The People’s Bank of China (PBoC) and major financial regulators in the nation are planning to open up the country’s Southern region to the “Greater Bay Area” that include Hong Kong and Macau. The Chinese government is attempting to tame Hong Kong as it faces financial strain from the economic consequences of the coronavirus pandemic.
China’s plan to allow cross-border remittances and investments between Hong Kong, Macau, and the rest of the Greater Bay Area reaffirms the government’s willingness to proceed with its well-known constitutional principle called “one country, two systems .”
For Hong Kong, the financial support from mainland China to the Greater Bay Area could aid the nation’s economic recovery from the coronavirus pandemic. But, it will come at a cost of increasing authority of China over the region.
Hong Kong was already struggling economically due to the frequent protests in highly populated cities.
By September 2019, the average cost of flights from Hong Kong to other countries like Vancouver and Paris were sold at under $500 . Some return flights to Los Angeles were on sale for as low as $153.
When the coronavirus pandemic spread across the U.S. and Europe, Hong Kong’s tourism industry took a more severe hit. Hong Kong’s immigration recorded less than 100 visitors a day in April.
The region can benefit from strong financial backing from mainland China in the short-term. But, the persistent issue is worsening unrest in the area.
On May 15, The Independent Police Complaints Council (IPCC)’s described police brutality claims in Hong Kong as a “weapon of political protest.”
The report read :
It cannot be over-emphasised that allegations of police brutality must not be made a weapon of political protest. That is a legal and not a political matter.
At a time where the public’s outrage over the handling of protests by the police is reaching its peak, efforts of China to increase its influence over Hong Kong may result in heightened tension.
In December 2019, Chinese President Xi Jinping praised Macau for its stability as the protests in Hong Kong showed no signs of slowing down.
The public comparison between the two regions was ostensibly made to point out that Macau’s strong relationship with mainland China proved beneficial for the city.
But, the difference Macau and Hong Kong is that while the former primarily relies on its gambling industry with its main clientele being mainland Chinese customers, Hong Kong’s economy is more dynamic.
Macau has more to gain from maintaining a tight relationship with China, as opposed to Hong Kong.
The intensity of protests has slightly dropped following the coronavirus pandemic, as the focus shifted to preventing from the virus from spreading.
Record high unemployment rate and the closure of thousands of offline stores are leading the economic slow down of Hong Kong.
When Hong Kong reopens along with the rest of the world, its financial and travel industries are expected to recover.
The government is prioritizing business travelers and opening up the economy as soon as possible to counter the economic consequences of the pandemic.