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Hong Kong’s growth prospects are inherently tied to the ebbs and flows of the global economy. Historically, this meant that the city took its economic cues from the US, the traditional bellwether for the global economy. But the rise of China into a global economic powerhouse has caused a growing shift in external influence away from the US and towards China. Today, China’s significance on Hong Kong’s economy is immense, with the city increasingly dependent on demand from mainland companies, investors, visitors and trade flow.
Looking at the correlation in economic growth of Hong Kong against China and the US in equal five year periods, we can see that the relationship with the US has been more volatile over the past 30 years, whereas that with China has remained largely steady.
As China has grown, so too has its impact on Hong Kong’s property market. The retail sector has become highly dependent on mainland shoppers. Demand for office space is increasingly being underpinned by mainland corporates. Cross-border trade remains the lynchpin of the city’s warehouse sector, while mainland participation in the residential property market is slowly transitioning from one of a buyer to that of a developer.
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27 January 2016