Hong Kong might only reopen in early 2024 because of its stringent COVID-19 policies, which could trigger an exodus of foreign firms and staff, and jeopardize its role as a financial hub, the territory’s European Chamber of Commerce said in a draft report.
The limited effectiveness of locally developed vaccines is forcing China to maintain tight restrictions on travel, the chamber said in the draft, which was reviewed by Reuters, but has not been made public.
The European Chamber of Commerce declined to comment on the report.
Photo: Bloomberg
The most likely scenario for Hong Kong would be that it would not reopen until China rolls out its messenger RNA (mRNA) vaccine across its 1.4 billion population, which could take until late next year or early 2024, it said.
If that was the case, the chamber said there was a risk of a “cascade effect” of firms leaving Hong Kong.
“We anticipate an exodus of foreigners, probably the largest than [sic] Hong Kong has ever seen, and one of the largest in absolute terms from any city in the region in recent history,” it said.
While Hong Kong has succeeded in keeping the virus under control for much of last year, it has become one of the world’s most isolated places because of its travel restrictions and intermittent lockdowns that have accelerated a brain drain from the former British colony.
Hong Kong saw a surge of infections this month, which authorities have struggled to control.
Given the scenario, multinational firms would increasingly relocate China-focused teams to the mainland or shift their Asian regional teams to Singapore or Seoul, the chamber said.
Hong Kong could lose its appeal as an international business hub as well as its potential to contribute to China’s economy.
The departure of international talent could also undermine the territory’s “potential to maintain world-class universities,” it said.
Unlike China, Hong Kong is dependent on business travelers and imported goods.
Its role as one of the world’s main transshipment and passenger hubs has been drastically curtailed by tough flight restrictions, which mean very few people are allowed to land and hardly anyone is allowed to transit.
In contrast, the rival financial hub of Singapore has eased its coronavirus curbs including border controls.
Only about 70 percent of people in Hong Kong have been double-vaccinated, compared with 91 percent of Singapore’s eligible population.
Most of Hong Kong’s elderly people have not been vaccinated.
The chamber outlined other scenarios of “average likelihood” including the possibility of an uncontrolled outbreak in the mainland leading to Hong Kong sealing its boundary with China and reopening with the rest of the world.
Another scenario was an uncontrolled outbreak in Hong Kong, which would make any additional restrictions meaningless. This could cause up to 20,000 deaths among elderly people.
The chamber made recommendations to the government, including accelerating vaccinations and shortening quarantine from 21 days to seven to 14 days, which would please the international business community.
Foreign businesses should assume that Hong Kong would very likely be “semi-closed for international travel in the coming 12-36 months,” it said.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS