refugees from the civil war in China and subsequent victory of Mao Zedong's communists.

Energized by Chinese entrepreneurs and cheap labor, Hong Kong's economy boomed and adapted. Yet crises in China reverberated across the border. In 1967, during the Cultural Revolution, pro-mainland protesters waving Mao's Little Red Book battled police, overturned cars and stoned hotels. The stock and property markets crashed.

By the end of the 1970s, the question of renewing the leases on properties that expired after 1997 forced Britain to start talking to China about Hong Kong's future.

In 1984, Prime Minister Margaret Thatcher and paramount leader Deng Xiaoping signed a joint declaration guaranteeing the one-country, two-systems solution until 2047.

Fears for the future were heightened in 1989 when Chinese troops cracked down on democracy activists in Tiananmen Square. In Hong Kong, the stock market plunged 37 percent in three weeks, and a million people took to the streets in protest, according to the Hong Kong government.

Residents Flee

Others headed for the airport. China's economic growth slumped to 4.1 percent from the 11.5 percent it had averaged over the previous seven years.

In 1991, the mainland economy resumed its rapid growth. By the mid-90s, returnees outnumbered those leaving the territory, now with the security of foreign passports. At the time of the handover, the Hang Seng Index had risen eightfold to 15,196 in as many years since Tiananmen, and property prices had hit records.

Just one day later -- on July 2, 1997 -- the Thai baht collapsed, sparking a regional financial crisis. Hong Kong's stock market plummeted 60 percent in a year.

In 2003, a mysterious pneumonia-like disease, Severe Acute Respiratory Syndrome, or SARS, swept across the border, killing 299. Shops, hotels, restaurants, subway lines, airplanes and even the normally packed Edwardian-era trams that still trundle between bank towers downtown lost business overnight.

Those who did venture out hid behind white and blue surgical face masks. "SARS was in a sense worse than the Japanese occupation," says Ronald Arculli, 69, chairman of Hong Kong Exchanges & Clearing Ltd., who has childhood memories of the war years. "This time, the enemy was faceless."

Housing Slump

Caught in a deflationary spiral that lasted until 2005, homeowners found their properties lost two-thirds of their value. Such a home price plunge would be unthinkable in the West, says Peter Churchouse, 57, a former Morgan Stanley property analyst who's now director of Hong Kong-based property consultant Lim Advisors Ltd. "If you had a decline like that in America or Europe, there would be blood on the streets," he says.

China came to Hong Kong's aid, signing a trade agreement that allowed Hong Kong companies freer access to Chinese markets. It eased travel restrictions on mainlanders visiting the territory, saving the SARS-ravaged tourism industry.

"That was a huge boost that turned the economy around," says Amar Gill, 43, an analyst at CLSA Asia-Pacific Markets. The official China Daily agreed. "The central government gave Hong Kong a big gift," it said of the free trade deal.

China's Advance

China also allowed more of its giant state-owned enterprises to sell shares on the Hong Kong market, which helped to boost stocks to 20,706 on May 8, down from May 7's record 21,070.

Chinese companies now make up half the market capitalization of the Hong Kong exchange, up from 10 percent a decade ago. Eight of the 15 largest stocks in the Hang Seng Index are Chinese companies.

Hong Kong's economy has grown 7.6 percent annually for the past three years, and gross domestic product per capita on a purchasing power parity basis will be $37,385 this year --higher than the $31,585 of its former colonial ruler.

Property prices for offices in the central business district and luxury apartments and houses on the slopes of the peak are also back to 1997 levels, according to Lim Advisors.

This time, Hong Kong isn't heading for another bust, says billionaire Victor Fung, a former Harvard Business School professor who's chairman of Li & Fung Ltd., a supplier of Chinese- made goods to retailers such as Wal-Mart Stores Inc. and Target Corp.

1997 `Bubble'

"Looking back, we were going through a bubble in 1997," Fung, 62, says. "Now we are on very solid ground. We are much more important as a financial center."

Although mainland China has two stock markets of its own, in Shanghai and Shenzhen, Hong Kong remains the No. 1 source of capital for the world's fastest-growing major economy.

Hong Kong IPOs raised $43 billion in 2006 compared with $10 billion in 1997. That total included $16 billion of the $22 billion raised last October by Industrial & Commercial Bank of China in the world's biggest-ever share sale (the other $6 billion was raised in Shanghai).

Shares in ICBC, as the bank is known, have since increased by 41 percent to 4.32 Hong Kong dollars on May 8, making China's biggest lender the world's ninth-biggest company by market value. In April, Hong Kong hosted the biggest initial public offering so far this year when Beijing-based China Citic Bank Corp. sold $5.95 billion of shares in a dual listing in Hong Kong and Shanghai. Country Garden Holdings Co., China's most profitable developer, also sold $1.9 billion of shares in Hong Kong last month.


In terms of personal wealth, Hong Kong is home to the most U.S.-dollar billionaires per capita, says Kathryn Shih, Hong Kong- based Asia-Pacific head of wealth management at UBS AG. That's 29 in a population of 7 million. One in every 50 residents is a millionaire, Merrill Lynch & Co. and Capgemini SA reported in a 2006 world wealth survey.

Total funds under management in Hong Kong are $579 billion, three times as much as in 2000, according to the Hong Kong Securities and Futures Commission.

To win a share of Hong Kong's booming investment banking and wealth management markets, foreign banks have been boosting their presence. UBS, which last year topped the league tables for arranging Hong Kong and Chinese overseas share sales, according to Bloomberg data, has doubled its Hong Kong staff to 2,000 in the past three years, Shih says. UBS arranged $7.4 billion worth of Chinese share sales last year, including part of the $11.2 billion IPO of Bank of China Ltd., the country's No. 2 lender.

"There's no opportunity I have seen anywhere in the world that compares with what we have before us here today in Hong Kong," says Steven Barg, 45, UBS's head of equity capital markets for Asia. Barg previously headed teams in Europe and the U.S.

Growth at Goldman

At Goldman Sachs, profits from Asia exceeded those from Europe since 2005 and last year more than doubled to $4.02 billion compared with $3.01 billion in Europe. Goldman now has 1,300 employees in Hong Kong, up from 800 in 2003.

"In the 10 years since the handover, Goldman Sachs in Asia has gone from being marginal to a genuine third leg of the global business," Freshwater, the Asia vice chairman, says.

Goldman was the No. 2 underwriter of China IPOs last year, arranging $7 billion, including the Bank of China sale. The U.S. bank has a paper profit of $8.75 billion on the $2.6 billion investment it made in ICBC last year before the share sale.

"No one would have dreamed the amounts of equity raised through listings here could have been done in that period of time," says Freshwater, a Briton who has spent 30 of the past 40 years in Hong Kong and who, as president of the city's law society in 1984, witnessed Thatcher and Deng sign the joint agreement.

No Need for New York

Hong Kong is now so good at raising capital that IPOs no longer need to be dual-listed in New York, says KL Wong, 57, Hong Kong-based chairman of Asia Origination at Merrill Lynch, which helped arrange the record ICBC share sale.

`Last year, the largest IPO in human history was just a Hong Kong listing," he says. "Our regulatory regime, governance and secondary market liquidity are now all acceptable."

China's big, newly listed lenders are also transforming Hong Kong's banking landscape, says David Li, the Cambridge University- educated chairman of Hong Kong-based Bank of East Asia Ltd. "I'm very much an underdog," says Li, 68, who advised Beijing on the handover and also holds a British knighthood.

"During colonial days, I was under the threat of the big British banks here. I'm under the threat of different big banks now."

Profits Surge

Some underdog. Last year, Bank of East Asia's net profit soared 25 percent to 3.43 billion Hong Kong dollars ($439 million) from HK$2.78 billion as the bank expanded into China. In the year ended on May 8, the bank's share price rose 44 percent to HK$47.00 -- more than double that of the Hang Seng Index and four times that of the Hang Seng finance sub-index.

Because of Li's mainland connections, the bank now has 31 outlets on the mainland -- nearly twice as many as Citigroup Inc.

Hong Kong's wealthy domestic market is still fertile pickings for the two London banks that have operated there for almost 150 years. HSBC and Standard Chartered Plc are issuing banks for Hong Kong's currency. Standard Chartered makes 26 percent of its profits there. HSBC makes 23.5 percent.

"It's remarkable that Hong Kong, with 7 million people, can be the biggest contributor to group profits," says Peter Sullivan, 59, Standard Chartered's Hong Kong CEO.

Banks aren't the only ones profiting from Hong Kong's prosperity. At Sam's Tailor, open since 1957, owner Manu Melwani says business jumps every year at bonus time as his clientele has changed from British army officers to bankers, lawyers and accountants.

Lack of Corruption

Chief Executive Tsang, who was reelected in March, says one of his priorities in his second five-year term is to make sure Hong Kong doesn't lose its edge to Tokyo, Singapore or China's domestic financial center, Shanghai.

Tsang, 62, a policeman's son who picked up a British knighthood before the handover, ticks off Hong Kong's advantages for foreign investors: a well-regulated market, the British-based legal system, free media and minimal corruption.

Hong Kong ranks 15th cleanest -- higher than the U.S., Japan and Germany -- out of 163 countries in the 2006 corruption perception index compiled by Transparency International, a Berlin- based advocacy group. China is 70th.

"We are part of the Chinese nation, but we are a unique jewel," Tsang says. "There are certain things that we represent that are lacking in the mainland."


Hong Kong will even share in Beijing's Olympic glory in 2008. As the only place in China apart from Macau where horse racing is legal, it will host the equestrian events for the 2008 games.

Casting a shadow over Tsang's vision is mainland China's commercial capital, Shanghai. Shanghai's stock market trades in so-called A Shares that are reserved mostly for Chinese investors using yuan. Increasingly, Chinese companies listing in Hong Kong are getting a second listing for their shares in Shanghai.

Last year, 71 percent of the $62 billion of funds raised on Chinese stock markets was in Hong Kong, according to PricewaterhouseCoopers LLP. This year, 64 percent of an estimated $58 billion will be raised in Shanghai and Shenzhen as companies already listed in Hong Kong sell more shares domestically, the New York-based accounting firm says.

In the first quarter of 2007, Shanghai's container port also overtook Hong Kong to become the world's second-busiest after Singapore, according to mainland and Hong Kong statistics.

"If you are complacent, you risk being overtaken one day," says Fred Ma, Tsang's secretary for financial services.

The momentum may already be moving away from Hong Kong, says Simon Murray, Hong Kong-based founder and chairman of General Enterprise Management Services, a $750 million private equity fund.

A Shares

"Hong Kong's such a great stock market because foreigners can't invest in A Shares," says Murray, 67, a former Asia chairman of Deutsche Bank AG and CEO of Hutchison Whampoa, Hong Kong's biggest conglomerate.

Eventually, China will make its yuan convertible to the dollar and other currencies. "When that changes, we will all be up in Shanghai," he says. "If you want to catch fish in China, you have to be up there. From Hong Kong, you need a very long rod."

Murray, a marathon runner, says pollution could also drive investors away from Hong Kong. "To be a successful financial center, you need to be not just transparent in your systems but also in the air you breathe," he says.

In the 1980s and '90s, Hong Kong moved its manufacturing industry across the border to Guangdong province, where labor is cheaper. Now, the pollution from 60,000 Hong Kong-owned factories wafts back across the border, adding to the city's homegrown haze.


In November, Merrill Lynch cut its ratings on three Hong Kong property developers over concerns that Hong Kong's pollution problems could cause a brain drain. "The air quality in Hong Kong is now regularly so poor that the long-term competitiveness of this city-state is, in our minds, in some doubt," former Hong Kong-based Merrill analyst Spencer White told clients in a note.

By comparison, rival Singapore has the best air quality of any major city in Asia, says ECA International, a London-based human resources consulting firm. Even Shanghai's is less polluted, ECA says.

In October, Tsang's government unveiled plans to enforce emission caps on power companies and give tax breaks for cleaner vehicles. He says he's also talking to his counterparts in Guangdong. "We will certainly do all we can in Hong Kong, but that will not be half enough," he says. "It will take hard work and continuous monitoring for the next five years."

Wealth Gap

Tsang says he's committed to narrowing the wealth gap by boosting spending on public works and investing more in education. Though unemployment has fallen to 4.3 percent from 8.6 percent in 2003, the proportion of families with monthly incomes of less than HK$6,000 has grown to 22 percent from 13 percent since the handover, he says.

Philip Ng, 70, is one of those who missed out on the boom. He operates a cigarette and soft drink stall in the shadow of HSBC'S Norman Foster-designed downtown headquarters.

Working seven days a week, Ng clears HK$2,700 a month, which leaves him nothing after he's paid for food and HK$1,600 to rent a 120-square-foot (11-square-meter) room in a 600-square-foot flat he shares with three other single men.

"If you are a property developer or in finance, of course this is the best time," Ng says. "But people like us at the bottom of society see none of these benefits. We don't have savings to invest. It's difficult and getting more difficult."


As important as economic issues, Tsang says, is winning approval from both Hong Kongers and leaders in Beijing for a plan to introduce a democratic system of government. Although China is a one-party state, it has promised that the people of Hong Kong will one day be able to choose their own chief executive.

Currently, the 60-member legislature has just 30 directly elected members. The chief executive is elected by 800 people, mostly Beijing loyalists.

Tsang says his goal is to set a timetable for introducing universal suffrage for the territory before he leaves office in 2012. To get approval for the necessary reforms, Tsang -- who won 649 votes after being challenged by a pro-democracy candidate, barrister Alan Leong -- has to win approval from Beijing plus two- thirds of Hong Kong legislators.

Pro-democracy legislators, including Leong, 49, want universal suffrage to happen in time for the next election. Beijing's leaders are more cautious, Tsang says. "I will try and maneuver and find something that is acceptable at the end of the day," he says.

Free Speech

While Hong Kong may lack democracy, it doesn't censor the media or ban freedom of speech, according to the 2006 U.S. State Department report on human rights practices in Hong Kong. Before the handover, the leading democracy activist of the time, legislator Martin Lee, was nicknamed Martyr Lee by people who believed he would be imprisoned or worse once the British left.

Today, the British-trained barrister, 69, still sits in the legislature, practices law and attacks both the Beijing and Hong Kong governments for what he claims are breaches of the constitution.

He says that while the handover declaration promises Hong Kong will be governed by its people, Tsang and his Hong Kong-born government team are really mouthpieces for Zeng Qinghong, the Chinese vice president with overall responsibility for Hong Kong affairs.

`Promises Broken'

"The big promises have been broken," he says. "Hong Kong people are no longer ruling Hong Kong, and democracy has been delayed."

Although he's escaped martyrdom, Lee has only been allowed to visit the mainland once -- for a day and a half -- in the past 18 years after he led demonstrations in Hong Kong against the Tiananmen crackdown. "I can visit every country in the world except my own," says Lee, whose father was a Nationalist general.

That hasn't stopped Hong Kong's people from demonstrating. In 2003, when former Chief Executive Tung Chee-hwa tried to introduce an anti-sedition law, 500,000 people, including Bank of East Asia Chairman Li, took to the streets in protest.

This year, the government was confronted by an angry mob when it demolished the downtown pier for the Star Ferry, which has shuttled between Hong Kong island and Kowloon for 100 years.

Is Tsang confident he can deliver on his democracy pledge? "That's not the right word, but I am determined," he says. Tsang has shown resolve in the past, says Goldman Sachs's Freshwater. In 1998, at the height of the financial crisis, the Hong Kong dollar came under attack from hedge funds that had profited from the collapse of the Thai, Indonesian and South Korean currencies.

`Gutsy Call'

Tsang, then financial secretary, fought back, spending $15 billion to buy up blue-chip Hong Kong stocks and shore up the market.

Tsang, who stands 5 feet 6 inches tall and wears a bow tie to work every day, says he didn't inform Beijing until 30 minutes after he entered the market. "Someone in Beijing said I must have swallowed a tiger's gall bladder," says Tsang, referring to a Chinese expression for someone who shows unexpected strength.

"It was a very gutsy call," Freshwater says. "Some people say it was a tougher decision than it would have been in 1996 because under a British governor, that decision would have been made by the Bank of England in London."

Impeccable Behavior

Tsang hasn't won all his battles. An attempt to introduce a goods and services tax was blocked in the legislature. In a city where the maximum income tax rate is 15 percent, Tsang says, Hong Kong still urgently needs to broaden its tax base.

Still, he says one thing he doesn't have to worry about is the PLA. He says the Chinese soldiers are more disciplined than their British predecessors, who were famous for rowdy nights in the bar district of Wanchai.

"We have never had any incident -- not even a speeding ticket," Tsang says. "These people behave impeccably."

Even with their bird's-eye view into the PLA compound, Freshwater and his Goldman Sachs colleagues say they never see signs of military activity. If so, the barracks may be the only place in today's Hong Kong where nothing much is happening.
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Excellent article.
Hong Kong traces its fortunes in its soaring skyline

HONG KONG, May 14, 2007 (AFP) - On either shore of the western entrance to Hong Kong's harbour stand what will be the city's two tallest office buildings -- the IFC2, which opened in 2003, and the ICC, due to open in 2009.

The soaring towers will form the two pillars of a so-called "harbour gateway," a striking monument to the strength of this Asian business hub's financial clout.

They are the most noticeable structures to have been erected in this city of skyscrapers since sovereignty passed from Britain to China in 1997, transforming a skyline that has changed in reflection of the city's fortunes.

Hong Kong possesses four of the world's 20 tallest buildings -- the figure wil rise to five with the opening of the ICC.

From the air, the southern shore of Hong Kong Island looks like a pin cushion, a solid three-mile wide swathe of skyscrapers creating one of the world's most spectacular skylines.

Skyline - October 2005

But it's a skyline in constant flux. Since the handover of June 30, 1997, Hong Kong's harbourfront has been transformed beyond recognition.

As well as the slender IFC2, which at 415-metres (1,381 feet) is the world's sixth tallest tower and Hong Kong's tallest, the skyline has been punctuated by several other new colossal buildings in the past 10 years.

In the downtown district, The Centre, a 346-metre monster opened in 1998, has added a dash of neon glitz to the city, with huge LED panels running up its sides that change colour every few seconds.

The Centre @ Night

The 283-metre Cheung Kong Centre is the flagship of property mogul Li Ka-shing, who is said to have a luxurious apartment in its penthouse.

Among the most noticeable changes to the skyline over the past decade has been the gradual shift of skyscraper construction from Hong Kong Island to Kowloon, on the opposite side of the harbour.

This is most apparent in the West Kowloon area where the Union Square precinct of towers has risen in the past few years.

Union Square - April 2007

Centred on the ICC, which will be Hong Kong's tallest building and home to the city's Ritz Carlton Hotel, it comprises the Sorrento, the city's tallest residential block at 256 metres, and the 270-metre twin Cullinan Towers, which will offer luxury boutique hotels and serviced apartments.

They are all concentrated over what will be the city's largest retail centre, the two million-square-foot Elements shopping mall, above the newly opened Kowloon station.

Further north, the silo-shaped Langham Place represents the first green shoots of regeneration in the run-down but bustling Mong Kok district.

Langham Place
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I'm sure the article meant to say the NORTHERN shore of Hong Kong Island...
China's presence deepens Hong Kong identity crisis

HONG KONG, May 23, 2007 (AFP) - Johnny Chung wears his England football shirt with pride; he listens to English rock bands and, like many other Hong Kong-born Chinese, speaks perfect English.

His girlfriend Atom Ho, however, speaks little English and judging by the tinny wails from her mobile phone ringtone, listens only to local Canto-pop.

For anglophile Chung, 29, the end of the British colonial era a decade ago was the saddest day in Hong Kong's history, while the event barely registered with Ho, who was just nine years old when sovereignty returned to China.

The pair illustrate an identity crisis that has emerged in this southern Chinese city.

In many ways -- the set-up of the government and the names of streets, for instance -- the city retains many of its colonial characteristics.

But a decade of rule by a nationalistic Chinese government has begun having an impact on the city.

"My earliest memories are of the British national anthem being played and fears of 'reds under the beds' as the 1997 handover approached," said Chung, a computer systems analyst for a European bank.

"But my girlfriend is 100 percent Chinese Hong Kong in her ways -- she hardly remembers the colonial days," he said. "She has only ever been aware of Hong Kong as a Chinese city."

Hong Kong has become something of a political football since the handover, with the city's new masters keen to win over trust and generate a spirit of Chinese nationalism in the southern city.

Some efforts, such as regular displays by China's People's Liberation Army and playing the Chinese national anthem on TV each night, have been blatant, while others have been more subtle.

Among the latter are regular exhibitions of national Chinese treasures, the donation of two pairs of giant pandas and dozens of visits by leading Chinese athletes.

China's presence in Hong Kong has increased without government help too.

The stock market is dominated by huge mainland corporations, the pop charts have more Mandarin-language singers and an easing of travel restrictions means the streets teem with Chinese tourists.

"We now have a real mash here -- there are people who think they are British, people who think they are Chinese and people who feel they are separate from China and are simply Hong Kongers," said Professor Chan Kwok-bun, head of the sociology department at Hong Kong Baptist University.

One of the battlegrounds has been language, with education authorities jettisoning many English teaching programmes after the handover.

Raymond Young, a former deputy secretary of the education department, said: "English is a foreign language despite 150 years of British rule.

"We have had English-medium teaching for 50 years, but look at the results -- 12-year-olds can't utter a coherent English sentence."

Although English proficiency statistics show standards of English dropped soon after schools switched to Chinese as the medium of instruction, and while business leaders warn that worsening levels of English may cost Hong Kong its business edge, academics say the issue is overplayed.

"Since the handover I'm not convinced the situation is any different," said Professor Stephen Andrews, head of the division of language and literature at Hong Kong University.

"The complaints about declining standards of English continue to be heard," he went on, but "there does not seem to be much empirical evidence to support this."

Andrews said a wider and more apparent use of English by a broader spectrum of society, rather than by the elite of past years, has given the perception that English standards have slipped.

While the colonial era is still fresh in many people's memories, academics agree authorities have taken a much more moderate line in promoting a Chinese national identity than they could have, or indeed had had been expected to.

"I'm sure there are many people who would want the process speeded up, but why would Beijing want Hong Kong to be just another Chinese city?" asked Chan of Baptist University.

"One would think they would want Hong Kong to remain unique -- after all, that's what has made it successful."
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This is most apparent in the West Kowloon area where the Union Square precinct of towers has risen in the past few years.

Union Square - April 2007

Centred on the ICC, which will be Hong Kong's tallest building and home to the city's Ritz Carlton Hotel, it comprises the Sorrento, the city's tallest residential block at 256 metres, and the 270-metre twin Cullinan Towers, which will offer luxury boutique hotels and serviced apartments.

They are all concentrated over what will be the city's largest retail centre, the two million-square-foot Elements shopping mall, above the newly opened Kowloon station.
I was once very pessimistic about the handover in 1997. In June 2007, however, I am convinced that Hong Kong did a great job in its development and infrastructure, especially in their effort in Central and West Kowloon.

Well done, Hong Kongers! 10 years of handover, built on the solid foundation of British rule, has proved more successful than expected. In 1997, by the time when West Kowloon was a desolate reclaimed area, undermined the stunning skyline which the urban developers in Hong Kong strived their best to provide. Behind the skyline... it is the sign of the recent economic growth.

English proficiency is not as pessimistic as reported in the media. In my point of view, most Hong Kongers with higher education have competent English proficiency. What makes the problem worse is their education reform. Hong Kong did have an excellent syllabus before 2000s. However, most Hong Kongers did not agree Brits indeed provided the best education system for them :(
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03七一後 現小移民潮
(明報) 06月 05日 星期二 05:05AM

【明報專訊】一本護照,解釋了回歸前後港人在國籍、身分上的迷思,不論它是由太平洋小國湯加發出,還是來自中美洲的伯利茲,港人都不放過,只求多一個國籍傍身。九七前「幾萬美元 買個安心」

「九七時,社會有『大限』的感覺,當年的羊群心態是,最緊要走得快!」移民顧問關景鴻回憶,自從末代港督彭定康 被魯平 指摘為「千古罪人」後,不少港人為求多一個國籍傍身,「大小通殺」,小國如伯利茲、菲濟、塞拉利昂、湯加等地的護照也要拿一個,「花幾萬美元已可做到,當買個安心」。




「有人說,十分之一的港人有加拿大 身分!」見證及參與港人移民潮,關景鴻過去10年見盡一班移民人士的起落、港人心態的矛盾。


近年經濟好 製造回流衝動


10年過後,香港由回歸時的臆測,到03年七‧一時的跌盪,港人都曾紛紛在國籍上找尋「歸宿」,英國 籍、BNO、美加國籍……總之就要買個保險。縱使拿多本不同顏色的護照,這些年來沒有變的,是不少港人在海外被問到從哪裏來時,都會答﹕「I come from Hong Kong!」
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「幾萬美元 買個安心」

Was this really true? I had no idea what was going on then, I was only 7 or 8.

I guess I was one of the many who emigrated from HK to the US in 97... I knew the people were fearful of China, but not so much they tried so hard to have a plan B to get out of the area...
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「幾萬美元 買個安心」

Was this really true? I had no idea what was going on then, I was only 7 or 8.

I guess I was one of the many who emigrated from HK to the US in 97... I knew the people were fearful of China, but not so much they tried so hard to have a plan B to get out of the area...
That's true. There were too many uncertainties before the handover. People were afraid the Communist would have done something bad to HK once China had the driver seat. A lot of HKers thought and tried many ways to get out of HK and earn another nationality other than "Chinese."
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英國廣播公司 回歸十年:香港這片福地

英國廣播公司 回歸十年:香港這片福地

英國廣播公司 回歸十年:香港這片福地


















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This is a very good article..thank you for sharing...I agreed to everything the author had said.

:banana: :banana: 事实证明还是保持了香港的稳定啊!其实大陆还是蛮尊重香港的:cheers: 反正希望中国人都好,不管政治:banana: :banana:
I preferred the Times article.
here's an SSC banner I made which I requested for Jan to post on July, 1. This is my first study. What do you think of the banner and what changes can be done?

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here's an SSC banner I made which I requested for Jan to post on July, 1. This is my first study. What do you think of the banner and what changes can be done?

I think you need the words "Hong Kong" (in english) somewhere near the two characters for HK.
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I think you need the words "Hong Kong" (in english) somewhere near the two characters for HK.
Thanks for the advice :)

Anyway, do we need it in English? Even with the Chinese characters forumers will still know it's HK.

One of my other plans is to add some more graphic behind Jiang Zemin and Prince Charles like people cheering, etc.
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Actually, the education system wasn't running so well before the handover. The focus was on rote learning, and to some extent that's still true today. Hence, students could memorize but could not analyze.
I think the banner is good as is.
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