Hong Kong ends hotel quarantine, bowing to demands from bank CEO summit

Hong Kong is back to business.

Hong Kong authorities announced on Friday that they would drop the hotel quarantine for arrivals in the city on Monday, September 26. The change ends two and a half years of almost complete isolation from the rest of the world and paves the way for Hong Kong to host a banking summit in November whose guests had balked at any quarantine requirement.

“We need to maximize our connectivity with the rest of the world… [So] I want to minimize the inconvenience for people [coming to Hong Kong,]John Lee, chief executive of Hong Kong, said Friday at a press conference. “I am optimistic that the new measures will be welcomed by people coming to Hong Kong.

Hong Kong’s reopening took months, if not years, behind virtually every other economy in the world outside of mainland China and Taiwan. Hong Kong’s reopening isn’t over either. After entering the city, local residents and foreign visitors will be required to take four government-administered COVID-19 PCR tests within the first week after arrival and will be required to self-isolate if positive. Every person arriving in Hong Kong will also receive a QR code through a COVID health tracking app. For the first three days, the code will be amber in color and will prevent travelers from eating out. After three days, the QR code will turn blue and travelers will be able to move freely around the city.

Hong Kong has maintained some of the strictest COVID border requirements in the world. Earlier this year, the city mandated 21-day hotel stays and sent all positive cases and their close contacts to centralized quarantine centers for 14-day quarantine stays. The city has gradually relaxed mandatory quarantine periods from 21 to 14 to seven and then three days in recent months, but a dizzying bureaucratic maze of PCR tests, hotel reservations, cut-out flight bans and potential lockdowns in the event of a positive test closed the city to only residents and a small cohort of determined visitors.

In the first eight months of this year, Hong Kong Airport handled 1.7 million passengersdown 97% from the 50.6 million same period of 2019. Hong Kong’s isolation has devastated the city’s economy. The Hong Kong government recently said it expects the economy to contract for the third consecutive year due to its COVID measures, and the city is on track to report a record budget deficit of $100 billion this year.

The scrapped quarantine represents a victory for Hong Kong’s business community which has long advocated for the city to join most of the rest of the world in reopening, but business groups say the new rules still don’t go far enough . According to them, Hong Kong must drop all restrictions to regain its former glory as Asia’s global city.

What was Hong Kong’s quarantine policy?

Hong Kong may have been one of the best places in the world to experience the pandemic in 2020 and early 2021, with residents able to live mostly COVID-free even as waves of infections and lockdowns have ravaged the United States, Europe and much of the rest. of the world.

Hong Kong’s initial COVID success was largely due to strict travel measures and the city’s ability to trace cases when they arose. But once vaccines helped much of the rest of the world reopen in the middle of last year, Hong Kong’s business community grew frustrated that the city remained closed. Businesses and leaders have started to decamp for places like Singapore, but calls from the Hong Kong business community have gone unheeded in the government, which prioritized reopening of travel with mainland China to the rest of the world.

“We’re at the point where we feel like we’re talking to a wall,” Tara Joseph, former president of the American Chamber of Commerce in Hong Kong, said last October.

Hong Kong’s COVID wave

In early 2022, an outbreak of Omicron overwhelmed the city’s defenses. Combined with the city’s relatively low vaccination rate, the variant has caused one of the deadliest waves of COVID in the world. The outbreak has been a turning point for public health officials who have diverted their support from closed borders, says Ben Cowling, an epidemiologist at the University of Hong Kong and one of the city’s leading experts on the pandemic.

“[Omicron] was just spreading too fast and too quickly and too aggressively to be able to stop it…Travel measures weren’t helping anymore,” he says.

COVID cases and the death rate in Hong Kong have fallen since a spring peak. The city has reopened bars, restaurants and most places in town despite officially adhering to a COVID-zero policy that tolerates no infection.

The government, however, has always insisted on imposing a quarantine period on hotels in the face of growing frustrations from the city’s business community.

“COVID measures are by far the most important thing, if not the only thing [our members care about]says Frederik Gollub, President of the European Chamber of Commerce in Hong Kong.

Hong Kong Banking Summit

But Hong Kong’s position appeared to change in recent weeks due to the approach of an important financial meeting.

In early November, Hong Kong will host a two-day international banking summit which should be included some of the most powerful financial leaders in the world. James Gorman, CEO of Morgan Stanley, and Jane Fraser, CEO of Citigroup, were invited; Standard Chartered CEO Bill Winters and HSBC CEO Noel Quinn had confirmed their attendance. The summit will coincide with the popular Hong Kong Sevens international rugby tournament. But bankers told the Hong Kong government in early September they would be reluctant to go to the summit if hotel quarantines were required, according to the the wall street journal. The Hong Kong government has offered to grant exemptions to some executives, but guests refused due to fears that they might be criticized in public for receiving special treatment.

The Hong Kong government’s deliberations on the banking summit may have been a breaking point for the hotel quarantine policy, says Vera Yuen, a professor of economics at the University of Hong Kong’s Business School. “With the bankers’ summit, they want to signal to the world that Hong Kong is coming back,” she said. “They want to give investors confidence that we won’t back down anymore.”

Calls to end heavy COVID demands have also sounded from unexpected places. In August, the China Manufacturers Association and the Hong Kong General Chamber of Commerce, two groups closely aligned with the government, joined the chorus of foreign chambers advocating for the relaxation of COVID measures.

“We have seen more and more local associations and important voices in the community reach out to John Lee [over the COVID restrictions]“says Gollub.

Gollub says the Hong Kong government has been more responsive to calls from the business community since Lee took over from former chief executive Carrie Lam in early July. “He realized very early [in his tenure] that the government must act.

COVID restrictions hit the economy

Lee said on Friday that Hong Kong was able to reopen because he was now “confident” the city could handle a potential increase in cases. He also assured the public that the Hong Kong government would not backtrack on easing quarantine periods, as it has done in the past.

Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis, says it was not necessarily a single event or even the chorus of community and business voices that motivated the Hong Kong government to finally abandon quarantine requirements. According to her, the reason is simple: the economic costs of the rules have become too great. In the first half of this year, companies raised $2.7 billion in Hong Kong IPOs, down 92.5% from a year ago and the worst performance in the world. scholarship in the first semester since 2003.

“[Opening the border] does not address cases, pandemic control or vaccination rates. This is about the need for the Hong Kong offshore market at a time when Chinese companies will surely need to issue bonds and debt,” says Garcia-Herrero. “Liquidity is shrinking in the banking sector and Hong Kong needs inflows. Of course, a very easy way to do this is to open the border.

Hong Kong loses ground to Singapore

It also became clear that Hong Kong’s loss was Singapore’s gain. “The private bank prefers to book in Singapore because Singapore is open,” says Garcia-Herrero. On Friday, Singapore overtook Hong Kong in a ranking of global financial centers based on a new survey of thousands of finance professionals of the whole world. “No bank in the world, their senior executives elsewhere haven’t been to Hong Kong for almost three years, you know, that makes a difference,” she said.

Whatever Hong Kong’s motivation for abandoning the hotel quarantine, Hong Kong’s business community is not satisfied. It’s unclear how many travelers will want to visit a city where they must undergo near-constant testing and be at the mercy of an orange health code that prohibits them from dining out.

“I don’t think Code Orange has a public health rationale,” Cowling says. “It will certainly not have an impact on public health. It is high time for Hong Kong to relax all travel-related measures.”

“It’s a step in the right direction…[but for] Hong Kong to truly regain competitiveness vis-à-vis other cities in the world, the announcement is far from sufficient; Hong Kong should be fully connected to the world without hindrance,” says Dr. Eden Woon, President of the American Chamber of Commerce in Hong Kong.

Gollub is happy with Friday’s announcement but awaits a victory lap. “For Hong Kong to bounce back and fully recover, we don’t need any restrictions. We need to get back to normal.”

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