Following is the transcript of the question and answer session by the Chief Executive, Mr Tung Chee Hwa, after addressing the APEC CEO Summit in Vancouver today (November 22, Canada time):

Reporter: Good afternoon sir, I am a freelance reporter for a Chinese paper in Malaysia and I would like to welcome you on behalf of the Vancouver Chinese media community. My question is, yesterday in New York, Mr Wei Jinsheng had a little comment about the 'one country, two systems'. Would you like to counter-comment about that?

Mr Tung: Well I think I am in the best position to comment about that because I lead Hong Kong and I have to say that his comment really does not reflect the reality of what is happening in Hong Kong. We are moving forward in Hong Kong strongly. 'one country, two systems' is being practiced every day and the foundation has now been solidly laid for this to be very successful.

Reporter: As you look to the recovery of the current financial difficulties in the region, how much impact do you expect them to have on growth in Hong Kong and in China over the coming months and particularly 1998 and how long do you think it will take the region as a whole, and therefore Hong Kong, to get back long-term, very positive growth track that you anticipate?

Mr Tung: Well I wish I knew all the right answers! But let me say this, that many of the countries in East Asia are now going through a period of difficulty. And always you can see the common issue there that many of the countries borrowed short-term, there is too much short-term debt invested too heavily in long-term projects. Many of them may not be yielding the right results, so there is a mismatch of the prior, borrowing short-term and investing long-term. There is also a currency mismatch obviously and I think there needs to be a great deal of thought as to how we can do better in terms of banking regulation, supervision and better credit risk analysis. I am glad to say that Hong Kong learn the lesson the hard way in the '80s and our financial institutions are strong and vibrant, the regulation, supervision all very good. But I believe some of the problems that I outlined are problems that can be addressed, it is not something that can not be addressed and there will be the determination to address these issues by many of the countries, so I would say that in a matter of a couple of years, the economies will start resuming growth. In so far as Hong Kong is concerned, of course the IMF has suggested that next year's growth rate will slow down from 5.5 per cent to 4.25 per cent. I think our economy will be slowed down because in the process of defending the currency link, interest rates have gone up. Whether the growth rate will be at four per cent, 4.5 per cent, 3.5 per cent, I think it is still too early for us to say. As soon as the dust totally settles down, we will be in a better picture to specifically predict what it might be.

Reporter: You have well described the 'one country, two systems'. Things are always changing. Do you foresee some particular aspects of the Hong Kong system being emulated in the rest of China and if so, which ones and on what kind of timetable?

Mr Tung: Well I think I am looking after Hong Kong and my responsibility is to make Hong Kong work well under 'one country, two systems'. If we are successful in Hong Kong, I would imagine it will be a good example for Taiwan in the future.

Reporter: I think this is your first APEC attending as a leader. What role do you hope to play in this current leaders APEC session and from the point of view of yourself in Hong Kong, what outcome do you hope to come from the meeting?

Mr Tung: Well sir, I am a new boy on the block, learning every day and I hope to learn as I go along. But I hope to have the opportunity to explain to the other APEC leaders what has transpired in Hong Kong and how well we are doing despite the financial turmoil that is around us. I hope we have the chance to exchange views about the financial turmoil and how best in the future we can all collectively do better. And I think even more important is really to look at the fundamentals of Asia, to recognise how strong the fundamentals of Asia are and that if before all this happened, it was said the 21st Century is the Pacific century. I will say that the 21st Century is still the Pacific Century. Yes, we need to correct some of the things but I am sure it will be corrected and we will march forward because the fundamentals in Asia are still very strong and I hope that these will be some of the things that will be discussed.

Moderator: One last question for the Chief Executive ...

Reporter: My name is (inaudible) from Taipei. I want to tell you Mr Tung, Taiwan is (inaudible) different from Hong Kong, that is my answer to you.

Mr Tung: Thank you very much for letting me know. I think you know I know Taiwan quite well. I visit, until becoming involved in politics, I visited Taipei regularly, or Taiwan regularly, so I know what Taiwan is all about.