By Juilin Lu
After several months of struggle, the Hong Kong Anti-Extradition-Law movement has finally achieved some success. The Chief Executive Carrie Lam announced the formal withdrawal of the Extradition Bill in response to the five demands made by the protestors. To achieve this goal, the city has suffered a tremendous amount. The protests have left the city severely injured in areas like tourism and finance, and it will take a long time for Hong Kong to recover.
The protests first began in early June. As the demonstrations developed, the number of tourists declined drastically, and this effect was mainly contributed by Chinese tourists. Comparing September 2019 to September 2018, the number of tourists dropped by 34.2%, going from 4,718,536 to 3,104,049. The number of Chinese tourists dropped by 35 %, going from 3,713,464 to 2,412,459.
Hong Kong was once the most favored tourist site and shopping center. Now, due to instability and insecurity, Chinese tourism is turning to other candidates like Singapore or Tokyo. This has had a very detrimental effect on Hong Kong’s economy, as Chinese tourists contribute a large portion of their economy. In 2017, Chinese tourists contributed 56.8 billion Hong Kong dollars, which is 2.2% of the city’s GDP. This is because Chinese tourists tend to spend more during their stay compared to tourists from other countries.
With the decrease in Chinese tourists, the retail business has also been affected. The retail business sales volume dropped to 29.4 billion HKD, a 25.3% difference compared to a year ago. Luxury brands were hit by store closure and the decrease of Chinese travelers. Sales in jewelry, watches, footwear, clothing, and department stores were hit the hardest. There was also a 27% drop in the export of watches from Switzerland during June. The absence of Chinese tourists hurts local restaurants and small businesses. The hotel industry was hit hard as well, with room occupancy rate dropping to 63% in September, compared to 86% a year ago. Though there are no statistics yet, Hong Kong presumably won’t be able to benefit from China’s national “Golden Week Vacation”, the prime season for Chinese tourism, as Chinese tourists are more likely to visit other cities in East Asia. Economists estimated that Hong Kong’s loss could potentially exceed 1.9 billion HKD during the break.
The protests and the decrease in foreign arrivals have affected the airline industry and Hong Kong international airport. During the protest, the protestors occupied the airport, paralyzing the aerial traffic. On August 12, Cathay Pacific canceled 200 flights due to the protestors blocking travelers entering and leaving Hong Kong. According to the Civic Aviation Department of Hong Kong, the total amount of passengers entering and exiting decreased by 12.7% in September compared to 2018.
Hong Kong’s financial sector was impacted by the movement as well. From May to August, the Hang Seng index dropped around 4000 points, wiping out its gain since December 2018. The protests also disturbed the business operation of different businesses, causing the stock price of Hong Kong-based companies to go down. The extradition bill caused distrust of foreign business. In August, DBS adjusted Hong Kong’s GDP growth forecast from 2.5% to 0%. The protests disturbed normal business activity and resulted in a decrease in domestic consumption. As the movement continued, the prediction may have to be adjusted downward again.
Ever since the British handover of Hong Kong, the city has been the strategic priority in southeast China. Hong Kong has a significant advantage as Asia’s financial hub. In recent years, China’s Greater Bay Area Strategy aims to further integrate Hong Kong into the Chinese economic and political system. The plan would create a megacity around Hong Kong and Hong Kong will lead the entire area and connect with the world using its established influence.
After the protests began, China has reconsidered Hong Kong’s position and posted an administrative opinion on August 18th. The document includes a lot of information, but the final objective is to undermine the importance of Hong Kong by strengthening Shenzhen and Macau. The overall theme of the opinion is to further implement the “Open Up” policy. In Shenzhen, the city will work to implement experimental policies in the economy, creating a fair and open government that is welcoming to investors and businesses. Shenzhen will also increase administrative efficiency and simplify the procedures for commerce, creating a business-friendly environment. The most important task of Shenzhen given by the Central Committee is to adopt a looser foreign currency exchange policy and strengthen Shenzhen’s stock market, enabling local top tier tech companies to acquire funds internationally. This will take away the unique advantage of Hong Kong as a financial hub. After losing the leadership of this greater project, Hong Kong will have to face the fact that they will be slowly integrated into the Chinese system and become a normal Chinese city.
The Hong Kong city and the protestors have made huge sacrifices for pushing back the extradition bill and maintaining the city’s autonomy. However, the struggle may be futile — the promise made by China is that “the city will not change in 50 years,” but when the time comes, Beijing will make even more ambitious moves rather than subtle changes right now. Losing its autonomy is an inevitable fact that Hong Kong will have to face in the near future. Still, the world should remember what this beautiful city sacrificed to defend her value and diversity.
Photo courtesy of Sam Li (Wikimedia Commons).