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Address by the Chief Executive of the Hong Kong Special Administrative Region of the People’s Republic of China1, Tung Chee-Hwa

Author(s):
International Monetary Fund. Secretary's Department
Published Date:
November 1997
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Premier Li, Chairman Khirbash, Mr. Wolfensohn, Mr. Camdessus, Ministers, Governors, guests, ladies, and gentlemen, I have much pleasure in welcoming you, distinguished officials and guests from around the world. We are honored that China is the host of the 1997 Annual Meetings of the World Bank Group and the International Monetary Fund and delighted that the Hong Kong Special Administrative Region (SAR) is to act as the host city to you.

Hosting the Annual Meetings this year has a special meaning for Hong Kong SAR. We have just witnessed, on July 1, 1997, our reunification with the People’s Republic of China. The presence of Premier Li and the distinguished guests of the international financial community signifies your strong support for Hong Kong SAR and underlines Hong Kong SAR’s status as a leading international financial center. These prestigious meetings also provide a unique opportunity for our visitors and friends from all over the world to witness firsthand the pride and confidence, and the continuing prosperity and stability, of Hong Kong SAR under the framework of “one country, two systems.”

July 1 has come and gone. We who live and work in Hong Kong SAR continue to work hard for an even more successful and prosperous future. All three branches of our political structure—the executive, the legislative, and the judiciary—have been functioning normally. There has been no change in our lifestyle, and our economy continues to grow. Indeed, recent surveys have shown that 78 percent of the Hong Kong people expressed confidence in Hong Kong SAR’s future.

Hong Kong SAR has achieved remarkable success in the past few decades. Because of our strategic position, Hong Kong SAR has benefited greatly by an increasingly open and global trade and financial system. Part of Hong Kong’s success is also as a result of our promotion of a free competitive environment, strict adherence to the rule of law, minimum bureaucracy, level playing field, and strong commitment against corruption—all provided and supported by an efficient civil service. Our conservative fiscal management and low and predictable tax structure have also contributed greatly to our stability and prosperity.

All the above-mentioned critical success factors for Hong Kong SAR have been enshrined in the Basic Law. The fundamental reason for our confidence is, of course, the old promises of our Basic Law. It is a comprehensive document that was drafted together by people from both Hong Kong SAR and mainland China after some four years of consultation and discussion. The Basic Law provides a constitutional framework for the Hong Kong Special Administrative Region. It institutionalizes the concept of “one country, two systems.” It clearly prescribes the social, economic, and political systems in Hong Kong SAR, which are different from those in mainland China. It protects the rights, freedom, and lifestyle of the Hong Kong people. The Basic Law guarantees the independence of our judiciary and, apart from foreign affairs and defense, it gives us full responsibility to manage our own affairs. It allows us complete financial autonomy and the independence of our monetary system. It establishes Hong Kong SAR as a separate customs territory and enables us to work directly with the international community to curb trade in strategic commodities, drugs, and illegal transshipments, and to protect intellectual property rights. The Basic Law has also established the framework for the democratic evolution of our political structure over the first 10 years, with my election as Chief Executive in December 1996 and the election for the first Legislature scheduled for May 1999. Development beyond the 10-year period will be determined by the views of the people of Hong Kong SAR at that time. The political evolution will continue with universal suffrage as the ultimate objective.

Over the past two decades, Hong Kong SAR has transformed itself successfully from a manufacturing economy to a service economy. Today, more than 70 percent of our workforce is employed in the service sector, contributing to more than 80 percent of GDP. With a GDP per capita of $25,000, we are a leading international financial center.

Hong Kong SAR has achieved this status through the maintenance of sound economic policies. We are proud of our linked exchange rate regime, which remains unshakable despite turbulence in the region. Today we have over $85 billion in foreign exchange reserves, of which about $50 billion constitutes fiscal reserves, with no external debt. Our fiscal surplus this year will exceed 2 percent of GDP, our savings rate continues to exceed 30 percent, and in the past 10 years, we exported on average more than 5 percent of GDP in domestic savings.

These sound fundamentals underline our approach to our role regionally and globally. Hong Kong SAR’s linked exchange rate regime is the anchor of our monetary and financial stability. We do not intend to compete internationally on the basis of exchange rate adjustment. We compete equally and fairly in terms of private sector productivity and public sector efficiency. Our open markets, free trade, and sound finance are the hallmarks of Hong Kong SAR.

Hong Kong SAR has benefited greatly from its strategic position at the heart of the fastest-growing region in the world, an Asia that is increasingly more open to global trade and investments. Asia may be going through a period of consolidation, but I am confident that many of the countries that have suffered from the recent turmoil in the financial market will soon be on a rebound. The continuing rapid growth and development in many parts of Asia will bring new opportunities to Hong Kong SAR.

We are gathered here today for a common objective—international economic and monetary cooperation to achieve stable global development, prosperity, and stability. As an international financial center, Hong Kong SAR is a living symbol of that cooperation. Hong Kong SAR will play its role as a good neighbor in promoting monetary and economic cooperation in the region and internationally. This is clearly shown in our recent $1 billion participation in the Thai adjustment package, led by the IMF; in the New Arrangements to Borrow; and in our recent membership in the Bank for International Settlements and the World Trade Organization.

Hong Kong SAR has enjoyed great prosperity over the past two decades. The extraordinary economic success of mainland China over this period has been a particularly important driving force behind our success. The Fifteenth National Congress, which was recently concluded in Beijing, has reaffirmed and ensured the path of development for China for years to come. Indeed, as we move into the twenty-first century under visionary leadership, China will become more prosperous and more open, and China’s economy will become one of the largest in the world. Hong Kong SAR, with its access to, knowledge of, and expertise in the global financial market, and its position as the primary gateway to China, looks forward to both taking advantage of and contributing toward the development of our country. China’s emergence is one of the most important events in the twenty-first century. We in Hong Kong SAR are proud to play an important role in this historic time.

Delivered at the Opening Joint Session, September 23, 1997.

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