CHINA'S projected economic slowdown will moderate Hongkong's gross domestic product growth and will have a negative psychological impact on consumers and investors in the short run, but the territory will ultimately benefit from a successfully reformed mainland economy, a Hongkong Bank report says.
The report predicts that Hongkong's GDP growth will be reduced by 0.4 percentage points this year and by a further 1.2 points next.
It says that during the mainland's last economic clampdown in 1989, the plunge in Hongkong export growth from 46 per cent in 1988 to four per cent in 1990 was due to exports whose final destination was China.
Since these exports depend directly on demand in China, they were hit head-on by the abrupt slowdown in China's industrial production and retail sales.
This trade declined sharply by 22 per cent year on year in value terms in the second half of 1989 and by a further four per cent in 1990.
Exports destined to be worked on in China and returned, and re-exports of Chinese origin, were less affected as they were sustained by other major industrialised markets.