BEIJING, Dec 19: China’s leaders are in principle supportive of the idea of a free-trade zone between the territory and the mainland and plan to set up a working group to study the issue, Hong Kong chief executive Tung Chee-hwa said on Wednesday. Hong Kong’s first leader following the end of British rule in 1997 told reporters China supported a free-trade zone after he met with President Jiang Zemin and Premier Zhu Rongji during day one of a two-day trip Xinhua news agency called a “duty visit”.

State-run Xinhua quoted Jiang as saying he was appreciative of Tung’s recent announcement of his intentions to seek a second five-year term in office and hoped he would succeed.

“The central government has now directed MOFTEC to establish a special working group to study this issue,” Tung told reporters of his recent proposal for a free-trade zone.

“The issue is complicated, it will take time,” he said. “I think mentally both the President and the Prime Minister were in principle very supportive of the idea”.

MOFTEC is China’s Ministry of Foreign Trade and Economic Cooperation.

Hong Kong had plans to set up a similar working group to explore how to take the free-trade zone proposal forward, he said.

The proposals Tung put forward to Beijing earlier this year were in keeping with Hong Kong’s efforts to forge closer links with fast growing mainland China to alleviate the territory’s economic pains. Hong Kong is on the brink of recession and confidence has plummeted in the global economic downturn.

Earlier this month, Tung announced plans to scrap its quotas for mainland China tour groups from January 2002, throwing open the territory’s doors to droves of tourists.

In October, China signed a slew of deals with Hong Kong companies at an annual Beijing-Hong Kong economic symposium during which hefty incentives were offered to the territory’s companies to lure investment ahead of the 2008 Olympic Games.

Xinhua reinforced China’s solid support for Tung’s virtually assured second term as chief executive.

An 800-member election committee will pick Hong Kong’s next leader in March and, as Beijing’s open preference, Tung may be unopposed.

Since singling out Tung as the first Chinese leader of post-colonial Hong Kong, there has never been any doubt that Beijing would play the dominant role in selecting the territory’s chief executive.

Beijing chose Tung to lead the territory after the end of British rule and has made no secret of its support for his second term.

“I believe he will be elected,” Jiang told reporters during an official visit to Myanmar last week.

Tung remains largely unpopular in Hong Kong, a major financial and transport hub. Opinion polls show widespread displeasure with his low-key style and perceived lack of political skills in dealing with the public.

He has also been dogged by crisis, from a property and stock market collapse to a fiasco surrounding the opening of a new international airport and two deep economic downturns.

Jiang told Hong Kong reporters that no one was perfect but that Tung’s overall performance was good.—Reuters