Hong Kong to Record Moderate Growth: PEO

Hong Kong's economy is expected to grow only moderately in 2001 due to weaker global economic conditions, with the real GDP growing by 1.1 percent, an economist said Wednesday.

The projection was announced by the Forecaster of the Hong Kong Committee for Pacific Economic Cooperation for the 2001-2002 Pacific Economic Outlook (PEO) William Chow at a press conference.

According to Chow, the sluggishness of the US economy was more severe than initially perceived. "The US economy is currently expected to grow by around 1.6 percent," he said.

"Despite the Fed's easing of monetary policy, a noticeable rebound may not be visualized before the fourth quarter of this year," he said, adding that the appreciation of the greenback, which was expected to continue at least for the next couple of months, had prompted a five percent increase in the value of the H. K. dollar on a trade-weighted basis.

The China factor had failed to offer much help to HK's overall exports, Chow said, although he noted that the Chinese economy, which recorded an eight percent year-on-year growth in the first quarter, had remained strong.

The World Trade Organization issue might not deliver short-term benefits, Chow added. "We expect Hong Kong's real total exports to post a gain of just 0.7 percent this year, with the third and fourth quarters experiencing negative growth." he said.

The PEO is an annual forecast of economic growth in the Pacific region. It is made by a team of experts from the Pacific Economic Cooperation Council economies including Hong Kong.

HK on the Cusp of Exciting New Era

Hong Kong is on the cusp of another exciting new era in its success story, since the region can play an important role as sophisticated knowledge-based economy and benefit from the opening up of the Chinese mainland economy, a Hong Kong official said Wednesday.

Financial Secretary, Antony Leung, said at the Hong Kong General Chamber of Commerce that though Hong Kong is faced with many challenges in the new information age, the region, among other advantages, has built its core strengths such as its rule of law, a level playing field for doing business, a clean administration and the free flow of information.

Leung voiced optimism about the vast opportunities brought about by the opening up of the mainland market, noting that Hong Kong should be looking at what more it "can do to capitalize on the growing Chinese market. "

Hong Kong entrepreneurs are already the largest investors in every mainland province. According to a recent report, at the end of 1999, there were over 184,000 Hong Kong-funded projects throughout the country, with an estimated value of realized direct investment of 162 billion U.S. dollars in June last year.

Leung predicted that Hong Kong entrepreneurs' involvement in the mainland should give them a head start when China finally becomes a member of the World Trade Organisation.

He said that Hong Kong investors, particularly in manufacturing, have been a driving force in China's externally-oriented economy, and this role should be maintained and even strengthened in the post-WTO era.

The mainland's trade is expected to double in the five years after it joins the WTO, which opens the opportunity for Hong Kong companies and their partners to sell their products on the huge mainland domestic market, Leung said.

The increased trade is expected to result in more cargo passing through Hong Kong in both directions and by sea, air and land, opening up more opportunities and enhancing Hong Kong's role as a logistics and transportation hub for the region, he said.

Hong Kong's status as an international financial center and fund-raising hub for the region should also be strengthened, since mainland-based companies will want to use the Hong Kong market even more to raise capital for business expansion or modernization plans.

Last year alone, mainland-based companies raised some 44 billion US dollars on the Hong Kong securities market, which is almost two-and-a-half times the amount of capital raised in the mainland's own securities markets, according to Leung.

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