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Following is the transcript(English portion) of a press conference given by the Chief Executive, Mr Tung Chee Hwa, and the Mayor of Shanghai, Mr Han Zheng, on Hong Kong/Shanghai economic and trade cooperation today(October 27).

Reporter: Mr Tung, you mentioned that there would be eight areas of co-operation between the two cities. Can you tell us more concretely how the two cities are going to co-operate? Secondly, while you emphasise that there are a lot of benefits for both cities, will this sort of co-operation also cause an outflow of talent and probably investment from Hong Kong to Shanghai? Can you also tell us how you define the relationship between Hong Kong and Shanghai? Do you think Shanghai still will be one of Hong Kong's major rivals, especially in competing for foreign investment?

Chief Executive: We are in the world of globalisation, movement of capital to where you get attractive return, movement of work processes to where the cost is the lowest and movement of research in science and technology to areas where there are these scientists and technologists are a natural tendency in the world today. In Hong Kong we are faced with globalisation's challenge every day and over the last few years, our main objective is how to overcome these difficult challenges and get Hong Kong's economy moving again. To do this, first we must recognise what our competitive advantages are. One of them is that we are a very international city, we are the best bridge between the Mainland and the rest of the world. Why? Because we have really top-class professionals. Why? Because our market economy is functioning very, very well indeed. So these points are our competitive advantages and we offer these competitive advantages to people around the world and people on the Mainland to use Hong Kong as a platform.

We also see that, for instance, Shanghai's economy is moving very rapidly forward and the need for professionals is very huge, so it gives our people the opportunity to participate in that economy. Shanghai's consumer market is one of the largest on the Mainland. It gives our business the opportunity to participate in such a huge market. And Shanghai's need for capital is large. Shanghai, of course, is now looking after its own capital needs but when fund-raising is needed for foreign currency, Hong Kong is a very automatic place to come to. So there are a lot of areas where we are complementary with each other. The agreement this morning allows the market to open up for us from Hong Kong and that is really very important for us to move forward. So are we rivals? Well from what I have said, you can see that there's more room - there's a lot of room - for co-operation by both Shanghai and Hong Kong. Yes, there'll be competition here and there, but competition, I think is healthy. Mr Han just said so himself, that competition is healthy. Competition gives both of us the will and the energy to do better all the time. So it's going to be wonderful co-operation between the two cities.

(Please also refer to the Chinese portion of the transcript.)

Ends/Monday, October 27, 2003

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