Press Release

 

 

FS' speech at Trade and Economic Policy Forum

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Following is the speech (English only) of the Financial Secretary, Mr Donald Tsang, during the Economic Strategy Institute's Annual International Trade and Economic Policy Forum via satellite link today (Thursday):

Good evening to every one of you in the East Coast, and good morning to Prime Minister Goh. And I must first start by saying that I agree almost with every remark made by Prime Minister Goh on the positive way in which many Asian economies have been responding to the challenges of the financial crisis. That response was a very courageous one, given the human suffering that goes behind the financial crisis, and that reform has spread quite uniformly from Korea right down to Singapore.

Of course people tend to expect economies such as Hong Kong and Singapore to make the right response. We, of course, have, in both territories, direct experience of short-term pain and the prospects of long term gains brought by having an open economy. But neither of us has been complacent, we have been accelerating our market reforms, both in Singapore and in Hong Kong.

But what is, in my view, particularly encouraging is to see a former, rather formerly closed economy like the Mainland of China, being reformed very rapidly, despite the obvious short-term pain. They have tried to privatize the state-owned enterprises at lightning-speed. They have made dramatic offers to the United States in their WTO accession discussions. And I see them as very constructive and presenting quite a competitive challenge to the region at the end of the day, and indeed to the world.

We in Hong Kong, together with many in Asia, have realized that globalisation is really an unstoppable force. Traditional trade and commercial practices, even our values, are being challenged. It is easy to talk about the benefits of globalisation. Perhaps, let's start with how, I think, Asian leaders probably see the future in the 21st century. I believe that you can see many practical examples of our sharing a recognition that the economic development is about a lot more things than just opening up markets.

I believe Asian leaders recognize that the development of their societies requires the rule of law, a strong anti-corruption culture, a level playing field, and a free flow of information. These attributes, of course, are very strongly held in Hong Kong and we regard them as the bedrock of our success.

But these attributes do not come over-night. Each of them requires education, raising public awareness, challenging vested interests. But I do sense, when I travel around the region in Asia, that the financial crisis has produced a much greater awareness of how important these attributes are to developing a society and providing for the growth of a more sophisticated economy.

I, therefore, believe that you will see, in the first decade of the new millennium, renewed Asian economic growth on a much firmer foundation. The Asian financial crisis has actually purified the system in Asia, making the fiscal system and the economic system much stronger. And I believe that United States businessmen and European businessmen will find the Asian markets more open and the business environments increasingly user-friendly. But they will also find much stronger demand for genuine reciprocation by the developed economies in commodity trade, such as textiles and garments, and they also expect people trading with us to be acutely aware of the pain and the political perils on rapid economic restructuring.

We will almost certainly find, early in the next century, the emergence of the Mainland of China as an established world economic power, with a more friendly face and a more enlightened approach to economic and international relations. This should, in my view, reduce global tensions and it will produce enormous economic opportunities for the rest of the world. This will, of course, produce a new geo-political and geo-economic configuration in the Asian region.

Hong Kong, being part of China, will benefit from its own location and from our own connections in the Mainland. Our advanced financial and communication infrastructure will put us to full use. Trade volumes both in goods and services will grow. Hong Kong will have to strive continuously, of course, to provide the quality and types of services to the Mainland at levels not readily available there.

With this economic growth will come new challenges, of course, presenting problems and opportunities: The problems of population growth, environmental issues, securities issues, and the challenges of electronic globalisation will loom large for Asian leaders.

As a finance man, there is little I can offer on security issues, except this: economic integration is a great force for peace. I am sure, for instance, the cross-straits relationship between the Mainland of China and Taiwan have been discussed at your conference. Relations between them are naturally something which we in Hong Kong care very much about. But being geographically close to them also gives us a reassurance because we can see just how close economic ties have become. Both the Mainland of China and Taiwan have considerable vested interests in the well-being of the other's economy. Those economic interests are likely to grow faster once both of them become members of the WTO. I do share the feeling of Prime Minister Goh that there is great urgency to bring a big trading nation like the Mainland of China into the fold of the WTO as soon as possible.

Population growth will pose a challenge for many of us. In Hong Kong we still have quite a young population. Immigration from the Mainland is controlled at the moment but it exceeds 50,000 new arrivals every year. We are planning for better housing, more schools, more jobs, better infrastructure. Vision, foresight and careful planning are vital if Asia is to cope with a steady rise in population. We urgently need to spread the higher standards of living that produce lower birth rates. There are, of course, for territories like Hong Kong, clear limits on the numbers of new immigrants that we can absorb and this is a critical issue which Hong Kong will have to face in the months and years ahead.

The pressure on the environment is closely linked too. Industrialization and population increases have taken their toll. The public demands for a cleaner environment are rising as incomes and education standards rise. We have seen that awareness growing vividly in Hong Kong. We have stringent controls, by regional standards, but environmental issues are increasingly politicized. Even the further reclamation of our harbour has become a matter of heated debate here in Hong Kong.

And as we cope with these major physical issues, we will also have to deal with the challenges created by, as I said, electronic globalisation. Information flows, commercial deals, entertainment and a host of other services will be available in ways we can barely imagine. The age of electronic communication is still in its infancy but the infant is growing very fast. The economies which learn how to make the best of these electronic opportunities will be the successful ones in the next century.

A further but important dimension: the demand for more accountable governments. We should expect organized, civil opposition in mainstream policy in all Asian economies. There will be increasingly pluralistic demands. There will be more diverse opinions. And this will be good. Good for Asia and good for the world. Therefore, you will see in Asia that there will be greater demands not only for competent but enlightened leadership.

Well, there are many other issues there but there will be no shortage of challenges in the next century. The pace of change will be faster than ever.

Adaptability, both in government thinking, in our societies, will be a vital attribute. And I would like to suggest that Asia has a pretty good record of adaptability. If there is anything to go by, just look at how we have responded in the current financial crisis. And we are prepared for the change, but we need the rest of the world to work with us, and I think it is a global challenge. If any area is in trouble, we are all in trouble. If there is prosperity growing in one region, that prosperity will be shared.

Perhaps I will stop here. Thank you.

End/Thursday, April 29, 1999

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