Heather du Plessis-Allan: Hong Kong protests could ruin their economy

Heather du Plessis-Allan,
Publish Date
Wednesday, 14 August 2019, 7:30PM
Hong Kong protesters may save their democracy but lose their economy. (Photo / AP)

It’s hard to know how this Hong Kong situation is going to play out: whether the protesters will give up, whether china will send in the troops, and how long this could go on for.

But there’s one thing you can count on, and that’s that this is doing economic damage to Hong Kong right now - and the fear is that could be lasting.

And this could do damage to Hong Kong’s standing as Asia's leading business city.

There are a couple of reasons for that. The first is investment. This is likely going to put off investors in both the short term and the long term.

In the short term, who knows how long this is going to last for. It’s already near the three month mark, so investors ready to go now will surely think twice before putting money into Hong Kong. There are already reports of investors with money in the place trying to get it out.

In the longer term- can you trust the place? Isn’t Hong Kong getting a bit of a reputation for protests? 2014: the umbrella protests. 2007: protests. 2003: protests.

Now to be fair, Hong Kong has survived as an economic hub despite relatively frequent unrest, but that brings me to the second way Hong Kong might suffer economic damage: China.

China has few ways it can punish Hong Kong without damaging its international reputation and its own economy. It can send in the army, it can crack down politically, it can target activists, but that’s obvious and not a good look.

Economic punishment, now that’s more subtle. And there’s speculation now, that when this is all over, that’s what China might do.

Could it punish Hong Kong’s businesses? Could it redirect investment and trade to other regions on the mainland? The point of that would be to make Beijing less reliant on it and it more reliant on Beijing, thus, theoretically at least, making protest and demonstration less likely.

This isn’t great news for Hong Kong. Analysts say the region’s already on the brink of falling into recession. It’s already hurting from the US China Trade war.

The protests have made that worse with cancelled flights, cancelled holidays, city-wide disruptions to transport and retail, Hong Kong’s stock exchange is down more than nine per cent in around a month.

So while the goal may be democracy, the cost may be the economy.

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