- hong kong
Here Comes the Sun
Last week we wrote about the gloom in Hong Kong and explained some of the factors behind it. But there is another side to the story. Hong Kong has seen gloom many times in its history. It has never failed to bounce back. Today, we look at some of those occasions.
There is light at the end of the tunnel. Once the virus peaks which, according to the University of Hong Kong, happened on March 4, the infection rate drops very quickly. Vaccination rates have also gone up which will also help to mitigate the virus’ impac], like it did everywhere else in the world.
We went through this lull in 1997, when the Handover happened, and people didn’t trust the idea of Hong Kong going back to China. I’ve been through the ups and downs of Hong Kong, and many media outlets have called this pandemic the end of Hong Kong. I really don’t believe that. I think we’re in a temporary lull and Hong Kong will come back very strong once this is over, like other countries around the world.
How this echoes our blog post of 16th December 2019, written at the height of the serious riots in Hong Kong. We described the crises in 1980, 1983, 1989, 1999, 2003. At the peak of each crisis came cries of ‘Hong Kong is finished’, ‘people are leaving in droves’, ‘just another Chinese city’ (whatever that may mean). Yet, within as little as six months, the city had bounced back and was more vibrant and successful than ever.
The same will happen again.
Hong Kong’s GDP growth
Often seen as a key indicator of Hong Kong’s mood and prosperity, emigration is not new. In a well-balanced paper written in 1990, Ronald Skeldon examined the then high rate of emigration. Was it caused purely by the potential transfer of sovereignty of Hong Kong to China in 1997? No, he argues:
Emigration is not new from Hong Kong, but its volume is presently at an all-time high. While the impending transfer is clearly one factor, there are more important reasons to be found in the policies of potential destination countries and in those conditions which are giving rise to an increase in the movement of Chinese peoples throughout Asia. The characteristics of the emigrants are biased towards the upper end of the educational and occupational spectrum. The loss of these personnel to the local economy may cause short-term problems in particular sectors but Hong Kong’s long-term viability is more likely to be associated with the potential for regional development in the Pearl River delta as a whole than with the outflow of population.
In fact, far from being negative, the movement of people in and out of Hong Kong is essential. Permanent citizens who ‘left’ often return with new skills and insights. Those who ‘leave’ may not actually have left at all but simply choose second home elsewhere. In either case, the city receives new talent each year from many sources. It changes, yes. But, as every country finds, movement of people brings new vitality to the economy and to its social life.
The World Bank chart shows how volatile Hong Kong’s economy is. More than most cities, it reacts rapidly to changes in the world and especially in China. Because it is small, diverse, entrepreneurial, and hard-working, Hong Kong takes advantage of changes in order to adapt and grow. This happens as rapidly as it suffers from downturns.
The Greater Bay Area is just one such huge opportunity for Hong Kong.
In 2019, the area was home to some 68 million people and had a combined gross domestic product of about $1.5 trillion, roughly equivalent to that of Australia or South Korea. Hong Kong can connect the Greater Bay Area with the rest of the world, much like San Francisco’s role in the San Francisco/Silicon Valley Bay Area.
The opportunities for Hong Kong are immense.
For the past 27 years, I have delivered annually summaries of the business prospects in Hong Kong to employers’ groups and other organisations. In even the most optimistic years, I have necessarily highlighted threats to the economy. As the World Bank chart shows, sometimes those threats have been substantial and have come to pass.
Yet, within a very short time, Hong Kong rebounds into growth. Its prosperity and happiness return. Nowhere else in the world has so great a capacity for adaptability and renewal.
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