As Hong Kong pro-democracy protests against the Extradition Bill entered its 11th week, businesses that are most crucial for the economy of China have warned it of dire consequences if the marches continue.
Top companies have raised alarms that the protests, which are often turning violent, are affecting the future earnings. Not only China, but the economy of Asia as a whole is at risks due to the massive standoff. Trade to and fro this Asian hub has been jeopardized due to the violence and protests.
Chief Executive of Hong Kong Carrie Lam Cheng Yuet-ngor compared the effect of protests on the economy to that of a “tsunami”. She has also termed it “worse” than the effect of the SARS epidemic of 2003 and global financial crisis in 2008.
As per a CNBC report, analyst David Roche said China’s response to the unrest going on in the region will be “linked to what happens to trade talks and international relations globally”, adding, that the politics go hand in hand with the Chinese economy.
The protests which started over an extradition bill, which if enacted would allow local authorities to detain and extradite people who are wanted in territories that Hong Kong does not have extradition agreements with, including mainland China and Taiwan, have now spilled over issues such as freedom and democracy.
According to official reports, the government of Hong Kong has announced that it has lowered its 2019 GDP growth forecast to 0% to 1%, from the original range of 2% to 3%. Various sectors such as tourism, airline, retail and real estate among others have been adversely affected with their sales and earnings declining.
As per a financial newspaper Nikkei report, “Cathay Pacific Airways CEO Rupert Hogg speaking to the media on Wednesday said that inbound bookings to Hong Kong were down on the year owing in part to the recent protests”. If such circumstance continue, ticket prices had to slashed down which would in return affect the revenue.
The hotel sector had already been suffering pertaining to the US-China Trade war that these protests added the cherry on top as 22 countries have issued travel advisories for Hong Kong. Nikkei further reported that MTR, which is the city’s railways and shopping malls operator, is facing the “biggest challenge” in providing safe and reliable services in its 40-year history. The report quoted MTR CEO Jacob Kam Chak-pui saying that the standstill has affected people’s “desire to go out, or to consume,” which has impacted the overall economy and he is sure that there will be an impact on the sector too.