Following is the speech by the Secretary for Economic Development and Labour, Mr Stephen Ip, at the Dragon Boat Dinner held by the Hong Kong Association, in London on June 22 (Tuesday, London time) (English only):
Baroness Dunn, Sir Stephen, ladies and gentlemen, good evening.
It is a special privilege to be here tonight, and I am delighted to be surrounded by so many friends of Hong Kong. My best wishes to all of you on the occasion of Tuen Ng, which is known to most people around the world as the Dragon Boat Festival. There is no doubt that this festival is a distinctive and colourful icon in Asia's world city and one that epitomises the spirit of team work and co-operation within the community.
Although the dress code for this function is black tie, you'll notice that I am not wearing a tie of any colour. Let me assure you that my lack of a bowtie does not mean that I do not attach great importance to the Dragon Boat dinner. I thought instead that I would mark this celebration of an Oriental festival with something a little more Chinese in flavour. This outfit was made by Armani in Europe, so I consider it a fitting symbol: a Western-made Chinese-style tux, a modern fusion of East and West, just like the unique culture of Hong Kong.
Given the array of dignitaries here tonight, I could be forgiven for thinking that I was speaking at Westminster rather than the Mandarin Oriental. Your presence here tonight is a singular honour for me and, more importantly, for Hong Kong. The fact that such distinguished people as yourselves are here demonstrates, in a crystal clear fashion, that Hong Kong still matters, and that our future under the 'One Country, Two Systems' principle is a matter of ongoing interest to those who participated in, or witnessed, the historic transfer of sovereignty seven years ago.
That unprecedented milestone has inevitably brought Hong Kong closer to the Mainland, both economically and politically. When the final appraisal of 'One Country, Two Systems' is written, its success or failure will depend on how we work within the parameters of this new economic and political reality.
There should be no doubt that people in Hong Kong, no less than the Central Authorities, want to see the successful implementation of 'One Country, Two Systems'. The challenge that has emerged - and it was always going to be a challenge - is to ensure that those elements of Hong Kong that make it distinctive under 'Two Systems' remain entrenched, and are preserved and nurtured. These pillars of Hong Kong's success - the rule of law upheld by an independent judiciary, the free flow of information, a clean civil service and a level playing field for business - are as crucial to Hong Kong's future as they were to its groundbreaking past. At the same time, we must also accept that there are two sides to a coin. We must wholeheartedly support the 'One Country' part of the equation to ensure that what we do in Hong Kong benefits our nation as a whole.
Ladies and gentlemen, the Hong Kong Association is one of the most important organisations of friends of Hong Kong in the world - in fact, it is probably the best informed group of Hong Kong friends in the world. I know that you keep yourselves up to date with what's happening in Hong Kong, and that both the Chief Executive and the Financial Secretary have addressed you within the past year. So I won't go over 'ancient' history.
A great deal has happened in the past few months, and that's what I would like to talk about tonight. There are two areas in particular I would like to discuss. They are both crucial to Hong Kong's continued success as an international financial, transport and services hub. These two areas are: Hong Kong's continued and crucial role as the strategic two-way platform to the Mainland market; and a reaffirmation of the commitment by all sectors of the community to the core values and freedoms that make Hong Kong great.
You are well aware of the painful economic restructuring that has taken place in Hong Kong in the wake of the Asian financial crisis and the bursting of our asset-price bubble. We've had to cope with five-and-a-half-years of deflation, falling property prices, rising unemployment and insidious diseases like SARS and avian flu. And, you are also aware of how dramatically our situation improved in the second half of 2003 - thanks in no small measure to the determination and resilience of Hong Kong people and our business community, who seem to thrive on challenges.
So far in 2004, the news continues to be favourable. The financial secretary has forecast economic growth of 6% for the year. Indeed, real GDP rose by 6.8% in the first quarter, the strongest year-on-year growth we've posted in over three years. The unemployment rate continues to edge downward, and deflation could well become a memory by year-end. A sustained recovery in property prices has reduced the number of mortgages in negative equity by more than half. Our currency and financial markets are stable. Our net external financial assets grew by over 15% last year, to the equivalent of two-and-a-half times our GDP, testimony to Hong Kong's leading position as an international banking centre, a major external direct investor and an attractive destination for foreign investment.
Within my own particular portfolio, the news is particularly encouraging, and bodes well for Hong Kong's future as a regional transport, logistics and tourism hub. The tourism industry is setting new arrival records, as Mainland visitors flock to experience China's most international city. Up to April this year, we have welcomed 6.6 million visitors, and are forecasting a record 20.5 million arrivals for 2004 as a whole. Many projects are coming on stream over the next few years to consolidate our position as Asia's most popular single destination - Hong Kong Disneyland, the Tung Chung Cable Car and the International Wetland Park, to name a few.
Throughput at our container port and international air cargo terminals continues to grow healthily - with both reaffirming their World No 1 rankings last year. Our shipping register continues to attract top-quality tonnage, rising from 9.3 million tonnes in 1999 to 24 million tonnes today.
A large factor in Hong Kong's recent success, of course, has been China's spectacular and steady growth. China is the fastest-growing large economy in the world. As the Mainland continues to open up under its WTO commitments, it is driving an increasing share of Asia's and the world's economic growth.
The World Trade Organisation had predicted that by 2020, China would be the world's second-largest exporter. But its growth has been so impressive, it could well reach that position 10 years earlier. Last year, China's exports grew by 35% and its imports increased by an even more robust 40 per cent. As the WTO notes, these are remarkable levels of growth for a country with such a substantial trade volume. China is now number three among the world's merchandise importers, after the US and Germany, leapfrogging France, Britain and Japan in the space of one year. As for merchandise exports, China is catching up quickly on Japan for the third spot. It is estimated that China became the largest exporter of commercial services among developing countries in 2003. It was already the largest developing-country importer of services, and its imports of commercial services continued to exceed its exports in 2003.
All of these confirm that China has indeed become the 'factory of the world'. But it also demonstrates even more dramatically what a voracious consumer of goods and services China has become - and will continue to be long into the future.
One of the ways we're taking advantage of China's growing thirst for goods and services is the new Hong Kong-Mainland free trade pact, the Closer Economic Partnership Arrangement, or CEPA, which was implemented at the beginning of this year.
But CEPA is only one aspect of our increased economic co-operation with the Mainland, and particularly with the Pearl River Delta (PRD) just across our boundary. We have also begun working more closely with the authorities in Guangdong Province, where there are over 50,000 Hong Kong-invested factories employing more than 10 million Mainland workers. We are building new cross-boundary transport links to handle the increasing flows of people and goods. Just last week, we signed co-operation agreements with Shenzhen in areas such as legal services, industry and trade, investment promotion, tourism and technology. This will undoubtedly boost economic co-operation between Hong Kong and our prosperous cousin economy just over the boundary. The Central Government has also permitted our banks to handle personal renminbi transactions, a building block for the further development of Hong Kong as an offshore renminbi centre for the Mainland.
Earlier this month, we took another huge step by establishing the Pan-Pearl River Delta (Pan-PRD) Regional Co-operation and Development Forum to work towards a unified and open market in the region. Encompassing nine Southern provinces and the two Special Administrative Regions of Hong Kong and Macau, the Pan-PRD region is a huge regional economy in itself, the equivalent of the 10-nation ASEAN bloc, and it comprises a population the size of Europe's. Last year, the Pan-PRD region registered a collective GDP of US$630 billion, accounting for about 40 per cent of China's total economic output. This regional GDP is forecast to exceed US$1,000 billion by 2010 and reach US$2,000 billion by 2020. Through CEPA, through closer co-operation between all players in the PRD, and through this new Pan-PRD regional forum, we are breaking down obstacles to trade, while attracting more foreign capital, technology, management and talent, to reinforce the PRD's status as one of the most dynamic economic centres of China and the world in the 21st century.
Ladies and gentlemen, these are all reasons for optimism in Hong Kong's future. But, just as important as our growing co-operation with the Mainland are the things that make Hong Kong unique. I'm talking about the core values on which Hong Kong's success is built.
After a rather intense and emotional discussion over the pace of constitutional reform, there has recently blossomed a more tolerant political atmosphere in Hong Kong. There has been constructive dialogue between the Chief Executive and the pro-democracy groups over the past week. Perhaps one of the catalysts for this new mood of accommodation was the debate about Hong Kong's core values.
The debate began in earnest with the resignations of three outspoken radio talk-show hosts, who indicated that they had been pressured to resign. Law enforcement authorities are investigating and the Government has reiterated our commitment to preserving Hong Kong as a free, open and tolerant society. The Chief Executive has made it clear that our core values distinguish us from other societies and constitute the foundation of Hong Kong's prosperity and stability. He has enumerated these values as: "individual freedom and human rights; the rule of law; equality of opportunity; free enterprise; market competition; individual initiative; respect for private property; social and cultural pluralism; open and clean government; social harmony; the family; community solidarity; and patriotism".
These values reflect both Hong Kong's Chinese roots and the influence of Western culture. They show a unique marriage of pragmatism and idealism, of respect for the individual and the community. They are essential to Hong Kong's future prosperity. The policy of 'One Country, Two Systems' is designed precisely to preserve and promote them. The SAR and Central People's Governments are fully committed to upholding and preserving these core values.
In other words, the freedom of speech and the other liberties that make Hong Kong unique will continue to thrive. Hong Kong has been one of the freest societies in Asia for decades. We have operated by the rule of law since long before the Handover, and there are people in this room who can take some credit for that.
And let us not forget that this new mood of tolerance would not have been possible without Hong Kong people's readiness and willingness to speak up to protect their core values, without Hong Kong people's desire to make their leaders accountable for protecting these values, or without Hong Kong people's pragmatism in realising that there is nothing to be gained by engaging in an ongoing confrontation with the Central authorities.
Hong Kong is moving gradually towards universal suffrage, the ultimate goal under the Basic Law. There has been a net increase of 232,000 registered voters for the Legislative Council elections in September. That makes a total of 3.2 million people who have demonstrated a commitment to participating in Hong Kong's political life.
I believe the voters of Hong Kong are realistic and pragmatic. They understand the constraints against rapid constitutional change. They also understand that the Central Authorities have a legitimate interest in the development of our political system. Obviously, there is a wide spectrum of views on this subject in Hong Kong and I am sure that many of you have been keeping a close eye on these developments. But what we are trying to do now is to foster an atmosphere of tolerance and understanding, so that these disparate elements can co-exist in our pluralistic society.
That is why, in the past couple of weeks, the Chief Executive has met with a group of academics and professionals who were concerned about the possible erosion of Hong Kong's core values. He has also met with members of the Democratic Party, and the Article 45 Concern Group; he will meet in the near future with others in the pro-democracy camp. He has pledged that the Government will work together with all the political parties to foster peace, stability and mutual understanding in the community and to safeguard Hong Kong's core values, which make our city thrive.
I believe that a sunray of compromise has broken through the fog of distrust that has hung heavily over Hong Kong in recent months. A willingness to engage in rational debate and a tolerance of other points of view reflect the maturity of our society. We can leverage this into finding common ground and building consensus as we move ahead on constitutional reforms under the Basic Law. The big winners will be Hong Kong people, who can once again focus their energies on doing what they do best - being creative, efficient and hard-working, and of course making money. Together we can build the kind of vibrant, pluralistic and prosperous society that all of us in Hong Kong, Beijing and London want our city to be.
Ladies and gentlemen, in this rapidly changing world, we cannot afford to become complacent. Many challenges still lie ahead, including external factors over which we have no control. But I am confident that, by leveraging our advantages to promote and benefit from China's growth, and with our society's renewed commitment to preserving the building blocks that made Hong Kong great in the first place, we have set the stage for a sustained period of growth and prosperity.
To conclude, I would like to thank the Hong Kong Association for your vital and steadfast support of Hong Kong's special relationship with the United Kingdom, and for organising the Dragon Boat Dinner tonight. It is a totally new experience for me to address a distinguished audience at 5am Hong Kong time and I must say I enjoy it very much. I wish all of you health and happiness.
Thank you very much.
Ends/Wednesday, June 23, 2004