Hong Kong’s zero-tolerance approach to Covid-19 could keep the Asian financial hub cut off from most of the world until 2024 and fuel a large-scale exodus of international workers and executives, according to a draft report by the European Chamber of Commerce in the city.
The most likely scenario for Hong Kong’s exit from its isolation is to wait for China to finish developing a powerful messenger RNA vaccine and immunize its 1.4 billion people, the business group said in an internal document seen and verified by Bloomberg.
A reopening could then happen late next year or early 2024, the document said, adding that companies should prepare for Hong Kong to remain “semi-closed” to international travel.
“We anticipate an exodus of foreigners, probably the largest that Hong Kong has ever seen, and one of the largest in absolute terms from any city in the region” in recent history, the report said.
That would make Hong Kong less diverse and less appealing to international firms, and eventually limit its potential to contribute to China’s economy, the report said, adding that global companies should plan to have regional offices in other Asian cities instead of the former British colony.
It’s unclear whether the European Chamber’s assessment will change in the final version of its report. The draft said the report consolidated insights from “a few sessions organized with different parties” over the past few months, without providing further details on the information used to formulate its scenarios.
An spokesperson for the European Chamber refused to comment.
This warning is issued as Hong Kong places restrictions on travel from 8 countries, including the U.S., in order to combat an outbreak of omicrons. The city’s Covid-Zero approach means an aggressive response to a minute number of cases by global standards, even as the rest of the world is adjusting to living with the virus amid high vaccination levels.
Travel bans for high-ranking financial professionals have left them out of city, and it has been difficult for multinational firms to find top talent.
China is waiting
Other scenarios were also considered in the report, such as the possibility of an uncontrolled Chinese outbreak that could derail efforts to open Hong Kong’s border with the mainland. It would then be up to China to either control it or for the city to reopen the border on its own.
According to the report, this could happen within 12 months after an uncontrolled Chinese epidemic. The city may also delay its reopening for up to 2023 or 2024.
Another possible outcome is that Hong Kong could be hit with an epidemic uncontrolled by the government, which would impose severe restrictions beyond what the city has experienced so far. According to the report, those restrictions include tighter border closures, widespread lockdowns and severe food shortages.
That scenario could result in as many as 20,000 deaths among Hong Kong’s elderly, the report said, since vaccination rates among seniors are much lower than the rest of the population.
The least likely scenario is that Hong Kong and China both adhere to their Covid Zero approaches for the foreseeable future and don’t open to the rest of the world. China would then continue with its internal focus and Hong Kong would become a “collateral casualty” stuck between its dependency on the mainland and its role as an international city.
This document is intended to assist international companies in preparing for Hong Kong’s future.
The report recommends that businesses focus their efforts on keeping skilled and talented workers in the face of travel restrictions.