Hong Kong and Shanghai lose their international luster as Covid restrictions bite

Analysis by Jessie Yeung and Akanksha Sharma, CNN

Hong Kong (CNN) – The glittering skylines of Hong Kong and Shanghai have long been associated with wealth and glamor.

But in recent weeks, they have become synonymous with a much grimmer reality, as authorities in the two international finance hubs struggle to contain raging Omicron outbreaks.

Extreme Covid measures have heavily restricted the lives of residents in both cities, with Shanghai now entering the third week of government-mandated home lockdown, and Hong Kong chafing under a third year of quarantine and travel curbs.

Once China’s gateways to the West, heavy-handed border closures and suspended air routes have closed the two cities off to much of the world, even as other hubs open up.

On Tuesday, just a single flight arrived in Hong Kong from outside Asia Pacific — a stark contrast to the pre-pandemic era when the city’s airport was one of the world’s busiest, regularly hosting 1,100 passenger and cargo flights daily to and from 200 international destinations.

Now most of the traffic is outbound, carrying residents fleeing Hong Kong for greener pastures with fewer restrictions. In February and March, more than 180,000 people left the city while only about 39,000 entered, according to immigration data.

Shanghai, like Hong Kong, is home to large numbers of foreign residents — but fears are growing that too could soon change.

Jörg Wuttke, president of the European Union Chamber of Commerce in China, estimates China has lost about 50% of all European expatriates since the pandemic started — and he warns there could be another exodus of families this summer when the school year ends. “I wouldn’t be surprised if another half of (those remaining) leave,” he told CNN last week.

A recent report by the British Chamber of Commerce in China appeared to back up this assessment, noting that international schools in China could see at least 40% of teachers leave ahead of the upcoming school year — which could prompt more families to relocate.

Driving these departures is China’s adherence to an uncompromising zero-Covid policy that relies on a combination of strict border quarantines, home lockdowns and mass testing in a bid to stamp out infections.
But those measures no longer appear sufficient in the face of the latest Omicron wave. Hong Kong recorded the highest death rate per capita in Asia and Oceania last month as cases spiked and the virus ripped through elderly care homes. Shanghai plunged into crisis soon after, with all 25 million residents placed under mandatory home lockdown in late March.

Many in Shanghai have complained of being unable to access food, basic supplies and even medical care during emergencies. Reports of health workers forcing elderly residents into quarantine and of workers killing a pet corgi after its owner tested positive fueled rare public fury toward the government on Chinese social media.

“Shanghai is really pushing us to the corner. They don’t treat us like humans at all,” one user wrote on Weibo, China’s highly censored Twitter-like platform.

“I really can’t understand. How could it be this bad? What’s happening to Shanghai?” another popular Weibo comment read.

Before this wave, Shanghai officials had prided themselves on their less disruptive approach to containing outbreaks, and had avoided the kind of citywide mass testing seen in other major Chinese cities.
Hong Kong, too, had once been lauded as a zero-Covid success story. Though it had previously faced several outbreaks, its death rate remained low until a fifth wave arrived in February. The risk of infection seemed so low that many residents — particularly the elderly — didn’t view vaccination as a priority, leaving much of the city vulnerable when Omicron struck.

Now, as a growing number of residents look to leave, that sense of relative safety — and both cities’ standing as international capitals of travel and commerce — seems further away than ever.

“We’ve gone over a month without making any money as a business,” said Josh Vaughn, an American entrepreneur in Shanghai who owns an online sunglasses brand. “It makes me stressed thinking about it because I don’t know when this lockdown is going to end … I’m so scared that this could be the end of my business.”

Vaughn said that after contracting Covid this month he faced hostility from his neighbors, who were reluctant to let him back into his apartment building after he was discharged from hospital — echoing similar experiences from other expatriates who have felt ostracized.
Wuttke, the European Union Chamber of Commerce president, warned that the economic impact of China’s Covid restrictions could push some foreign companies to consider moving regional headquarters out of greater China — throwing the future of major business hubs like Shanghai and Hong Kong into question as the rest of the world opens up.

Singapore, which for years has competed with Hong Kong for the title of Asia’s top international business hub, was the first Asian country to declare it was moving away from a zero-Covid policy to living with the virus last year. Some in Hong Kong’s business sector are now eying the Southeast Asian city state, which lifted all quarantine requirements for vaccinated travelers in April.

Chinese authorities have acknowledged this precarious position, with Hong Kong’s leader Carrie Lam saying in late March, “I have a very strong feeling that people’s tolerance are fading … that some of our financial institutions are losing patience about this sort of isolated status of Hong Kong, as Hong Kong is an international financial center.”
In an effort to boost Hong Kong’s flagging economy, Lam lifted some flight bans and shortened quarantine requirements last month. But it may be too little, too late — especially as Chinese officials and state media ramp up rhetoric praising China’s zero-Covid policy, offering little hope that these international financial centers will open up anytime soon.

Gabriele, an Italian resident in Shanghai who asked to be identified by his first name only, tested positive in early April and has since been confined to his apartment for more than three weeks, he said.

Describing the situation as a “nightmare,” Gabriele said health workers said they would come to test him again but “never showed up,” and attempts to contact local authorities have gone nowhere. “We feel helpless,” he said.

Now, he’s thinking of moving home for good — leaving behind a city he had once loved. “The city completely lost its shine. I don’t know if it will recover,” he said. “It’s like a completely different city … it really feels like we’re going backwards in time instead of looking forward to the future.”

Additional reporting by CNN’s Akanksha Sharma and Michelle Toh

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