Hong Kong’s return from isolation is gathering pace but a long road lies ahead | Mint

Hong Kong’s return from isolation is gathering pace but a long road lies ahead

Property prices, in a place that might have invented Monopoly, dropped 16% last year but rents are on the rise this year.
Property prices, in a place that might have invented Monopoly, dropped 16% last year but rents are on the rise this year.

Summary

  • Observing that the pandemic changed people’s lifestyles, the Hong Kong government has mounted a ‘Night Vibes’ campaign that seems like a state directive to go out and party. For a revival of Hong Kong’s vibe, though, citizens need to be trusted more.

Hong Kong, a city whose blazing night skyline encircles a mystical harbour, was once the defining metaphor of a bustling Asian metropolis. Those images became visual shorthand for the rise of Asia and even the ‘Chinese Century.’ Now, all is change. For the past few months, the Hong Kong government has felt compelled to launch a ‘Night Vibes’ campaign to get more of the local population out at night. The initiative variously offers discounts or free entry to entice people to visit its famous racecourse, street markets and malls. The scheme aims “to create a dynamic vibe in Hong Kong." As the government observes in its bizarre directive to citizens to party, “many people’s lifestyle habits changed during three years of a global pandemic."

Hong Kong itself has changed dramatically in the last few years, and yet paradoxically remains a place where a simple flat tax of 15% makes it a pleasure to pay taxes, and its legendary efficiency remains intact. But, the city, along with its sovereign China, which has a mostly separate government and bureaucracy, had some of the most extreme controls during the pandemic, including three-week hotel quarantines for returning residents. In 2019, Hong Kong witnessed huge protests, sometimes one million strong, against a national security law, which was pushed through anyway the following year. Activists and a prominent newspaper publisher were jailed. Several leaders of the movement demanding universal suffrage were accused of sedition and collusion with foreign forces. This July, the Hong Kong government issued a warrant for the arrest of eight activist living in asylum overseas, offering a bounty of HK$1 million for each. The local government’s secretary for security described a prominent self-exiled leader as “a turtle hiding inside its shell, living off the blood and sweat of others."

Happily for Hong Kong, after a couple of years of isolation bordering on self-exile because of overly strict travel regulations, the city appears to be recovering. Hong Kong’s economy rebounded in the third quarter of 2023; GDP grew by 4.1% year-on-year. Led by a huge jump in tourism and transport services, exports of services grew by nearly a quarter, despite the export of financial services declining. At drinks this week, a banker said the firm’s Hong Kong office had received plenty of interest in transfers from employees in its European offices. Property prices, in a place that might have invented Monopoly, dropped 16% last year but rents are on the rise this year. The population, which had declined in 2020 and 2021, as many Western expatriates moved away, some temporarily and others permanently, has grown to 7.5 million, more or less the level before the pandemic and escalation of protests against the security law.

But, Hong Kong’s economy and society have much healing ahead. As an IMF report noted, “There remains large slack in the economy, with real GDP in 2022 remaining 6% below its level in 2018." Hong Kong, like India, has a disproportionately large number of billionaires for an economy its size, but its government has a huge piggy bank from which it could deploy social spending to soften the blow taken by the hard-up. But, from the time Hong Kong was a British colony, and since 1997, when it was returned to China but largely administered by Hong Kong people, this has been a government mostly for the rich and by the rich. It neither likes to spend on the bottom half nor support small businesses the way it has its oligarchs. It did spend about 5% of GDP putting cash in people’s pockets over the two worst years of covid, but as the IMF recently reported, there is still “ample" fiscal space: the Hong Kong government’s fiscal reserves are 27.4% of GDP.

After falling in love at first sight with this jewel-box of a city, I moved from New York in the mid-1990s without even finalizing the salary I would receive for a job at Time magazine. Its traffic lights sounded like amplified stop watches, reminding pedestrians and drivers alike that time is money, but for me its appeal was the made-for-movies skyline and the kinetic energy and yet calm efficiency of its people. Prescriptions of an ample safety net for the unemployed and elderly and building more housing are thus all too familiar, but, with a drop in low-level services jobs and Hong Kong people even going out on weekends to less expensive restaurants across the border in mainland China, a prolonged stimulus has never seemed so necessary.

It might even prove a balm; many see the national security law and what followed as a harsh rollback of civil liberties. In a polarized society, about as many Hongkongers likely believe protestors were pushing the city to anarchy. Last week, the city’s courts ruled against a retired civil servant who had challenged a nomination process for district elections (scheduled on 10 December) that vets candidates for ‘patriotism’ towards China. It was put in place after so-called prodemocracy candidates in Hong Kong won in a landslide victory in 2019. The court missed an opportunity. One way for Hong Kong to regain its old vibe would be to trust its own citizens more.

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