FS attends G20 Leaders' Summit (with photo)

     The Financial Secretary, Mr John C Tsang, today (November 3, Cannes time) attended the first day session of the G20 Leaders' Summit in Cannes, France as a member of the Chinese delegation.

     Issues discussed today included the global economic outlook, with particular focus on the European debt crisis, and the contribution of resources to the European Financial Stability Facility (EFSF).

     Other issues discussed included the G20 Framework for Strong, Sustainable and Balanced Growth. The framework aims to come up with an action plan which contains specific measures by G20 economies to address global imbalances. Another topic discussed was the reform of the international monetary system. Attention was on the contribution of the International Monetary Fund to EFSF resources and the review of the composition of the Special Drawing Rights (SDR) basket.

     The Financial Secretary said the Summit took place at a time when the global economy is facing significant downside risks. The world economic outlook is further clouded by uncertainties surrounding the proposed Greek referendum.

     :All eyes are now on the confidence vote in the Greek Parliament which will have dire political and economic consequences not only for Greece, but also for the Eurozone and the world at large.

     :Developments in other parts of Europe are also worrying. For example, yields of 10-year bonds in Italy have breached the six percent level. There is a flight to quality German bonds, resulting in yield gaps between German and French bonds widening to 130 basis points, the largest in recent years.

     :This suggests that it is becoming increasingly difficult for most European countries to raise funds through bond issues. This will be problematic.

     :I very much hope that G20 leaders will demonstrate resolve and leadership in steering the world through this difficult period and move towards a healthy and sustainable economic environment.

     :However, the short term outlook remains a concern. There is obviously no quick fix to the structural problems that have plagued Europe and the United States. These problems included huge fiscal deficit and high levels of debt,; he said.

     "Against this background, Hong Kong, as a small and open economy, will need to be vigilant and watch out for any negative repercussions brought about by developments in other parts of the world.

     :Our exports have already slowed in recent months and this would adversely affect our growth performance in the coming quarters.  

     :Hong Kong's economic fundamentals remain solid. With our domestic demands continuing to be robust, I am confident that the Hong Kong economy will be able to sail through this period of global economic uncertainty,; he said.

     The summit will continue tomorrow. The focus will be on financial regulatory reform. A joint communiqum will be issued after the meeting.

Ends/Thursday, November 3, 2011
Issued at HKT 22:52