Hong Kong’s reputation as a haven for freewheeling business has steadily eroded since the territory was handed over to China from Britain in 1997. As anti-government protestors step up demands for democracy, and with demonstrations becoming more violent, however, the business environment is getting worse.
High-technology professionals, bankers and financiers head the list of those wanting to go to the United States, a desire that has taken on an added sense of urgency with the level of investment required for the EB-5 U.S. investment visa, known as the “golden visa,” leaping to $900,000 next month from $500,000, where it has been since 1993, as part of an effort to stem money laundering.
The EB-5 visa grants a two-year conditional green card in return for investments in struggling parts of the United States, and applicants have until November 21 to apply under the current investment level.
John Hu, principal consultant of John Hu Migration Consulting, says inquiries have risen four-fold overall since the protests escalated five months ago. He says he is receiving thousands of callers a month, mainly from those interested in heading to the United States, Canada and Australia.
“The protests is definitely a catalyst for people who are determined to go to the U.S.,” Hu says from his office in the Wanchai financial district, adding that the U.S. trade war with China is a further spur.
“This is a very favorable destination, and also in November the investment amount is going to increase from $500,000 to $900,000, so people are rushing in,” he says, referring to the EB-5 visa.
Hong Kong has witnessed a steady loss of its financial clout over the last two decades.
Some business have opted for the Chinese financial capital of Shanghai, others for the West, moves which have been blamed on an erosion of freedoms and failure by Beijing to uphold the promises it made before the handover from Britain.
As a result protests have become common, but the recent hike in violent clashes between protesters, police and pro-Beijing gangs, in response to government-planned extradition laws bitterly opposed by business groups, has deeply unsettled the city.
Despite the scrapping of those laws, protesters continue to agitate for universal suffrage, and most Sundays are dominated by police and hardcore demonstrators exchanging tear gas and Molotov cocktails. Train stations and businesses with known pro-China leanings are often trashed.
On potential emigration to the United States, Hu notes, “First of all, there is the education, because you have the top-of-the-world Ivy League colleges, and we have lots of financial professionals in Hong Kong.”
“For people who want to work in Wall Street and the financial world they would like to migrate to the U.S.,” he added
An October survey by the Chinese University of Hong Kong found at least a third of the territory’s 7.4 million people would emigrate if they could. Taiwan, Britain, Malaysia, Singapore and Japan are also popular destinations.
Huw Watkin, head of the risk, research and investigation company Drakon Associates, says a weak economy and comments by the pro-China lobby have not helped, as they have fueled increased migration, amid the current wave of protests.
He cites comments by Junius Ho, ejected from the Legislative Council, Hong Kong’s legislature, after suggesting pro-democracy politician Claudia Mo, whose husband is British, “eats foreign sausage.”
“Incomes have been static for years, the cost of living remains very high, and racist comments by the business elites and pro-China political lobby give the sense that Westerners are actually no longer welcome in Hong Kong,” Watkin adds.
“Given that China is clearly more aggressively nationalistic, here as elsewhere, I am not surprised that people are leaving,” he says.
At the corporate level, the more recent evidence is anecdotal, however.
Goldman Sachs has estimated that between $3 billion and $4 billion in deposits flowed to Singapore, the territory’s main rival in international finance, in July and August.
A flash survey led by the American Chamber of Commerce in Singapore found 80% of respondents believed Hong Kong protests had affected their decisions on whether to make future investments here.
Twenty percent said they had “considered plans” to move capital out or relocate their business functions, particularly to Singapore, a trend described by the Hong Kong chamber as a “real concern.”
Watkin said Hong Kong’s strong English-language credentials make it easier for business immigrants to meet U.S. entry standards and that the scramble to leave is unlikely to abate, unless the pro-China lobby backs off and Beijing adheres to its “one country two systems” policy.
That includes the Basic Law, under which Beijing agreed to 50 years of self government and autonomy.
“Hong Kong is this entrepot, this cosmopolitan place, and has been so since its inception,” Watkin saus. “There was a deal and I think it’s incumbent upon the Chinese administration to honor that deal, if not for their own self-interest in being a trusted partner in the world.”
“In Hong Kong it’s a very unique situation and frankly it’s very hard to predict how this will turn out.”