Murdoch to advise HK on business business

THE MEDIA tycoon Rupert Murdoch, who recently established a special relationship with Hong Kong in the form of Wendy Deng, his new girlfriend, is to establish an official relationship with the former colony by joining a team of high-powered international businessmen who will become advisers to the government.

Mr Murdoch has been spending more time in China and Hong Kong. Ms Deng, 31, who is a Hong Kong resident and vice-president of business development at the Murdoch-controlled Star TV network, has been playing a key role developing ties between the Murdoch empire and the Chinese government.

The other business leaders who are joining Mr Murdoch on the 14-strong advisory committee include Paul Volcker, former chairman of the US Federal Reserve, the head of General Electric in the US, and the heads of Deutsche Bank, Philips, Royal Dutch Petroleum and Toyota.

The only British representative is Sir William Purves, former chairman of HSBC Holdings. He was a firm opponent of Chris Patten's plans to introduce more democracy when he was governor of Hong Kong.

The team will meet at least once a year and advise Tung Chee-hwa, Hong Kong's chief executive, on long-term development plans. Mr Tung announced the appointment of the business advisory team in his annual policy address.

While the overseas businessmen will be given a direct line to the chief executive, the territory's municipal councils will be abolished, Mr Tung said.

The councils are the only elected bodies in Hong Kong with executive powers. The legislature has no executive power.

"This is a very negative step," said Michael DeGoloyer, head of the Hong Kong Transition Project at the Baptist University. "It has wiped out the possibility of elected representatives learning about administration."

The annual policy address was seen as an opportunity for Mr Tung to regain some of the popularity he has lost since becoming the first post-colonial head of government. He is trying to grapple with Hong Kong's worst recession in three decades. In the speech he painted a bleak picture of further falls in growth, increasing unemployment, lower corporate profitability and a "substantially" rising budget deficit.

The poor, unemployed and badly housed were told "scarce resources" could not be spared to increase public spending. The emphasis was to be on large infrastructure projects to stimulate the economy. In the face of these problems Mr Tung urged the community to pull together. "The most crucial factor is our confidence. We should not lose our confidence." Asked why his plan was notably short on specific proposals, he gave a general reply about the need to "recognise the strength we have. Is government omnipotent? Does it have a magic wand? I think not."

Martin Lee, leader of the Democratic Party, Hong Kong's biggest, said his members were angry about the speech. They organised a sit-in to protest over Mr Tung's plans.

Mr Tung's most specific proposals centred on the development of Hong Kong as a technology centre.

The government has decided to establish a pounds 384m Innovation and Technology Fund and a new technology institute to make industry more competitive.