There have been more outspoken criticisms of Hong Kong government policy by business and finance circles in the last two months than in two years of political and social turmoil.
A slow launch of Covid-19 vaccines combined with the failure to explain a plan to exit the pandemic has finally ignited a fire under the bankers of the territory.
Hong Kong’s financial services sector enjoys a golden status, contributing more than one-fifth of the territory’s total gross national product each year. About 70 of the world’s 100 largest banks have operations in the Chinese city, and they have so far been protected for the most part from the consequences of Beijing’s tight grip on Hong Kong.
Now the bankers are revolting. It’s been just over 100 days since Hong Kong began spreading vaccines and only about 17 percent of adults – and less than 5 percent of people over the age of 70 – showed up for the shots. It’s half as much as in London and Singapore.
The disappointing vaccination program, hampered in part by widespread distrust in the government, has shattered hopes of international travel for people in Hong Kong, perhaps until next year. The borders remain closed to foreign visitors and a hefty two- or three-week hotel quarantine for returning residents has created a de facto blockade now entering its second year.
Although the government is on track to improve vaccination rates, it has yet to link its plan for this to a strategy to reopen borders. This has led to fears that the city will be abandoned when Europe and the United States reopen this summer, at a crucial time for its reputation as a global financial center.
“We have effectively signaled that we are closed for business,” a Wall Street banker in Hong Kong said this week. “Hong Kong’s position as an important financial center is in question.”
Frederik Gollob, president of the European Chamber of Commerce of the territory, said the quarantine rules meant “Hong Kong could lose its competitive advantage to attract the highest talent”, and that people were already leaving “definitely”.
Even HSBC, that has been burnt before spreading an opinion on Hong Kong policy, he urged the government to “safeguard public health and allow business travelers to gradually return to normalcy can coexist.”
Conjured by the pandemic, Hong Kong has fallen into a compelling experiment: how long can an international financial center survive without foreign travel? How long does it take for your large expatriate community to be able to go abroad? How much can airlines and hotels do to deal without business trips or tourism? The government has not yet established a timetable that would allow these companies and individuals to plan ahead.
Carrie Lam, Hong Kong’s executive director, said she would not “sacrifice the security of the Hong Kong people just to face the reopening of borders.” But like other places that have suppressed the virus (Hong Kong has had only 210 deaths in a population of 7.5 m), the territory is now in danger of being trapped in a purgatory of small outbreaks and extreme restrictions. A proposed travel corridor with Singapore has been delayed twice due to the growth of homes.
The directors of Hong Kong’s largest international banks were briefly excited last week when the government announced that up to four executives of a company could fly in each month without having to go into quarantine. The little picture has since forgotten the feeling. He revealed that they were to return to quarantine at the end of each day of meetings. “It’s like a day of release for prisoners,” said David Webb, a large-scale activist investor.
For now, Hong Kong has revived its inoculation campaign with zeal. Local newspapers were lined with advertisements. Businesses were encouraged to do their part. The reserve for vaccines is growing.
Yet companies are still confused as to Hong Kong’s goal. Will it reopen to the world before rival Asian business hubs like Singapore, or to open the border with mainland China? If the latter, Hong Kong would be at the behest of Beijing for its chronology for reopening to international travel. This would probably mean a much longer delay than if the travel decision had been made only for Hong Kong.
Hong Kong has only been around so far approved travel without quarantine for government officials and executives of major mainland Chinese companies such as Tencent and Alibaba. For some in the international financial community, it is a sign that Hong Kong has accepted its fate as a global financial center for China that risks becoming too dependent on the Chinese capital.