The famous, witty and masterful 17th-century French playwright and thinker Moliere had some brilliant quotes that remain relevant some 360 years later. When looking at the Hong Kong political situation today, the quote that immediately comes to mind is: “True enough, none are so deaf as those who will not hear.”
All Hong Kong residents, whatever their political persuasion, should realize that the global pandemic will exert an unprecedented economic and life-changing impact on many of us. The world of tomorrow will be vastly different from what we knew before the pandemic. Politicians in Hong Kong should be focusing on one issue, and one issue only: How will Hong Kong navigate the severe global depression that is coming? A tsunami is forming on the horizon while we are all still playing on the beach. The recent delaying of important decisions in the Legislative Council over childish procedural arguments, which saw “pan-democratic” members engaged in unseemly pushing and pulling with the security staff, does not bode well for more collaborative council meetings ahead, although that is exactly what is needed if we are going to design effective countermeasures against the coming wholesale business closures (particularly among SMEs) and extensive unemployment in the services sector.
All Hong Kong residents, whatever their political persuasion, should realize that the global pandemic will exert an unprecedented economic and life-changing impact on many of us. The world of tomorrow will be vastly different from what we knew before the pandemic
There is no time to waste. Unfortunately, the world is entering into a global recession with a severity that will exceed the 2008 financial crisis, or the 1987 Asia financial crisis. This will be more akin to the Great Depression of 1929. In fact, the International Monetary Fund has already warned of “the worst recession since the Great Depression”. The Bank of England went even further, forecasting the worst downturn since 1709! The facts speak for themselves. Hong Kong is both a global trading hub and a global financial center. It is therefore highly dependent on global supply and demand, and consequently on the growth of major economies around the world. The economic well-being of the rest of China and the United States are especially relevant, as they are the major trading partners of Hong Kong.
Hong Kong exported $536 billion worth of goods in 2019; any significant reduction in this amount will quickly affect two of our most important sectors of the economy: trading and logistics.
According to some economists, the US is now estimated to have a real unemployment rate of close to 23 percent, probably a historic high. It was only 3.5 percent just a few months ago. Trump’s wild predictions of an American recovery within months will fit in only with his electioneering pronouncements but not with the reality that the pandemic will remain a dark overhang above its national economy for at least the rest of the year. Trump’s wishful thinking that a vaccine will be found in the remaining months of this year has been unanimously rejected by all leading scientists in the field. The US economy might pick up slightly here and there, but it will be a slow and sporadic recovery at best well into 2021.
While China’s lockdown has almost completely ended, this does not mean that the Chinese economy is operating at pre-pandemic levels. China is also part of the global supply chain, and some manufacturers are dependent on components from overseas, often from countries still in their own full lockdown mode. Chinese exporters are also dependent on international demand, which clearly is muted to say the least.
Everywhere across the globe the virus will rear its ugly head again and again, making distancing measures a permanent part of life, and therefore forever changing consumer behavior and spending patterns. Experts are predicting second and even third resurgent waves of the pandemic in countries that reopened their economies prematurely, or countries with weak anti-virus protocols. Meanwhile, the increased focus on self-reliance for all things related to the medical field might expand to other areas considered critical. This will have a negative impact on global trade, which will hit the Hong Kong trading and logistics sectors particularly hard.
The other important pillar of the Hong Kong economy is travel and tourism. Already battered by the many months of seemingly endless storms of social unrest, violence, and property destruction, this sector will struggle to keep its head above water. Unfortunately, quite a number of tour agencies have already gone under. As businesses facing economic headwinds will attempt to cut their costs, corporate travel will be one of the first things to be cut. This will be easier as many employees have now gotten used to teleconferencing. Non-corporate tourism will also be hesitant as many are afraid to fly until the airlines find ways to alleviate the perceived risk of contagion on board aircraft, and cruise ships have their reputations in tatters following the various outbreaks on board cruise liners and the fiascos in trying to evacuate passengers. This has enormous consequences for not only the hotel, cruise and airline sectors, but retail, taxis, and amusement parks, to name but a few.
In this unprecedented economic tsunami, it clearly is time for “all hands on deck”. While Hong Kong is very fortunate to have ample fiscal reserves to weather a massive economic blow, this does not mean that complacency is warranted. Lawmakers of all rival parties need to reach across the aisle to work together with the government in unity to focus on guiding our ship through this economic storm. The government needs to reach out to all parties because an all-party economic dialogue leading to a plan is urgently needed. Everyone should listen to dire predictions of economists across the globe. If they remain “deaf”, all other political issues will become totally irrelevant, because extreme unemployment and a prolonged economic recession will spell the end of Hong Kong as a serious economic player on the world stage, while locally, it will just continue to simmer with petty politics and go nowhere!
The author is a specialist in international public law, an adviser on China-related matters to both the private and public sectors. He has lived in Hong Kong for over 18 years. The views do not necessarily reflect those of China Daily.
HONG KONG NEWS