THERE is little doubt that 1993 was a momentous year for the Hong Kong economy, with international investors rediscovering the share market in a big way and beginning to view Hong Kong as an economic entity of China. With the Hang Seng Index bursting through the 10,000 barrier, it would be all too easy to get carried away with the euphoria that has gripped the equity markets. A realistic assessment of the territory's economic performance during the year must be a more sober one. At just over five per cent - perhaps 5.3 per cent - the territory had good growth in gross domestic product, but all this means is the economy performed up to the expectations of 12 months ago. Not only did the Hong Kong economy perform adequately during the year, it did so in the face of continuing political uncertainly about its democratic future and a mid-year attempt to put the economic brakes on in China. What the share market's performance, with its emphasis on the ''China play'' aspect, did show is that the Hong Kong economy's future is irrevocably tied to China, even though the handover of sovereignty is still 31/2 years away. It also showed its performance and that of the local economy is now more divorced from political events concerning Britain and China than at any other time since the Joint Declaration was signed 10 years ago. What it has become more closely aligned to, however, is the link to the health of the Chinese economy. Growth in China at double-digit pace (such as this year's 13 per cent), or near double-digit pace, is now imperative for Hong Kong's economic advancement. Inflation, at least according to the most widely quoted index, the CPI (A), was brought down slightly from previous rates. But Hong Kong has been lucky because the index has gained from record lows in world commodity prices, disinflation worldwide and the devaluation of the renminbi reducing the cost of cross-border trade. Put in this context - with everything running the territory's way - the level of inflation was far from satisfactory. With wages and asset prices still rising at a rapid rate, Hong Kong is an expensive place to do business. Moreover, even at the lower rate of 8.5 per cent, CPI (A) inflation is still far too high when measured in global terms, where low, single digits and even zero inflation are the rule. In determining future growth in Hong Kong, both the pace of advancement of the Chinese economy and the effect on business of the territory's own cost base will have to be monitored more closely. Even a cursory look at how the official Government forecasts have changed during the year shows how expectations and sources of growth for the Hong Kong economy changed throughout the year. Most noteworthy is the role Government capital spending - although relatively small in terms of the total economy - has helped underpin the rate of growth achieved by the economy this year. A look at the accompanying table of the four economic forecasts given by the Government during the year shows how the expected sources of growth changed throughout the year. Private consumption spending remained strong and on target at 7.5 per cent real growth, a figure supported by the strong retail sector. But day-to-day Government spending - Government consumption expenditure - was weaker than expected at the beginning of the year, being revised from five per cent real growth to three per cent. However, in the trade and investment sectors expectations were initially revised upwards from 7.1 per cent to 7.6 per cent, but fell to 6.6 per cent. This revision downwards has been due to the weaknesses in the private sector, probably a result of two factors - slower than expected domestic investment and the emphasis on manufacturing expansion in China rather than Hong Kong. The changes in the building and construction industry's contribution to overall growth have been particularly dramatic, with private-sector growth downgraded from minus two per cent to an even weaker minus four per cent. However, public sector spending has been substantially upgraded five times from eight per cent at the beginning of the year to 40 per cent in the third quarter economic report. The same trend is shown in investment in machinery and equipment, with the private sector downgraded significantly from 15 per cent to 9.5 per cent and the public sector upgraded six times from 10 per cent to a massive 60 per cent. Most surprising to most analysts, however, has been the downgrading of the external trade sector's contribution to the pace of growth. At the beginning of the year, domestic exports were expected to grow only by a one per cent in real terms. But a worsening of the performance of domestic exports towards mid-year has seen this downgraded to minus five per cent. It is the poorest performance by domestic merchandise exports in many years. There has also been a cut in the expected pace of growth of re-exports, with the original Government forecast of 25 per cent dropping to 20 per cent, mainly due to increased trade between China and Taiwan. Trade in services, however, has grown faster than expected, reflecting the economy's increasing reliance on this sector. Ian Perkin is chief economist with the Hong Kong General Chamber of Commerce. The views expressed in this column are his own and may not necessarily reflect chamber policy.