HK's economy buckles under pressure as airport loses its aura of stability

Hong Kong

DEMONSTRATORS largely retreated from the airport on Wednesday while flights have been restored in Hong Kong's airport after two chaotic days of violence and disarray at the international hub.

Late on Tuesday, protesters, police officers and passengers clashed in the same sleek terminals through which executives and financiers transit daily. But the anxiety created by the violence could linger, as businesses weigh their futures in a city once lauded for its stability.

"The airport is crucial, utterly crucial for Hong Kong," said Tara Joseph, president of the American Chamber of Commerce in Hong Kong. Business travellers, she said, have been cancelling trips in significant numbers.

Many of Hong Kong's most important industries - trade, finance, tourism - depend on ready access to the skies. If the anti-government demonstrations this summer have tested the semi-autonomous territory's political union with China, then the airport disruptions have threatened something much more basic: the easy accessibility that makes Hong Kong such a valuable gateway to China for the rest of the world.

"People who didn't have to come were starting to rethink their plans already," Ms Joseph said. The turmoil at the airport, she added, "is the icing on the cake."

All sides in the unrest seemed to take a pause on Wednesday. Online, some protesters circulated apologies about the intensity of the violence at the airport the previous night.

The demonstrators proved that they had the ability to paralyse an important economic artery, but the strong reaction that Tuesday's chaos elicited from businesses, travellers and the mainland Chinese media means that protesters may be more careful about trying such tactics again.

The instability, combined with the trade war between China and the United States, has already rattled Hong Kong's economy. The territory's stock market has plummeted in recent weeks, and forecasters have slashed estimates for economic growth.

The local economy expanded 0.6 per cent in the latest quarter from a year earlier. The figure was unchanged from the quarter before, and is the slowest pace of growth for Hong Kong since the aftermath of the global financial crisis.

Some residents have started considering new contingency plans for their families and their wealth. David Lesperance's firm helps the ultra rich plan their tax and personal affairs to minimise legal and political risks. In earlier years, he said, perhaps one potential client from Hong Kong or mainland China contacted him every three months. Lately, it has been three or four a week.

"People have gotten more pessimistic as events have picked up," he said. "Now, instead of talking about it over drinks with their friends, they're reading it in the newspapers. Now they're looking out their windows at the crowds."

Any major shifts by global companies could depend on whether large-scale protests continue in the coming months. Such changes take months, if not years, and Hong Kong still has major benefits that few other places in Asia can match, including proximity to China and a dependable legal system.

"It's too simplistic to think that people will just pick up their suitcases and leave for Singapore," said Ms Joseph, the American chamber president.

Over the past two decades, Beijing has worked to bring Hong Kong closer to the mainland, both politically and in terms of rail and road connections. But the territory has long been a place that outsiders reach by air.

The ability to jet in with ease has been fundamental to making Hong Kong an attractive place for global companies to do business, and for Chinese tourists to surf the Internet freely and buy saucy books, banned in the mainland, about the private lives of China's elite.

In all, nearly 430,000 aircraft landed at or took off from Hong Kong International Airport last year, carrying almost 75 million passengers. A decade earlier, there were 300,000 aircraft and 47 million passengers.

"Left unaddressed, the closure of the airport would have seriously tarnished Hong Kong's reputation and role as an air transport hub for the region," the Hong Kong General Chamber of Commerce, a business group, said in a statement.

"We need to go back to business. We need to live our life," said Davide De Rosa, chairman of the European Chamber of Commerce in Hong Kong.

One factor that has potentially mitigated the economic impact is that the disruptions have not affected cargo flights. The Hong Kong airport handles 5.6 million tonnes of cargo a year, more than any other airport on the planet.

But more airfreight is carried nowadays by wide-body passenger planes, and those shipments have invariably faced delays.

At the airport on Wednesday afternoon, Adrianne McKinnon was relieved to find that her flight to Toronto had not been cancelled. Ms McKinnon works in finance, and she said that her primary concern after the latest violence was about how Beijing might react. "You never know what China can do," she said. NYTIMES

READ MORE: