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I come back to what I said earlier. I cannot give you any guarantee beyond the words that are on the paper in the Joint Declaration. I can guarantee that I will go on doing my best to make a reality of what the Joint Declaration says, even when it occasionally makes me a shade unpopular. Beyond that, it seems to me that there is not only Chinese honour but Chinese national interest in ensuring that those guarantees hold, and I am encouraged to think that they will by my very strong belief that what is happening in Hong Kong is very like what is happening elsewhere in Asia from Korea, Thailand and so on to other communities where there is not perhaps the same degree yet of economic or political development.
Andrew Cummins (Inchcape plc): I have written down two issues. There is obviously the whole issue of political uncertainty. The other issue I think most of our companies are trying to get to grips with is the issue of rising costs, which are forcing us to take some of our... out of Hong Kong. Could you perhaps comment on that, Governor?
Governor: On rising costs? We have managed to retain our price competitiveness in exports in part because we have taken advantage of lower labour unit costs in Canton and elsewhere in the region, though some of that competitive advantage is starting to be hit by increasing labour costs in those areas.
It is important to keep this debate within commonsense parameters. The world economic forum has just rated Hong Kong, for all the problems we have had about inflation and costs, the third most competitive economy in the world. Last year we were fourth; this year they have pushed us up to third.
The downside is first of all the cost of property, commercial property and domestic rental; secondly, the cost, at least until recently, of employment.
There are limits to what we can do on either, though I think we did manage last year to take the top off the inflation in domestic property prices with a quite successful and well-targeted series of measures, which took the steam out of the property sector without leaving it flat on its back. However, so long as one is in a position in which there is such a limit to supply and a continuing increase in demand, it is very difficult to do all that much about market-driven increases in property prices.