The prospect for Hong Kong's economy is encouraging, despite the beginning of a new interest cycle, high oil prices and possibly uncertain geo-politics, said Tung Chee Hwa, chief executive of the Hong Kong Special Administrative Region, on Monday.

Speaking at a luncheon for the "Hong Kong Economic Summit: Leveraging on the Mainland and Engaging Ourselves Globally", Tung said Hong Kong posted 6.8 percent GDP growth in the first quarter of 2004, and growth in the second quarter is expected to be in double digits.

Property prices have stabilized, unemployment has leveled off and been declining although very slowly and deflation is disappearing, said Tung.

He pointed out that Hong Kong needs a favorable social and political environment to ensure successful restructuring of the economy and continuing progress of the society.

"It is imperative that we continue to work to strengthen the relationship between Hong Kong and the mainland, a relationship that is based on mutual trust and common interests," Tung said.

"We must faithfully turn the 'One Country, Two Systems' conceptinto an everyday reality in full accordance with the Basic Law. And we must be sensitive to the needs and concerns of our country,and therefore actively promoting her national interests and well-being," he said.

Hong Kong's progress and prosperity also depend on good and constructive relationship between the government and the legislature. A strong executive and legislative relationship is essential to galvanize Hong Kong's energy and resources for the challenges ahead and to reach consensus as to how Hong Kong needs to move forward, said Tung.

The direction that the government set out for economic recovery is making good progress. "I hope the new Legislative Council when elected will support and work closely with the government to ensure that progress will continue to be made for the common good," he said.

He also noted that Hong Kong's future depends on securing greater access to the Chinese mainland market for Hong Kong's businesses and professionals, and on building on Hong Kong's expertise in serving the mainland's trade and investment needs.

It is also clear Hong Kong's future depends on ensuring two-wayfree flow of goods, people and when the time is ripe, capital flow between Hong Kong and the mainland, he added.

Source: Xinhua