If so, Hong Kong's worst recession in three decades is likely to deepen and the optimistic forecasts of an upturn in the second half of the year will be shattered.
The big question is whether China will go back on its promise not to devalue the local currency, the yuan, which in turn will put heavy pressure on the Hong Kong dollar and have close to unthinkable consequences for financial markets in Hong Kong and beyond.
In December, the Chinese government renewed its pledge to maintain the stability of the yuan. However, there are still jitters as Chinese exporters face price competition from elsewhere in Asia where currencies remain weak.
Meanwhile the Chinese government has declined to set an economic growth target for the year, though the word from Peking is that it hopes to repeat 1998's figure of 7 to 8 per cent.
In its newly acquired territory of Hong Kong, the government has finally abandoned its bizarre stance of denial and estimates that the economic decline in 1998 will amount to 5 per cent. Only a few optimists think the Hong Kong economy will manage any growth in 1999. A poll of economists by Reuters produced the consensus forecast of a 2.2 per cent shrinkage.
Tung Chee-hwa, Hong Kong's chief executive, speaks of how "Hong Kong people will bear this pain until we successfully adjust". By which he means that asset prices fall sharply, people lose jobs and the whole place becomes more competitive. However, the government itself has emerged as the main block to the adjustment process. First it tried to prop up property prices by using its monopoly ownership of land to curtail the supply of new developments. Then, last August, it plunged into the stock market to prevent share prices falling and emerged as the biggest single owner of shares.
The government says it was not acting to prop up prices but to fight off attacks on the local currency. But the net effect of its actions has been to prevent asset values adjusting at a rate which would be expected at a time of recession and the sudden emergence of deflation.
Once proud of its free market credentials, Hong Kong is struggling into 1999 unsure what it is doing and looking to China to stop the economy sinking even further.Reuse content