1999 李光耀 香港政策研究所講話

香港政策研究所資政李光耀的講話，1999 年 10 月 25 日

https://www.nas.gov.sg/archivesonline/data/pdfdoc/1999102502.htm

36 樓，PSA 大廈，460 Alexandra Road，新加坡 119963。電話：3757794/5

轉型中的香港

過去三十年來，我每年都會訪問香港，香港人民樂觀進取的精神給我留下了深刻的印象。 無論情況有多麻煩，例如1966/67年紅衛兵模仿者的喧鬧示威，或1973年油價突然翻兩番而導致經濟衰退，香港人並沒有感到沮喪或沮喪。 所以今年六月初我在香港待了幾天，我驚訝於它完全不同的心情。 我遇到的人似乎因發現自己處於解決方案不明顯的境地而感到沮喪。 香港目前的困境在很大程度上源於轉型過程中的問題，事實證明轉型過程比預期更加困難。 部分原因在於上任總督五年來的政策，而亞洲金融危機又加劇了這種政策。 在香港度過這個過渡階段之前，不可能對香港的未來做出任何長期預測。

1992年至1997年的五年間，中國和東亞繁榮，香港繁榮。 香港接受了彭定康主持的民主和人權速成班，並得到了西方媒體，尤其是美國和英國媒體的支持。 人們普遍擔心，中國的高壓手段會否定香港人所珍視的舊製度的一切。

英國人相信，他們可以在香港人民的心中銘刻言論自由原則的神聖性，尤其是新聞自由、像立法會這樣的代表大會擁有最廣泛選舉權的普選、保護基本自由的權利法案、 法治和司法獨立，向中國移交一個不可逆轉的民主香港。 這樣，香港人就會抵製失去他們所懂得珍惜的東西。 人們認為經濟會自行發展，一切都會好起來。 在新加坡等其他社會，政府的首要關注和主要責任是提供人民的福祉：這意味著食物、住房、健康、教育以及能夠提供就業機會和生存所需資金的經濟（如果可能的話） 舒適的生活。 作為新加坡政府，我們要做的第一件事就是讓人民明白為什麽他們必須與政府、管理層和工會合作，為每個人謀生，即讓經濟運轉。

1992年12月，我在香港大學演講時，比較了新加坡和香港的政治演變：

“從1948年第一次立法會選舉到1965年獨立，新加坡經曆了17年的悠閑過渡。1955年，新加坡出現了第一個部分選舉產生的政府，並任命了首席部長。1959年，新加坡實現了完全的內部自治 幾年之內，立法會或政府中沒有英國官員取代了所有關鍵職位的英國官員，但這些當地公務員已經有了一些時間來適應他們的工作。

香港的轉型是短暫且迅速的。 第一次立法會選舉於 1991 年 9 月舉行，距離英國統治結束還不到六年。 下一次選舉將於 1995 年舉行，距離英國統治結束僅兩年。 隻有首席法官和警務處處長是香港人。 短短四年多的時間，很多重要部門的負責人肯定是香港人。 過渡並不容易。 如果沒有信心的氛圍，就可以維持士氣、紀律和標準，這將是危險的。 因此，必須謹慎處理過渡時期的政治問題。”

然後我接著闡述了我認為對香港來說重要的事情，即為這一轉變做好準備：

“在未來四年內，香港總督必須與中國內地官員協商，決定接任行政當局的人選。他們必須有能力管理香港的製度，並具有深厚的、幾乎是本能的、 理解共產黨的普通話頭腦，否則一個國家、兩種製度就不能順利進行。

我相信找到合適的人選來勝任這些工作比香港是否有20名、40名或更多議員直接選舉進入立法會更為重要。 香港從來沒有實行過自治。 它一直由任命的總督統治。 當他們好的時候，香港就會繁榮。

英國總督對倫敦的殖民地大臣負責，而不是對香港人民負責。 根據《基本法》第四十三條，香港行政長官“對中央人民負責”

第七十三條第五款授權立法會“就政府的工作提出質詢”。

香港沒有努力與大陸趨同與合作，而是走上了相反的道路，在香港人民中鞏固當代英國的政治態度和做法。 彭定康總督召開沒完沒了的新聞發布會，讓人們期待下一任特首也能如此開放和負責。 許多香港人開始相信這些做法將保留他們以前繁榮的生活方式。 事實上，它使香港人民兩極分化，分為意識形態派和務實派。

為了使香港的問題更加複雜化，政府開始進行福利改革。 1992年我在香港大學演講時說：

“從60年代末開始，我幾乎每年都會去香港，去研究和理解為什麽香港人比新加坡人工作更有幹勁和活力，並向他們學習一些東西。他們為自己的付出付出了代價。 他們支付教育費用，支付醫療費用；政府不欠他們任何東西，隻提供法律和秩序，他們在山坡上搭建自己的棚屋，建立了現代香港。

通過對香港的觀察，我得出的結論是，國家福利和補貼削弱了個人成功的動力。 我驚訝地看到香港工人在繁榮時期輕鬆地調高工資，在經濟衰退時調低工資。 我決心扭轉我黨繼承或複製英國工黨政策的福利政策。 我縮減了補貼，除非補貼可以通過更好的教育、更好的健康和更好的住房來提高人們的生產力。

如果香港存在爭奪政府組建權的政黨政治，經濟和社會利益集團以及工會就會出現。 那麽財富再分配和福利補貼的壓力將是不可抗拒的。

無論過去成功的原因是什麽，未來都會帶來更多的焦慮和不確定性，這主要是因為中國政治的不確定性。”

我很容易就明白為什麽香港比新加坡更有競爭力。 但現在的香港已經不一樣了， 人民期盼香港特首能夠給香港帶來美好生活。 無論是雞流感，還是紅藻殺死魚類，還是房地產和股票價值下跌，人們都期望政府做出彌補。

行政長官現在麵對的立法會采取反對立場可以獲得更多好處。 反對是贏得民眾支持並在下一輪連任的簡單方法。 然後，李嘉誠先生警告說，他不會投資100億美元在一個項目上，因為反對黨要求他不要行使法律權利，將不按揭還款的人告上法庭。 這些都是初期問題，是可以解決的。 隨著時間的推移，香港人將必須在競爭的社會和經濟群體之間達成社會契約：首先合作並擴大經濟蛋糕，其次重新分配蛋糕的份額並使自由市場政策的結果更加公平。 換句話說，政府應該從GDP中拿出多少，以什麽樣的稅收，以及多少稅收應該用於教育、醫療、住房、娛樂和休閑設施的補貼，以使人們獲得機會的機會更加均等。 下一代。 雇主和工人必須就經濟如何最好地運轉達成妥協，以便企業保持競爭力並向員工支付他們能負擔得起的最好工資。 當香港因貨幣貶值而麵臨成本上升和工資過高時，雇主無法讓工會和工人同意減薪。

人們感到沮喪的是，每個人都為自己努力工作並且每個人都成功（或多或少）的舊製度現在不起作用了。 然而，不可能回到舊製度。 期望和態度已經改變。 從長遠來看，一個反對派、不承擔任何責任的立法會，無法為善治作出貢獻。 給民粹主義政治帶來現實感的方法是讓政治領導人承擔起履行承諾的責任。 如果他們知道在贏得並掌握權力後必須兌現自己的承諾，那麽他們要麽改變政策和口號，要麽就會緊隨其後。 你必須找到解決方案，因為隻要香港選舉政治不負責任（這是你在殖民統治末期可以負擔得起的），大量的精力和資源就會被浪費。

香港需要因地製宜地根據基本法調整政府體製。 發揮民主代表作用

政府在新加坡有效地運作，我們不得不對英國留給我們的憲法做出調整。 沒有任何係統可以從架子上取下來並投入使用，就像一件外套必須根據人的長度和形狀進行調整一樣。

在我六月訪問期間，我還發現香港人對他們的新身份感到不安。 香港浸會大學香港轉型計劃進行的民意調查顯示，老一輩香港人稱自己為“香港華人”，年輕一代則稱自己為“香港人”。 當家長被問及是否建議每天早上在學校唱中國國歌並升國旗時，85%的受訪家長不同意。 這些數字反映了他們對被納入中國的另一個實體的不安。 香港的自我認同必須得到界定和具體化。 你們是中國的一部分，但在接下來的48年裏，你們是一個特殊的群體，被稱為特區華人或香港華人。 除非大家認識到這個問題的重要性，否則特區政府與香港市民之間很難建立新的社會契約所需的團結。 在香港度過這個過渡階段之前，對其未來趨勢的任何預測都隻能是暫時的。 舊時的香港已成為曆史。 香港的未來取決於香港人民如何共同促進其群體利益。

香港與中國的融合

二十年來，中國的開放政策給香港帶來了繁榮。 與中國的商業活動使香港成為世界十大貿易國家之一。 你們的金融中心有很大的中國成分。

香港與內地的經濟融合加速了其從製造業經濟向服務業經濟的轉型。 當你的低端製造業轉移到廣東以利用較低的土地和勞動力成本時，它為服務業釋放了資源。 結果，製造業活動占香港GDP的比例從1984年的24%下降到1997年的不足7%。在金融服務業增長的帶動下，服務業的比例飆升至85%。 如今，香港以服務業為基礎的經濟是全球第九大商業服務出口國。

香港學者和經濟規劃者問，現在是否應該通過發展高科技，特別是IT產品來建立製造業。 製造業為經濟提供了一定的壓艙石。 在香港的新形勢下，重新審視經濟政策選擇是有益的，但不要忘記，過去將所有舉措交給私營部門的做法效果很好。

與香港不同，新加坡決定維持占GDP約四分之一的核心製造業基地，以實現更安全的平衡。 為了保持競爭力，我們不斷將製造生產升級為更高附加值的活動。

香港可以最大限度地發揮與中國的聯係。 高科技製造業潛力巨大。 中國工程師和香港企業家的技能是互補的。 香港企業家有智慧、有能力將中國科學家的創新商業化，並將其轉化為利潤。 中文電子詞典就是這種協同作用的一個例子。 將整個英語句子翻譯成中文的技術在中國已經存在了一段時間。 但香港公司 Group Sense 通過與中國研究中心結成戰略聯盟，獲得了這項技術並將其商業化。

香港及其他中國城市

未來25年中國經濟每年可實現5%至7%的增長。 中國的蛋糕還會繼續做大。 香港的涉華業務將會增加。 然而，許多中國沿海城市正在努力發展與你們類似的能力。 香港不會永遠是華南沿海唯一的商業金融中心和貿易港口。 一些公司已將地區總部從香港遷至上海或北京，以更貼近市場並培養本地員工。 雀巢已將地區總部從香港遷至北京，飛利浦電子則遷至上海。 在航運方麵，香港麵臨來自中國發展中的天津、上海、寧波和深圳港口的競爭。

上海——曾經是亞洲最國際化的城市——是許多金融改革的試驗場。 中國希望將浦東陸家嘴金融貿易區建設成為世界級金融中心。 放寬限製並提供激勵措施以吸引外國金融機構和跨國公司。 例如，1997年，浦東成為中國第一個允許外資銀行開展人民幣業務的地區。 截至1999年9月，全市共有19家外資銀行從事本幣業務。

您對 Chi 的價值

就在於與中國其他城市的不同。 香港在法律基礎設施、強大的機構、管理專業知識以及金融市場的成熟度方麵領先於上海和中國其他城市。 法治、所有政府立法和法規的透明度、為所有參與者提供公平的競爭環境、加上國際化的生活方式、方便的英語溝通，是香港領導人和人民必須確保保留的特征。 上海的缺點是法製不健全，服務業工作態度差。

兩個相反的拉力

香港必須解決兩個相反的問題。 為了對中國有用，它必須能夠與具有不同社會、經濟和政治製度的中國官員合作。 但它對中國有價值，因為它不僅僅是另一個中國城市。 英國統治下的香港與中國其他城市之間的區別使其成為中國與世界之間的寶貴中介。 不幸的是，一國兩製，意味著舊香港的特色無法全部保留。 國防和外交事務已從英國手中轉移到中國手中。 因此，教皇的訪問被拒絕，美國的軍艦和飛機也時常被拒絕入境。 但應盡可能多地培育和保留香港區別於其他中國城市的特色。

香港及新加坡

作為亞洲的兩個商業中心，新加坡和香港在許多商業和金融服務方麵相互競爭。 這不是零和遊戲。 兩者可以共同成長並獲利。 兩個城市之間的競爭促使每個城市在競爭力和相關性方麵力爭成為最佳。 市場足夠大，足以讓兩國經濟蓬勃發展。 此外，科技主導的金融服務業變革為我們之間的合作和協同創造了機會。

為了應對技術的力量，全球資本市場一直在經曆結構性變化。 新的競爭對手，包括許多非傳統的電子通信網絡（ECN）和軟件提供商，正在挑戰交易所的特許經營權。 亞洲交易所擁有的時區特許經營權可能會因其他時區主要交易所延長處理時間而受到侵蝕。

我們正在應對這些變化。 新加坡和香港都在努力實現股票和衍生品交易所的股份製和整合。 這將使交易所更加商業化，通過提供更廣泛、更有趣的產品、增加流動性、通過與其他交易所聯盟創造高效、便捷的跨境交易能力，為投資者帶來更大價值。

新加坡和香港作為該地區的主要交易所，擁有獨特的合作機會，有助於促進區域資本市場的發展。 我們可以整合流動性池，降低區域發行人的資本成本，降低投資者的交易成本，並提供健全和透明的監管基礎設施。

例如，越來越多的亞洲高科技初創企業現在尋求資金，而交易所可以滿足這些資金。 一些亞洲交易所迅速做出反應，通過設立小市值或“高增長”董事會來滿足這些需求。 不幸的是，與納斯達克相比，這些董事會單獨而言缺乏足夠的規模。 新加坡和香港交易所可以將這些主板的交易聯係起來，以創造更大的流動性並吸引跨境和區域投資者。 整合流動性池的通用功能為發行人、投資者和亞洲資本市場帶來好處。

通信和信息技術是我們兩國經濟的新增長領域，合作空間廣闊。 我們可以通過培養官員之間的持續交流來加強我們的機構聯係。

新加坡和香港有著相似的曆史。 兩者都曾是大英帝國的貿易前哨。 第二次世界大戰後，新加坡與其經濟腹地分離。 我們於1965年成為一個獨立國家，必須在世界上尋找自己的出路。 新加坡麵臨的挑戰完全不同。 為了獨立建國，新加坡必須對其政治、經濟和社會未來做出艱難決定。 我們的企業必須適應該地區政治和經濟狀況的周期性變化。 因此，我們的企業實現了出口市場多元化，網撒得更廣。 我們的製造生產網絡遍布東南亞，我們的市場是國際性的。

香港從未有過獨立或建國的前景。 相反，它已經回歸中國，但在未來 50 年內擁有所有內部事務的完全自主權。 隨著你們回歸中國，我們的政治命運發生了分歧，將走上不同的道路。 政治和經濟挑戰

我們麵臨的長度將會有所不同； 因此，我們必須製定的戰略和政策不會相同。 盡管如此，我們長期建立的關係仍然很有價值。 我們兩國政府官員之間的實際合作並沒有證實媒體關於致命競爭的報道。 我們倆都在世界競爭排行榜上名列前茅。 兩者都在維護法治、致力於自由市場的誠實、高效的政府方麵獲得了高分。 當我們在全球化經濟中與世界合作和競爭時，雙方都可以從分享信息和經驗中獲益匪淺。

來自其經濟腹地。 我們於1965年成為一個獨立國家，必須在世界上尋找自己的出路。 新加坡麵臨的挑戰完全不同。 為了獨立建國，新加坡必須對其政治、經濟和社會未來做出艱難決定。 我們的企業必須適應該地區政治和經濟狀況的周期性變化。 因此，我們的企業實現了出口市場多元化，網撒得更廣。 我們的製造生產網絡遍布東南亞，我們的市場是國際性的。

香港從未有過獨立或建國的前景。 相反，它已經回歸中國，但在未來 50 年內擁有所有內部事務的完全自主權。 隨著你們回歸中國，我們的政治命運發生了分歧，將走上不同的道路。 我們麵臨的政治和經濟挑戰將有所不同； 因此，我們必須製定的戰略和政策不會相同。 盡管如此，我們長期建立的關係仍然很有價值。 我們兩國政府官員之間的實際合作並沒有證實媒體關於致命競爭的報道。 我們倆都在世界競爭排行榜上名列前茅。 兩者都在維護法治、致力於自由市場的誠實、高效的政府方麵獲得了高分。 當我們在全球化經濟中與世界合作和競爭時，雙方都可以從分享信息和經驗中獲益匪淺。

Singapore Government Press Release, Media Division, Ministry of Information and The Arts,

Speech by Senior Minister Lee Kuan Ye the Hong Kong  Policy Research Institute, 25 October 1999

https://www.nas.gov.sg/archivesonline/data/pdfdoc/1999102502.htm

36th Storey, PSA Building, 460 Alexandra Road, Singapore 119963. Tel: [phone]

Hong Kong in Transition

During my yearly visits to Hong Kong over the last thirty years, I was struck by the upbeat, can-do spirit of its people. However troublesome the situation, such as the noisy demonstrations of the imitators of the Red Guards in 1966/67, or the economic downturn caused by the sudden quadrupling of oil prices in 1973, Hong Kong people were not dismayed or despondent. So when I spent a few days in Hong Kong at the beginning of June this year, I was surprised by its completely different mood. The people I met seemed frustrated at finding themselves in a situation where the solutions were not obvious. Much of the present malaise in Hong Kong arises from the problems of a transition that proved more difficult than expected. In part it was because of the five years of the last governor's policies, aggravated by the Asian financial crisis. Until the territory has come through this transition phase it is not possible to make any long term forecasts on Hong Kong's future.

In the five years from 1992 to 1997, Hong Kong boomed when China and East Asia were prospering. Hong Kong was taken through a crash course in democracy and human rights conducted by Chris Patten and supported by the Western, especially the US and UK, media. The prevailing concern was that the heavy hand of China would negate everything that Hongkongers valued of its old system.

The British believed they could etch in the minds of Hong Kong people the sanctity of the principles of freedom of expression especially of the press, popular elections with the widest franchise to a representative assembly like LEGCO, a Bill of Rights to protect fundamental liberties, the rule of law and the independence of the judiciary, and hand over to China an irreversibly democratic Hong Kong. Then Hong Kong people would resist losing what they had learnt to value. It was assumed that the economy would look after itself and all would be well. In other societies like Singapore, the first concern and primary responsibility of a government is to provide for the people's wellbeing: that means food, shelter, health, education, and an economy that will provide the jobs and the wherewithal for survival, and if possible a comfortable life. The first thing we, as the government in Singapore, had to do was to get the people to understand why they had to work together with the government, management and unions to make a living for everyone, i.e. get the economy going.

In my lecture at the University of Hong Kong in December 1992 I had compared the political evolution of Singapore with that of Hong Kong:

"Singapore had a leisurely 17-year transition from the first elections to the Legislative Council in 1948 to independence in 1965. In 1955, Singapore had our first partially elected government with an elected Chief Minister. In 1959, Singapore had complete internal self-government with no British officials in the Legislative Council or in Government. Singaporeans replaced British officials in all key jobs within a few years but these local civil servants had already had some time to grow into their jobs.

Hong Kong's transition is short and will be swift. The first elections to Legislative Council were in September 1991, less than six years before the end of British rule. The next elections are due in 1995, only two years before the end of British rule. Only the Chief Justice and the Commissioner of Police are Hongkongers. In just over four years, many important heads of departments must be Hongkongers. The transition will not be easy. It will be dangerous to assume that morale, discipline and standards can be maintained if there is no climate of confidence. So the politics of the transition has to be sensitively handled."

I then went on to spell out what I thought was important for Hong Kong, namely to prepare for this transition:

"Within the next four years, Hong Kong's Governor must in consultation with his PRC counterparts, decide on the men who will take over the administration. They must have the ability to run the system in Hong Kong and also have a deep, almost instinctive, understanding of the Communist Mandarin mind. Otherwise one country, two systems, will not work smoothly.

I believe finding the right men for these jobs is more critical than whether Hong Kong has 20 or 40 or more members who are directly elected to the Legislative Council (LEGCO). Hong Kong has never had self-government. It has always been ruled by appointed Governors. And when they were good, Hong Kong prospered.

British governors were accountable to the Secretary of State for the Colonies in London, not to the people of Hong Kong. Under Article 43 of the Basic Law, Hong Kong's Chief Executive is "accountable to the Central People's Government and the Hong Kong SAR". Article 73(5) empowers the LEGCO "to raise questions on the work of the government".

Instead of working towards convergence and co-operation with the mainland, Hong Kong was set on a contrary course, to entrench contemporary British political attitudes and practices in the people of Hong Kong. Governor Patten held endless press conferences so that people came to expect the next Chief Executive to be as open and accountable. Many in Hong Kong began to believe that these practices would preserve their previous prosperous way of life. In fact, it polarised the people of Hong Kong, between those who were ideological, and those who were pragmatic.

To compound Hong Kong's problem, the government embarked on welfare reforms. In my 1992 lecture at Hong Kong University, I said:

"From the late '60s, I have visited Hong Kong almost every year, to study and to understand why Hong Kong people work with so much more drive and vigour than the people in Singapore, and to learn something from them. They paid for their education, they paid for their medical services; the government owed them nothing and provided only law and order. They made their own housing in little shanty huts on the hillsides. They paid their way, and built modern Hong Kong.

Through Hong Kong watching, I concluded that state welfare and subsidies blunted the individual's drive to succeed. I watched with amazement the ease with which Hong Kong workers adjusted their salaries upwards in boom times and downwards in recessions. I resolved to reverse course on the welfare policies which my Party had inherited or copied from British Labour Party policies. I scaled back on subsidies except where they made the person more productive through better education, better health and better housing.

Had there been party politics in Hong Kong competing for the right to form the government, economic and social interest groupings and trade unions would have emerged. Then pressures for redistribution of wealth and subsidies for welfare would have been irresistible.

Whatever the reasons for past success, the future promises more anxiety and uncertainty largely because of the uncertainties of the politics of China."

I recognised easily why Hong Kong was more competitive than Singapore. But Hong Kong has now become different; its people expect the Hong Kong Chief Executive to deliver the good life. Whether it is chicken flu, or red algae killing fish, or the property and stock values going down, people expect the government to make amends.

The Chief Executive now faces a LEGCO that has more to gain by taking an opposition stand. Opposition is the easy way to win popularity and get re-elected in the next round. Then there was Mr Li Ka Shing warning that he would not invest US$10 billion in a project because an opposition party was demanding that he should not exercise his rights under the law to take people to court for not meeting their mortgage payments. These are teething problems and can be resolved. Over time, Hongkongers will have to arrive at a social contract between competing social and economic groups: first to co-operate and increase the economic pie, next to redistribute the shares of the pie and make more equitable the results of free market policies. In other words how much of the GDP should the government take, in what kinds of taxes, and how much of the taxes should be spent on subsidies for education, health, housing, recreation and leisure facilities, to make more equal the chances of the next generation. Employers and workers must reach an accommodation on how the economy can best work so that enterprises stay competitive and pay the best wages they can afford to their employees. When Hong Kong was confronted with rising costs and over-high wages as a result of currency devaluation in the region, the employers were not able to get the unions and workers to agree to any reduction of wages.

People feel frustrated that the old system where everybody worked hard for himself and everybody succeeded (more or less), is now not working. However, there cannot be a return to the old system. Expectations and attitudes have changed. In the longer run, a LEGCO which is oppositionist and shoulders no responsibility, cannot contribute to good governance. The way to bring a sense of reality to populist politics is to saddle the political leaders with the responsibility of fulfilling their promises. If they know that after winning and assuming authority they have to deliver on their promises, then they either change policies and slogans, or they will be out on their heels. You will have to find a solution to this because so long as Hong Kong electoral politics is responsibility free (something you could afford during the tail end of colonial rule), much energy and resources will be wasted.

Hong Kong needs to adapt and adjust its system of government under the Basic Law to fit its circumstances. To make democratic representative government work effectively in Singapore, we had to make adjustments to the constitution the British left us. No system can be taken off the shelf and made to work, just as a coat off the peg has to be adjusted to suit the length and shape of a person.

During my visit in June, I also found Hong Kong people uneasy about their new identity. Polls carried out by the Hong Kong Transition Project at the Hong Kong Baptist University disclosed that the older generation of Hongkongers refer to themselves as "Hong Kong Chinese", the younger generation as "Hong Kong people". And when parents were asked about a proposal to sing the Chinese national anthem and to raise the national flag every morning in school, 85% of parents polled did not approve of this. These figures reflect their unease at being absorbed into a different entity of China Chinese. Hong Kong?s self-identity has to be defined and crystallised. You are a part of China, but for the next 48 years, you are a special sub-group known as the SAR Chinese, or Hong Kong Chinese. Unless you realise the importance of this issue, it will be difficult to forge that solidarity necessary for a new social compact between the SAR Government and Hong Kong people. Until Hong Kong has come through this transition phase, any forecast of its future trends can only be tentative. The Hong Kong of old is history. The Hong Kong of the future depends upon how the people of Hong Kong together promote their group interests.

Hong Kong's Integration with China

In the last two decades, China's policy of opening-up has brought prosperity to Hong Kong. Business activities with China have made Hong Kong one of the world's top ten trading nations. And your financial centre has a large China component.

Hong Kong's economic integration with China accelerated its transformation from a manufacturing to a service-based economy. When your low-end manufacturing activities relocated to Guangdong to take advantage of lower land and labour costs, it freed resources for the service industries. As a result, the proportion of manufacturing activities in Hong Kong's GDP fell to less than 7% in 1997, compared with 24% in 1984. The share of services ballooned to 85%, led primarily by growth in financial services. Today Hong Kong's service-based economy is the world's 9th largest exporter of commercial services.

Hong Kong academics and economic planners have asked whether you should now build up a manufacturing sector by going into high tech, especially IT products. Manufacturing provides a certain ballast to the economy. In Hong Kong's new situation it is useful to re-examine your economics policy options, always not forgetting that in the past, leaving all initiatives to the private sector has worked well.

Unlike Hong Kong, Singapore has decided to maintain a core manufacturing base of about one-quarter of GDP for a safer balance. To remain competitive, we continually upgrade our manufacturing production to higher-value added activities.

Hong Kong can maximise its links with China. There is vast potential in high-tech manufacturing. Skills of Chinese engineers and Hong Kong entrepreneurs are complementary. Hong Kong's entrepreneurs have the savvy and ability to commercialise innovations by Chinese scientists and translate them into profits. The Chinese electronic dictionary is one example of this synergy. The technology that translates whole English sentences into Chinese, had already existed in China for some time. But Group Sense, a Hong Kong company, was able to capture the technology and commercialise it, by forming strategic alliances with Chinese research centres.

Hong Kong and other Chinese cities

China's economy can achieve 5-7% growth annually for the next 25 years. The Chinese pie will continue to grow. Hong Kong's China-related businesses will increase. However, many Chinese coastal cities are trying to develop capabilities similar to yours. Hong Kong will not always be the only business and financial centre and trading port on the south China coast. Some companies have moved their regional headquarters from Hong Kong to Shanghai or Beijing, to be closer to their markets and to develop local staff. Nestle has relocated its regional headquarters from Hong Kong to Beijing, while Philips Electronics has moved to Shanghai. In shipping, Hong Kong faces competition from China's developing ports in Tianjin, Shanghai, Ningbo, and Shenzhen.

Shanghai - once Asia's most cosmopolitan city - is the testing ground for many financial reforms. China wants to develop the Lujiazui Finance and Trade Zone in Pudong into a world-class financial centre. Restrictions are being relaxed and incentives offered to attract foreign financial institutions and multinationals. In 1997, Pudong for example became the first place in China where foreign banks could conduct renminbi transactions. By end of September 1999, there were 19 foreign banks engaged in local currency activities in the city.

Your value to China lies in being different from other Chinese cities. Hong Kong has a lead over Shanghai and other cities in China in legal infrastructure, strong institutions, management expertise, and the sophistication of its financial markets. The rule of law, the transparency of all government legislation and regulations, a level playing field for all players plus its cosmopolitan lifestyle, with ease of communication in the English language, are features Hong Kong's leaders and people must ensure are retained. Shanghai's drawback is its inadequate legal system, and poor work attitudes in its service sector.

Two contrary pulls

Hong Kong has to resolve two contrary pulls. To be useful to China, it must be able to work with Chinese officials who have different social, economic and political systems. But it is of value to China because it is not just another Chinese city. The difference between Hong Kong under British rule and other Chinese cities was what made it a valuable intermediary between China and the world. Unfortunately one country, two systems, means that not all the features of old Hong Kong can be retained. Defence and foreign affairs have moved from British to Chinese control. Hence the Pope was denied a visit and US warships and planes are from time to time denied entry. But as many as possible of the characteristics that distinguished Hong Kong from other Chinese cities should be assiduously cultivated and retained.

Hong Kong and Singapore

As two business hubs in Asia, Singapore and Hong Kong compete with each other for a number of business and financial services. It is not a zero sum game. Both can grow and profit together. Rivalry between the two cities spurs each to strive to be the best in competitiveness and relevance. The market is big enough for both economies to thrive. Furthermore, technology-led changes in the financial services sector open up opportunities for co-operation and synergy between us.

The global capital markets have been undergoing structural changes in response to the forces of technology. New competitors, many non-traditional like electronic communication networks (ECNs) and software providers, are challenging the franchise of exchanges. The time zone franchise that Asian exchanges have owned risk being eroded by the extension of processing hours by dominant Exchanges in other time zones.

We are responding to these changes. Both Singapore and Hong Kong are working to demutualise and integrate their stock and derivatives exchanges. This will make the exchanges more commercially oriented, giving greater value to their investors by offering a wider and more interesting range of products, besides increasing liquidity, and creating efficient and convenient cross-border trading capability through alliances with other exchanges.

Singapore and Hong Kong, premier exchanges in the region, have a unique opportunity to work together and help spur the development of the regional capital market. We can integrate liquidity pools, lower cost of capital for regional issuers, lower trading costs for investors and provide a sound and transparent regulatory infrastructure.

For instance, a growing number of Asian, high-tech start-ups now seek funding, which can be met by the exchanges. Some Asian exchanges have responded quickly to meet these needs by setting up small market capitalization or "high growth" boards. Unfortunately, individually, these boards lack critical mass when compared to Nasdaq. The Singapore and Hong Kong exchanges can link up trading in these boards to create greater liquidity and appeal to cross border and regional investors. A common capability that integrates liquidity pools provides benefits for issuers, investors and Asian capital markets.

There is ample room for collaboration in communication and information technology, a new growth area in both our economies. We can strengthen our institutional links by cultivating the on-going exchanges between our officials.

Singapore and Hong Kong share similar histories. Both were former trading outposts of the British Empire. After World War Two, Singapore was separated from its economic hinterland. We became an independent nation in 1965, and had to find our own way in the world. Singapore's challenges are totally different. Thrust into nationhood on its own, Singapore had to make hard decisions on its political, economic and social future. Our businesses had to adjust to periodic changes in the region's political and economic conditions. As a result, our businesses have diversified their export markets and cast their nets wider. Our manufacturing production network spans Southeast Asia and our markets are international.

Hong Kong never had the prospect of independence or of nation-building. Instead, it has reverted to China, but with full autonomy in all internal matters for the next 50 years. With your reversion to China, our political destinies have diverged and will take different paths. The political and economic challenges we face will be different; hence the strategies and policies we have to work out will not be the same. Nevertheless our long established ties will be valuable. The practical co-operation between officials of our two governments do not bear out media stories of deadly rivalry. Both of us are rated at the top of world competitive tables. Both score high marks for honest and efficient government that uphold the rule of law, and are committed to free markets. Both have much to gain from sharing information and experience as we co-operate and compete against the world in a globalised economy.

from its economic hinterland. We became an independent nation in 1965, and had to find our own way in the world. Singapore's challenges are totally different. Thrust into nationhood on its own, Singapore had to make hard decisions on its political, economic and social future. Our businesses had to adjust to periodic changes in the region's political and economic conditions. As a result, our businesses have diversified their export markets and cast their nets wider. Our manufacturing production network spans Southeast Asia and our markets are international.

Hong Kong never had the prospect of independence or of nation-building. Instead, it has reverted to China, but with full autonomy in all internal matters for the next 50 years. With your reversion to China, our political destinies have diverged and will take different paths. The political and economic challenges we face will be different; hence the strategies and policies we have to work out will not be the same. Nevertheless our long established ties will be valuable. The practical co-operation between officials of our two governments do not bear out media stories of deadly rivalry. Both of us are rated at the top of world competitive tables. Both score high marks for honest and efficient government that uphold the rule of law, and are committed to free markets. Both have much to gain from sharing information and experience as we co-operate and compete against the world in a globalised economy.