Hong Kong’s “Zero-COVID” policy, following mainland China’s lead, has hit the local economy by making many Hong Kongers worry about their future and causing a massive outflow of both talent and capital.
A large number of residents have left Hong Kong since the city implemented Beijing’s National Security Law in July 2020. The exodus has recently intensified due to the draconian pandemic measures put in place.
According to the Hong Kong Immigration Department, from Feb. 13 to 22, the total number of arrivals of Hong Kong residents was 150,081. However, departures were 154,541, indicating a net loss of 4,460 people.
The American Chamber of Commerce in Hong Kong and the European Chamber of Commerce recently confirmed that Hong Kong’s border closure and its “zero-COVID” policy have accelerated the outflow of international talent and the withdrawal of foreign investment.
In addition, the Hong Kong Securities and Futures Commission (SFC) said on Feb. 7, influenced by the competition for financial talent and Hong Kong emigration, 12 percent of manpower was lost in 2021. The drop-out rate of 25 percent for junior professionals is particularly severe. The SFC also admitted that it is difficult to bring in talent from outside the country at this time, as reported by Bloomberg on Feb. 7.
Senior hedge fund manager Qian Zhijian said in an interviewwith the Chinese language edition of The Epoch Times on Feb. 10, the drain of financial regulators shows the impact of the migration wave on Hong Kong’s financial sector and highlights the concerns talented individuals have about the current situation in Hong Kong. They will seek options in other Asian countries or global financial markets.
“Doing business cannot transcend the environment, which is inseparably interwoven into a whole with politics, economics, and finance,” he said,
“How can people do normal business in Hong Kong with the zero clearance [tolerance] policy?” The Hong Kong government announced on Feb. 22 that its social distancing measures will extend to April 20. Restrictions include restaurant closure in the evening and a limit of two people per table at lunch. In addition, safety masks must be worn in parks and during outdoor sports activities. Public gatherings are limited to a maximum of two people, and the gathering of two or more households on private premises is prohibited, according to HK01, a Hong Kong-based online news portal.
The Vaccine passport went into effect on Feb. 24. Malls, supermarkets, and restaurants require proof of vaccination prior to entry. Bars, beauty salons, fitness centers, hair salons, and places of worship will remain closed.
Top Executives Leave Hong Kong
A woman walks out of the Mandarin Oriental hotel in Hong Kong on February 7, 2014. Philippe Lopez/AFP via Getty Images
Once proud of its stable of excellent talent, Hong Kong’s economic situation now makes it difficult to retain skilled professionals in the financial sector. The strict segregation policy not only made Hong Kong people confused about the future and determined to leave but also triggered a continuous drain of foreign talent.
Hong Kong’s zero-COVID measures are hampering the operations of multinational companies and affecting the quality of life of their employees. Hence, senior executives leaving Hong Kong has become a major trend this year.
Senior staff of international luxury hotel group Mandarin Oriental, and the world’s second-largest spirits maker Pernod Ricard, are considering relocating outside Hong Kong temporarily as strict pandemic measures make the city more isolated from the world, the Financial Times reported in February.
Financial services giant JPMorgan Chase has transferred some of its senior management from Hong Kong to Europe in the last six months. Ryan Holsheimer, the bank’s head of cash equity and equity distribution for Asia-Pacific, is leaving Hong Kong to return to Australia, reported Bloomberg on Feb. 21.
Six senior Citigroup staff will be relocated to Singapore and other markets. Sue Lee, who heads Citi’s equity derivatives distribution division, previously moved out of Hong Kong; while Lee McQueen, who heads Citi’s Asia Pacific equities business, will move to Singapore along with another four or five directors, according to Bloomberg on Feb. 16.
Tough regulations imposed on travelers to Hong Kong require compulsory 14-day quarantine and seven-day home quarantine. All airlines from Australia, Canada, the United States, the United Kingdom, France, India, Pakistan, the Philippines, and Nepal, will be banned from landing in Hong Kong from March 5 to April 20; and people who have visited these countries within 14 days will be prohibited from changing flights or arriving in Hong Kong directly.
Capital Outflow
The exodus of talent will inevitably lead to the outflow of capital, a sign that Hong Kong’s economy could be heading into a recession.
Oriental Daily News cited a report by Daiwa Capital Markets, saying that Hong Kong’s GDP will decline in the first two quarters of this year, with GDP growth forecast depreciating to 1.8 percent from 2.9 percent.
Daiwa Capital predicts that Hong Kong will have further capital outflows, which could potentially surpass the $55 billion lost in the years 2016-2019. A total outflow of up to $100 billion is expected.
Nie Law
Author
Nie Law is a contributor to The Epoch Times with a focus on Hong Kong-related topics.
