Legco election postponed, an economic storm for HK firms

The Chief Executive of Hong Kong SAR Carrie Lam announced yesterday (31st Jul) that the coming Legco election will be postponed, from 6th Sep 2020 to 5th Sep 2021, by the Emergency Regulations Ordinance. The CE said the hard decision is purely based on the current COVID-19 pandemic to protect Hong Kong public health. Nevertheless, the pro-democratic camp believed that the establishment attempted to avoid a big loss in the election.¹ No matter what, election is one way to resolve social conflict. After the social unrest in 2019 and the national security law bill in 2020, the economic society of Hong Kong has no chance to recover under the COVID-19 pandemic. It is natural for general citizens to voice out in the coming election. Now the postponement will bring more uncertainty to the fragile local community and economy, it is very hard time for SMEs to survive.

Gov cannot control COVID-19 over a short period

Let assume Government honest, i.e. the one-year Legco election postponement is based on public health concern only. The message it brought to citizens is: the Government has no confidence to bit COVID-19 over a short period, and thinks that the epidemic will further till next Summer. We may look back to previous measures, such as the prohibition of group gathering, it usually lasts for 7 – 14 days and extends on demand. There is no measure that exists as long as months. Without an open discussion and expert advice, the Government postponed a major election for one year in one go. It simply makes the public doubt how determined the Government is to fight the coronavirus.

Deepened conflicts

There were street chaos almost every weekend in the second half of 2019, and the society was in extreme conflict.² Although the Government repeatedly emphasized that the postponement was no political, the Pro-democracy camp and its supporters looked skeptical. In addition, 12 pro-democratic candidates were just disqualified by returning officers. All these may drive the popular pan-democrats ³ and radical protesters to take any possible actions. It will be harder to implement public policy and brings social unstability.

Ground zero in the New Cold War

The Sino-US tension started from the trade war in 2018. Certain events such as the case of Weng Wanzhou and the COVID-19 outbreak in the US sink the US-China relations to bottom in decades. Some describes this as the “New Cold War”. ⁴ From anti-extradition law protest, national security law to latest candidate disqualification and election postponement, the West is alert to China’s threat to universal value and human rights. Now the English-speaking Five Eyes have suspended extradition with Hong Kong. ⁵ Just before, the US government passed the Hong Kong Autonomy Act that sanctions by all means any officers, corporations and individuals who deprive of Hong Kong human rights. Recently, there is a rumour that American banks cancel the account of members of the Executive Council. This is a notable news for finance-dominating Hong Kong, and not just inconvenience to individuals. Get back to a basic point, the current economic status of Hong Kong is due to the specialty of this South China city. It is no longer possible for Hong Kong to take advantages from both sides anymore nowadays and the economy will have a structural change. As a Hong Kong firm, we must get well prepared to survive.

We are not going to discuss if the postponement decision correct or not here. We are neither a specialist in infectious diseases, nor a power to provide political comment. However, the government decision brings a profound impact to Hong Kong economy. The fundamental change takes place in both internal and external factors. You may read a previous article “Uncertain Future“. Hong Kong firms may sooner or later be regarded as a “Chinese corp” and face barrier overseas. Then, they should consider to develop in mainland China market with BUD Mainland Programme, promote in China with the EMF, or increase productivity with the TVP. No stability and no prosperity.

BizMagnet was founded in the era and together with Hong Kong people. Doing business should be flexible, as Bruce Lee said, “Be water, my friend”.

1. (2020) Hong Kong Delays Election Citing Pandemic, but Democracy Camp Sceptical, the New York Times, https://www.nytimes.com/reuters/2020/07/31/world/asia/31reuters-hongkong-security-election.html
2. (2019) Hong Kong protests: 10 top reads as the city’s social unrest marks five months since it began, South China Morning Post. https://www.scmp.com/news/hong-kong/politics/article/3037034/hong-kong-protests-10-top-reads-citys-social-unrest-marks
3. (2019) Hong Kong elections: pro-democracy camp wins 17 out of 18 districts while city leader says she will reflect on the result, South China Morning Post. https://www.scmp.com/news/hong-kong/politics/article/3039151/hong-kong-elections-tsunami-disaffection-washes-over-city
4. (2020) Hong Kong Is Becoming Ground Zero in the New Cold War, by Fong, the Diplomat. https://thediplomat.com/2020/05/hong-kong-is-becoming-ground-zero-in-the-new-cold-war/
5. (2020) Hong Kong to suspend deals on extradition and criminal justice cooperation with Australia, Britain and Canada, South China Morning Post. https://www.scmp.com/news/hong-kong/politics/article/3094998/hong-kong-suspend-deals-extradition-and-mutual-legal