ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Hong Kong protests

Hong Kong's Li Ka-shing urges 'no violence' amid weakening economy

Business leaders warn public on protests as city moves toward possible recession

Protesters in Hong Kong's financial district in June. The government on Friday said the economy expanded 0.5% in the April to June period from a year earlier. (Photo by Ken Kobayashi)

HONG KONG -- Amid growing signs that Hong Kong may be slipping into recession, businessman Li Ka-shing on Friday added his voice to a chorus of local tycoons and companies publicly denouncing violence after weeks of clashes between anti-government demonstrators and police.

The economy continued to face significant downward pressure in the second quarter of this year, the government said on Friday. Gross domestic product expanded at a modest pace of 0.5% in the April to June period compared with a year earlier, slightly slower than the 0.6% growth in the preceding three months.

"The recent local social incidents, if continued, will cause significant disruptions to inbound tourism and consumption-related economic activities, further dampen economic sentiment, and even hurt the reputation of Hong Kong as an international financial and business center," government economist Andrew Au said at a news conference.

A weakening economy and continuing demonstrations have prompted a parade of business leaders and companies to take out full-page advertisements in Hong Kong newspapers to call for a return to "law and order."

Li, the founder of what is now CK Hutchison Holdings, offered a slightly nuanced message in his ads on Friday. In one version, over a logo of "no violence," he said: "The best of reasons can lead to the worst of results." FWD Group, an insurer controlled by Richard Li, the chairman of telecommunications company PCCW and the son of the CK Hutchison founder, took out its own ads on Friday with the message, "Oppose violent behavior, protect social order."

Billionaire Li Ka-shing, identifying himself as a Hong Kong resident, took out front page ads in local newspapers on Friday to address the recent political turmoil. (Photo by Nikki Sun)

Other executives and companies which have spoken out this week include Peter Woo, former chairman of developer Wheelock, and Lui Che-woo, chairman of casino operator Galaxy Entertainment Group, as well as property companies New World Development and Henderson Land Development and conglomerates Swire Pacific and Jardine Matheson Holdings.

In its statement, the government said that "economic conditions in the first half of the year were the weakest since the recession in 2009."

For the first half of 2019, the economy expanded 0.5% over the same period a year earlier, the government said in its statement. On a seasonally adjusted quarter-to-quarter comparison, GDP decreased by 0.4% in the second quarter -- revised from an advance estimate of a 0.3% decline -- following an expansion of 1.3% in the preceding quarter.

Au said the economy is facing "significant downward pressure" going forward, as recent government surveys have shown that local business sentiment has turned pessimistic and readings fell to multi-year lows. The labor market, however, remained strong with a low jobless rate of 2.8%. But Au warned there are signs that labor demands of several industries, including exports, logistics and retail are softening, and might be reflected in economic figures later this year.

Responding to a question about whether Hong Kong could soon enter a recession, Au said the "chances of negative growth in the third quarter are not low," as both domestic and external economic activity has not improved in July and August.

On Thursday, Financial Secretary Paul Chan had referred to the protests as well as the U.S.-China trade war, Brexit and other factors as headwinds that could keep economic output flat this year. He slashed the official annual GDP growth forecast to a range of 0% to 1% from 2% to 3% previously, while announcing 19.1 billion Hong Kong dollars ($2.44 billion) worth of tax breaks, fee waivers and other support for residents and companies.

"It would be prudent and reasonable to assume that the economic headwinds will continue to be very strong," Chan said. "So we need to get ourselves prepared."

Economists Julian Evans-Pritchard and Martin Lynge Rasmussen of research company Capital Economics predicted on Wednesday that Hong Kong will enter a technical recession in the current July-September quarter due to the protests, with economic output contracting as much as 1% from the April-June period.

"Tourism, a sector that contributes around 4% of GDP, appears to have been hit especially hard," they said, citing reports of steep falls in hotel bookings and retail purchases by mainland Chinese tourists. The cancellation of hundreds of flights amid demonstrations at Hong Kong International Airport earlier this week spurred further warnings from foreign governments about the risks of travel to Hong Kong as well as the postponement or cancellation of meetings, concerts and other events.

Hong Kong Chief Executive Carrie Lam on Tuesday warned that the clashes between protesters and police constituted an "emergency situation" and were pushing the city into a "deep abyss."

With the government refusing to give any consideration to protesters' demands, even those endorsed by leading business groups and other members of the establishment, clashes between demonstrators and police have grown more violent and many observers expect the confrontations to worsen further. Zhang Xiaoming, Beijing's top official for Hong Kong matters, called members of the city's elite to a meeting last week in neighboring Shenzhen to rally their support.

The protests began as a campaign to stop proposed legislation to ease the extradition of criminal suspects to mainland China and other areas but has since expanded to focus on violent tactics used by police, the lack of democratic accountability and other issues.

While Lam and other key officials have until now refused demands to resign, the government announced on Thursday that Cathy Chu would be replaced as chief government spokesperson by Rex Chang, most recently the deputy secretary for education.

The Civil Human Rights Front, which organized two marches in June that it said drew 1 million and 2 million participants, respectively, has called for another large-scale protest on Sunday. Police, however, rejected its application for a march, while giving it approval for a rally. The group is appealing the rejection.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more