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FROM. 28-01-83 10.23
IF 1
H.M.TREASURY
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0712706328
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4
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DRAFT BUFF STATEMENT -
IME: 1992 HONG KONG ARTICLE IV CONSULTATION
General
1.
2.
3.
Hong Kong'e aconomic succese resulte in largo part from its favorable investment climate and business environment, which reflect a free international trade and finance regime, limited domestic regulation, low taxation and a sustained record of fiscal discipline. Under the Sino-British Joint Declaration, the Hong Kong Special Administrative Region (HKSAR) will, after 1997, remain an international financial centre, maintaining the free flow of capital into and out of the territory, and the Hong Kong dollar as a freely convertible currency. The HKSAR will have full autonomy in its external commercial relations and will remain a separate customs territory.
Since the last Article IV discussion, economic growth in Hong Kong has been strong, underpinned by strong private demand and increases in exports and re-exports. The authorities now expect GDP Growth to reach the official forecast of 5% for 1992 and the prospects for 1993 remain favorable.
China's continued commitment to economic reform and the strengthening of Hong Kong's economic links with southern China have enhanced Hong Kong's role in providing essential financial and trade-related services to China. Moreover, the expansion of productive capacity in southern China, has led to the transfer of many labour-intensive manufacturing activities - and also some labour intensive service activities from Hong Kong to mainland China.
Monetary and exchange rate policies
4.
I welcome the Staff's clear support for Hong Kong's continued commitment to the linked exchange rate system which has served as the cornerstone for financial stability and confidence in Hong Kong since 1983. The link has again proved its worth over the last year as a needed anchor of financial stability for Hong Kong.
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