"Let me categorically say this", stated Hong Kong's Chief Executive, leaning forward in his armchair. "We are not going to break the peg. We are not going to repeg. There is only one rate and this is it. We do this because it is in Hong Kong's fundamental interest to do it. We do this because business and the economy need the certainty of exchange rate."
Hong Kong's fixed exchange rate of 7.74 to the US dollar is the one constant in an unprecedented period of crisis and recession in the territory. There are rising unemployment, soaring interest rates, plummeting property prices, a shell-shocked stock market, fewer tourists, multiple bankruptcies and a currency under siege.
"We have suffered a lot of pain," said Mr Tung Chee-hwa, and there were more "reverberations" from the Asian crisis to come, depending on the external environment. But the Hong Kong dollar would remain pegged to the US dollar, even though it made Hong Kong an expensive city among Asia's devalued currencies.
"We have been more expensive in the past," he said. "Property prices were too high. But in a way we have gone through a very painful adjustment period and it's still continuing. And I believe we are now more competitive already. So. No. We are not going to break the peg. We will keep the peg going."
Pressure to break the link had in fact lessened because the US dollar had weakened and "that obviously has helped". Since the Asia crisis broke, property prices in Hong Kong have tumbled up to 50 per cent, ruining many investors, and causing Mr Tung to freeze land sales. Residential prices were bottoming out, he believed, but "I can't say this about the commercial property prices because there's too huge a supply coming through. They may still go down a bit."
But how much would depend on unpredictable external factors like the US economy? Asked what external factor he feared most, he replied: "Let's put it another way. What do I wish most? I wish a rapid recovery of the Japanese economy because that would impact the Asia region very much." And if the Japanese economy collapsed? "Well," he said laughing, "it hasn't being doing very well anyway, so I would say that if it started to do better it would be very helpful to the rest of us."
One of the most controversial measures taken by Mr Tung's government to save the peg was its intervention in the stock market in August, when Hong Kong spent HK$118.13 billion (£9 billion) on stocks, giving it a 7.5 per cent share of the Hang Seng index. A massive attack by hedge-fund speculators had posed a threat to the financial system, with untold psychological consequences if the index had gone into free fall. The gamble paid off. But had Hong Kong, in winning the battle, undermined its position in the war, and changed the dynamic of Hong Kong's uniquely free market? Mr Tung did not think so.
"The purpose of our intervention was really to free up the market, because both the forward market and particularly the stock market were cornered in such a way that the prices were not natural and you could not establish proper prices any more," he said. "The issue was not about propping up our property market or propping up our stock market. That was not our objective, our objective was to free the market from artificial manipulation." I asked Mr Tung if the market intervention came after consultation with Beijing. He denied this "absolutely".
"One country-two systems is really being turned from a concept into a reality," he said. "So apart from defence, apart from foreign affairs, China is not involved [in Hong Kong]. We made our decision here, we took the action here, then of course we notified the central government."
Many people forecast that Hong Kong in future could become just another Chinese city. How could it remain more attractive than booming Chinese cities like Shanghai, I asked. "Competition keeps us on our toes," he said. Hong Kong would stay in front by "focusing on the longer term, investing in education, investing in infrastructure". If there was more competition from China's more open and efficient container ports, "fine, we have to do better".
Mr Tung emphasised the importance of maintaining Hong Kong's international character. "Our culture is the best of the east and the west. That's what made us very strong, very successful . . . We want to continue to be the international financial centre in Asia."
He praised the expatriate community, which contains 45,000 Europeans, for their contribution to business, cultural and sporting life. English in Hong Kong has declined, however, at a time when it is becoming the foremost world language. Mr Tung has introduced a policy of "mother-tongue" teaching through Cantonese, which he told me had been done after consulting overseas experts who concluded that this helped the study of all subjects including new languages.
"The English standard in Hong Kong has been declining ever since the '90s, maybe even before that," he said. "Even our Chinese standard has been declining. It has to do with the methodology of teaching in schools."
He did not think the Asia crisis had encouraged xenophobia, because throughout history being outward-looking was "the key to our success".
Co-operation with Beijing is at the heart of a current outcry in Hong Kong over a local criminal called Cheung Tze-keung, or Big Spender, who is being tried in mainland China for crimes connected with two tycoon kidnappings in Hong Kong. If Hong Kongers were prosecuted in mainland China for crimes committed in Hong Kong, would the two systems not became indistinguishable, I asked. "Mr Cheung has committed 20 crimes, as I'm told, for instance that he smuggled arms from China which he sells from China so it is a crime committed in China," Mr Tung said. "Second is that I'm told . . . that he has committed murders in China so it is a criminal issue in China. Third, he planned the kidnapping of Hong Kong people in China and under Chinese law this is a crime in China. So this is why he is being prosecuted in China. If he's a Hong Kong permanent resident, if the crime is committed here, he will not be tried in China."
However "some kind of arrangement" would have to be made to deal with extradition in future. Mr Tung made it clear he would not be accelerating the democratisation process, as Hong Kong's Democratic Party wants him to do. "We are still at the very early stage yet," he said.
The current legislature didn't quite work when the government did not have representation in the legislature itself. But the Basic Law, Hong Kong's constitution, laid out the steps to a more democratic system by 2007. Would universal suffrage come in that year, I asked. "Universal suffrage is our ultimate objective; as to the precise timing of that it is too early to say because we need to work through our own experiences," he said.
So it might be later than 2007? "That's right," Mr Tung replied. The method of election to the first post-2007 legislature would be subject to the approval of two-thirds of the legislature and the chief executive. A new chief executive would be chosen in 2002 by an 800-member election committee and in 2007 by a new election procedure to be approved by the chief executive, two-thirds of the legislature and the government in Beijing. Would he be putting his name forward for a second term, I asked. "I'm so involved in my work now I'm not thinking about these things," replied Mr Tung.