ABSTRACT
The dynamism of Hong Kong’s economy and the political changes ahead make any attempt to pinpoint Hong Kong’s future development presumptuous. For example, economic reform in China may fail and lead to rapid contraction of the Chinese economy. It may also succeed and enable China to make use of more efficient economic institutions. Hong Kong should first of all maintain a stable macroeconomic environment. A most likely scenario for the Hong Kong economy some years hence is the following. China’s economic reform does not go smoothly. Various problems emerge that need to be tackled, such as inflation, unemployment, income inequality, and corruption. The financial markets in Hong Kong will gravitate more and more toward financing development in China. The mainland as well as Hong Kong must make adjustments, however. It is the first time that mainland decision makers will have to manage a capitalist society with an extremely free market economy.
