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Unformatted text preview: industrial services. HK became the service
hub of an industrialized Guangdong.
In the 2nd phase, new job creation is slower. New jobs
created are largely for the skilled, and the jobs may not
be in HK. Asset Price Inflation
Limit of 50 hectares p.a. before 1997.
Including residential, commercial, industrial,
community and infrastructure, except public
Housing is non-tradable.
Negative real interest rate, easy credit for mortgage
loans, inflow of speculative capital. Bubble Economy
Soaring property prices and low default rate.
Mortgage rate is usually higher than the prime rate.
Due to wealth effect, asset price inflation fed into other
Support high cost of operation.
Historical height of Hang Seng Index in August 1997
(before I.T. bubble)
Shrinkage of real sector: “industrial hollowing” took away
manufacturing jobs, led to fall in domestic exports.
Physical output dropped, structural imbalance.
Expansion in nominal sector: speculative activities
involved large m...
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This document was uploaded on 03/26/2014.
- Spring '14