Chapter V Economy
Section 1 Public Finance, Monetary Affairs, Trade, Industry and Commerce
Article 105
(1) The Hong Kong Special Administrative Region shall, in
accordance with law, protect the right of individuals and legal
persons to the acquisition, use, disposal, and inheritance of
property and their right to compensation for lawful deprivation
of their property.
(2) Such compensation shall correspond to the real value of the
property concerned at the time and shall be freely convertible and
paid without undue delay.
(3) The ownership of enterprises and the investments from outside
the Region shall be protected by law.
Article 106
(1) The Hong Kong Special Administrative Region shall have
independent finances.
(2) The Hong Kong Special Administrative Region shall use its
financial revenues exclusively for its own purposes, and they
shall not be handed over to the Central People's Government.
(3) The Central People's Government shall not levy taxes in the
Hong Kong Special Administrative Region.
Article 107
The Hong Kong Special Administrative Region shall follow the
principle of keeping expenditure within the limits of revenues in
drawing up its budget, and strive to achieve a fiscal balance,
avoid deficits and keep the budget commensurate with the growth
rate of its gross domestic product.
Article 108
(1) The Hong Kong Special Administrative Region shall practise an
independent taxation system.
(2) The Hong Kong Special Administrative Region shall, taking the
low tax policy previously pursued in Hong Kong as reference, enact
laws on its own concerning types of taxes, tax rates, tax
reductions, allowances and exemptions, and other matters of
taxation.
Article 109
The Government of the Hong Kong Special Administrative Region
shall provide an appropriate economic and legal environment for
the maintenance of the status of Hong Kong as an international
financial centre.
Article 110
(1) The monetary and financial systems of the Hong Kong Special
Administrative Region shall be prescribed by law.
(2) The Government of the Hong Kong Special Administrative Region
shall, on its own, formulate monetary and financial policies,
safeguard the free operation of financial business and financial
markets, and regulate and supervise them in accordance with law.
Article 111
(1) The Hong Kong dollar, as the legal tender in the Hong Kong
Special Administrative Region, shall continue to circulate.
(2) The authority to issue Hong Kong currency shall be vested in
the Government of the Hong Kong Special Administrative Region.
The issue of Hong Kong currency must be backed by a 100 per cent
reserve fund. The system regarding the issue of Hong Kong
currency and the reserve fund system shall be prescribed by law.
(3) The Government of the Hong Kong Special Administrative Region
may authorize designated banks to issue or continue to issue Hong
Kong currency under statutory authority, after satisfying itself
that any issue of currency will be soundly based and that the
arrangements for such issue are consistent with the object of
maintaining the stability of the currency.
Article 112
(1) No foreign exchange control policies shall be applied in the
Hong Kong Special Administrative Region. The Hong Kong dollar
shall be freely convertible. Markets for foreign exchange, gold,
securities, futures and the like shall continue.
(2) The Government of the Hong Kong Special Administrative Region
shall safeguard the free flow of capital within, into and out of
the Region.
Article 113
The Exchange Fund of the Hong Kong Special Administrative Region
shall be managed and controlled by the government of the Region,
primarily for regulating the exchange value of the Hong Kong
dollar.
Article 114
The Hong Kong Special Administrative Region shall maintain the
status of a free port and shall not impose any tariff unless
otherwise prescribed by law.
Article 115
The Hong Kong Special Administrative Region shall pursue the
policy of free trade and safeguard the free movement of goods,
intangible assets and capital.
Article 116
(1) The Hong Kong Special Administrative Region shall be a
separate customs territory.
(2) The Hong Kong Special Administrative Region may, using the
name "Hong Kong, China", participate in relevant international
organizations and international trade agreements (including
preferential trade arrangements), such as the General Agreement on
Tariffs and Trade and arrangements regarding international trade
in textiles.
(3) Export quotas, tariff preferences and other similar
arrangements, which are obtained or made by the Hong Kong Special
Administrative Region or which were obtained or made and remain
valid, shall be enjoyed exclusively by the Region.
Article 117
The Hong Kong Special Administrative Region may issue its own
certificates of origin for products in accordance with prevailing
rules of origin.
Article 118
The Government of the Hong Kong Special Administrative Region
shall provide an economic and legal environment for encouraging
investments, technological progress and the development of new
industries.
Article 119
The Government of the Hong Kong Special Administrative Region
shall formulate appropriate policies to promote and co-ordinate
the development of various trades such as manufacturing, commerce,
tourism, real estate, transport, public utilities, services,
agriculture and fisheries, and pay regard to the protection of the
environment.
Section 2 Land Leases
Article 120
All leases of land granted, decided upon or renewed before the
establishment of the Hong Kong Special Administrative Region which
extend beyond 30 June 1997, and all rights in relation to such
leases, shall continue to be recognized and protected under the
law of the Region.
Article 121
As regards all leases of land granted or renewed where the
original leases contain no right of renewal, during the period
from 27 May 1985 to 30 June 1997, which extend beyond 30 June 1997
and expire not later than 30 June 2047, the lessee is not required
to pay an additional premium as from 1 July 1997, but an annual
rent equivalent to 3 per cent of the rateable value of the
property at that date, adjusted in step with any changes in the
rateable value thereafter, shall be charged.
Article 122
In the case of old schedule lots, village lots, small houses and
similar rural holdings, where the property was on 30 June 1984
held by, or, in the case of small houses granted after that date,
where the property is granted to, a lessee descended through the
male line from a person who was in 1898 a resident of an
established village in Hong Kong, the previous rent shall remain
unchanged so long as the property is held by that lessee or by one
of his lawful successors in the male line.
Article 123
Where leases of land without a right of renewal expire after the
establishment of the Hong Kong Special Administrative Region, they
shall be dealt with in accordance with laws and policies
formulated by the Region on its own.
Section 3 Shipping
Article 124
(1) The Hong Kong Special Administrative Region shall maintain
Hong Kong's previous systems of shipping management and shipping
regulation, including the system for regulating conditions of
seamen.
(2) The Government of the Hong Kong Special Administrative Region
shall, on its own, define its specific functions and
responsibilities in respect of shipping.
Article 125
The Hong Kong Special Administrative Region shall be authorized by
the Central People's Government to continue to maintain a shipping
register and issue related certificates under its legislation,
using the name "Hong Kong, China".
Article 126
With the exception of foreign warships, access for which requires
the special permission of the Central People's Government, ships
shall enjoy access to the ports of the Hong Kong Special
Administrative Region in accordance with the laws of the Region.
Article 127
Private shipping businesses and shipping-related businesses and
private container terminals in the Hong Kong Special
Administrative Region may continue to operate freely.
Section 4 Civil Aviation
Article 128
The Government of the Hong Kong Special Administrative Region
shall provide conditions and take measures for the maintenance of
the status of Hong Kong as a centre of international and regional
aviation.
Article 129
(1) The Hong Kong Special Administrative Region shall continue the
previous system of civil aviation management in Hong Kong and keep
its own aircraft register in accordance with provisions laid down
by the Central People's Government concerning nationality marks
and registration marks of aircraft.
(2) Access of foreign state aircraft to the Hong Kong Special
Administrative Region shall require the special permission of the
Central People's Government.
Article 130
The Hong Kong Special Administrative Region shall be responsible
on its own for matters of routine business and technical
management of civil aviation, including the management of
airports, the provision of air traffic services within the flight
information region of the Hong Kong Special Administrative Region,
and the discharge of other responsibilities allocated to it under
the regional air navigation procedures of the International Civil
Aviation Organization.
Article 131
The Central People's Government shall, in consultation with the
Government of the Hong Kong Special Administrative Region, make
arrangements providing air services between the Region and other
parts of the People's Republic of China for airlines incorporated
in the Hong Kong Special Administrative Region and having their
principal place of business in Hong Kong and other airlines of the
People's Republic of China.
Article 132
(1) All air service agreements providing air services between
other parts of the People's Republic of China and other states and
regions with stops at the Hong Kong Special Administrative Region
and air services between the Hong Kong Special Administrative
Region and other states and regions with stops at other parts of
the People's Republic of China shall be concluded by the Central
People's Government.
(2) In concluding the air service agreements referred to
in Paragraph (1), the Central People's Government shall take
account of the special conditions and economic interests of the
Hong Kong Special Administrative Region and consult the government
of the Region.
(3) Representatives of the Government of the Hong Kong Special
Administrative Region may, as members of the delegations of the
Government of the People's Republic of China, participate in air
service consultations conducted by the Central People's Government
with foreign governments concerning arrangements for such services
referred to in Paragraph (1).
Article 133
(1) Acting under specific authorizations from the Central People's
Government, the Government of the Hong Kong Special Administrative
Region may:
1) renew or amend air service agreements and arrangements
previously in force;
2) negotiate and conclude new air service agreements providing
routes for airlines incorporated in the Hong Kong Special
Administrative Region and having their principal place of business
in Hong Kong and providing rights for over-flights and technical
stops; and
3) negotiate and conclude provisional arrangements with foreign
states or regions with which no air service agreements have been
concluded.
(2) All scheduled air services to, from or through Hong Kong,
which do not operate to, from or through the mainland of China
shall be regulated by the air service agreements or provisional
arrangements referred to in this article.
Article 134
The Central People's Government shall give the Government of the
Hong Kong Special Administrative Region the authority to:
1) negotiate and conclude with other authorities all arrangements
concerning the implementation of the air service agreements and
provisional arrangements referred to in Article 133 of this
Law;
2) issue licences to airlines incorporated in the Hong Kong
Special Administrative Region and having their principal place of
business in Hong Kong;
3) designate such airlines under the air service agreements and
provisional arrangements referred to in Article 133 of this Law;
and
4) issue permits to foreign airlines for services other than those
to, from or through the mainland of China.
Article 135
Airlines incorporated and having their principal place of business
in Hong Kong and businesses related to civil aviation functioning
there prior to the establishment of the Hong Kong Special
Administrative Region may continue to operate.
