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

Following is the speech by the Chief Executive, Mr Tung Chee Hwa, at the banquet hosted in honour of the British Prime Minister, Mr Tony Blair, at the Government House tonight (Friday):

Prime Minister, Mrs Blair, Distinguished Guests, Many Friends from the UK, Ladies and Gentlemen,

Prime Minister, to you and Mrs Blair, and all of you who have come together on the visit to China, may I say how warmly we welcome you to Hong Kong.

Mr and Mrs Blair, of course, have very special family connections here in Hong Kong. I understand Mr and Mrs Blair spent part of their honeymoon here in Hong Kong, so I know Hong Kong has a special place in both of your hearts.

I tried to figure out how I can outdo Mr Blair, but really I cannot - on almost every front. I do want to tell you though that my wife and I were engaged in July 1960, in London.

We have all been following the news of your visit to China closely, from the statements that you made in Britain before you set out, to the speeches you have given and meetings that you have had over the last few days in Beijing and Shanghai, and now here with us in Hong Kong. We are very pleased indeed.

I am happy that the visit has been such a great success, doing so much to create a relationship of friends who talk to each other, rather than of people who talk past each other. That relationship is very important to Britain and to China, and it is a relationship that is vital to this community. Hong Kong is now proudly a part of China but Hong Kong and Britain will always have a very special relationship. It will remain a permanent part of the character of this place to be the city in which Britain and China can meet in commerce, in culture and in friendship to create lasting bonds and benefits.

Prime Minister, here in Hong Kong we have followed your career not just from interest in all that you have done for the relationship between Britain and China, but in admiration for the many other things that you have accomplished.

It seems to us that in the time since your party assumed office, Britain has found new confidence in itself and new respect in the international community. You have encouraged enterprise and flair. You have upheld clear values. And you personally, Prime Minister, have shown determined and effective leadership.

I think particularly of your commitment to making Britain an effective partner in the European Union, a Union whose development is a strength and stay to the world economy, not just to its own members.

I think, too, of the commitment you have shown to fostering the peace process in Northern Ireland. That process is one of the most hopeful things that is happening in the world today, showing that the hurts of history can be healed. It gives encouragement to everyone who labours to bring communities together, to bring reconciliation and new hope.

The Asian financial turmoil which began inconspicuously on 2 July in Thailand has now taken on global dimension and may, if not handled carefully, result in global recession. I am heartened by the initiative you have taken to call for new international financial architecture to create greater degree of transparency supervision and order in international financial market. I am also glad to know that Britain and China will work closely together to achieve this major objective.

And looking beyond today's economic problems, we are all encouraged by the vision that you have set out for a comprehensive long-term relationship between Britain and China : a relationship that builds on people and ideas as well as on trade and commerce. A relationship of real friends. That is the sort of relationship under which lasting benefits can come to everyone, and here in Hong Kong we will do all that we can to foster that relationship. By all this, we are indeed greatly impressed by what you have done and by your strong leadership.

Enormous and fundamental changes have taken place since you were last here, changes that are both politically and economically. At the political level, with a high degree of autonomy, we are taking up responsibility for our own affairs. The Central Government is determined to uphold the Basic Law and to ensure the full implementation of "One Country, Two Systems". So are the people here in Hong Kong. We have been managing that change well. In May this year, we saw the highest turnout ever in our Legislative Council elections.

On the economic front, we are facing enormous changes as a result of the financial turmoil, and the need for structural adjustments. These adjustments have been painful to the community as a whole but we have kept our balance, and I am confident that out of these adjustments will come great opportunity for Hong Kong.

On Wednesday, in my second policy address, I set out foundations for Hong Kong's future economy. They were practical ideas to start to put in place the vision that we have for a more imaginative, dynamic and broadly based economy for the new century. An economy that we can sustain, and that can better sustain us and our environment in the years ahead.

I am confident that it is a vision that we can realize, because it is built and anchored upon fundamental values and policies that have proved themselves over the years.

On the economic front, these include our fixed link to the US$ and our commitment to continue high levels of investment in the infrastructure that we need to compete in the modern world. Over the five years beginning 1997, we will invest $235 billion, more than what we have put into our airport programme. We are also committed to continue to invest on education and our environment.

But we depend on far more than economic fundamentals. We are building our community around vigourous protection against corruption; care for those in need; freedom of speech; openness to the world. And we are steadily developing our political institutions as provided for in the Basic Law. We are determined to uphold the rule of law, which together with good public administration as have been the fine legacy that Britain has given us. These are all fundamental to Hong Kong's strength as a community.

Today we welcome you to the Hong Kong Special Administrative Region, but you find here a familiar city. Britain remains our largest outside investor, and there remains far more to our relationship than trade and commerce. Many thousands from Britain still make their homes here, contribute to our society, contribute to our government. Many thousands from Hong Kong live in Britain, study in Britain, delight in all that Britain offers to the world. Our relationship is one of history, of culture and of partnership in almost every field of social, academic, artistic, sporting and business endeavour.

Prime Minister, I believe that, thanks to the vision you have for relationship between Britain and China, thanks to the commitment that you have to friendship between peoples, the future for this city as a bridge between Britain and China and as a place of friendship between our peoples, is much brighter and more hopeful than at any time in our past. That is a thought which brings encouragement in these trying times for our economy, and gives purpose to our work.

Once again, I want to thank you for your coming to China and to this city with a message and a commitment to friendship and to partnership at all times. It is a message and a commitment that I know the Leaders of China have reciprocated. From all of us here in Hong Kong, Prime Minister, and Mrs Blair, please be assured that you - and everyone from Britain - will always find the warmest welcome, the strongest friendship and the most lasting partnership.

Thank you very much.

Photo: Picture shows the Chief Executive, Mr Tung Chee Hwa, and the British Prime Minister, Mr Tony Blair, proposing a toast during the banquet at the Government House.

End/Friday, October 9, 1998

NNNN