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10
We do not expect the provisions of the Sino-British agreement
on land to inhibit these programmes. We have sought to
moderate the growth rate of Government expenditure,
stabilized the size of the public service, and we have carefully adjusted taxes so as to increase our tax revenue whilst not damaging
the incentives of a low tax economy.
30.
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After three difficult budgets, the Financial Secretary is in sight of restoring a balance between revenue and expenditure, assisted,
Our revenues are of course, by the considerable uptum in the economy. now substantially less dependent on land sales. Faster economic growth has not, however been accompanied by a resurgence of inflation. Indeed, Hong Kong's inflation rate has been falling steadily, from a year-on-year rate of just under 11% for the first three months of last year to under 7% for the three months ending in October last year. The continuing stability of the Hong Kong dollar, in terms of its link with the US dollar, remains a favourable factor. We intend to retain that link.
31.
The outlook for Hong Kong is thus a fair one; and here I would
Article 4 draw your attention to another provision of the agreement.
Lays on the United Kingdom the responsibility of administering Hong Kong up to 30 June 1997 with the aim of preserving its economic prosperity; and states that the Government of the People's Republic of China will cooperate in this. Both countries have thus stated a common interest in maintaining the economic health of the territory. Chinese investment in Hong Kong has in fact increased dramatically in recent years, in parallel with the emergence of China as an export market for Hong Kong products. While the United States remains by far our largest trading partner, China is in second place. The Bank of China has already started work on a new building which, when templeted, will be a major headquarters for its operations.
32.
At the outset of my lecture I spoke not only of opportunities but of challenges. One of those challenges lies in the development of more representative government. It is my own view that, whether or not the question of 1997 had existed, there would have been a need to provide a more visible neans of community participation in the process of
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