Curbs on mainland tourist numbers may backfire on Hong Kong
Regina Ip says we risk severe economic fallout and damage to our relations with the mainland under a rumoured government proposal to cap the number of visits by Shenzhen residents
At the May meeting of the Commission on Strategic Development, the chief executive sparked a firestorm by asking, in the context of discussions on the relationship between mainland China and Hong Kong, whether the quota for individual mainland Chinese tourists visiting Hong Kong should be cut by 20 per cent.
The suggestion immediately triggered howls of protest from members representing the retail sector. The following day, news of this possible cut led the shares of publicly listed companies seen to have benefited the most from mainland tourism to drop by 3 to 4 per cent.
For those local people long annoyed by congestion on MTR trains swelled by mainland tourists, or the displacement of popular by luxury retailers targeting mainland visitors, the news might have brought relief. Finally, good riddance to the "locusts" who benefited only property developers and high-end retailers but skewed our economy, some might think.
The retail, tourism and hotel industries quickly reacted by petitioning the authorities against any cut, citing the importance of mainland tourism to gross domestic product growth.
According to media reports, the government has completed a review of the economic and social impact of mainland tourism and has recommended limiting the multi-entry permits for Shenzhen residents to 52 visits per year. No decision has, however, been taken. The authorities in Beijing, who, under the Basic Law, alone have the power to control entry into Hong Kong as visitors, appear to be hedging their bets, watching which way Hong Kong's economy might go.
Both the chief executive and Beijing appear to be caught between a rock and a hard place. Should the numbers be cut, to appease the "anti-locusts" crowd? Or should they risk a sharp downturn in mainland tourism at a time when Hong Kong's economic growth is heading south, with all that that implies in terms of job losses and a slump in consumption?
A closer look at arrival statistics since the introduction, in 2003, of the individual visitor scheme suggests that mainland tourism has peaked. Visitor arrivals spiked in 2009, after the introduction in April of a scheme allowing qualified residents of Shenzhen to visit on multiple-entry permits.
The relaxation caused mainland arrivals to increase by 26.33 per cent, 23.87 per cent and 24.24 per cent on a year-on-year basis since 2009. But the growth rate slowed to 16.71 per cent last year, and 16 per cent in the first six months of this year.
The slowdown could be attributed to a number of reasons - the economic downturn on the mainland, the anti-corruption drive, the availability of more options for travel for wealthy mainland residents and, above all, the cases of discrimination here which have caused a backlash of animosity against Hong Kong on the mainland.
If the government has indeed recommended cutting back multiple-entry permits for Shenzhen residents to 52 visits per year, it must clearly explain its rationale and policy objectives for such an unprecedented measure.
If the objective is purely to appease the handful of "locust haters" whose behaviour is unbefitting of our civilised, supposedly "first world" city, the government should be held accountable for any negative economic consequences and fallout in terms of relations between mainland residents and Hongkongers.
If the cutback is necessitated purely by constraints in our reception capacity, the government should focus its efforts on overcoming the constraints, not sending negative signals to drive away visitors.
Considering that Hong Kong has failed to restructure its economy since the migration of its manufacturing industries, and that large numbers of its low-skilled workforce are dependent on tourism-related jobs for their livelihood, economically speaking, the government is on weak ground to initiate a drastic cutback in the number of Shenzhen visitors.
A cutback to 52 visits per year is no laughing matter. Based on statistics compiled by the Security Bureau over a five-month survey, 96 per cent of the multiple-entry permit holders from Shenzhen visited Hong Kong once a day, and many were parents of children born in Hong Kong rather than parallel traders. Despite a public perception of mainland visitors making multiple visits to Hong Kong daily, the statistics show that only 1,700 visitors visited Hong Kong twice a day during the survey period; 22 visitors three times a day; and 10 four times a day.
The cutback might deliver a lot more than what some Hongkongers hope for. It could trigger a landslide, as the sense of ingratitude and discrimination sink into the hearts and minds of the mainlanders. Some might never want to come back.
Relaxation of mainland travel arrangements were introduced in 2003 and again in April 2009 in response to our calls for help to boost our economy after the severe acute respiratory syndrome outbreak and the global financial crisis. If we tell people on the mainland now that we have become so rich (and crowded) that you are no longer needed, what would you think if you were one of the mainlanders?
