There has been more outspoken criticism of Hong Kong government policy from business and finance circles in the past two months than in two years of political and social turmoil.
A slow Covid-19 vaccine rollout combined with the failure to outline an exit plan from the pandemic has finally lit a fire under the territory’s bankers.
Hong Kong’s financial services sector has enjoyed a gilded status, contributing more than a fifth of the territory’s total gross domestic product each year. About 70 of the world’s 100 largest banks have operations in the Chinese city, and they have so far been mostly shielded from the consequences of Beijing’s tightening grip over Hong Kong.
Now the bankers are revolting. It is just over 100 days since Hong Kong started rolling out vaccines and only about 17 per cent of adults — and less than 5 per cent of people over 70 — have come forward for the jabs. That is half as many as in London and Singapore.
The disappointing vaccination programme, hampered in part by widespread mistrust in the government, has crushed hopes of international travel for people in Hong Kong, possibly until next year. Borders remain closed to foreign visitors and a punishing two- or three-week hotel quarantine for returning residents has created a de facto lockdown that is now entering its second year.
Although the government is scrambling to improve vaccine rates, it has yet to connect its plan for this to a strategy to reopen borders. This has led to fears that the city will be left behind when Europe and the US reopen this summer, at a pivotal time for its reputation as a global financial centre.
“We are effectively signalling that we are closed for business,” one Wall Street banker in Hong Kong said this week. “Hong Kong’s position as an important financial centre is in question.”
Frederik Gollob, chair of the territory’s European Chamber of Commerce, said the quarantine rules meant “Hong Kong could lose its competitive edge to attract top talent”, and that people were already leaving “for good”.
Even HSBC, which has been burnt before by airing an opinion on Hong Kong policy, has urged the government that “safeguarding public health and allowing business travel to gradually get back to normal can coexist”.
By cocooning itself from the pandemic, Hong Kong has stumbled into a compelling experiment: how long can an international financial centre survive without foreign travel? How long will its large expat community put up with not being able to go abroad? How long can airlines and hotels cope without business travel or tourism? The government has yet to set out a timeline that would let these businesses and individuals plan ahead.
Hong Kong chief executive Carrie Lam has said she will not “sacrifice the safety of the people of Hong Kong just to rush reopening borders”. But like other places that successfully suppressed the virus (Hong Kong has had just 210 deaths in a population of 7.5m), the territory is now at risk of becoming trapped in a purgatory of small outbreaks and extreme restrictions. A proposed travel corridor with Singapore has been delayed twice due to rising cases.
Managers at Hong Kong’s biggest international banks were briefly excited last week when the government announced that up to four executives at a company could fly in each month without having to quarantine. The small print has since damped sentiment. It revealed that they would have to return to quarantine at the end of each day of meetings. “It’s like day release for prisoners,” said David Webb, a high-profile activist investor.
For now, Hong Kong has revived its inoculation campaign with zeal. Local newspapers have been plastered with adverts. Businesses have been encouraged to do their part. Bookings for vaccines are climbing.
Yet businesses are still confused about Hong Kong’s goal. Is it to reopen to the world before rival Asian business hubs such as Singapore, or to open the boundary with mainland China? If the latter, Hong Kong would be at the behest of Beijing for its timeline for reopening to international travel. That would likely mean a much longer delay than if the decision on travel had been made for Hong Kong alone.
Hong Kong has so far only approved quarantine-free travel for government officials and executives of big mainland Chinese companies such as Tencent and Alibaba. To some in the international finance community, it is a signal that Hong Kong has accepted its fate as a global financial centre for China that is at risk of becoming too reliant on Chinese capital.