As Torto Wheaton's report points out, the situation in the US isrelatively straightforward: "A shrinking economy and a contractingjob market translate into weakening property fundamentals." Thereport, authored by Torto Wheaton economist Arthur Jones, contraststhat situation with conditions in China, which has not sufferednegative annual GDP growth in more than 30 years.

That, Jones' analysis says, makes it more difficult to foreseehow the economic downturn will play out in China, where the topthree office markets are in Beijing, Shanghai and Hong Kong.. Otherfactors complicating the forecast include the sizzling annualgrowth rate of more than 10% in China's economy, and the strengthits markets have shown in weathering the Asian financial crisis in1997 and the SARS outbreak in 2002.

Despite these strengths, China's economy and commercial realestate markets are not exempt from the impact of slowing economicgrowth, according to the Torto Wheaton analysis. "In fact, whileChina's economy continues to expand, concerns mount among economicplanners," the report says. Specifically, it notes that Hong Kongmay already have entered into a mild recession.