XN000022-1985-01-22 — Page 4

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TUESDAY, JANUARY 22, 1985

OTHER REASONS FOR LOOKING FOR A SETTLEMENT WERE THE COLLAPSE IN LAND AND PROPERTY PRICES IN THE SUMMER OF 1982, AND THE EFFECT OF THE VERY SHARP RECESSION OF 1982 IN THE UNITED STATES.

ALTHOUGH THERE WAS CONFIDENCE OF ECONOMIC RECOVERY, THERE WAS ALSO NEED TO RESTORE CONFIDENCE IN THE FUTURE OF HONG KONG, SO AS TO TAKE ADVANTAGE OF IT.

POINTING OUT THAT NOT ONLY ECONOMIC FACTORS AFFECTED BUSINESS DECISIONS, SIR EDWARD SAID THE CRISIS OF CONFIDENCE IN THE HONG KONG DOLLÁR WHICH HAD COME TO A HEAD IN THE AUTUMN OF 1983, AT A PARTICULARLY DELICATE STAGE OF THE NEGOTIATIONS, HAD BEEN LARGELY THE RESULT OF POLITICAL UNCERTAINTY.

TO RESTORE A STABLE CURRENCY, THE HONG KONG GOVERNMENT REVISED THE FRAMEWORK OF ITS MONETARY POLICY SPECIFICALLY THE NOTE-ISSUE ARRANGEMENTS WITH THE AIM OF LINKING THE VALUE OF THE HONG KONG DOLLAR TO THAT OF THE U.S. DOLLAR. WITH THE COOPERATION OF HONG KONG'S MAJOR BANKS, THE NEW ARRANGEMENTS ACHIEVED THAT AIM, HE SAID,

+THUS, + SIR EDWARD SAID, WE WERE ABLE TO CONDUCT THE CRUCIAL CONCLUDING STAGES OF THE NEGOTIATIONS IN 1984 AGAINST THE BACKGROUND OF RISING EXPORTS, A STABLE CURRENCY, AND A CONSEQUENT STRONG STIMULUS TO GROWTH IN OUR ECONOMY, FULL EMPLOYMENT AND STEADILY FALLING RATE OF INFLATION.+

EVEN THEN, THE KEY TO HONG KONG'S FUTURE HAD YET TO BE FOUND.

+ IF OUR ENTREPRENEURS, AND OUR PROFESSIONAL AND TECHNICALLY QUALIFIED PEOPLE, WERE TO BE CONVINCED THAT HONG KONG WOULD CONTINUE TO OFFER THEM AND THEIR FAMILIES AN ACCEPTABLE HOME, THEY HAD TO BE CONVINCED THAT ITS ECONOMIC SYSTEM AND FAMILIAR LIFE-STYLE WOULD SURVIVE,+ SIR EDWARD SAID.

IF THIS GROWTH WAS TO CONTINUE, THERE HAD TO BE REINVESTMENT AND NEW INVESTMENT. FOR ALL THAT, THERE HAD TO BE POLITICAL CONFIDENCE; AND THE KEY TO THAT POLITICAL CONFIDENCE WAS A SATISFACTORY COMPLETION OF THE SINO-BRITISH NEGOTIATIONS, HE SAID.

+THAT KEY WAS PROVIDED BY THE INITIALLING IN PEKING

ON 26TH SEPTEMBER LAST YEAR OF THE DRAFT SINO-BRITISH AGREEMENT.

+THE AGREEMENT RECEIVED AN IMMEDIATE WELCOME, AND I HAD

NO DIFFICULTY IN COMMENDING IT T HE PEOPLE OF HONG KONG.

+ THE CONCLUSION THAT THE AGREEMENT IS A GOOD ONE HAS BEEN ENDORSED BY THE PEOPLE OF HONG KONG, BY BOTH HOUSES OF PARLIAMENT, AND BY THE INTERNATIONAL COMMUNITY, SIR EDWARD SAID.

/SIR EDWARD