Hong Kong’s violent protests are showing no signs of stopping anytime soon. The pro-democracy protests, which carry on the back of the 2014 Umbrella Movement, started three months ago over a now-suspended extradition bill that would have allowed people to be extradited and sent to the mainland for trial, essentially enabling China to have full reign over people in the special administrative region that is Hong Kong.
Largely led by peaceful student protesters, the protests have garnered global attention and support for their courageous stand against China’s “tyrannical” rule – until now. But acts that have accumulated to result in “wanton destruction” and severe economic costs to Hong Kong are beginning to make people less sympathetic to protesters, with business, investors and tourists wary of the current situation and the long-term consequences on the city’s economy. On Sunday, Hong Kong saw its most violent day since the mass demonstrations began over three months ago – a reaction to the region-wide ban on the face masks that have become synonymous with Hong Kong’s protesters.
En route to Hong Kong International Airport, roads were blocked and public transportation routes too, preventing travellers from accessing the city on arrival in a bid to truly draw the world’s attention to the pro-democracy movement. Tear canisters were hurled at police, fires were started at major MTR stations, CCTV cameras were torn down and metal fences were thrown onto rail tracks in an effort to force travellers to be left stranded at the airport for hours on arrival.
Even though Carrie Lam – Hong Kong’s Chief Executive – conceded to remove the extradition bill which originally brought on the protests, the movement continues and if anything is growing larger and more violent, inflicting serious damage to Hong Kong’s economy. Hong Kong’s Census and Statistics Department reported that GDP contracted 0.4% in the second quarter, and if societal upheaval continues, economic impacts could also be felt within the broader Asian economy and damage Asia’s trading partners worldwide. Hong Kong’s credit rating is also at risk of further downgrade if the protests continue to heavily impact the city, according to Fitch Ratings which stunned city leaders last Friday by cutting Hong Kong’s credit rating for the first time since 1995, trimming it by one notch to AA from AA+. The agency issued a warning at the same time: continued protesting could further tarnish the city’s reputation, business environment, rule of law and government institutions.
Foreign exchange reserves fell from a record high of US$448.4 billion in July to US$432.8 billion last month, according to data from the Hong Kong Monetary Authority (HKMA), very likely a response to an absurd amount of money being taken out of Hong Kong amid the protests. The US$15.6 billion decline was the largest recorded since the data was first published in 1997, according to the Hong Kong Monetary Authority.
Hong Kong’s luxury retail sector has been hit similarly hard: figures show that sales of watches, jewellery and other valuable gifts plunged by almost half in August this year compared to the same month in 2018 – the biggest drop ever recorded in the city. Hong Kong luxury retail outlets including Gucci, Coach, Patek Philippe and Coach are all facing dilemmas brought on by the protests, with retail spending and tourism lower than they have been in many years. In their July trading updates, both Swiss luxury powerhouse Richemont and Swatch Group said the demonstrations had dented their local sales.
For pro-Beijing or mainland Chinese businesses operating in Hong Kong – there is even less hope. During the protests, protesters have been targeting those businesses or shops with with pro-Beijing links, graffiting store fronts and vandalizing outlets city-wide. One group of protesters tried to smash the cameras above ATMs at the Bank of China Hong Kong Wan Chai branch last week and graffiti the machine screens, the day after they threw petrol bombs at a branch of Nanyang Commercial Bank.
“We’re now seeing, really, what can only be described as mindless vandalism from the radical protesters,” said Richard Harris, of consulting investment management firm Port Shelter Investment.
In response to the falling economy, Hong Kong’s wealthiest billionaire pledged $127 million to help small, local businesses who are struggling as a result of the mass protests that have been sweeping through the city. The protests have mostly occupied the central areas of the city, forcing shops to close – if they are not already destroyed. Li Ka-Shing previously urged protesters to stop the movement “in the name of love”, and has made efforts to quell the unease in the city. Now, his charitable foundation has committed to helping those businesses caught in the cross-fire.
Even global partnerships and businesses have been affected: China recently suspended all business ties with NBA team the Houston Rockets, over a tweet that supported the pro-democracy movement.