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Incidentally, Mr President, I would dare anyone to say that our industrial support policy is a do-nothing policy or a passive one. When the Industrial Support Fund went up from zero in 1993-94 to $180 million, an infinite increase in mathematical terms, in 1994-95 and further to $210 million in 1995-96. On top of all that we also spend $250 million in building the Industrial Technology Centre and $180 million in funding it, and further $200 million has been allocated to the Applied Research Fund.
We intend to go on upgrading our technological infrastructure. Next week, we shall seek approval from the Finance Committee of this Council for funds to establish the Cooperative Applied Research and Development Scheme, to be run by the Applied Research Council in cooperation with research institutions in China. In addition, we are studying the possibility of a second technology centre, a fourth industrial estate, and a science park.
Why a More Interventionist Strategy would be Impracticable
But for those Honourable Members convinced that the Government should intervene to stimulate the economy artificially, let us consider what tools we could
use:
Not interest rates. Even if we were able to manipulate interest rates, it is by no means certain that lower interest rates would act as a boost to the economy, since many economic activities may not be particularly sensitive to interest rate movements, again as experience in other economies have shown. But the vital importance of maintaining exchange rate and monetary stability in the run- up to 1997 and beyond requires us to maintain the peg with the US dollar. This means that there is no scope for lowering interest rates to stimulate the economy.
Not subsidies. Even if we believed that distorting market forces was a good thing - which we emphatically do not, to provide subsidies to our export-oriented manufacturing industries would be contrary to our obligations under the World Trade Organization and would lay us open to challenge and trade sanctions by our trading partners.
Not more imported labour. Even though the present comparatively modest levels of labour importation secure many more jobs for Hong Kong workers than they displace, I doubt that there would be much support in this Council for even a small increase, let alone a scheme on the much larger scale of that in Singapore, which, incidentally, is one of the reasons why, in the past several years, Singapore has been able to achieve substantially higher economic growth rates than Hong Kong and considerably lower inflation rates than Hong Kong.