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."
The CIA has a message for Chinese government officials worried about their place in Chinese President Xi Jinping’s (習近平) government: Come work with us. The agency released two Mandarin-language videos on social media on Thursday inviting disgruntled officials to contact the CIA. The recruitment videos posted on YouTube and X racked up more than 5 million views combined in their first day. The outreach comes as CIA Director John Ratcliffe has vowed to boost the agency’s use of intelligence from human sources and its focus on China, which has recently targeted US officials with its own espionage operations. The videos are “aimed at
STEADFAST FRIEND: The bills encourage increased Taiwan-US engagement and address China’s distortion of UN Resolution 2758 to isolate Taiwan internationally The Presidential Office yesterday thanked the US House of Representatives for unanimously passing two Taiwan-related bills highlighting its solid support for Taiwan’s democracy and global participation, and for deepening bilateral relations. One of the bills, the Taiwan Assurance Implementation Act, requires the US Department of State to periodically review its guidelines for engagement with Taiwan, and report to the US Congress on the guidelines and plans to lift self-imposed limitations on US-Taiwan engagement. The other bill is the Taiwan International Solidarity Act, which clarifies that UN Resolution 2758 does not address the issue of the representation of Taiwan or its people in
DEFENDING DEMOCRACY: Taiwan shares the same values as those that fought in WWII, and nations must unite to halt the expansion of a new authoritarian bloc, Lai said The government yesterday held a commemoration ceremony for Victory in Europe (V-E) Day, joining the rest of the world for the first time to mark the anniversary of the end of World War II in Europe. Taiwan honoring V-E Day signifies “our growing connections with the international community,” President William Lai (賴清德) said at a reception in Taipei on the 80th anniversary of V-E Day. One of the major lessons of World War II is that “authoritarianism and aggression lead only to slaughter, tragedy and greater inequality,” Lai said. Even more importantly, the war also taught people that “those who cherish peace cannot
US Indo-Pacific Commander Admiral Samuel Paparo on Friday expressed concern over the rate at which China is diversifying its military exercises, the Financial Times (FT) reported on Saturday. “The rates of change on the depth and breadth of their exercises is the one non-linear effect that I’ve seen in the last year that wakes me up at night or keeps me up at night,” Paparo was quoted by FT as saying while attending the annual Sedona Forum at the McCain Institute in Arizona. Paparo also expressed concern over the speed with which China was expanding its military. While the US
RSS