XN000022-1995-10-19 — Page 11

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Mr Patten stressed that the Government would not take short-term measures which would damage the long-term competitiveness and flexibility of the economy.

"I have two difficulties with calls for kick starting the economy. The first is that this approach seems to ignore the facts. The economy has not stalled. We are not drifting towards recession," he said.

Citing statistics, the Governor said no matter what time frame one took, the economic facts of life in Hong Kong were compelling testimony to the resilience and success of the economy.

He pointed out that over the long term, Hong Kong had enjoyed economic growth in the past 35 years and its GDP had on average doubled every decade for the past 40 years.

Over the medium term, since 1984, when the Joint Declaration was signed, Hong Kong's GDP had increased by 84 per cent, investment by over 100 per cent, merchandise exports up over 350 per cent and service exports up by 130 per cent.

"Attempting to stimulate an economy which is already growing at 5 per cent in real terms each year would create the very real dangers of giving a kick start to inflation, eroding our competitiveness, and, ultimately, leading to higher unemployment," he said.

On the second difficulty with the kick start school of economic policy, Mr Patten said the impressive statistics of Hong Kong's economic success had not been achieved by government management of the economy.

He said the Government was spending each year over $30 billion on Hong Kong's physical infrastructure; $34 billion on skills infrastructure through the educational system, vocational training and research; and hundreds of millions of taxpayers' dollars supporting business through various organisations and encouraging

investments.

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"But the Government cannot- and should not attempt to cushion business from the hard realities of the market place. It is these hard realities that ensures that Hong Kong's business remain competitive and successful," he said.

"If we ever attempt to create a sort of welfare state for inefficient business, we shall be putting in jeopardy the enterprise and the flexibility which are the very

essence of our economic success."