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The following is a speech by the Chief Executive, Mr Tung Chee Hwa, at the Hong Kong Trade Development Council annual dinner in London on October 30 (UK time):
Lord Chancellor, Peter, Distinguished Guests, Ladies and Gentlemen,
First of all, let me thank the Hong Kong Trade Development Council for organising the dinner this evening and for bringing together such a big gathering of distinguished guests and old friends of Hong Kong. It is always a pleasure to be back in the UK. For me, it brings back a lot of fond memories, going back to my student days in Liverpool. The country has changed a lot even since my last visit three years ago. It is full of vigour, optimism and is highly competitive. London in particular has seized on the opportunities presented by new IT developments and the globalisation of trade. Its position as a cosmopolitan city and a world financial centre is growing stronger everyday.
Hong Kong has gone through some momentous changes too in the past three years. Indeed, since the Handover, Hong Kong has seen two very important achievements. The first one was the smooth establishment of Hong Kong as a Special Administrative Region under Chinese sovereignty. The second was the overcoming of the Asian Financial Turmoil, the worst economic downturn which Hong Kong has faced in recent memory.
Anybody who has been to Hong Kong recently can see that, with the strong support of the Central Government, the concept of "One Country, Two Systems" has been transformed into an everyday reality. Hong Kong remains as a vibrant international financial centre and a bustling trade entrepot. The foundations upon which Hong Kong's success have been built - the rule of law, a level playing field for business, clean and transparent government, and the whole range of freedoms with which all of us can identify, such as the freedom of speech, freedom of the press, freedom of religion, of movement, and of assembly, are firmly intact and protected by the Basic Law.
To cope with the Asian financial crisis, we introduced tax cuts and freezes or reductions in government fees and charges. We have proceeded with massive investments in infrastructure such as roads, railways and schools, not only as a means to stimulate the economy but also as a way to build a better future for Hong Kong. We launched an incursion into the financial markets to protect the integrity of our systems. It was controversial at the time. But by now, the move has received wide international endorsement. With the recovery of the regional economy in Asia, and the continued growth of the economy in the rest of the world, Hong Kong's economy is now rebounding strongly.
The recovery in Hong Kong has been led by increases in trade, activities in the financial markets, tourist arrivals, government investment and consumer spending. The economy grew at double digits in the first quarter of this year. For 2000 as a whole, we forecast our economy will grow at 8.5%, to be followed by 4% in 2001.
By all accounts, we have managed the challenges we faced well. However, while managing these challenges in the past three years, we also continued to focus our eyes firmly on the future. Indeed, as we move towards a new era, we are faced with three momentous changes.
First, economy has become increasingly global. We will be able to compete in the world market successfully only if we can provide a wide range of high quality, innovative and technologically sophisticated products and services.
Second, two decades of rapid economic growth on the Mainland have continued to narrow the gap between Hong Kong and the key cities there. The wealth of talented people available in the Mainland, their increasing sophistication as they gain experience in dealing with foreign businesses, and improved infrastructure developments present us with great challenges. But we are also seeing great opportunities.
Third, Hong Kong cannot continue to count on a recovery led by asset inflation. Also, some labour-intensive service industries have followed the lead of the manufacturing sector and moved to the Mainland. These together with globalisation and the development of the Mainland's economy, are leading to another phase of economic restructuring for Hong Kong. Operating costs in Hong Kong have lowered, and many firms have implemented internal restructuring to enhance productivity. But we must develop and strengthen our advantages further, turn increasingly to innovative, knowledge-intensive economic activities, make the best use of information technology and reduce our costs further to enhance our competitiveness.
To take on all these challenges, a little over two years ago I announced the formation of a Commission for Strategic Development to help Hong Kong formulate a long-term plan for the future. Drawing on the advice of the Commission, we are positioning Hong Kong not only as one of the major cities of China, but a world city in Asia, with a status comparable to London in Europe and New York in the Americas.
London and New York are cosmopolitan cities with a great depth of talent in culture, technology and education. They are vibrant economies and possess the financial strength to serve the region and the world in areas such as finance, trade, tourism, information and transport. They are also home to numerous national and multi-national enterprises. Their solid economic foundations have made it possible for their residents to enjoy a relatively high average income.
Hong Kong already possesses many of the key features common to London and New York. For example, we are already an international centre of finance and a popular tourist destination, and hold leading positions in trade and transportation, home to a host of multi-national companies which provide services to the entire region. These are all pillars of our economy. If we can consolidate our existing economic pillars and continue to build on our strengths, we should be able to become a world city.
In addition, we enjoy a unique advantage and that is our strong link with the Mainland of China which is expected to grow economically stronger and more important with China's accession to WTO.
The Asian financial crisis, however, also highlighted some structural weaknesses in our economy. We have seized on the opportunities to tackle these weaknesses by implementing a range of reforms and initiatives. These include the demutualisation, merger and listing of the security and future exchanges, the establishment of the Growth Enterprise Market (GEM) modelled on NASDAQ, and measures to enhance the transparency and efficiency of our financial market; the re-organisation of the provision of municipal services to enable more efficient deployment of resources and improve quality of services; and a range of measures to streamline and modernise the structure and management of the civil service to enhance productivity. By 2004, civil service reform will save 5.8 billion HK dollars from our annual recurrent expenditure. We are also vigorously promoting innovation and technology and since last year, we have seen a mushrooming of start-ups in Hong Kong and the enthusiastic embracing of IT by our community.
While these reforms and initiatives are producing results we know that there are two specific areas we need to do more and better. The first is education and the other is the environment. In the New Economy, we compete not on capital but on the pool of talent we have. Having talent is not enough, we need attractive living environment to retain them. In my past two Policy Addresses, I have announced a range of far-reaching initiatives to improve our education and our environment. On education we will improve the physical environment of our schools, upgrade teaching standards and put more resources and greater emphasis on enhancing the English standards of our students. More importantly, I have set a target to increase the percentage of high school graduates going to higher education from the present 30 per cent to 60 per cent in 10 years time. That will put us on par with most other advanced economies.
On the environment, we have embarked on a number of major efforts to improve our air quality. These include conversion of diesel taxis to LPG, and the successful introduction of ultra-low sulphur diesel. Indeed we were the first place in Asia to introduce ultra-low sulphur diesel. We have also established a working group and formulate a range of initiatives with Guangdong Province to tackle cross-boundary pollution issues. We will soon be launching a campaign to green urban Hong Kong and are introducing a new set of design standards to encourage the construction of environmentally friendly buildings. The UK is a pioneer of green and innovative construction techniques. I am particularly pleased to welcome the launch of the 'Integer Project' in Hong Kong next year. The 'Integer Project' is a partnership among the UK Government, the Hong Kong Government and private companies to show to the public and building professionals some best practice and green concepts and products suitable for use in Hong Kong.
Reform in education and environment will take time, but with determination we know we will succeed.
Ladies and gentlemen, we have put in all these reforms and initiatives because we are optimistic about our future. At the dawn of the 21st Century, I see China's economy continuing to grow strongly. The World Bank has already predicted that China's gross national product, which currently ranks 7th in the world, will rise to 2nd or 3rd place by 2020, with an enormous cumulative growth in the interim. I also see the economy of Asia recovering from the impact of the financial turmoil of the past two years and actively re-emerging in size as large as that of the European Union or NAFTA. Hong Kong, with our unique relationship with the Mainland of China, and our prime position within Asia - within five hours flying time of more than 50 per cent of the world's population - is ideally situated for those UK companies who wish to participate actively in the growth of the economy in the region.
I will now say a few words of our governing philosophy which may be of interest to you. With reunification, Hong Kong has been exercising a high degree of autonomy in accordance with the Basic Law. The approach of our governance has been to engage Hong Kong people in a collective effort to build a better future while looking after the interests of all. Governance in a modern society involves three main elements: first, to ensure equality of all before the law, judicial independence and that the rule of law prevails in all sphere of society; second, to respect the rights and dignity, and to safeguard the freedoms of each individual; and third, to maintain a highly transparent and accountable government which supports civic participation. These three elements are not only protected by the Basic Law, but are a reality in the daily life of Hong Kong today.
I would also like say a few words on Hong Kong's political structure. Concerns have been expressed about the relationship between the executive authorities and the legislature. Under the previous system, for the longest time, a top-down appointment system was adopted. Therefore, the legislature and the executive authorities used to operate very harmoniously. However, since the introduction of elected seats to the Legislative Council, the political environment has undergone a profound change. Furthermore, the Basic Law stipulates that one of the most important functions of the Legislative Council is to check and balance the executive branch of the Government.
Therefore, it is not surprising that sometimes tension exists between the two institutions, a natural phenomenon in a political system with a division of powers and constitutional checks and balances. However, overall the relationship has been working effectively. In the past two years, we have had practically all our important bills, 159 in total, passed by our first Legislative Council through consultation, negotiation and yes, very often, compromise. I admit the relationship between the two can be better and greater effort will be exerted in that direction.
While still on the subject of political structure, I should mention that the community has been calling for a higher degree of accountability of senior officials of Government. In my latest Policy Address, I announced that we would examine how we could introduce a 'Principal Officials Accountability System' in which principal officials accountability can be enhanced. This will only affect the top layer of Policy Secretaries. For the rest of the civil service, the permanence and political neutrality will be preserved.
In Hong Kong, one of our cornerstones is our strong and highly trusted legal system. Courts at all levels exercise judicial power independently. The Government respects and upholds judicial independence, and acts in accordance with the rulings of the Court of Final Appeal and the lower courts. As a Special Administrative Region, Hong Kong enjoys the power of final adjudication - a unique constitutional arrangement. Our legal system is functioning very well. Judges from other common law jurisdictions serve in the Court of Final Appeal as non-permanent judges. This signifies confidence of the international judicial community in our rule of law.
Now, let me say something about our constitutional development. Having inherited most of the systems and institutions operating prior to the reunification, Hong Kong does have to go through a process of adaptation. Our political structure outlined in the Basic Law is the manifestation of a spirit which encompasses respect for history and respect for reality. It establishes the principle of gradual and orderly progress and provides Hong Kong with ten years from 1997 during which we can strengthen the foundation of our political structure and accumulate experience before taking further steps. In the meantime, our experience since the reunification demonstrates that our political system can function very effectively. The community, with the SAR Government, have worked together to meet the challenges of the financial turmoil, to restore economic growth and to maintain social stability.
Ladies and gentlemen, during this three-year period, I am delighted to see that the many special links between Hong Kong and Britain have been well maintained and indeed strengthened. The United Kingdom remains one of our largest trading partners among the European Union. British companies continue to invest substantially in Hong Kong and the British Chamber of Commerce is very active in Hong Kong. The people to people relationship continues to grow. There are 22,000 British citizens living and working in Hong Kong making important contributions to the community as they have always done before. There are over 70,000 Chinese who were born in Hong Kong and are now living in the UK, and some 14,000 students from Hong Kong who are studying in Britain. Our cultural links remain strong and growing through exchanges of youth music groups, performances by top UK orchestras, dance and theatre companies, and art and cultural exhibitions held in Hong Kong.
Ladies and gentlemen, at the dawn of a new millennium, we take pride in being a part of China, a China moving forward confidently and will take her rightful place in the community of nations of the world. We also value the special relationship we in Hong Kong have with the United Kingdom and the UK has indeed left some fine legacies in Hong Kong. We value this special relationship. It is not only our mutual interest to see this relationship continue to grow and develop, it is also the common wish of our two peoples to see this happen. I am sure this special relationship will grow from strength to strength in the years ahead.
Thank you very much.
End/Tuesday, October 31, 2000
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Photo: The Chief Executive, Mr Tung Chee Hwa, delivers the keynote speech at the Hong Kong Trade Development Council annual dinner in London.
