With daily cases breaching 7,000, Hong Kong is poised to adopt more draconian COVID measures
Businesses with operations in Hong Kong should prepare for extended disruptions, especially B2C firms that rely heavily on in-person engagement with end customers. Executives hoping to travel to the Asian financial hub soon should revisit their plans, as Hong Kong will not fully open to international travelers for at least another six to nine months.
Overview
Hong Kong’s COVID-19 case numbers shot up to more than 7,000 a day at the start of this week, significantly up from less than 1,000 just two weeks ago. The city’s public healthcare system is on the brink of being overwhelmed, with patients lying on beds outside hospitals and thousands of others waiting at home for days to be admitted. Authorities have been struggling to find spaces in hospitals and quarantine facilities for the thousands of people testing positive every day, most of whom have only mild symptoms or no symptoms at all.
China’s president Xi Jinping has spoken out, telling Hong Kong to “take all necessary steps” to contain this COVID-19 outbreak. His message is clear: he intends to impose a mainland-style zero-COVID approach on Hong Kong. International business has warned that the prospective harsh policies will undermine Hong Kong’s role as a crucial financial hub of the region. The city has been effectively cut off from both foreign countries and mainland China for almost two years.
Our View
Despite the political turbulence of 2019 and Beijing’s forceful remolding of the city’s media, education, and electoral system since then, Hong Kong still (largely) maintains an approach to policymaking and policy execution that is distinctive from the mainland. This unique system is now under pressure to follow the mainland’s zero-COVID approach, which requires multiple rounds of all-population testing, tough lockdowns of residential blocks, and an intrusive mass surveillance system that monitors everyone’s movements, all of which are beyond the capacity of the Hong Kong government. While Beijing has sent in reinforcements, it will take time for them to work their way through the (very different) Hong Kong system and actually implement mainland-style policies. Before that, the number of positive cases will, unfortunately, linger at a high level. That will put further pressure on Hong Kong’s already stretched public health system, disrupting people’s lives and business operations. The days of Hong Kong opening its border look ever more remote.
International businesses have been reeling under Hong Kong’s ever stricter COVID containment policies for some time now. Dissatisfaction is running high. A number of multinational firms, including Bank of America, Pernod Ricard, and the Mandarin Oriental Hotel Group, have publicly announced plans to relocate staff away from Hong Kong, at least temporarily, all citing the severe COVID restrictions. More are almost certainly making similar plans behind closed doors. The international business community’s repeated calls to relax the rules have fallen on deaf ears so far. With Beijing now effectively taking over Hong Kong’s COVID policies, the city’s government has no choice but to introduce and implement even more drastic measures.
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