Shoppers throng the streets as Hong Kong recovers from Covid-19

Hong Kong's hard-hit economy has revived, with the seasonal unemployment rate down from as high as 7 percent during the pandemic.


Fans cheer as they watch a match at Hong Kong Stadium on the second day of the rugby sevens tournament on April 1. The event attracted about 75,000 spectators. CALVIN NG/CHINA DAILY

April 13, 2023

HONG KONGShoppers throng the streets as city recovers from COVID-19

Hong Kong is bustling again, with its streets becoming increasingly crowded as life returns to normal after the COVID-19 pandemic.

Between Qingming Festival, which fell on April 5, and the Easter break that ended on Monday, more than 4.2 million people entered or left Hong Kong. It was the first long holiday since local travel restrictions were fully lifted.

Lines of travelers formed at the city’s international airport, West Kowloon high-speed railway station and for shuttle bus services across the Hong Kong-Zhuhai-Macao Bridge to neighboring Macao.

Only the sight of a number of passersby wearing face masks served as a reminder of the days when the city was in the grip of the disease.

In December, the authorities in Hong Kong began gradually relaxing social distancing measures. In February, border crossings with the Chinese mainland fully reopened, while last month, the compulsory wearing of face masks — the city’s final COVID-19 restriction — ended, signaling a full return to normality.

The number of travelers has risen quickly. Daily average patronage of the Hong Kong section of the express rail link to Shenzhen and Guangzhou in Guangdong province, which resumed service on Jan 15, surpassed 23,000 passenger trips by the end of February. That month, the airport welcomed 2,146,000 passengers, a rise of over 2,392 percent compared with February last year.

Many large-scale international events have also returned to the city.

Early last month, the 39th International Jewellery Show attracted more than 2,500 exhibitors from a total of 36 countries and regions. In late March, thousands flocked to Art Basel Hong Kong, one of Asia’s leading art fairs, to view works from 177 top galleries from 32 countries and regions. The Hong Kong Sevens rugby tournament, held from March 31 to April 2, attracted about 75,000 spectators.

Governmental and private sector exchanges between Hong Kong and the mainland have also increased.

In late February, Hong Kong Chief Executive John Lee Ka-chiu visited Guangzhou and Shenzhen on his first trip to mainland cities in the Guangdong-Hong Kong-Macao Greater Bay Area since he became the city’s top leader last year.

Secretary for Culture, Sports and Tourism Kevin Yeung Yun-hung and Secretary for Health Lo Chung-mau visited Guangzhou separately last month to explore cultural and medical cooperation, respectively. Numerous Hong Kong social groups have also visited the mainland in droves for the first time in three years.

Hong Kong’s hard-hit economy has revived, with the seasonal unemployment rate from December to February falling to 3.3 percent, down from as high as 7 percent during the pandemic.

In his budget speech in late February, Financial Secretary Paul Chan Mo-po estimated that the local economy would grow by 3.5 percent to 5.5 percent this year.

Policy scientist Anthony Cheung Bing-leung said Chan’s forecast will not be difficult to achieve, as it is “relatively conservative”.

Cheung, advisor (public administration) in the department of Asian and policy studies at Education University of Hong Kong’s Faculty of Liberal Arts and Social Sciences, said that as the city’s economy contracted by 3.5 percent last year, it is not hard for it to rebound.

In addition, with a range of industries recovering after Hong Kong fully resumed travel services with mainland and overseas destinations, local economic growth this year is likely to be more than 3.5 percent, Cheung said.

Passengers throng Admiralty Station in Hong Kong on March 1. ANDY CHONG/CHINA DAILY

Economy recovers

The tourism sector, among those hit hardest by the pandemic, has also been one of the fastest to recover, with Hong Kong reopening links to the mainland and the rest of the world.

In 2018, the city welcomed more than 65 million visitors, but in 2021, the number fell to about 91,000.However, in January, more than 500,000 visitors arrived, about 71 times the number for the same month last year. In February, the city saw 1.46 million visitors arrive, the first time the number had exceeded 1 million since the pandemic emerged three years ago.

Mainland visitors accounted for 76 percent of the total number of arrivals in February. For short-haul markets excluding the mainland, most visitors came from Southeast Asia, including Thailand and the Philippines, and also from South Korea.

Timothy Chui Ting-pong, executive director of the Hong Kong Tourism Association, said: “The recovery in the city’s tourism industry has been relatively quick. After all, it was not until February that Hong Kong fully resumed travel with the mainland and overseas countries.”

Kenny Sham Ho-ki, Hong Kong general manager at Klook, a travel, leisure and entertainment e-commerce platform founded in the city in 2014, said the number of bookings to the city by overseas users rose by 490 percent quarter-on-quarter from January to March.

In view of the Easter holiday and soon-to-be-distributed consumption vouchers, Sham expects a further rise in local spending this month.

In an attempt to stimulate the economy, Chan, the financial secretary, announced in his budget the issuance of a new round of consumption vouchers with a value of HK$2,500 or HK$5,000($318 or $637). The first round of vouchers, worth HK$1,500 or HK$3,000, will be distributed on Sunday.

Cheung feels that handing out vouchers is a public policy where the rewards far outweigh the costs.

The return of visitors has also boosted the retail and catering sectors.

Government data show that retail sales value in the city rose for two consecutive months, reaching HK$36.2 billion in January, a year-on-year rise of 7 percent.

However, for small retailers such as Peter Tong Tinpang, the recovery has not been fast enough, despite his pharmacy and restaurant in the city’s Jordan district registering 10 percent sales growth last month.

Tong said visitors are now more conservative in terms of spending than before the pandemic struck.

On April 5, more than 56,000 mainland visitors arrived in Hong Kong, accounting for 20 percent of inbound passengers, but way below the pre-pandemic level of 80 percent.

Caspar Tsui Ying-wai, executive director of the Federation of Hong Kong Hotel Owners, said there was room for the number of mainland visitors to rise, as Easter is not a public holiday on the mainland. He estimated the city would see more travelers from across the border for the May Golden Week holiday, which this year runs from April 29 to May 3.

Simon Wong Ka-wo, president of the Hong Kong Federation of Restaurants and Related Trades, said the number of mainland travelers arriving in Hong Kong under the Individual Visit Scheme has yet to fully return to the pre-pandemic level, which has limited their contribution to boosting local spending.

Cheung attributed this lower-than-expected growth to deterioration of the global economy and higher prices and living costs, which will curb people’s consumption desire and reduce their level of consumption.

He added that the pandemic has also reshaped living habits and consumption behavior, with numerous activities, including shopping, ordering takeout meals, attending events, and using medical, legal and financial services, shifting from offline to online.

Visitors view works at Art Basel at the Hong Kong Convention and Exhibition Centre on March 21. ANDY CHONG/CHINA DAILY

Even though offline activities have gradually resumed since the pandemic, people have become used to online convenience. As a result, a mix of online and offline economic activities will be the trend in the post-pandemic era, Cheung said, adding that in view of this, business operators and service providers should rethink their strategies.

Some companies are now posting bigger rises in profits. For example, those of Lan Kwai Fong Group, a property investment and management company, have risen continuously in recent months. Allan Zeman, chairman of the group, said that as of the middle of last month, its business had risen by 20 percent compared with the pandemic period.

Zeman estimates that business activity in Hong Kong this year will return to about 70 percent of the pre-pandemic level.

He expects a full recovery by late next year, as many sectors in Hong Kong, including retail, catering, services, hotels and tourism, face a labor shortage.

Zeman, known as “the father of Lan Kwai Fong”, one of Hong Kong’s most popular nightlife areas and home to hundreds of restaurants and bars, said, “Recruiting people is the hardest thing for every restaurant and bar right now.”

Wong said many wedding banquets planned during the pandemic were postponed until this year, worsening the staffing shortage in the catering industry.

Before the pandemic, one waiter served one or two tables for such a banquet held at a restaurant, but now, a single waiter has to cater to five tables, lowering the quality of service, Wong said.

The same problem is hindering recovery in the city’s tourism industry. Chui, the Hong Kong Tourism Association executive director, said the industry needs more tour guides and bus drivers.

Cathay Pacific Group CEO Ronald Lam Siu-por said the staffing shortage is also the biggest challenge for the aviation industry, which lacks flight attendants, ground staff and pilots whose licenses expired during the pandemic.

Local media reports said Hong Kong lost nearly 190,000 workers over the past three years.

Peter Shiu Ka-fai, lawmaker for wholesale and retail sector, said the city still needs about 40,000 workers in the retail and wholesale industry. He suggested it follow the example of Macao by importing workers from mainland cities in the Greater Bay Area on a daily basis.

Shiu said the government could set a quota for imported workers and issue two-year visas for them. To protect the local workforce, the quota would be subject to change if the local unemployment rate rose or if the economy worsened, he said.

Pedestrians, many of them wearing face masks, use a crossing in Central, Hong Kong, on Feb 28. ANDY CHONG/CHINA DAILY

Aiming higher

To attract young people, Cheung, from the Education University of Hong Kong, suggested that the city’s low-skilled industries should transform themselves to become more value-added and provide increased professional services to enhance their appeal.

For example, the tourism industry should become qualitative-oriented instead of quantitative-oriented, Cheung said.

Before the pandemic, tourists crowded Hong Kong’s restaurants and public facilities, including transportation services, affecting residents’ daily lives, Cheung said.

The city was known as a shopping paradise, but now that people have become accustomed to shopping online, it needs to adapt to this situation, Cheung said.

“A return to normalcy is not a return to the past,” he added.

Cheung feels that as the post-pandemic world differs from the pre-pandemic one, Hong Kong should change to meet new demands.

In February, the government launched the Hello Hong Kong campaign — pledging to distribute 500,000 free air tickets to travelers worldwide to visit the city.

Cheung said these tickets can draw visitors to Hong Kong, but in the long run, a city’s attraction should be its charm, spirit and soft power, rather than free tickets.

Ceajer Chan Ka-keung, the SAR’s former secretary for financial services and the treasury, agreed that the city should first revive its tourism and aviation industries.

As Hong Kong would not be immune from the slow recovery of the global economy, with the support of the nation, it should strengthen its supervision over financial markets to reduce uncertainty, said Chan, who is adjunct professor and senior adviser to the dean at the Hong Kong University of Science and Technology’s Business School.

Li Chen, an associate professor at the Chinese University of Hong Kong’s Centre for China Studies, suggested that the city cultivate new economic growth areas to increase its resilience to risks. The pandemic highlighted a character in Hong Kong’s economy — the city’s high degree of interconnection with and dependence on the outside world, Li said.

Hong Kong has a high degree of openness, but its economy is susceptible to crisis, particularly during a pandemic, when external links are cut, Li added.

He said the city should use the opportunities arising from China’s 14th Five-Year Plan (2021-25) to transform itself into a global innovation and technology hub.

Specifically, Hong Kong can nurture more technology companies in high-tech fields such as artificial intelligence, semiconductor electronics, and financial technology. Such companies not only have high added value, they can also drive development of upstream and downstream complementary industries, thus bringing new economic opportunities to the city, Li added.

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