HK to Play to Best of Its Strengths: Leung

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Last updated at: (Beijing Time) Wednesday, March 06, 2002

HK to Play to Best of Its Strengths: Leung

Hong Kong's Financial Secretary Antony Leung said Wednesday in his budget speech that Hong Kong needs to play to the best of its strengths while undergoing its economic restructuring.

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Hong Kong's Financial Secretary Antony Leung said Wednesday in his budget speech that Hong Kong needs to play to the best of its strengths while undergoing its economic restructuring.

Hong Kong experienced a bubble economy in the years up to and including 1997, due to factors such as the restriction on land supply and the effect of negative real interest rates brought about by low interest rates in the U.S. and a high inflation rate in Hong Kong, Leung said, noting that following the Asian financial crisis, this bubble burst.

As the bursting of the bubble economy coincided with Hong Kong' s economic restructuring, Hong Kong has experienced heavy deflationary pressure, Leung said, adding that property prices have dropped from their peak by more than half and labor costs are being trimmed through pay reductions and layoffs.

Leung reiterated that the government has no intention of making any change to the existing linked-exchange-rate system in face of persistent deflation, but stressed that Hong Kong, in the process of an economic restructuring, must consider what are its strengths and play to the best of them.

Leung believed Hong Kong's strengths lie in four areas, namely, its favorable geographic location, its institutional strengths, its talents in fields such as business, management, and professional services, and its strong business base.

However, the financial secretary also pointed out that the Hong Kong economy is faced with several challenges. Hong Kong needs to develop high-value-added business since costs in Hong Kong are relatively high, Leung said.

Hong Kong needs to upgrade the quality of its manpower further and increase the number of talented individuals, to meet the needs of the changing economy; and it also needs to enhance economic ties with its neighboring region, particularly the Chinese mainland, to maintain Hong Kong's status as a regional financial and commercial center, he said.

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