Implementing the three direct links between the mainland and Taiwan will allow better communication and economic development between the two economies, the World Bank's newly appointed senior economist, Justin Lin Yifu, said. 'With the direct links of postal services, trade and transportation to be recognised, overall trading costs across the Taiwan Straits will be dramatically reduced in the long term,' Mr Lin said in a lecture at the Chinese University of Hong Kong yesterday. 'Taiwan enterprises will be able to finish their upgrades on industries or businesses more quickly and put their products on the mainland's huge market faster.' The founding director of the China Centre for Economic Research at Beijing University said even with the three links in place, Hong Kong would retain its status as Asia's leading logistics centre, although in the short term it might need to 'adjust' to cope with the change. 'From a long-term perspective, Hong Kong will also be a beneficiary of the three links as the mainland's economy gets stronger,' he said. Separately, Mr Lin reiterated his support for Beijing's decision to defer the launch of the 'through train' that allows mainland individuals to invest directly in Hong Kong stocks. 'Launching the through train means recognising the yuan's free convertibility, but our country obviously is not prepared for it yet,' Mr Lin argued. Just how soon the scheme should be launched would depend on how fast the mainland can establish a 'really effective financial monitoring system', he said. 'We need to further strengthen our financial system as well as the market.' Earlier, Mr Lin had said if the through train was launched quickly, it might bring short-term prosperity to the Hong Kong market but at the cost of 'big ups and downs' in both the local and mainland markets as speculators rushed in. He said he preferred using interest rate increases to 'effectively curtail and restrict' hot money flowing into stocks and properties, rather than raising the reserve requirement ratio for commercial banks. He said increasing the reserve ratio would make it hard for small and medium-sized enterprises to secure much-needed loans, thus it would 'not be helpful at all'. It would not raise the pay levels of rural workers, and would not address the income imbalance between rural and urban residents - two issues that the state is keen to address, he said. He forecast mainland inflation would hover at 5 per cent this year as investment and consumption activities would continue to pick up. Even so, he is upbeat about the country's economy, which he said would 'continue to grow robustly' at 8 per cent to 10 per cent this year.