Since then, we have indeed made some minor political adjustments, many of which have been widely reported and even blown out of proportion. However, the real fundamental changes to the HKSAR have taken place at an economic strategic level, although these changes have been rarely noticed.

Hong Kong has always thrived on change. We embrace change with an open mind, turning adversity to opportunity in our bid to create our own fate. This spirit is still with us today in great abundance. But now it is time for us to hold a long-term vision of working closely with China - a vision which will enable us to benefit from the synergy of working together.

Fortunately, there are signs that we are moving away from the Asian financial storm. This storm has taught us not to become over-dependent on financial services and not to assess our wealth simply by the appreciation of assets. The fact that we need more business activities to support our economy is now etched deep in the minds of our top policy-makers. Hong Kong is slowly on the road recovery, but as it picks up speed, it is now the deeper and more fundamental issues exposed during the crisis that we must seek to address.

Hong Kong has exploited China's cheap land and labour for over 20 years. We can no longer take this success formula for granted. As China's own reform intensifies and begins to take off, it poses a serious challenge to Hong Kong. Unless we maintain our edge by continually upgrading our technology and skills, other great cities will catch up with us in no time.

The 1990s have witnessed the world's IT revolution. The fast pace of technological changes has intensified competitive forces, thus separating the strong from the weak in the race to be the fitness in the business world. Hong Kong has little option but to throw itself into this tremendous race.

The advancement of IT and the convenience of travel have helped to accelerate the pace of globalisation of the world economy. Powerful economic trading blocks emerged in North America and Europe rendering the much weaker and more isolated Asian economies vulnerable. In response, Hong Kong has had to keep an international perspective, while also fostering a more rational economic relationship with China.

To add further flavour to the melting pot, China is almost set to enter the WTO, where further challenges and opportunities will no doubt present themselves in great measure. We have no time to lose in preparing ourselves before the impact strikes - Hong Kong has been well-treated by China so far, but the political halo of 1997 will not last for long. We need to see clearly our future role and set our goals now. We must realise that Hong Kong's main value is to be a useful economic city to China.

Our in-depth knowledge of overseas markets and well-developed network; foreign language skills; ability to respond quickly through the latest communication technology and world-class sea and air ports all give us an advantage over other Chinese cities. Hong Kong should also take advantage of its accessibility to capital financing; liberal and open telecommunications policies and front-line experience of what the world markets need in order to gain a lead over China in IT and applied research. If we can also take advantage of China's huge talent in research and the vast diversity of production processes available to test new technologies, there is a good possibility for synergy.

Another possibility is to develop tourism in the River Pearl Delta. With a widened vision, we can set our sights on a unique mix of Chinese and Western entertainment which is complemented by one of the world's best international airports.

However, actions speak louder than words. We must strive to stay ahead when devising our land, manpower and financial polities. China's strengths, weaknesses and the possible synergy between us is very much part of our success formula.

Hong Kong must keep its land costs at a reasonable level to avoid overheating the economy with rapid assets appreciation which would add significant costs. In the long run, we must recognise that a shortage of land is a serious disadvantage and we must tap China's vast resources just as freely as other Chinese cities in order to be competitive.

Investment in education is our surest bet for the 21^st century, where real advancements in technology and humanity will result from knowledge. As many young people as possible should be well-equipped with the abilities to access and assimilate knowledge for themselves, gain language skills and good Chinese and international perspectives. They should also be creative and be prepared to embark on a career requiring life-time learning. Importing highly-skilled manpower will also contribute to Hong Kong's own niche.

Hong Kong is now a major investor both in China and overseas. We have helped to further deepen China's experience of international exposure by developing multi-national management disciplines and networking. Our monetary policies should also move in parallels, which would help the region's stability, attracting investment and supporting China's claim to a rightful place at the World Economic Forum.

Hong Kong also lacks natural resources, but this should not discourage us from developing cluster areas for individual high-technology, high-volume products or production parts. We still have strong professional skills, i.e. accountancy, law and financial advisory, all of which China will need time to catch up on. Our internationally acclaimed and well-accepted political and legal systems should be protected and stay open and free if we are to fulfil our international role for China.