President Xi Jinping emphasised Hong Kong’s international status in an important speech on July 1. With more knowledge now of Covid-19, leading cities around the world have reopened. Hong Kong must catch up, and quickly.
President Xi Jinping has laid to rest concerns people may have had about Hong Kong’s continued vitality as an international financial and business centre. In his speech here on July 1, he resoundingly endorsed “one country, two systems”, saying: “There is no reason for us to change such a good policy, and we must adhere to it in the long run.”
Indeed, he mentioned one country, two systems 20 times in the speech. He also reaffirmed that the central government “fully supports Hong Kong in its effort to maintain its distinctive status and edges, to improve its presence as an international financial, shipping and trading centre, to keep its business environment free, open and regulated, and to maintain the common law, so as to expand and facilitate its exchanges with the world”.
Clearly, the institutions that have made our city great and enriched our country are here to stay. For many international investors, this should come as an affirmative signal for Hong Kong’s future.
Equally important is Xi’s emphasis on Hong Kong’s international status. There were nine mentions of “international” in the same speech, with some indicating his vision for the city – whether it is Hong Kong’s smooth compatibility with international rules, its status as an international financial, shipping and trading centre, or its international perspective.
It is clear that Hong Kong will continue to be an important platform for China’s trade and interaction with the international community. For the city to fulfil its function, maintaining free flows of people, capital and goods is of paramount importance.
Looking at the statistics, in 2019, before the pandemic, foreign visitor inflow into mainland China was around 31.88 million; meanwhile, 155 million Chinese visited other markets.
As for Hong Kong, the city logged 65.15 million visitor arrivals in 2018, including 22 per cent from overseas markets. These visitors stayed for an average of three nights and spent a total of HK$331.7 billion, or HK$6,614 each.
In 2021, tourist arrivals plummeted to 91,398 due to the pandemic, a drop of nearly 99.9 per cent. The tourism sector, one of our four traditional pillar industries, has been devastated.
While eradicating the coronavirus from a densely populated city like Hong Kong is a tall order, managing it is distinctly feasible. We need to prioritise the reopening of our international border, with confidence and prudence.
Hong Kong has one of the highest Covid-19 vaccination rates in the world, with 89 per cent of the eligible population having received two doses (on a par with Singapore, with 93 per cent of the total population double-jabbed). Furthermore, this is being buttressed by hybrid immunity, with University of Hong Kong researchers estimating that at least 4 million residents had contracted Covid-19 during the fifth wave.
Given that there is more understanding now of both the disease and how to treat it, leading international cities such as New York, London and Singapore have all reopened to visitors.
In this regard, Hong Kong needs to catch up. Hong Kong can only serve the country if it is open like its international peers. Otherwise, we will lose our relevance and competitiveness.
Recently, some have proposed shortening hotel quarantine to three or four days, with the remainder of the week spent in home quarantine, or lifting quarantine altogether on fully vaccinated residents and travellers. This would be a welcome development.
I returned from a week-long business trip to Singapore earlier this month, and saw for myself the contrasting fortunes of Asia’s two leading cities. Singapore began easing travel restrictions for vaccinated travellers late last year, and the benefits are clear. Hong Kong’s economy contracted by 4 per cent year on year in the first quarter this year, while Singapore reported 3.7 per cent GDP growth in the same period.
There remains understandable concern about cross-contamination and upticks in Covid-19 cases if the border between Hong Kong and Shenzhen reopens, given the heavy traffic between the two cities.
To pre-empt this, we could consider a closed-loop system for travellers, commuters and those working in logistics; such a system has been implemented and proven effective in mainland cities. Hong Kong has the responsibility and capability to protect Shenzhen against cross-contamination.
There must, of course, be ramped-up sanitising and testing measures to ensure the effectiveness of the closed loop. These come at a cost, yet I am sure the gains from the business activities resulting from a managed reopening will outweigh the cost.
Over the past two years, Hong Kong has been draining its fiscal reserves to respond to the pandemic and support the population. A big question mark hangs over the sustainability of these measures, in view of the contracting economy and shrinking business activities.
We are also seeing a brain drain, with about 300,000 people estimated to have left Hong Kong in the past two years.
There are various reasons for their decision, but as I have learned from many of my friends, a key factor is uncertainty over when Hong Kong will reopen and lift quarantine for inbound travellers.
While some of the departing talent may return, others may settle down in new homes, and the impact on our city’s future productivity is far-reaching. We must offer incentives such as tax breaks and rebates to encourage people to return, and to attract top talent from around the world to Hong Kong.
We need to help Hong Kong regain its lustre as the most international city in the country, one that is globally oriented and making valuable contributions to China. With meticulous, rigorously planned measures, I have full confidence that we can do this.
Hong Kong enjoys many unique strengths. We need to make Hong Kong attractive to talent and business again, and reopening our international border is the very first step.