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Sunday, Sep 27, 2020

Visitors stayed away, retail sales plunge. Protests took a harder toll on Hong Kong’s economy than Sars virus did in 122 days

On seven of 10 economic yardsticks, today is worse than during the deadly Sars epidemic. Property, employment have held up better during Sars – but the protests continue

The world had never seen anything quite like this: Travellers, uniformed pilots and cabin crew trudging with their luggage in tow on the 2-kilometre (1.2-mile) bridge that links Hong Kong to its airport, after thousands of anti-government protesters laid siege to one of Asia’s busiest airfields and disabled road and rail link to the city.

The day was August 12, just as Hong Kong’s worst political crisis in history was entering its second month, when protesters clad in black sat in the airport’s departure hall, preventing travellers from checking in. The main highway to the city was paralysed, as was the express rail link serving a transport hub that handles more than 65 million travellers every year.

It was unprecedented – a word that has come to define a city turned upside down by pent-up anger about its past and its future.

Some station exits of the city’s subway network operated by MTR Corporation were set ablaze. Shops, cafes, restaurants and bank branches that belong to mainland Chinese owners were vandalised and looted, in some cases set on fire.

Saturday marks 125 days since Hong Kong’s protesters stormed the local legislature on July 1, a public holiday to mark the return of the city’s sovereignty to China. Anti-government vandals laid waste to the Legislative Council’s chambers, spray-painting slogans and destroying public property.

What began on June 9 as an uneventful march by an estimated 1 million residents opposing a controversial extradition bill had descended into street mayhem involving frequent clashes between police and protesters. Police deployed tear gas, rubber bullets and water cannons, while radical protesters responded with fire bombs, rocks and more vandalism.

As the unrest enters its fifth month, Hong Kong’s economy has suffered its worst quarterly contraction in a decade, slumping by a larger-than-expected 3.2 per cent in the three months ended September, driving it into its first recession since 2008.

The toll on the economy has surpassed other crisis and natural disasters in recent memory, including the 2003 outbreak of the severe acute respiratory syndrome (Sars), based on 10 measures compiled by South China Morning Post.

“The current protests are much worse than Sars,” said Tommy Cheung Yu-yan, a city legislator representing the catering industry. “Already, 200 restaurants and shops have closed, and the closures may exceed 1,000 next year.”

Sars, the respiratory epidermic that afflicted 8,098 people in 37 countries, killed 299 people in Hong Kong after the first carrier of the virus travelled to the city from southern China’s Guangdong province in February 2003. The protests of 2019 has yet to claim a fatality, even though more than 2,000 protesters had been arrested, a third of them under the age of 18.

Still, the protests of 2019 had been more damaging than Sars by seven measures, as they piled on to the economic woes of a city that is already suffering from the year-long US-China trade war.

The effects were more pronounced on the benchmark Hang Seng Stock Index, the stock market’s turnover, retail sales, tourist arrivals, economic activity (GDP), the number of initial public offerings and the number of bankruptcies. Sars was rougher on three measures: property prices, real estate transactions and employment, according to the data examined by the Post.

Property developer and local businessman Allan Zeman, dubbed the Father of Lan Kwai Fong for his role in turning the area into Hong Kong’s main entertainment hotspot of 300 bars and restaurants, remembers what 2003 was like, after “patient zero” checked into a Hong Kong hotel and set off the global alarm on what was then still an unknown ailment.

“It was very scary because you couldn't trust anyone, not even your family, as you didn't know where they were and what they touched,” Zeman said. “You used to touch the lift buttons with your elbow. The worry was no one knew when it would end.”
Sars began its destruction in Hong Kong on February 21, 2003, when a 64-year-old medical professor named Liu Jianlun arrived from Guangzhou to attend a wedding banquet.

He checked into Room 911 of the Metropole Hotel in Mong Kok for one night, not knowing he had brought the virus from mainland China, where it originated after civets contracted it from bats and passed it to humans.

He became severely ill and was rushed to a hospital where he died on March 4 of a mysterious illness.

Liu, later known as “patient zero”, infected dozens of tourists and visitors at the hotel and the medical staff at the hospital.
Eventually, Sars spread to 37 countries with the aid of international air travel, spreading as far afield as Canada and Africa.
Thousands of shops and public places shut in Hong Kong, forcing as many as 54,000 people to be laid off.

“Streets and restaurants were empty,” Zeman said. “I could not sleep many nights during Sars.”

The World Health Organisation (WHO) removed Hong Kong from the list of affected areas on June 23, 2003, officially marking the end of the outbreak in the city.

During Sars, property prices fell 9 per cent, according to Centra-City Leading Index, and transactions in the secondary property market fell a whopping 67 per cent.

In contrast, used-home property prices fell 5.5 per cent between July and October, while the number of transactions in the secondary property market declined 18 per cent.

“Sars saw a bigger drop of property prices and transaction volumes as the economy had been weakened since the 1998 Asian financial crisis and the unemployment rate was high at the time,” said Sammy Po Siu-ming, chief executive of Midland Realty’s residential division.

“Back in 2003, everybody had to wear masks in the office or on the street,” Po recalled of the illness spread by coughing or sneezing. “Many people were reluctant to go out, while property owners also were not willing to let potential buyers enter their homes for fear of potential infection.”

During Sars, the local property market was faced with an oversupply after the government set an aggressive target to add 85,000 new houses every year.

By 2019, housing supply had turned from a glut into a shortage, with 47,779 new houses being planned a year earlier, driving prices to break records and making Hong Kong the world’s most unaffordable major city to live in. Housing affordability and a yawning income gap would undergird the grievances and wrath that drove Hong Kong’s youth to protest on the streets.

Right after the Sars, the government launched measures to boost the economy. Two measures were to bring in more mainland travellers and make it easier for Hong Kong and mainland firms to work together.

The spending in Hong Kong by mainland China-owned businesses was the major lifeline that helped Hong Kong dig itself out of its post-Sars slump. Mainland Chinese tourists poured into the city to shop for everything from luxury goods to wealth management products and insurance coverage, while businesses snapped up offices and prime addresses.

“Sadly, these measures have created resentment among Hongkongers, and stoked the rage behind the hard core protesters. It will be more difficult to reboot the economy this time than after the Sars as it is not just about a disease but it is about split of the society that some people are very against the mainland tourists and businesses,” said Jojo Choy Sze-chung, vice-chairman of the Institute of Securities Dealers, the industry body of local brokerage.

“Many of the current protests have targeted mainland-related banks and shops. It would be hard to encourage more mainland tourists to come and it will be hard to develop more cross border business cooperation. The mainlanders tourists’ spending and mainland companies’ listings are the reasons for the V-shape bounce back of the local economy after the Sars,” Choy said.

“There are now almost 60 per market cap of the stock market are mainland companies while 26 per cent of life insurance are bought by the mainlanders. Without the mainland companies or mainland tourists, Hong Kong’s economy will never be the same.”

Both Sars and current protests have changed patterns of tourists and local residents, even affecting wedding plans.

Back then, the Sars only last for a few months, so wedding plans were not seriously affected. The protests, however, have led about 12 per cent of 729 couples who had intended to get married by 2021 to delay their plans, and one per cent have cancelled their weddings altogether, according to a survey conducted by online platform ESDlife this month.

“There are many requests to change wedding banquets from dinners to lunches, while some are moving the dates from weekends to weekdays to avoid the protests. There have also been a few cases where they have cancelled bookings,” according to a manager of Chariot Club in Central.

Sars happened in spring so did not affect tourism as much because it is not a busy holiday time.

The current protests happened during summer months and Golden Week when restaurants are usually packed during weekends and nights.

“Now people avoid gathering during weekends or night time because they worry about the protests or that the MTR may close early. Our shops have become busier during weekdays or lunches over the past few months,” said a Japanese restaurant manager who wanted to only be identified by her surname Chu.

“People now will first check online on when and where the protests will be held before they book a table. If the protests were held on the Kowloon side, we had a full house as our shop is located at Causeway Bay,” Chu said.

“If the protests were held at Causeway Bay or nearby, there was no booking and we only had one or two tables during the protest. It was close to an empty house and our boss closed the shops early.”

Zeman said this year’s Halloween was the worst on record in the 33-year of history of celebration due to a protest that marched from Causeway Bay to Lan Kwai Fong on Thursday night.

“If the protests continue until Christmas and the Lunar New Year, it is going to lead to more cancellation of bookings of banquet orders, which will lead more restaurants to close,” Cheung, the lawmaker for catering said.

“It should be noted that many restaurants rely on earning during the peak seasons festival times to survive the low season after the Lunar New Year. If the peak season has little business, a lot of restaurants may not survive next year,” Cheung said.

Struggling restaurants would have to cut staff or ask their staff to take no pay leave.

“During Sars and the current protests, we were asked to take a holiday from our annual leave or sometimes to take no pay leave. Sometimes there were more waiters than the customers, so we did not need that many people to work,” said Yeung Kong-ying, a waiter at the Old Shanghai restaurant in Wan Chai.

“The Sars last only three months but the current protests have last for five months already. Our restaurant is in Wanchai where it has many protests during weekends. But we found the customers have gottten used to the pattern and come more often during weekdays and avoid the weekends,” he said.


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