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Hong Kong's population contracted by 50k residents in 2020, biggest shrink since WW2. Lam govt believes mainland arrivals will offset aging and emigration, and is pushing youth to seek work in China. But will mainlanders still come?
https://www.breakingviews.com/considered-view/hong-kongs-fate-hangs-on-demographic-fallacy/?bved=MjQ%3D&bvshr=MjA1NDcx e
https://www.breakingviews.com/considered-view/hong-kongs-fate-hangs-on-demographic-fallacy/?bved=MjQ%3D&bvshr=MjA1NDcx e
Answer: Probably not. For starters, Lam herself, abetted by state media, makes a fairly solid case for moving to the Greater Bay Area instead of Hong Kong. If the GBA is great, and HK isn't generating jobs for its youth, why exactly would mainlanders choose HK? [2/x]
It's true that many current mainlanders living in HK were reassured by the crackdown on a democracy movement they saw as targeting them personally. That isn't the same as restoring Chinese faith in the city's future competitiveness vis a vis Shanghai, Shenzhen, or New York. 3/x
Hong Kong's population projections depend heavily on steady immigration, much of it from the north, compensating for deaths exceeding births at an accelerating clip starting in 2023. So if mainlanders don't come, it's a problem. 4/x
2020 was a bad year, and with borders more-or-less closed, it's unsurprising that mainland arrivals tanked and deaths exceeded births, resulting in a net outflow of 50k. Even so, the only other contractions on record are a small one in 2002 (SARS), and a big one 1941. 5/x
If net inflows regain their average projected rate of around 40k new residents per year, the population will peak at around 8.1m in 2041. But immigration from the north started falling in 2016. More emigration plus less immigration would move the peak forward significantly. 6/x
Remember that Beijing's extraterritorial tax law is now being applied in HK, so there's no tax incentive for mainlanders to move. Also remember that while the financial sector will continue to hire more mainlanders, it employs only 7% of Hong Kong's workforce. 7/x
Also: a lot of the mainlanders who moved to HK did so because they LIKED its freedoms, its distance, its exception to mainland norms. Politically liberal mainlanders, unexcited by HK's direction of travel, are more likely to stay home, or move to NY or Amsterdam than HK, no? 8/x
Beijing might force SOEs et al to teleport their workforces to HK, altho they need to fill Xiongan first. The emigration surge may fade. But the HK govt assumption that it can stall demographic crisis by swapping dissidents for docile northerners is a fantasy IMHO. [end]
