Chairman Fang, Ladies and Gentlemen,

I am pleased to be invited by the Hong Kong Productivity Council to speak to you here this evening. I have planned to focus today's talk on the productivity of Hong Kong. Yet, some recent mainland-related events, such as the successful visit of Chairman Jiang Zemin to the United States, the commencement of the damming of the Yangtze River and Wei Jingsheng's departure for the United States for medical treatment a few days ago, have touched me and reinforced my macroscopic outlook of our country's prospect. Therefore, I would like to share with you here my personal views.

Of course, you may have very different views on these issues. But personally, I think and hope that when we come to discuss these issues, we have to look at things from a higher elevation and look from the perspective of the national interests and development. With a broader and more far-reaching view, the conclusion we may have would be more positive and accurate.

As we know, our country had a very hard time during the past hundred years. Today, it has finally got over and is flourishing. At the turn of the nineteenth century into the twentieth century, our country was invaded and humiliated by foreigners. At that time, Chinese hardly had a standing at the international level. With the founding of the People's Republic of China, changes began to emerge in the outlook of our country. The situation was particularly encouraging with the end of the Cultural Revolution. With almost two decades of hard work, the nation as a whole has now entered a new stage of development and the Chinese people have rejuvenated.

Let me cite a few examples. China has a population of 1.2 billion, equivalent to one-fifth of the world's population. However , its arable land only accounts for 7% of the world total. After years of hardship, we have managed to achieve on so little arable land an annual production of 450 million tonnes of staple food, which suffices for the consumption of over 20% of the world's population. This is indeed a very outstanding achievement. Two decades ago, almost one-third of the population in China led a life below the poverty line. Today, very remarkable improvements have been witnessed in education, housing, medical care, city development, standard of living as well as quality of life. The percentage of those impoverished has dropped to a single digit. During the recent ten years or so, a great number of railways and expressways were built; telecommunication was also rapidly developed. When new China was founded in 1949, the steel production was almost zero. But now, the annual figure of iron and steel production exceeds 100 million tonnes, which enables China to rank first in the entire world. With the 95 Year Plan for National, Economic and Social Development and a Long-Range Programme for 2010 in place as well as the principles of development laid down at the 15th National Congress of the Communist Party of China, our country will emerge as one of the modernized nations by the middle of the next century and reach the standards comparable to medium developed nations. The World Bank even forecasts that China will become one of the strong economic powers in the world by the year 2020.

Recently, I have witnessed the damming of the Yangtze River on television. The grandeur impressed me a great deal. The Yangtze project is indeed an uphill task. That is why Dr. Sun yat-sen made such remarks a long time ago. After repeated efforts of planning for more than half a century, the Chinese leaders are eventually turning a dream into reality. The project will not only supply electricity to the central part of China for economic development, but also eliminate the natural threat posed by flooding. One point we must bear in mind is that a massive project of world scale can only be implemented smoothly with the enormous development of our country's economy and the immense growth of our country's strength. Apart from this project, indeed many other large scale projects such as the South-North Water Transfer Project, which aims at carrying water from the south to the north of China, are already underway.

People in every part of China have benefited from the achievements China made during the past two decades. This is a fact widely recognized in the world. Just imagine why our country could within a short span of twenty years made such significant achievements that we had never dreamt of. The reason is that the direction of the country's political, economic and social policies is correct, agreed and supported by all people. Our country has been assertive of its correct economic policies and persevering in the maintaining of social stability. It is only with such determination could the country trigger off the undreamt-of developments and the people enjoy better living.

Throughout the history of national development, the Cultural Revolution was the most miserable and remembered lesson. Discipline and stability are a must for our country. In order that our country could flourish and achieve its own goals, a stable environment within the country is definitely not dispensable. We learn from history that a chaotic country will not do. Without a stable society, there is very slim hope of rapid economic development, success of open-up and reform or marked improvement in living standard, let alone the rise of reputation at the international level.

Every country will work out its own political system and decide upon its own pace of democratization according to its own situation. The population of China accounts for one-fifth of the world's population. It goes without saying that it will design its own political system and democratic framework with reference to its own situation. It is on this very basis that the concept of nation is to be formed. The direction of the political, economic and democratic development in China at present has been set by the Chinese leaders after looking thoroughly into the past decades of development and is well supported by the whole country. Besides, the implementation of the above policies during the past twenty years has proved to be advantageous to the national development and the rejuvenation of the Chinese people. What is more important is that tremendous success has already been achieved.

The point I want to put forward by mentioning the above is not that our country has already been developed fully and successfully, thus requiring no further development. That is not what I intend to put forward. What we perceive is that our country is now politically very stable, with good social order and favourable social environment. The main objective of our country is its economic development and the direction is very clear. Moreover, during the past years, our country injected considerable resources into infrastructural development, which has provided a good environment for the economic take-off. Tremendous investment has also been made in education to train up talents for the next phase of development. All these facts further boost my confidence. When our country enters the next century, it will certainly become more open, democratic and advanced. I have voiced my own opinion here in the hope that all of us will see things that occur to our country with a more dynamic view, not to judge by the happenings to a single person or with a one-sided view, but look at the society as a whole. Only when we see things from a wider perspective can we understand the concept of a nation and the love for our country.

Likewise, the implementation of the "one country, two systems" policy in Hong Kong is a concept developed by the leaders of our country, taking into account the actual situation of Hong Kong and its economic development. This policy allows Hong Kong to continue its political, economic and social systems, which are distinct from those currently in practice on the mainland. The development of various aspects of Hong Kong, including that of the political system, will eventually follow the direction as laid down in the Basic Law in a manner different from that being adopted on the mainland. This is the reason for the implementation of the "one country, two system" policy. For the successful implementation of this policy, it is better to have a full and correct understanding of our country, including its current condition, and safeguard the "two systems". If the "one country, two systems" policy is to be successful, I am very confident that it will be successful and that we are able to safeguard the "two systems". To protect the "two systems", we must have a better understanding of our country.

After sharing with you my views on the prospect of our country, I would like to extend my warmest congratulations to the Hong Kong Productivity Council, our host this evening, on the occasion of the 30th Anniversary of its foundation, which has added greater joy to 1997, a year of special historical meaning to Hong Kong.

With continuous development in information technology and transportation, the world economy has become more open and free. Competitions have grown beyond the borders of countries. As I have mentioned in my policy address, whether Hong Kong can maintain its competitive edge and leading position in the international market depends very much on the ability of our manufacturing and services industries to develop fully into high value-added activities. The future will be in the hands of those enterprises which are able to make continued efforts in improving their production skills for the manufacture of high value-added goods.

In the past thirty years, the Hong Kong Productivity Council provided the commercial and industrial communities with unfailing encouragement and assistance in the adoption of more advanced methods for production and more efficient mode of operation in a bid to raise the overall productivity of Hong Kong. Today, Hong Kong has become an important commercial and industrial city and is the seventh largest commodity trading centre in the world. These achievements are encouraging and can serve as the best return for the past efforts ever made by the Council. I believe that all of you would share with me the same aspiration for a more prosperous future of Hong Kong. To achieve this end, I hope that the Council would continue to work hard with other supporting institutes for trade and industry as well as members of the trading and industrial sectors to create a better environment for commercial and industrial development in the future.

Thank you.