The record exodus of Hong Kongers over the past 12 months is raising concerns that the island’s status as a global financial center could be at risk.
More than 113,000 residents left the territory last year, which represents a population decline of 1.6%. It is the biggest drop in Hong Kong’s population since record-keeping began more than 60 years ago.
Between 2020 and 2021, 89,200 people—or 0.3%—left the city, and 20,900 people left the countryside from 2019 to 2020. The city’s population has grown from 7.41 million in mid-2021 to 7.29 million by mid-2022, according to the latest 2022. data from the Hong Kong Census and Statistics Department.
This exodus over the past year is mainly due to Hong Kong’s strict COVID-19 policies and political unrest, several China experts told VOA.
“I’m not really surprised, given the extraordinary circumstances of COVID and the recent political changes; it’s certainly creating a different environment,” Johns Hopkins political science professor John Yasuda said in an interview with VOA Mandarin, and adding that the changes have brought a lot of uncertainty to Hong Kong. “The financial community understandably doesn’t like uncertainty.”
At one point during the pandemic, Hong Kong required up to 21 days of hotel quarantine for travelers. Last week, Hong Kong reduced the required quarantine period to three days a week.
Following the 2019 pro-democracy protests in Hong Kong, Beijing introduced a sweeping new national security law in 2020. The loosely worded law criminalizes any acts deemed secession, subversion, terrorism and foreign collusion, with these crimes punishable by a maximum penalty. life imprisonment.
A Hong Kong government spokesman previously told VOA that the recent population decline was due to a lack of newcomers to the city.
Liu Pengyu, the spokesman for the Chinese embassy in Washington, told VOA Mandarin that the national security law has had a positive impact on Hong Kong.
“The legal rights and freedoms of Hong Kong residents and foreigners in Hong Kong have been better protected in a more secure environment,” he wrote in an email. He added that many Hong Kongers “believe that the national security law has improved the business environment” in the city.
Tara Joseph, former president of the United States Chamber of Commerce in Hong Kong, was part of the exodus and returned to the United States in August 2021 after living in Hong Kong for about 20 years.
Hong Kong’s strict COVID-19 policies made it difficult to plan their lives, said Joseph, who worried about the political situation.
Political concerns weigh disproportionately on Hong Kong’s native residents because non-citizen residents, or those with dual citizenship, can leave the city and go elsewhere when they or their employers so choose.
“Many Hong Kongers had migrated or taken up residence in other countries for a rainy day. And this rainy day came,” Joseph told VOA Mandarin. In many cases, “these are people who left China to go to Hong Kong because of the freedoms that Hong Kong provided. And now they’ve had to leave Hong Kong as well. It’s a big change for a lot of people.”
Joseph previously worked as a Reuters correspondent in Hong Kong. Now based in California, he will begin work at the Freedom Committee in Hong Kong in September.
The recent exodus includes top talent in finance, which is moving to places like Singapore and London, Joseph said, adding that it is now difficult to replace them with positions in Hong Kong. “There is a brain drain and an outpouring of talent from Hong Kong,” he said.
International companies are also quietly leaving the city as recent changes make the city less attractive to do business, according to Joseph.
“It’s kind of a quiet trickle in, as opposed to companies standing up and saying, ‘We’re out of here,'” Joseph said.
There were 254 US companies with regional headquarters in Hong Kong as of June 2021, the last time the Hong Kong Census and Statistics Department reported this data, compared to 282 in 2020.
Still, academics like Yasuda of Johns Hopkins and Victor Shih of the University of California, San Diego, don’t think Hong Kong’s status as a global financial center is at risk just yet.
Yasuda is not convinced that major financial institutions are willing to give up on Hong Kong, because nowhere else has comparable access to the mainland Chinese market.
“When it comes to finance, you go where the money is. There’s a lot of banter about politics, but I think it’s too early to tell,” Yasuda told VOA. “There’s kind of a wait-and-see attitude.”
One reason is that there are many workers from mainland China to support Hong Kong’s financial sector, according to Shih.
“The financial sector has always been a plutocratic sector, if you will, that is divorced from the vast majority of people in Hong Kong,” Shih told VOA in an interview.
Hong Kong issued about 2,600 work visas to foreign finance workers in 2021, nearly 50% less than in 2019, about the same as the 2,300 visas issued to applicants for mainland finance positions, according to Nikkei Asia, a news outlet Japanese financier.
And if Hong Kong is losing international stature, it is becoming China’s financial magnet. According to the Nikkei, since 1997, when Hong Kong returned from British to Chinese control, until today, the number of Chinese companies listed in Hong Kong has increased from 101 to 1,370.
While the exodus of Hong Kongers may hurt other sectors in Hong Kong, Shih says the financial sector will likely remain intact for the foreseeable future.
“Any savvy investor will know in their heart that things are very different these days,” Shih told VOA Mandarin in an interview. “But at the end of the day, they want to make money this year.”