When SARS spread here last spring, employees at Lee Fung China Ware, a large store that sells porcelain, did not see a single overseas tourist for two months and sales to local residents plunged.
Business has mostly recovered this winter, but the store's base of customers has changed, perhaps permanently. The American and European tourists and businesspeople who previously snapped up figurines representing the Chinese zodiac signs have not yet returned in large numbers.
They have been replaced, however, by Chinese customers, both Hong Kong residents and visitors from the mainland, who are buying flower vases with feng shui designs in preparation for the Chinese New Year, said Lily Wong, a sales representative.
The store's sales mirror a broader shift in Hong Kong, and in East Asia generally, toward a greater reliance on the booming Chinese economy.
Hong Kong's recovery has been especially significant. Forecasters predict that its economy will expand 4.5 percent this year after shrinking sharply last spring during the SARS outbreak. The stock market rose 35 percent last year, after three losing years.
So much money has poured into the territory that the Hong Kong Monetary Authority has been unable to drive the Hong Kong dollar back down to its peg of 7.8 to the American dollar, despite repeated interventions in the last three months.
Asked if they thought 2004 would be a better year, economically speaking, than 2003, Hong Kong residents were more optimistic than people in any of the other 59 countries and territories where similar questions were posed, according to survey results released last week by Gallup and TNS, a market research firm.
Of course, doing worse than last year would be quite a feat, given that Hong Kong had more cases of SARS per million residents than anywhere else in the world.
The city depends on its roles as the trade and finance capital of China and the busiest transportation hub in Asia, both of which suffered during the two months when the World Health Organization discouraged travel here. And last year was Hong Kong's sixth consecutive year of declining prices, as the territory has suffered worse deflation than even Japan.
As a huge demonstration on New Year's Day showed, many in Hong Kong also remain dissatisfied with their government and eager for the introduction of greater democracy. But several signs now suggest that Hong Kong's recovery has staying power, at least as long as the mainland economy continues to boom.
Exports are strong, especially to Taiwan, Singapore and Thailand. Growth in exports to the US has been weaker, but that is lessening a dangerous dependence on the American market.
Re-exports of goods manufactured in mainland China, which dominate Hong Kong's trade, were 10 percent higher in November than in the same month a year earlier.
Exports of locally produced goods slipped 3 percent, but even that was a significant improvement after years of double-digit declines, said Paul Tang, the chief economist at the Bank of East Asia here.
The modest decline suggests that after years of factories moving across the border to lower-wage cities on the mainland, the remaining factories may be staying in Hong Kong, where patents and other intellectual property are much more easily protected.
Tourism, which produces low-wage jobs to replace some of those lost to the mainland, is expanding because of Beijing's decision to allow more visits here. The number of mainland tourists here in October was up 31 percent from a year earlier, even as the number of European tourists fell 11 percent and the number of American tourists dropped 15 percent.
Beijing regulators are also siding less with Shanghai's financial markets over Hong Kong's these days. Hu Jintao (胡錦濤), China's president since March, has relied less on former Shanghai officials than did his predecessor, Jiang Zemin (江澤民).
Renewed confidence here has produced a surge in local consumption as well. Because of Hong Kong's wealth and high savings rate, "whenever sentiment recovers, the economy recovers very strongly," said Joan Zheng, an economist here for J.P. Morgan.
A peculiarity of the renewed optimism is that the biggest source of unhappiness -- a decline of two-thirds in property prices since a bubble burst in 1997 -- has not really gone away. Prices dropped an additional 15 percent during the SARS outbreak last spring and summer, and rebounded last autumn only to the levels of last January.
"We worked ourselves back to where we were pre-SARS, and people are happy," said Peter Woo, a businessman who is chairman of the Hong Kong Trade Development Council. "And before they were feeling bad."
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