'With an economy just half the size of Hong Kong's 10 years ago, Singapore has now surpassed us.'
Leung Chun-ying, chief-executive-elect
Technically he's right. The Singapore economy is running at about US$260 billion a year at the moment and the Hong Kong economy at about US$245 billion. Ten years ago Singapore's economy was only half the size of Hong Kong's in US-dollar terms.
I could go for the easy explanation of this and say it is the result of the Sing dollar strengthening against the US dollar while the Hong Kong dollar is pegged to the greenback, but I won't.
I have a better explanation. Gross domestic product is not a foolproof way of measuring the wealth of an economy. If you value the appearance of wealth more than the actual fact of it, you can work the system to get the numbers you want. It is what Singapore has done.
Start with the fact that a third of Singapore's GDP is composed of an export surplus. This is all very well if your own people generated the export success and can then reap the rewards.
If this were so, we would expect Singapore's huge trade surplus with the rest of the world to be matched by equally huge investments abroad (the balance of payments always balances), which would in turn generate a rising tide of investment income from abroad, all of it flowing back home and making life more comfortable.
