Two cities and a Colossus – Too big to fail?

Dear Reader,

the last week meted out very different fates to the two Special Administration Regions on both sides of the Pearl River Delta. Hong Kong SAR Government (still written with a capital “G” like in British colonial times) announced on the 14th, that from the 15th of September 2000 the so-called Come2hk Scheme, which will allow 2,000 Chinese living in Guangdong or Macau SAR to enter Hong Kong every day without quarantine requirements in Hong Kong will start.

Any non-Hong Kong resident who has not stayed in places other than Hong Kong, Guangdong Province or Macao, could apply for a quota to enter Hong Kong through the online booking system of the Come2hk Scheme. Non-Hong Kong residents with a quota must enter Hong Kong on the date and via the boundary control point as specified in the booking, and present valid proof of negative nucleic acid test result that is obtained within three days prior to or on the day of entry into Hong Kong. A daily quota of 1,000 each is set for the Shenzhen Bay Port and the Hong Kong-Zhuhai-Macao Bridge Hong Kong Port.

First reports confirmed that the offer was eagerly taken up mostly by persons who want to visit their relatives, and handle business matters as well as students. Applications for the first 2,000 quota were reached within hours after the system went online at midnight of the 15th. 

2,000×30 = 60,000 arrivals per month is still a far cry from the four to five million arrivals per month before 2019, but can at least be seen as a sign of hope, even most of the visitors will not stay in hotels or do sightseeing. 

On the other side of the estuary, Macau SAR has surprisingly been the No. 1 tourism destination in Asia in the last twelve months and the No. 1 globally for Mainland China with around 600,000 arrivals per month from Mainland China, about a third of previous levels. Until last week, gambling (or gaming, to use the polite term), saw increasing restrictions from the Chinese governments side, with the casinos in Macau however spared. On the 15th however, the same day the Come2hk scheme started, the former Portuguese province was shocked by an announcement of Macau’s secretary for economy and finance. He declared the start of a 45-day consultation period on the gambling industry, including changes in the number of licenses, better regulation and employee welfare, as well as having government officials to supervise day-to-day casino operations. The share value of the casino companies fell dramatically.

In Mainland China itself, the main sound of rumbling and tumbling came from Evergrande (HengDa 恒大), one of the biggest real estate developer in the word, which unfortunately amassed a level of dept which equals two percent of the Chinese GDP. The pandemic has resulted in China, as in most countries, in an increase in the wealth of the already wealthy, filling their pockets with more travel money than ever before. Much of the wealth creation in China however, for local administrations and for affluent families alike, is connected with real estate. Massive payments for yet-to-be-build apartments may be lost for millions of citizens, if the Communist Party of China decides that Evergrande is after all not too big to fail and needs to be bailed out at all costs, but rather tries to find a way to let it fall without too much collateral damage. Looking at the fate of HNA and Dalian Wanda in recent years and the many radical reforms of the past months, it may be that the losses of affluent Chinese from a crumbling real estate market will make some of them think again about how much money they want to spend on their first trip abroad after the border opens again.  

As always, all best wishes from Prof. Dr. Wolfgang Georg Arlt and the entire COTRI WEEKLY team!

Archive >>