Hong Kong’s Economic State Since the Protests Began (June 2019 – Present)


Hong Kong’s annual economic growth rate for the second quarter of 2019 was revised to 0.5%, compared with a previous preliminary reading of 0.6%. That is the weakest rate of expansion since the contraction experienced in the third quarter of 2009 during the GFC. This downward trend is largely resultant due to ongoing trade tensions between China and the US, and growing social and political unrest within the country.

Political Background and How It All Started

Hong Kong has been a special administrative region of China since July 1997, when the British handed Hong Kong back to the mainland. As a special administrative region, Hong Kong maintains a distinctive ‘one country, two systems’ policy – with different governing, economic and legal systems to China. As guaranteed by China and stated under the agreement, for 50 years Hong Kong is allowed to exercise the stated degrees of self-autonomy.

In February 2019, the Hong Kong Government attempted to pass a bill through the legislature that would amend its current extradition laws. Under the amendments, Hong Kong would be allowed to provide case-by-case extraditions to additional countries, beyond the 20 states with which Hong Kong currently has agreements. This was of specific relevance to a Hong Kong man, who had murdered his girlfriend in Taiwan back in 2018. Under existing laws, he was unable to be sent back to Taiwan for trial, hence supplementing reasons for why the law needed to be amended.

However, the additional countries included in the new extradition bill also included China, which many in Hong Kong saw as dangerous considering the mainland’s lack of a common law and hence the potential for “Unfair trials “in their eyes. Hence, thousands of people marched in defiance of this extradition bill. Following Carrie Lam’s failure to address concerns from its citizens who were protesting and her desire to push through with the bill, major protests broke out in June.

In June 2019, more than 2 million Hong Kong citizens participated in the mass march. An increased media presence led to consistent weekly protests and marches in different areas of Hong Kong, particularly in busy financial hubs. These include Admiralty and Central, and populated tourism areas such as Tsim Sha Tsui and Mong Kok. Large protests saw increasing violence from both sides including vandalism of commercial shops, restaurants, local pharmacies by protesters. Many shop owners have been forced to close their stores during these marches, resulting in decreased revenue. Moreover, disruptions of public transport amenities, in particular MTR (train services), have imposed consistent delays and cancellations of train schedules and thus limited transportation arrangements for citizens, affecting the ability of workers going to work and their daily life routines.

Over the following months, violence increased from both sides and extensive rhetoric was used by media and Government. By the time Carrie Lam had chosen to withdraw the bill, the movement had already morphed from a protest about the extradition bill to one of accountability regarding police brutality and the autonomy promised to Hong Kong amid China’s growing influence. Hence protesters refused to stop once the bill was withdrawn but wanted 5 new demands to be met. These include, full withdrawal of the extradition bill, a commission of inquiry into alleged police brutality, retracting the classification of protesters as “rioters”, amnesty for arrested protesters and dual universal suffrage, meaning for both the Legislative Council and the Chief Executive.

Intense social unrest and segregation of political perspectives have aroused uncertainties regarding the future of Hong Kong. House prices in the second half of 2019 have dropped by 5% to 20% within a period of 3 months, an extremely unusual trend, in the most expensive housing city in the world. This can be explained due to the increase interest of homeowners wanting to redeem cash and immigrate to other countries aligning with their political views and interests. Furthermore, Hong Kong’s tourism businesses have shown decreases in popularity and income due to reduced safety and transport uncertainties. Tourists from all over the world, particularly from mainland China now have decreased demand to travel to Hong Kong. This has resulted in increased unemployment within these industries and has contributed to an overall decrease in economic growth across the country.

Consumer Spending

  • Spending on non-essential goods have decreased. Retail sales declined by a record 23% from last August, year on year, additionally holding an 11.5% slump the month before.
  • In Hong Kong’s Wan Chai district, which has been at the centre of mass marches since June, small businesses say they have seen a drop of 30% to 40% in sales on protest weekends.
  • People who are partaking in the protests could be affecting which businesses are currently able to operate and how many people are shopping. A survey showed that while about 60% of protesters were under 30, almost one-fifth were 45 or older. Many shopkeepers, motorists and others have supported the protesters with handouts of water and even offers of financial assistance. For example, on August 18th, protest organisers estimated that 1.7 million people turned out in the pouring rain to demonstrate. This would represent almost one-quarter of Hong Kong’s population. This would invariably affect business sales for that day based on which shops are open, who is going to shop and the mood of the businesses.


  • Airport Aviation experts estimate that Hong Kong suffered a US$76 million hit from flight cancellations during the Hong Kong International Airport shutdown. The airport contributes to around 5% of Hong Kong’s GDP.


  • The turmoil is drawing away tourists and business travellers. Travel advisories in 22 countries including the U.S. and Australia, have issued travel warnings for the city and a TripAdvisor travel forum called ‘Is HK safe to travel?’ has drawn almost 600 responses.
  • 4% of Hong Kong’s GDP comes from tourism and 75% of tourists from the mainland have stopped going due to the way the protests are portrayed in the mainland.  This has additionally occurred during a time of continuous depreciation of the yuan against the Hong Kong dollar reducing incentives for Chinese to come to Hong Kong.
  • Businesses such as the Hong Kong Food Crawlers business which takes tourists on food tours around the city claim to have experienced a 50% drop in private bookings since July.

International Finance Hub

  • Hong Kong holds status as a financial hub for international companies seeking to do business in China or the region. In 2018 1,530 multinational companies had established regional headquarters in the city, with 290 of these companies being American. Companies have historically chosen to set up shop in Hong Kong because of its desirable location and its perception as a tax-free haven where the rule of law is strong, particularly compared with China. If China seeks to resolve the protests by taking more control over Hong Kong and taking an aggressive or militarised stance this will likely erode Hong Kong’s current attractive legal environment. Companies leaving Hong Kong could create unemployment for the employees currently working in these companies and many expatriates could also move out of Hong Kong.

Financial News

  • Hong Kong’s initial public offering (IPO) market has been hit badly by the ongoing unrest in the city, plummeting nearly 43% in proceeds year to date. However, it has been able to raise $18.5 billion in proceeds so far this year.
  • Upcoming IPOs and talk of U.S. investment curbs on China could revive Hong Kong’s listings.
  • Hong Kong’s Hang Seng index has fallen since the protests began in June.
  • Chinese giant Alibaba postponed its up to $15 billion listing.
  • Saudi Arabia’s state oil giant Saudi Aramco reportedly switched preference from Hong Kong or London to Tokyo as the international destination to list its shares.
  • Logistics firm ESR Cayman’s up to $1.45 billion IPO, was pulled in June, but relaunched recently and is set to begin trading Nov. 1. That could be Hong Kong’s second-largest listing this year, after the Budweiser IPO.
  • Chinese sportswear retailer Topsports International also launched its IPO in October, raising $1.01 billion as it began trading on the Hong Kong stock exchange. That contributed to an uptick in Hong Kong IPOs for the month, during which 11 deals raised $1.4 billion, as compared with just six new listings in September.
  • Other upcoming listings in Hong Kong include financial institution Home Credit’s up to $1.5 billion IPO and Bank of Guizhou’s up to $1 billion listing.
  • As many as 40 companies have filed IPO applications with the Hong Kong stock exchange in September, the highest pace of filing since March this year.

World Outlook

  • Hong Kong demonstrations will affect China’s relations and perceptions with the rest of the world. U.S. President Donald Trump has warned China that it must deal with the protests “humanely” if it wants to seal an agreement to end the trade war.
  • Many Pro-Democratic countries warn China to avoid another Tiananmen Square and to negotiate peacefully.
  • The authorities in Beijing, which see the protests as a direct challenge to its authority, are rethinking its relations with its increasingly troublesome special administrative region. The Chinese troops massed across the border in Shenzhen suggest a day of reckoning awaits.


  • Arguments between pro-democracy and pro-China supporters within Hong Kong may make it a more divisive and tensioned place, affecting desire to work there or travel there.
  • Hong Kong’s richest man, Li Ka-Shing and many of its big banks posted full-page adverts in local newspapers pleading with protesters to stop the rallies and marches. There is currently a war of control within the media industry to gain people’s favour and support.