Doldrums
It is Hong Kong’s fate that it will always be compared, on every subject and issue, with two great cities: Shanghai to the north, and Singapore to the south. Looking north, Shanghai is larger, and more deeply embedded in the nation’s political and social fabric; Hong Kong has the freedom of manoeuvre that distance and a separate constitutional arrangement can bring. Looking south, Singapore as a sovereign country is autonomous so can be more decisive and bold, but lacks a proper hinterland; Hong Kong has to keep in mind national priorities while enjoying the benefit of backing from and proximity to the world’s second largest economy.
There can be swings and roundabouts in both directions according to the subject, and so it is with response to the COVID 19 pandemic. The mainland is applying a “Zero COVID” policy, with entry strictly controlled and a ferocious response to mini outbreaks backed by a thorough track and trace system. As a result, the number of infections has been kept amazingly low (China is not even in the top hundred of countries affected). The economy is not seriously damaged by being hermetically sealed off: international trade in goods can continue and the domestic economy is large and robust enough to prosper. It does not depend on large inflows of foreigners to thrive.
Hong Kong’s situation is different. It too is applying a Zero tolerance policy and has also kept the number of infections and deaths commendably low. The economy did suffer a recession in 2019-20 but is now enjoying a recovery. However, the domestic economy by itself is not sufficiently large to sustain us in the longer term. Our strengths are in financial and professional services which we provide on a national, regional, even a global level. These two sectors, plus tourism which used to be one of our major employers, depend on ease of movement for people. When even returning vaccinated residents are subject to a long quarantine period, our position as a regional business hub is bound to weaken.
Hong Kong’s proximity to the mainland is no advantage in terms of access at the moment as Hongkongers too are considered outsiders for the purposes of immigration and health checks. Thus, staff of a company based in Shanghai have reasonable access to business operations throughout China whereas Hong Kong based companies are in essentially the same boat as those from Singapore.
The government’s declared priority is to secure an open border with the mainland on both social and business grounds. This is understandable but will not be easy. We do not know for sure what conditions the Central People’s Government will set for quarantine-free access, but one aspect is bound to be vaccination levels. Here is Hong Kong’s Achilles’ heel. The mainland has administered over 2.2 billion doses to its 1.4 billion population and achieved over 80% coverage. Singapore has achieved a similar result with 9.7 million jabs for its 5.5 million people. The equivalent numbers for Hong Kong are 8.8 million doses for 7.5 million people giving rise to a vaccination rate of just over 60%.
Moreover the take-up rate of first vaccinations has dwindled to around 5,000 per day and is on a falling trend. At that speed, and in the absence of robust new initiatives, we would not reach 80% coverage much before Christmas next year.
Many countries are beginning to accept the reality that COVID is now endemic and we have to learn to live with it. This is a sensitive exercise as any degree of opening up is bound to carry a risk that the number of infections will rise, with consequent increases in the number of hospitalisations and deaths. Notwithstanding these downside risks several countries in Europe are moving in this direction. In our part of the world the first mover is Singapore whose strategy can best be described by the traditional Chinese expression of “crossing the river by feeling the stones”.
Singapore, our traditional competitor as regional business hub, has recognized that prolonged closure to international travel is very negative for development of its economy. It is therefore prepared to move away from zero COVID and accept the risks to public health, by establishing travel bubbles with selected countries in whose virus containment measures it has confidence.
All of Hong Kong’s efforts to establish similar travel bubbles – with Australia, New Zealand and Singapore – have come to naught because of our ultra-cautious approach. It is unlikely the mainland will change its policy any time soon – observers have pointed to the Winter Olympics in the spring and even the next Party Congress scheduled for November 2022 as events Beijing will wish to run smoothly with the virus still under effective control.
The questions that arise are whether Hong Kong’s autonomy stretches to the point that we could, if we wished, start to move away from zero and follow the trend to open up; whether Beijing would still open its borders to us even if we adopted a different policy; whether the local administration has the appetite to adopt a different policy; or whether we will put all our eggs in the Greater Bay Area basket and risk losing our premier regional hub status.
Paradoxically, in the latter case, we would also lose some of our usefulness to the nation. These are tough choices: be one city among several in the Pearl River Delta, or continue to fly the flag as top location for regional headquarters. I would feel more confident if I couldn’t hear Singapore smacking its lips at the prospect of eating our lunch.