Crisis and Transformation in China's Hong Kong by Chan Ming K.;So Alvin Y.;White Lynn T.;

Author:Chan, Ming K.;So, Alvin Y.;White, Lynn T.;
Language: eng
Format: epub
ISBN: 4586821
Publisher: Taylor & Francis Group

8

Legal Facets of Hong Kong SAR Economic Development

Colonial Legacy and Constitutional Constraint

Berry Fong-Chung Hsu

Introduction

The government of the Hong Kong Special Administrative Region (the HKSAR) possesses a mandate pursuant to the Basic Law of the HKSAR (the Basic Law), part of the Laws of the People’s Republic of China, to provide “an appropriate economic and legal environment for the maintenance of the status of Hong Kong as an international financial center.”1 For instance, under the new legal order of the Basic Law, the Legislative Council may exercise its power to impeach the chief executive if the Executive Government fails to make good this provision.2 Historically adherent to a laissez-faire policy, colonial Hong Kong was slow to support any form of regulatory control. Even when laws were enacted to regulate the financial markets, the politic and administrative will to enforce the laws was absent. When the People’s Republic of China (PRC) resumed the exercise of sovereignty over the HKSAR on July 1, 1997, it also assumed control over one of the least developed legal systems in the developed common law world.

The Asian financial crisis of 1997 demonstrated the domino effect of unsound banking and financial markets.3 With the advent of the PRC’s membership in the World Trade Organization (WTO), the HKSAR could become the PRC’s liability if it fails to reform better its laws relating to banking and finance in meeting the global challenge. The first and foremost priority for the HKSAR should naturally be the development and implementation of international standards in the regulatory framework of banking and finance. Globalization and increased competition from neighboring countries and other major cities within the PRC have already reshaped the HKSAR as an international financial center. Not only would information technology facilitate the utilization of human resources (as well as marketing and transportation of products in the global market), but also it is indispensable to banking and financial services. After all, an international center of banking and finance is just a “network of information.” Naturally, the free flow of information requires a sound legal system to protect the rights of the citizens.

In a previous paper, the major aspects of the legal infrastructure necessary and essential in providing stability in the banking and financial markets were discussed.4 The first aspect is the constitutional framework, which provides an independent judiciary to arbitrate rights, protects private ownership of property, and maintains certainty in economic policies. In the HKSAR, it also sets out the relationship between itself and the Central People’s Government and the rule of law in the HKSAR in strengthening investors’ confidence and preventing the arbitrary power of the state in meddling with private affairs. The Basic Law has provided this framework in enabling the HKSAR as an international center of banking and finance.5

The second aspect is the legal framework, which should protect banking and financial institutions, as well as investors, creditors, and depositors. It deals with the common law and legislation, which support the operation of banking and financial laws. However, this framework has yet to be improved.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.