Hong Kong Tries to End Covid Without Resorting to Lockdown

(Bloomberg) -- It’s becoming clear Hong Kong will do everything short of a citywide lockdown as the financial hub battles to control a rapidly escalating omicron outbreak.

Instead of such a drastic and costly step, mass testing and isolating positive cases will be the priority, using mainland support. Parts of the city may be sealed off when cases flare until residents have tested negative, according to officials and advisers. The size may range from single buildings to larger areas, while the length of these mini-lockdowns would vary. Off the table, according to the government, is a scenario where residents are forced to mostly stay in their homes for weeks on end, as seen in cities from Xi’an to Melbourne.

President Xi Jinping urged the Hong Kong government to “stabilise and control the coronavirus situation as soon as possible,” local pro-Beijing media reported on Wednesday. The city must take “all necessary measures” to contain the outbreak, which is a “mission that overrides everything,” Xi said, according to Wen Wei Po.

A wider lockdown would cause immense damage to Hong Kong’s economy, businesses and livelihoods, according to analysts, business leaders and politicians interviewed for this story. Even just implementing such a measure on the 7.4 million inhabitants would be virtually impossible due to a lack of manpower, and would inflame tensions less than three years after pro-democracy protests divided the city. Hong Kong’s leader Carrie Lam on Tuesday said the government has “no plans whatsoever to impose a complete, wholesale lockdown.” 

“When the word lockdown is used, people assume it’s going to be China-style but Hong Kong can’t do what China has done -- it’s physically not possible, ” said Bernard Chan, a financier and convener of Lam’s advisory Executive Council. “We have a lot of opinion leaders saying we should follow a lockdown. All these unnecessary comments made by various people are confusing, and when people get confused, you create unnecessary panic.”

Pressure is rising on the government to contain the outbreak, the city’s worst since the pandemic began. Cases are mushrooming as omicron blows holes in the city’s anti-Covid measures. Daily infections topped 2,000 on Monday for the first time, with another 1,619 reported Tuesday. The health-care system is overloaded, with thousands awaiting hospitalization, isolation facilities are full and deaths are starting to climb.

Hong Kong is among the last places on earth refusing to live with Covid, even as omicron makes that strategy increasingly difficult and costly. Despite the explosion in cases, Beijing has made it clear Hong Kong has no choice but to stick to the Covid-Zero policy that’s seen the city isolate itself from the world for much of the past two years. Air travel is virtually non-existent in the once bustling travel hub, with inbound flights banned from countries including the U.S. and the U.K., while the border with mainland China is closed.

Officials are rolling out tougher measures. Gatherings of more than two people in public are banned, while a maximum of two households can mix in private. Schools are shut, restaurants can’t offer dine-in services after 6 p.m., while soon only people who can prove they have been vaccinated will be allowed into venues ranging from shopping malls to churches and hair salons. 

As cases spread, the government is adopting a mass testing approach partly based on sewage samples. Last month, officials locked down blocks of a public housing estate for a number of days, confining thousands to their apartments while they were tested. Earlier this month, the 20,000-strong community of Discovery Bay — home to many expat financial-industry professionals — was issued with mandatory testing orders.

Pursuing such a strategy makes more sense than locking down the city, according to Ronny Tong, a lawyer and member of the Executive Council.

“A total lockdown of the entire Hong Kong territory would not be feasible and would do great harm to our status as an international financial center,” Tong said. “But would there be a district lockdown, where there is an explosion of cases, or a particular area or block of buildings? That is likely.”

Going further in Hong Kong could lead to a humanitarian crisis: the city would quickly run out of food, health-care resources and manpower, said Pamela Mak, president of Hong Kong Small and Medium Enterprises Association. The poorest residents live in tiny spaces with shared kitchens and refrigerators that are too small to stock up on supplies. 

The economic pain would be severe. Businesses in the services industry would go under, unemployment would spike and the economy would likely enter another recession, said Lloyd Chan, an economist at Oxford Economics Ltd. Enforcing a large-scale confinement would also be logistically difficult: Hong Kong has only about 33,000 police officers and 4,730 civilian officers. Deploying the People’s Liberation Army would be risky for Beijing just as President Xi Jinping prepares to seek a third term.

The economy is already under strain. Fitch Ratings last week cut its 2022 growth forecast for the city, saying the delayed pandemic recovery makes Hong Kong among the weakest of the 120 economies it tracks. 

Even if Hong Kong limits lockdowns to neighborhoods, the city needs to increase its supply of quarantine venues and use real-time tracking for citizens, said Michael Tien, a lawmaker and a Hong Kong deputy to China’s National People’s Congress.

“Hong Kong can decide to lock down the city, but the economy will be over and it may not even achieve Covid Zero,” said Tien. “It’s slightly better if it locks down districts, but then you need enough isolation facilities and a tracking system. Do you have that?”

The government is planning to convert 44 hotels used to quarantine arrivals into isolation centers, Sing Tao reported Tuesday, citing unidentified people. The city has also reached out to the mainland for help with testing, with Chief Secretary John Lee leading a delegation to neighboring Shenzhen on the weekend. 

Adding real-time tracking to the city’s contact-tracing app is an additional measure Hong Kong can take. Yet this would be a sensitive issue in a city where pro-democracy protesters wore masks, destroyed CCTV cameras, tore down so-called smart lampposts and used umbrellas to evade detection by authorities.

“We should have a tracing and tracking system on our device,” said Jeffrey Lam, a lawmaker and Executive Council member. “This is something that we ought to improve as soon as possible. Omicron is spreading so fast.”

The risk is Hong Kong’s tough measures at a time when countries from the U.S. to Australia are winding down pandemic restrictions means the city increasingly fades as a global and regional hub. Pernod Ricard SA has asked top executives from its Hong Kong office to temporarily relocate outside the city, the Financial Times reported on Tuesday. That comes after the Mandarin Oriental hotel group asked senior executives to leave the city for now because of virus curbs, according to the FT.

The city’s lack of a clear endgame also troubles some residents, who worry that even if Hong Kong succeeds in bringing cases down, this may only mean tighter restrictions to prevent future flare ups and maintain Covid Zero. 

“If once we’re over this wave Hong Kong doubles down on Zero Covid, then we know this has nothing to do with health and all to do with politics,” said Jefferies Group equity strategist Simon Powell. 

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