Se­cu­rity and sta­bil­ity cru­cial to Hong Kong’s eco­nomic resur­gence

China Daily (Hong Kong) - - COMMENTHK - The views do not nec­es­sar­ily re­flect those of China Daily.

Re­cently re­leased sta­tis­tics show that Hong Kong’s eco­nomic en­vi­ron­ment has suf­fered greatly from the year­long so­cial un­rest, un­sta­ble for­eign trade and the COVID-19 pan­demic. For ex­am­ple, the city’s gross do­mes­tic prod­uct in the first quar­ter fell by 8.9 per­cent year-on-year and 5.3 per­cent quar­ter-on-quar­ter; both were the big­gest quar­terly de­clines on record. At the same time, the sea­son­ally ad­justed unem­ploy­ment rate rose to 5.2 per­cent in the three months to April, which is at a 10-year high. The un­der­em­ploy­ment rate is 3.1 per cent, a 15-year high. In ad­di­tion, re­tail sales also struck a new record for de­clines. Peo­ple are won­der­ing when Hong Kong’s econ­omy will see the dawn of re­cov­ery.

COVID-19 has dealt a heavy blow to ma­jor economies around the world. Hong Kong should ben­e­fit from the early con­tain­ment of the novel coro­n­avirus in the city as well as on the Chi­nese main­land and East Asia by grad­u­ally pro­mot­ing the re­cov­ery of lo­cal eco­nomic ac­tiv­i­ties and con­sump­tion and restart­ing eco­nomic and trade ex­changes with neigh­bor­ing re­gions. Un­for­tu­nately, in­vestors and busi­ness­peo­ple are still de­terred by wor­ries about a re­turn of vi­o­lence after a lull due mainly to the pan­demic. With the epi­demic ba­si­cally hav­ing been brought un­der con­trol in the city, the lack of a safe and sta­ble busi­ness en­vi­ron­ment seems to be the main hin­drance to eco­nomic re­cov­ery in Hong Kong. This ex­plains the busi­ness sec­tor’s strong de­sire and sup­port for na­tional se­cu­rity leg­is­la­tion for Hong Kong.

There is no doubt that so­cial har­mony, po­lit­i­cal sta­bil­ity and se­cu­rity are key el­e­ments of a good busi­ness en­vi­ron­ment, the ab­sence of which would lead to the de­te­ri­o­ra­tion of the busi­ness en­vi­ron­ment, for sure. This is ev­i­denced by Hong Kong’s fall­ing rank­ings in var­i­ous in­dexes over the past six months. Hong Kong first suf­fered a set­back in the global eco­nomic free­dom rank­ing. Ac­cord­ing to the Her­itage Foun­da­tion’s 2020 Eco­nomic Free­dom In­dex re­leased in March, Hong Kong lost the “freest econ­omy” ti­tle to Sin­ga­pore after hav­ing held it for 25 years. The rank­ing re­port un­mis­tak­ably states that con­tin­ued po­lit­i­cal and so­cial tur­moil has be­gun to un­der­mine Hong Kong’s rep­u­ta­tion as one of the best places to do busi­ness and has re­duced in­vest­ment in­flows. The city also slid back three places to sixth in the Global Fi­nan­cial Cen­tres In­dex pub­lished in March by the United King­dom’s Z/Yen group and the China (Shen­zhen) Re­search In­sti­tute for

In­te­grated Developmen­t. A le­gal direc­tor with a Hong Kong in­vest­ment man­age­ment firm is quoted in the re­port as say­ing: “Due to so­cial un­rest, it is ex­pected that tal­ents will con­tinue to be drained and the sup­ply and de­mand for skilled la­bor will de­crease.” In early June, Hong Kong was dealt an­other blow when it fell from sec­ond place last year to fifth place this year in the In­sti­tute for Man­age­ment Developmen­t’s Annual Re­port on World Com­pet­i­tive­ness. IMD says in its re­port that Hong Kong’s fall is due to its weak eco­nomic per­for­mance and so­cial un­rest be­sides its ex­po­sure to the main­land econ­omy. “So­cial un­rest” is the most crit­i­cal and com­mon fac­tor be­hind Hong Kong’s fall in all these highly re­garded in­ter­na­tional rank­ings.

“Busi­ness­men want sta­bil­ity and cer­tainty. They want to make sure that their busi­nesses will not be dis­rupted by so­cial un­rest. So most busi­ness­men wel­come the (na­tional se­cu­rity) leg­is­la­tion,” Stephen Phillips, direc­tor-gen­eral of in­vest­ment pro­mo­tion at In­vestHK, said in a re­cent in­ter­view with Xin­hua News Agency.

Netease and JD, two main­land com­pa­nies listed in the United States, came to Hong Kong for their sec­ond list­ing on the lo­cal stock mar­ket ear­lier this year when vi­o­lent protests sub­sided amid the COVID-19 pan­demic. Other US-listed main­land com­pa­nies in­clud­ing Baidu and Ctrip have also queued up to list in Hong Kong. This sug­gests Hong Kong is still an at­trac­tive des­ti­na­tion for fundrais­ing and do­ing busi­ness as long as so­cial sta­bil­ity is re­stored and the busi­ness en­vi­ron­ment im­proves.

To the re­lief of Hong Kong peo­ple, the timely en­act­ment of the na­tional se­cu­rity law for Hong Kong will boost busi­ness con­fi­dence for sure as it will help re­store so­cial and po­lit­i­cal sta­bil­ity, which are cru­cial to the ex­is­tence of a good busi­ness en­vi­ron­ment. When the most se­ri­ous prob­lem in the city, which is po­lit­i­cal in na­ture, is re­solved, all other prob­lems will have a bet­ter chance to be tack­led ef­fec­tively. Hong Kong has over­come var­i­ous kinds of chal­lenges be­fore and after the han­dover in 1997. It will con­tinue to move for­ward.

Ed­ward Liu

The au­thor is the vice-president of the Hong Kong and Main­land Le­gal Pro­fes­sion As­so­ci­a­tion. Hong Kong has over­come var­i­ous kinds of chal­lenges be­fore and after the han­dover in 1997. It will con­tinue to move for­ward.

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