Expert Speak Raisina Debates
Published on Nov 06, 2019
Ironical it will be if Singapore gains at the expense of Hong Kong unrest This is the 89th article in the series The China Chronicles. Read the articles here.

Hong Kong’s young leader of protesters Joshua Wong Chi-Fung has been disqualified from contesting in Hong Kong District Council elections, after the authorities adjudged his nomination to be invalid. This is likely to deepen the existing fissures between the band of protesters and the administration. For months, anti-government protests have rocked Hong Kong and this latest episode bears testimony to the fact that protests are unlikely to die down.

Snowballing protests

It all started in June this year after proposals were floated to allow extradition of “criminal suspects” to mainland China. Critics saw this as an attempt to expose Hong Kong citizens to unfair trials and violent treatment in the mainland. After weeks of protest, the bill was suspended indefinitely, but the unrelenting protesters carried on fearing a revival of the bill in the future. After returning to Chinese rule from being a British colony in 1997, Hong Kong exercises more autonomy and more citizen rights, in comparison to mainland China.

Gradually the defence of the “right to protest and politically debate” has transformed into “Five demands, not one less!” agenda. The demands are as follows.

●  No protest can be characterised as “riot”. ●  Amnesty has to be provided for arrested protesters. ●  An independent enquiry has to be constituted into alleged police brutality. ●  Implementation of universal suffrage. ●  The contentious extradition bill has to be completely withdrawn.

Except for the fifth and last demand, none of these demands is met yet. The Chinese government has branded the protests as “pro-West separatist” in nature and warned of dire consequences. Following this latest move to debar one of the prominent young leaders from contesting elections, this prolonged and now violent series of protests is expected to go on.

Singapore set to gain economically?

Economically, Hong Kong is expected to bear the brunt of this unrest, however one views these protests. Given current realities in Hong Kong another self-governing, Chinese-majority, financial, commercial and shipping hub in East Asia is going to benefit and that country is Singapore. These two geographical locations share many common attributes. They are commerce-friendly, light-touch regulation, efficient, seemingly uncorrupt bureaucracies all of which contribute to economic prosperity. In World Bank’s Ease of Doing Business ranking, Singapore comes at 2nd place while Hong Kong occupies the 4th place.

The Economist Intelligence Unit (EIU) estimates Singapore’s real GDP growth to ease to 0.9% next year, from the current 3.1% in 2018. However, given the small population of the island nation (Table) and an identical average population growth at 0.9% – Singapore is unlikely to suffer adverse effects in the short run by this easing of real GDP growth rate.

In terms of domestic demand, inflation and external sector performance Singapore economy does not appear to be in any immediate danger. The violent protests that have rocked Hong Kong for the last four months have started contributing positively to the economy of Singapore. At least, some of the initial impact data suggest that trend.

TABLE: Basic Economic Data of Singapore

Annual data 2018 Historical averages (%) 2014-18
Population (mn) 5.6 Population growth 0.9
GDP (US$ bn; market exchange rate) 364.1 Real GDP growth 3.3
GDP (US$ bn; purchasing power parity) 571.5 Real domestic demand growth 3.1
GDP per head (US$; market exchange rate) 64,580 Inflation 0.2
GDP per head (US$; purchasing power parity) 1,01,347 Current-account balance (% of GDP) 17.4
Exchange rate (avg) S$:US$ 1.35 FDI inflows (% of GDP) 23.6
* All data are in actuals. Source: The Economist Intelligence Unit (EIU)

In August this year, tourist numbers to Hong Kong fell by 39% and to mainland China fell by 42% year-on-year. Meanwhile, Singapore experienced year-on-year 4% increase in tourists from China in August. Mainland China accounts for 21% tourists visiting Singapore, but more importantly almost 80% of visitors to Hong Kong. So, there is a trend of Chinese tourists shifting their destination from Hong Kong towards Singapore.

Singapore might be getting more outflows of money from Hong Kong as well. According to a Goldman Sachs Report, up to $4 billion of deposits may have shifted to Singapore from Hong Kong in the month of August. The rich in mainland and Hong Kong have already started showing their preference to buying property in Singapore. Since 2017, these buyers have acquired more than a 1,000 private homes in Singapore, in spite of a 20% stamp duty charged to foreigners.

 In the asset management, Singapore has a slight lead (with $3.4 trillion assets) over Hong Kong ($3.1 trillion assets) at the end of 2018. Thus, a gradual shifting of institutional financial activity from Hong Kong to Singapore was underway even before the current crisis started. The recent upheaval in Hong Kong might just accelerate this process.

A sense of irony

As things stand now, Singapore is loosely an illiberal democracy while Hong Kong represents a model of liberal autocracy. The former has a freely elected government but strict laws limiting public protests and in some cases political debate, while the other has a chief executive “elected” by a few hundred officials, a partially elected legislature, which is weak, but a robust tradition of freedom of speech and assembly.

In a way, citizens of both these places clamour for democratic freedoms that are available to the other. It may not be surprising that 75% of Singaporeans sympathised with the Hong Kong protestors. This was demonstrated by a protestor in Hong Kong, apparently a Singaporean, whose viral picture on social media with a placard read: “Don’t let Hong Kong be like Singapore, where people live in fear”.

This might be an exaggeration, but it touched a chord among many Singaporean. It seems that many Singaporeans, after all, are all ears for the Hong Kong protest leaders’ arguments that these protests have an economic genesis, unaffordable housing for example, rather than only political motives.

Not so surprisingly, there was condemnation of the attempts to equate Singapore with Hong Kong from pro-government commentators. A ban on rallies in Singapore in support of Hong Kong protestors is also in force, and in early October, 2019 the foreign ministry advised all Singaporeans to “defer non-essential travel” to Hong Kong. However, it would be ironic if Singapore gains economically in the short run at the expense of Hong Kong, despite both having more similarities than differences.

The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.


Abhijit Mukhopadhyay

Abhijit Mukhopadhyay

Abhijit was Senior Fellow with ORFs Economy and Growth Programme. His main areas of research include macroeconomics and public policy with core research areas in ...

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