Hong Kong would have faced the same economic problems if it had not reverted to Chinese sovereignty, Tung Chee-hwa said yesterday.
Asked whether it would have been much the same situation without the handover, Mr Tung said: 'I would think so, because my financial team is exactly the same team as before.' Critics have argued a spate of policy blunders on issues such as financial turmoil and avian flu has exposed incompetence among senior officials.
Mr Tung admitted the future looked gloomy with unemployment, now at 4.8 per cent, likely to increase. The economy next year would be lean, he said in an interview with Associated Press.
But stressing the need to maintain the US dollar peg, Mr Tung said: 'The danger [of removing the peg] is that if you do this, there is a herd instinct. People would want to change their Hong Kong dollars into US dollars, and the interest rate then will shoot up even higher.
'We have the need to keep the link and we have the means to keep the link, and we will keep the link - we are not going to change.'