TOKYO -- Law Chi-kwong, Hong Kong's secretary for labor and welfare, said in an interview with Nikkei on Aug. 6 that escalating protests against Beijing's proposed extradition bill were having a negative impact on the territory's tourism and retail industries, which would likely result in a higher rate of unemployment in the second half of 2019.
Law revealed that the Hong Kong government was considering taking measures to stimulate personal spending and support businesses.
Another worrying factor is the trade dispute between the United States and China, which shows no signs of abating. Concerns are growing that the friction will deal a blow to Asian economies.
"Both (overseas) demand and internal demand are dropping very fast. We believe the future will be very challenging economically and in fact it is possible unemployment will rise later this year. Risk is high," Law said.
The territory's unemployment rate has been declining over the past decade, but Law stressed that it could rise if consumption and exports fall. According to the International Monetary Fund, the rate stood at 2.8% in 2018, down 0.3 points on the year.
Hong Kong Secretary for Labor and Welfare Law Chi-kwong, speaks to the Nikkei in an interview on Aug. 6. (Photo by Shosuke Kato)
Since the protests began, Cathay Pacific and other carriers have cancelled more than 200 flights to and from Hong Kong International Airport because of the risk of a staff walkout.
Declines in the service and retail industries and a drop in tourist numbers will affect about 30% of the working population, Law warned.
Any prolongation of the trade dispute and protests will cause the economy to slow down and consumption to lose steam, leading to fewer tourists visiting from mainland China and elsewhere. With Hong Kong's economy heavily dependent on mainland tourists, this would deal it a severe blow.
"If we can stimulate internal consumption, and we can maintain order as soon as possible, then business will be sustainable," Law said.
