The development of the cross-strait situation is continuously getting a lot of publicity after the election of Chen Shui-bian as the Taiwan's President. This should undoubtedly have some impact on the economic development of Hong Kong in the short term.

In order to understand the views on the impacts of such changes upon Hong Kong's business community, Hong Kong Policy Research Institute conducted an opinion survey of senior business executives between the 10^th and 20^th of April 2000. 119 responses were received, with a response rate of 30.5%.

In summarizing the survey results, business executives generally expressed a neutral and a slightly pessimistic response on Chen Shui-bian's acceptance of the "One China" principle, with the response rate accounted for almost 30% and 50% respectively. Relatively, only about 10% showed optimistic views. Nevertheless, near 85% of respondents believed that the probability of military conflict between the Mainland and Taiwan in the next few months should less than fifty percent. 55% among them even expected that the probability should be less than ten percent.

The survey also found that, although 67% of respondents expected the current uncertain cross-strait relation should have no impact on their business operations, 27% of them worried about the negative impact. On the other hand, 25% of the respondents expected a positive impact (25%) on their business regarding the implementation of the "mini-three direct links", which were about twice of those expecting a negative impact (13%). However, more respondents considered that no impact would occur, with the response rate of 41%.

In respect of the new development of cross-strait status, the majority of the business executives in Hong Kong stated that their investments in Hong Kong and in the Mainland would remain unchanged, which accounted for about 82% and 67% respectively. In contrast, only 34% of them expressed that there would be no change on their investments in Taiwan, and about 14% of them considered decreasing their investments.

In conclusion, the majority of Hong Kong business community believed that no military conflict would occur between the Mainland and Taiwan in the next few months, although they were slightly pessimistic about Chen Shui-bian's acceptance on the "One China" principle. More than one-half of the respondents expressed that the current uncertain cross-strait relation would have no impact on their business operations. In particular, most of them stated that their investments in Hong Kong and the Mainland would not be affected under this aspect.

The respondents in this survey are senior executives in the Hong Kong business community. They were from the panel of the PRI Hong Kong Free Market Index, who provide their opinions on the free market status in Hong Kong every six-month since the reunification.

1. "One China" Principle

From the survey results, business executives in Hong Kong expressed a slightly pessimistic response that Chen Shui-bian will accept the "One China" principle after taking up the Taiwan's presidential position. 52.1% of respondents showed pessimistic, and 4.2% even expressed extremely pessimistic. In contrast, only 10.9% showed optimistic on such aspect, and only 0.8% expressed an extremely optimistic view. 28.6% of the respondents stated neutral opinion, while 3.4% have no idea about this. (Refer to Table 1)

Table 1

Chen Shui-bian will accept the "One China" principle after taking up the Taiwan's presidential position

Response Rate (%)

Extremely Pessimistic	Pessimistic	Neutral	Optimistic	Extremely Optimistic	Don't Know
4.2	52.1	28.6	10.9	0.8	3.4

2. Probability of Military Conflict

Regarding the probability of military conflict between the Mainland and Taiwan in the next few months, 24.4% of respondents believed that the military conflict would not be occur. 31.1% of them expected the probability would be ten percent or less, while 28.6% expected the probability might fall between 10% and 50%. Only 3.3% of respondents estimated that the probability would more than one-half, and 12.6% of them had no comment on this. (Refer to Table 2)

Table 2

The Probability of military conflict between the Mainland and Taiwan in the next few months

Probability of military conflict (0-100%)		Response rate (%)
0%		24.4
>0% to 10%		31.1
>10% to 30%		14.3
>30% to 50%		14.3
>50% to 70%		2.5
>70% to 100%		0.8
Don't Know		12.6

3. Impact of Uncertain Situation on Business

The survey also found that 67.2% of respondents considered that the current uncertain cross-strait relation would have no impact on their business operations. Nevertheless, 26.9% reflected their concern of negative impact on their business, while only 2.5% of respondents expected a positive impact. (Refer to Table 3)

Table 3

The degree of impact of the uncertain cross-strait relation on the business

Response rate (%)

Extremely Negative	Negative	No Impact	Positive	Uncertain	Not Applicable
0	26.9	67.2	2.5	0	3.4

4. Opinion on the Implementation of "Mini-Three Direct Links"

There was no consistent opinion in regard of the implementation of "mini-three direct links". 25.2% of respondents expected a positive impact on their business, while 13.4% worried about a negative impact instead. 41.2% believed that there would be no impact on their business at all, and also 16% of the respondents stated uncertainty on such aspect. (Refer to Table 4)

Table 4

Impact of the "min-three direct links" on the business

Response rate (%)

Negative	No Impact	Positive	Uncertain	Not Applicable
13.4	41.2	25.2	16.0	4.2

5. Future Investment Planning

In considering about the future investment planning, 81.5% of the respondents stated that Chen Shui-bian's election would not affect their investments in Hong Kong. Only 1.7% considered increasing their investments in Hong Kong, while 5% of them would decrease. At the same time, 5% showed uncertain on this.

67.2% of the respondents expected that their planning of investments in the Mainland would remain unchanged. Those respondents considered either an increase or decrease on their investments in the Mainland accounted for 4.2% and 7.6% respectively. 6.7% of them expressed an uncertainty on this.

Nevertheless, only 60% among the overall respondents have had investments in Taiwan. 33.9% among them indicated that the relevant investments would remain unchanged. Those respondents considered decreasing their investments in Taiwan or expressed uncertainty accounted for 13.6% and 11% respectively. In contrast, only 0.8% expected to increase the investments in Taiwan. (refer to Table 5)

Table 5

Response rate (%)