The top echelons of the civil service did not fare much better. The civil service was considered a main pillar underpinning Hong Kong's prosperity before 1997. However, top officials were incapable of handling crises under the new administration in the past year. The retention of civil service molded after the British generalist tradition. Calls for the removal of some top officials in charge of financial and monetary affairs were even heard.
Policy miscalculations and blunders were rife in the first year of Tung's administration. For instance, the government's mandatory program to introduce the mother tongue at the medium of instruction in high schools starting from the fall of 1998 was greeted by angry parents who wanted more use of English. The outburst of numerous medical blunders, the delayed and ill-prepared response to the avian flu, and the inability to deal with unemployment and economic recession inspired little confidence in the administration's governance. The chaos during the early days of the new airport led to the unprecedented stowing down of freight transport, at a huge cost to Hong Kong. More importantly, this fiasco not only created an incredible public relations disaster, but also destroyed a golden opportunity to boost popular confidence after a year of political and economic malaise. Top officials defended an ultra-optimistic economic forecast of 3.5 percent growth for 1998 well into the summer, only to be embarrassed by the subsequent release of the -2.8 percent figure for the first quarter and the estimated decline of -five percent second quarter from the previous year.
Tung's government has been fighting a losing battle in stabilizing the economy. For instance, after an aggressive housing policy was promulgated in the autumn of 1997, property prices began to fall in a market soon to be further depressed by the financial crisis. By late June 35 percent from last year's level, which prompted the government to introduce a package to stabilize the real estate market and stimulate the economy, including more support for home purchases, more credit guarantees for small and medium-sized enterprises, and a moratorium on land sales for nine months. After a serious battle with speculators in late October 1997, which led to skyrocketing interest rates, the government bought massively into the stock market in late August to defend the peg with the US dollar at the HK$ 7.8 to one US dollar. It also introduced new restrictions on the stock and futures markets to make it more difficult for speculators to manipulate the market and, consequently, to attack the dollar peg. Although the unprecedented buying won considerable popular support, the intervention remains highly controversial and many have begun to question whether Hong Kong has deviated from its time-honored policies of laissez faire.
