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The Asian financial crisis knocked the wind out of Hong Kong's sails but signs of a strong and sustained recovery were beginning to be seen in the region, the Chief Secretary for Administration, Mrs Anson Chan, told Belgian businessmen in Brussels today (June 22, Brussels time).

Speaking at a business luncheon organised by the Belgian-Chinese Economic and Commercial Council, Belgium-Hong Kong Society, and Royal Institute for International Relations, Mrs Chan noted that Asian economies were expected to out-perform G-7 countries in the coming two years following the economy recovery in the region.

" Forecasts indicate that this year the nine economies of East Asia, excluding Japan, will grow by an average of 6.3 per cent; there are predictions of a six per cent growth in 2001. In Hong Kong, we are also forecasting a growth of six per cent this year," she said. This compared with a 3.3 per cent forecast growth rate for G-7 countries this year."

Trade and investment flows resurged as the economy was on a solid road to recovery.

"Belgian and European trade with Hong Kong and the wider Asian market did suffer in the previous two years due to the Asian financial crisis. But trade between Belgium/Luxembourg and Hong Kong is again on an upward trend - growing by 13.6 per cent in 1999.

" This indicates two things: first, Hong Kong's economy is recovering strongly. We are not only exporting more to Belgium, we are actually importing even more from Belgium. Secondly, there is renewed interest from Belgian and European companies in trade and investment with Hong Kong and in the wider East Asian region."

Mrs Chan went on to brief the guests on how Hong Kong was positioning itself as Asia's premier international city and the major gateway to China.

"After recovering from the initial shock waves of the Asian financial crisis, we recognised the opportunities as well as the risks that came in its wake. We arrived at two clear conclusions which have guided our actions since.

"The first was that the basic economic, financial, administrative and social infrastructure was sound, and did not require major surgery. But it was just as plain to us that within that overall framework there was much we should and could do, while remaining faithful to our underpinning policies and principles."

Mrs Chan noted that as a result of market adjustments and cost restructuring, Hong Kong was now a much more affordable place in which to live and do business, and its competitiveness had been given a boost.

She pointed out that at the same time, Hong Kong realised that its economy should be more diverse, and a very comprehensive raft of reforms and initiatives had been set in train.

"There is a clear focus to all of these efforts, and that is to make Hong Kong the world city in Asia," she stressed.

The Chief Secretary highlighted that it had been economic, rather than political or constitutional challenges that had occupied most of Hong Kong's time since the handover.

" We are moving ahead very well as a Special Administrative Region. And it is abundantly clear that Hong Kong people are vigorously exercising all of their rights and freedoms and the high degree of autonomy, to protect their way of life as spelt out in the Basic Law," she said.

Turning to China's accession to the World Trade Organisation, the Chief Secretary said that it was important not simply for the region, but for the whole world economy. China would become a party of the international economy operating on a rule-based regime. Its accession to the WTO would help maintain discipline and momentum in its ongoing economic reforms. The forecast growth in China's foreign trade and foreign investment would generate enormous opportunities for Hong Kong and the entire trading world.

Mrs Chan also elaborated on the economic interdependence between Hong Kong and the Mainland, and the vital link Hong Kong played as a springboard for international companies wanting to establish a foothold in China. She believed that Hong Kong's in-built advantage would be enhanced rather than diminished by China's accession to WTO.

End/Thursday, June 22, 2000

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