Hong Kong Special Administrative Region (HKSAR) Chief Executive Donald Tsang began delivering the 2008-09 Policy Address at the Legislative Council Wednesday morning, outlining the HKSAR government's policy direction in the coming year.

Chief Executive of the Hong Kong Special Administrative Region, Donald Tsang, delivers his second Policy Address to the Legislative Council on Wednesday, October 15th, 2008, . [cnsphoto]

Tsang focused on the current global financial crisis while responded to other challenges such as food safety in his one and half hour policy address titled "Embracing New Challenges," which was broadcast live here.

"New challenges have surfaced since my last policy address," Tsang said in his second annual policy address since he won a second term as HKSAR Chief Executive in March 2007.

"These are uncertain times and we are facing risks to our economy, society and everyday lives," Tsang said in the policy address, vowing to uphold the principle of "Big Market, Small Government" in promoting economic development.

"When the market fails, however, the government should be prepared to intervene in a timely and decisive manner," Tsang said, "strong government leadership is the key to stabilizing the economy and helping people regain peace of mind."

Chief Executive of the Hong Kong Special Administrative Region, Donald Tsang, delivers his second Policy Address on Wednesday, October 15th, 2008. [cnsphoto]

According to Tsang, Hong Kong's economic growth declined noticeably to 4.2 percent in the second quarter and he expected the economy to slow further due to the worsening global credit crisis.

Describing the severe external economic environment as Hong Kong's "major challenge," Tsang said the financial turmoil triggered by the U.S. subprime crisis continues to deteriorate and has spread to Europe.

"It seems the worst is yet to pass," he said, "its destructive force is much stronger and more widespread than the Asian financial turmoil in 1997."

"The recovery will take longer, be more difficult and certainly cannot be taken lightly," Tsang added.

He said he will soon establish and chair a task force to continually monitor and assess the impact of the financial tsunami on local and global markets, and provide timely evaluation of its impact on the local economy and major industries.