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Following is the transcript of the question and answer session by the Chief Executive, Mr Tung Chee Hwa, after a luncheon speech in Silicon Valley today (Friday, Hong Kong time):
Question: (Moderator John Chen, Sybase) This is an easy one. Will we have a Disneyland in Hong Kong?
Mr Tung: I would like to tell you a whole lot about Disneyland but as negotiations are ongoing and there are commercially sensitive discussions, there is very little I can say. But I'm very hopeful that in a few years' time I will be able to take my grandchildren to visit Mickey Mouse in Hong Kong.
Question: I have three questions that relate to the stability of the Hong Kong Dollar as well as the potential devaluation of the yuan in the near future and if that happens what will happen to the Hong Kong Dollar and how does that impact on the Hong Kong Dollar?
Mr Tung: Let me say this. China's economy is moving ahead well. The first quarter growth was more than 8 per cent. It has a foreign exchange reserve of US$147 billion, the second highest in the world. Last year's direct foreign investment into China was over US$40 billion and the export surplus was close to US$40 billion. I don't have the current figure for this year yet but I would imagine that China would continue, despite the competitive environment in Asia, continue to enjoy a sizeable trade surplus as well as substantial foreign direct investment. China's total budget deficit as a per cent of GDP is much below 2 per cent and it has very prudent financial management and if it was in Europe it would qualify under the Maastrich Treaty and become a member of this group of 13. So given that set of numbers I just cannot imagine the yuan will be devalued. These are the fundamental figures. So I am afraid that the yuan will not be devalued so I'm afraid I can't answer this hypothetical question.
In so far as Hong Kong is concerned we have gone through a very difficult time in Hong Kong. As a result of the Asian financial turmoil our economy contracted more than 5 per cent last year. Unemployment, from a low of 2 per cent was as high as 6.1 per cent at the last quarter. It's been a difficult period for us but I'm glad to see the latest set of figures showing that things are stabilising. Our financial market is now calm. Our property market, having fallen off very substantially has now stabilised and we are all looking forward to a slow but a sure recovery perhaps later on in the year.
The linked exchange rate, linking the US Dollar with the Hong Kong Dollar is a policy we will not change. This is a very important government policy that will not be changed. And I just want you to know that we operate under what is called a currency board system and it is different from some of the other countries, who just link their currency with some other currency. What we do is, for those banks which issue notes in Hong Kong, Hong Kong Dollar notes, and there are three commercial banks which issue notes in Hong Kong, for every HK$7.80 of notes they issue they deposit with the Hong Kong Government US$1. So if you bring back to the Hong Kong Government HK$7.80 I will give you back US$1. And today the foreign exchange reserve that the Government holds, at some US$88 billion, covers the currency in circulation not one time, not two times, not three times. I think it covers it eight times. So again I'm afraid the devaluation of Hong Kong Dollar is really a hypothetical question which I don't want to answer.
Question: First of all I'd like to let everybody know I must have got in 60 or 70 questions. I thought it was an easy job, in fact it is a tough job. And in the limited span of time I have chosen to collapse a lot of questions. Earlier when I was chatting with C H he said I could ask any questions and he will give an open answer. So, C H, if you like the questions, this is obviously my brilliant choice of the question. If you don't like the question I think it belongs to table 52 or something: Dear Honourable Tung, how do you like the one nation, two systems in Hong Kong so far? What is your opinion to Mr Lee's in Taiwan about the separation of China? Do you think a good Hong Kong will serve as a good example that the reunion of Taiwan is going to be in the near future?
Mr Tung: And I thought John Chen was my good friend!
"One Country, Two Systems" is really working very well in Hong Kong. "One Country, Two Systems" is not just a slogan. It is institutionalised by an act of law by the National People's Congress of China. It is called the Basic Law, which applies to Hong Kong. The Basic Law guarantees our way of life. It provides for an independent judiciary, separate monetary systems, it provides for independent customs territory and it provides a whole lot of things. Freedom of speech, assembly, information and movement and it's a piece of document that was promulgated by the National People's Congress of China after four years of discussion between people from Hong Kong and people on the Mainland. And in the two years since July 1st 1997 we have been moving forward under "One Country, Two Systems". It's really going very well. The leadership, the Chinese leadership, are very, very determined to make "One Country, Two Systems" work. It's good for Hong Kong, it's good for China as a whole, and as I said time and again it will be a good example, and I would hope it would help, if we are successful, it would help towards the ultimate reunification of the country.
So, yes it is working well and for those of you who have been to Hong Kong recently, I'm sure you will agree with me, having been there a week or so you will hear all the noises and the demonstrations and you will see all the funny cartoons of me in the newspaper and all the criticisms and abuse I myself and some of my colleagues have to face in the newspaper every day. For those who have not been to Hong Kong yet we really invite you to come and see for yourself how well we have done.
In so far as Taiwan is concerned, I think the One China policy, One China principle, is the very basis, the very foundation of the informal discussions that's been going on between the Central Government and between Taiwan authorities. So that is the basis of all these discussions and in fact the One China principle is very much accepted internationally, also accepted by people all around the world, Chinese people. So I would hope, and I would expect that the discussion will eventually go forward on this basis. And to the extent people ask me what is my role in all this. Well my role in all this is to make Hong Kong successful, to make sure "One Country, Two Systems" is successful. Thank you very much.
Question: In the interests of time unfortunately I will have to apologise, this is the last questions. The questions categorically have to do with attracting talents and the easing of immigrations back into Hong Kong to promote the innovative and technology knowledge-based economy. So what is the policy changes put in place to effect that?
Mr Tung: I can't be specific at this moment yet because the task force is now studying it and in fact putting the final touches onto what we are going to do. But I would like to emphasise, number one, is that the regime will be liberal and, number two, the response will be fast and sensitive, and number three, is that there will not be upper limits as to how many will be able to come. And number four is that it will be the responsibility of the private sector to really sponsor people to come to Hong Kong. And I think based on these principles we are now putting on the final touches onto this plan and I would hope that it would not be too long before we will be able to make it public.
Mr Chen: Thank you very much, Honourable Tung Chee Hwa and thank you very much everyone who joined us here at the Fairmont Hotel today. The meeting is now closed.
Mr Tung: I'm sorry the speech was longer than it should be. It contained a lot of propaganda stuff. But what I did want to say also is that I am delighted that there is now this HongKong-SV.com organisation which Pauline (Lo Alker), John Chen and a few others who have been very helpful. It is an important organisation to Hong Kong, it will provide a bridge between Hong Kong and Silicon Valley and I would hope that Pauline, you and John and your colleagues will really help Hong Kong and Silicon Valley to work very closely together. I look to Silicon Valley, not from the point of view being competitive, because we can't be, you are the very big brother and we are just beginning, we are just at kindergarten level, so we hope you will come and help us. Thank you very much.
Chief Executive's transcript in Silicon Valley (Chinese Part)
End/Friday, July 23, 1999
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