Some British companies canceled business visits to Hong Kong or even postponed Hong Kong investment plans due to anti-government protests in the city, Financial Secretary Paul Chan Mo-po wrote in a blog yesterday.
Hong Kong's economy and its international image as a safe global financial and trade center have been hit by constant demonstrations on the street with growing violence, including vandalizing stores and public facilities, Chan said.
Last week Chan visited London and met politicians, financial regulators and people in companies and startups to explore potential cooperation. Chan said many people at the meetings addressed their concerns about Hong Kong's situation and asked when the violent chaos will subside, adding these responses were similar to what he heard from people in New York and Washington last month.
Hong Kong may report negative growth this year on the double whammy of the Sino-US trade war and local anti-government protests, Chan said.
Hong Kong has slipped into a technical recession for the first time since the 2009 financial crisis. The third-quarter gross domestic product fell 2.9 percent year on year, or 3.2 percent quarter to quarter, the SAR government announced last week. The demonstrations were blows to local retail, food and beverage, as well as other consumption-related industries, Chan said. Excluding government spending, both internal and external demand worsened significantly, with private consumption expenditure falling for the first time in more than 10 years, declining 3.5 percent year on year, he said.
If the declines in the private consumption sector, which accounts for more than two thirds of local GDP, continue it will put more pressure on the labor market.
The increasing violence has taken a toll on investment confidence, but oversea investors are still interested in opportunities in Hong Kong and the Greater Bay Area, he said.
"Foreign investors still believe that Hong Kong has strong competitiveness if it restores social order, especially as a bridge between mainland China and international financial markets, and a springboard to enter the Greater Bay Area," he said.
Amid Brexit issues, Britain has to strengthen cooperation with other markets, and the Chinese market is vital to them, Chan said. British political and business leaders have a huge interest in signing trade agreements with Hong Kong after leaving the European Union.