H.K. banks shielded from subprime crisis: official

by Reiji Yoshida

The subprime loan crisis is far from over and could inflict further pain on the U.S. market, but most banks in Hong Kong will not be greatly affected, the Hong Kong government’s second-most important official said Tuesday during a visit to Tokyo.

“We are not so much concerned because this problem . . . is not a huge problem (for Hong Kong). Certainly not as big as (for) the U.S.,” Henry Tang, chief secretary of the administration of the Hong Kong Special Administrative Region, said during an interview in the morning. Asian stock markets tumbled further by the end of the day.

He arrived Monday on a four-day trip to meet with government and business leaders.

Tang stressed he is confident about Hong Kong’s economy for the foreseeable future, saying it has and will continue to benefit from the rapidly growing Chinese economy.

“If we look at the global economy, the balancing force is actually China’s economy,” said Tang, who previously served as Hong Kong’s financial secretary.

The worst, however, may not yet be over for the rest of the world, particularly the U.S., he warned.

“I believe the U.S. market still has a lot of worries in front of it. I don’t think we have seen the end of the subprime problem” he said. “And the negative impact the U.S. will have on the rest of the world will be very serious,” he added.

Boosted by the economic boom in mainland China, Hong Kong has enjoyed average annual economic growth of 7.7 percent during the past three years.

After the end of the 2008 Olympics, Beijing will try to slow down economic growth a little but should still achieve around 7 percent annually, at least for the next few years, Tang predicted.