XN000022-1995-01-07+08 — Page 4

There are two other points I want to make. First of all, we have to go on as far as we can as a government, making home ownership available to as many people as possible and we have particular schemes for helping those who are on the margins financially in being able to afford their own homes.

And secondly, whatever happens to markets in the short term, the fundamentals in Hong Kong as far as our economy is concerned are as strong as any in the world. Just look at our own finances. We've seen recently in Mexico and elsewhere concerns about the financial situations of developing economies. We've looked at the European Community where there are countries whose public deficits are greater than their gross national product. Here in Hong Kong, we have a very sound financial position. We have a very sound trading position. All the fundamentals remain exceptionally strong and that will be an enduring reality in Hong Kong this year, next year and beyond.

Question: But from the beginning of this year, the Hong Kong stock market has fallen sharply, so do you think that this year's economy will be worse than last year?

Governor: No, we've made our predictions about economic growth for the coming year and we hold to them. There've been some suggestions in the financial press of a slight fall in consumer spending. At the same time, analysts have pointed to an increase in investment in infrastructure which should take up the slack in any form fall in consumer spending. So we remain prudent but positive about the future course of Hong Kong's economy. The Financial Secretary said last year that people of a nervous disposition shouldn't spend too much time in stock exchanges. That's true in everywhere from Wall Street to Hong Kong. It's not for me to predict or comment on day to day rises or falls in the stock market. I leave that to stock brokers who are handsomely rewarded for their endeavours.

Question: Governor, by your future plan to work with the Chinese side for the Preparatory Committee.... is it a preconditioned one or a selective one?

Governor: No, the only preconditions I set were ones I imagine everybody would agree with including the Chinese side. What we have to ensure is first of all that everything we do is in line with the Joint Declaration. Secondly, we have to ensure that everything we do is in the best interest of Hong Kong. Thirdly, we have to ensure that everything we do supports rather than undermines the authority of government, and government continues right through 1997. I'm concerned about the authority of government and the credibility of government before 1997 and obviously there are those who will be concerned about the authority and credibility of government after 1997. I'm sure that any sensible Chinese officials would recognise that the authority of the government before 1997 is important to ensure that the SAR government itself in 1997 gets off to the best possible start. So there aren't any preconditions except those which touch on the well-being and the fundamental interest of Hong Kong.