Magazine article Management Today

Airport Pact Lifts Spirits

Magazine article Management Today

Airport Pact Lifts Spirits

Article excerpt

Fears about the future of Hong Kong after 1997 under Chinese sovereignty and the events in Tianenmen Square in 1989 have taken their toll on the economy of the Territory. But a new mood of optimism has emerged following the signing of the Sino-British agreement for a new 7.9 billion pounds international airport.

Visitors to Hong Kong -- business travellers and tourists alike -- rarely forget their first encounter with the city. The approach to Kai Tak International airport is unlike any other, weaving a path between skyscrapers close enough to make even the most seasoned traveller turn in his seat.

Spectacular though this introduction to the city may be, it is one that is soon to be denied the majority of travellers. If all goes to plan, 1997 will see the opening of a new international airport at Chek Lap Kok on the north shore of Lantau Island.

In July, leading business figures welcomed the announcement that the British and Chinese had finally reached agreement on the airport. On the eve of the announcement, speculation pushed the Hong Kong stock market's Hang Seng Index up more than 54 points, with dialy turnover reaching the highest for the year at HK$2.62 billion. The airport news sent the Hang Seng up still further, and saw turnover shoot to HK$3.4 billion the following day.

It was just what the Hong Kong wanted. Uncertainty over the future of the Territory under Chinese sovereignty in 1997, the stock-market crash in 1987, and the events of June 1989 in mainland China had combined to give the business community the jitters, in the circumstances entirely understandable.

The British government, however, as Prime Minister John Major re-emphasised on his recent visit, remains firm that the Sino-British Joint Declaration provides sufficient reassurance to believe it will be 'business as usual' in Hong Kong. The Joing Declaration describes the new regime as 'one country, two systems', a concept which, in theory at least, will enable the Territory to exercise a good deal of autonomy over its affairs. Under the agreement, Hong Kong becomes a 'Special Administrative Region' of the People's Republic of China, permitting the Territory to retain its capitalist system and lifestyle for at least 50 years after 1997.

Contrary to suggestion in the British Press, the business community of Hong Kong is not solely preoccupied with planning a mass exodus. Indeed, many closely connected with the manufacturing, financial services and shipping industries, which are the mainstays of Hong Kong's economy, firmly believe that 1997 will present many new opportunities.

Recent figures released by the Hong Kong government underline a new mood of confidence and support claims that a recovery is slowly picking up momentum. They show the economy, a measured by gross domestic product, growing by an annual rate of 4.1% in the first quarter of this year. This is well below the corresponding figures for the boom years of 1987 and 1988 (13.8% and 7.9%), but nevertheless considerably better than those for 1989 and 1990 (2.3% and 2.5%).

Hong Kong, the city which runs the nightshift of the international financial world, has the archetypal 'tiger economy', the epithet now attached to most of the fast-growing economies fo the Pacific Basin. …

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