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Weapons of Mass Destruction (WMD)

Can Hong Kong Stem the Outflow of Residents?

By Cindy Sui November 27, 2022

Hong Kong has eased most of its stiff COVID19-related restrictions and begun promoting the territory's reopening to the world, but relocation professionals do not expect an early end to the largest emigration wave the city has seen since its handover to China in 1997.

"In pre-COVID times, we usually would have a 50/50 mix of outbound/inbound activity. In 2021 and 2022, we've had a 75/25 mix of outbound/inbound. This ratio mirrors our sister company in Hong Kong [Asian Tigers Group]," said Kay Kutt, CEO of Silk Relo, a local relocation services company with over 40 years of experience in Hong Kong.

"Our team doesn't foresee the volume of relocations diminishing as we head into 2023," Kutt said.

In September, the government ended hotel quarantine, significantly loosening some of the world's toughest COVID-19 restrictions, and this month it hosted more than 200 global financial leaders in a summit to win back confidence in Asia's top financial center.

But Kutt said what continues to drive the exodus is uncertainty. Parents with small children complain that preschools still shut down unexpectedly when there are COVID-19 cases, and mask-wearing remains a requirement even outdoors. Some people who had decided to move a while ago are also now getting their visas and preparing to leave, she added.

Andrew Collier, a Hong Kong-based economist and managing director of Orient Capital Research, agrees the trend is not yet easing.

"Yes, I think it will continue because the security risks are increasing, not decreasing," said Collier.

He cited concerns about the National Security Law (NSL), which Beijing imposed on Hong Kong in 2020, in response to widespread, disruptive and sometimes violent protests in 2019 against a proposed bill to extradite economic criminals to mainland China. The law punishes people convicted of secession, subversion, terrorism, and colluding with foreign forces, with a maximum penalty of life imprisonment.

The broadly worded nature of the law worries even those not involved in the protests, said Collier. One of the offenses listed — colluding with foreign forces — is "the most worrisome," because it can be indiscriminately applied and could impact foreign companies, he said.

"There are corporations that are hollowing out their operations in Hong Kong. They are shifting people to other locations, mainly for security reasons. They don't feel comfortable having their staff do their work here," Collier said.

A consul general of a European country has told him that his consulate has lost 50% of its staff because of concerns about the NSL.

"The only upside is if business in Hong Kong really, really flourishes — for instance, we're going to have Alibaba's dual listing that could raise $16 billion," Collier said. "People may throw their caution out the window and come back here."

While recently released government data pointed to a net outflow of 113,200 residents from mid-2021 to mid-2022, departures in the past three and a half years have actually been much greater, at 248,600 or 226,300, according to the Census and Statistics Department, depending on whether midyear or year-end data is used. The actual number of departed residents is even higher, given the government figures are net outflow; the government doesn't provide gross figures.

Retiree Sunny Chan and his wife are among those planning to uproot themselves from the only place they've ever called home, and emigrate to Australia, where their daughter, son-in-law and grandsons live.

"Hong Kong has changed. ... It's no longer the Hong Kong I know," said Chan, referring to the freedoms that Hong Kongers had, which he feels have been eroded. "Hong Kong used to be a very free place. As long as you didn't bother others, you could say whatever you want. ... Now, I no longer feel safe. I have to watch what I write on social media and what I say to my friends."

Without factoring in mainland Chinese citizens who've moved to Hong Kong to reunite with family, the territory has seen more people leaving than coming almost every year since 1997. The recent spate of departures, however, has been greater than previous periods of significant outflow, such as during the 2002-04 SARS outbreak or the 2007-09 global financial crisis.

To be sure, Hong Kong lost only about 3% of its 7.48 million people — it's population in 2018 — before COVID-19 and adoption of the NSL, according to calculations based on the Census and Statistics Department data. Many people do not feel they are in danger of being arrested and view the NSL as primarily targeting anti-government activists or those who were heavily involved in the protests.

One of the people who share such views, Tracy Chan, 22, was born on the mainland to a Hong Kong parent. She has lived here since she was 3 years old.

"I don't think people need to be worried. ... I don't feel any change since the [NSL] was passed. It's not like we won't say as much as before or won't say the things we used to say just because the law has been passed," she said. "But of course, we shouldn't say bad things about our country; after all Hong Kong is a part of China."

She doesn't plan to leave.

"My roots are in Hong Kong," she said. "It's much more open here than in the mainland."

While some observers, such as Collier, attribute the declining population to a wave of emigration fueled by fears about the NSL or increasingly draconian governance, the government attributes this year's 1.6% population drop — the biggest since 1961 when record-keeping began — to a low birthrate, border restrictions interrupting the inflow of foreign workers and mainland Chinese people, and Hong Kongers opting to ride out COVID-19 overseas, according to a government press release.

Others also attribute the increased emigration to the U.K. government making it easier, after Beijin imposed the NSL, for Hong Kong British (National) Overseas passport holders to settle in Britain and eventually gain citizenship.

Meanwhile, the number of mainland Chinese spouses and children of Hong Kongers arriving under China's so-called One-Way Permit — a Chinese government document allowing mainland residents to settle permanently in Hong Kong or Macau, primarily for the purpose of reuniting with family — is expected to return to normal after being interrupted by COVID-19. More than 1 million such immigrants have arrived in Hong Kong via the special permit since 1997.

Many mainland students are also choosing to study here because of China's tough "zero-COVID" policy, Hong Kong's highly ranked universities, and the relatively low college tuition rates.

As more mainlanders arrive and Hong Kongers leave, the character of the city is slowly changing. Mandarin is commonly heard on the streets alongside the predominant Cantonese dialect. More mainlanders work in the service sector and open restaurants serving cuisine from other parts of China.

"They think Hong Kong is better than the mainland. At the same time, I compare overseas countries to Hong Kong and think it's better overseas," Sunny Chan said. "We are all seeking a better life."



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