China’s forced National Security Law on Hong Kong has triggered a wave of emigration with hundreds of thousands of people. These people bring along with them hundreds of billions of dollars. This will lead to a sharp contraction of Hong Kong’s economy.
According to Hong Kong’s latest official data, for the past year, Hong Kong registered a net emigration of more than 110,000 people. This is a net increase of more than 20,000 people over the same period last year.
The increase in the emigration numbers has been taking effect since 2019 after the infamous extradition bill to mainland China was proposed, and Hong Kong people faced widespread opposition. The emigration number turned from net inflow to net outflow for now.
Wu Mingde is a former senior banker in Hong Kong. He told Voice of America (VOA) that more than 80% of those who leave the city fall into three age groups of 20-24, 35-39, and 55-59. This is bad news for Hong Kong since these people hold in their hands the financial and intellectual resources.
In particular, people aged from 20 to 24 are college students and will soon enter the workplace. Those from 35 to 39 have been working for 15-20 years. They belong to the group of middle management talents. They play a key role in supporting Hong Kong’s businesses and economy. And finally, retirees from the age group 55 to 59 would likely take their money abroad to support their children in their 20s.
In addition, according to Bank of America estimates, from 2021 to 2026, 320,000 Hong Kongers will leave the city. Total money outflows would reach almost HK$590 billion, or $75 billion.
However, banking expert Wu Mingde believes that this has not counted the “multiplier effect”, whereby the stimulus effect of currency on the economy is calculated in multiples. According to his estimate, the money supply taken by more than 300,000 Hong Kong people will be as high as 5 trillion Hong Kong dollars, or almost $640 billion. This will definitely lead to a sharp contraction of the Hong Kong economy in the long run.
As a result of the capital outflow problem, Hong Kong will lose its status as a global financial center. Banking expert Wu Mingde warns that if Beijing continues to stick to its “nationalism” and “common prosperity” policy, along with the US-China decoupling trend, Hong Kong will be drained of all its capital.