City welcomes visitors amid signs of recovery but pandemic may force industries to rethink
Fans cheer as they watch a match at Hong Kong Stadium on the second day of the rugby sevens tournament on April 1. The event attracted about 75,000 spectators. (CALVIN NG / CHINA DAILY)
Hong Kong is bustling again, with its streets becoming increasingly crowded as life returns to normal after the COVID-19 pandemic.
Between Qingming Festival, which fell on April 5, and the Easter break that ended on April 10, more than 4.2 million people entered or left Hong Kong. It was the first long holiday since local travel restrictions were fully lifted.
Lines of travelers formed at the city’s international airport, West Kowloon high-speed railway station and for shuttle bus services across the Hong Kong-Zhuhai-Macao Bridge to neighboring Macao.
Only the sight of passersby wearing face masks served as a reminder of the days when the city was in the grip of the disease.
In December, authorities in Hong Kong began gradually relaxing social distancing measures. In February, border crossings with the Chinese mainland fully reopened, while last month, the compulsory wearing of face masks — the city’s final COVID-19 restriction — ended, signaling a full return to normality.
The number of travelers has risen quickly. The Hong Kong section of the express rail link to Shenzhen and Guangzhou in Guangdong province, which resumed service on Jan 15, surpassed 23,000 passenger trips by the end of February. That month, the airport welcomed 2,146,000 passengers, a rise of over 2,392 percent compared with February 2022.
Many large-scale international events have also returned to the city. Last month saw the 39th International Jewellery, Art Basel Hong Kong, and the Hong Kong Sevens rugby tournament attract visitors.
Hong Kong’s hard-hit economy has revived, with the seasonal unemployment rate from December to February falling to 3.3 percent, down from as high as 7 percent during the pandemic.
In his budget speech in late February, Financial Secretary Paul Chan Mo-po estimated that the local economy would grow by 3.5 percent to 5.5 percent this year.
Policy scientist Anthony Cheung Bing-leung said Chan’s forecast will not be difficult to achieve, as it is “relatively conservative”.
Cheung, public administration advisor in the Department of Asian and Policy Studies at Education University of Hong Kong’s Faculty of Liberal Arts and Social Sciences, said that as the city’s economy contracted by 3.5 percent last year, it is not hard for it to rebound.
With a range of industries recovering after Hong Kong fully resumed travel services with mainland and overseas destinations, local economic growth this year is likely to be more than 3.5 percent, Cheung said.
The tourism sector, among those hit hardest by the pandemic, has been one of the fastest to recover, with Hong Kong reopening links to the mainland and the rest of the world.
In 2018, the city welcomed more than 65 million visitors, but in 2021, the number fell to about 91,000. However, in January, more than 500,000 visitors arrived, about 71 times the number for the same month last year. In February, the city saw 1.46 million visitors arrive, the first time the number had exceeded 1 million since the pandemic emerged three years ago.
Mainland visitors accounted for 76 percent of the total number of arrivals in February. For short-haul markets excluding the mainland, most visitors came from Southeast Asia, including Thailand and the Philippines, and also from South Korea.
Timothy Chui Ting-pong, executive director of the Hong Kong Tourism Association, said: “The recovery in the city’s tourism industry has been relatively quick. After all, it was not until February that Hong Kong fully resumed travel with the mainland and overseas countries.”
Given the Easter holiday and the new round of consumption vouchers, Sham expects a further rise in local spending this month.
In an attempt to stimulate the economy, Chan, the financial secretary, announced in his budget the issuance of another round of consumption vouchers with a value of HK$2,500 or HK$5,000($318 or $637). The first round of vouchers, worth HK$1,500 or HK$3,000, will be distributed on April 16.
Cheung, from Education University, said that he feels that handing out vouchers is a public policy where the rewards far outweigh the costs.
The return of visitors has also boosted the retail and catering sectors. Government data show that retail sales value in the city rose for two consecutive months, reaching HK$36.2 billion in January, a year-on-year rise of 7 percent.
On April 5, more than 56,000 mainland visitors arrived in Hong Kong, accounting for 20 percent of inbound passengers, but way below the pre-pandemic level of 80 percent.
Caspar Tsui Ying-wai, executive director of the Federation of Hong Kong Hotel Owners, said there was room for the number of mainland visitors to rise. As Easter is not a public holiday on the mainland, he estimated more travelers would cross the border for the May Golden Week holiday, which runs from April 29 to May 3.
Simon Wong Ka-wo, president of the Hong Kong Federation of Restaurants and Related Trades, said the number of mainland travelers arriving in Hong Kong under the Individual Visit Scheme has yet to fully return to the pre-pandemic level, which has limited their contribution to boosting local spending.
Cheung attributed this lower-than-expected growth to the deterioration of the global economy, higher prices and rising living costs, which will curb people’s consumption desire and reduce their level of consumption.
He added that the pandemic has also reshaped living habits and consumer behavior, with numerous activities shifting from offline to online.
Even though offline activities have gradually resumed since the pandemic, people have become used to online convenience. As a result, a mix of online and offline economic activities will be the trend in the post-pandemic era, Cheung said, adding that given this, business operators and service providers should rethink their strategies.
Some companies are now posting bigger rises in profits. For example, those of Lan Kwai Fong Group, a property investment and management company, have risen continuously in recent months. Allan Zeman, chairman of the group, said that as of the middle of last month, its business had risen by 20 percent compared with the pandemic period.
Zeman estimates that business activity in Hong Kong this year will return to about 70 percent of the pre-pandemic level.
He expects a full recovery by late next year, as many sectors in Hong Kong, including retail, catering, services, hotels and tourism, face a labor shortage.
Zeman, known as the “Father of Lan Kwai Fong”, one of Hong Kong’s most popular nightlife areas and home to hundreds of restaurants and bars, said, “Recruiting people is the hardest thing for every restaurant and bar right now.”
The same problem is hindering a recovery in the city’s tourism industry. Chui, the Hong Kong Tourism Association executive director, said the industry needs more tour guides and bus drivers.
Cathay Pacific Group CEO Ronald Lam Siu-por said the staffing shortage is also the biggest challenge for the aviation industry, which lacks flight attendants, ground staff and pilots whose licenses expired during the pandemic.
Local media reports said Hong Kong lost nearly 190,000 workers over the past three years.
Peter Shiu Ka-fai, lawmaker for the wholesale and retail sector, said the city still needs about 40,000 workers in the retail and wholesale industry. He suggested Hong Kong follow the example of Macao by importing workers daily from mainland cities in the Greater Bay Area.
Shiu said the government could set a quota for imported workers and issue two-year visas for them. To protect the local workforce, the quota would be subject to change if the local unemployment rate rose or the economy worsened, he said.
To attract young people, Cheung, from the Education University of Hong Kong, suggested that the city’s low-skilled industries should transform themselves to become more value-added and provide increased professional services to enhance their appeal.
For example, the tourism industry should become qualitative-oriented instead of quantitative-oriented, Cheung said.
Before the pandemic, tourists crowded Hong Kong’s restaurants and public facilities, including transportation services, affecting residents’ daily lives, Cheung said.
The city was known as a shopping paradise, but now that people have become accustomed to shopping online, it needs to adapt to this situation, Cheung said. “A return to normalcy is not a return to the past,” he added.
Li Chen, an associate professor at the Chinese University of Hong Kong’s Centre for China Studies, suggested that the city cultivate new economic growth areas to increase its resilience to risks.
Li said the pandemic highlighted a character in Hong Kong’s economy — the city’s high degree of interconnection with and dependence on the outside world. Hong Kong has a high degree of openness, but its economy is susceptible to crises, particularly during a pandemic, when external links are cut, Li added.
He said the city should use the opportunities arising from China’s 14th Five-Year Plan (2021-25) to transform itself into a global innovation and technology hub.
Specifically, Hong Kong can nurture more technology companies in high-tech fields such as artificial intelligence, semiconductor electronics, and financial technology. Such companies not only have high added value, but they can also drive the development of upstream and downstream complementary industries, thus bringing new economic opportunities to the city, Li added.
