The global financial tsunami and other major challenges facing the Hong Kong society such as food safety and environmental pollution call for strong government leadership, Chief Executive Donald Tsang said Wednesday.
Delivering the second policy address for his second term, the top official of the Hong Kong Special Administrative Region (HKSAR) said economic globalization had narrowed the distance between different members of the global community and that Hong Kong, as an externally-oriented economy, was naturally vulnerable to external changes.
"With globalization, Hong Kong is even more exposed to external factors such as the economy, finance, food safety and environmental protection," he said.
Tsang said the financial crisis triggered by the U.S. sub-prime mortgages has spread worldwide, with Hong Kong suffering a noticeable slowdown in its economic growth.
"Some banks have been affected by rumor-mongering, which has shaken the confidence of customers," and, as a result, "risk management has become more important than ever to our financial system," he said.
The Bank of East Asia recently suffered a bank run following rumors spread by text message questioning the bank's financial stability. The dust settled soon as the bank's senior management and government officials stepped in to dispel the rumors.
"Rising public expectations, coupled with rapid information dissemination by the media, necessitate prompt government response," Tsang said.
The globalization of the food trade is a huge challenge to food safety management due to the sourcing of food ingredients from different places, and the environmental pollution also called for more than the efforts of one single government, he said.
While it is necessary to re-examine the functions and roles of the government to meet the challenges, the HKSAR government will continue to uphold the principle of "Big Market, Small Government" in promoting economic development, he added.
"The Government's role is to formulate policies conducive to market competition. When the market fails, however, the Government should be prepared to intervene in a timely and decisive manner," he said.
(Xinhua News Agency October 15, 2008)