XN000022-1993-04-02 — Page 3

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FRIDAY, APRIL 2, 1993

We have falling class sizes, we have plans within a couple of years for about a quarter of the relevant age group to go on to tertiary education. We have a very large and continuing public housing program at the same time as we can point to increasing home ownership with, I hope, getting on for two-thirds of our community homeowners by the end of the decade.

It's an extraordinary story of economic and social success, and I think that it's reasonable to ask, what accounts for that story, what accounts for that success in Hong Kong? I believe there are three reasons for that success. First of all, we have, as the chairman observed, practised the lessons of an open market economy more faithfully than most for longer than most. We have been believers in free trade. We have no tariffs on imports into Hong Kong and look forward to the day when everyone else can say the game. We have very low taxea, We've kept prudent control over public expenditure, which has enabled us, which some regard as a paradox, to increase public axpenditure precisely because we've got the economic growth which can pay for it. Even with an increasing of social welfare programs, we'll be containing public expenditure to around 18 or 19% of our GNP. So far as business is concerned, we've followed the adage of minimum interference and maximum support. So, we've followed all those lessons, which I'm delighted to learn, others themselves are also following today.

A second reason for our success is our geographical, as well as our economic position. Hong Kong stands at the gateway to China. It stands at the crossroads of Asia. So, it's at the heart of what the OECD has recently confirmed is the most rapidly growing regional economy in the world. A regional economy which is growing partly by winning larger markets in the rest of the world, but partly by what it sells within the region. About half the increase in trade is trade between communities within the Asian region itself. And, of course, we benefit hugely from the opening up of the Chinese economy, one of the most important and significant developments in our global economic history in the last few years. I think it's fair to say that not only do we benefit from that opening up, but We also contribute significantly to it as well. About 70% CE

70% of the external investment which goes into China goes through Hong Kong. About 80% of the investment that goes into Guangdong goes in from Hong Kong. 60, we have an important symbiotic relationship with Guangdong and with Southern China as a whole. If you look at Hong Kong alone, it represents, 28 an economy about 19% of China's GNF. If you look at Hong Kong and Guangdong together, they represent about 29% of China's GNP,

There is a third reason for Hong Kong's success and it's the reason which I wanted to dwell on most today. We see Cantonese Shanganese entrepreneurialism operating in a free society, under the rule of law. And that produces an astonishing chemistry, which has been in my judgement and that of most others, responsible for Hong Kong's success. China, as all of you know, is committed to implementing the historic concept of one country (that is, China), two systems. Our system, the system in Hong Kong, isn't just a capitalist economic model, it's capitalism operating within a framework which is set up specifically in terms in the joint declaration, the treaty that was signed

/BETWEEN BRITAIN