At a glitzy finance summit in Hong Kong this week, town’s chief triumphantly advised a room filled with prime Wall Avenue executives that the Asian hub was again in enterprise. “The worst is behind us,” he declared.
Two days later, tens of 1000’s of rugby followers descended on town’s largest stadium for the Hong Kong Sevens, its largest (and normally booziest) annual sporting occasion, which had been suspended since 2019 because of political unrest, and, later, Covid-19.
The 2 high-profile worldwide occasions despatched a transparent message: After nearly three years of border closures, necessary quarantines, and restrictions on companies and social gatherings, Hong Kong was lastly reopening.
For a lot of the pandemic, the semi-autonomous Chinese language metropolis maintained a few of the area’s most stringent restrictions, together with one of many world’s longest necessary quarantines for worldwide arrivals. With the economic system tanking and issues mounting that Hong Kong was being left behind because the world moved on, the federal government lastly threw open town’s doorways in September and ended formal quarantine to the aid of hundreds of thousands of individuals.
“We had been, we’re and we are going to stay one of many world’s main monetary facilities,” vowed Hong Kong chief John Lee at Wednesday’s summit, attended by greater than 200 traders from 20 international locations. “You may take that to the financial institution.”
Talking on Friday forward of the kickoff of the Sevens, Hong Kong Rugby Union CEO Robbie McRobbie hailed the return of the event as a “catalyst, watershed,” an emblem that “Hong Kong continues to be a vibrant, resilient metropolis.”
However specialists warn the push to revive Hong Kong, whereas welcome and lengthy overdue, faces many challenges forward.
The previous few years of isolation, which coincided with an ongoing political crackdown, have taken their toll, they mentioned. Regardless of what Lee and different leaders insist, the Hong Kong that’s reopening will not be the identical metropolis the world knew earlier than the pandemic – and the true influence of that change stays to be seen.
Final 12 months, as many locations reopened to vacationers and relaxed restrictions, Hong Kong seemed to be caught in a special actuality.
Eating places, bars and gymnasiums had been often compelled to shutter or restrict their hours. Residential buildings had been positioned underneath lockdown for days. At one level, public gatherings had been capped at two individuals. And most residents didn’t depart town for years, unable or unwilling to spend as much as three weeks in lodge quarantine at their very own price upon return.
Companies had been hit arduous. The Sevens event makes up 95% of the Hong Kong Rugby Union’s income, so “we’ve had three years of redundancies and cutbacks,” mentioned McRobbie.
Many disillusioned residents selected to depart completely; this previous 12 months, town recorded its steepest drop in population since data started in 1961. Corporations, too, began eyeing other locations – most notably Singapore, Hong Kong’s longtime regional rival.
However Hong Kong authorities, wanting to reopen the border with mainland China – which nonetheless reveals no signal of easing its strict zero-Covid coverage that goals to stamp out infections – remained reluctant to loosen restrictions for worry circumstances would spike and shut that door.
Then, a extreme outbreak fueled by the extremely contagious Omicron variant initially of the 12 months put an finish to Hong Kong’s hope of sustaining zero each day circumstances.
Beneath mounting public strain, the federal government lifted flight bans with sure international locations and shortened lodge quarantine in March – however these small concessions did little to lure individuals again.
In response to media studies in August, some Wall Avenue banks warned their executives would solely attend Wednesday’s finance summit if there was quarantine-free journey – a widely-speculated issue behind the federal government’s ultimate decision to scrap quarantine.
Finance leaders within the metropolis breathed a sigh of aid on the information.
“We’ve been closed for too lengthy,” mentioned Sebastian Paredes, CEO of Singaporean financial institution DBS’ Hong Kong operations. “We’re starting to open up following the opposite components of the world which have already opened up. And this can be a tangible demonstration that Hong Kong is again.”
Alicia Garcia-Herrero, chief Asia Pacific Economist of French funding financial institution Natixis, agreed the week’s twin large occasions had been “a giant signal of Hong Kong transferring away from Covid restrictions to a brand new world.”
Nevertheless, the remaining restrictions pose a aggressive drawback.
Worldwide guests should take Covid assessments for seven straight days after arrival in Hong Kong, and for the primary three days are barred from eating places, bars and gymnasiums. However the testing doesn’t cease there – bars and golf equipment that don’t serve meals require proof of a adverse speedy antigen take a look at from all patrons.
A masks mandate – indoors and outdoor – can be in impact, although pictures of the finance summit present attendees sitting at tables with out face coverings. They included town’s Monetary Secretary Paul Chan, who was declared a “recovered case” by well being authorities after testing constructive for Covid upon arrival from a visit overseas on Tuesday.
These guidelines are “nonetheless largely prohibiting the abroad journey market,” mentioned McRobbie, the Hong Kong rugby chief. Earlier than the pandemic, roughly half the followers on the Sevens got here from overseas; this 12 months, that quantity is “negligible,” he mentioned.
The lengthy stretch of isolation and monetary hardship has additionally created challenges for firms hoping for a comeback. Many individuals have left the sports activities and occasions sectors previously few years in favor of extra steady jobs, leaving the business brief staffed, McRobbie added.
This partial reopening has left town in an ungainly Covid limbo, mentioned Vera Yuen, an economics lecturer on the College of Hong Kong.
“If we need to open up our border with the Mainland China, our restriction is just too lenient … so it’s not allowed,” she mentioned. “However then if we need to open ourselves as much as the world, we’re nonetheless too stringent. We are actually caught in between, hoping to see higher insurance policies sooner or later.”
Others additionally warn of rising political challenges. “Clouds are actually coming to Hong Kong from completely different angles,” mentioned banker Garcia-Herrero, pointing to the West’s response to the sweeping national security law Beijing imposed on Hong Kong in 2020.
Beneath this regulation, pro-democracy activists have been jailed or exiled, unbiased newsrooms shut down, and former lawmakers focused. In the meantime, authorities have modified faculty curricula to emphasise Chinese language historical past and tradition, and pushed larger financial cooperation within the Higher Bay Space, a nationwide scheme to hyperlink China’s southern Guangdong province nearer with Hong Kong and Macao.
The regulation has been broadly criticized by international governments and human rights organizations, with the US sanctioning Lee and different prime Hong Kong officers over their position within the crackdown. Hong Kong authorities have repeatedly claimed the regulation has restored order and stability after town’s 2019 anti-government, pro-democracy protests.
For the US and the European Union, the nationwide safety regulation and crackdown characterize “a change within the guidelines of the sport in what was agreed upon,” mentioned Garcia-Herrero.
These rising tensions may spell bother for Hong Kong’s commerce and diplomatic relationships with different international locations. Hong Kong is afforded extra freedoms than different Chinese language cities, thus has lengthy been seen as a gateway between the mainland and the West – a place that appears more and more precarious as its civil liberties erode.
“The West would now perceive that Hong Kong will not be solely a part of China, but it surely’s nearer to China than earlier than,” mentioned Yuen, the economics lecturer. “The worst situation is that the West would deal with Hong Kong as the identical because the mainland China, after which Hong Kong would endure the form of sanctions.”
And this drawing nearer collectively is more likely to proceed. In an effort to stem the mind drain, the federal government is spending 30 billion Hong Kong dollars ($3.8 billion) to attract in world companies and contemporary expertise – which Yuen mentioned is anticipated to “entice plenty of mainland staff” who could also be keen to flee an much more dire job market throughout the border.
Regardless of these geopolitical frictions, some argue Hong Kong’s innate benefits will permit a revival – even when town is heading in a special path than earlier than.
Asia doesn’t have many different monetary facilities that may match Hong Kong’s open regulatory surroundings, low salaries tax and present monetary infrastructure – “subsequently, even when the picture could also be tarnished a bit of bit, there should not many different locations to go,” mentioned Garcia-Herrero.
Yuen echoed this level, saying town’s proximity to China stays interesting to companies and traders hoping to faucet into the huge and profitable mainland market.
“We are able to plug into China and form of preserve the standing as having a bit of little bit of autonomy, and (being) completely different from them, given completely different Covid insurance policies and (methods of) governance,” she mentioned.
However, each specialists acknowledged, the trail ahead is now fraught with new dangers. Worldwide companies could come to Hong Kong, however be warier in how a lot they spend money on town, maintaining in thoughts the specter of US sanctions and regional battle.
At this time’s Hong Kong is more and more underneath Beijing’s management, with China rising extra assertive on the world stage as chief Xi Jinping enters a 3rd time period in energy surrounded by loyalists. These rising tensions between China and its rivals have triggered rising divides “because the world deglobalizes,” mentioned Garcia-Herrero – results that inevitably spill over into Hong Kong, caught within the center.
“It would by no means be, for my part, what it was once by way of the openness of Hong Kong to each the West and the East,” she mentioned.