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The early years of the 21st century saw Hong Kong recover from lengthy economic malaise and resume rapid growth. But political disputes intensified. A pro-democracy movement lobbied and demonstrated for speedier evolution to universal suffrage, which suspicious Communist cadre in Beijing refused to provide. This forced the resignation of Hong Kong's first Chief Executive, Tung Chee Hwa, an unpopular figure opposed to democratic rule, and brought into office the more personable Donald Tsang, who favored greater local autonomy but lacked the power to grant it.


Legco elections are held, with 24 seats filled by popular vote. The biggest winners are the Democratic Party with 12 seats (less than predicted) and the pro-Beijing Democratic Alliance for the Betterment of Hong Kong (DAB) with 11 seats.
Chinese officials warn the Hong Kong media to limit reporting on the pro-independence movement in Taiwan, and tell Hong Kong businessmen to avoid doing business with Taiwanese who support the island's independence. After consulting mainland representatives, the Hong Kong government states that commerce will not be politicized.

President Jiang Zemin and other Chinese leaders say they support a second term for Tung as Chief Executive. In 1996, Tung said he would only serve one term.

Tung begins his second five-year term as Chief Executive without an election as no candidates qualify to stand against him.

A ground-breaking ceremony is held for the Hong Kong Disneyland project on Lantau Island.
On July 1, a 500,000-strong public demonstration protests against a proposed "anti-subversion" law (required in some form by Article 23 of the Basic Law) on grounds that it threatens broader civil liberties. After the conservative Liberal Party withdraws support for the bill, the government no longer has the Legco votes needed to pass the legislation and shelves it indefinitely.
An epidemic of Severe Acute Respiratory Syndrome (SARS) afflicts more than 1700 people and kills 299.

China announces that it will not permit popular elections for Chief Executive in 2007 or for more than half of the Legco seats in 2008, although these would have been permitted under terms of the Basic Law. It says some electoral changes can be introduced before 2007, including expansion of Legco provided the 50-50 ratio between directly and indirectly elected seats is not changed.
After another large July 1 demonstration in favor of enhanced civic and voting rights, Tung confirms the Basic Law provision stating that universal suffrage is the "ultimate" goal.
Legco elections are held, with 30 seats filled by popular vote. The Democratic Party and its allies are the biggest winners with 25 seats, though fewer than expected.

Chief Executive Tung, widely criticized for providing ineffectual leadership, resigns from office, officially for health reasons. Donald Tsang, Chief Secretary (the second-ranking government official) and former Financial Secretary, is named by China to complete his term. Many Hong Kong legal experts believe the relevant clause in the Basic Law called for a new five-year term.
Ministers from 149 nations held a week-long meeting of the World Trade Organization to negotiate terms of an international trade agreement under the Doha Round of talks. Hundreds of activists from other countries staged street demonstrations in opposition.
The government-backed political reform package failed December 21 when only 34 of 60 Legco members-less than the required two-thirds majority-voted in favor. China called the vote "unfortunate" and later said American official statements in favor of early universal suffrage were "rash" and "foreign interference".
After meeting Tsang in Beijing, President Hu and Prime Minister Wen said Hong Kong should concentrate on economic issues. Tsang said there would be no new political reform proposals before the 2007 elections.

January 11: Invest Hong Kong, an official agency, said 232 more overseas companies had established or expanded regional offices in Hong Kong during 2005. Foreign direct investment in the territory totaled $34 billion in 2004, seventh-highest in the world. This was a 150% increase over 2003.

January 12: Chief Executive Donald Tsang Yam-Kuen said he would not propose changes to the existing electoral system for at least two years, following refusal by the Legislative Council in late December to approve his package of modest reforms. This means there will be no changes until after scheduled elections in 2007 and 2008.

January 18: The government said it would review operations of Radio Television Hong Kong (RTHK), the territory’s public service broadcasting company. Officials said the goal is to assess the need for publicly-funded services; critics said the purpose is to restrict freedom of its news service.

January 26: A $580 million, four-year plan to boost passenger and cargo capacity at Chep Lap Kok airport was announced. Both experienced a 10% growth rate in 2005.

January 27: Three senior government appointments were announced. They were Joseph Wong Wing-ping as Secretary for Commerce, Industry and Technology; Denise Yue Chung-yee as Secretary for the Civil Service; and John Tsang Chun-wah as Director of the Chief Executive’s Office.

February 14: The International Monetary Fund praised Hong Kong’s economic management, but called on it to address longer range problems like an aging population and increased competition from other Asian financial centers.

February 20: Hong Kong’s Airport Authority got Beijing approval to form a joint venture to operate the airport in the nearby Chinese city of Zhuhai. The new venture will relieve pressure on Chep Lap Kok by channeling air freight from the Pearl River Delta area through the Zhuhai terminal.

February 21: The government postponed plans to turn reclaimed land in West Kowloon into one of the world’s largest cultural centers after private developers refused to participate on grounds the price was too high. The $5.2 billion project called for building museums, performance venues and parks under a 52-acre (21 hectare) glass canopy. It was to include branches of the Solomon R. Guggenheim Foundation and the Museum of Modern Art in New York and the George Pompidou Centre of Paris. Developers were to construct the center free of charge and create a $3.8 billion trust fund to pay operating costs in return the right to use other land for commercial purposes. A committee was formed to assess Hong Kong’s cultural needs and report back to the government in September with revised proposals. The original plan had been widely criticized on grounds it reflected arbitrary decisions by bureaucrats rather than public consultation.

March 1: The Harbour Business Forum, representing Hong Kong’s leading companies, criticized government plans to develop the central waterfront. It said they did not reflect wise urban planning or popular demand. This put at risk Mr. Tsang’s project for a new high-rise government office on the Tamar site, already objected to as being too costly and unnecessary, and as restricting public access to the city’s distinctive waterfront.

February 22: The paper named Bishop Joseph Zen Ze-kiun, an outspoken support of democratic politics, to the rank of cardinal. Later, the vice chairman of China’s official Catholic Patriotic Association, warned him against trying to use the church to weaken the Communist Party.

Financial Secretary Henry Tang announced that Hong Kong will have its first budget surplus for eight years, three years ahead of schedule. He said surpluses will increase annually for the next five years. He ordered minor tax cuts but rejected calls for major cuts on grounds Hong Kong needs to accumulate reserves for future use. He also ordered officials to study the possibility of installing a sales tax to widen the tax net and diversity the revenue stream, but said action was years away.

March 15: Management turmoil at the government-owned Kowloon-Canton Railway Corp. ended when Chairman Michael Tien Puk-sun withdrew his resignation and agreed to stay in office, and career civil servant James Blake was named acting chief executive. Mr. Blake replaced Samuel Lai Man-hay, who—along with most senior managers—had criticized Chairman Tien’s policies and working style. Hong Kong Chief Executive Donald Tsang Yam-Kuen said he would speed up plans to merge KCRC with the MTR Corp., operator of the subway system.

March 16: Hong Kong’s gross domestic product rose 7.9% in 2005 to $372.6 billion, the government announced. The 2006 rate is expected to exceed 5%.Unemployment remained at 5.2%, a four-year low.

March 19: A new pro-democracy political party, the Civic Party, was launched. Founded by political moderates and career professionals, it includes six current members of Legco. Its goal is to campaign on practical policies that could win broader support than many other Hong Kong political organizations.

March 20: Imports of live poultry from China will resume with some restrictions, the government announced. They had been curtailed because of bird flu cases on the mainland. Meantime, Hong Kong is reducing the number of poultry farms and its own chicken population.

April 6: The government named a 15-person consultative panel to review plans for the delayed West Kowloon cultural center. Headed by Chief Secretary Rafael Hui, it has subcommittees for performing arts and tourism, museums and financial matters. Panel recommendations are expected by October.

April 7: A new tax system, based on profits rather than turnover, was announced for Jockey Club horserace betting. Government receipts from racing, used to fund social programs, have fallen yearly since the 1999-2000 season due mainly to the growth of illegal bookmaking, and dropped to HK$8.35 billion (US$1.08 billion) last year. Under the new system, the Jockey Club will guarantee tax payments of at least HK$8 billion annually over the next three years.

April 12: Plans were announced to merge Hong Kong’s two railway systems—the MTR Corp. (77% government-owned) and the Kowloon-Canton Railway Corp. (100% government-owned)—over the next year. Terms call for MTRC to lease KCRC rails services under a 50-year renewable lease and to buy its property development rights.

April 21: Hong Kong will allow residents of another six mainland cities to visit as individual tourists, bringing the total to 38 cities with a population of 200 million. Other Chinese citizens must travel in organized tour groups.

April 22: Chinese Vice President Zeng Qinghong, the senior official who oversees Hong Kong affairs, told Hong Kong businessman at an economic conference on Hainan island that they should support the HKSAR government and promote social unity.

In a major speech at the conference, Chief Executive Donald Tsang called for eventual creation of a pan-Asian currency and for five interim steps toward regional financial integration. He said Hong Kong is ready to offer advice and assistance toward these goals.

April 26: RTHK was told to submit a report on alleged “non-compliance with government procedures” and “inadequacies in internal controls.” The problems apparently involve financial management and not program content.

April 28: In a Beijing speech, Wang Zhenmin, an advisor to the central government on Hong Kong issues, outlined six concerns that he said impede the introduction of a fully democratic political system in Hong Kong. [For some of Professor Wang’s other views, see his article in the second issue of the Hong Kong Journal.] Pro-democracy politicians in Hong Kong criticized the speech, calling the six “conditions” an excuse for denying the vote to citizens who are fully ready for universal suffrage.

May 3: Hong Kong Disneyland offered free admission to 40,000 taxi drivers in an effort to promote more business. Admissions at the entertainment complex, partly owned by the government, have been running below expectations.

May 8: The government said it will begin gradual introduction of a five-day work week on July 1, down from the current 5 ½-day week. However, the 59,000 affected civil servants will have to work longer days, leaving the total number of weekly work hours unchanged.

May 9: In a joint operation, law enforcement officials of China, Hong Kong and the U.S. shut down a Colombia-based cocaine trafficking ring. They seized US$13.5 million worth of the drug and arrested nine people—three Colombians, a Venezuelan, three mainlanders and two from Hong Kong.

May 24: The economy expanded at an annual 8.2% rate in the year’s first quarter, faster than expected. Overall 2006 GDP growth is now expected to exceed the official forecast of 4% to 5%.

May 29: New government plans for a future Central District waterfront were unveiled. Included are a new 18-story hotel, two 14-story office complexes, a 1.4-kilometer promenade, an arts center and 11 hectares of greenery and public open spaces. Also included is the proposed government headquarters complex on the Tamar site.

The Tamar project its first political hurdle as 16 of 18 members of the Legislative Council’s public works sub-committee voted in favor. A final vote is scheduled for June.

May 31: About 170 secondary school teachers will retire early this year under a government buy-out plan. Facing declining enrollment due to demographic changes, the goal is to eliminate 840 such jobs by the 2009-10 school year.

The government ran a HK$9 billion surplus in April, the first month of the new fiscal year. This was more than four times the 2005 figure and was due mostly to increased salary-tax revenues and land sales.

June 1: Bank of China shares gained 15% on the Hong Kong Stock Exchange, the first day of trading after the bank raised US$9.725 billion in China’s largest initial public offering to date, and the biggest anywhere since 2000.

June 3: Controversy continued over whether political parties must disclose their full membership lists to the government under the Companies Ordnance. Some parties have done so on grounds it is an unavoidable legal requirement; others have declined for fear their members could become subject to political pressure from Beijing.

June 4: An annual candlelight vigil to commemorate the 1989 crackdown in Beijing’s Tienanmen Square had the smallest turnout since 1998. Organizers said the ceremony drew 44,000 people; police said it was 19,000.

June 8: Air pollution in Hong Kong causes more than 1,600 deaths and costs at least HK$2 billion annually, according to a study by experts from a local think tank and three universities. It said air quality has been deteriorating for several years.

June 9: Cathay Pacific Airways said it will acquire Hong Kong Dragon Airlines in a complex HK$13.6 billion deal that also involves Air China, the mainland’s leading international carrier. When completed, Cathay Pacific will acquire all Dragonair shares it doesn’t already own, while Air China will increase its holdings of Cathay shares to 17.5% and Cathay will double its ownership of Air China to 20%. The deal will give Cathay access to 23 more mainland cities; it now has limited service to only three.

June 12: The government said it expects to have a new terminal for cruise ships in operation by 2011. One possible site is Kai Tak, home of the former international airport.

June 13: The Hong Kong Monetary Authority said it has formed a working group to combat money laundering and terrorist financing, chaired by William Ryback, deputy chief executive of the HKMA.

June 15: Imports of live birds and poultry from the mainland were banned for three weeks following confirmation of a human case of avian influenza in adjacent Shenzhen. Public health officials also said they will strengthen surveillance measures.

June 19: May unemployment fell to a 57-month low of 4.9%, according to new government statistics, down from 5.1% in April.

Margaret Fong was named Commissioner for Economic and Trade Affairs, USA. She had been Director-General since 2004 of the Washington, DC office since 2004. She succeeds Jacqueline Willis, who will retire from government service after directing Hong Kong’s American offices since 1999.

June 22: A new government plan for developing the former Kai Tak airport site was announced; a two-month period for public discussion will follow. The plan includes 700,000 square meters of new office space, 29,000 apartments and a 24 hectare (60-acre) stadium complex and cruise ship terminal. Part of the old runway will be removed to improve water flow in the harbor; another portion will become a helicopter terminal for cross-border flights. Construction is scheduled to begin in 2010.

June 23: By a 40-10 vote, Legco approved a HK$5.2 billion plan to build a new government headquarters complex on the Tamar site in central district, ending a long dispute. The tendering process will begin later this year and construction is to be completed by late 2010.

July 1: The annual pro-democracy march drew a crowd somewhat larger than year's 21,000, though an absence of economic grievances limited the turnout. Organizers claimed 58,000, a university poll said it was between 36,000 and 43,000, and the police called it 28,000. The presence of Anson Chan Fang On-sang, former Hong Kong chief secretary, drew much attention. Meantime, government organizers of a rival “patriotic” parade, featuring lion dancers and pop singers, claimed a similar turnout of 50,000, while police said the crowd was 40,000.

July 4: A government-appointed committee called for new laws against price-fixing, bid-rigging and other forms of unfair competition. The Tsang administration said it would give the report “careful” consideration.

July 10: Richard Li, chairman of the telecommunications company PCCW Ltd., said he would sell most company assets to Francis Leung, a Hong Kong banker, for US$1.8 billion. Earlier bids from Australian and American companies were rejected because Beijing authorities wouldn’t allow sale of Chinese telecoms properties to foreigners.

July 11: The Court of Final Appeal ruled that temporary laws permitting certain police wiretaps were unconstitutional.

July 12: An official consultation paper said the income tax rate could be cut to 11% from 16% if a new general sales tax (GST) is approved.

July 14: Hong Kong and mainland China signed an agreement making commercial judgments in their courts enforceable on both sides of the border.

July 15: Chief Executive Donald Tsang Yam-kuen said universal suffrage might be possible for the 2012 elections, his first explicit public mention of that date.

July 18: The government announced its plans for a GST, and said there should be nine months of public consultation before further action is taken. It indicated that it favors a rate of 5%.

Regina Ip Lau Suk-yee, former secretary for security, endorsed Tsang for a second term and said she will not form her own political party, despite rumors to the contrary. She also announced formation of her own think tank, the Savantas Policy Institute.

July 19: Anson Chan Fan On-sang, former chief secretary, said she will organize a task force to lobby for more democracy in Hong Kong.

July 25: A semi-annual British government report said Hong Kong has made no new progress toward universal suffrage.

July 26: The government announced plans to create new senior posts for political appointees, who would serve as deputies to Principal Officials. It said this would make the administration more politically representative and improve governance.

August 2: Tsang said “a significant breakthrough” has been made in talks about building a 30-kilometer bridge to connect Hong Kong, Macau and Zhuhai, China, and that construction could begin soon.

August 6: Legco passed contentious new laws to regulate police surveillance, including creation of secret courts to issue warrants for wiretapping. Pro-democracy lawmakers complained that all 200 of their proposed amendments were rejected, including a promised “sunset clause” that would have let the laws lapse after two years unless renewed.

August 13: Justice Woo Kwok-hing was named to the new post of Commissioner on Interception of Communications and Surveillance, and said his three-judge panel will not be a rubber stamp for the government. The panel is supposed to monitor implementation of new covert surveillance laws and investigate complaints.

August 16: The government announced a HK$2.3 billion plan for five research and development centers at its Science Park. They will focus on auto parts and accessories, information and communication, logistics and supply chain management, nanotechnology and advanced materials, and textiles and industry.

August 20: Masked thugs with wooden batons beat pro-democracy legislator and lawyer Albert Ho Chun-yan in a McDonald’s restaurant in central. There was speculation that the beating might be related to his legal work on behalf of clients who are suing Macau gambling interests.

August 22: Decreasing U.S. export demand helped slow the annual economic growth rate to 5.2% in the second quarter. This compared to official predictions of 8.2% and an 8% rate in the first quarter.

August 26: The government released its renovation plan for the Wanchai waterfront. It includes an expressway tunnel under the convention center, reclaiming 15 hectares (37 acres) from Victoria Harbor and building parks and promenades along the waterfront.

September 4: Hong Kong Disneyland said first-year attendance will fall short of the projected 5.6 million visitors. The government, which invested HK$23 billion (US$2.95 billion) in the project, is 57% owner.

September 7: The government said it will revise the security zone along the mainland border, opening for development 2,000 hectares (about 4,900 acres) of land that has been closed since 1951. Conservationists said this could endanger wetlands and cause environmental problems.

September 11: Tsang presided over an economic conference designed to find ways of coordinating Hong Kong’s development with that of the mainland. This indicated a greater government role in future economic strategy.

September 19: Unemployment fell to a five-year low of 4.8%.

September 23: Anson Chan announced that she will not run against Donald Tsang for the post of chief executive, but will head a new committee to advocate universal suffrage and good governance.

October 11—In his annual policy address, Chief Executive Donald Tsang said Hong Kong faces three major challenges: sustaining economic development, moving toward democratic politics and building a “harmonious” society—the latter echoing a favorite theme of Chinese President Hu Jintao. His specific proposals included strengthening the financial services industry, helping families meet education costs and improving the enviroment. But critics called the speech short on substance, particularly on environmental issues.

October 17—Hong Kong retained its position as Asia’s second-largest destination for foreign direct investment, trailing only mainland China, a United Nations agency reported. The 2005 total was US$35.9 billion, up 5.6% from the prior year.

Financial Secretary Henry Tang Ying-yen outlined a package of tax concessions that might offset a new goods and services tax if government plans to introduce a GST are approved. These could include cutting the current 16% income tax rate and increasing personal deductions.

October 18—More than 30 people—including 20 from one real estate agency—were arrested for taking or offering illegal payments related to the sale and lease of property, the ICAC announced.

October 19—A anti-smoking bill cleared Legco and will take effect January 1. It will ban smoking in most indoor workplaces and public places, including restaurants, bus stops, beaches and parks. Tobacco advertising will also face new regulations.

In a rare show of unity, most Hong Kong political parties rejected the government’s call for a GST, saying it would damage the economy and hurt the poor.

Bus companies were told that any new vehicles must have the best-available anti-pollution technology or they won’t be licensed.

October 22—Christopher Hill, the US assistant secretary of state for East Asia, met with Hong Kong officials to seek help in opposing money-laundering and counterfeiting by North Korea.

October 23—The Industrial and Commercial Bank of China completed a record US$22 billion initial public share offering, with $16 billion of that raised in Hong Kong. This helped place the Hong Kong market fourth worldwide in terms of capital raised by placement of new shares.

October 24—The former Kai Tak airport will become the site of a new cruise ship terminal by 2012, the government announced, able to handle two ships of up to 100,000 tons displacement each. Also included will be new commercial, retail and office facilities. The current terminal in Tsim Sha Tsui will remain in business.

October 31—Fanny Law Chiu-fun, secretary for education and manpower, was named commissioner of the IC AC, the anti-corruption agency. She replaces Raymond Wong Hung-chiu, who will assume the education portfolio.

November 6—Most pro-democracy political parties agreed to back Civic Party legislator Alan Leong Kah-kit, a barrister, as their candidate in the forthcoming election for chief executive. If he obtains the necessary 100 nominating votes from electors, Mr. Leong will campaign against incumbent Donald Tsang Yam-kuen.

The government began a three-month period of public consultation about terms of a new competition policy. It would be aimed at price-fixing, bid-rigging and other anticompetive practices.

November 22—As a sign of growing business concern about pollution, Merrill Lynch, the investment firm, advised clients to sell Hong Kong property shares and invest in Singapore companies. It said air pollution dimmed the business prospects of Hong Kong real estate companies.

The government raised its official economic forecast for 2006 to 6.5%, up from a previous 5%, following a robust 6.8% annual rate in the third quarter.

November 23—Pro-Beijing legislators blocked a Legco motion calling for the introduction of universal suffrage by 2012, saying Hong Kong is not yet ready for full democracy.

November 24—The government said it plans new legislation to control volatile organic compounds (VOC), a chief source of smog.

November 27—David Eldon, head of the General Chamber of Commerce and former chairman of HSBC, criticized Hong Kong’s business leaders for doing too little to support stronger anti-pollution measures.

Dr. Margaret Chan, a former Hong Kong health official, was elected head of the World Health Organization, a UN agency.

November 30—Minority shareholders of PCCW, Hong Kong’s leading telecommunications company, blocked its sale to a local banker who had financial backing from the Spanish company Telefonica and Li Ka-shing, father of PCCW chairman Richard Li Tzar-kai. This attempted sale came after Chinese authorities vetoed earlier PCCW efforts to sell assets to Australian and American investors on grounds the Hong Kong company is a strategic national asset. That official interference seemed to violate Chinese pledges that Hong Kong would have full autonomy in business matters.

December 4—James Tien Pei-chun, chairman of the conservative Liberal Party, criticized Chief Executive Tsang for failing to take more decisive action against pollution.

Wu Bangguo, chairman of China’s National People’s Congress, ended a two-day visit during which he called on Hong Kong leaders to “keep a firm grip on the two main themes of development and harmony.”

December 6—In a surprise move, Financial Secretary Tang shelved plans for a goods and services tax. He said it was “clear” that the government had not convinced the public that new revenue sources are needed to meet anticipated future expenses, such as for healthcare. But officials will consider other possible levies, such as an energy tax to finance environmental programs.

December 7—The government said it will introduce legislation to increase official campaign financing for candidates who seek district council seats. The goal would be to encourage more people to seek public office.

A study by a UN agency reported that Hong Kong people have the world’s highest individual net worth—US$202,000 each in the year 2000. Economists said this reflects the city’s high savings rate and property investments.

December 8—The Asian Development Bank said Hong Kong’s economy should expand 5.2% next year, down from 6.5% in 2006. It said this would reflect a general Asian slowdown of export growth and slower economic growth in mainland China.

December 10—A record turnout of 56,000 voters—about 27% of those eligible—chose 427 members for the 800-person election committee that will select a chief executive in March (the other 373 seats automatically go to electors based on their positions in society or government). Of the total, a reported 134 have promised to nominate Alan Leong for the position, giving Hong Kong its first-ever election contest for the top government post.

December 13—Chief Executive Tsang scheduled a December 24-26 visit to Beijing to discuss, among other matters, the election committee vote and the prospects for universal suffrage in Hong Kong. He is expected to meet President Hu and officials from 11 ministries.

December 14—An annual survey of business leaders by the General Chamber of Commerce found 84% of respondents unhappy about pollution, up from 66% a year ago. However, 72% said they were satisfied with the government’s overall performance, up slightly from 2005.

A senior official said the government could legally deny admission to pregnant women from the mainland suspected of trying to enter Hong Kong for childbirth. Through October, 12,398 non-resident mothers—most from China—gave birth in Hong Kong, 20 times the 2001 rate.

December 15—Legco passed a much-criticized school voucher plan that had been delayed. It provides HK$10,000 per year per child for kindergarten fees, but passed only after the government agreed to less-restrictive rules.

December 16—Despite public protests, the government demolished the landmark Star Ferry terminal and its clock tower in Central District to make way for a new highway.

December 19—The jobless rate fell to 4.4%, the lowest in five years.

December 26-28—In yearend meetings in Beijing, President Hu Jintao and other leaders praised Mr. Tsang highly for leading Hong Kong back to prosperity. “The central government fully recognizes you and the SAR government’s work,” Mr. Hu said.

December 31—A ban on smoking in most public places took effect at midnight.


January 9—Invest Hong Kong, a government agency, said it helped 246 overseas, mainland or Taiwanese companies begin or expand operations in Hong Kong during 2006, up 6% from the previous year.

The government published a list of 496 historic buildings and said it will try harder to preserve them for heritage reasons.

January 12—Tang King-shing, deputy police commissioner, was named to replace the retiring commissioner, Dick Lee Ming-kwai. Several other senior appointments are expected in coming months.

January 15—Hong Kong suspended poultry imports from Japan as part of its effort to prevent an outbreak of avian flu. Authorities have found the deadly H5N1 strain in several birds in the territory.

Chief Executive Donald Tsang Yam-kuen announced an advisory panel's list of 50 policy recommendations and 207 specific measures to strengthen economic and financial links between Hong Kong and the mainland. Many are designed to promote Hong Kong as a regional financial center.

January 16—Hong Kong border officials said on February 1 they will begin denying entry to women who are seven or more months pregnant and don't have hospital bookings. The goals is to reduce the number of mainland Chinese women who give birth in Hong Kong hospitals at public expense in hopes of gaining the right of abode for their newborn children.

January 30—Hong Kong and Guangdong Province announced plans for an emission trading pilot plan for thermal powerplants in an effort to reduce air pollution. It covers three pollutants but not carbon dioxide, or greenhouse gas.

February 1—Donald Tsang Yam-Kuen formally announced his intention to seek a second term. He said he would work to make the political system more democratic and tackle air pollution, among other things.

February 13—CLP Power's plan to build a liquified natural gas terminal on South Soko Island was approved by government environmental advisors, an imortant step toward final permisson. Environmental activists claim it will add to air and water pollution.

February 15—The chief executive appointed a commission to investigate allegations that it interfered with academic freedom by trying to fire faculty members of the Hong Kong Insitutute of Education who criticized government education policies.

Barrister and Civic Party official Alan Leong Kah-kit formally became a candidate for the post of chief executive with 132 nominations, 32 more than necessary. He said he represents those “without a vote, power or money.”

Donald Tsang got 641 nominations and is expected to win easily.

February 23—The 2006 population was 6.9 million, well below earlier estimates of 7.2 million. A government census showed both a continuing fall in the birth rate and an aging population.

February 28—Financial Secretary Henry Tang Ying-yen announced cuts for salaries, property and alcohol taxes for the 2007-08 fiscal year. He said government spending would total HK$248.2 billion (US$31.8 billion), leaving a surplus of HK$7.2 billion (US$920 million). Social welfare, education and health care will account for more than 60% of overall spending.

March 1—The two contenders for the chief executive's post held their first public debate, something new in Hong Kong politics. Instant polls indicated the public thought Alan Leong did bettter than incumbent Donald Tsang.

March 5—Former Chief Secretary Anson Chan Fang On-sang proposed that direct elections for the chief executive's position by introduced in 2012, and for the legislative council by 2016. Business and pro-Beijing groups said they would oppose her plan.

March 9— China said it will give Hong Kong two more pandas to mark the 10 th anniversary of the handover on July 1.

March 10—Thirteen primary schools were told to stop admitting first grade pupils due to the declining number of young children in Hong Kong . The schools eventually will be closed.

March 15—A survey of 254 cities by ECA International, a consulting firm, said that Hong Kong had dropped to 23 rd place (from 18 th the year before) as a desirable place to work for Asian expatriates. It said air pollution was the main reason.

March 16—Donald Tsang fared better in the second and last public debate with challenger Alan Leong, according to snap polls.

Chinese Premier Wen Jiabao, in a Beijing press conference, praised Hong Kong for its financial system, “relatively sound” legal system and managerial talent. He said its unique role cannot be matched by other cities.

March 18—Saving Queen's Pier from demolition for heritage reasons is not feasible, the government said. It said it would find a place for a new pier in Central District once a reclamation project is completed.

March 19—The government said it would draft new laws to outlaw bid-rigging, price-fixing and other anti-competitive practices.

A public demonstration against the highly-limited election for chief executive, in which only 796 people can vote, drew fewer than 5,000 people.

March 20—Unemployment dropped to 4.3%, the lowest since 1998.

March 22—A new study by the Hong Kong University of Science and Technology and Civic Exchange, a research group, claimed local sources accounted for most of Hong Kong 's air pollution on 53% of 2006's 324 polluted days. Pollution from Pearl River Delta sources accounted for the majority on 36% of the days. Researchers concluded that stronger environmental action inside Hong Kong could give it more blue-sky days.

March 23—The economy grew 6.8% in real terms during 2006, the government said.

March 25—As expected, Donald Tsang won a full five-year term as chief executive. He received 649 election committee votes, compared to 123 for challenger Alan Leong. Eleven members cast blank ballots, six did not vote and five ballots were ruled invalid. Tsang promised a “pragmatic and proactive” effort to resolve the universal suffrage issue.

March 27—James Tien Pei-chun, leader of the Liberal Party, was named chairman of the Hong Kong Tourism Board, replacing Selina Chow Liang Shuk-yee.

April 2—Donald Tsang Yam-kuen was formally named to a full term as Hong Kong 's chief executive at a cabinet meeting in Beijing .

April 3—Property developer Nina Wang Yu-sum, believed to be the wealthiest woman in Hong Kong , died of cancer. This prompted legal disputes about the disposition of her US$4 billion or more estate.

April 9—President Hu Jintao and Premier Wen Jiabao, in separate Beijing meetings with Donald Tsang, praised his record as head of the Hong Kong government. President Hu said Hong Kong 's progress toward democracy should proceed in a “gradual and orderly” manner.

May 15—Ma Lik, chairman of the Democratic Alliance for the Betterment of Hong Kong, generally described as a pro-Beijing party, said Hong Kong won't be ready for universal suffrage before 2022 because residents aren't yet properly patriotic. He also denied that a “Tienanmen massacre” took place in 1989.

June 4—A candelight vigil in Victoria Park commemorated the 18 th anniversary of the Tienanmen massacre. Organizers said 55,000 people attended, a number exceeded only in 1999 and 2004; police put the total at 19,000.

June 5—The government said its 155,000 civil servants would get pay raises of nearly 5%, despite opposition from private-sector employers.

June 6—Wu Bangguo, chairman of the National People's Congress in Beijing , warned a visiting group of Hong Kong officials—including Chief Executive Donald Tsang—that the city will get only whatever degree of autonomy that the central government chooses to grant it.

June 8—The Legislative Council approved a bill allowing merger of Hong Kong 's two rail companies, the Mass Transit Railway Corp. and the Kowloon-Canton Railway Corp.

June 14—The government's Commission on Poverty reported that aid programs for the poor needed improvment. It said about 820,000 people of all ages live in households with extremely low incomes.

June 15—Financial Secretary Henry Tang Ying-yen said the Hong Kong dollar's peg to the US dollar won't be changed anytime soon, partly because the Chinese yuan is not yet fully convertible. One of his predecessors and a Bank of China ( Hong Kong ) study paper had called for a review of the 20-year-old peg.

June 20—Fanny Law Chiu-fun resigned as head of the Independent Commission Against Corruption after seven months on the job. This followed an official board of inquiry's finding that she had improperly interfered with academic freedom while in her previous job as Secretary of Education and Manpower. The case involved a government effort to force a merger of the Hong Kong Institute of Education, a teachers training college that wished to remain independent, into Chinese University . The board also criticized the current education secretary, Arthur Li Kwok-cheung, but less severely.

June 22—Official statistics showed that Hong Kong continues to enjoy strong economic growth. Gross domestic product in 2007's first quarter was 5.6% higher than a year earlier, with 85% of total GDP coming from the sevices sector. Inflation for May was up only 1.2% from a year ago, the unemployment rate remained unchanged at 4.3%, the lowest for nine years, and the work force totaled a record 3.63 million people.

June 23—The chief executive named his 15-person cabinet for his second term in office. Eight are holdovers though some portfolios will change, and 10 have civil service backgrounds. Financial Secretary Henry Tang Ying-yen will replace the outgoing Raphael Hui Si-yan as Chief Secretary, the number two government post, with John Tsang Chun-wah, a former minister, rejoining the administration as the finance chief. One newcomer is the new Secretary for Home Affairs, Tsang Tak-sing, a former leftwing journalist who was jailed in 1967 for his role in the anti-British riots.

Timothy Tong Hin-ming, former customs and excise commissioner, was named the new ICAC chief, replacing Fanny Law Chiu-fun.

June 25—Outgoing Chief Secretary Raphael Hui Si-yan was appointed the 16 th unofficial member of Hong Kong 's Executive Council, joining 15 other unofficial members who will retain their posts. This senior policy advisory body also includes the goverment's 15 cabinet secretaries.

June 26—President Hu Jintao will visit Hong Kong from June 29 to July 1 for celebrations marking the 10 th anniversary of the handover to Chinese sovereignty, Beijing announced. It will be his first visit to the city.

Organizers of the fifth annual July 1 pro-democracy rally won an appeal against a police ruling that would have limited their march to three hours because of the handover ceremonies. An appeals board said the rally could last four hours but would have to begin 30 minutes earlier than previously planned.

July 1—Rally organizers said 68,000 people—the highest total for three years—marched in the annual pro-democracy demonstration, including former Chief Secretary Anson Chan Fang On-sang and Roman Catholic Cardinal Joseph Zen Ze-kiun. Police put the total at 20,000, while a University of Hong Kong survey estimated it at 24,000.

President Hu Jintao swore in Donald Tsang for a second term as Chief Executive in ceremonies marking Hong Kong’s 10th anniversary under Chinese sovereignty. In a speech, he called for continued “gradual” political reform but warned that policies of the central government are predominant.

In his remarks, Mr. Tsang promised “a new mode of economic development” to alleviate poverty and narrow Hong Kong’s wide income gap. He also said efforts to introduce universal suffrage will continue.

July 6—The chief executive could be selected by universal suffrage in the 2017 elections, according to a statement by the Democratic Alliance for the Betterment and Progress of Hong Kong (DAB), the largest pro-Beijing political party. However, it said a vetting system should be introduced to ensure that all candidates are acceptable to the central government. Most pro-democracy parties want such voting in 2012 without such an approval system.

July 11—The government released its official Green Paper on political reform. It offered three options for public discussion—universal suffrage in 2012, by gradual steps until 2016 or sometime after 2016. It also contained many other models for revising the existing political process but retained the concept of having some Legco seats filled indirectly, such as by the present functional constituencies. Officials remined the public that any final plan must have Beijing’s approval; pro-democracy politicians said they were disapointed by the complex paper. The public discussion period will end October 10.

Hong Kong finished the last fiscal year with a treasury surplus of HK$58.6 billion (US$7.6 billion), higher than expected.

July 14—The government should revise its policymaking process to include much more public consultation, according to a study by the Bauhinia Foundation Research Centre, which has close ties to the government. It said this would reduce widespread public distrust of administration decisions.

July 16—An official projection said Hong Kong’s population would reach nearly 8.6 million in 2036, up from the current 6.9 million. The portion aged 65 or more would rise to 26% compared to the present 12%.

July 19—The unemployment rate fell to 4.2%, the lowest since mid-1998.

July 26—In a report to Parliament, David Miliband, the British foreign secretary, called Hong Kong’s slow progress toward universal suffrage “disappointing.”

August 3—Forty-seven leading construction companies announced new measures to reduce air pollution caused by their projects.

August 8—Ma Lik, leader of the DAB and a consistent supporter of mainland policies, died of cancer at age 55. His death will require a December 2 by-election on Hong Kong island to fill his Legco seat.

In a special report, the Bauhinia Foundation said Hong Kong and Shenzhen should seek closer integration leading to formation of a single urban center.

August 10—A high-court judge ruled that plans to demolish Queen’s Pier in Central District could go ahead despite objections from citizens who wanted it preserved for heritage reasons.

August 11—The government unveiled plans for its new headquarters complex at Tamar. The project, which will cost about HK$5 billion, is due for completion in 2010.

August 18—The latest official plan for redeveloping the former Kai Tak airport reduced the area dedicated to commercial building and increased that for public spaces.

An official forecast said 2007 economic growth will be 6%, up from a previous 4.5% to 5.5% estimate.

August 23—Striking metal workers and employers reached agreement on wage increases, ending a dispute that had halted some construction projects. September 7—The government anounced that it has a 5.88% stake in Hong Kong Exchanges and Clearing, the city’s stock exchange, making it the largest shareholder. It said this would help maintain Hong Kong as a leading international financial center and lead to closer ties to mainland exchanges. Some finance executives worried this might bring more government intervention in the markets.

September 11—Former Chief Secretary Anson Chan confirmed that she will run for the Legco seat left open by the death of Ma Lik.

Sepember 13—The government announced a new financing plan for the projected West Kowloon cultural center, whose construction has been delayed due for cost reasons. The revised project will cost HK$19 billion (US$2.45 billion), much less than the previously expected HK$30 billion. Under the new plan, the government expects the center’s performance venues, museums and other facilities to be financially self-sustaining.

September 19—Hong Kong banks cut their lending rates ¼% following a decision by the U.S. Federal Reserve Board to cut American interest rates. The Hong Kong dollar’s value is pegged to the U.S. dollar.

September 24—The pan-democratic political parties announced they will field 289 candidates in November’s district council elections, the most ever. This means they will compete for 70% of the 405 seats chosen by ballot; another 102 are appointed by the government and 27 are ex-officio. Later, the DAB announced it would field 177 candidates, while the Liberal Party will have 60.

September 25—Inflation for 2007 may reach 2%, up from a previously-predicted 1.5%, according to Financial Secretary John Tsang Chun-wah. He blamed rising food prices, a stronger yuan and a weaker U.S. dollar.

September 27—Former Secretary for Security Regina Ip Lau Suk-yee announced plans to run for the Hong Kong island Legco seat left open by the death of Ma Lik, leader of the DAB. Her main opponent in the December 2 by-election will be Anson Chan.

Anthony Cheung Bing-leung, a professor at the City University of Hong Kong and a member of the government’s Executive Council, was named president of the Hong Kong Institute of Education. Following a public row over alleged government interference in the institute, the contract of his predecessor was not renewed.

October 10—In his annual policy address, Chief Executive Tsang said most Hong Kong people favor universal suffrage but progress toward full local democracy should be made “rationally and pragmatically”. He also announced a HK$7.6 billion (US$975 million) tax relief package despite increased spending on health and education, including the extension of free education from nine years to 12. He also said work on major infrastructure projects would continue, including a Hong Kong-Shenzhen-Guangzhou high speed railway, a new cruise ship terminal at the former Kai Tak airport, the Hong Kong-Zhuhai-Macao highway bridge and a new arts center in West Kowloon.

Mr. Tsang also announced plans to create two new layers of political appointees to policy-making bureaus. Officials said this would give potential political leaders practical experience in government.

October 17—A United Nations report for 2006 said Hong Kong remained second only to mainland China as a destination for foreign direct investment in Asia. It said the territory attracted US$42.9 billion worth, up 28% from 2005, compared to the mainland’s US$69 billion, down 4%.

October 27—Joseph Yam Chi-kwong, chief executive of the Hong Kong Monetary Authority, will retire in 2009, officials said. His deputy, Norman Chan Tak-lam, is expected to succeed him.

November 19—The pro-Beijing DAB party was the big winner in the 18 District Council elections. It nearly doubled its total to 115 of 405 elected seats, while the pan-democratic group’s total fell nearly 50% to 106 seats.

November 23—During a visit to Beijing, Mr. Tsang asked the central government to include Hong Kong in early stages of drafting China’s 2011-2015 national development plan.

December 2—Former Chief Secretary Anson Chan On-sang, backed by the pan-democratic alliance, won a by-election to fill an empty Legco seat representing Hong Kong island. She defeated former Secretary for Security Reginia Ip Lau Suk-yee, supported by pro-Beijing and business groups, by a 55% to 43% margin.

December 12—In a report on constitutional development to the central government, Mr. Tsang said most Hong Kong residents want universal suffrage soon but continued opposition from a strong minority makes 2017 the most likely year for implementation. The report went to the Standing Committee of the National People’s Congress for action.

December 14—The government exercised its right to appoint 102 District Council members, guaranteeing that the pan-democratic alliance will not have a majority of seats in any district following November’s elections for the other 405 seats.

December 18—The unemployment rate dropped to 3.6%, the lowest since 1997.

December 19—Hong Kong and Shenzhen officials signed seven agreements to increase cooperation in such areas as infrastructure development, environmental protection and urban planning. Included was an agreement to study building a 30-kilometre railway to link their airports.

December 26—A draft resolution on universal suffrage for Hong Kong was submitted to the National People’s Congress by the NPC leadership. No details were announced.

December 29—The Standing Committee of the National People’s Congress voted that Hong Kong elections for Chief Executive in 2017 and all Legislative Council seats in 2020 “may” be decided by universal suffrage. The HKSAR government was told to submit methods for making these changes for Beijing’s approval in 2012. Meantime, scheduled elections for 2012 must be conducted according to existing rules. Chief Executive Tsang praised the NPC decision; democratic politicians said the changes should come sooner.


January 7—The government and power companies agreed on a new rate system that could reduce both electricity bills and pollution.

The Independent Commission Against Corruption charged Lily Chiang Lai-lei, chair of the Hong Kong General Chamber of Commerce, with fraud and making false statements following its investigation of a share-options plan.

January 9—Legco rejected a pan-democratic motion calling for universal suffrage in 2012 by a 31-23 vote.

January 12—More than 85% of the former security zone—about 2400 hectares or 6000 acres—along the Hong Kong-China border will be opened for public use by 2012.

January 25—Fifty-nine Hong Kong residents were elected to the National People’s Congress, 36 of them for the first time. Four pro-democrats failed to win seats.

February 6—The International Monetary Fund estimated that Hong Kong’s economy will grow 5% or less in 2008, down from 6.3% in 2007.

February 14—The territory’s population rose to 6.96 million at the end of 2007, up 0.8% from a year earlier, the goverment said.

February 17—David K.P. Li, chairman of the Bank of East Asia, resigned from Executive Council after settling an insider-trading case in the U.S. He will remain a member of the Legislative Council.

February 27—Hong Kong’s budget for fiscal year 2007-08 will have a surplus of HK$115.6 billion (US$14.8 billion), Financial Secretary John C. Tsang announced. The new budget contained several tax cuts, including a one-time 75% reduction of property and salary tax rates and eliminating import taxes on wine and beer. Mr. Tsang also announced establishment of a HK$18 billion (US$2.3 billion) fund to finance university research.

February 28—A financing agreement for construction of a HK$46 billion (US$5.9 billion), 30-kilometer toll bridge connecting Hong Kong, Zhuhai and Macao was reached by the three governments concerned. Hong Kong will pay 50.2%, China’s Guangdong Province 35.1% and Macao 14.7%.

March 11—The government approved construction of a new 17-kilometer MTR (subway) line from Sha Tin to Central District and to extend the existing Kwun Tong line to Whampoa. Completion of the HK$41.6 billion (US$5.3 billion) projects will take about 10 years.

March 14—All elementary schools and pre-schools were closed for two weeks due to an influenza outbreak that killed three children and hospitalized several others.

March 20—The consumer price index for February was up 6.3% from 12 months earlier, the steepest inflation rise for 10 years. The unemployment rate fell to 3.3%, the lowest for 10 years.

March 28—Martin Lee Chu-ming, 69, a longtime leader of the drive for democratic politics in Hong Kong, announced that he will not seek re-election when his Legco term expires in July.

March 31—Schools reopened following a two-week closure to break an influenza transmission cycle.

April 3: Six U.S. warships, headed by the aircraft carrier Nimitz, arrived in Hong Kong waters for shore leave. These were the first American navy ships to call since Beijing denied the carrier Kitty Hawk entry last November.

The Independent Commission Against Corruption arrested 29 members of an alleged bribery ring involving renovation contracts for residential buildings.

April 8: Oasis Hong Kong Airlines, a long-haul budget carrier, suspended operations due to rising fuel costs. Other airlines began reducing flight frequency to and from Hong Kong for the same reason.

April 23: The government will build a HK$39.5 billion (US$510 million) high speed railway to the border, linking it to a new rail line to Beijing. When completed, travel time to Guangzhou will be 48 minutes, Shanghai eight hours and Beijing 10 hours.

April 25: Visitors to Hong Kong spent a record HK$140.5 billion (UKS$18.1 billion) in 2007, up 16.4% from the previous year.

April 26: Building height restrictions in Tsim Sha Tsui were reintroduced.

May 2: The Olympic torch relay passed through Hong Kong under tight security but without major incident. Several foreign human rights activists were denied entry to Hong Kong but American actress Mia Farrow, who opposes China’s links to Sudan, was allowed to keep a speaking engagement.

May 7: The government announced details of a new law designed to prevent price-fixing, bid-rigging and other anti-competitive practices, and said a new independent commission would enforce its terms. Critics said the proposed law, which allows exemptions, was too weak.

May 14: Development will be allowed on only 12% of the currently-closed
2,400 hectare (6,000 acre) border zone when it opens to the public in 2010, the government announced. Natural and historic landscapes are to be protected, along with wetlands. 

May 16: Andrew Brandler, chief executive of electricity supplier CLP Holdings, was elected chairman of the General Chamber of Commerce. He replaces Lily Chiang Lai-lei, who earlier was charged by the ICAC with involvement in a stock-option fraud.

Hong Kong’s economic growth for the first quarter was up 7.1% from a year earlier, higher than expected, due mostly to strong investment and increased exports. The inflation rate rose sharply to 4.9%.

May 23: Chief Executive Donald Tsang Yam-kuen named eight deputy ministers and nine political assistants (of a possible 24 new posts) as part of an effort to give management experience to potential legislators and senior officials. Critics said political loyalty outweighed competence in some cases.

May 30: The ICAC arrested 30 people for involvement in an alleged warrant trading fraud.

June 3: The government announced civil service pay increases ranging from 5.3% to 6.3%.

June 7: Education minister Michael Suen Ming-yeung said more secondary schools will be allowed to teach in English if they meet certain qualifications. Since 1998, about 80% of Hong Kong’s secondary students have been required to learn in Chinese. There have been many complaints about declining standards of English among graduates.

June 8: The deadly H5N1 strain of avian flu was found in Hong Kong for the first time in five years, leading to new restrictions on the poultry trade.

June 17: The unemployment rate for May remained unchanged at 3.3%.

June 19: A Legislative Council committee approved a HK$21.6 billion (US$2.8 billion) grant for a new West Kowloon arts center. The center is to include public parks, performance venues and museums.

June 21: The government announced a HK$1 billion (US$128 million) plan to buy back all relevant licenses and revise the live poultry trade in an effort to reduce the risk of avian flu. Traders called the payment too low.

June 24: Secretary for Commerce and Economic Development Frederick Ma Si-hang resigned for health reasons.

July 1: The annual march in favor of full local democracy drew a smaller than usual crowd and for the first time also included protests about other issues, such as inflation and racial discrimination. Organizers said the crowd totaled 47,000, a University of Hong Kong estimate called it from 17,000 to 19,000 and police said it was 15,500.

July 8: China’s Xi Jinping completed a three-day visit to Hong Kong, his first as vice president. He urged Chief Executive Tsang to govern “sensibly and reasonably” to overcome “current difficulties”.

July 9: The government rejected bids from two leading developers—Sun Hung Kai Properties and the Cheung Kong Group—to build a cruise ship terminal at the former Kai Tak airport. It said it would re-tender the project by yearend.

July 11: Legco unanimously passed a bill outlawing racial discrimination, ending 10 years of legislative efforts to do so. It also voted to impose a HK50 cent levy on retailers’ plastic bags beginning in 2009. In addition, it approved a cross-border emissions trading plan which some legislators called inadequate to reduce pollution.

July 13: Career civil servant Rita Lau Wai-lan was named secretary for commerce and economic development, a political post. She replaced Frederick Ma Si-shang, who resigned for health reasons.

July 17: The government announced a HK$11 billion (US$1.4 billion) relief package to offset inflation’s impact on low-income residents, its second such measure in five months.

July 22: Inflation rose at a 6.1% annual rate in July, the sharpest increase in 11 years.

July 24: Exports declined 0.6% in the year ending with June, reflecting a global economic slowdown.

August 4: The governments of Hong Kong, Zhuhai and Macao agreed on a cost-sharing plan for construction of a 30-kilometer-long bridge network to connect the three cities. Work is to begin in 2010 and is expected to cost up to HK$40 billion (US$5.1 billion).

August 7:  Franklin Wong Wah-kay, a veteran media executive, was named director of broadcasting for RTHK, the government-owned broadcast service. Questions were raised about whether it could retain editorial independence.
August 15: Hong Kong’s gross domestic product dropped 1.4% in the year’s second quarter, the first decline in five years.

September 4: The government will try to revive fish stocks by banning commercial fishing in Hong Kong waters and buying out local fishermen affected by the plan.

September 7: Despite lower turnout, the pan-democrats won 23 of 60 Legco seats, a decline of three. This lets them retain a blocking minority during scheduled negotiations for new rules about future elections as the voting franchise is extended. The pro-business Liberal Party lost three of its 10 seats, causing party chairman James Tien Pei-chun and vice chairman Selina Chow Liang Shuk-yee (who lost their seats) to resign; Mrs. Chow also resigned from Exco, the government’s cabinet. The pro-Beijing Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) won 13 seats, a gain of one, and remains the legislature’s largest party.

September 9: A new health care voucher plan will give financial aid to 660,000 residents over the age of 70, officials said.

September 23: The government amended food safety rules to restrict the use of melamine. This followed the dairy products scandal in China, which affected several Hong Kong children.

September 30: The Hang Seng Index fell 4.3% to a two-year low as effects of the global financial crisis continued to be felt. The HKMA responded with five new measures to increase liquidity in the banking system. The government also announced new rules, effective immediately, to reduce emissions of sulphur dioxide, a major air pollutant. In addition, it dropped efforts to recruit a developer to build a cruise ship terminal at the former Kai Tak airport, and said it would spend HK$7 billion (US$900 million) to build the facility itself.

October 8—Jasper Tsang Yok-sing, a founder of the pro-Beijing Democratic Alliance for the Betterment and Progress of Hong Kong (DAB), was elected president of the Legislative Council (Legco). He defeated Fred Li Wah-ming of the Democratic Party by a 36-24 vote.

October 9—The Hong Kong Monetary Authority (HKMA) said it will investigate tactics used to sell certain financial products, known as mini-bonds, backed by the failed U.S. investment bank Lehman Brothers. An estimated 43,000 buyers spent nearly HK$13 billion (US$1.7 billion) for these securities; about 8,000 have complained to authorities that they were misled by sales organizations.

October 14—The government said it would fully guarantee all bank deposits until 2010 in an effort to maintain confidence in the banking system. Previously, only the first HK$100,000 was guaranteed. It also promised to provide capital for the 23 locally-incorporated banks if needed.

October 15In his annual policy address, Chief Executive Donald Tsang Yam-kuen promised new measures to offset affects of the global financial crisis. He also said there would be new efforts to protect food safety and improve the environment.

October 22—The Secretary for Security, Ambrose Lee Siu-kwong, said Hong Kong has no plans to follow Macao’s lead and seek passage anytime soon of a national security law as required by Article 23 of the Basic Law. Past efforts to pass such a law in Hong Kong have led to massive public protests.

October 24—The old age allowance will be raised to a maximum of HK$1,000 per month, an increase of HK$300 or more.

October 27—Food inspectors found the toxic industrial additive melamine in eggs from northeast China, adding to the list of banned Chinese foods and food products that contain the dangerous chemical.  

November 15—The Hong Kong economy shrank for the second consecutive quarter, meeting the standard definition of a recession. It contracted at a 1.4% rate in the July-September quarter, according to official figures, followed a 0.5% rate of decline in the previous quarter.

December 8—The government announced a HK$100 billion (US$12.9 billion) stimulus plan, consisting mainly of new loans for small businesses to provide operating funds and maintain employment.
December 11The government suspended for five years the collection of a HK$500 per month levy on employers of foreign domestic helpers after it helped block efforts to cancel the tax outright. The controversial levy was used to fund an employee retraining program.

December 15—Government spending will exceed 20% of gross domestic product in both 2008 and 2009, surpassing a traditional budget limit in effect for decades, according to Financial Secretary John Tsang Chun-wah.

Merger of two pro-democracy parties was completed when former Frontier Party leader Emily Lau Wai-hing was elected vice chair of an expanded Democratic Party. 

December 10—Thousands of chickens at a Central District market were culled after a strain of the H5N1 flu virus was discovered. It was the first instance of avian flu in Hong Kong in five years.

December 11The HKMA said the government-backed Hong Kong Mortgage Corp. would buy up to HK$30 billion (US$3.9 billion) of mortgages from local banks in an effort to increase bank liquidity.

December 17—Monetary authorities lowered the base lending rate to 0.5% in the latest effort to counter affects of the global economic slowdown.

December 18—The unemployment rate rose to 3.8% in the three months ending with November, compared to 3.5% in the previous period. Economists predict it may reach 5.5% by mid-2009.

December 20—China announced a 14-point plan to help Hong Kong survive the current global economic crisis. Details were made public at the end of the third annual  so-called “duty visit” to Beijing by Chief Executive Donald Tsang Yam-kuen, whose leadership was praised by Premier Wen Jiabao and President Hu Jintao. Several measures are designed to increase Hong Kong’s international financial role, such as by allowing more cross-border trade in renimbi, establishing a currency swap facility and  encouraging more mainland entities to both develop international services via Hong Kong and list their shares on the Hong Kong stock exchange.   


January 15—Chief Executive Donald Tsang Yam-kuen delayed for six months political consultations about electoral methods to be used in the 2012 voting for his successor so he could concentrate on economic issues. The consultations had been scheduled for the first half of 2009.

January 18—The government delayed indefinitely plans to seek a public health system that would require mandatory contributions from workers. It called such a system its preferred solution but said it lacked public support.

January 20—Chief Executive Tsang named five new members to the Executive Council (Exco, or cabinet) with a mandate to promote economic cooperation with the mainland. None represent pro-democracy political parties.

February 12—Responding to protests from business leaders, the Hong Kong Stock Exchange weakened proposed rules to restrict the ability of company directors to trade shares in their own companies.

February 13—Temporary indoor smoking bans, due to expire July 1, will be extended and broadened, Health Secretary York Chow Yat-ngok announced.

February 15—Hong Kong airport reported a 29% drop in air cargo in January, another sign of a worsening global economy.

February 17—Hong Kong’s population grew 0.8% in 2008, surpassing the seven million mark, the government said.

February 20—Hong Kong, Macao and Guangdong Province agreed to relax travel restrictions to allow more mainlanders to visit the two special administrative regions.

February 25—Financial Secretary John Tsang Chun-wah introduced a fiscal 2009-10 budget that predicts a HK$7.5 billion (US$970 million) deficit, partly due to some income tax reductions, waiving of property rates and a freeze of government fees. Other measures included a 50% increase of tobacco taxes, various measures designed to improve the environment and a promise to improve financial regulations. He said the economy contracted at a 2.5% rate in last year’s fourth quarter—though it grew 2.5% for the year as a whole—and predicted a 2% to 3% decline in 2009, the first negative figure since 1998. He said growth should resume and return the budget to balance in four years.

February 27—The Hong Kong Monetary Authority’s chief executive, Joseph Yam Chi-kwong, confirmed that he will resign this year, as agreed privately with the government in 2007.

February 28—Anna Wu Hung-yuk, an Exco member, was named chair of the Mandatory Provident Fund Schemes Authority, a retirement plan covering more than 2.4 million employees and with assets exceeding HK$209 billion (US$27.1 billion).

March 4—Pro-democracy members of the Legislative Council urged the government to find out why several Hong Kong political leaders were denied permission to enter Macao. The Macao government gave no explanation.

March 9—The chairman of the Hong Kong Small and Medium Enterprises Association said about 3,200 factories in the Pearl River Delta region, 5% of the total with Hong Kong investment, did not resume operations following the Lunar New Year holiday for lack of orders.

March 11—Cathay Pacific Airways, Hong Kong’s dominant carrier, reported a record HK$7.9 billion (US$1 billion) loss for 2008’s second half due to decreased passenger and cargo business.

March 13—A design contract for the HK$37 billion (US$4.8 billion) Hong Kong-Macao-Zhuhai bridge was signed. The 30-kilometer bridge is supposed to open by 2015.

March 14—Premier Wen Jiabao said China would take new measures to support the Hong Kong economy, including implementing renminbi trade settlements, speeding up infrastructure projects and improving access to the mainland’s service sector for Hong Kong firms.

March 17—Unemployment rose to 5%, the highest for three years.

March 26—February’s total exports decreased in value by 23% from a year earlier, the government announced, with re-exports down 22.4% and Hong Kong’s domestic exports down 39.6%. Total shipments to the U.S. fell 36.7%.

April 3—Chief Executive Donald Tsang named six service industries as potential growth areas when planning Hong Kong’s economic future. The designated areas—product testing, medical services, innovation, creative services, environmental services and education—will receive additional government aid.

April 8—China gave four Guangdong cities—Guangzhou, Shenzhen, Zhuhai and Dongguan—permission to settle cross-border trade with Hong Kong in yuan. This marked the first step of an announced plan to expand the use of Chinese currency in international commerce.

April 19—After meeting with Premier Wen Jiabao in Beijing, Chief Executive Donald Tsang listed new Chinese financial and commercial measures to aid the Hong Kong economy.

April 23—The Legislative Council approved a government plan to require most retail outlets to charge customers 50 Hong Kong cents per plastic shopping bag in an effort to reduce waste.

May 7—Chinese changed visa rules so mainland citizens can visit both Hong Kong and Taiwan on a single permit. This is expected to boost tourism in Hong Kong.

May 15—The economy shrank at a 7.8% annual rate during the year’s first quarter, the government said, and predicted the full year’s rate will be between minus 5.5% and minus 6.5%.

June 4—Organizers said 150,000 people gathered at Victoria Park to commemorate the twentieth anniversary of the 1989 crackdown on demonstrators in Beijing’s Tien Am Men Square. The peaceful turnout was the largest one in many years, with many other thousands unable to fit into the park. Police said the total was 62,800.

June 5—Secretary for Constitutional and Mainland Affairs Stephen Lam Sui-lung made an official visit to Taiwan, reflecting a new Chinese policy of promoting such links. Two quasi-government committees were established to promote further economic and cultural exchanges.

June 10—The government plans to spend an additional HK$1 billion (US$128 million) on an existing program to help elderly property owners renovate their buildings.

June 11—All kindergartens and primary schools were closed for at least two weeks to inhibit the spread the H1N1 virus, or swine flu.

June 15—Air cargo shipped through Hong Kong declined 17.6% in the year ending with May, the airport authority said, as the global economic downturn continued.

June 16—Unemployment remained steady at 5.3% in the most recent monthly survey.

June 22—The inflation rate dropped to 1.3% for the year ending in May.

June 25—Exports fell 14.5% in May from a year earlier, less than expected and the smallest decline since December.

June 26—Taipei Mayor Hau Long-bin arrived in Hong Kong to promote tourism, direct flights and trade between the two cities. The visit was another move in the new policy using Hong Kong as a conduit for improving cross-Strait relations.

June 29—The number of swine flu cases passed the 700 mark, with more schools being closed.

June 30—The Walt Disney Co. will spend HK$3.6 billion (US$465 million) to expand its Hong Kong theme park, which has had disappointing attendance since opening. The park faces competition from a larger Shanghai Disneyland scheduled to open in 2014.

July 1—Organizers claimed 76,000 people marched in favor of faster movement toward universal suffrage and to protest economic grievances; police put the total at 26,000. The turnout exceeded last year’s figure but was below the 100,000 goal. A self-styled “loyalist” celebration of the 12th anniversary of the handover of Hong Kong’s sovereignty to China, led by Chief Executive Donald Tsang Yam-kuen, drew a far smaller crowd.

July 3—A Hong Kong court sentenced Shenzhen resident Huang Nanhua to 16 years in prison on firearms charges related to an alleged assassination plot against Apple Daily publisher Jimmy Lai Chee-ying and former Democratic Party Chairman Martin Lee Chu-ming. Huang admitted being hired by an unnamed person to “teach somebody a lesson” and had intended to harm Lee.

July 13—A US$465 million plan to expand Hong Kong’s Disneyland was approved by the Legislative Council. The Walt Disney Co. will provide the capital, while a government loan will be partially converted into shares in the venture, reducing the territory’s stake from 57% to 52%.

July 14—A new passenger ferry service began linking Hong Kong’s airport to Nansha Port in Guangzhou.

July 17—The government said work will begin in December on the HK$7 billion (US$900 million) Kai Tak Cruise Terminal project, scheduled to turn the former airport site into a cruise ship terminal by 2013.

Norman Chan Tak-lam, director of Hong Kong Chief Executive Donald Tsang’s office and a former official of the Hong Kong Monetary Authority, was confirmed as HKMA’s new chief executive. He will replace Joseph Yam, whose term expires October 1.

July 22—The Securities and Futures Commission announced a plan which will allow some 29,000 investors to recoup most losses on so-called “minibonds” backed by the bankrupt financial firm Lehman Brothers Holdings. The SFC said 16 banks agreed to repurchase these instruments for up to 70% of their face value at a cost of about HK$5.3 billion (US$813 million). The agreement followed public protests about lax government regulation of sales methods used by financial firms.

July 24—The government announced several proposals to reduce air pollution and sought public reaction before setting dates for implementation. The measures include using more gas to generate electricity and phasing out high-polluting vehicles. It said the proposals would bring both health benefits and economic costs.

August 6—The government reserved six sites in Kowloon and the New Territories for new international schools, partly to make Hong Kong more attractive to overseas families. Business groups said it would not meet demand.

August 9—According to testimony in a Shenzhen court, an unnamed Hong Kong businessman living in Taiwan put up US$1 million to finance assassination attempts on Hong Kong publisher Jimmy Lai Chee-ying and democratic politician Martin Lee Chu-ming. Ten alleged participants in the scheme are on trial in the Chinese city.

August 10—Construction began on the HK$15.4 billion (US$1.99 billion) West Island Line, a three-kilometer extension to Kennedy Town of the existing metro line that serves the Central district.

August 15—The economy grew at a 3.3% annual rate during the year’s second quarter, after shrinking during the four preceding quarters.

August 20—The Hong Kong and Guangdong Province governments signed eight agreements designed to improve cooperation in a variety of service and high technology industries.
August 21—A government survey found that 62,000 Hong Kong people now live in Shenzhen.

September 1—Retail sales for July were down 5.5% from a year earlier.

September 2—Chief Justice Andrew Li Kwok-nang said he will retire September 1, 2010 after 13 years in office.

September 9—China’s Ministry of Finance said it will issue RMB6 billion (US$879 million) worth of government bonds in Hong Kong, a major step toward increasing use of its currency overseas.

September 15—Chief Executive Donald Tsang Yam-kuen said the 2017 vote for that office will be by universal suffrage. Pro-democracy political parties had voiced doubts about whether China will allow that reform to be implemented.

September 17—The unemployment remained unchanged at 5.4%.
September 18—A United Nations report said Hong Kong was Asia’s second largest recipient of foreign direct investment in 2008. Its total of US$63 billion trailed only China’s US$108.3 billion.

A former Morgan Stanley executive, Da Jun, was sentenced to seven years in jail and fined HK$23 million (nearly US$3 million) for insider trading. It was the 10th conviction since insider trading was made illegal in 2003, and was cited as proof that Hong Kong is tightening its regulation of financial markets.

September 22—August consumer prices fell 1.6% compared to a year earlier.

The Executive Council (cabinet) agreed to retain RTHK as a government department and public service broadcaster with increased funding. The issue of how to choose its 15 governing board members was not resolved.

September 24—August exports fell 13.9% from a year earlier, a slower rate of decrease than in preceding months.

Mark Steward, executive director (enforcement) of the Securities and Futures Commission, was given a three-year contract extension, indicating an official policy of rigorous enforcement of securities laws will continue.

A judge dismissed two lawsuits that sought to restrict the Legislative Council’s right to summon witnesses for hearings. The ruling was considered a victory for the legislative branch.

September 26—HSBC announced that the office of its chief executive would transfer to Hong Kong from London, a decision considered symbolically important to Hong Kong’s status as a global financial center.

October 2—Norman Chan, the new chief executive of the Hong Kong Monetary Authority, said the currency will remain pegged to the US dollar despite the declining value of the American currency.

October 14—In his annual policy address, Chief Executive Donald Tsang listed six potential growth industries that the government will help develop as part of its strategy for economic development. They include education services, medical services, and testing and certification services, among others. He also said households would receive a HK$100 coupon to buy energy saving light bulbs. In addition, new rules will limit real estate development in Central District for environmental reasons. 

October 21—The Executive Council approved plans for a new cross-border rail link that will connect Hong Kong to the national rail system via a new terminal near Guangzhou. Hong Kong’s share of the project will be HK$65.2 billion (US$8.4 billion), 65% above original estimates.

October 24—The government raised the required down payment for luxury homes to 40%, from 30%, in an effort to control soaring real estate prices.

November 2—Retail sales in September rose 2.4% from a year earlier, the first monthly increase since January.

November 4—The International Monetary Fund said Hong Kong’s economy will shrink 2% in 2009 but expand by 5% during 2010. Previously it had forecast a 3.5% decline this year and 3.5% growth in 2010. It also predicted that unemployment will decrease and the inflation rate will be near zero. But it warned about rapid asset price inflation and urged the government to sell more land for development.

November 13--The government said the third-quarter economy grew by 0.4% from the year's second quarter, but had a 2.4% year-on-year decline. It predicted an overall 3.3% decline for 2009, compared to its earlier forecast of a 3.5% decline. 
November 18--The government issued its promised consultation paper outlining proposed voting changes for the 2012 elections. The main changes include: increasing the Election Committee that chooses the chief executive to 1200 members from 800 and making it the nominating committee to select candidates for that office when universal suffrage applies in 2017; increase to 150 from 100 the number of Election Committee nominations a candidate must have to qualify for a place on the ballot; increasing Legislative Council membership to 70 from 60, with five more seats from both functional and geographic constituencies; and consider having the five new functional constituency seats chosen by vote of elected District Council members (excluding the 102 appointed members). The public consultation period will end February 19, 2010, with final changes to be announced later. Pro-democracy politicians criticized the paper for failing to set forth a specific plan for introducing universal suffrage for the 2017 and 2020 elections, and called it a retreat from the 2005 reform plan that failed to win legislative approval.   

December 15--Construction began on the 73 billion yuan (US$10.7 billion) bridge connecting Hong Kong to Macau and Zhuhai. The six-lane, Y-shaped bridge is due for completion in six years.

December 18—A Shenzhen court sentenced ten defendants to jail for plotting to attack former Democratic Party Chairman Martin Lee Chu-ming and media executive Jimmy Lai Chee-ying. They told the court that a Hong Kong businessman living in Taiwan instigated the plan.

December 23--Construction began on a new cruise ship terminal at the former Kai Tak airport. The HK$7.2 billion (US$930 million) project is due for completion in 2013.

December 28--President Hu Jintao told Chief Executive Donald Tsang--making his annual duty visit to Beijing--that he should handle Hong Kong's constitutional reforms "in an appropriate manner" but did not define the term in public. In an earlier meeting, Premier Wen Jiaobao praised Chief Executive Tsang for economic stabilization efforts but also said he should study "the overall and macro situation" and resolve "deep-rooted conflicts" more effectively. Premier Wen also did not define his terms but Mr. Tsang said later that the premier was referring to economic issues such as high wages, prices and rents.

 November exports rose 1.3% from a year ago, the government said, the first year-on-year increase for 13 months.

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