XN000022-1985-10-26 — Page 3

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SATURDAY, OCTOBER 26, 1985

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HONG KONG WAS NOT A SWEAT-SHOP ECONOMY: ITS STANDARD OF LIVING AND ITS PER CAPITA GDP (ON A PAR WITH SINGAPORE'S) WERE AMONG THE HIGHEST IN ASIA AFTER JAPAN.

AND HONG KONG HAD PLAYED A RESPONSIBLE PART IN THE ARRANGEMENTS WHICH HAD BEEN IN FORCE FOR A NUMBER OF YEARS TO RESTRAIN TEXTILE EXPORTS TO THE U.S. AND OTHER DEVELOPED COUNTRIES IN ORDER TO HELP THE OFTEN PAINFUL PROCESS OF READJUSTMENT IN THESE DECLINING INDUSTRIES.

+WE TOO HAVE OUR DECLINING INDUSTRIES, BUT WE HAVE TO LET MARKET FORCES SETTLE THE IR FATE. THIS IS SIMPLY BECAUSE WE MUST ADAPT AND REINVEST IN ORDER TO ACHIEVE ECONOMIC EXPANSION. WE NEED THAT EXPANSION TO ENABLE US TO PAY FOR THE HIGHER LEVELS OF PUBLIC AND SOCIAL AMENITY TO WHICH THE PEOPLE OF HONG KONG ASPIRE,+ SIR EDWARD SAID.

POINTING OUT HONG KONG'S CLOSE AND IMPORTANT RELATIONSHIP. WITH THE U.S. AND THE CLOSE INTEREST PEOPLE HERE TOOK + IN EVERYTHING THAT HAPPENS IN THAT COUNTRY, + SIR EDWARD SAID THIS WAS A REFLECTION NOT ONLY OF THE FACT THAT THE U.S. WAS A GREAT COUNTRY AND A GREAT POWER WHOSE ACTIONS HAD AN IMPACT EVERYWHERE

IN THE WORLD. NOR WAS IT A REFLECTION ONLY OF THE IMPORTANCE OF THE U.S. MARKET FOR HONG KONG'S ECONOMIC WELL BEING. THE INTEREST GREW ALSO FROM STRONG PERSONAL AND CULTURAL TIES: MANY OF HONG KONG'S BUSINESSMEN, PROFESSIONALS, MANAGERS AND EDUCATORS RECEIVED THEIR EDUCATION IN THE U.S., HE SAID.

THE GOVERNOR EXPLAINED SOME BACKGROUND FACTORS WHICH LAY AT THE HEART OF HONG KONG'S SUCCESS, BUT SAID ALSO THAT TO REMAIN SUCCESSFUL SOCIETIES NEED NOT ONLY A STABLE AND PROSPEROUS PRESENT, BUT ALSO CONFIDENCE IN THE FUTURE.+

+ IT WAS FOR THIS REASON THAT A SEARCH WAS LAUNCHED IN 1982 FOR A SOLUTION TO THE PROBLEM RAISED BY THE EXPIRY IN 1997 OF The LEASE ON THE GREATER PART OF HONG KONG.

+THE NEGOTIATIONS WERE LONG, AND, AT TIMES, DIFFICULT BUT BY COMMON ACCORD THEY WERE ALSO SUCCESSFUL.

+THE AGREEMENT WHICH RESULTED HAS BEEN ENDORSED BY THE CHINESE AND BRITISH GOVERNMENTS AND ACCEPTED IN HONG KONG AND INTERNATIONALLY AS PROVIDING A SOUND BASIS FOR HONG KONG'S FUTURE.

+ IT DOES NOT OF COURSE ANSWER ALL THE QUESTIONS RAISED BY THE 1997 PROBLEM NOR QUELL ALL THE ANXIETIES. BUT IT HAS BEEN ACCEPTED IN HONG KONG BECAUSE IT PROVIDES FOR THE CONTINUATION OF THOSE ELEMENTS WHICH THE COMMUNITY HAVE ALL ALONG MADE CLEAR THAT THEY REGARD AS ESSENTIAL -- A FREE-ENTERPRISE CAPITALIST ECONOMY, THE MAINTENANCE OF THE LEGAL SYSTEM, GUARANTEE OF PERSONAL RIGHTS AND FREEDOMS, INCLUDING THE FREEDOM TO TRAVEL AND MANY OTHER FEATURES,+ THẾ GOVERNOR SAID.

THE GOVERNOR SAID THAT THE AGREEMENT HAD RESTOREL THE FAT OF LOCAL AND INTERNATIONAL INVESTORS.