Quarantine rules could last until end of 2022
The Hong Kong government is choosing to ignore the pleas of the foreign business and financial communities to ease some of the world’s strictest Covid quarantine restrictions. They may remain in place until the end of 2022.
This will persuade an increasing number of foreigners to leave the city and foreign companies to move parts of their operations to other Asian cities.
Following letters from the American and European Chambers of Commerce, the Asia Securities Industry and Financial Market Association (ASIFMA) in October sent a letter to Financial Secretary Paul Chan calling for a timeline to relax travel restrictions.
“There is a growing sentiment among Hong Kong’s international financial services community that talent, people and business operations were leaving the city,” said ASIFMA, which represents 155 of the largest banks, asset managers and professional service firms in the city.
“Almost three-quarters of firms were struggling to attract and retain talent in Hong Kong,” it said. Without a clear and meaningful exit strategy from the current zero-case approach, Hong Kong risks losing its vital international status, it added.
A few days later, the Chief Executive gave her response. “Most of the so-called group exemptions will be cancelled,” she said, as one of a series of tighter restrictions. Apparently, her priority is to open the border with the mainland and persuade the central government that Hong Kong is safe.
In recent months, Hong Kong has succeeded in driving down the number of locally transmitted Covid-19 cases to near zero. But this is not enough for Beijing. This means that exemptions to quarantine given to diplomats and executives of international financial institutions when they return to Hong Kong are likely to be cancelled.
An executive in a foreign IT firm said that satisfying Beijing took precedence over the demands of the foreign business community.
“The exit began during the student protests and has continued after the implementation of the National Security Law and these quarantine rules,” he said. “Next year, Beijing hosts the Winter Olympics and the Communist Party Congress, when President Xi could receive a third, and unlimited term. These events take precedence over everything else. So the vaccination rules could remain in place here until end-2022.”
Last month, six officials in Ejin Banner city in Inner Mongolia were fired or disciplined for “slow response and ineffective management” of Covid -- 31 new cases were detected in the city, out of 49 locally transmitted cases in the region.
It was a reminder, if any were needed, to all officials in China, including Hong Kong, of the penalties for mistakes in handling the pandemic.
Another important date next year is July 1, which marks the 25th anniversary of Hong Kong’s return to China. To mark the event, the Hong Kong Palace Museum will open. It is expected to be attended by a senior Chinese leader, possibly even President Xi himself.
“The leader will announce that, unlike many countries in the world, China has saved its people from Covid, a measure of its greatness,” said a Western diplomat. “This means that there cannot be any relaxation of the restrictions at least until then.”
In an article in China Daily last week, Stephen Phillips, director-general of Invest Hong Kong said that there was no factual evidence of an exodus of foreign companies. “The number of overseas and mainland companies has increased by 10 per cent since 2017 to a record 9,049 in 2021. The mainland ranked first with 2,080 companies, followed by Japan with 1,388, the U.S. with 1,267 and the U.K. with 667, he said.
The IT executive said that international firms would keep their HK/China headquarters here but some had moved Asia/Pacific base to Singapore, Tokyo and other cities. “With the current restrictions, how can a manager supervise his factories and offices in different countries out of Hong Kong?”
He said the freezing of accounts last December by HSBC of former legislator Ted Hui and his family had alarmed foreigners. “It seems that even his account in Britain was frozen. So even your money outside Hong Kong is not safe. I know companies which had moved their money out of HSBC.”
In response, HSBC said that it had no alternative but to follow an instruction from the police, according to its legal obligations.
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