1. Brief account

Lying on the eastern side of the mouth of the Pearl River of Guangdong Province, the Hong Kong Special Administrative Region is adjacent to GuangdongProvince.It is situated in the centre of the Asia-Pacific area and is endowed with good natural ports.The geographical position and conditions are fairly advantageous.It is a hilly land, located in the subtropical monsoon zone.The climate is warm and wet with abundant rainfall.It has an area of 1101.03 square kilometres, including the Hong KongIslandcovering an area of 80.40 square kilometres, Kowlooncovering an area of 46.89 square kilometres and NewTerritoriesand islets covering an area of 973.74 square kilometres.The population is 6.78 million, including Chinese accounting approximately for 95% of the total.Foreign nationals are mainly Philippines, Indonesians, British, Indians, Thais, Japanese, Nepalese and Pakistanis. (Up to the end of 2002)

Hong Konghas been Chinese territory since ancient times.After the Opium War, Britainforced the Chinese Government of the Qing Dynasty to sign "the Nanjing Treaty", "the Beijing Treaty" and "the Convention of the Extension of Hong Kong" and occupied Hong Kongstep by step.Since the founding of New China, the Chinese Government has for many times expounded its position on the question of Hong Kong, namely, Hong Kongis Chinese territory, and Chinawill not accept the unequal treaties imposed on Chinaby the imperialists.The Chinese Government maintains that the question of Hong Kongshould be settled peacefully through negotiation at an appropriate time and before that a status quo should be maintained temporarily.In 1972, the 27th Session of the UN General Assembly adopted a resolution to approve the resolution of the UN Special Committee on Decolonization concerning the deletion of Hong Kongand Macaofrom the list of colonies.

The Chinese and British Governments held 22 rounds of talks on the question of Hong Kongfrom July 1983 to September 1984.On December 19, 1984, the Heads of Government of the two countries signed "the Joint Declaration on the Question of Hong Kong".The Joint Declaration confirmed that the Chinese Government has decided to resume the exercise of sovereignty over Hong Kongwith effect from July 1, 1997and the British Government will return Hong Kongto the People's Republic of Chinaon July 1, 1997.In the Joint Declaration, the Chinese Government expounded its fundamental principles and policies regarding Hong Kong.The signing of the Joint Declaration set an example for a settlement of the questions between states left over by history and international issues by peaceful means and was of vast realistic significance to the promotion of the cause of world peace and progress.

At the mid-night of June 30, 1997, the Chinese and British Governments held a ceremony in Hong Kong to transfer Hong Kong.The Chinese Government Delegation led by Chinese President Jiang Zemin and the British Government Delegation led by Crown Prince Charles were present at the hand-over ceremony.On the zero hour of July 1, 1997, the Chinese national flag and the regional flag of the Hong Kong Special Administrative Region were raised solemnly, declaring the resumption of the exercise of the sovereignty over Hong Kongby the Chinese Government.The Hong Kong Special Administrative Region was established formally.Hong Kongput an end to the British rule lasting for more than 150 years and returned to the embrace of the motherland.

Immediately after that, the Chinese Government held a ceremony for the establishment of the Hong Kong Special Administrative Region and the oath-taking of the Government of the Special Administrative Region.President Jiang Zemin announced the establishment of the Hong Kong Special Administrative Region.Tung Chee-hwa, the first Chief Executive of the Hong Kong Special Administrative Region, main SAR government officials, members of Executive Council, members of the Provisional Legislative Council and judges of the Court of Final Appeal and the High Court took their oath of office.The return of Hong Kong to the motherland and the establishment of the Hong Kong Special Administrative Region marked the success of the great concept of "one country, two systems" put forward by Deng Xiaoping and a substantial achievement scored by the Chinese people in their efforts to realize a complete reunification of the motherland.From that time, Hong Kongmoved into a new historical era.

2. Political structure

The Hong Kong Special Administrative Region practises an "executive-led" political framework.

The Chief Executive is the head of the Hong Kong Special Administrative Region, and is accountable to the Central People's Government and the Hong Kong Special Administrative Region.The Chief Executive should be a Chinese citizen of not less than 40 years of age who is a permanent resident of the Region with no right of abode in any foreign country and has ordinarily resided in Hong Kongfor a continuous period of not less than 20 years.The Chief Executive is selected by election or through consultations and appointed by the Central Government.The method of selecting the Chief Executive is specified in the light of the actual situation of the Hong Kong Special Administrative Region and in accordance with the principle of gradual and orderly progress.The ultimate aim is the selection of the Chief Executive by universal suffrage upon nomination by a broadly representative nominating committee in accordance with democratic procedures.The term of office of the Chief Executive is five years.He or she may serve for not more than two consecutive terms.On December 11, 1996, the Selection Committee of the HKSAR Government held an election by vote on three candidates for the Chief Executive: Tung Chee-hua, Peter K.C Woo and Tie-liang Yang.Tung Chee-hua was elected as the first Chief Executive by 320 votes. On December 16, Li Peng, Premier of the State Council, signed Decree No. 207 of the State Council, appointing Tung Chee-hua as the first Chief Executive to assume his office on July 1, 1997.In July, 2001, the Legislative Council of the HKSAR adopted the Regulations on the Election of the Chief Executive, which laid down concrete provisions for the election of the second-term Chief Executive in accordance with the Basic Law.On February 28, 2002, Tung Chee-hua was nominated by 714 members of the Election Committee and was elected the Chief Executive for the second term automatically by an absolute majority vote with 89.9% rate of support. On March 4, Zhu Rongji, Premier of the State Council, signed Decree No. 347 of the State Council, appointing Tung Chee-hua as the Chief Executive for the second term.On July 1, 2002, President Jiang Zemin attended the meeting in celebration of the 5thanniversary of the return of Hong Kongand the ceremony for the inauguration of the second-term HKSAR Government.At the ceremony, Tung Chee-hua formally assumed his office as the Chief Executive for the second term.

The Executive Council is a body to assist the Chief Executive in making policy decisions.It meets once a week, presided over by the Chief Executive.Members of the Executive Council are Chinese citizens who are permanent residents of the Hong Kong Special Administrative Region with no right of abode in any foreign country.They are appointed by the Chief Executive from among the principal officials of the executive authorities, members of the Legislative Council and public figures.According to the Basic Law, the Chief Executive should consult the Executive Council before making important policy decisions, introducing bills to the Legislative Council, making subordinate legislation, or dissolving the Legislative Council, except for the appointment, removal and disciplining of officials and the adoption of measures in emergencies. The Executive Council advances opinions to the Chief Executive who makes decisions.Members of the Executive Council put forward opinions in the capacity of individuals but all decisions of the Executive Council are collective resolutions.At present, the official members of the Executive Council are Administrative Secretary Donald Tsang Yam-kuen, Financial Secretary Antony Leung Kam-chung, Secretary for Justice Ms Elsie Leung Oi-sie, Secretary for Commerce, Industry & Technology Henry Tang Ying-yen, Secretary for Housing, Planning & Lands Michael Suen Ming-yeung, Secretary for Education & Manpower Arthur Li Kwok-cheung, Secretary for Health, Welfare & Food Yang Yong-qiang, Secretary for the Civil Service Joseph Wong Wing-ping, Secretary for Home Affairs Patrick Ho Chi-ping, Secretary for Security Regina Ip Lau Suk-yee, Secretary for Economic Development & Labour Stephen Ip Shu-kwan, Secretary for Environment, Transport & Works Sarah Liao Sau-tung, Secretary for Financial Service and the Treasury Frederick Ma Si-hang, and Secretary for Constitutional Affairs Stephen Lam Sui-lung.Non-official members are Leung Chun-ying, James Tian Pei-chun, Tsang Yok-sing, Cheng Yiu-tang and Andrew Liao Cheung-sing.

The administrative body is the Government of the Hong Kong Special Administrative Region and its head is Chief Executive, under whom there are the Department of Administration, the Department of Finance, the Department of Justice and various bureaus, sections and commissions.In accordance with provisions of Article 62 of the Basic Law, the Government of the Hong Kong Special Administrative Region exercises powers and functions, mainly includingthe formulation and implementation of policies, the conduction of various administrative affairs, the handling of external affairs as authorized by the Central Government, the drawing up and introduction of budgets and final accounts, and the drafting and introduction of bills, motions and subordinate legislation.

On April 17, 2002, Chief Executive Tung Chee-hua made public in the Legislative Council a proposal for an Accountability System for Principal Officials of the HKSAR Government, and at the same time announced the merging of 16 policy departments into 11.After the introduction of the accountability system for the principal officials, the Administrative Secretary, the Financial Secretary, the Secretary for Justice and 11 other secretaries of policy departments are no longer civil servants.Instead, the Chief Executive employs them by contract for a term of five years which should not exceed the term of the Chief Executive.Under the accountability system, the principal officials would be directly accountable to the Chief Executive.They exercise an overall control of the work of the departments under their respective jurisdiction.They are responsible for the formulation, interpretation and introduction of policies in order to win the support of the Legislative Council and the citizenry.All the principal officials under the accountability system attend the Executive Council to participate in deciding the overall policies of the Government and their priorities and coordinate inter-departmental work..On the nomination and recommendation of the Chief Executive Tung Chee-hua, the State Council appointed the principal government officials for the second term of office of the Government of the Hong Kong Special Administrative Region on June 21.The accountability system for principal officials was put into practice as of July 1, 2002.

The Legislature is the Legislative Council of the Hong Kong Special Administrative Region.The Legislative Council is composed of Chinese citizens who are permanent residents of the Region with no right of abode in any foreign country.However, permanent residents of the Region who are not of Chinese nationality or who have the right of abode in foreign countries may also be elected to be members of the Legislative Council of the Region, provided that the proportion of such members does not exceed 20 percent of the total membership of the Council.The legislative Council is constituted by election.The method for forming the Legislative Council is specified in the light of the actual situation in the Hong Kong Special Administrative Region and in accordance with the principle of gradual and orderly progress.The ultimate aim is the election of all the members of the Legislative Council by universal suffrage.

The term of office of the Legislative Council is four years, except the first term which was two years.The President of the Legislative Council should be a Chinese citizen of not less than 40 years of age, who is a permanent resident of the Region with no right of abode in any foreign country and has ordinarily resided in Hong Kong for a continuous period of not less than 20 years, and is elected by and from among the members of the Council.

The Legislative Council exercises the powers and functions in accordance with the provisions of Article 73 of the Basic Law, which are mainly to enact, amend or repeal laws in accordance with the provisions of the Basic Law and legal procedures; to examine and approve budgets introduced by the government; to approve taxation and public expenditure; to receive and debate the policy addresses of the Chief Executive; and to raise questions on the work of the government, etc. The election of the second-term Legislative Council was held in September 2000.At present, the Legislative Council has 30 members returned by functional sectors, 6 members returned by the Election Committee and 24 members returned by geographical constituencies through direct elections, totalling 60 members. The President of the Legislative Council is Rita Fan Hsu Lai-tai.

The judiciary comprises the courts at all levels of the Hong Kong Special Administrative Region, exercising the judicial power of the Region.The courts of the Region have jurisdiction over all cases in the Region, except that the restrictions on their jurisdiction imposed by the legal system and principles previously in force in Hong Kongare maintained.But the courts have no jurisdiction over acts of state such as defence and foreign affairs.The courts of the Region should obtain a certificate from the Chief Executive on questions of fact concerning acts of state such as defence and foreign affairs whenever such questions arise in the adjudication of cases.This certificate is binding on the courts.Before issuing such a certificate, the Chief Executive should obtain a certifying document from the Central Government.

The power of final adjudication of the Hong Kong Special Administrative Region is vested in the Court of final Appeal of the Hong Kong Special Administrative Region.The Chief Justice of the Court of Final Appeal and the Chief Judge of the High Court of the Region should be Chinese citizens who are permanent residents of the Region with no right of abode in any foreign country.The endorsement of the Legislative Council should be obtained before the appointment or removal of the Chief Justice of the Court of Final Appeal and the Chief Judge of the High Court of the Region, and such appointment or removal should be reported to the Standing Committee of the National People's Congress for the record.At present, the Chief Justice of the Court of Final Appeal is Justice Andrew Li Kwok-nang and Permanent Judges are Justice Bokhary, Justice Chan and Justice Li, and there are 12 non-permanent Hong Kongjudges in the list and 8 other judges in the list in the areas where the common law applies.The Chief Judge of the High Court is Arthur Leung Shiu-chung.

3. Economy

The Hong Kong Special Administrative Region practises the capitalist economic system.At present, it is still an important trade, financial, navigation and information centres in the Asia-Pacific area and the world.

Hong Kongis the freest economic entity in the world and possesses the best business environment.Up to the end of 2002, 3,119 overseas companies operated regional businesses in Hong Kong, of whom 948 companies set up head offices and 2,171 companies set up regional offices there.6,710 companies had registered in Hong Kong.Hong Kongis the most ideal place for trans-national corporations to manage their businesses in the Asia-Pacific area.

Hong Kongis the 10thlargest trade area and the 9thlargest service-export place in the world.In terms of the total volume of service export, Hong Kongranks second in the Asia-Pacific area, next only to Japan.

Hong Kongis the 11thlargest banking centre in the world.Up to the end of 2002, of the 100 largest banks in the world, 73 had established banks in Hong Kong.Hong Konghas 133 licensed banks, 46 limited licensed banks and 45 companies accepting deposits.The institutions authorized by the above-mentioned 224 banks or companies operate a total of 1,416 local banks.The exchange market in Hong Konghas grown mature with brisk transactions.In terms of business volume, Hong Kongis the world's 7thlargest, and the Asia's third largest exchange market.At the same time, Hong Kongis also the world's 10thlargest, and Asia's 2nd largest stock exchange market.Up to the end of 2002, 812 companies had listed on the Main Board with the total capital market value reaching approximately 3,559.1 billion HK dollars, and 166 companies had listed on the Growth Enterprise Market with the total capital market value reaching 52.2 billion HK dollars.

Hong Kongis an important international shipping centre and aviation centre.Hong Kongis both a pivotal port in the Asia-Pacific area and is a port for transiting shipment for the mainland of China.At present, it is the busiest container port in the world.In 2002, the volume of container freight handled in the port was 18.65 million standard container units.The Hong KongInternationalAirportis one of the busiest airports in the world.66 international airlines provide about 3600 sorties of regular passenger and freight flights to about 130 destinations around the world.In 2002, the arrival and departure flights reached 207,000 sorties.

Hong Kongis an important tourist destination in the world and is also the most popular city in Asia.In 2002, the tourists who visited Hong Kongnumbered 16.566 million person-times, including 6.825 million tourists from the mainland, 2.429 million from TaiwanProvinceand 1.395 million from Japan.

The mass media in Hong Kongare extremely developed.Up to February 2003, there were a total of 841 registered publications, including 53 newspapers.The Hong Kongaudience can receive and watch about 100 channels of local and non-local television programs provided by local licensed agencies.Hong Kongpossesses the most advanced and most sophisticated market of telecommunications in the world.Up to June 2002, Hong Konghad 4.8 million telephone sets, with the total telephone lines exceeding 3.9 million, namely, every one hundred persons have 71.7 telephone sets and 57 telephone lines.Hong Konghas about 1.8 million dial-access-to-network users and 820,000 users of broad band with a speed of 10 megabit.There are 5.827 million users of mobile phones, with the service rate reaching 86.2%.

4. External affairs

Since the return of Hong Kongto the motherland, with the support and assistance of the Central People's Government, the Hong Kong Special Administrative Region has continuously made new advances in external affairs.

The Government of the Hong Kong Special Administrative Region has sent delegates to participate in the activities of 24 international organizations that admit members by taking a country as a unit in the capacity of a member of the Chinese delegation or in the capacity permitted by the Central Government and the international organizations concerned.

The Government of the Hong Kong Special Administrative Region independently participated in the activities of 30 international organizations that do not admit members by taking a country as a unit in the capacity of "Hong Kong, China".

Authorized by the Central Government, the Government of the Hong Kong Special Administrative Region has concluded civil aviation agreements with 48 countries, investment protection agreements with 14 countries, agreements on the delivery of the convicted with 7 countries, agreements on the delivery of escaped prisons with 13 countries and agreement on criminal judicial assistance with 14 countries (up to the end of May 2003).

More than 200 international conventions are applicable to the Hong Kong Special Administrative Region, of which over 80 international conventions are not yet applicable at present to the mainland of China.

124 countries or regions have given the treatment of exemption of entry visa to passport holders of the Hong Kong Special Administrative Region (through the conclusion of mutual exemption of visa or as an arrangement made by the other side unilaterally) (up to the end of May 2003).

Moreover, the Government of the Hong Kong Special Administrative Region has concluded with the European Community the Agreement on Customs Cooperation and Mutual Administrative Assistance, with the Israeli Government the Agreement on Matters of Cooperation in Information, Science and Technology and Communication, and with the Governments of the United Kingdom, the Netherlands, Germany and the United States agreements on prevention of double taxation.