The influx of parallel traders who buy their stock tax-free in Hong Kong to resell it in mainland China at a profit is causing growing unrest. Residents of Sheung Shui, a town close to China's border, say the increase in parallel importers has pushed up retail prices and causes a general nuisance. Importers argue that their trade benefits the Hong Kong economy.
Two-tin milk rule 'a bad precedent' for Hong Kong
Officials defend cap on formula after Basic Law expert says it may result in legal challenges
Colleen Lee, Gary Cheung in Beijing and Emily Tsang
Hong Kong officials have defended the new two-tin restriction on infant formula exports against criticism by a Basic Law expert in Beijing who said the curb was "inconsistent" with the mini-constitution.
Basic Law Institute chairman Alan Hoo said the restriction on travellers out of Hong Kong might face legal challenges.
"This practice curbs Hongkongers' freedom to bring goods into and out of the city, which is protected by Article 115 of the Basic Law," Hoo said, on the sidelines of the Chinese People's Political Consultative Conference (CPPCC) in Beijing.
"This is a bad precedent. This is not only inconsistent with Article 115, but also threatens the reputation of Hong Kong as a free market."
But both Secretary for Food and Health Dr Ko Wing-man and Secretary for Security Lai Tung-kwok, responding to the criticism from Hong Kong, said the limit - imposed on Friday - was the only way to curb rampant parallel trading in the scarce commodity.
"We are being forced to put the restriction into practice as there is no alternative," Ko said. "The only reason we have implemented the new law is to guarantee a sufficient supply of infant formula for local parents."
Lai said the restriction was not aimed at any particular people and rejected suggestions that it was a half-baked solution that lacked thorough consideration.
He also said that cancelling the multiple-entry permit scheme for mainland travellers - blamed by some for encouraging the traders - was not the answer.
Under the new rules, passengers over the age of 16 can take two tins, or 1.8kg, of infant milk formula out of Hong Kong on their first trip out of the city in 24 hours. By yesterday, at least 87 people had been arrested for exceeding the limit, of whom 60 per cent were Hongkongers and others mainlanders. They face a maximum penality of a HK$500,000 fine and up to two years in jail.
Several deputies and delegates in Beijing for the annual meetings of the National People's Congress and the CPPCC criticised the change and said the penalties were too harsh.
Hong Kong delegate Henry Tang Ying-yen, former chief secretary and failed chief executive candidate, said he hoped it was a temporary move.
"I hope it won't stir up conflict between Hong Kong people and mainlanders," he said.
Tang said Hongkongers should be tolerant of mainlanders coming to the city to shop.