Opinion | Hong Kong should brace for lengthy slog of financial restoration with endurance and a courageous face

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After the lack of round 113,000 residents between mid-2021 and mid-2022, which trimmed Hong Kong’s inhabitants to round 7.3 million, the Census and Statistics Division says our inhabitants has rallied again to 7.5 million.

And the neighborhood of foreign-owned firms in Hong Kong (together with these with mainland dad and mom) has grown to eight,978 final yr, 224 greater than in 2018.

However there may be nonetheless a lot to be gloomy about, as any stroll previous the shuttered outlets in Causeway Bay or SoHo shortly makes clear. Newest statistics present that meals service retailers, for instance, have shrunk by over 8 per cent since 2018 (from 15,660 to 14,318 in 2021), with meals service jobs down by 20 per cent (to 217,000). Retail employment can be down by about 10 per cent.

Such contractions go an extended strategy to explaining Hong Kong’s sluggish client restoration and the acute livelihood challenges confronted by many, regardless of large authorities funding in consumption vouchers over the previous two years.

Final yr, Oxfam reported that Hong Kong’s richest 10 per cent earned 47 occasions extra than the poorest 10 per cent – in contrast with 34 occasions extra in 2019 – making this one of many world’s most unequal societies. Even the center lessons are seeing the worth of their houses decline, and fairness investments are down sharply because the starting of the yr.

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Underprivileged class bearing the brunt of Hong Kong’s rising inflation

But, in some ways, Hong Kong additionally stays among the many world’s most lucky. Unemployment stays low, at 2.8 per cent, and inflation sits comfortably under 2 per cent. That our authorities has negligible debt additionally supplies enormous flexibility to introduce financial stimulus – a luxurious not loved by many others.

Chan has made clear, nevertheless, that restoration might be lengthy and sluggish. And whereas he celebrated the return of vacationers and predicted that mainland arrivals had been prone to be a key driver of restoration, the fact is that vacationer arrivals within the first half of this yr reached simply 13 million – barely a 3rd of that within the first half of 2019.

Given the brazen hostility in 2019 of many Hongkongers to mainland Chinese language, it’s moot whether or not we are going to see a fast vacationer restoration.

Maybe the worst of the federal government’s financial challenges is the eagerness of so many within the West to jot down Hong Kong off.

The blunt reality is that, because the Seventies, Hong Kong has largely been ignored or disdained. One view of these in London’s monetary markets was that anybody leaving to work in Hong Kong was “filth”, an acronym for “ failed in London, strive Hong Kong”. That disdain is maybe worse than ever, with the US-China battle exhibiting no indicators of abating, and Hong Kong dismissed as a pariah in lots of elements.

Regardless of Chan’s finest efforts to promote Hong Kong – and our Higher Bay Space hinterland – as a number one world hub for headquarter companies, skilled and monetary companies, and fast-evolving know-how, the uncomfortable actuality is that we stay out of favour. Different worldwide hubs, predominantly Singapore and the United Arab Emirates, have capitalised on this, at Hong Kong’s expense.

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A fast comparability exhibits simply how far Hong Kong has slipped behind. In 2000, Singapore’s economic system was simply over 55 per cent of Hong Kong’s, and the UAE’s was at 60 per cent, in line with World Financial institution gross home product knowledge at present costs. Final yr, Singapore’s GDP was 30 per cent bigger than Hong Kong’s, whereas the UAE’s was 41 per cent bigger.

Extra importantly, they’ve recovered far more quickly from the pandemic than Hong Kong, and there may be little proof we’re properly positioned to catch up.

Most world rankings, by which Hong Kong used to impress the world, now inform a forlorn story. Take Kearney’s World Cities report, for instance, by which Hong Kong has tumbled since 2019 from fifth to tenth place. Or the Mori Memorial Basis’s Energy Metropolis Index: Hong Kong largely sat within the high 10 as much as 2020, however has now collapsed to twenty third, whereas Dubai is as much as eleventh from twenty third in 2017.

No matter our views in regards to the biases and gross simplifications of such world polls, they feed Western prejudices and might be powerful to reverse. For Chan, meaning endurance and a courageous face.

David Dodwell is CEO of the commerce coverage and worldwide relations consultancy Strategic Entry, centered on developments and challenges going through the Asia-Pacific over the previous 4 a long time

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