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16 May 2003

U.S. Consul General Praises Hong Kong's Handling of SARS

(James Keith's May 16 remarks) (3080)


The deadly disease SARS (Severe Acute Respiratory Syndrome) has hurt
Hong Kong's economy, but city's response has been remarkable, says
U.S. Consul General James R. Keith.


In a speech to the Hong Kong General Chamber of Commerce May 16, Keith
said "Hong Kong has demonstrated impressive assets in the face of this
public health crisis."

He said Hong Kong's health care workers "deserve tremendous thanks
from the whole world for fighting so valiantly against SARS. We salute
them."

Keith added that the United States "stands ready to help however we
can, including by sharing our experience with infection control in
hospitals."

The economic impact of the disease around the world has been serious,
Keith acknowledged. But, he added, "The macroeconomic effects in Asia
may not be severe if the spread of the disease can be controlled soon.
Major Asian economies might suffer total losses amounting to less than
2% of total GDP."

According to Keith, "it will take the measured, professional judgment
of health professionals to convince people that SARS is not a threat.
This is not an evaluation that can be cajoled, negotiated, or
demanded. Much will depend on the Hong Kong public health authorities'
ability to effectively screen borders and account comprehensively for
so-called 'sporadic' cases."

"But I take solace from the flexibility and entrepreneurship of the
Hong Kong people," he added. Hong Kong, he said, "is not sitting on
its hands. It is actively seeking solutions to real problems."

Keith said he believes that Hong Kong's trade prospects are good
despite the impact of SARS and the threat of worldwide terrorist
attacks.

"Hong Kong's current account surpluses are high, it enjoys a large net
international investment position, it has no government debt,
substantial fiscal reserves, and an excellent financial market
infrastructure. Hong Kong has relied on strict adherence to the rule
of law; the free flow of information, capital, and goods; and clean,
efficient, non-interventionist government. So long as these
fundamentals remain sound, there is every reason to look to the future
with confidence," he said.

Following is the text of the May 16 speech in Hong Kong:

(begin text)

"Challenges and Changes in U.S.-Hong Kong Relations"
Remarks by U.S. Consul General James R. Keith
Hong Kong General Chamber of Commerce
Conrad Hotel
May 16, 2003  

(As prepared for delivery)

I am grateful to the General Chamber for giving me a chance to be here
with you today. Once again, the international community is facing a
wide variety of serious challenges, and Hong Kong is, as usual, on the
frontlines of many of them. Even so, Hong Kong's resilience and the
advantages of its free market system should help it prosper in these
difficult times.

Let's review where things stand. For those who watch such things, the
Year of the Sheep got off to a rather ominous start. We had both war
and pestilence in quick succession, and both dealt blows to Hong
Kong's economy. Neither the SARS outbreak nor the conflict in Iraq has
been fully resolved, though great progress has been made. SARS
presents a severe challenge, but Hong Kong is working hard to overcome
it. It has been said that experience is a hard teacher because she
gives the test first, the lessons afterwards.

The end of the 20th and beginning of the 21st centuries have not been
kind to Hong Kong and thus it has been tested, and is building up a
portfolio of lessons since 1997. Its integration with China has been
one of the ingredients of its success. Indeed, trade from China
through Hong Kong has been crucial for Hong Kong's development as a
prosperous, cosmopolitan city. And Hong Kong's economic relationship
with the mainland has contributed to China's successful economic
reforms. The two economies are helping each other as their
interdependence grows.

SARS has intruded abruptly into this picture. Economic integration
with the mainland has huge benefits, but it has become even more
evident that there is risk to be managed as well. Hong Kong has
demonstrated impressive assets in the face of this public health
crisis, beating back a new disease that broke without warning from
across the border. Hong Kong went first and the rest of the world
learned from your experience. Hong Kong health authorities provided
the public with a wealth of information about the outbreak and
authoritative advice as to how to prevent spread of the disease,
advice that was refined on a daily basis by productive dialogue with
the World Health Organization (WHO). As all affected areas now know,
more can and should be done around the world to improve both the
"hardware" and the "software" of public health crisis management.

So we are all in this together. One of the first Hong Kong victims was
a Chinese-American businessman who stayed at the Metropole Hotel. The
U.S. Centers for Disease Control and Prevention (CDC) sent
professionals to Hong Kong under the auspices of the WHO. Our health
care workers supported Hong Kong's selfless doctors and nurses on the
frontlines of the fight. We mourn with you the loss of your citizens
to SARS, including nurses and doctors. The U.S. stands ready to help
however we can, including by sharing our experience with infection
control in hospitals. Hong Kong's health care workers deserve
tremendous thanks from the whole world for fighting so valiantly
against SARS. We salute them.

Looking ahead, we are encouraged by indications that the general
picture is improving in Hong Kong. That is a hopeful and welcome sign,
but we must remain vigilant, as the recent news out of Singapore
highlights so poignantly. Our collective work on SARS is not yet over,
and it may continue well into the future.

I am no cynic. One of America's most hardened journalists once said "a
cynic is a man who, when he smells flowers, looks around for a
coffin." There is no place in Hong Kong for that sort of defeatism.
But we do have to be realistic. 2003 is a very challenging year. We
know that the economic numbers are not good, and people are concerned
about livelihood issues. The Hong Kong Tourism Board suggests that
tourist arrivals fell 70% in April. Most hotels have occupancy rates
in the single digits. At the airport, passenger traffic in April fell
by 70% and flights were down 35%. Overall, economists forecasted Hong
Kong's 2003 growth downward to 2% or less. No question, these are
stark figures. And we ought to be realistic about the prospects on the
mainland as well, a sobering thought since China has such remarkable
influence on Hong Kong's economy.

The macroeconomic effects in Asia may not be severe if the spread of
the disease can be controlled soon. Major Asian economies might suffer
total losses amounting to less than 2% of total GDP. Travel,
convention, entertainment, retail, and financial service sectors, as
in Hong Kong, will be hardest hit. This year's Guangzhou trade fair
booked a fraction of last year's orders, for example. Even a 2% hit
might be too optimistic if the tourism sector takes longer to rebound.
Long-term damage on the supply side will depend on how quickly the
affected economies can restore business confidence. I know that people
in this audience are anxious to do just that. My only comment is that
it will take the measured, professional judgment of health
professionals to convince people that SARS is not a threat. This is
not an evaluation that can be cajoled, negotiated, or demanded. Much
will depend on the Hong Kong public health authorities' ability to
effectively screen borders and account comprehensively for so-called
"sporadic" cases. This is a steep challenge, I know, and one that
strikes at the heart of Hong Kong's economic vitality.

But I take solace from the flexibility and entrepreneurship of the
Hong Kong people. To give just a few examples of this: at the end of
April, Cheung Kong (Holdings) announced a $300 million loan guarantee
fund to help its tenants rebound from the SARS retail slump. A leading
property developer recruited 500 "anti-SARS ambassadors" for its
commercial and shopping centers to restore public confidence. Towngas
extended credit to 8,000 restaurant and hotel customers through July.
The Hong Kong Jockey Club donated $500 million toward the
establishment of a centralized disease control center to monitor Hong
Kong and Southern China. So Hong Kong is not sitting on its hands. It
is actively seeking solutions to real problems.

There are no guarantees about the way forward, of course. Warren
Buffet said, "In the business world, the rearview mirror is always
clearer than the windshield." Public confidence is one indicator as to
what might loom ahead. Signs on the street suggest that Hong Kong
people are getting on with their lives. SARS may be here for a while,
but Hong Kong has the capacity to adapt to this new factor in every
day life. Greater attention to public health will increase the quality
of life in the long run, helping Hong Kong combat other diseases such
as tuberculosis and dengue fever. As public hygiene improves, so will
the lives of the Hong Kong people, and that will be a permanent change
for the better.

Hong Kong must labor against the backdrop of continuing turbulence on
the world scene, as this week's terrorism in Saudi Arabia makes clear.
The war on terrorism is well begun, but we still have a long way to
go. I won't dwell here on the political and human cost of the war in
Iraq: Americans don't need to be reminded since we paid with our
citizens' lives for freedom in Iraq. Looking at it from a global
economic perspective, the relatively quick resolution of the conflict
in Iraq should be good for the regional economy. Though the Coalition
still has much work to do in the transition to Iraq's new government,
the end of hostilities means increased stability in oil prices and the
elimination of a major element of uncertainty in global markets. This
is to say that we shouldn't lose sight of the war on terror. It will
continue to weigh heavily on the minds of investors and traders the
world over. Like SARS, terrorism is a fact of life for now.

Closer to Hong Kong, the U.S. is actively working with China and our
allies in Asia to promote stability in the region and to resolve the
North Korean nuclear situation. President Bush and South Korean
President Roh reiterated this week their strong commitment to work for
the complete, verifiable, and irreversible termination of North
Korea's nuclear weapons program through peaceful means based on
international cooperation. If Pyongyang were to address the
international community's long-standing concerns, we and North Korea's
neighbors might find ways to generate a more predictable, stable, and
prosperous region and significantly improve the lives of the North
Korean people. That is our goal. The DPRK's actions this week
underline the need for patience and a long-term view, but we will
persevere.

The war on terror and the SARS epidemic can't help but leave us with a
sober view of global developments, but we can point to positive
developments in U.S.-Hong Kong ties.

-- After years of negotiations, last fall we reached agreement to
liberalize air services in ways that benefit both sides.

-- Hong Kong is participating in the Container Security Initiative, or
CSI. The CSI team from U.S. Border Control and Protection arrived in
Hong Kong last week and is already at work in support of Hong Kong
Customs. Our goal is both safer and more efficient trade.

-- Law enforcement cooperation and counter-terrorism efforts are key
to our mutually beneficial relations. Given Hong Kong's role as an
international financial center, it has a special contribution to the
international effort to deny financing to terrorists. The U.S.
appreciates Hong Kong's leadership in this important area, including
as a leader in the Financial Action Task Force.

-- The Hong Kong government is moving anti-terrorism legislation
required under UN Security Council Resolution 1373. The bill was
recently gazetted. The first reading will take place later this month.
We support early passage of this legislation.

-- Hong Kong's strong, autonomous export control regime has allowed
for continuing U.S. licensing of high technology exports to the
separate customs territory of Hong Kong.

Our common efforts against terrorism and in pursuit of international
criminals have a strong foundation. Hong Kong and the U.S. share basic
values and principles. Some criticize Hong Kong's "live to work"
culture, while Americans recognize something of ourselves in it: our
own Puritan work ethic, our market-based economy, and the "melting
pot" vibrancy of a multi-ethnic society. There is deep support in the
U.S. for the values Hong Kong represents in Asia: open markets, free
trade, and the rule of law.

It is on the basis of these shared values that the U.S. closely
follows the debate on new legislation to implement Article 23 of the
Basic Law. What can the international community contribute to this
debate? First and foremost, we have underlined our abiding interest in
as open and transparent a process as possible to ensure that all of
the interested voices are heard. Our own experience is that the more
transparent the process, the better the ultimate outcome.

In addition, we have an obligation to convey to the Hong Kong
government and people our sense of the consequences of policy choices.
For example, only Hong Kong can decide whether there must be an
explicit reference to mainland law as part of the new legislation's
provisions regarding proscription of social organizations that might
be deemed national security threats. Where is the anchor of Hong
Kong's jurisprudence? Is it in the long history and tradition of the
rule of law in Hong Kong or is it in the emerging and as yet
incomplete system of laws and regulations that is developing on the
mainland? The answers to this question as the new law in Hong Kong
emerges and is implemented will affect the degree to which Hong Kong
can sustain the confidence of the international community, confidence
not only in the rule of law in the Hong Kong SAR but also with regard
to the vitality and sustainability of "one country, two systems."

The American people maintain a strong commitment to preserve the
greatest possible degree of autonomy for Hong Kong. We want to see its
continuing evolution as a model of free market capitalism and believe
that in doing so it must take on another mandate arising from the
Basic Law, that is the elaboration of Hong Kong's democratization in
2007 and beyond. What do we as outsiders look for in Hong Kong in the
decades ahead to instill confidence and promote greater trade and
investment? We look for a strong civil society, a well established and
unfettered press, increased involvement of the people of Hong Kong
from all walks of life in a more representative government, the
preservation of an independent judiciary, and strong political
leadership. "Laws alone cannot secure freedom of expression; in order
that every man present his views without penalty there must be a
spirit of tolerance in the entire population." That is a quote from
Albert Einstein, but it seems more like common sense than rocket
science. Toleration and unity are the hallmarks of a society that is
stable and knows its own strengths. If that kind of unity can be
sustained in the difficult area of political reform in Hong Kong it
will go a long way to build confidence in the international community
about Hong Kong's future.

So let us take stock: yes, SARS has seriously challenged Hong Kong.
The terrorist attacks of September 11, 2001 and the Bali bombing hurt
Asian tourism and trade. Hong Kong was vulnerable to SARS due to its
very openness -- its close integration with China, its open borders,
and its generally non-interventionist government. Unfortunately, SARS
will be with us for the foreseeable future and the course of the
disease on the mainland will impose significant burdens on Hong Kong's
economy. We were buoyed by the cooperation we saw in Bangkok a few
weeks ago at the ASEAN-PRC leaders' conference. More of the same will
come with the APEC health ministers' conference, scheduled for July.
We must learn to live with this new reality in much the same way we
all have learned to live with the ongoing war against global
terrorism.

I promised to end on a positive note, and here it is: Hong Kong's
trade prospects are good, and sources of international instability
have been and are being reduced. The situation in Iraq is less and
less a global economic concern. The recent Beijing talks on North
Korea hold promise. The U.S. commitment to Hong Kong remains strong,
and the SARS outbreak has not undercut the fundamental basis for
robust Hong Kong-U.S. trade. Hong Kong's current account surpluses are
high, it enjoys a large net international investment position, it has
no government debt, substantial fiscal reserves, and an excellent
financial market infrastructure. Hong Kong has relied on strict
adherence to the rule of law; the free flow of information, capital,
and goods; and clean, efficient, non-interventionist government. So
long as these fundamentals remain sound, there is every reason to look
to the future with confidence.

Hong Kong has long been an example for the rest of China. Even though
it is a city of just seven million people, it can play a pivotal role
for all of Asia. Everyone knows there are more tough times ahead, but
Hong Kong has seen this before. Hong Kong's unique history has created
a culture that thrives on innovation and creativity. And I have seen
over the course of the SARS crisis that Hong Kong citizens can unite
impressively to confront formidable challenges. And to overcome them.

But, as famous American businessman Henry Ford said, "You can't build
a reputation on what you are going to do." Now is the time for Hong
Kong to take steps to strengthen the medical, social, political, and
economic infrastructure necessary to succeed in this most competitive
world. The United States stands ready to help in any way that we can.

(end text)

(Distributed by the Bureau of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)