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The search for identity by Hong Kong people since the handover will make Hong Kong a more united and democratic society, the Chief Secretary for Administration, Mrs Anson Chan, said in Washington D C on Thursday (Washington time).

Democracy, she believed, began with the individual establishing his or her identity. "I believe that a sound democracy, a lasting democracy must grow from the needs and will of the community.

"To endure, it must be an evolutionary democracy, not an imposed democracy. This takes time, patience and tolerance."

Mrs Chan was speaking at the Asia Society Annual Dinner when she shared with the audience the personal journey she had travelled in the 11 months since the handover last July.

After the handover, Mrs Chan said, "We do not have the high drama of foreign troops in our streets, nor have we simply exchanged London for Beijing.

"The real transition has been much more complex, subtle and profound. In many ways, it has asked more of us than we expected.

"That is because the real transition is about identity, and not sovereignty."

Late on the evening of June 30, 1997, she said, between the lowering of one flag and the raising of another - in that instant when Hong Kong seemed truly without identity - identity became the issue. "That was one of the handover's defining moments and is the challenge Hong Kong faces today."

Mrs Chan said that for her, the defining moment occurred on the national day.

The first national day celebration ceremony held in Hong Kong began in the morning of October 1, 1997 with the raising of the flag and the playing of the national anthem.

"As I watched the flag unfurl in the early morning breeze, I was suddenly filled with emotion.

"The ceremony, brief as it was, the sight of the flag and the sound of the national anthem touched something deep inside and moved me in a way that is very difficult to describe.

"I think for the first time, I began to appreciate the spiritual propriety of Hong Kong's return to the mainland. I am Chinese," she said.

While expressing her highly personal thoughts and feelings, Mrs Chan, however, denied that she was becoming an apologist for China, nor was she beginning to turn her back on Britain's legacy.

"What I am doing is acknowledging who and what I am," she said.

This search for identity, she said, will ultimately make us a more united and democratic society.

"If we base our governance on a full and frank understanding and acceptance of who and what we are, we cannot go wrong. But if we begin to bow to outside interests, and allow external forces - however well meaning- to shape our policies and the structure of our government, we will fail."

Mrs Chan said her candour in unfolding such highly personal thoughts and feelings, spoke of her confidence in the stability and resilience of Hong Kong's administration and the strength of the will of its people. "It also speaks, I think, of my profound personal commitment to Hong Kong and the hope I feel for our future."

In her speech, the Chief Secretary for Administration also called on the US to renew MFN status for China. By so doing, she said, US could play an important part in removing potential economic instability in Asia.

"To revoke China's MFN status would have a devastating effect on the Hong Kong economy," Mrs Chan said, noting that strong economy was vital to Hong Kong's ability to continue to play the role of a firewall in the Asian financial crisis.

"Hong Kong is facing a tough year. Our commitment to defend the US/HK dollar link has made us a bastion of stability in the region. Withdrawal of MFN will not only deal a further severe blow to business confidence in Hong Kong at a critical time, it will also take away a stronghold and a powerful line of defence in the economies of the region which are coming to grips with the effects of recent events.

"We simply cannot afford another wave of uncertainty," she stressed.

Explaining to the audience on how Hong Kong had ridden out the Asian storm, Mrs Chan highlighted that Hong Kong did not have the problems which had bedevilled its neighbouring countries in the region.

In contrast to the some Asian economies, she said, Hong Kong practised free trade, had a level playing field for business, and a government which saw its responsibility in providing the physical and legal infrastructure which enabled enterprise to flourish, which maximised the opportunities for men and women to exercise their freedom to choose and to make their own decisions.

The Chief Secretary for Administration also noted other vital elements for maintaining confidence in Hong Kong as an international financial centre - a small, competent and clean administration; a sophisticated currency board system which protected the linked currency exchange rate; a sound monetary system, a well supervised and generally healthy banking sector; tight fiscal discipline; surplus budgets and strong reserves.

Despite all these, Mrs Chan said, Hong Kong had now embarked on a major review of the banking system which was planned long ago before the recent crisis.

It would scrutinise everything from Internet banking and electronic cash to the effect on Hong Kong of bank mega mergers abroad.

Hong Kong also launched a wide ranging review of the technicalities surrounding the operation of the currency board and the securities and futures markets, in the aftermath of the currency crisis when the linked rate came under attack, Mrs Chan said.

"There was - and is - no intention to abandon the link. It is here to stay.

"But the review provided us with the opportunity to introduce a series of measures which will fine-tune our regulatory framework and increase transparency and accountability of our markets," she said.

End/Friday, June 12, 1998

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