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Hong Kong: Riots, violence and its port in decline

PortandTerminal.com, July 28, 2019

Hong Kong’s past success has made it blind to how much and how fast others are improving and leaving it behind, especially in mainland China. Now hundreds of thousands of Hong Kong’s citizens are demanding more autonomy from China and things are turning violent.

HONG KONG – Like many export-reliant Asian economies, Hong Kong has been hit hard by the year-long U.S.-China trade war and grew at its slowest pace in nearly 10 years in the first quarter of this year.

Now it appears that the recent rioting and violence in the city are only making its economic situation more precarious and Hong Kong’s future less certain.

“To foreign businesses and tourists, Hong Kong now appears unstable, which has affected their interest in coming to Hong Kong for leisure, business and investments.”

Paul Chan, Financial Secretary, Hong Kong

One of Hong Kong’s many luxury hotels, The Peninsula, with its famous fleet of Rolls Royces

Hotel occupancy rates fell as much as 20% in June from a year earlier, and are expected to drop 40% in July. Retailers have warned that July and August sales could drop by double-digits from a year earlier as tourists put off their visits.

Hong Kong has been in a gradual but steady decline over the past decade or so. The recent violence in the city is only going to make things worse.

Paul Chan, Financial Secretary, Hong Kong

“To foreign businesses and tourists, Hong Kong now appears unstable, which has affected their interest in coming to Hong Kong for leisure, business and investments,” said Pual Chan, Hong Kong’s Financial Secretary.

Recent violence

White-clad men wielding sticks, many believed to be organized gang members, assaulted peaceful protesters and commuters on Sunday (Jul 21)

Rioting and violence in Hong Kong continued this weekend. This Saturday’s demonstrations mark the eighth consecutive weekend of major protests in the city, during which hundreds of thousands of people have taken to the streets.

An estimated 430,000 people took to the streets to protest last weekend (July 21) in Hong Kong

Initially, protesters were demanding the withdrawal of a now-shelved extradition bill. Critics feared that the bill would undermine the independence of Hong Kong’s legal system and put Hong Kong citizens and foreign nationals at risk by allowing suspects to be sent to mainland China for trial.

Photo: Carrie Lam, Chief Executive of Hong Kong

Now though the demonstrations have evolved to include more destabilising calls for greater democracy, an independent investigation into alleged police brutality, and the resignation of the Hong Kong’s unpopular city leader, Carrie Lam.

As the summer of unrest has heated up, violence from protesters and police has become a more common sight, with tear gas, rubber bullets and pepper spray used on July 21 after protesters threw bricks and pushed into police lines.

Last week in an alarming escalation, police raided a warehouse in an industrial area of the city, seizing a large cache of high-powered explosives, petrol bombs and other weapons. Three men, in their twenties with alleged links to a pro-independence group, were arrested in connection with the seizure.

The Port of Hong Kong

Hong Kong owes its existence to its port — the sheltered, deep water “fragrant harbour” that fostered the city’s breakneck growth for more than a century as the gateway for goods into and out of China. The Port’s fortunes though have been waning long before the violence of the past weeks.

The entrance to the port of Hong Kong, ca. 1880. Photo Lai Afong.

Leadership position lost

Hong Kong used to be the world’s largest container port. It lost that mantle in 2005 to Singapore. Today, Hong Kong is still the 7th busiest container port in the world but is under pressure.

In recent years, the Port of Hong Kong has faced increasing competition and a changing business environment that has continued to undermine its competitive position as one of the world’s leading container shipping hubs.

With no doubts, the port business in Hong Kong has been partially taken over by Chinese competitors

Kelvin Wong Tin-yau, Deputy Managing Director , Cosco Shipping Ports

The shipping line alliance reshuffle in 2017 cost Hong Kong dearly with the loss of five calls on northern European and Mediterranean loops, while key competitor Singapore gained seven more weekly calls.

In 2018 Hong Kong had total container volume of 19.60 million TEUs. That’s 15% less than they had in 2008, their busiest year.

Meanwhile, other mainland China ports have raced ahead of them to occupy the top spots. The world’s largest port, Shanghai, had container volume of 42.01 million TEUs in 2018. That’s more than double that of Hong Kong’s size today.


Credit: Visual Capitalist

Hong Kong as business enclave has been eclipsed and outdone by the mainland. At the same time, its future increasingly depends on mainland China.

Since 1993, Hong Kong dropped from representing 25% to just 3% of China’s GDP today.

For China today Hong Kong is just another Chinese city, meaning it is dispensable. Shenzhen and the rest of the mainland do not need a problematic Hong Kong for China’s continued rise.

Perhaps the worst punishment for Hong Kong’s would be getting exactly what the protesters want – isolation. That will leave it further behind as the mainland prospers, continuing its surge ahead.

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