'Interesting times', is how Australia's Reserve Bank chief described the continuing travails in global markets at a gathering of the nation's leading economists recently.
More closely linked international markets and the rapid way in which sentiment is communicated meant that last year's slowdown in an overheated mainland economy compounded the shock created by the United States credit crisis, Reserve Bank of Australia governor Glenn Stevens said.
'The fortunes of the Chinese economy are increasingly important, particularly for Australia and other countries in our time zone,' Mr Stevens said. 'The most striking real economic fact of the past several months is not continued US economic weakness, but that China's economy has slowed much more quickly than anyone had forecast.'
But Mr Stevens added that despite the uncertain outlook in financial markets, and views that mainland GDP forecasts for this year would be weaker than expected, China's economic policies were now moving in an 'expansionary direction' with a good chance of its economy gaining strength if domestic demand was boosted.
This would mean good news for Hong Kong's position as an entrepot between Australia and the mainland at a time when trade relations between the special administrative region (SAR) and Australia are 'flourishing' despite the global economic downturn.
'Australian trade and investment in Hong Kong relies in large part on Hong Kong's role as an international financial and business centre, and its role as an entrepot and trend leader for China,' a spokesman for the consulate said.
'Hong Kong is a sophisticated and affluent market for Australian goods and services in its own right. Hong Kong's emphases on financial and professional services, environmental protection, education, tourism and information technology development are providing significant new areas of potential for further co-operation, trade and bilateral investment.'