Coronavirus infection rates are soaring in Hong Kong; the city, in 2022, has the highest reported death rate, for its population size, in the world. After once being praised as a global example for Covid-19 contaminant, the semi-independent region’s zero-Covid strategies have failed, and infections have rocketed.
Low vaccine coverage rate is driving the infection and fatality rates. As of March 2022, the death rate stands at 25 per 100 000. Chinese authorities have ordered Hong Kong to get a grip on its infection rates – but in this as in so much else to do with the two countries, mounting tensions are being exposed. In 2019 protests erupted in Hong Kong. The media, education sector, civil society and electoral system have all been restructured to China’s liking. And mainland China has forced Hong Kong to adopt its zero-Covid policies. But given that the vaccines on offer are manufactured in Beijing, trust is low.
Warring policies
Hong Kong’s zero-Covid policy was designed to mirror that of mainland China. Just as other governments were lifting restrictions and easing rules, the region implemented some of the strictest Covid-19 rules in the world. This is proving incredibly tough for Hong Kong’s economy. In February, following China’s lead, Hong Kong closed its border. This cut its connection with both the mainland and the rest of the world. The city, a global financial hub that brands itself as “Asia’s World City”, saw 71 000 people depart in February and a further 54 000 in March. The already dwindling number of travellers to the city had to undergo a two-week quarantine period.
Recently, however, Hong Kong’s outgoing leader, Carrie Lam (she has announced that she will not seek a second term at the helm) declared that the territory would ease some restrictions. She lifted a travel ban on flights coming from nine countries – among them the US, Australia and the UK. Quarantine periods for travellers were also dropped to seven days. And she detailed a roadmap to the gradual easing of further restrictions related to social gatherings, mask-wearing and in-person schooling. This so-called “dynamic zero policy” has irked China, which says that unless Hong Kong maintains a zero-Covid policy, borders between it and the mainland will remain closed.
Economic impacts
Despite escalating tensions, Hong Kong and China’s economic ties have remained strong. The two nations boost each other's economies with annual bilateral trade estimated at $547 billion in 2020. Hong Kong is seen as a gateway for those who wish to do business in the mainland or to enter the Chinese business market. As of 2021, 31 of the 161 licensed banks in Hong Kong operated with mainland interest. Mainland China is the largest contributor to Hong Kong’s economy and the second-largest direct source of inward investment. It is also China’s main (45.1%) import source, and the mainland is Hong Kong’s largest (46.6%) receiver of exports.
China’s threat to keep its borders closed unless Hong Kong maintains the Covid policy foisted upon it has left the semi-autonomous region with little room to manoeuvre.
If Hong Kong maintains China’s policy, it will need to implement severe fiscal buffers to cushion the economic blow to households and businesses. Considering the extreme nature of the “zero-Covid” policy, Hong Kong may look less attractive to potential investors; this, coupled with the fact that there is no clear end in sight for the policy, means that Hong Kong will have to use its large fiscal reserves. This would have adverse effects on the region’s credit profile.
Hong Kong’s Fitch rating is sensitive to economic competitiveness. As a central hub for economic prosperity and connectivity, it will worry that the prolonged implementation of China’s “zero-Covid” policy may erode its hallmarks. This is a double-edged sword: on one hand, it acts as a test of loyalty to the mainland, and on the other, it is an extreme cause of friction in an already tense situation.
Vaccination uncertainties
Hong Kong’s vaccination procedure is shrouded in mistrust and scepticism.
Hong Kong’s Free Press announced that in January, there were more than 500 cases per 100 000 residents. This high infection rate has been attributed to multiple factors: a high population density, cramped living conditions especially in mass housing estates, and an unprepared healthcare system.
Low vaccination rates are a problem. Currently, 80% of those aged 12 and above have received two doses of the vaccine; this number drastically decreases to 37% in those aged 80 and above, despite the elderly being the most vulnerable to Omicron. After months of pro-democratic protests, arrests and the security law crackdown, mistrust in the authorities may also be to blame for the spike of cases. In Lam’s roadmap she highlighted the scope for mass vaccinations among the elderly.
Economically, socially and politically, Covid – and the battle between Hong Kong’s policy versus China’s – has shaken life in the now deeply isolated region to its core.
About the Author
Qhawezo Ayesha Fakude is a Junior Research Fellow at Africa Asia Dialogues (Afrasid). She holds a Bachelor of Social Science from the University of Cape Town, South Africa. She majored in politics and governance, anthropology and sociology.