[1/5]The flags of China and Hong Kong are seen on the pedestrian bridge as decoration for the National Day celebration in the financial district in Hong Kong, China, 3 October 2023. REUTERS/Tyrone Siu Acquire License Rights
HONG KONG, Oct 11 (Reuters) – Hundreds of business executives, diplomats and foreign business chambers gathered over canapés and cocktails at Hong Kong’s landmark M+ Art Museum last month with a clear mission: to revive the financial hub’s appeal.
Anti-government protests in 2019, followed by Beijing’s rapid implementation of a sweeping national security law in 2020 and three years of draconian COVID lockdowns led to an exodus of tens of thousands of people from Hong Kong, negatively impacting Hong Kong’s reputation and economy .
Sino-American tensions and China’s slowing economy posed additional challenges for Hong Kong and dented its traditional role as a gateway between the West and the mainland, diplomats and business leaders said.
“The last few years have created a very negative image of Hong Kong,” said Inaki Amate, chairman of the European Chamber in Hong Kong, one of the speakers at the M+ event.
Other speakers included government officials, European Union representatives and executives from the city’s banks, aviation industry and stock exchange, among others.
The event was one of many attempts to rebuild ties between the West and the former British colony, with visitors coming mainly from the mainland and Asia while visa applicants coming mainly from China, Amate said.
Executives point to Hong Kong’s changing structure, with more than nine in 10 mainlanders approved to work under government talent programs.
“If we think that by continuing this trend, Hong Kong can regain its status as the most international city in Asia, we are completely wrong,” Amate said. “Hong Kong needs diversity.”
Finance Minister Paul Chan held a marketing blitz of European cities in September, while the Hong Kong Monetary Authority is holding a high-profile banking conference in November to show people the “vibrancy” of Hong Kong and “show guests the best” of the city.
But for many outside Hong Kong, the perception is still very negative, executives said.
“People who have not lived in Hong Kong see a really tarnished and negative image that has prevailed since the protests in 2019,” said former American Chamber of Commerce President Tara Joseph.
“You have what happened with the national security law and the pandemic, and now you have a pretty big problem with the Chinese economy. People’s image has been deeply damaged, and it’s going to take more than a banking conference at the Four Seasons Hotel to really get people to say, ‘Wow, this is exciting.'”
Bad PR
Hong Kong’s efforts to attract top talent are being hampered by concerns over Beijing’s imposition of the security law, a diplomat in the city said, citing bounties on opposition figures that have led to negative publicity.
“Life here is great, especially if you live abroad. “It’s safe, the nature is great and there’s so much going on, but the image is still very negative,” the diplomat said.
Many in the legal industry said the law had raised concerns about the independence of the judiciary, while some executives were concerned that Hong Kong would become less important as some businesses relocated to Singapore and Dubai.
According to Colliers, more than a fifth of Hong Kong’s office tenants will reduce their office space in the next two years, with more than half citing falling business demand.
A September survey by recruiter Robert Walters found that more than half of Hong Kong professionals are considering or planning to move out of the city.
Companies such as National Bank Australia have left Hong Kong, while dozens of bankers and corporate lawyers have been laid off due to a lack of business opportunities.
“Hong Kong is a barometer of economic activity in China,” said Patrick Ip, managing director of the China-ASEAN Investment Cooperation Fund. “Due to the recent economic downturn in China and regulatory changes in some key sectors, the capital market is suffering due to weak investment sentiment.”
Hong Kong’s IPO market has lost momentum, with only around $2.7 billion raised so far this year, compared to $4 billion last year and at least $35 billion at the market’s peak during the Corona crisis.
Asia-Pacific funds, which include China, are now more difficult to arrange because of concerns about the country’s political and economic prospects, a senior banker said.
Total visitor numbers are 70% of pre-pandemic levels, with tourism from mainland China recovering much faster than that from Europe and the US.
David Baverez, a Hong Kong investor and author of “China & Europe: The Turning Point,” said the city would adapt and thrive, with inflows from the Middle East and the mainland replacing money from the West.
“The old Hong Kong is not back,” Baverez said. “A new Hong Kong will emerge. It will continue to thrive, but only because it manages to reinvent itself.”
additional reporting by Dorothy Kam and Scott Murdoch; Edited by Simon Cameron-Moore
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