While hotels in Hong Kong are expensive, food and shopping generally aren't (it depends on where you go, of course!)
Hong Kong has TONS of shops with cheap clothes and accessories. Watches and purses are available on street corners for less than $10 - they're all fake, of course. And customs is cracking down on designer knock-offs, so be VERY careful not to buy anything that looks designer. Just "regular" stuff is very cheap, too.
There are night markets that have very cheap goods (again, most are knock-offs; beware of the DVDs and video games). Temple street in Kowloon has a good night market; just ask any local where it is (you can get tourist maps that show you where the markets are).
Also beware that much of the merchandise is 2nd quality - look carefully before buying.
For souveniers and Chinese crafts, go to Yue Hwa - they're all over the place. Chinese Arts and Crafts (store) is good too - they have good stuff, but are more expensive. Yue Hwa is more authentic and less expensive. I love the little snuff bottles that are painted from the inside. It's fascinating to see them do this (the paintbrushes literally have only one hair!), and they are really beautiful. That's not something you'll find here.
Have a great time - I love Hong Kong!
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