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Following is the speech by the Financial Secretary, Mr John C Tsang, at "Session 1: Global Outlook and Perspectives for Asia-Pacific Region" of the Asia-Pacific Economic Cooperation (APEC) Finance Ministers' Meeting in Moscow, Russia, today (August 30).
Mr Chairman,
First of all, I would like to thank you, and the people of Russia, for your warm hospitality and the superb organisation of this year's meeting.
Last year, we gathered to discuss growth and rebalancing. This year, as we come together again, the global economic situation has made a turn for the worse. Despite some encouraging developments early in the year, downside risks to the global economic prospects have loomed large again in recent months. Given the underlying structural problems and fiscal uncertainty of some advanced economies, the prevailing risk factors will likely continue to plague the global economy in the period ahead.
The eurozone sovereign debt crisis is undoubtedly the biggest threat to the global economy right now. A series of developments in the past few months have made economic sentiments even worse both within and outside Europe. We hope that the proposed initiatives at the June EU Summit could be effectively implemented in the next couple of months.
Along with the lingering euro debt crisis, the growth pace of the US economy has remained modest thus far. We hope that the US economy will be able to continue to recover and give positive impetus to the global economy.
Hong Kong, China, being a small and open economy, can hardly stay unscathed in the current environment. Our economy has been moving along a decelerating trend over the past year with GDP expanding slowly by only 1.1 per cent in real terms in the second quarter over a year earlier, as against our trend growth rate of 4 per cent. The notable fall-off in goods trade has been the key drag. The domestic sector, however, has remained resilient and has helped cushion the overall economic performance.
In order to sustain economic growth and maintain a healthy financial system, we have rolled out a series of measures.
Among these initiatives, we are providing a guarantee commitment of HK$100 billion (US$12.8 billion) in enhancing our Financing Guarantee Scheme to help our SMEs obtain bank credit. SMEs in Hong Kong are very important to the health of our economy because they account for over 98 per cent of our firms and half of our total employment.
Secondly, we are continuing with our strategy of developing essential infrastructure projects to the tune of some HK$70 billion (US$9 billion) per year for a number of years in order to preserve employment and build the foundation for future growth. We have been able to keep the labour market in full employment, with the current unemployment rate at 3.2 per cent.
Thirdly, while recognising the downside risks to the economy will inevitably affect people from all sectors of society, I have launched in my Budget in February this year a basket of support measures costing some HK$80 billion (US$10 billion) to help those in need. We are continuing to spend heavily in areas that directly affect people's livelihood such as education, medical and health services as well as social welfare.
Fourthly, we have introduced a series of countercyclical supervisory measures requiring banks to further strengthen their liquidity and credit risk management, and maintain a high degree of vigilance in their underwriting standards.
We have also put in place a new short position reporting requirement on top of our rigorous regime which provides our regulator with useful information for market monitoring work. We recognise as well the importance of financial education to the public and we are now establishing the Investor Education Council to enhance the public's understanding on risks of financial products and their rights as well as responsibilities when making investment decisions.
When drawing up these support measures, I have reminded myself of the importance of observing the fundamental principle of keeping government expenditure in line with the trend growth rate of the economy. As a result of our fiscal discipline, we have managed to achieve fiscal surplus in the past eight years and maintain healthy fiscal reserves equivalent to 22 months of expenditure, leaving the Government with adequate fiscal room to introduce necessary stimuli during an economic downturn.
Mr Chairman, I am glad to see that other economies in the region have also implemented support measures with a view to promoting sustainable growth. With the concerted efforts of APEC, I am optimistic that the Asia-Pacific region will be able to tide over the turbulent period ahead before rising to new heights.
Thank you.
Ends/Thursday, August 30, 2012
Issued at HKT 21:32
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