Hong Kong trapped in a stalemate

Asia Media Centre contractor Mark Russell was one of the speakers at a recent panel discussion in Wellington on the future of Hong Kong and its relevance to New Zealand. Russell is the immediate past president of the Hong Kong New Zealand Business Association and previously worked in Hong Kong as a journalist. "Hong Kong: Towards an uncertain future?" was organised by the New Zealand Institute of International Affairs and the New Zealand Contemporary China Research Centre. 

This is an excerpt of his speech. 

I’d like to begin by explaining that while I’m going to be looking at some of the economic impacts caused by the protests, I’m not an economist or business analyst.

But I do know Hong Kong well; I lived there for five years, working for the South China Morning Post and the Hong Kong Tourism Board. I’m also the immediate past president of the Hong Kong New Zealand Business Association. I visit Hong Kong often, and I follow its unfolding story very closely, including on a number of private social media feeds.

When I told one Hong Kong Kiwi friends about the speech I was giving tonight, his response was, and I quote: “Please mention the dehumanising of the people and the protesters. There are many instances that make you want to get out on the streets and demonstrate."

Of course, there is unacceptable behaviour on both sides of the Hong Kong divide. And innocent victims.

We now have a police force thrown unfairly into a political maelstrom and demonised to the extent that the wives of some police officers are reportedly talking about divouce because their children are being victimised so badly at school.

Hong Kong now appears trapped in a stalemate with no solution in sight. The territory is in recession. Retail sales slumped by just under 25 per cent in October and thousands of retail job losses and store closures are expected.

Tourist arrivals have fallen by more than 40 per cent. Manufacturing is also well down and analysts predict restaurant profits could fall by 30 per cent.

Even its ever-reliable MTR metro company, a regular target of radical protesters, has revealed it faces losses of NZ$310 million.

And despite the world’s largest stock exchange listing of 2019, Alibaba Group Holding’s second IPO, finally going ahead last month, the Hang Seng index remains volatile, and international fund managers are advising caution.

Tara Joseph, president of the American Chamber of Commerce in Hong Kong said in late November: “It will take months to restore confidence in many aspects of the economy. The city’s global reputation has been tarnished and we need to actively show that change is afoot to restore peace, security and a solution to the ills affecting society.”

Ms Joseph was later refused entry into Macau when she travelled there for a social function. No reason was given, and she was forced to return to Hong Kong.

The US-China trade war has also been hitting Hong Kong hard. Lower volumes of trade passing through Hong Kong impact many employed in trade-related industries.

The retail slump is also affecting the luxury end of the retail market. Even luxury brands are demanding landlords reduce their rent. Widespread store closures and redundancies are expected.

Not surprisingly, Hong Kong’s conference and events sector is also feeling the pain. Attendance at trade exhibitions has fallen by more than 20 per cent and some trade shows and exhibitions have been postponed or cancelled.

The tourism slump is significant because the sector has been facing significant challenges in recent years, despite arrivals from Mainland China booming. Chinese tourists now account for nearly 80 percent of international arrivals, and that’s changing the face of the Hong Kong tourism sector. At the same time, the number of non-Chinese visitors in recent years has stagnated or declined.

Most New Zealand exports to Hong Kong are retail or tourism-related: fresh produce, seafood, dairy and wines. A New Zealand Trade and Enterprise contact told me many exporters say they are being affected by the downturn. However, he also reported others have yet to experience any negative impact – although they are increasingly concerned.

The slowing Hong Kong economy is also affecting outbound travel. Statistics New Zealand reports a 7.1 percent fall in visitor arrivals from Hong Kong in the year ended September.

Everyone has they own views about what might happen next. The reality is, of course, it’s impossible to predict.  But, for what it’s worth, here’s my take.

There are no signs of the movement waning. The protests continue to draw networks of peaceful people as well as the more radical protesters. My Hong Kong contacts tell me about scouts who share details about police movements on social media, drivers who transport protesters home, first-aid workers who treat the wounded on the front line and in secret surgeries, and office workers and students who guide crowds during retreats.

Many protesters, especially the young, believe this is a fight they cannot walk away from because their very future is at stake. Of the 6,000-odd people arrested since the protests began, about 40 per cent are students. The youngest person arrested is only 11 years old.

I believe what started as a protest about the extradition bill was always going to morph into a backlash against the dismal economic prospects so many young, educated Hong Kong people face. And, of course, they fear for their futures as the freedoms they currently enjoy are slowly eroded.

The Hong Kong many tourists see is a city of glitz and glamour, luxury shopping malls, bustling nightlife and upmarket restaurants.

But the reality of life for many Hong Kong people is one of struggle.

Hong Kong is one of the most expensive places in the world to live. Young adults, many not even born at the time of the Handover, face a future of crippling student loans and apartments they can’t afford to rent – even if they can find one available.

And although the recession is hitting many locals hard, they are prepared to endure that pain. They simply don’t see Carrie Lam as willing or able to help solve the crisis. The recent local government elections really boiled down to a vote of confidence on Lam’s leadership. It’s a vote she failed miserably.

I believe Lam’s days as Chief Executive are numbered. It’s only a matter of time before she’s axed by Beijing.

I don’t see a strong-arm response from mainland China happening any time soon because it’s hard to see an upside to them sending in the PLA. Unless the violence on the streets escalates, I think they will continue to play a waiting game. If they don’t, the outcome would be catastrophic.

Sadly, to my eyes, Hong Kong has reached an impasse that neither side can win without making concessions they simply aren’t prepared to make. And that means it’s an impasse that neither side appear prepared to lose.

Views expressed are personal to the author.

- Asia Media Centre