ABSTRACT
This chapter reviews of Hong Kong’s overall performance in the period and focuses on the issues of inflation, structural change, external trade, and developments in money and finance. The unimpressive performance is more domestic in origin: bickering between China and the United Kingdom over the future of Hong Kong triggered slumps in both the stock and property markets. The inflation is in general closely related to monetary policy, it is necessary to refer briefly to Hong Kong’s monetary arrangements. A more plausible explanation of current inflation in Hong Kong is the structural change the economy has been undergoing, which has accompanied by changes in the labor market. The sectoral shifts in the Hong Kong economy sharply increased the demand for services workers, for whom workers on the mainland are not yet ready substitutes. The openness of Hong Kong’s economy, changes in its domestic economic structure is readily matched by corresponding changes in its trade patterns.
