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Are protests bringing Hong Kong to the brink of a recession?
Posted on 20/11/2019

PoliticalHong Kong

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After 5 months of protests and social unrest, Hong Kong is on the brink of its worst recession since the 1997 handover.

What is happening in Hong Kong?

What is happening in Hong Kong?
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Finance chief Paul Chan Mo-po calls for unity to save the economy. Whilst the government has formed a crisis management committee and the finance minister has called for protesters to unite against the notion of "burning together," it seems that protestors have no intention of putting out the fire any time soon.

Figures indicate that the economy is declining. In the third quarter, the economy shrank 3.2 percent, after having shrunk 0.5 percent the previous quarter. The economic growth forecast for this year had been a growth of between zero and one percent. However, revised forecasts have revealed that the real economic growth will drop down to negative 1.3 percent.

The tourism industry has also taken a severe hit as a direct result of the protests. On 5th August 2019, over 200 flights were cancelled due to a city wide strike. Furthermore, many countries, including the UK, have issued heightened travel advisories due to what the US called "confrontational" protests. Chan noted that the number of inbound travellers decreased by 39 percent in August and September compared to last year.

Despite the worrying statistics, unrest is likely to continue. Why?

Despite the worrying statistics, unrest is likely to continue. Why?
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Protestors have five demands that they want met and 'not one less.' Up to now, only one demand has been met; the demand to get rid of the controversial extradition bill. This bill was removed in September 2019. If the extradition law were to be passed, that would give China legal cover for taking anyone considered a dissident out of Hong Kong in order to silence opposition to their government. This would pose a great threat to many Hong Kong residents working towards greater autonomy and democracy in the district.

There are 4 other requests that, as of yet, have not been met:

For the protests not to be characterised as a "riot"

Amnesty for arrested protesters

An independent inquiry into alleged police brutality

Implementation of complete universal suffrage

What is the general consensus?

What is the general consensus?
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In June, 2 million of Hong Kong's 7 million residents attended one protest. Whilst there are concerns about the impact of the protests on Hong Kong's reputation as an attractive financial capital and some don't sympathise with the tactics of the protesters (such as defacing the legislative building), the sheer amount of people who have joined the protests highlights the increasing fear and anger of this administrative district that feels the tightening grip of mainland China.

What's more, the younger generations are particularly fearful that they will not be able to live the rest of their lives with the freedom they grew up with, as they realise 2047 (the year that the 'One Country, Two Systems' agreement expires and Hong Kong theortically will become fully absorbed into China) is not that far away.

The US-China trade war

The US-China trade war
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However, it is not just the protests that have been damaging to Hong Kong's economy. The US-China trade war is also starting to hit hard. For decades, Hong Kong has been a re-export hub between America and China, seeing around 17 percent of Chinese exports to the US pass through the city and around 9 percent of US exports pass through Hong Kong before heading to mainland China.

Although Hong Kong is technically shielded by a deal called the United States-Hong Kong Policy Act, which means that the US has treated Hong Kong as a separate entity from China since the return of the city's sovereignty from Britain to Hong Kong in 1997, Hong Kong remains piggy in the middle between these two economic power houses, neither of which seem prepared to back down.

Whilst the economic implications for Hong Kong are worrying, it seems that they are a secondary concern to the city's citizens. At the heart of the matter is the freedom of those who live there.