Hong Kong Expats Eye Exit as Protests Threaten ‘World City’

(Bloomberg) -- Like many expatriates in Hong Kong, Madeline Bardin is thinking more and more about leaving.

The 36-year-old entrepreneur has thrived in the city for seven years, but she worries that its summer of unrest isn’t going away anytime soon. She won’t go outside with her 8-month-old son without first checking chat groups and the news for reports of tear gas, and she recently canceled a business trip on concern that protests at the airport might prevent her from returning home.

“We have a young family to think about and we think this is just the beginning of the changes in Hong Kong,” said Bardin, who moved to the city from London in 2012. “Long term, it just doesn’t make sense for us to stay here with the rising instability.”

Hong Kong’s ability to assimilate people from around the globe has helped turn the former British colony into one of the world’s biggest financial and commercial hubs. But that status is increasingly under threat as expats and their employers weigh the costs of committing to a city mired in its worst political crisis since the handover to China in 1997.

If people like Bardin decide to leave, it could do significant damage to an economy that hosts the world’s fourth-biggest stock market and regional offices for hundreds of foreign companies.

Fitch Ratings Ltd. cited Hong Kong’s deteriorating international reputation as one reason for downgrading the city’s credit rating on Friday, saying that public discontent is likely to persist even after Hong Kong Chief Executive Carrie Lam withdrew the controversial extradition bill that first sparked the demonstrations three months ago.

Just a few hours after the Fitch statement on Friday, police used tear gas in a populated area to disperse protesters who dismantled traffic lights and started fires. On Saturday, protesters blocked a main road in Mong Kok, a busy shopping and residential district, and burned a barricade near the police station before being chased off by riot cops. Similar scenes played out in the central business district on Sunday.

Iwa, 36, a domestic helper from the Philippines who moved to Hong Kong three years ago, said she supports the demonstrations but is scared by the risks involved. She and her friends were hanging out in central Hong Kong on Sunday when a swarm of protesters ran past, screaming and signaling to each other that police were on their way. They had set fire to a nearby subway entrance and broken glass at two others. Iwa isn’t sure whether she’ll renew her visa once it expires.

"They are fighting for their freedom and to save their future, but it’s dangerous," she said. "And it’s annoying. There’s no transportation. How are we supposed to get home?"

Hong Kong has long attracted international bankers, lawyers and other professionals with its energetic urban lifestyle, negligible crime rate and low taxes -- a combination that convinced expats to stomach sky-high rents and cramped living spaces. At the end of 2018, the territory had more than 650,000 foreign residents, in addition to the more than 1 million people from mainland China who have settled in the city of 7.5 million since 1997.

While Hong Kong’s government doesn’t publish comprehensive immigration statistics frequently enough to gauge the full impact of this year’s unrest, there are signs that foreigners are cooling on the city.

Applications for general employment visas dropped 7% in August from a year earlier, after rising on an annual basis for most of 2019, according to official figures. The number of mobile residents -- those who recently spent between one and three months in the city -- fell 4.1% in the first half, the biggest decline in a decade.

Online forums now often feature expats debating whether to leave Hong Kong to give birth, whether it’s safe to let their kids take mass transportation, and whether to move out of the city for good. Many worry that Beijing is chipping away at the “one country, two systems” framework that gives Hong Kong certain freedoms unavailable in Communist China. The extradition bill would have exposed both Hong Kongers and foreigners to the risk of being sent to the mainland to face what the U.S. State Department has called China’s “capricious” legal system.

Hong Kong’s status as “Asia’s World City” was based on “values that are eroding quickly as Beijing exerts more and more influence in Hong Kong, especially in recent years,” said Lo Kin-hei, vice chairman of Hong Kong’s Democratic Party. “If these values are gone, those names and the status Hong Kong enjoys now will be gone forever.”

For all its challenges, Hong Kong has plenty of foreigners committed to the city for the long haul. Some argue that the turmoil has had minimal impact on their day-to-day lives and that Hong Kong will weather the storm just as it did during Asia’s financial meltdown in the late 1990s and the SARS outbreak in 2003. Several foreigners have been notable fixtures at the demonstrations, offering support to protesters, live-streaming clashes with police on Twitter, and in at least one case drawing the ire of pro-Beijing lawmakers.

Others are reluctant to leave for economic reasons. In a survey of 982 Filipino domestic helpers conducted by HelperChoice, a recruitment platform, 45% said they were worried about the protests but not enough to leave Hong Kong, where salaries are often far higher than in their home country, the South China Morning Post reported.

Hong Kong’s government knows the city’s reputation is at risk. This month, it took out full-page ads in international newspapers that said: “We remain a safe, open, welcoming and cosmopolitan society and an internationally connected, vibrant and dynamic economy. We will no doubt bounce back. We always do.”

While Hong Kong did return to normality soon after the Occupy Central movement fizzled in 2014, this year’s demonstrations have had a more dramatic impact. Not only have they spilled from the city’s streets into the airport, subways, shopping malls, and schools, they also threaten to tip the economy into a recession as retail sales and tourism plunge.

The outlook could get worse if the trend toward increased violence by some protesters persists. Hong Kong’s government hasn’t ruled out invoking the city’s emergency law, which could allow it to disrupt Internet service and seize property. Meanwhile, China has signaled repeatedly that it could send in the People’s Liberation Army if necessary to quell the unrest.

Professionals who moved to Hong Kong from mainland China share many of the same concerns about stability as Western expats. But some are also souring on the city for different reasons.

One common gripe is that native Hong Kongers have become less welcoming to people from the mainland as the protests have escalated. A Chinese banker who has lived in the city for almost a decade, and who asked not to be named discussing a sensitive issue, said his wife has ordered him not to speak Mandarin in public. The couple had planned to retire in Hong Kong, where locals speak Cantonese, but are now considering Shenzhen instead.

Jason Tan, a director at recruitment agency Kelly Services in Shanghai, said he’s fielding as many as 20 calls a day from financial professionals who’ve been in Hong Kong for a few years, but now want to move back to China. “Candidates are looking for greener pastures,” he said.

Even as they question how long they should remain in Hong Kong, daily life goes on for most foreigners who work in the city. On a recent Saturday, as demonstrators lit a massive fire outside a police station and engaged in some of their most violent clashes since the protests began, a group of mostly western expats attended a children’s birthday party about a mile up the road.

While conversations at the party inevitably touched on the unrest and how the situation might play out, attention eventually turned to more practical considerations. Babies’ noses needed wiping, a mess on the floor had to be cleaned, and a toddler’s tantrum had to be dealt with.

--With assistance from Alfred Liu, Manuel Baigorri, Shawna Kwan, Enda Curran, Stephen Tan, Sofia Horta e Costa and Carol Zhong.

To contact the reporters on this story: Blake Schmidt in Hong Kong at bschmidt16@bloomberg.net;Shelly Banjo in Hong Kong at sbanjo@bloomberg.net;Cathy Chan in Hong Kong at kchan14@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net, Anjali Cordeiro

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