After months of violent protests and political instability — exacerbated by a bitter trade war between the United States and China — Hong Kong was dealt another blow: the novel coronavirus (Covid-19).
As Asia’s financial hub rang in the new year, it had high hopes of reigniting economic confidence, welcoming back tourists with open arms, and repairing its damaged retail sector. Mainland China’s coronavirus outbreak, however, has staggered Hong Kong’s return to prosperity.
The resilient city, which weathered the financial crises of 1997 and 2008 far better than its neighbors, can tackle this new challenge if it remains united.
Disrupted by the anti-government protests, Hong Kong’s economy contracted by 1.2 percent in 2019 with fourth-quarter GDP dropping even lower. Yet this economic data from last year was released prior to the coronavirus outbreak, meaning current data may actually be lower.
The impact of the 2003 SARS outbreak was a lesson for Hong Kong if the city’s response is not properly coordinated. During SARS, the World Health Organization warned against all non-essential travel to Hong Kong. Demand for flights plummeted, with restaurants and stores forced to close and retail sales dropping by 50 percent. While SARS resulted in 8,098 infections and 774 deaths worldwide — meaning the virus had a mortality rate of about 10 percent — the Covid-19 has infected substantially more people but with a lower mortality rate of 2.1 percent.
Goldman Sachs has warned that the outbreak will affect Asian and indeed global economic growth. The bank predicts the infection rates will slow dramatically by March, with chief economist Jan Hatzius cautioning: “What happens to 2020 as a whole really depends on how quickly [the virus] is brought under control.”
Curbing the virus will also depend upon how quickly Hong Kong, and global hubs like it, react. After months of chaos and finger pointing during the height of the protests, Hongkongers appear to be coming to terms with the gravity of their predicament. Fortunately, the city’s sound economic institutions and modern healthcare systems mean it is well placed to mitigate the full impact of the coronavirus.
No room for complacency
As Hong Kong recorded its first death from the virus after a 39-year-old man succumbed to complications, the city is beginning to display rare signs of unity after being fractured by the protests. Calls for high-speed trains and ferries to be closed were answered after Hongkongers uniformly demanded the closure of the border with the mainland. The pro-Beijing Liberal Party has also urged Lam to shut the entire border, saying there was no time for procrastination.
Chief Executive Carrie Lam responded, eventually, by closing almost all of the crossings and quarantining arrivals. The outbreak could build a sense of unity in Hong Kong that has been lacking for months.
A unified response
Hong Kong is harnessing its modern medical facilities to help define the international response to the coronavirus. As scientists in China and the U.S. race to develop a treatment, researchers in Hong Kong say they have already developed a vaccine soon to undergo clinical trials.
Hong Kong’s medical sector can behave in the same way its economy does — as a gateway to China. The city’s established healthcare system has allowed for teams of international medical experts to convene and tackle the epidemic.
A medical breakthrough in Hong Kong would undoubtedly deliver a long overdue sense of pride and help establish Hong Kong as the medical capital of Asia, not just a financial one.
Speaking at the World Economic Forum in Davos, Carrie Lam said Hong Kong’s “fundamentals remain strong and … future remains bright.” She pointed to how the territory has a robust stock market and banking system, along with substantial fiscal reserves of US$130 billion that can be deployed to withstand any economic downturn.
Vowing that Hong Kong will remain a “globally significant city,” Lam added: “This is not the first time we have faced a crisis. We always bounce back - that is the enduring power of Hong Kong.”
With the memory of the 2003 SARS outbreak still fresh in the minds of most Hongkongers, anti- and pro-government activists see the value in unifying to combat the coronavirus outbreak. Preserving and building upon this newly returned harmony will prove crucial in ensuring that the city’s economy and medical infrastructure react swiftly and appropriately as the extent of the coronavirus becomes clearer.
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TNL Editor: Daphne K. Lee (@thenewslensintl)
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