How vigorously China - and by extension Hong Kong - can bounce back from the economic downturn depends largely on the health of consumer demand on the mainland.
Unfortunately, the prognosis is not good.
So far Chinese consumer demand has appeared to hold up relatively well. As export demand has stalled and property investment slumped, retail sales - widely used as a proxy for overall consumer demand on the mainland - have continued to expand, growing at a 19 per cent year-on-year rate in December (see the first chart below).
On the surface that appears to be a retreat from the heady 23 per cent growth rates enjoyed last summer before the economic crunch began to bite.
But when you consider that consumer price inflation dropped 4 percentage points over the same period, it looks as if mainland consumers have continued to spend at an impressive clip in real terms, despite the twin blows of falling asset prices and mounting job losses.
Following yesterday's release of inflation figures for January, however, economists are beginning to doubt whether that enthusiasm can be sustained.
According to the official data, consumer prices rose just 1 per cent over the 12 months to the end of January. That's a steep fall from the inflation rates of 8 per cent and more seen in the first half of last year. But according to many analysts, even a rate as low as 1 per cent overstates the true figure.
They credit the fact that prices rose at all over the year to January to seasonal demand for food over the lunar new year festival. Strip out food inflation, and they note that prices actually fell by 0.6 per cent.
Many economists believe a slump into outright deflation is likely this month.
Although falling prices might sound just the ticket for getting consumers to open their wallets, often they have exactly the opposite effect. Sinking prices lead shoppers to defer big ticket purchases in anticipation of greater savings in the future. As a result, sales volumes fall, eroding corporate profits and heightening fears about job losses, which further dampens consumer sentiment.
Some analysts believe the mainland may now be sliding into just such a deflationary spiral. 'Growing deflation expectations are set to dampen domestic confidence and further delay household spending and capital investment,' warned Qian Wing at JP Morgan yesterday.
The picture may not be quite so bleak. A look at the different components of the mainland consumer's shopping basket reveals that much of January's non-food deflation was the result of falling prices for transport, fuel, and household utilities; all the result of lower energy costs.
Experience suggests that reducing energy bills is the equivalent of putting money back into consumers' pockets, which may just persuade them to go out and spend more on other things.
Even so, hopes that consumer spending can support mainland growth through the international slump look unrealistically optimistic.
January's retail sales figures have yet to be released, but other evidence suggests that mainland consumer confidence is indeed waning. For example, car sales were down almost 8 per cent in January compared with the same month in 2008.
The property market continues to struggle, too. Home sales - a key driver of consumption - dropped steeply in December despite a range of new government incentives intended to support the market. And with the stock of unsold housing up by a third over last year, there is little prospect of a recovery in prices, or in sales volumes and related consumption, in the near future.
Even the prospect of lower interest rates is unlikely to spur demand. Little spending on the mainland is financed with credit, while low deposit rates could actually prompt people to save more rather than spend.
As a result, it looks unwise to pin too much hope on the robust health of mainland consumers. They may be about to catch a nasty dose of demand flu.