XN000022-1988-03-02 — Page 12

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WEDNESDAY, MARCH 2, 1988

H

INCOMES,

RAPIDLY, RESULTING IN A EVEN

ALLOWING AFTER

FOR LARGE SHARED IN THE FRUITS OF OUR

'THIRDLY, WAGES AND SALARIES ROSE SIGNIFICANT INCREASE IN PERSONAL

COMMUNITY AT INFLATION. THE ECONOMIC SUCCESS," HE SAID.

MR JACOBS SAID THAT DURING THE YEAR HONG KONG'S IMPORTS INCREASED RAPIDLY IN LINE WITH THE STRONG GROWTH IN THE ECONOMY OVERALL THE VISIBLE TRADE ACCOUNT IN 1987 WAS ROUGHLY IN BALANCE.

ALSO AND

"SO ALTHOUGH WE HAVE BEEN MAINTAINING TRADE SURPLUSES WITH

OUR EXPORT

TO MANY OF OUR MAJOR MARKETS WE HAVE USED

EARNINGS

BUY WHAT WE NEED FROM OUR MAJOR SUPPLIERS, WITH MANY OF WHOM WE RUN TRADE DEFICITS, HE SAID.

TI

LARGE

"WE DO NOT AMASS VAST SURPLUSES ON OUR VISIBLE TRADE ACCOUNTS.

HE ADDED. WE ARE FREE TRADERS IN THE FULL SENSE OF THAT TERM,

P

PARTICULAR ATTENTION

MR JACOBS SAID HE DREW

TO OUR VISIBLE TRADE ACCOUNT AND OUR LARGE TRADE DEFICITS WITH A NUMBER OF ECONOMIES BECAUSE OUR TRADE SURPLUSES WITH SOME ECONOMIES, PARTICULARLY THE UNITED STATES, HAD BEEN CITED AS A

CHANGING THE LINKED EXCHANGE RATE.

REASON FOR

CHANGE THE LARGE

"OUR OVERALL VISIBLE TRADE BALANCE PROVIDES NO JUSTIFICATION WHATSOEVER FOR A CHANGE IN THE LINKED RATE, ESPECIALLY SINCE A

OF WOULD INVOLVE A REVALUATION

THE HONG KONG DOLLAR AGAINST TRADING PARTNERS CURRENCIES OF

WITH WHOM WE

HAVE ALREADY VISIBLE TRADE DEFICITS,

HE SAID.

SPECULATIVE PRESSURE TO WHICH

TIME

MR TIME,

JACOBS

ΤΟ

IN THE LIGHT OF THE INTENSIVE THE EXCHANGE RATE HAD BEEN SUBJECTED FROM WISHED TO EMPHASISE THAT THE GOVERNMENT MUST HAVE REGARD TO THE LONG-TERM OVERALL INTERESTS OF HONG KONG AND ITS COMMUNITY.

"THE LINKED RATE SYSTEM IS A VITAL ELEMENT OF STABILITY HONG KONG; AND IT PROVIDES A MECHANISM FOR MONETARY CONTROL.

[I]

"I HAVE NO INTENTION OF ALTERING THE CURRENT RATE, HE SAID.

FOR

MR JACOBS SAID THE ESSENCE OF THE SYSTEM WAS THAT ADJUSTMENTS

THE DID NOT TAKE PLACE THROUGH

EXCHANGE RATE

BUT ITSELF,

THROUGH CHANGES IN OTHER ASPECTS OF THE ECONOMY, A PROCESS WHICH MIGHT INCLUDE CHANGES IN THE RATE OF INFLATION.

HE SAID THE RECENT INFLATION RATE CREPT UP OVER THE 1987, BUT REMAINED FAIRLY MODERATE BY HISTORICAL STANDARDS.

"IN THE FOURTH QUARTER OF 1987, THE CONSUMER PRICE

EARLIER, WHILE WAS 6.7 PER CENT HIGHER THAN A YEAR

FOR WHOLE THE AVERAGE ANNUAL INCREASE WAS 5.5 PER CENT.

COURSE OF

INDEX (A) 1987 AS A

"SOME OF