Business cycle and inflation synchronisation in Mainland China and Hong Kong

This paper uses annual data spanning 1962 to 2003 to examine whether business and inflation cycles have become more similar across Chinese provinces as the economy has been liberalised and modernised. We find evidence of synchronisation, although business cycles in a group of mainly northwestern provinces appear to have diverged from those in the rest of China. Both the business and inflation cycles in Hong Kong seem to have become increasingly synchronised with those in the Mainland over recent years. (C) 2008 Elsevier Inc. All rights reserved.