From the Editor

            
Three years have passed since the Hong Kong Special Administrative Region was established and the Chief Executive Tung Chee-hwa assumed leadership of the government. July 2000 turns out to be a month of intense political controversies. The Legislative Council passed a vote of non-confidence in the former Housing Authority chairwoman Rosanna Wong and Director of Housing Tony Miller. There were sensational allegations about political intervention into the 'academic freedom' of a pollster at the University of Hong Kong. Groups of civil servants, doctors, teachers and home owners suffering negative equity took to the streets to protest against government policy reforms, together with radical activists who challenged Mr. Tung's legitimacy to govern. Events in this so-called 'summer of discontent' certainly are indicative of the political difficulties facing the government in times of economic downturn and restructuring, not to mention Mr. Tung's failure so far to galvanize strong community support behind his many reforms which have upset some stakeholder interests. 

Articles featured in this issue provide some insights into understanding the present state of governance. Mr. Chor-yung Cheung reviews reasons for the Chief Executive's falling popularity and argues that his problem is not one of public relations per se, but involves more deep-rooted issues of political accountability. Dr. Tai-lok Lui looks at the impact of economic restructuring which has upset social expectations and stability grounded in a social contract that is no longer functioning because of the drastic socio-economic changes taking place. He calls for the re-negotiation of the social contract between the government and the governed in order to rebuild consensus and trust. Interpreting the Hong Kong Policy Research Institute's regular economic and political confidence indices, Dr. Jane C. Y. Lee and Mr. Michael C.M. Kwan also urge the government to return to basics, by making more efforts to gain legitimacy and seek support for its policies, as well as addressing better the immediate problems and pressures encountered by the general public. 

Mr. Paul K.W. Yip's special contribution, in Chinese, provides some thought-provoking reflections on Hong Kong's future after three years under China's 
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sovereignty. Without under-estimating social and political turbulence in the days ahead, sometimes triggered domestically but also a result of the atmosphere of the external environment, Mr. Yip advocates rational debates and well-intended political and social dialogues so as to facilitate a common direction and the necessary harmony in which to take Hong Kong forward. In order for Hong Kong to have an ultimate impact on China's progress, the special administrative region must first of all put its own house in order, and chart itself with a clear vision as a city of China with global outlooks.
Finally, an interview with Mr. K.C. Kwok, a chief economist at Standard Chartered Bank, discusses Hong Kong's opportunities and challenges in the globalized economy. Despite its temporary setback after the Asian financial turmoil, and the possibility of 'direct links' to be established between mainland China and Taiwan sometime in the future, Mr. Kwok is of the view that Hong Kong still enjoys considerable comparative advantages which, if utilized properly, can help to consolidate its regional competitiveness and enable it to adapt to the new economic challenges.
Dr. Anthony B.L. Cheung
Editor-in-Chief