The View | Umbrella Revolution won't dump heavy rain on Hong Kong economy
Scaremongering cries of damage to the economy are well off the mark, providing it ends peacefully
The Umbrella Revolution is a historical event - not just for Hong Kong but also for China. For a group of disorganised students to take matters into their own hands, after Occupy Central had run out of ideas, was dramatic. For the government and the police to wisely enact a hands-off policy breaks the cycle of reaction and protects the economy.
But the revolting students are still in the streets and sooner or later Gloucester Road has to be cleared. In the meantime, what is the likely impact on the economy? A review of Hong Kong government economic statistics together with some dangerous fieldwork in the streets of Wan Chai provides us with a good indication.
Hong Kong is a sub-economy of China. We have 0.6 per cent of the population of the mainland and are merely China's 14th largest city. Our economic growth has slipped this year to 2.4 per cent, because of weakness up north. This has massively more impact than a bunch of student squatters sleeping rough.
Nevertheless, local prosperity can be very different from the rest of the country. We have full employment, inflation is a fraction of what it was, and house prices are still extraordinarily high. We are pretty important to the mainland too - our economy is as much as 9 per cent of the size of the mainland (though re-exports count for half of that).
The stock market increasingly reflects the Chinese economy, albeit one with a global outlook, and US interest rates. Seventy per cent of the Hang Seng Index comprises companies trading in the mainland economy, and around 15 per cent are those who trade outside Greater China. That leaves only about 15 per cent of the market sensitive to events within Hong Kong.
This may be why the Hang Seng Index only fell 3.5 per cent on Monday and Tuesday to 22,933, when in the 1967 riots, it collapsed to an all-time low of 58.6. The best way to shake an economy to the core is to hear the bellow of a police sound cannon and badly sung songs from The cessation of violence certainly helped the index. In 1967, when children were killed by roadside bombs, businesses couldn't wait to leave.
