Why Hong Kong’s economy is more than capable of weathering the recent protest headwinds
- Tourist arrivals are not a good barometer of the state of the economy, given that inbound tourism accounts for only 3.7 per cent of Hong Kong’s GDP
- Meanwhile, Hong Kong has been growing in strength and attracting senior personnel in some areas, such as the legal sector
Although the damage the protests have done to the fabric of our civil society is clear, the extent of the economic damage has been exaggerated. Hong Kong’s economy is far more resilient than we have assumed and will certainly rebound in the long term.
First, dips in tourist rates do not amount to the economic damage that pundits claim, because tourism was never a big part of Hong Kong’s economy to begin with. According to the Census and Statistics Department, inbound tourism in 2018 accounted for a mere 3.7 per cent of Hong Kong’s gross domestic product and outbound tourism 0.8 per cent.
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While its sister special administrative region, Macau, relies on inflows of tourists because of a lack of trade, Hong Kong is a global financial paragon because it has one of the world’s largest concentrations of commercial, trading and banking institutions.
Second, the human capital we see departing from Hong Kong largely consists of junior professionals and those on temporary contracts. Senior professionals and the most prestigious firms continue to remain in the city.
From the 1980s onwards, Hong Kong has been the site from which foreign law firms reach into the Chinese market. Western law firms have set up regional headquarters in Hong Kong, both bringing in personnel from abroad and hiring local lawyers, allowing them to participate in the lucrative regional deals from the immense market that a modernising China represented.
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Chinese law firms have also been collaborating with mid-level professionals in Hong Kong tasked with setting up local offices destined to later merge with them. For example, Chinese law firm Llinks Law worked with Hong Kong’s Vivien Teu and Company until 2018 before moving on to Dennis Fong and Company.
Simultaneously, Chinese law firms have brought rosters of foreign professionals into Hong Kong, such as when the 2012 King and Wood Mallesons merger pulled in numerous Australian and English legal partners.
In becoming a conduit for Chinese-to-Western and Western-to-Chinese investment and recruitment, Hong Kong has evolved into an important destination for attracting senior talent and training junior personnel.
Anson Au is a visiting professor in the School of Humanities, Social Science and Law at Harbin Institute of Technology and a PhD student in sociology at the University of Toronto