The new year dawns with the news that two surveys show most Hong Kong people feel good about their city and their lives and expect things to get even better in 2008. In fact, we may be the most optimistic in the world about the outlook. After a year of local economic growth, rising incomes, a booming stock market and buoyant property market, we are the least likely of 54 economies surveyed worldwide to see clouds on the horizon. The 58 per cent of people who expect this year to be even more prosperous is more than twice the regional and global average. Nationally, China has a year to look forward to, marked by the countdown to the Beijing Olympic Games, with 220 days to go before the opening ceremony on August 8. Beijing hopes the Olympics will showcase to the world, through global television and the internet, the nation's astonishing achievements in economic growth and modernisation. It is not the Games themselves that will put the nation under close scrutiny. Beijing promised that hosting the Olympics would be positive for human rights and openness, and that foreign journalists would be allowed to travel on the mainland and report more freely until after the Games. A senior official has hinted that the new freedoms may be extended if this helps the world better understand China. It is to be hoped so. The appearance of transparency and a willingness to face up to issues can help understanding of the structural economic and social problems created by rapid modernisation, and of China's efforts to tackle them. For example, a new labour contract law that takes effect today tops a year of landmark legislation aimed at protecting the basic employment and property rights of individuals. The country's feelings of anticipation about the Olympics, however, are tempered by cross-strait political tensions with Taiwan. With a presidential election due on the island in March, there are worries about dangerous provocation by the ruling pro-independence Democratic Progressive Party before the polls. Fortunately, a likely election win by the opposition Kuomintang candidate Ma Ying-jeou would be expected to lead to an easing of those tensions. Meanwhile, Hong Kong is taking a new turn on its long journey to democracy, with the National People's Congress having approved a timetable for implementing universal suffrage for election of the chief executive in 2017 and the Legislative Council in 2020. That will finally meet the wishes of a majority of Hong Kong people, but it will call for compromise among political parties and sacrifice of privileges by vested interests if it is to be achieved. The people will get a chance to express their will at the ballot box in the Legislative Council elections in September by voting against candidates who do not support the universal suffrage timetable. Economically, the global outlook is problematical despite the past year of booming world stock markets and global growth fuelled by China and India. Worries about the extent and duration of the fallout from the subprime mortgage collapse in the United States have raised fears of an American economic slowdown this year. Many economists question whether it still holds true that if America sneezes, the rest of the world catches a cold. A US slowdown may show whether Asia's new economic power has decoupled world growth from the American economy. At home, experts agree that we may find ourselves riding the roller coaster of property and stock market bubbles. With falling American interest rates dragging ours down and inflation rising, the conditions are right for money to flow out of banks and into assets, sending prices higher. By the end of the year, brave investors could be contemplating the bubbles of celebratory champagne. But volatile markets also raise the risk that they could be crying into their beer. Good luck and good health for 2008.