The Chief Executive, Mr Tung Chee Hwa, met a US Congressional Delegation led by Representative Jim Leach today to exchange views on the regional economic outlook.

At the meeting Mr Tung briefed the delegation on the latest economic situation in Hong Kong and highlighted the strong economic fundamentals that underlined our confidence for an early recovery.

"We have huge foreign exchange reserve and fiscal surplus; clear market rules and regulations; and an efficient open market that responds quickly to external market changes," he said.

"The linked exchange rate system provides us with the certainty and stability that are necessary for our economic development amidst the regional financial turmoil," he said. "We are confident and able to maintain the system and see no reason for changing it."

Mr Tung told the delegation that there was no need for competitive devaluation of the Hong Kong dollar as 84 per cent of our GDP was composed of the services sector which was not in direct competition with other regional economies affected by the recent financial turmoil.

He said that we were sensitive to the fact that adjustments in our stock and property markets would be painful in the short run. However, he pointed out that the adjustments would bring us back to realistic levels and make us more competitive in the region over the long term.

"The IMF is the appropriate vehicle to assist regional economies in adjusting themselves and regaining their economic vitality. Support from the US Congress is essential for the IMF to perform this important task," Mr Tung said.

"I believe that the 21st century will still be the Asia Pacific Century," he said. "Asian economies possess the strengths for economic recovery : we have a high saving rate; our labour force is flexible and hardworking; and we are receptive to technology transfer and free trade. These strengths remain and I see no reason why we should suddenly lose confidence in ourselves."

"As the international market becomes increasingly globalised, recovery in the Asian markets would no doubt bring benefit to the American and other markets," he added.