******************************************

The Chief Executive, Mr Tung Chee Hwa, told the visiting British Prime Minister Tony Blair today (Friday) that he was confident of a full recovery of our economy and held a positive long term view of the future of Hong Kong.

During a one-hour meeting, the Chief Executive exchanged views with the Prime Minister on the latest development of the Asian financial turmoil. He also briefed the Prime Minister on the political and economic challenges that people in Hong Kong had experienced since the Handover.

"I am encouraged by the initiative taken by the Prime Minister in advocating a new global order for the international financial market," Mr Tung said. "There is a need for concerted efforts among nations, in particular the G7 members, in order to take the matter further."

On the economy in Hong Kong, the Chief Executive said that while fully appreciating the short term economic difficulties that we were facing, there was no quick fix.

"The Government has been introducing immediate and timely measures in response to latest economic changes over the past few months," he said.

"These include fiscal measures in February, a market stimulation package in June and measures for the financial market in August. Altogether they amount to $53 billion in terms of tax cuts and government expenditure.

"We chose not to wait until the Policy Address to include these measures in order to ensure that they are timely and responsive to people's need," he said.

"I am confident that the measures we put forward will not only provide some degree of relief, but will also lay a solid foundation for the recovery," he said.

"Full recovery depends on four major factors : improvement in the external economic environment; moderation of interest rates; stabilisation of property prices; and increased public confidence," Mr Tung said.

"We are committed to creating the best possible environment for our economic development," he said. "We look forward to continuing and increasing British participation in our economic development."

Mr Tung also assured Mr Blair of Hong Kong's commitment to the linked exchange rate and the maintenance of a free and open market. He told Mr Blair that we had no plan for foreign exchange control.

Mr Tung told Mr Blair that people in Hong Kong took pride in the successful and smooth implementation of the "One Country, Two Systems" principle.

He assured the Prime Minister that we were firmly committed to a strong and robust framework that was essential for the development of democracy in accordance with the Basic Law.

"We are very conscious of the need to preserve the rule of law, freedoms of speech and the press, and rights of political parties in our democratic evolution," he added.

In relation to this, the Chief Executive said that he was pleased with the enthusiastic public participation in the May elections of the first Legislative Council. Mr Tung said: "This reflects people's confidence and determination in the implementation of the concept of 'Hong Kong people ruling Hong Kong' with a high degree of autonomy."

"I am pleased to learn that the Prime Minister had a successful visit to China and he was impressed by the country's latest developments," Mr Tung said.

The Chief Executive congratulated the Prime Minister on the successful opening up of a new, comprehensive partnership with China which was of great importance to Hong Kong in furthering our ties with the UK.

The meeting was also attended by the Chief Secretary for Administration, the Acting Financial Secretary, and the Secretary for Trade and Industry on the Hong Kong side. On the British side were the British Consul General in Hong Kong, the Special Coordinator of the Foreign and Commonwealth Office and the Senior British Representative to the Joint Liaison Group.

Mr Blair arrived in Hong Kong today and will stay for two days on the last leg of his China visit. The Chief Executive will host a banquet in honour of Mr Blair at Government House tonight, to be attended by about 120 guests.

Photo: The Chief Executive, Mr Tung Chee Hwa, meeting the British Prime Minister, Mr Tony Blair, at the Chief Executive's Office.

End/Friday, October 9, 1998

NNNN