Trade and investment links between Hong Kong and Japan will deepen and benefit in tandem as China's massive economy continues to open up next century, the Chief Executive, Mr Tung Chee Hwa, has told Japan's political and business leaders today.

Mr Tung said the reform of state-owned enterprises in China would present opportunities for Japanese banking and investment houses in Hong Kong in areas such as raising capital and providing financial management expertise.

Japan has a considerable presence in Hong Kong's banking sector, with more than 45 banks licensed to operate and about 30 with representative offices in the SAR. About 50 more restricted-licence banks or deposit taking companies also operate in Hong Kong.

In the first full day of meetings on his first official visit to Japan as Chief Executive, Mr Tung encouraged Japanese business chiefs to look for areas in which partnerships could be forged in Hong Kong's fast-developing value-added service industries.

Topping the list of ministerial calls was a meeting with Japanese Prime Minister, Mr Ryutaro Hashimoto, who congratulated Mr Tung on the smooth running of Hong Kong since the reversion of sovereignty on July 1.

"The friendship between Hong Kong and Japan is not going to change. If anything, it will only get deeper," Mr Tung said of the meeting with the Japanese Prime Minister.

Mr Tung said the importance of a free and open global trade regime was discussed, as well as the important role the World Trade Organisation is set to play within the international community.

Mr Tung told Mr Hashimoto, as well as other political and business leaders, that Japanese investments would be thoroughly protected by the rule of law in Hong Kong.

He stressed the Hong Kong Government was committed to rooting out and punishing corruption, the maintenance of law and order and prudent fiscal policy.

The Chief Executive was asked about Hong Kong's linked exchange rate which he said would be maintained because it provided stability and certainty to Hong Kong's financial markets and trading partners.

Other meetings were held with the Minister for Foreign Affairs, Mr Keizo Obuchi, the Minister of Finance, Mr Hiroshi Mitsuzuka, and the Minister for International Trade and Industry, Mr Mitsuo Horiuchi.

Earlier today, Mr Tung met members of the Japan-Hong Kong Business Co-operation Committee and the influential Japan Federation of Economic Organisations (Keidanren).

Mr Tung was also guest of honour at a reception tonight hosted by China's Ambassador to Japan, Mr Xu Dunxin.

Meanwhile, business and political groups in Japan expect Hong Kong to continue to prosper as a leading financial and trading hub.

The Japan-Hong Kong Parliamentarian League and the Japan-Hong Kong Business Co-operation Committee expressed confidence in Hong Kong's future prosperity under the 'one country, two systems' formula.

"It is highly desirable for Japan, as well as China and all other countries, that Hong Kong should continue to brim with vitality as an international trade and financial centre while it enjoys a broad range of autonomy by firmly maintaining the 'one country, two systems' policy," said Japan-Hong Kong Parliamentarian League chairman, Mr Tsutomu Hata, in a 'Japan Times' supplement to highlight the Chief Executive's visit.

"I have great confidence in the continued prosperous future of Hong Kong."

Japan-Hong Kong Business Co-operation Committee chairman, Mr Tomiichi Akiyama, said it was common knowledge that Hong Kong owed its prosperity to its economic freedom.

"I firmly believe that Hong Kong, under the 'one country, two systems' policy, will continue to acquire greater importance as a business gateway to China and as a trading centre in Asia," said Mr Akiyama.

"I hope that Japan and Hong Kong will maintain their close relations for many years to come, and also that Hong Kong will keep up its free-wheeling economic activities so that it may attain greater prosperity as an international economic and trading centre."