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"In addition, I see tremendous opportunities for further development in Hong Kong as a funding centre for both the Chinese equity and debt markets," he said. Mr Tsang said China also had a very substantial financial stake in Hong Kong, predominantly in the service sectors and in major infrastructural projects. Direct investment in Hong Kong by China had doubled from an estimated US$10 billion at the end of 1990 to over US$20 billion at the end of 1994.

"There is simply no reason for China to upset the apple-cart after 1997. Indeed, there is very good reason for China to ensure that Hong Kong continues to thrive," he said.

Mr Tsang said the international business community should have every reason to feel confident about Hong Kong's future and that confidence was well-founded for the following reasons:

* There is a strong and continuing demand for Hong Kong dollar assets.

Hong Kong's linked exchange rate has been exceedingly stable since its establishment in 1983.

* Total assets of Hong Kong's Exchange Fund stood at US$58 billion at the end of June 1995. Hong Kong's foreign exchange reserves amount to US$54 billion. It is ranked seventh in the world in terms of overall foreign exchange reserves and second in reserves per capita. And Hong Kong has zero public debt.

* Economic and business activities exhibit steady growth. Hong Kong's gross domestic product will continue to grow at about five per cent per annum in real terms over the next four years.

* There has been a strong pick-up in private sector expenditure on plant and

machinery.

* Exports and re-exports continue to surge ahead.

Mr Tsang told the Committee that the continued ebullience of Hong Kong and the promotion of free trade in the region, and indeed the world, were of vital importance to US interests.