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Hong Kong

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Hong Kong brief

Political Overview

Hong Kong, officially known as the Hong Kong Special Administrative Region of the People's Republic of China, is a former British territory that reverted to Chinese sovereignty on 1 July 1997. Hong Kong is governed by the Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China (the Basic Law), passed by China's National People's Congress (NPC) in 1990. The Basic Law serves as Hong Kong's 'mini-constitution'. It provides for independent executive, legislative and judicial powers, and accords the territory a high degree of autonomy under the principle of 'one country, two systems' in all areas except defence and foreign affairs (for which China is responsible).

Hong Kong can conclude and implement agreements with states, regions and international organisations. It does so in areas such as the economy, trade, shipping, fishing regulation, communications, tourism, culture and sport. Hong Kong is a member of the World Trade Organisation (as a separate customs territory) and the Asia-Pacific Economic Cooperation (APEC) forum.

Hong Kong Protests

Minister Payne has conveyed the Australian Government’s concern about violence in Hong Kong. Australia continues to urge genuine efforts by all parties to find an effective political solution that supports and upholds Hong Kong’s freedoms and advantages, open and accountable law enforcement and the professional and unbiased application of justice.

DFAT keeps its travel advisories under close review. We encourage all Australians in Hong Kong to subscribe to Smartraveller for the latest updates.

Chief Executive

The Basic Law designates a system of governance led by a Chief Executive (CE) and an Executive Council, with a two-tiered system of representative government and an independent judiciary.  The CE makes policy decisions and has the power to initiate legislation. According to the Basic Law, the CE is 'accountable to the Central People's Government and the Hong Kong Special Administrative Region'.

The CE is appointed by Beijing after election by an Election Committee, whose 1,200 members are themselves elected through a limited franchise from a number of professional, business and community bodies, Hong Kong deputies to the NPC, and Hong Kong members of the Chinese People's Political Consultative Conference. Chief Executives are appointed for a period of five years. On 1 July 2017, Mrs Carrie Lam Cheng Yuet-ngor was sworn in as Hong Kong's fourth CE.

Legislative Council

The major function of the Legislative Council (LegCo) is to enact laws, examine and approve budgetary matters, monitor the government's performance, and debate issues of public interest. The LegCo also endorses the appointment and removal of judges of the Court of Final Appeal. It cannot initiate bills involving government expenditure, limiting its role in policy development. Its meetings are open to the public.

Elections for the seventh LegCo took place on 4 September 2016. The LegCo is currently on its 6th term with all 70 members elected for a term of four years. Of the LegCo's 70 seats, 35 are directly elected by voters (30 from geographical constituencies and five from District Council 'super-seat' functional constituencies) with the remaining 35 elected indirectly by the members of traditional functional constituencies representing occupational and other special interest groups.

District Council Elections were held in Hong Kong on 24 November 2019. The elections attracted a record turnout with nearly three million people voting, the equivalent  of 71 per cent of registered voters. The pro-democracy camp won 388 of 452 directly elected seats. The pro-Beijing camp won 59 seats, a significant loss from their nearly 300 seats held since the 2015 election. Independents secured five seats. Pro-democracy groups now control 17 of the 18 district councils.

Judiciary

Under Hong Kong’s Basic Law, the judiciary is independent of the executive and legislative branches of government. The Court of Final Appeal in Hong Kong replaced the British Privy Council as the highest appellate court after Hong Kong reverted to Chinese sovereignty in 1997. China's National People's Congress Standing Committee (NPCSC) has the power of final interpretation of the Basic Law. The NPCSC has exercised this power on five occasions concerning the right of abode (1999), universal suffrage (2004), the term of office of the Chief Executive (2005), state immunity (2011) and lawmakers' oath of allegiance to Hong Kong as part of China (2016).

As Hong Kong is Australia's most popular business base in north-east Asia, we have a substantial stake in the integrity of Hong Kong's legal system. Distinguished Australian jurists have been appointed to the Court of Final Appeal as non-permanent judges, including former Chief Justice of the NSW Supreme Court, James Spigelman and former justices of the High Court, Sir Francis Gerard Brennan, Sir Daryl Dawson, Robert French, Anthony Murray Gleeson, William Gummow, Sir Anthony Mason and Michael McHugh. French, Gleeson, Gummow and Spigelman are currently appointed to the Court of Final Appeal.

Economic Overview

Hong Kong occupies an area smaller than the Australian Capital Territory and has a population of 7.5 million. On 31 October 2019, the Hong Kong government announced that Hong Kong’s economy had slid into a technical recession. According to the Hong Kong Census and Statistics Department, Hong Kong’s GDP decreased by 1.2 per cent in real terms from 2018.

Hong Kong's economic growth and prosperity have been underpinned by an open trade and investment regime complemented by a highly educated and flexible workforce and a transparent legal and regulatory environment. The city has evolved into an efficient global and regional transport and trade hub.

The free movement of capital in and out of Hong Kong has accelerated the city's development as an international commercial and financial centre. A strong institutional framework including the rule of law has attracted a number of important corporate headquarters to Hong Kong. It has emerged as a major provider of services to China and is the mainland's designated centre for the internationalisation of the Renminbi (China's currency).

Hong Kong's economic integration with mainland China developed through the 1980s with the establishment of China's first Special Economic Zone in Shenzhen, across the border, transforming a fishing village into a global manufacturing centre of nearly 13 million people. Investment by Hong Kong industrialists across the Pearl River Delta (PRD) - arcing from Hong Kong in the East, through Shenzhen, Dongguan, Guangzhou, Foshan, Zhongshan and Zhuhai to Macau in the West - has been one of the main drivers of China's rapid economic modernisation.

Since 2004, the China-Hong Kong Closer Economic Partnership Arrangement (CEPA) has accelerated integration between Hong Kong and the PRD, giving favourable treatment to Hong Kong manufactures and services. In July 2017, Hong Kong signed two economic agreements with the Central Government under CEPA, including an Investment Agreement and an Agreement on Economic and Technical Cooperation. At the same time, Hong Kong and the Central Government also signed a Framework Agreement on Deepening Guangdong-Hong Kong-Macao Cooperation in the Development of the Greater Bay Area. Hong Kong is part of the Greater Bay Area, which is a Chinese government scheme to link nine cities of Guangdong's Pearl River Delta (Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing) with the Special Administrative Regions of Hong Kong and Macau into an integrated economic and business hub.

Australian companies have benefitted from greater access to mainland China, in part due to CEPA’s delivery of a more level playing field for foreign-owned companies. Infrastructure projects such as a high-speed rail link from Hong Kong to Guangzhou via Shenzhen which opened in September 2018 and a bridge linking Hong Kong, Macau and Zhuhai, which opened in October 2018, are improving transport links with the region.

Bilateral Relations

Australia has extensive and enduring interests in Hong Kong built on strong trade and investment connections and close people-to-people links. The Australian Government supports Hong Kong's high degree of autonomy as provided for in the Basic Law and in accordance with China's policy of 'one country, two systems'.
The Australian Consulate-General represents the Australian Government in Hong Kong. In Australia the Hong Kong Economic and Trade Office, based in Sydney, represents the Hong Kong Government.

Then Prime Minister Malcolm Turnbull visited Hong Kong on 11-12 November 2017. This was the first official visit by an Australian Prime Minister since 1984, and helped strengthen cooperation between Australia and Hong Kong on trade, investment, innovation, law enforcement and combating transnational crime. 

At an event to mark the 20th anniversary of the establishment of the Hong Kong Special Administrative Region of the People's Republic of China in July 2017, then Foreign Minister Julie Bishop spoke about the importance of bilateral relations between Australia and Hong Kong.

People-to-people links

Hong Kong has one of the largest Australian communities abroad with around 100,000 Australians residing in Hong Kong. Around 96,000 people born in Hong Kong live in Australia.

Education cooperation between Australia and Hong Kong is deepening. In 2018, there were 130 formal agreements between Australia and Hong Kong, covering student and staff exchange, academic and research collaboration, and study abroad.

As at November 2019, Hong Kong ranked 16th as a source location for international students to Australia. In 2019, 15,500students from Hong Kong studied in Australia across all sectors. From 2002 to 2019, there were almost 158,000 higher education course enrolments and more than 49,000 VET course enrolments by students from Hong Kong.

Hong Kong was one of the four host locations that participated in the pilot phase of the New Colombo Plan in 2014. The New Colombo Plan is a signature initiative of the Australian Government, which aims to lift knowledge of the Indo Pacific in Australia by supporting Australian undergraduates to study and undertake internships in the region. By the end of 2020, the NCP will have supported around 1,500 Australian undergraduates to undertake New Colombo Plan experiences in Hong Kong, across diverse fields including business, communications, education, engineering, health, science and urban design. 

In December 2019, Minister Payne announced that the Australia-China Council (ACC) will be replaced by the National Foundation for Australia-China Relations. For more than forty years, the Australia-China Council has promoted people-to-people links and enhanced mutual cooperation with China. The new and innovative National Foundation, based in Sydney and in operation from early-2020, will further strengthen this important bilateral relationship. 

Bilateral trade and investment

The Australia-Hong Kong Free Trade Agreement and associated Investment Agreement entered into force on 17 January 2020.  Together, they strengthen Australia's relationship with one of our most important trading partners.  The FTA locks in zero tariffs for Australian exporters and provides Australian service suppliers with guaranteed access into key sectors of Hong Kong's growing services market. The Investment Agreement (which updates and replaces the 1993 agreement for the Promotion and Protection of Investments) will protect investors on both sides, including providing for a minimum standard of treatment, a requirement to pay compensation in certain circumstances where an investment is expropriated, and protection against discrimination.  

Australia and Hong Kong have a longstanding trade relationship. Hong Kong was Australia's twelfth largest trading partner overall in 2018, with total two-way trade in goods and services worth $17.8 billion. In 2018-19, Hong Kong was Australia's tenth most important destination for goods exports ($7.9 billion) and seventh-largest services market ($3.0 billion). In 2018, Australia’s financial services exports were worth $259 million. Australia's major merchandise exports were gold, edible products and preparations, telecommunications equipment and parts, and fruit and nuts.

Australia is an important source of high-quality food and beverages for Hong Kong's hotel and restaurant sector — featured exports include wines, fresh and chilled seafood, premium fruit, nuts, vegetables and dairy products. Hong Kong's strategy to become a wine trading and distribution centre for the Asian region presents opportunities for Australian wine producers and for providers of wine-related services, such as storage and auctioning.

Australia's major imports from Hong Kong in 2018-19 were telecommunications equipment and parts, pearls and gems, jewellery, edible products and preparations and printed matter. Bilateral services trade with Hong Kong is centred on transport, recreational travel and business services.

Hong Kong is the fifth largest investor in Australia, with total foreign investment amounting to $118.8 billion in 2018. Investment sectors include utilities, infrastructure, transport, telecommunications, resources, clean energy and hotels, and increasingly agri-food, major infrastructure and health services. Hong Kong businesses see Australia as a safe, reliable and open investment destination with a well-performing and well-managed economy.

Hong Kong is also an attractive investment destination for Australia. It is the eleventh largest destination for total Australian investment abroad (by stock), worth $52 billion in 2018. Sectors of interest include banking and finance, construction and engineering, health and medical services, telecommunications, insurance, legal services, education, information technology, consulting, logistics, and transport.

Hong Kong has Australia's largest commercial presence in Asia. The Australian Chamber of Commerce in Hong Kong is Australia's largest offshore Chamber of Commerce. Australian businesses are drawn to Hong Kong because of the transparency and efficiency of its regulatory environment, the integrity of Hong Kong's financial markets and the rule of law. Hong Kong's location gives Australian companies an important base for commercial engagement with China and neighbouring countries in Southeast Asia.

For more information about business opportunities in Hong Kong, see Information on doing business and opportunities in Hong Kong .

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