HK Businesses Cheer China Reopening But A Boom Is A Year Away

On Sunday, January 8, 2023, residents of Hong Kong and mainland China were permitted to resume two-way, quarantine-free travel after three years, albeit in limited numbers, Michelle Toh, Sandi Sidhu and Marc Stewart reported for CNN.

Photo Insert: While Hong Kong is poised to come out of recession this quarter, the estimate is that it could take a full year for the city to bounce back.

The move is the latest effort by Hong Kong to rebuild its status as a global business hub. For decades, the former British colony has been seen as a friendly gateway to the vast market of mainland China, but its economy was battered during the pandemic as COVID-19 restrictions took hold.

Hong Kong’s economy fell into recession in 2022, and is estimated to have contracted by 3.2% over the full year, according to a government forecast, Jennie Chen, Kathleen Magramo and Simone McCarthy also reported for CNN.

Restricted cross-border travel was the biggest concern for businesses across the city, according to a survey by the Hong Kong General Chamber of Commerce released Monday.

“The worst Is over,” the group declared in a statement, though it warned of other lingering headwinds. Yet, businesses and economists aren’t rushing to upgrade their forecasts just yet.

“In the first half of this year, the rebound is definitely going to be significant. We’re going to see things really pick up, but it’s not going to reach a full recovery,” said Sheana Yue, China economist at Capital Economics.

Yue said that hotels and restaurants could soon see an uptick, particularly as “a backlog of people getting their visas sorted” from mainland China was cleared.

Currently, as part of a gradual reopening, Hong Kong has a quota of 60,000 visitor arrivals from mainland China each day but less than 6,000 people in that category have been coming in daily so far.

The city has seen a total of just under 21,600 arrivals from mainland China from Sunday through Wednesday, in its first four days of reopening, immigration department data show.

While Yue expects Hong Kong to come out of recession this quarter, she estimates it could take a full year for the city to bounce back, potentially by the first quarter of 2024.

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