The combination of large-scale protests since last year and the ongoing coronavirus pandemic have dealt a blow to Hong Kong’s economy that has now been compounded by the Chinese Government’s imposition of a new national security law in Hong Kong. As a result, confidence in the territory’s institutions and rule of law is faltering, and its future as an international financial centre is being put into question. Amidst this backdrop of economic uncertainty, we at Redfield & Wilton Strategies polled a representative sample of adults in Hong Kong to understand their views about the future of Hong Kong’s economy.
We found that respondents were twice as likely to be pessimistic rather than optimistic about the future of Hong Kong’s economy. Whereas the plurality (49%) said they feel pessimistic about it, only 23% said they feel confident about the future of the territory’s economy.
Likewise, our poll found that among the employed or self-employed, more than a third of respondents earned less than usual in the past month (37%), compared to 14% who earned more than usual. The plurality (48%) said they earned the same amount as they usually do.
Going into the next month, a third of employed and self-employed respondents said they expect to earn less than usual in the coming month (34%) in comparison to 15% who expect to earn more than usual. Once again, the plurality (49%) expect to earn roughly the same as last week. This is despite the fact that social distancing measures in Hong Kong have been relaxed for some time now, with restaurants, bars, and gyms open for business.
With a third of employed respondents finding themselves earning less money than they usually do, it is not surprising that 27% of respondents list having more financial security as a reason why they would consider leaving Hong Kong. This was the third most popular reason why our respondents would consider moving away permanently, following wanting more political security and more physical living space. Although these reasons are largely intertwined, it is noteworthy that financial insecurity is a reason why more than a quarter of respondents in Hong Kong would considering emigrating.
Alongside the global economic slowdown as a result of the coronavirus pandemic, another reason for Hong Kong’s economic instability is the Chinese Government’s increasing control of the territory, which is rapidly eroding the “one country, two systems” framework that has been in place since 1997. Not only have Beijing’s incursions into Hong Kong led to questions about the resilience of Hong Kong’s rule of law, but it has also resulted in protests that have destabilized the local economy and repelled both leisure and business travelers. If this situation was to further deteriorate, 43% of respondents say they would consider withdrawing their money from the bank if the Chinese Communist Party’s influence and control in Hong Kong increases and they feel their democratic and legal rights are under serious threat.
Consequently, there is a significant risk of capital flight in Hong Kong if the Chinese Government continues to assert itself in Hong Kong. This has become particularly pronounced as countries such as the UK begin to offer some Hong Kong residents the possibility of relocating to the UK and eventually becoming full British citizens. It is not unlikely that most who leave would take their capital with them, dealing another blow to Hong Kong’s economy. Indeed, a plurality of respondents indicated they would feel more secure if some of their finances were held in US Dollars (45%) or British Pounds (39%) rather than in Hong Kong Dollars.
Ultimately, our research suggests the Hong Kong public has a largely pessimistic outlook about the future of the territory’s economy, with a third of the population having earned less this month than usual (and expecting this to continue into next month) and a quarter of adult respondents saying financial insecurity is a reason why they would consider leaving Hong Kong. Likewise, it remains unclear whether there will be capital flight as a result of Hong Kong residents deciding to relocate elsewhere, and the impact this will have on Hong Kong’s economy. Regardless, the public is not optimistic.