With the joint efforts of the government and the whole community, Hong Kong's economy will be able to thrive through adversities and scale new heights, the Chief Executive, Mr Tung Chee Hwa, said at the spring reception held by Xinhua News Agency, Hong Kong Branch today.

"Hong Kong has now entered a period of economic readjustment. This readjustment would have come sooner or later anyhow, because for years we have been troubled by high land prices, soaring inflation and negative interest rates, with the result that our competitiveness has gradually lagged behind that of our competitors," he said.

"Should this prevail, the continuous growth of our economy will be impeded. It is therefore inevitable that Hong Kong's economy should undergo structural readjustment. While the recent financial turmoil in Asia has inflicted a lot of pain on us, it has also catalysed the necessary readjustments of our economy.

"I hope the storm will soon calm down, and that Hong Kong's economy will complete its readjustment before long."

He said he was full of confidence that the SAR Government will join hands with the whole community in times of trouble to solidify Hong Kong's economic foundation, properly utilise the resources and work for the well-being of the community.

"One of the reasons that we are able to look beyond the hard times to a bright future for Hong Kong is that we have the powerful backing of our nation. In addition, we have ample fiscal reserves, sound banking systems, as well as the resilience and wisdom of the people of Hong Kong, which will be brought into fuller play under the principle of 'Hong Kong people running Hong Kong'."