XN000022-1981-11-09 — Page 5

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MONDAY, NOVEMBER 9, 1981

HONG KONG ECONOMY SEEN ADJUSTING WELL

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THE EXTERNALLY-ORIENTED NATURE OF THE ECONOMY MAKES IT NECESSARY FOR HONG KONG TO DEPEND LARGELY ON THE AUTOMATIC ADJUSTMENT MECHANISM, THE FINANCIAL SECRETARY, MR JOHN BREMRIDGE SAID THIS AFTERNOON (MONDAY).

THE ECONOMY WAS NOW ADJUSTING FAVOURABLY TO COPE WITH PARTICULARLY DIFFICULT EXTERNAL ECONOMIC CONDITIONS, AND DESPITE RECESSIONS IN THE MAIN MARKETS, DOMESTIC EXPORTS WOULD LIKELY ACHIEVE A REAL GROWTH RATE OF SEVEN PER CENT, RE-EXPORTS OF 34 PER CENT AND TOTAL EXPORTS OF 17 PER CENT FOR THIS YEAR, HE SAID.

MR BREMRIDGE ALSO DISCLOSED THAT, HELPED BY THE DEPRECIATION OF THE EXCHANGE VALUE OF THE HONG KONG DOLLAR AND THE MARGIN OF SPARE CAPACITY, THE MANUFACTURING SECTOR NOW APPEARED +WELL POISED TO TAKE ADVANTAGE OF ANY RECOVERY IN DEMAND+.

+ IT HAS, IN FACT ADJUSTED TO A POINT WHERE OUR EXPORTS HAVE SIGNIFICANTLY INCREASED THE IR COMPETITIVENESS. MANUFACTURING EMPLOYMENT IN JUNE THIS YEAR WAS AT AN ALL-TIME RECORD LEVEL, AND THE GROWTH IN THE UNEMPLOYMENT RATE, WHICH STARTED AT THE BEGINNING OF 1979, HAS BEEN REVERSED SINCE MARCH THIS YEAR, + MR BREMRIDGE SAID.

JUST BECAUSE THE MANUFACTURING SECTOR HAD BEEN DECLINING IN RELATIVE IMPORTANCE TO THE TERTIARY SERVICES SECTOR, IT DID NOT MEAN THAT THE ECONOMY HAD BECOME LESS DEPENDENT ON EXPORTS, HE POINTED OUT.

HONG KONG WAS FORTUNATE THAT IT HAD LITTLE UNEMPLOYMENT ON A LONG-TERM BASIS, HE ADDED.

MR BREMRIDGE WAS SPEAKING THIS AFTERNOON ON THE GOVERNMENT'S ROLE IN THE ECONOMY - PAST, PRESENT AND FUTURE+ AT THE ANNUAL MEETING OF THE HONG KONG MANAGEMENT ASSOCIATION, IN WHICH HE DESCRIBED HONG KONG'S ECONOMIC PHILOSOPHY.

MR BREMRIDGE SAID THAT IN DEALING WITH PROBLEMS INVOLVING THE ECONOMY, HONG KONG RELIED IN PRINCIPLE ON MARKET FORCES TO PROVIDE SOLUTIONS. THROUGH THE UNDERLYING PHILOSOPHY OF +POSITIVE NON-INTERVENTION ISM+, AS DESCRIBED BY HIS PREDECESSOR, SIR PHILIP HADDON-CAVE.

+BUT IN EACH CASE, WE DO NOT SIMPLY APPLY THIS POINT AS DOGMA. WE TEST IT OUT SO THAT IF WE DO DECIDE THAT MARKET FORCES WILL PROVIDE AN ACCEPTABLE ANSWER, THEN WE MAKE A POSITIVE DECISION NOT TO INTERVENE.

+WE REMEMBER THAT INVARIABLY WHAT WE ARE TRYING TO DO IS TO RECONCILE CONFLICTING OBJECTIVES IN DYNAMIC CHANGING SITUATIONS.+

+SO, AS THESE SITUATIONS CHANGE, WE NEED TO ASK OURSELVES CONSTANTLY WHETHER OUR DECISIONS OF YESTERDAY ARE STILL VALID, + HE SAID.

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