Hong Kong’s current economic challenges are unprecedented in living memory, but the city has faced difficulties before. Indeed, as we often say, Hong Kong has bounced back stronger after surviving several crises in the past. We catch up with current Chairman Peter Wong, and former Chairmen Anthony Nightingale and Andrew Brandler, about the experiences of Covid-19, SARS and the Global Financial Crisis.
Coping with Covid
When our current Chairman Peter Wong took the reins in May last year, the seriousness of the Covid-19 pandemic was becoming apparent. Almost a year later, Hong Kong continues to experience “exceptionally difficult times,” Wong said.
Border closures and social-distancing measures have been effective in keeping the virus largely at bay. But the impact on business has been huge.
In response, HKGCC has successfully lobbied on members’ behalf to ask the Government to roll out measures including the Employment Support Scheme, the D-Biz Programme, and enhancements to loans and funding.
“I am proud of the work the Chamber has done to bring the business community together and reflect our views to the Government,” Wong said. “Particularly on how to structure relief efforts to help our members and society more generally face the challenges posed by Covid-19 and the economic fallout it has created.”
The Chairman added that he valued the opportunity to work with some of Hong Kong’s most creative businesspeople to find solutions, and he also expressed his gratitude to HKGCC staff, who have worked hard to deal with the challenges of the past year.
The current economic situation remains highly uncertain, but we can take comfort from the fact that Hong Kong has recovered from crises before.
“At times over the past 12 months the challenges have looked daunting,” Wong said. “But looking back over the Chamber’s 160-year history, I am reminded of both our business community’s resilience and of its ability to re-invent itself to grasp new opportunities as the world around it changes.”
In the last two decades, we have emerged stronger from both SARS and the Global Financial Crisis. Indeed, we have been able to use these experiences as a catalyst to re-examine what is working and what is not, and to use our agility to adapt.
“There are strong signs that our resilience and agility is once again manifesting itself. Chamber members have embraced the opportunities that are appearing in the Greater Bay Area,” he said.
The Covid-19 crisis is not yet over in Hong Kong, and our economic revival will also depend on the global outlook.
“There are still problems,” Wong said. “I know many of our members have exhausted their reserves and will need help if they are to be able to expand into the recovery, and youth unemployment remains high.”
“But as the recovery takes hold over the next 12 months, the Chamber remains committed to creating a business environment where all our members can thrive by disseminating information, helping members make connections, and lobbying the Government on your behalf.”
Living Through SARS
Hong Kong’s experience with SARS almost two decades earlier in many ways foreshadowed the Covid-19 pandemic. Anthony Nightingale, who became Chamber Chairman in 2003, recalled the experience.
“It was a very sharp reaction, and at that time, Hong Kong hadn’t seen anything like it in the post-war years,” he said. “Hotel occupancy was down to near zero, and overall the economy was suffering very badly.”
In response, the Government actively sought the help of the Chamber and the business community to come up with ideas for initiatives to restore confidence. And by the end of 2003, Hong Kong’s economy had already started to recover much more strongly than expected.
Nightingale noted that when SARS first appeared, the city’s economy had been fairly weak for around five years. Issues that the Chamber was concerned about at before SARS included deflation and the Government’s fiscal position. “The Hong Kong economy had been in the doldrums for a while,” he said.
But the city’s economy had started to improve, a process which was delayed by the SARS crisis. One of the key aspects that helped Hong Kong’s successful recovery after the epidemic was the Closer Economic Partnership Agreement (CEPA) with the Mainland, signed in June 2003.
Before CEPA, Hong Kong had been not actively pursued free trade agreements with other economies. However, HKGCC had for a number of years been promoting the benefits of such a deal as the Mainland’s economy continued to grow and open up.
The signing of CEPA was particularly timely, Nightingale said, as it greatly relaxed the restrictions on tourists coming from the Mainland, giving a much-needed boost to the sectors that had been particularly badly hit by SARS. “It also led the way to what later became a huge explosion of Mainland Chinese tourists.”
But the comparisons with SARS only go so far. “Covid-19 has been much longer lasting and much more difficult to get on top of,” he said. “And economies like Hong Kong, which have kept infections at a very low level, have done so at the cost of making travel in and out extremely difficult. Which, for an open economy like Hong Kong, is very tough.”
Looking forward, we are still in a period of uncertainty, with countries around the world adopting different strategies, and with vaccination programmes being rolled out with varying levels of success.
“It is all still quite unpredictable. Regarding quarantine and other restrictions, I feel that Hong Kong will still be pretty cautious,” Nightingale said. “The only way the world is going to get out of this situation is a widespread vaccination programme.”
Global Financial Crisis
While Hong Kong’s economy bounced back strongly after SARS, another crisis was looming just a few years later. The Global Financial Crisis began in 2007, but it was the following year that it really made its presence felt. Taking over as HKGCC Chairman in 2008, Andrew Brandler found himself in the eye of the storm.
“It was a massive crisis,” he said. “There was a time when one really didn’t know whether the financial architecture globally was going to collapse and banks were going to go bust.”
This period of extreme uncertainly was fairly short-lived, as the U.S. Federal Reserve stepped in to prevent a financial collapse. The Chamber then acted quickly to find ways to help the Hong Kong business community recover.
“The General Committee got together and proposed various measures to the Government to shore up confidence,” Brandler said.
These included the introduction of deposit insurance, so people weren’t worried that their bank would go bust, as well as loans to SMEs on favourable terms. The Financial Secretary at the time, John Tsang, was willing to listen to the concerns of the business community, Brandler added.
“I do feel there was a good partnership between the Chamber and the Government, and that the Government would look to the Chamber to understand the business view.”
Hong Kong did not suffer as badly as many other economies during the Global Financial Crisis: it did not see banks going bust and its property market did not collapse - partly due to lessons learned after the Asian Financial Crisis in 1998.
Turning to today, as the world emerges from Covid-19, Brandler expects Hong Kong will recover. However, he noted that the current situation in the city is patchy: while some sectors are holding up well, those depending on tourism have suffered a much bigger impact.
“What we are missing is international travel. That’s going to take quite a while to recover.”
Looking to the future, the recovery in the Mainland and particularly the increased connections with Guangdong province will help to boost Hong Kong, Brandler said, although cross-border people flow still needs to be made easier.
“The Greater Bay Area is going to be massive. Its growth rate will be exponential,” he said. “The technology may be done in Shenzhen, but the window to the outside world is going to be Hong Kong.”