A
high-level Chamber delegation visited Beijing last month and was told by Vice Premier Li
Lanqing that China is confident that the seven per cent growth rate this
year can be achieved and that she will keep up with policies which are effective in
stimulating the economy including continued infrastructure investments, encouraging
consumption and lowering of interest rates.
The delegation
also learnt at other meetings with senior Chinese officials that China will forge ahead
with reforms under all circumstances and will open up markets which are previously not
encouraged or restricted, as well as improve investment environment. They believed that
Hong Kong businesses would be the first to benefit from these opening up measures because
of her proximity to and ease of communications with China.
The 25-member
delegation of the Chamber, led by Chairman C C Tung, visited
Beijing from 13-15 June 1999. Also in the delegation were Deputy Chairman Christopher
Cheng, Vice Chairman Dr Lily Chiang, Legislative
Council representative the Hon James Tien, Director Dr Eden
Woon, General Committee members and chairmen of several Chamber committees.
It also includes chairmen of eight international Chambers in Hong Kong.
Apart from a
call on Vice Premier Li, the delegation had meetings with Minister of Foreign Trade and
Economic Cooperation Shi Guangsheng, Director of Hong Kong and
Macau Affairs Office Liao Hui, Executive Vice Minister of
Finance Lou Jiwei, Chairman of the China Council for the
Promotion of International Trade Yu Xiaosong, Secretary General
of State Economic and Trade Commission Jiang Qiangui, and
Director of the Hong Kong SAR Office in Beijing Bowen Leung.
Below is a
summary of the meeting with Vice Premier Li. For members who are interested in detailed
reports of other meetings, please refer to the Chamber Web site http://www.chamber.org.hk. |
 Receiving the Chamber delegation in Zi Guang Room
of Zhong Nan Hai,
Vice Premier Li started the meeting by expressing confidence in the imminent recovery of
the Hong Kong economy. He commended the Hong Kong business community for their efforts in
promoting economic development since Hong Kong's return to China about two years ago, and
that Hong Kong will have bright prospects very soon as most of the difficulties have
already been overcome.
Vice Premier Li
admitted the Asian financial crisis has hit China hard, but in a delayed manner. To
counter this crisis, the Central Government decided the value of currency should be
maintained as a way to ensure economic stability.
Active fiscal policy
Vice Premier Li
said alongside the stable monetary policy was an active fiscal policy which sought to
stimulate China's economy by investing in infrastructure development, in particular to
bring forward projects that have been scheduled for implementation at a later stage. This
on one hand could help to address problems brought about by the financial crisis and on
the other, develop more favourable conditions which are conducive to China's economic
development. And the result was that China maintained a 7.8 per cent economic growth in
1998.
He maintained
that the active fiscal policy is not a short-term measure and they will continue to pursue
it as a way to drive the economy but this alone is not enough.
Stimulation of consumption
He said the
second measure adopted is direct stimulation of consumption, and that real estate and
education are the two sectors which have immense potential in encouraging people to spend
their money. He reckoned both sectors are in need of faster and more vigourous
developments, and told the delegation they would welcome investments both from Hong Kong
and overseas to facilitate these developments.
Vice Premier Li
said the key to developing the real estate sector is not to focus merely on the first-hand
market but to open up the second-hand market as well. On education, he pledged to
establish more universities and high schools with funding either from the State, civilians
or the private sector. The goal is to allow more students to enroll in these higher
education institutions and at the same time, encourage more consumption in this sector.
Lowering of interest rates
The third
policy is to reduce interest rates significantly so that those who deposit money in banks
would withdraw some of their money and spend it now, Vice Premier Li said. He added they
are also considering measures to increase the salary of lower wage earners but not those
with high incomes as the former tend to spend the additional money more readily than the
latter.
He said to the
delegation that with these three major policies plus more which are on the way to address
the economic problems now facing China, he is confident the seven per cent economic growth
for this year can be achieved.
Foreign investments
The Vice
Premier admitted foreign investments have declined partly due to the overall sluggish
economic environment around the world, but added it also related to the investment
environment. Different ways are being looked at to attract foreign investments and one
direction is to further liberalise markets which are previously restricted such as trade
in services. He said the area that they would like to work with Hong Kong in is tourism of
which China has vast potential to develop but because of the low standard of services, it
hasn't been able to move forward at a fast pace. He hoped this cooperation could help to
raise the quality and efficiency of this service sector.
WTO
On the question
of China's accession to the World Trade Organisation (WTO), Vice Premier Li stressed that
both parties need each other but China will not sacrifice her principles for the sake of
joining WTO (see P.12). He said if China enters the WTO, it would not only be beneficial
to China but also to the SAR and promised Hong Kong companies would not be at a
disadvantageous position to compete with foreign companies when China's door opens wider.
While Hong Kong business needs to compete with their overseas counterparts under "One
Country, Two Systems", they should nevertheless enjoy the same benefits.
Hi-tech development
On the reform
of state-owned-enterprises (SOEs), Vice Premier Li stated the areas they will focus on are
to intensify the technical revolution within corporations, and to commercialise research
work by turning scientific institutions into enterprises. To facilitate such development,
the Central Government is looking at different financing means to fund these enterprises.
However, because of the lack of personnel and expertise, there is a need to look for
external support. He expressed support for Hong Kong's intention to develop
high-technology and indicated the second board (Growth Enterprise Market) soon to be set
up in Hong Kong could be an area where the two cooperate.
Vice Premier Li
concluded the meeting by reiterating that hi-tech is going to be an industry of unlimited
potential and that China and Hong Kong could cooperate closely on these issues, especially
to facilitate the commercialisation of scientific research. He said Hong Kong would
benefit from these developments as it is at an advantageous position to attract talent and
raise capital.
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