Curbs on mainland tourist numbers may backfire on Hong Kong
Regina Ip says we risk severe economic fallout and damage to our relations with the mainland under a rumoured government proposal to cap the number of visits by Shenzhen residents
At the May meeting of the Commission on Strategic Development, the chief executive sparked a firestorm by asking, in the context of discussions on the relationship between mainland China and Hong Kong, whether the quota for individual mainland Chinese tourists visiting Hong Kong should be cut by 20 per cent.
The suggestion immediately triggered howls of protest from members representing the retail sector. The following day, news of this possible cut led the shares of publicly listed companies seen to have benefited the most from mainland tourism to drop by 3 to 4 per cent.
For those local people long annoyed by congestion on MTR trains swelled by mainland tourists, or the displacement of popular cha chaan teng by luxury retailers targeting mainland visitors, the news might have brought relief. Finally, good riddance to the "locusts" who benefited only property developers and high-end retailers but skewed our economy, some might think.
The retail, tourism and hotel industries quickly reacted by petitioning the authorities against any cut, citing the importance of mainland tourism to gross domestic product growth.
According to media reports, the government has completed a review of the economic and social impact of mainland tourism and has recommended limiting the multi-entry permits for Shenzhen residents to 52 visits per year. No decision has, however, been taken. The authorities in Beijing, who, under the Basic Law, alone have the power to control entry into Hong Kong as visitors, appear to be hedging their bets, watching which way Hong Kong's economy might go.
Both the chief executive and Beijing appear to be caught between a rock and a hard place. Should the numbers be cut, to appease the "anti-locusts" crowd? Or should they risk a sharp downturn in mainland tourism at a time when Hong Kong's economic growth is heading south, with all that that implies in terms of job losses and a slump in consumption?
A closer look at arrival statistics since the introduction, in 2003, of the individual visitor scheme suggests that mainland tourism has peaked. Visitor arrivals spiked in 2009, after the introduction in April of a scheme allowing qualified residents of Shenzhen to visit on multiple-entry permits.