Henry Tang confident that government's forecast for the economy will be matched Hong Kong's economic growth this year will match the government's forecast of 7.5 per cent because of benefits created by the free-trade agreement with the mainland, the financial secretary said yesterday. Henry Tang Ying-yen's comments, based on latest economic figures, come ahead of the announcement of third-quarter economic growth figures today. They are expected to confirm that the city is on track to recovery and to meeting the government's forecast growth rate. Mr Tang said the economy had finally turned the corner. 'We are sustaining our momentum well into the final months of this year. When you see the figure for growth in the third quarter ... you will understand why I said I was confident that the target of 7.5 per cent full-year could be met.' Mr Tang said investment in industrial machinery for manufacturing use, having suffered several years of decline, had risen in the past three quarters, with the last quarter seeing 33 per cent growth compared with the same period last year. The finance chief, who spoke at the annual business summit of the Hong Kong General Chamber of Commerce yesterday, said: 'The timing of these investments coincided well with the Closer Economic Partnership Arrangement [Cepa].' The trade pact with the mainland, which came into effect on January 1, allows 273 types of Hong Kong goods to enter the mainland tariff-free. Mr Tang said some businesses had found it competitive to manufacture certain products in Hong Kong following last month's signing of the second phase of Cepa. Jeffrey Lam Kin-fung, the legislator representing the Hong Kong General Chamber of Commerce, said many companies manufacturing clothing, food and drinks had recently moved their production lines back to Hong Kong. Mr Tang said the economy had created more than 100,000 jobs in the past year, and companies were now complaining about staff shortages. He said that unlike last year, when the city saw empty hotel rooms and shopping malls, this September hotel occupancy rates had been in the region of 90 per cent and retail sales had risen by 7.8 per cent. Mr Tang also pointed to the fact that the property market had seen much-improved sentiment, and the number of mortgages in negative equity had plunged from more than 100,000 to 25,000. He remained cautiously optimistic that next year would be a good one for the economy and was also hopeful of meeting the target of balancing the books by 2008-09. But he said it was still necessary to study ways in which the tax base could be broadened. Mr Tang said the government was in the early stage of studying a sales tax, and an internal committee would submit a report to him by the end of the year.