Identifier
Created
Classification
Origin
08HONGKONG1933
2008-10-20 09:31:00
CONFIDENTIAL
Consulate Hong Kong
Cable title:  

"BORING" HONG KONG POLICY ADDRESS DODGES

Tags:  PGOV PREL PHUM HK 
pdf how-to read a cable
VZCZCXRO9317
RR RUEHCN RUEHGH RUEHVC
DE RUEHHK #1933/01 2940931
ZNY CCCCC ZZH
R 200931Z OCT 08
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC 6051
INFO RUEHOO/CHINA POSTS COLLECTIVE
C O N F I D E N T I A L SECTION 01 OF 03 HONG KONG 001933 

SIPDIS

DEPT FOR EAP/CM

E.O. 12958: DECL: 10/15/2013
TAGS: PGOV PREL PHUM HK
SUBJECT: "BORING" HONG KONG POLICY ADDRESS DODGES
SPECIFICS, CE DODGES FRUIT

Classified By: Consul General Joe Donovan for reasons 1.4(b) and (d).

C O N F I D E N T I A L SECTION 01 OF 03 HONG KONG 001933

SIPDIS

DEPT FOR EAP/CM

E.O. 12958: DECL: 10/15/2013
TAGS: PGOV PREL PHUM HK
SUBJECT: "BORING" HONG KONG POLICY ADDRESS DODGES
SPECIFICS, CE DODGES FRUIT

Classified By: Consul General Joe Donovan for reasons 1.4(b) and (d).


1. (C) Summary: Consensus among Hong Kong's public and
politicians was that Chief Executive Donald Tsang's October
15 Policy Address was dull. Pundits had long anticipated
virtually all of Tsang's main points. The only proposal
arousing heated debate was his suggestion that an increase in
a grant to old-age pensioners should be means-tested.
Considerable time devoted to the "financial tsunami"
reinforced already deployed government talking points that
Hong Kong's economy is strong and that valuable experience
gained in the 1997 Asian Financial Crisis would help Hong
Kong weather the current crisis. Tsang announced that the
"Wage Protection Movement", a voluntary program whereby some
employers undertook to pay security personnel and char forces
a living wage (but most did not) had failed, and therefore
the government is "inclined" to seek an across-the-board
minimum wage. Tsang signaled a new stage in Hong Kong's
relations with Taiwan by announcing that the Hong Kong Trade
Development Council (TDC) will open an office in Taipei.
There were no concrete announcements regarding democratic
development or outreach to democrats. While most members
listened in silence to the 90-plus minute address, the League
of Social Democrats (LSD) -- Leung Kwok-hung ("Long Hair"),
Raymond Wong ("Mad Dog") and Albert Chan livened the
proceedings with vocal (if staged) outbursts and bananas
hurled at the dais, resulting in their ejection from the
chamber. End Summary.


2. (C) Comment: Tsang mentioned that the financial crisis
might offer opportunities for Hong Kong, and we'd argue it
certainly offers a modest one for him. The crisis gives him
an opportunity, for now at least, to set aside controversial
issues on which he most often faces criticism, such as
constitutional reform, in favor of one in which he has
considerable expertise (he was Financial Secretary during the
Asian Financial Crisis and won plaudits for his handling of
Hong Kong's response). Economics are Tsang's forte, he
prefers to work in small groups of advisory committees
involving experts he chooses, and Hong Kong does have the

experience and resources to weather the storm better than
most. Leading Hong Kong safely through the crisis could help
undo recent declines in Tsang's popularity ratings. End
comment.


3. (SBU) Chief Executive Donald Tsang delivered the second
Policy Address of his current five-year term October 15.
With the government starting from its previously-announced
five-year agenda, the Central Policy Unit (CPU, the Hong Kong
Government's in-house research arm which drafts the address)
told us in a pre-briefing there would be no real surprises.
As billed, the address covered the issues long anticipated in
the press which have leaked out from consultation sessions
held by the Hong Kong SAR government (HKSARG) with various
sectors of society, with no bold initiatives. The content of
the address also reflected the dual nature of Hong Kong as
both an economic center boasting roughly the 36th largest
economy in the world and as a fairly small Chinese city of
slightly more than seven million people. Thus, international
capital markets and maintaining Hong Kong's competitive edge
are discussed in almost the same breath as rectifying
discrepancies among the tolls charged at Hong Kong's
cross-harbour tunnels. Polls gave this Policy Address the
lowest marks of any in Tsang's four years in office, with
"bare pass" being the evaluation of most.

--------------
Financial Tsunami: Tsang's Perfect Storm?
--------------


4. (C) We will discuss the potential impact of Tsang's
proposals to address the "financial tsunami" septel; here we
will focus on its impact on Tsang's political fortunes. In
general, the Policy Address was criticized for offering
platitudes over specifics on the crisis. Tsang took pains to
reinforce the government's already stated message that
financial regulators were already vigilant (i.e., minibonds
are not our fault) and were taking additional measures to
protect Hong Kong's financial system. He broke with Hong
Kong's laissez-faire orthodoxy by saying "the market is not
omnipotent. Intervention is not necessarily an evil. If the
market fails, the government should intervene." Tsang won
modest praise for announcing he would head a new taskforce
"to continually monitor and assess the impact of the
financial tsunami on local and global markets" with the goal
of keeping government and the community abreast of the
challenges and vigilant to the opportunities arising from the
crisis. The committee will "include top government
officials, finance experts, economists, and representatives
of major industries."

HONG KONG 00001933 002 OF 003



--------------
Commitment to a Minimum Wage
--------------


5. (C) One element of the address which won general support
was Tsang's admission that the voluntary "Wage Protection
Movement" (WPM) had failed and that "there has been a gradual
shift in the community's attitude towards a minimum wage."
Recognizing the impracticability of mandating a minimum wage
just for cleaning and security staff (typically the
lowest-paid workers and the focus of the WPM),Tsang declared
he was "inclined" to support an across-the-board minimum
wage, and pledged to introduce legislation in the current
LegCo session. The legislation would put into place a board
charged with setting the wage and various other mechanisms,
but Secretary for Labour and Welfare Matthew Cheung told the
media he did not expect the board to propose a wage figure
before 2010. South China Morning Post (SCMP) Editor-at-Large
Chris Yeung told us he doesn't think the process could be
completed any faster for mechanical reasons. However,
minimum wage legislation has support from most parties across
both political camps, particularly the pro-Beijing Federation
of Trade Unions, so we expect LegCo and the public to
continue to push for more rapid action

-------------- --------------
"Fruit Money" Controversy Leads to Fruit-throwing
-------------- --------------


6. (C) Chinese University Professor Ma Ngok told us the Old
Age Allowance (OAA),popularly known as "fruit money" and
currently between HK$625 and HK$705 (just under a hundred
U.S. dollars) a month, was never meant to be a social
security payment. He described it as a gratuity to seniors
in recognition of their service to society. Cast in this
light, it becomes clearer why the issue of applying a means
test as the cost of raising the allowance to HK$1000/month
(about USD 128) would result in such universal opprobrium.
Tsang's economic arguments against subsidizing already
well-off retirees might make sense if people viewed "fruit
money" as part of the Comprehensive Social Security
Assistance Scheme, but they don't, and it speaks to Tsang's
political acuity that he didn't realize it. The opposition
may complain generally about the lack of specifics in a
number of Tsang's points in the Policy Address, but this one
issue has the right combination of simplicity and popular
appeal to give it real political salience. For that reason,
even Tsang's allies in the DAB and FTU have criticized the
means-test plan, and newly-elected DAB legislator Starry Lee
led a few hundred seniors to protest the plan at the HKSARG
central government offices October 19. That said, Hong Kong
society did not support the League of Social Democrats' (LSD)
very scripted-looking outburst against the means test, which
involved Raymond "Mad Dog" Wong hurling a bunch of bananas at
the LegCo President's dais before he was led out of the
chamber with fellow LSDer Albert Chan. (The bananas were
leftovers from "Long Hair" Leung's pre-address outburst,
which involved him brandishing a banana at Tsang and asking
if he knew how much fruit cost as a way to show Tsang was out
of touch with the poor working class. CU's Ma told us, only
half jokingly, that "Long Hair" knew it would be a boring
speech and so made sure he got thrown out as early as
possible.) Former Chief Secretary and LegCo Member Anson
Chan declared herself "appalled" at the outburst, and warned
these kinds of stunts merely give ammunition to those arguing
Hong Kong is not yet ready for democracy.

--------------
Two Systems, One Direct Link
--------------


7. (C) Tsang's announcement that the Trade Development
Council will open a representative office in Taipei and that
the government is encouraging Hong Kong and Hong Kong-based
Taiwanese business leaders to form a Hong Kong-Taiwan
Business Co-operation Committee speaks to the sea-change in
the SAR's relations with a Taiwan under KMT leadership.
Additional steps include increasing the permitted number of
entries per month and the duration of stay for holders of the
travel documents Hong Kong issues to Taiwan residents, as
well as the establishment of an inter-departmental steering
committee under the Financial Secretary to look at expanding
economic and trade ties with Taiwan . SCMP's Yeung told us
these ideas were already in preparation before the March
election of Ma Ying-jeou (Hong Kong was apparently betting
blue),and in fact the TDC has been talking about the Taipei
office for months without visible progress. Nevertheless,
mention of these initiatives in the policy address represent
the most public announcement possible of an end to Hong

HONG KONG 00001933 003 OF 003


Kong's arms-length relationship with Taiwan.

--------------
The Defeat of Politics
--------------


8. (C) In a 136-paragraph address, six paragraphs speak in
platitudes about better Executive-Legislative relations.
"Government officials at different levels - the Chief
Executive, the three Secretaries (the Chief Secretary for
Administration and the Secretaries for Finance and Justice),
all Directors of Bureaux, as well as Under Secretaries and
Political Assistants - will maintain dialogue with Members
when formulating policies, and seek their views as early as
possible," Tsang promised. Only one paragraph discusses the
democratic reforms expected for the 2012 LegCo and CE
elections, and offers nothing more than to begin another
round of consultations in 2009. Had Tsang really wanted to
improve his relationship with LegCo, particularly the
pan-democrats, he could have announced the appointment of a
democratic LegCo member (or a retiree like Martin Lee or
Yeung Sum),or committed to an enhanced dialogue with LegCo's
democrats on constitutional reform. That said, no one
expected more, and the democrats have expressed resigned
disappointment rather than outrage (even Mad Dog focused
instead on the fruit money).
DONOVAN