Will "Occupy Central" Trigger Recession In Hong Kong?

Protesters resting near Hong Kong's Central Government Office on Oct. 7.
Protesters resting near Hong Kong's Central Government Office on Oct. 7.
Yang Gang

BEIJING — While the clouds of the student protests are still casting a shadow over Hong Kong, the impact of the "Occupy Central" movement on the city's middle- and long-term prospects is particularly concerning.

A forecast from the University of Hong Kong predicts a sharp drop in growth from the 3.4% predicted earlier to 2.2% for the city's GDP this year, specifically citing economic uncertainty in Europe and mainland China as well as the turbulence caused by the democracy protests. The International Monetary Fund has also lowered forecasts for Hong Kong's economic growth for the year from 3.7% in April to 3%.

The big question seems to be whether the Occupy Central movement will trigger Hong Kong's next round of economic recession. Numerous Hong Kong economists say this major political event may bring short-term fluctuation to the island's economy — similar to what happened during the 2003 SARS viral respiratory disease outbreak.

Wang Jiafu, principal lecturer at the University of Hong Kong, says that comparing the impact of the student demonstrations to what happened during the flu-like epidemic is reasonable because both were unexpected events. And then, as now, the SARS outbreak led to a decline in both local consumption and services such as tourism.

Tear gas fired on protesters on Sept. 28 — Photo: voafanti

The university's report predicts that a decline in tourism coupled with weak local consumer demand will lead retail sales to fall by 2% this quarter and 1.2% annually compared with last year.

Lu Mingli, economist at DBS Bank, agrees that the political campaign will inevitably have a negative effect on local and tourist demand in the short term. But he predicts the scale won't reach SARS proportions.

What will create the greatest economic impact is less demand for the city’s Individual Visit Scheme, which allows mainland travelers to visit Hong Kong on an individual basis without holding a business visa or joining a tour group. As Xinhua News reports, tour groups from the mainland decreased by about 200 a day during China's recent national holiday. The hotel occupancy rate around Occupy Central area fell to between 50% and 60% while it was typically around 80% to 85% in previous years.

The economists seem to believe that this political situation will not create structural financial risks or affect investor confidence. Hong Kong Financial Secretary John Tsang notes that the stock and foreign exchange market operations have been operating normally, and that any systemic impact on the local economy would already have been registered.

Still Tsang does note that if the political dispute continues any longer it could have a certain influence on market confidence. Since the student movement started, the Hang Seng Index fell at most by 2.3%, but it has since stabilized at its original level.

Wang Jiafu says that Hong Kong remains an attractive place for investors, thanks to advantages such as the rule of law, a huge neighboring mainland market and the upcoming China-Hong Kong stock market opening.

In response to those who hold a pessimistic view of the former British colony's status as an international financial center, Wang says that mainland China"s opening-up does bring a certain competition to Hong Kong. But this is not a "zero-sum game" because Hong Kong also contributes to this process, creating a mutually beneficial situation. The key lies in how Hong Kong grasps the opportunity of China's opening.

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A Mother In Spain Denied Child Custody Because She Lives In Rural Area

A court in Spain usurps custody of the one-year-old boy living with his mother in the "deep" part of the Galicia region, forced to instead live with his father in the southern city of Marbella, which the judge says is "cosmopolitan" with good schools and medical care. Women's rights groups have taken up the mother's case.

A child in Galician countryside

Laure Gautherin

A Spanish court has ordered the withdrawal of a mother's custody of her one-year-old boy because she is living in the countryside in northwestern Spain, where the judge says the child won't have "opportunities for the proper development of his personality."

The case, reported Monday in La Voz de Galicia, has sparked outrage from a women's rights association but has also set off reactions from politicians of different stripes across the province of Galicia, defending the values of rural life.

Judge María Belén Ureña Carazo, of the family court of Marbella, a city on the southern coast of 141,000 people, has ordered the toddler to stay with father who lives in the city rather than with his mother because she was living in "deep Galicia" where the child would lack opportunities to "grow up in a happy environment."

Front page of La Voz de Galicia - October 25, 2021

Front page of La Voz de Galicia - Monday 25 October, 2021

La Voz de Galicia

Better in a "cosmopolitan" city?

The judge said Marbella, where the father lives, was a "cosmopolitan city" with "a good hospital" as well as "all kinds of schools" and thus provided a better environment for the child to thrive.

The mother has submitted a formal complaint to the General Council of the Judiciary that the family court magistrate had acted with "absolute contempt," her lawyer told La Voz de Galicia.

The mother quickly accumulated support from local politicians and civic organizations. The Clara Campoamor association described the judge's arguments as offensive, intolerable and typical of "an ignorant person who has not traveled much."

The Xunta de Galicia, the regional government, has addressed the case, saying that any place in Galicia meets the conditions to educate a minor. The Socialist party politician Pablo Arangüena tweeted that "it would not hurt part of the judiciary to spend a summer in Galicia."

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