TEXT: U.S. CONSUL GENERAL BOUCHER 11/6 ASIA FOUNDATION REMARKS
(U.S. supports democratic development in Hong Kong)

Hong Kong -- The United States strongly supports continued democratic development in Hong Kong, according to U.S. Consul General Richard Boucher.

"Our hope is that democratic development will continue in Hong Kong and that at every step of the way decisions will be made in favor of more openness and more fully representative government," Boucher said in November 6 remarks to The Asia Foundation. "This is why we have expressed concerns about some aspects of new election arrangements, while welcoming the pledges to hold open and fair elections next May. This is why we are watching closely any steps that might restrict freedom of expression."

"What happens in Hong Kong in the future will not only affect the people here. What happens here, what kind of place this becomes, will have an impact on the rest of China, on the region, and on the world," he continued.

Boucher cited Hong Kong's adherence to the rule of law; the free flow of information; a clean, efficient government; and "an open society that tolerates differences of opinion and variations in lifestyle," as fundamental components of Hong Kong's economic success.

"Business comes here because contracts are fairly implemented. Markets flourish efficiently because information flows freely. Government interference is low and creativity is fostered in a society of pluralism," he said. "The further development of these elements is the only conceivable foundation for a successful future."

"Hong Kong "sets a tremendous example for its neighbors, and indeed for the world, in terms of demonstrating the virtues of free markets and open societies," he said.

Following is the text of Boucher's remarks:

(begin text)

THE GENIUS OF HONG KONG
Remarks by U.S. Consul General Richard A. Boucher
to The Asia Foundation
November 6, 1997

We've just come through a very interesting couple of weeks on the world's stock markets, including Hong Kong's. I guess one of the lessons to be drawn from this experience is that you should never get too smug about understanding what's going on, because probably you really don't.

The refuge for those of us who know we don't understand the present is to start talking about the long term. That's what I'd like to do today. I want to talk from the point of view of U.S. interests about Hong Kong, its future, and the ways in which Hong Kong plays an important international role. And I'll also have some comments about the role that the United States sees itself playing in the future of this great city.

I approach this particular speech with more trepidation than usual, since I rarely have a chance to address such an impressive gathering of world-class experts on things Chinese, especially those of you who have many more years of experience in this corner of the world than I do. But I do look forward to a good give and take, and hope you'll have some good questions to throw my way when I've finished my remarks.

First, let's take a look at what I like to call Hong Kong's genius. When it comes to international commerce, this city is truly a creative force, spinning magic from the ether. Hong Kong people have a sense for identifying and developing opportunities that otherwise would not exist. They know how to bring together a marketing opportunity in the U.S., Europe, or Japan, financing from Asia or outside, the right technology, the right manufacturing elements (often in China, but more and more frequently elsewhere), and the management capabilities that make a business deal happen, and happen quickly.

I don't know of any other place where this process repeats itself so often and so efficiently. These qualities have made Hong Kong a crossroads of capital and markets, an open city based on open trade. Everything here is international, virtually every firm, however small, a multinational. When we look at the practical issues identified by Chief Executive C. H. Tung in his recent policy address, we see that the factors he lists as important livelihood issues in Hong Kong are also necessary to maintain Hong Kong's international competitiveness. Those factors include the cost of housing, the availability of trained personnel, and the maintenance of a superior information infrastructure. We look forward to the progress towards his goals because they can make Hong Kong an even better place to do business in Asia.

Underpinning Hong Kong's success as a business center are several very basic principles. These are the elements which have constituted Hong Kong's past strength. They include first and foremost adherence to the rule of law; the free flow of information; the presence of clean, efficient government; and an open society that tolerates differences of opinion and variations in lifestyle. Business comes here because contracts are fairly implemented. Markets flourish efficiently because information flows freely. Government interference is low and creativity is fostered in a society of pluralism. The further development of these elements is the only conceivable foundation for a successful future.

So here we are at the start of that new future. The government of the Hong Kong Special Administrative Region which came into being on July 1 is unlike any other I know of. No other region or city in China, or elsewhere for that matter, has the kind of high global profile and the scope of responsibility that this one does. Accordingly, Hong Kong's present government is in the process of setting precedents, of working out exactly what its high level of autonomy is going to mean in concrete terms. Its courts are handling cases, and its political system is dealing with issues, that are giving shape to the new Hong Kong polity and society. And while the government's role is important, the decisions, reactions and experimentation of Hong Kong's private sector -- its companies, its interest groups, its individual people -- are equally crucial in determining what tomorrow's Hong Kong is going to be like. As the precedents are created and the facts play out, the reality of Hong Kong's future role will take shape. Our view of that future needs to be based on what actually happens here, not what we, and many others, predicted might happen.

As that future unfolds, there are a number of areas which deserve our attention. For Hong Kong's future will indeed be determined by the actions of its civil servants in maintaining clean government. It will be decided by securities regulators ensuring transparency and fairness in a complicated regulatory environment. It will be decided by impartial decisions on government contracts, and active efforts against corruption. It will be decided by whether a free and active press provides the information that citizens and business people need to operate in an open environment. It will be decided by whether all issues are aired and whether all points of view are welcome to be expressed, either in writing or on the streets. It will be decided by whether consistent progress is maintained at every juncture towards more open and accountable government. It will be decided by whether election rules are set and executed independently, free from political interference. It will be decided on great matters and small ones.

As Hong Kong people, Hong Kong courts, and the Hong Kong government decide a myriad of issues in the future, the first question for us is whether Hong Kong is being left to decide its own fate and then whether Hong Kong keeps up the standards and practices that have characterized its past. So far, apart from the notable exception of the replacement of an elected Legislative Council by a selected one, the signs are good. For most people living in Hong Kong through the reversion of sovereignty, there is a feeling of familiar comfort about almost every aspect of life here. The media for the moment remain free and feisty. The courts are trying cases based on the common law. The Special Administrative Region still operates as a separate customs territory from China. Customs regulations are being enforced. Hong Kong policemen patrol the streets. Businessmen come and go, doing deals. Hong Kong is active as an independent member of important international groups like the World Trade Organization and the Asia-Pacific Economic Cooperation forum. We value these precedents and hope this establishes the pattern for the future.

One thing that permeates the fabric of Hong Kong is change. Staying the same is not good enough for Hong Kong. All these elements need to progress in a consistent direction. As Hong Kong works out its future, markets and investors here will need more openness, not less. As business becomes more complicated, transparency becomes even more necessary for markets to function efficiently and for corruption to be held at bay. As more firms from other parts of China seek financing in Hong Kong, markets here will need more, not less, information about China from newspapers and electronic media. As people in Hong Kong operate businesses on a wider and wider scale, basing their prosperity on more and more knowledge-intensive services, they will expect more and more control over their local government and laws.

Thus our hope is that democratic development will continue in Hong Kong and that at every step of the way decisions will be made in favor of more openness and more fully representative government. This is why we have expressed concerns about some aspects of new election arrangements, while welcoming the pledges to hold open and fair elections next May. This is why we are watching closely any steps that might restrict freedom of expression. For in the end, Hong Kong's future must rest on the founding principles derived from its past.

What happens in Hong Kong in the future will not only affect the people here. What happens here, what kind of place this becomes, will have an impact on the rest of China, on the region, and on the world. With regard to China, we all know that, for many years now, Hong Kong has been a crucial engine powering the economic development of southern China. In the future, Hong Kong will continue to energize China's modernization, bringing together traders and investors who are plunging into the China market, providing capital for China's reforming enterprises, and acting as a sophisticated cross-cultural bridge for Chinese business people who are reaching out to world markets.

Regionally, Hong Kong can bring capital and opportunity to the benefit of all of Asia, creating growth within the region as intra-Asia trade and investment develop. Hong Kong can be a magnet, attracting those who have operated only outside Asia into the region, and providing them with a comfortable, convenient and efficient base.

Beyond this, Hong Kong already sets a tremendous example for its neighbors, and indeed for the world, in terms of demonstrating the virtues of free markets and open societies in a region whose future recovery and prosperity depend, I believe, on adopting similar policies. Hong Kong is important in part because it acts as an outspoken advocate for free trade and open investment policies in all the international fora in which it participates.

Finally, let me say a few words about the role of the United States in Hong Kong's future. I like to hold our Consulate General up as an example of the continuity that has so far characterized post-transition Hong Kong. If you come to the Consulate General today, you will find that we are still doing exactly what we did last year and the year before. We are assisting U.S. citizens, issuing visas, facilitating port calls by the U.S. Navy, working closely with our counterparts across the board in Hong Kong government on a full range of issues, including, especially, promotion and protection of U.S. commercial interests. The authorities here continue to cooperate closely with U.S. law enforcement agencies on stamping out crimes which afflict both our societies, including credit card fraud, counterfeiting, trademark and copyright infringement, smuggling, drug trafficking, and illegal immigration. With clearance from the Chinese authorities, U.S. Navy ships call in Hong Kong regularly at the same rate as they have for many years, providing an opportunity for their crews to enjoy liberty while the ships themselves reprovision -- using the same procedures and contractors as before. Our relationships with the official representatives of the Chinese government who have arrived since the handover are developing in a friendly and businesslike way.

The American community here now numbers some 50,000 persons. Americans are involved in all aspects of life in Hong Kong. We are here as investors, and as reliable partners. We have massive trade and investment interests here, and we expect that our commercial interdependence will continue to develop. We join in many important projects, both here and elsewhere in the region, which are launched from a Hong Kong base. We estimate that some 400 U.S. companies use Hong Kong as their regional headquarters. As members of the Asia Foundation, most of you are probably aware that we also have an extensive network of two-way cultural and educational exchange. We've given up trying to keep track of all the alumni associations of U.S. colleges and universities that exist in Hong Kong, serving tens of thousands of Hong Kong alumni. We plan to continue encouraging more and more openness in Hong Kong society, because that is in our interest and, we firmly believe, in the interest of Hong Kong, too. We plan to go on contributing American talent and capital to the growth of Hong Kong, and to play our part in the unique flexibility and creativity that are the keys to Hong Kong's future.

The Asia Foundation did well to choose to gather in Hong Kong this fall. I hope those of you who are not lucky enough to live here will try to keep coming back over the coming months and years to update yourselves on the progress of this great city, and to see what "One Country, Two Systems" looks like up close. I think the future here is full of excitement and promise, and I know that Americans will always be here both to contribute to, and benefit from, the genius of Hong Kong.

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