The role of government is increasing as globalization deepens, chief executive of China's Hong Kong Special Administrative Region Donald Tsang said in an interview with the official publication of the Boao Forum for Asia (BFA) Annual Conference 2009.
"We shall get rid of the dichotomy that governmental intervention is evil while free market is universal in order to practically define role of government in different economic activities," he said before the BFA session which starts Friday.
Hong Kong has been pursuing the principle of "Large Market and Small Government" for long, and the government does not randomly intervene in the market. However, as the global market enjoys strong connectivity, the government shall not adhere to conventionalism but respond to market needs and protect the interests of citizens, said Tsang.
For instance, he said, when Ireland implemented 100 percent guarantee for bank deposit, other economies, including Hong Kong, followed up. The move might be deemed as market intervention, but otherwise Hong Kong's reserve might run out and the position of Hong Kong as a financial center might be weakened.
"When government intervention is required by the market, we shall intervene; when intervention is not required, we shall withdraw at a proper time," he said.
Tsang mentioned that Hong Kong's government expenditure will exceed 300 billion Hong Kong dollars in the next fiscal year to ease economic pressure and it will bring about 62,000 new jobs and internship positions in the next three years.
"We will consider to launch more appropriate moves to support the citizens and pull through from such difficulty, in case the situation turns worse," Tsang said.
The year of 2009 will be difficult, as the government budget plan forecast that the gross domestic product (GDP) of Hong Kong will shrink by 2 percent to 3 percent this year, the first annual decline ever since the Asian financial crisis in the late 1990s, he added.