Competition for the status of “global financial center” is extremely keen. It is gratifying that in the latest Global Financial Center Index ranking, Hong Kong managed to keep the third spot, which it had regained in September, but notable contenders for this position are plenty. Shanghai’s position jumped from the sixth to fourth in this round. While London was behind New York City by 33 points, Hong Kong’s rating score, at 715, was just one point above that of Shanghai (714). And after Shanghai were, in descending order, Los Angeles, Singapore, San Francisco, Beijing, Tokyo, and Shenzhen, each of which was just one point behind the next higher-ranked city.
The Honorable Robert Lee Wai-wang, legislator for the Financial Services Functional Constituency, last week expressed worry over the loss of talents due to Hong Kong being cut off from much of the rest of the world because passenger flights from eight countries have been banned since early January. The countries are Australia, Canada, France, India, Nepal, Pakistan, the Philippines, the UK and the US. On Feb 11, the SAR government added Nepal to the list and announced the bans would be extended to March 4, and the flight bans were later further extended to April 20. Although the government announced on March 21 that it would lift the flight bans on the nine countries from April 1 and shortened the quarantine requirements to seven days, Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-ngor emphasized that this does not mean that the circuit-breaker mechanism for flights has been abandoned. She maintained that Hong Kong still needs to suspend flights that carry a large number of confirmed patients in order to prevent the importation of cases.
While reducing the frequency of inbound flights from risky countries may be appropriate, arbitrarily imposing flight bans for an extended period is not
It is enlightening to compare Hong Kong’s approach with the Chinese mainland’s approach in dealing with flights from high-risk countries. The mainland is known to have followed a rigorous “dynamic zero infection” strategy and to have been more successful than any other jurisdiction in containing the pandemic. Yet it has never completely banned flights from any country over an extended period. In stark contrast to Hong Kong’s long flight bans, a recent update from China Briefing from Dezan Shira & Associates says: “The worsening global pandemic and the spread of the highly contagious Delta and Omicron variants have led the (mainland) authorities to take tougher prevention measures during the winter and spring period. As such, on October 29, 2021, the Civil Aviation Administration of China (CAAC) announced that it would be reducing the number of international passenger flights in and out of China to just 408 per week from the period between October 31, 2021, and March 26, 2022. This is a 21.1 percent reduction from the same period in 2020.”
Hong Kong, oddly enough, is the only jurisdiction in the world that has imposed flight bans from key business partners for an extended period. Hong Kong, a top global financial center and a world city, has long been regarded as one of the most open economies in the world. Remaining open and attractive to talents is crucial for Hong Kong’s competitiveness. Hong Kong has lost about 1.6 percent of its population from year-end 2019 to year-end 2021. Although this appears mild, the decline for the 20-40 age group amounted to 8 percent. It is believed that this sharp decline has mainly to do with emigration. A survey just released by the Hong Kong Public Opinion Research Institute, which canvassed 6,723 respondents, shows that almost a quarter of the population have plans to permanently leave Hong Kong. Last year, the Hong Kong Institute of Asia-Pacific Studies at the Chinese University of Hong Kong surveyed 716 people aged 18 or above from Sept 16-25 and also found intentions to emigrate were high. About 42 percent of the respondents indicated they would emigrate if they had the chance. Many people think that Hong Kong should have no difficulty replacing talents that leave the city with new immigrants. But the number of regional headquarters in Hong Kong peaked in 2019 and is already falling. Speaking on a radio program Saturday morning, Mr Bernard Charnwut Chan, a member of the Executive Council, pointed out it is not likely for multinational companies (MNCs) to return to the city once they have relocated. With the prolonged flight bans and the uncertainty about possible flight bans overhanging, more multinational companies could leave the city. This could start a vicious circle, with MNCs leaving, feeding the loss of attraction to talents, which in turn feeds on the motivation for MNCs to leave.
A European Chamber of Commerce survey discovered that a quarter of the 260 respondents reported that their companies were mulling moving operations out of Hong Kong, while another quarter were contemplating moving part of their operations out of Hong Kong. Forty percent of the respondents expressed concern over the difficulty of attracting talents, given the travel restrictions and the separation from family.
To conclude, legislator Robert Lee’s worries are not groundless. I have long argued that while reducing the frequency of inbound flights from risky countries may be appropriate, arbitrarily imposing flight bans for an extended period is not. Any “circuit breaker” mechanism to ban inbound flights altogether must be considered an extreme measure that should be avoided as much as possible. The worry over possible flight bans would haunt investors with the thought that doing business in Hong Kong is subject to much uncertainty.
The author is director of the Pan Sutong Shanghai-Hong Kong Economic Policy Research Institute, Lingnan University.
The views do not necessarily reflect those of China Daily.