Author: Vera Yuen, HKU
Hong Kong has seen a series of unexpected political developments since 2019. The government proposed a new extradition law that would have allowed Hong Kong residents to be extradited to mainland China, which sparked months of protests and social unrest.
In mid-2020, the Chinese government passed a new national security law in Hong Kong and arrested a number of opposition candidates and activists. Soon after, the Hong Kong government postponed the Legislative Council elections for a year and, in 2021, changed the electoral rules to further limit the influence of the opposition.
Political conflicts, among other factors such as cramped living spaces, have prompted Hong Kong residents to consider migration. According to a Chinese University of Hong Kong survey conducted in September 2020, 44% of those polled said they would emigrate if given the chance. Of these respondents, 35 percent had taken action to prepare for the move. These percentages represent significant increases compared to the previous year. Among those inclined to emigrate, the three most popular prime destinations are the United Kingdom (23.7%), Australia (11.6%) and Taiwan (10.7%).
A number of countries have relaxed their visa restrictions for Hong Kong residents. In early 2021, the UK offered residents of the former colony who hold British Overseas Nationality (BNO) and their immediate families the opportunity to apply for two five-year periods to live and work in the UK. United. After five years, these residents can apply to move to the UK and after another 12 months, they can apply for citizenship. BNO citizenship is a type of British citizenship that was created in 1985 for residents of Hong Kong who sought to maintain a connection with the United Kingdom after the 1997 handover to China.
As part of this new route, the UK government estimates that 5.4 million Hong Kong residents, or 72% of Hong Kong’s estimated residential population, will be eligible to settle in the UK. The UK government predicts that the new visa could attract more than 300,000 people, of whom around 140,000 will arrive in the first year. In the first three months of 2021, the UK received 34,000 applications.
Canada has also opened up a new avenue for immigration. Under its visa rules, any Hong Kong resident who has graduated from a Canadian university or holds an equivalent foreign degree obtained within the past five years can apply to work in Canada for a period of up to three years. Since its launch in February 2021, 6,000 candidates have applied for this initiative.
A bottom-of-the-envelope calculation using UK government forecasts and destination preferences (which indicate that a quarter of potential migrants would choose to settle in the UK) suggests that total emigration from Hong Kong could reach 1.2 million people, or 16 percent. percent of the population. Although the estimate is subject to great uncertainties, emigration on such a large scale would have huge implications for the Hong Kong economy.
The exodus would reduce the supply of labor in the city and the domestic demand for goods and services. When people migrate, they can also leave with their wealth. Bank of America predicts capital outflows will reach up to HK $ 280 billion ($ 36 billion) this year. With a deposit base of around HK $ 15 trillion (US $ 1.9 trillion), outflows appear manageable. There is also no evidence that emigration drives down property prices. As long as the city does not impose capital controls, residents of abroad can manage their wealth remotely.
The demographic effect depends heavily on the part of the population that moves. Although systematic data is not available, some evidence suggests that families with young children are more likely to go out. More than 19,000 primary and secondary school students, or 3% of the total student population, dropped out in 2020-2021, double the previous year. Students and parents have expressed concerns about the latest education reform, which includes the promotion of national security and an overhaul of liberal studies in schools. It is likely that these students would migrate with their parents, who are mid-career and tend to be well educated.
Another group of people who are more inclined to find opportunities elsewhere are young people at the start of their careers. A recent survey suggests that a quarter of college graduates under the age of 35 were planning to leave the city. The departure of these educated individuals and families would mean a loss of valuable human resources, which are vital to Hong Kong’s knowledge-based, service-based economy.
Even if some leave, others will arrive. The Hong Kong government maintains that the National Security Law restores political stability and long-term prosperity to the city. A number of international banks have announced plans to expand their operations and increase hiring in Hong Kong. It looks like Hong Kong will remain a key financial hub and continue to attract financial professionals from around the world.
In a recent question-and-answer session at Legislative Council, Chief Executive Officer Carrie Lam said the demographics were not a major cause for concern. Hong Kong is moving towards greater integration within the Greater Bay Area, an area that includes nine municipalities in Guangdong Province and Macao, with a total population of over 72 million. Attracting young talent from the mainland can be an effective solution to Hong Kong’s population problems.
Vera Yuen is a lecturer at the Faculty of Business and Economics at the University of Hong Kong.