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Follows is a transcript (English part) of the press conference by the Chief Executive, Mr Tung Chee Hwa, following the conclusion of the 2001 APEC Economic Leaders' Meeting in Shanghai today (October 21):

Mr Tung: I am delighted to be here in Shanghai, to be in my own country attending the APEC Leaders' Meeting. The development of Shanghai, the development of the whole country is really, really very impressive. And the Central Government and the Shanghai authorities have planned the meetings well. All the Leaders who attended the meeting have said to me how impressed they were with Shanghai and with the way the meeting was handled. I'm sure those reporters, those journalists who have come with us from Hong Kong are equally impressed.

The four main topics of the discussion were, first of all about the macro-economic development. Secondly about the short-term impact of what happened on September 11, the terrorist attacks in New York and Washington and how would they affect economic development in the short term. The third is about human capacity building. And fourth was about APEC's future development. In all these areas the Leaders reached a great deal of common understanding.

The Leaders were optimistic about the medium and long-term development from an economic point of view. But from a short-term point of view we are witnessing a rapid decline and slowdown of the economy. Every country, every region is mapping out their own strategy as to how to face this economic decline and a looming recession. The truth is that the events of September 11 have had a major affect on economic development and that event has given a great deal of uncertainties. In Hong Kong, obviously we have been very badly hurt and we are watching the developments very, very carefully.

We have reached, as Leaders, a very strong consensus that terrorism is a common enemy for entire mankind. All the Leaders are firmly committed to fight terrorism collectively and to strengthen international co-operation in this regard. In accordance with a directive of the Central Government we are implementing the latest UN Resolution, Resolution 1373, in Hong Kong.

So all in all it was a very useful three or four days I have spent in Shanghai. Thank you very much. I'll be happy to take questions.

Reporter (Dow Jones Newswire): Last Friday there was this market speculation that Hong Kong may adjust the Hong Kong Dollar peg and it rattled the financial markets. I'm just wondering what's your comment on this and my second question is . . .

Mr Tung: The answer is no, no, no. Okay.

Reporter: . . . under what circumstances do you think your government should seriously study the possibility of changing the peg?

Mr Tung: The answer is still no, no, no.

Reporter (Shanghai TV): It is well known that Hong Kong, South Korea, Singapore and Taiwan are four dragons in Asia. And given the circumstances right now with the global slowdown how do you comment on Hong Kong's situation and compare it with the three economies and what are the key measures you have taken [to help Hong Kong in this situation]?

Mr Tung: I think all the four economies you have mentioned have been adversely affected by the global slowdown and by the very sad events of September 11.

As to what I think, I think in these difficult times, while we have to realistically look at all these difficulties, we also need to be focused on really the strengths we have. And in Hong Kong we have a lot of strengths going for us. For instance, we have a unique geographic location. We are there in the South China Sea. We have the support and the backup of the entire Mainland of China, the entire Chinese economy. And that is a tremendous position to be in.

Secondly, our infrastructure, whether it is soft infrastructure in terms of people, in terms of rule of law, it is really one of the best anywhere you can find in the world. Hardware infrastructure, roads, railway, port, airport, telecommunications is also one of the best you can find anywhere in the world. These are very important for economic development in the future, and we have all that with us.

And thirdly, we have a cluster of people, professionals - they may be foreign exchange dealers, investment bankers, accountants, lawyers - they are all there in Hong Kong because Hong Kong has already been, for some time, the financial centre of Asia. There are over 400 financial institutions now already headquartered in Hong Kong. There are people involved in logistics, in transportation. They are all there, already clustered in Hong Kong. And these are some of the strengths that I think will be very difficult for the others to repeat in a short period of time.

So what we have to remember is that what we have to do is, that in this very difficult time, we have to improve our strengths, improve our competitive advantage. What we have we keep on improving and making it better all the time so that when recovery does come we will be riding it out very, very quickly. And I think it is important for us in Hong Kong to remember we have these competitive advantages and that we must have the confidence, we should have the confidence, to weather this temporary difficulty. And the Policy Address which I made last week was aimed at, made some proposals, for short-term measures, medium-term measures and long-term measures all designed to strengthen our competitive advantage in the short term, and also to strengthen our competitive advantage in the medium term by improving the friendliness of the business environment so we can attract more investment, and in the long term by investing in education and infrastructure so that we will continue to have these competitive advantages in the long term. So we are working very hard at it.

(Please also refer to the Chinese transcript)

End/Sunday, October 21, 2001

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