International surveys of expatriate living costs have their disadvantages. Spending patterns of different expatriate households vary widely, they adjust spending as they re-locate from city-to-city and data can be unreliable. Yet they are widely followed.

In Hong Kong, private sector surveys have often been criticised for wildly over-inflating the cost of living (mainly due to the property factor). Yet the Hong Kong SAR Government's own survey still shows that local costs are high by world standards.

There are now any number of these surveys, some of them purporting to cover the whole spectrum of costs, others measuring merely one element of overall costs, say, commercial and residential property costs (either rentals, or purchase price, or both).

In all of them Hong Kong does continue to rank high, despite the clear decline there has been in costs since the 1997-98 recession. This is reflected in the latest survey by the economic analysis division of the Census and Statistics Department.

What the latest Hong Kong Government survey found was that the Hong Kong SAR ranks in the middle of the seven cities surveyed, that is, fourth overall behind Tokyo, New York and London, but ahead of Singapore, Shanghai and Taipei (see table).

Perhaps even more important in assessing the survey is that it shows Hong Kong well down on the costs of living for expatriates in the first three, a modest margin ahead of Singapore and fairly significantly ahead of Shanghai and Taipei.

In terms of direct competition, it probably matters little that Hong Kong comes in well below New York and London (they are geographically distant) and the high costs of Tokyo (within the immediate region) are positive for the SAR. It means that even with greater opening and a healthier economy, Tokyo would not compete.

The problem lies more with Singapore (nearly always regarded as a competitor to Hong Kong), Shanghai (often cited as the future competitor for the SAR) and, to a far lesser extent, Taipei. All are in our immediate region and all, apparently, have lower expatriate living costs than does Hong Kong.

The positive points for Hong Kong are that, despite its costs, it has the "China advantage" (at least for the present), and all those other things that are normally listed in its favour, lifestyle, rule of law, infrastructure, taxation et al. Above all else, it has built up an image over the years that makes it attractive, despite the costs.

Some of the details of the survey also leave room for optimism; others a more negative for the SAR than the overall results suggest.

As the government economist, K Y Tang pointed out: "Excluding housing cost, Tokyo remains the most expensive city, followed by New York and London.

"Hong Kong recedes to the fifth place and shares the same ranking with Shanghai, while Singapore moves up to the fourth. Taipei remains the lowest cost city amongst the seven cities included."

Not surprisingly, given the massive run-up in prices and rents during the bubble of 1996-97, Hong Kong ranks second, after New York, in terms of the costs of housing. It also ranks second, after Tokyo, in terms of the costs of miscellaneous goods.

It ranks third in terms of the costs of alcoholic drinks and tobacco; fourth in terms of the costs of food, utilities and consumer services; and sixth in terms of the costs of clothing and transport. It is least expensive in terms of the costs of durable goods.

"Taking Hong Kong as the "reference city" for comparison, in overall terms the cost of living for expatriates in Tokyo is considerably higher than in Hong Kong, by around 34 per cent," Mr Tang said.

"This is due to the much higher costs in Tokyo of the various major consumption categories, except those of housing, alcoholic drinks and tobacco."

"The cost of living in New York and London is also distinctly higher than in Hong Kong, by around 24 per cent and 16 per cent respectively.

"In New York, the costs of consumer services, utilities, alcoholic drinks and tobacco, durable goods and housing are much higher than in Hong Kong, while in London, the costs of durable goods, transport, utilities and consumer services are markedly higher.

"Compared with Hong Kong, the cost of living for expatriates in Singapore is around 10 per cent lower. In Shanghai and Taipei, they are lower by around 17 per cent and 29 per cent respectively.

"While the costs of housing, utilities, miscellaneous goods and consumer services are lower in Singapore than in Hong Kong, the costs of durable goods and transport are markedly higher in Singapore.

"For Shanghai, the costs of transport and durable goods are higher than in Hong Kong, while the costs of housing, utilities, alcoholic drinks and tobacco, miscellaneous goods and consumer services are markedly lower.

"As to Taipei, the costs of housing, utilities, and alcoholic drinks and tobacco are much lower than in Hong Kong, while the costs of clothing and durable goods are higher."

Mr Tang noted that excluding housing, the cost of living for expatriates in Tokyo was around 58 per cent higher than in Hong Kong, while those in New York and London were both around 26 per cent higher.

"The cost of living (excluding housing) in Singapore is around 12 per cent higher than in Hong Kong. On the other hand, while the cost of living for expatriates in Shanghai is about the same as in Hong Kong, that in Taipei is around 4% lower."