If Taiwan's new policy of seeking closer economic links to the mainland proves successful - and much will depend on a Beijing response which hasn't yet come - there is no doubt that some consequences will be adverse for Hong Kong. Yet it is unlikely that the overall harm will be great, and there is the distinct possibility of offsetting benefits. The new approach results from the recommendations of a 120-member advisory panel appointed by President Chen Shui-bian to find ways of energising the Taiwanese economy, which has hit a worrisome spell of negative growth. Among other findings, it said Taiwan should drop restraints on cross-strait investments and seek direct trade, transport and communications links to the mainland. Mr Chen, who finds this advice politically convenient, has said he will implement its conclusions. All of which may be good for both Taiwan and mainland China, but what about Hong Kong? Much commerce and traffic between those two takes place via the SAR, and their possible loss raises fears of a new financial blow just as a fading world economy is giving Hong Kong serious problems. It's clear there will be some local losers if unrestrained cross-strait relations are established. Among them will be local airlines and the airports of both Hong Kong and Macau. Most travel between Taiwan and the mainland currently must go via those airports, and the volume is high; several hundred thousand Taiwanese already do business in the mainland and many others visit there. But relatively few of them will choose the inconvenient detour via Hong Kong or Macau once Shanghai is only an 80-minute flight from Taipei. Likewise, some financial transactions now routed via Hong Kong will be done directly. But by all accounts that business mainly affects two local banks and is not of major concern to the whole banking community. And while some freight traffic may be lost, that too is not crucial. Many ships already ply a non-stop route between island and mainland by detouring through Japanese waters for political reasons. On the positive side, there could be a new flow of Taiwanese capital into nearby Guangdong - despite Taiwan's current crush on Shanghai - and Hong Kong's service industries would benefit. In addition, the advisory panel advised Taiwan to open its own financial and real estate markets in ways which could mean new business for Hong Kong institutions. Despite some rough spots, intensified cross-strait business relations should bring gains to both sides, especially after they join the World Trade Organisation and apply its market-opening rules. Once that happens, the Hong Kong economy should rank among the winners.