FRIDAY, AUGUST 7, 1992
"SO THE LEVEL OF THE HK DOLLAR IS CLEARLY NOT A PRIME CAUSE OF
THERE IS NO EVIDENCE TO SUGGEST THAT IT IS."
INFLATION.
MR MACLEOD SAID MORE GENERALLY, IT WAS WELL ACCEPTED BY MOST COMMENTATORS THAT THE MAIN CAUSE OF INFLATION WAS IN FACT THE STRUCTURAL CHANGES IN OUR ECONOMY, COUPLED WITH THE DEMAND FROM INDUSTRIAL EXPANSION IN SOUTHERN CHINA ON A HONG KONG ECONOMY WHICH WAS TO SOME EXTENT LIMITED BY ITS SHORTAGE OF LAND AND LABOUR.
"THE SECOND ARGUMENT BY THOSE WHO ARGUE FOR A BASKET SOLUTION IS THAT WE NEED MORE FREEDOM TO USE HIGHER INTEREST RATES AS A WEAPON TO COMBAT INFLATION
AGAIN A PERFECTLY RESPECTABLE ARGUMENT IN
ITSELF.
——
"BUT THE FLAW IN THE ARGUMENT IS IN LINKING THIS TO PROPOSING THAT WE SHOULD LINK ΤΟ A BASKET OF CURRENCIES RATHER THAN THE U.S. DOLLAR.
**THE FACT IS
THAT WE WOULD STILL BE CONSTRAINED IN OUR INTEREST RATE POLICY, WHETHER THE PEG IS TO A BASKET OR
то THE U.S. DOLLAR.
WHATEVER THE HK DOLLAR IS PEGGED TO, THE INTEREST RATE CANNOT VARY TO0 FAR FROM THE INTEREST RATE OF THE OTHER CURRENCY OR CURRENCIES. THAT'S SIMPLY A FACT OF LIFE. THERE ARE OTHER PROBLEMS WITH THE IDEA, BUT I THINK THAT'S THE MAIN ONE."
TAKING STOCK OF THE CHALLENGES FACING HONG KONG'S INDUSTRIES AT PRESENT, MR MACLEOD SAID THE TREND WHICH STOOD OUT OVER THE PAST FIVE YEARS WAS THE DRAMATIC EXPANSION OF THE SERVICES SECTOR.
"THE RESULTS ARE PLAIN FOR EVERY ONE TO SEE
THE FACT THAT WE CAN FORECAST HIGH ECONOMIC GROWTH IN THE FUTURE, THE FACT THAT OUR CONTAINER PORT IS EXPANDING, IT SEEMS FAST AND ENDLESSLY, THE FACT THAT THE PROPERTY BOOM CONTINUES FOR AN AMAZINGLY LONG PERIOD OF TIME.
"ALL THESE ARE RESULTS, MAINLY, NOT ONLY, OF THIS DYNAMIC GROWTH IN SOUTHERN CHINA FEEDING BACK INTO HONG KONG, GROWTH KONG FEEDING BACK INTO SOUTHERN CHINA,' HE SAID.
"
IN HONG
"THE GROWTH IN THE SERVICES SECTOR IS GOING TO CONTINUE TO BE ONE OF THE MAIN STORIES OF THE NEXT FIVE OR 10 YEARS. I WOULDN'T ATTEMPT TO LOOK INTO 15 OR 20 YEARS, BUT I THINK THAT CERTAINLY IS GOING TO BE THE TREND.
"WE ARE FORTUNATE NOT ONLY то BE IN OUR PRESENT CLOSE RELATIONSHIP WITH CHINA, BUT OF COURSE WE ARE FORTUNATE TO BE IN THE ASIA PACIFIC REGION IN GENERAL.
"IT'S VERY EVIDENT WHEN YOU HAVE VISITORS FROM EUROPE UNITED STATES, IT JUST KEEPS REMINDING US HOW FORTUNATE WE ARE IN ONE OF THE FEW GROWTH AREAS IN THE WORLD.
OR
THE ΤΟ BE
TEXTILES
IT
"DOES THAT MEAN THAT MANUFACTURING INDUSTRY AND THE INDUSTRY, AMONG OTHERS, HAVE NO FUTURE IN HONG KONG? I DON'T THINK DOES. I THINK IT HAS A RATHER DIFFERENT FUTURE.
/AND IT'S