Hong Kong’s covid chickens are coming home to roost. The first quarter GDP figures, showing a year-on-year drop of 4 per cent, were bad enough. But they could well be the harbinger of continuing weakness in the months ahead. The tide is flowing against us, we need bold and decisive leadership to change the direction of the current. We must open up to the outside world quickly.
If that means a further delay in opening up the border with the mainland, a chimera we have been pursuing for the best part of a year now, then that is a bullet we are just going to have to bite. Our competitors are forging confidently ahead, while we risk sleepwalking into economic irrelevance.
I will not rehearse again the many missteps in our pandemic policies up to now. After all, I and other commentators have practically beaten the subject to death. That is water under the bridge, or to put it another way, bodies in the morgue. But we have finally stumbled into a reasonably satisfactory position.
Our overall vaccination rate is almost 90 per cent, over 80 for the over 60s and even the recalcitrant octogenarians are over 60 per cent and rising. These efforts must of course continue, including boosters for the seniors. (I had my second booster, fourth jab overall, last week).
But the one area where we remain very weak is in international access, putting our stated objective of being a major aviation hub at serious long-term risk. The number of flights arriving and departing Chek Lap Kok are running at abysmally low levels. Some international airlines have stopped servicing Hong Kong altogether – one major American airline ceased flying here over a year ago. All the others – including our home carrier Cathay Pacific – have sharply curtailed their schedules.
And no wonder. We actively deter leisure tourists and business visitors by insisting that even fully vaccinated passengers testing negative on arrival must spend a week in a quarantine hotel. Only the most desperate would consider such a custodial sentence, hence most of those arriving are returning residents. Moreover the flight suspension arrangements whereby an airline can be banned from a route for a period of time depending on test results of its passengers makes no sense. It punishes airlines for matters largely beyond their control and disrupts the travel plans of passengers booked on subsequent flights. The system should be scrapped. The quarantine system has to go, and as soon as we have absorbed the effects of that, the mask mandate also.
Not surprisingly, passengers wishing to fly long haul with certainty in their travel arrangements on underserved routes are reported to be flying via other regional hubs such as Seoul, Tokyo or Singapore. Surely we did not spend billions on a third runway just so we could be a feeder airport.
Hong Kong hitherto has been a major player in the world economy to the benefit of ourselves and to the whole of China. But we need to face up to the fact that global business could get on very well without us, as regional rivals are champing at the bit to take our place.
The situation in the mainland has similarities with Hong Kong but also major differences. One difference has been at the policy level, with the mainland adopting “dynamic clearing” which meant living life as normally as possible, mostly without masks, but clamping down hard whenever an outbreak occurred. Hong Kong by contrast was seeking to achieve zero covid on a preemptive basis, with masks required everywhere (even in country parks) and severe social distancing measures such as closure of bars, gyms, beaches and swimming pools and restricted opening hours for restaurants and so on.
Both strategies have their merits, but neither is perfect. The omicron variant exposed the weaknesses of both. In Hong Kong we only really got to grips with the outbreak when we belatedly became much more proactive in pushing vaccination of the elderly, and in enforcing the passport arrangement. The mainland had a relatively smooth 2021 with the economy continuing to grow strongly, the momentum carrying over to the first quarter of this year. But when “clearing” required shutdown for a month of most of Shanghai and (now) Beijing, then the flaws and difficulties became apparent. All the economic indicators have turned sharply lower and will no doubt be reflected in the second quarter GDP figures in due course.
Small wonder that China’s top expert on the subject, Zhong Nanshan, has started to query whether the policy is sustainable in the long term, but his view has yet to gain much support at senior political levels.
Part of the problem, and the second major difference, is the sheer scale of the situation in the mainland. Hong Kong has endured about 8,000 deaths in a population of 7.5 million which is unfortunate, but the potential numbers in the mainland are mind-boggling. Of the 264 million aged over 60, more than 50 million are unvaccinated. Moreover the health systems, especially in rural areas, are much less developed. Even a two percent mortality rate would result in over a million deaths which would be socially destabilizing. Hence the caution against premature relaxation.
Given the size and diversity of the mainland economy, closing the country off from the outside world seemed a viable option, at least for a while.
But time’s up for this approach. China has the world’s second largest GDP and is an integral part of the global economy. Whereas the world could manage without Hong Kong if it had to (and if we were that foolish) it cannot manage without China. The case for a forceful vaccination drive is becoming overwhelming.