PacNet #24 – Comparative Connections Summary: May 2021

REGIONAL OVERVIEW
CHANGE IN STYLE, CONTINUITY IN ASIA POLICY
BY RALPH COSSA, PACIFIC FORUM & BRAD GLOSSERMAN, TAMA UNIVERSITY CRS/PACIFIC FORUM
Quadrennially, we write to assure readers that there will be more continuity than change as a new foreign policy team takes office. Globally, this would not be the case this year. In its first few months, the Biden administration made 180-degree turns on issues such as climate change, World Health Organization membership, the role of science in the battle against COVID-19, immigration, and the Iran nuclear agreement. In our region, however, there has been more continuity. The Trump administration’s Indo-Pacific strategy focused on the Quad—the informal but increasingly structured grouping of Australia, India, Japan, and the US—and the Biden administration has doubled down on this effort, conducting the first (virtual) Quad summit. It has largely continued the “cooperate when we can but confront when we must” approach toward China. And while Trump appeared to have disdain for US alliances, every national security document from his administration underscored the central role US alliances played in its Asia strategy.

US-JAPAN RELATIONS
SUGA AND BIDEN OFF TO A GOOD START
BY SHEILA A. SMITH, COUNCIL ON FOREIGN RELATIONS & CHARLES MCCLEAN, HARVARD UNIVERSITY
The early months of 2021 offered a full diplomatic agenda for US-Japan relations as a new US administration took office. Joe Biden was sworn in as the 46th president of the United States amid considerable contention. Former President Donald Trump refused to concede defeat, and on Jan. 6, a crowd of his supporters stormed the US Capitol where Congressional representatives were certifying the results of the presidential election. The breach of the US Capitol shocked the nation and the world. Yet after his inauguration on Jan. 20, Biden and his foreign policy team soon got to work on implementing policies that emphasized on US allies and sought to restore US engagement in multilateral coalitions around the globe. The day after the inauguration, National Security Advisor Jake Sullivan reached out to his counterpart in Japan, National Security Secretariat Secretary General Kitamura Shigeru, to assure him of the importance the new administration placed on its allies. The COVID-19 pandemic continued to focus the attention of leaders in the United States and Japan, however.

US-CHINA RELATIONS 
CONTINUITY PREVAILS IN BIDEN’S FIRST 100 DAYS
BY BONNIE GLASER, GERMAN MARSHALL FUND OF THE US & HANNAH PRICE, CSIS
In its final days, the Trump administration took more actions to impose costs on China for its objectionable policies and to tie the hands of the incoming Biden team. The first 100 days of President Biden’s administration revealed substantial continuity in policy toward Beijing, with strategic competition remaining the dominant feature of the US-China relationship. Senior Chinese officials delivered speeches that pinned blame entirely on the US for the deterioration in bilateral ties. A round of combative, yet serious, talks took place between senior US and Chinese officials in Anchorage, Alaska. The US added new sanctions on Beijing for undermining Hong Kong’s autonomy. In coordination with its allies, Washington imposed sanctions on Chinese individuals deemed responsible for carrying out genocide and crimes against humanity in Xinjiang. Steps were taken by the US to demonstrate “rock-solid” support for Taiwan in the face of stepped-up Chinese coercion. Cooperation on climate change was launched with John Kerry’s visit to Shanghai to meet with his counterpart Xie Zhenhua, and Xi Jinping’s participation in the US-led Leaders Summit on Climate.

US-KOREA RELATIONS
HOPE SPRINGS ETERNAL
BY MASON RICHEY, HANKUK UNIVERSITY & ROB YORK, PACIFIC FORUM
In the first four months of 2021—the first three and a half of a Biden administration focused on domestic progress and COVID-19 vaccinations—US relations with the Korean Peninsula assumed familiar contours after four years of an unorthodox Trump administration. The US and South Korea quickly reached a military burden-sharing agreement and pledged cooperation in a variety of areas, although the regular differences of opinion lurk under the surface regarding how closely Seoul should work with both North Korea and Japan. The US-China rivalry remains a shadow over the Asia-Pacific security and political economy situation, complicating South Korea’s regional hedging strategy. Finally, North Korea’s nuclear program advanced apace, US and South Korean attempts to open dialogue were rebuffed, and the Biden team’s North Korea policy review will not endear it to Pyongyang.

US-SOUTHEAST ASIA RELATIONS
ASEAN CONFRONTS DUAL CRISES  
BY CATHARIN DALPINO, GEORGETOWN UNIVERSITY
The Feb. 1 coup in Myanmar dealt a serious blow to the ASEAN diplomatic order and presented the incoming Biden administration with its first major policy challenge in Southeast Asia. More profoundly, the coup set into motion a political and humanitarian crisis that has pushed Myanmar into an economic free fall. The imposition of Western sanctions gave China and Russia an opening to strengthen ties with the Tatmadaw. Myanmar was an extreme example of political turmoil, but the instability surrounding Thailand’s anti-regime and anti-monarchy movement persisted into the new year. In January, Vietnam embarked upon a more orderly political transition through the 13th National Party Congress, resulting in a leadership structure focused on ensuring stability, both external and internal.

CHINA-SOUTHEAST ASIA RELATIONS
BEIJING’S ADVANCES COMPLICATED BY MYANMAR COUP AND US RESOLVE
BY ROBERT SUTTER, GEORGE WASHINGTON UNIVERSITY & CHIN-HAO HUANG, YALE-NUS COLLEGE
Beijing confidently forecast continued advances in high-priority efforts promoting regional economic integration, ASEAN’s prominence as China’s leading trade partner, as well as strengthening supply chain connections disrupted by the pandemic and US trade and economic restrictions. Ever-closer cooperation to counter COVID-19 saw Chinese pledges add to its leading position providing more than 60% of international vaccines to Southeast Asian countries. Nevertheless, the unexpected coup and protracted crisis in Myanmar headed the list of important complications. The incoming Biden administration showed no letup in US-led military challenges to China’s expansionism in the South China Sea, while strong high-level US government support for the Philippines in the face of China’s latest coercive moves supported Manila’s unusually vocal protests against the Chinese actions. Beijing also had difficulty countering Biden’s strong emphasis on close collaboration with allies and partners, seen notably in the first QUAD summit resulting in a major initiative to provide 1 billion doses of COVID vaccines for Southeast Asia and nearby areas. The effectiveness of Chinese vaccines was now questioned by Chinese as well as foreign specialists and Beijing’s domestic demand was growing strongly, slowing donations and sales abroad.

CHINA-TAIWAN RELATIONS
TAIWAN PROSPERS, CHINA RATCHETS UP COERCION, AND US SUPPORT REMAINS “ROCK-SOLID”
BY DAVID KEEGAN, JOHNS HOPKINS SCHOOL OF ADVANCED INTERNATIONAL STUDIES & KYLE CHURCHMAN, JOHNS HOPKINS UNIVERSITY
For the leadership of Taiwan, the significance for Taiwan’s relationships with the US and China of the end of the Trump administration and the arrival of the Biden administration formed the defining concern as 2021 began. Taiwan welcomed two steps that the Trump administration took in its waning days: announcing a visit to Taiwan by the US ambassador to the UN (even though it was later cancelled) and repudiating the longstanding Taiwan Contact Guidelines, which was widely seen in Taiwan as overly restrictive. Taiwan’s anxieties regarding the Biden administration were quickly allayed, as incoming senior officials repeatedly called US support for Taiwan “rock solid” and issued new far less restrictive Guidelines. Taiwan also benefited from unusually direct expressions of support from Japan and other international partners.

NORTH KOREA-SOUTH KOREA RELATIONS
THE SOUND OF ONE HAND GIVING
BY AIDAN FOSTER-CARTER, LEEDS UNIVERSITY, UK
As in 2019-20, inter-Korean ties remained frozen, other than a rare lawsuit. Revelations that in 2018 Moon Jae-in’s government had pondered building the North a nuclear power plant caused a brief furor. Seoul’s propaganda balloon ban backfired, prompting widespread criticism—but no thanks from Pyongyang, which was also unimpressed by scaled-down US-ROK war games. North Korea tested its first ballistic missile in nearly a year, amid concerns of a new arms race; some analysts deemed the South culpable, too. Kim Jong Un’s sister Kim Yo Jong fired four verbal volleys, mostly insults. Another undetected defector highlighted failings in ROK border security. MOU Lee In-young was ubiquitous and loquacious, but scattergun in the causes he championed. Moon’s government remained reticent, or worse, regarding DPRK human rights abuses. With just a year left in office, and notwithstanding rare criticism of the North by ministers, Moon was expected to double down on engagement despite Pyongyang’s lack of reciprocity.

CHINA-KOREA RELATIONS
CHINA-KOREA RELATIONS POISED FOR RECOVERY DESPITE INTENSIFIED CONFLICT ON SOCIAL MEDIA
SCOTT SNYDER, COUNCIL ON FOREIGN RELATIONS & SEE-WON BYUN, SAN FRANCISCO STATE UNIVERSITY
China’s relations with North and South Korea gained momentum in the first four months of 2021. China-North Korea relations were propelled by an exchange of messages between North Korean leader Kim Jong Un and Chinese President Xi Jinping around North Korea’s successful convening of the Worker’s Party of Korea’s (WPK) Eighth Party Congress, the appointment of former North Korean Trade Minister Ri Ryong Nam as North Korea’s new ambassador to China, and another round of messages in March that emphasized the importance of close relations. In a Jan. 21 Cabinet meeting, South Korean President Moon Jae-in pledged to develop relations with China to new heights, and in a Jan. 26 telephone call with Moon, Xi expressed support for Korean denuclearization and joint development of China-South Korea relations. China and South Korea held consultations on maritime enforcement cooperation, defense lines of communication, health security, and free trade negotiations.

JAPAN-CHINA RELATIONS
THE GLOVES COME OFF
BY JUNE TEUFEL DREYER, UNIVERSITY OF MIAMI
After several years of seeking to counter each other while insisting that their relations were at a recent best, Tokyo and Beijing became overtly contentious. A major event of the reporting period was China’s passage, and subsequent enforcement, of a law empowering its coast guard to take action, including through the use of force, to defend China’s self-proclaimed sovereignty over the Japanese administered Diaoyu/Senkaku Islands in the East China Sea. Heretofore reluctant to criticize Beijing over its actions in Xinjiang and Hong Kong, Japanese Foreign Minister Motegi Toshimitsu finally did so in April, and pledged to work with the United States to resolve China-Taiwan tensions. Chinese Foreign Minister Wang Yi warned that a continuation of such moves would cause Chinese-Japanese ties to hit bottom and threatened retaliation for any interference on Taiwan. No more was heard about a long-postponed Xi Jinping visit to Japan.

JAPAN-KOREA RELATIONS
DIFFICULT TO DISENTANGLE: HISTORY AND FOREIGN POLICY
JI-YOUNG LEE, AMERICAN UNIVERSITY
Unsurprisingly, historical issues proved difficult to disentangle from other foreign policy issues in Japan-South Korea relations, which remained at the “worst level since the normalization” in the first four months of 2021. The Seoul Central District Court’s ruling on Jan. 8 that the Japanese government should pay damages to victims of sexual slavery during World War II set the tone for contentious relations at the beginning of the year. While the Moon Jae-in administration made gestures to mend ties, the Suga administration maintained that South Korea should take concrete measures to roll back the 2018 South Korean Supreme Court ruling on Japanese companies requiring them to compensate wartime forced laborers. Export restrictions levied by Japan against South Korean companies in 2019 remain in place, while the case is with the World Trade Organization after South Korea reopened a complaint in 2020 that was filed and then suspended in 2019.

CHINA-RUSSIA RELATIONS
EMPIRE STRIKES BACK AT MOSCOW AND BEIJING
BY YU BIN, WITTENBERG UNIVERSITY
For Moscow and Beijing, the changing of the guard in the White House in January 2021 meant no reset of ties with Washington. Instead, the newly inaugurated Biden administration turned the screws on both China and Russia by reinvigorating alliances, firming up sanctions, and prioritizing force deployment, particularly to the Indo-Pacific region. In contrast to Biden’s multifaceted diplomatic offensive, China and Russia seemed passive, if not inactive, both in terms of their bilateral ties and their respective relations with the US. Top Russian and Chinese diplomats met in person just once in the first four months of 2021 in the middle of sharply escalated tensions across the Taiwan Strait and in East Ukraine. Meanwhile, Beijing and Moscow waited to see if the transition from Trumpism would lead to a brave new world (“new concert of powers”), a grave new world of Kissingerian “great games” in the era of WMD plus AI, or something in between.

JAPAN-SOUTHEAST ASIA RELATIONS
A DIPLOMATIC “NEW NORMAL” IN THE INDO-PACIFIC REGION?
BY KEI KOGA, NANYANG TECHNOLOGICAL UNIVERSITY
Japan-Southeast Asia relations were relatively stable, despite COVID-19, as summarized by three trends: emphasizing multilateral actors; prioritizing enhancement of bilateral relations with two countries (Indonesia and Vietnam); and the synthesis of Japan’s Free and Open Indo Pacific “vision” (FOIP) and ASEAN’s ASEAN Outlook on the Indo-Pacific (AOIP). Japan and Southeast Asian states managed to achieve tangible cooperation, as illustrated by the establishment of the ASEAN Centre for Public Health Emergencies and Emerging Diseases (ACPHEED). Yet, strategic dynamics among Southeast Asia, Japan, and the United States are shifting because of changes in Japanese and US political leadership. Japan, the most reliable partner for Southeast Asia in the Trump era, seemingly faced a relative decline in the importance attached by Southeast Asia because of the United States’ renewed commitment to the region. In the context of this new diplomatic reality, the foremost challenges that Japan and Southeast Asia will likely face in 2021-2022 are Myanmar and ASEAN Centrality in the Indo-Pacific.

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PacNet #37 – How Xi Jinping Thought Gave Hong Kong its National Security Law

The anticipated adoption of the Hong Kong National Security Law embodies the growing influence of Xi Jinping Thought on Diplomacy, bridging the intersection between China’s domestic actions and its increasingly assertive foreign policy. The law will have lasting implications in empowering Beijing to outlaw pro-democracy opposition, place additional limits on civil liberties, and dismantle the rule of law in Hong Kong.

On May 21, the National People’s Congress (NPC) introduced a draft law for debate under the title of Establishing and Improving the Legal System and Enforcement Mechanism of Hong Kong (henceforth the “National Security Law”). The NPC stated that delegates would review a plan to set up a legal framework and enforcement mechanism for safeguarding national security in Hong Kong.

The central government urged Hong Kong to accelerate its implementation of national security legislation, mindful of their prior failed attempt in 2003. Despite the existence of the Emergency Regulations Ordinance as an established precedent for maintaining public order in the city, Beijing has determined that its implementation of the law is necessary to  “prevent, stop, and punish” threats to Chinese sovereignty in Hong Kong.

The draft law was shared with NPC delegates and presented publicly as a motion during the third session of the 13th NPC on May 21, and rubber stamped on May 28. The law is presently undergoing the drafting process by Beijing, after which the Hong Kong government is expected to adopt it by promulgation over the coming months. 

What is in the Law?

The National Security Law is predicated upon several basic principles—including safeguarding national security, upholding the principle of OCTS, protecting the rule of law, opposing external interference, and safeguarding the legitimate rights and interests of the Hong Kong people.

The draft contents of the law itself consist of an introduction and seven articles, most prominent being Articles 2, 4, and 6. Article 2 outlines Beijing’s opposition to foreign interference in Hong Kong’s internal affairs, a matter of growing relevance following the United States’ adoption of the Hong Kong Human Rights and Democracy Act in 2019.

Article 4 specifies that the Hong Kong government establish “enforcement mechanisms” to safeguard national security. This follows upon the contention of Beijing’s liaison office to Hong Kong in April that the central government held the authority to interfere in local affairs, despite it being a clear violation of the Basic Law.

Article 6 provides the central government with a “carte blanche,” affirming Beijing’s authority to establish and improve Hong Kong’s legal system and enforcement mechanisms, to punish any separatist or terrorist activities, and to enact the National Security Law under Annex III of the Basic Law.

The law was introduced owing to perceived national security risks by elements in the city opposed to Beijing’s “one country, two systems” (OCTS) principle, which is to be addressed in the creation of the “national security bureau”—coordinating with the local judiciary and law enforcement in protecting both the Constitution of the People’s Republic of China and Hong Kong’s Basic Law.

Impact of the Law

The law’s enactment by the Hong Kong government will have irrevocable and permanent effects upon the city’s autonomy and its international reputation as a free market system.

The law will serve as a “master key” in simplifying the process through which the central government may introduce, interpret and enforce new laws in the city. This will empower Beijing to harmonize Hong Kong’s laws with the mainland’s, and further erode the established governance framework of the OCTS principle which has guided the city since 1997.

The law will also facilitate the introduction and strengthening of oppressive systems which seek to corrode Hong Kong’s identity, among them laws providing for “national security education” in schools, requiring educators to instill youths with patriotic values. This is furthered by the passage of the National Anthem Law on June 11, which provides that those whom offend the Chinese national anthem may be subject to three years imprisonment or a fine of HK$50,000 (about US$6,500).

Finally, the law will enable further restrictions on civil liberties—freedom of speech, expression, and the press. This has already been observed through the Hong Kong government’s “creative” invoking of the Emergency Regulations Ordinance to ban the wearing of face masks, the arrest of reporters for “loitering,”  and in ruling that the use of a loudhailer constitutes assault.

Xi Jinping Thought on Diplomacy

The escalation of Beijing’s legal authority in Hong Kong represents the practical application of Xi Jinping Thought on Diplomacy (XJTD), evidenced through China’s willingness to assert its status as a Great Power,  to advance its interests against the international community, to right historical wrongs, and to reconceptualize its objective of peaceful reunification under OCTS.

The main points of XJTD are predicated upon the desire for international relations to have “Chinese characteristics,” for Beijing to have a leadership role in international affairs, and for China’s foreign policy to safeguard her sovereignty, security, and developmental interests. This leads to the conclusion that XJTD is directed toward challenging the existing international order, prioritizing China’s core national interests, and advancing Xi’s image as China’s new paramount leader.

China is well-aware of Hong Kong’s stature as a global city, as a “global stage” within which events can give rise to international consequences. The former British colony exists as an opportunity for Beijing to showcase its resolve and assertiveness under the ideal of Fen Fa You Wei (“striving for achievement”), mindful of Hong Kong’s colonial history and its symbolism as a stronghold of democracy and Western ideals in the region. The outcome of the Hong Kong situation will directly impact upon Xi’s image and legacy as a paramount leader.

Beijing’s assertive actions also represent a willingness to prioritize core national interests in rescinding unfavorable international agreements, and disregarding international human rights standards. In focus is the 1984 Sino-British Joint Declaration, in which China agreed to preserve the city’s sociopolitical status quo from reunification from 1997 until 2047, and how the National Security Law may prove incompatible with China’s international obligations under the International Covenant on Civil and Political Rights. Furthermore, Beijing’s actions indicate a revised conception of the OCTS principle and its implementation, from one of peaceful reunification to one of forceful reunification under Xi’s tenure.

Summary

When the dragon is cornered, he is at his most dangerous. Beijing’s intensifying control over Hong Kong embodies China’s resurgent assertive foreign policy under Xi and XJTD, to reinforce China’s newfound status as a global power and strike out in the face of significant international criticism surrounding Covid-19 and the evolving trade war with the US.

Despite the looming sociopolitical crisis expected to follow the National Security Law, the motivation of the Hong Kong people to unite and force change upon their government cannot be ignored. News of the law has already been met with strong opposition with thousandsvoicing their disapproval, and protests expected to intensify in the lead up to the 2020 Legislative Council Election and the National Security Law’s formal implementation.

Adoption of the National Security Law represents the final nail in the coffin for Hong Kong’s autonomy, and demonstrates the evolving nature of OCTS under XJTD. This raises questions of whether the former colony of Hong Kong will continue to retain its unique identity or devolve into just another mainland Chinese city.

Jonathan Lim (jl@wiselaw.com.au) is a Pacific Forum Young Leader and Australian lawyer. His expertise spans Chinese foreign policy and East Asian Affairs.

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PacNet #15 – Covid-19 and protests need not cripple tourism-heavy Hong Kong

On April 3, 2019, the Hong Kong government introduced amendments to Hong Kong’s extradition bills that would enable criminal suspects to be sent to mainland China for trial. This decision sparked Hong Kong’s anti-extradition bill protests—the number of individuals going out to demonstrate peaked on June 16 at an estimated 2 million individuals. To date, more than 1,000 protesters have been arrested.

The continuing demonstrations, which have evolved into a call for democratic reforms and police accountability, have been a heavy blow to local tourism. The number of mainland Chinese visitors from late September until the end of 2019 dropped by some 60% year-on-year. Forward bookings for travel to Hong Kong from the mainland between September 24 to December 30 plummeted by 58.2% compared to the same period in 2018. Even during the week following China’s National Day last October, dubbed “Golden Week,” bookings for travel fell by 39.7% relative to 2018.

According to Jameson Wong, APAC business development director of ForwardKeys, “Mainland China is Hong Kong’s most important source market and the tourism industry offers 300,000 jobs in Hong Kong, [so] these numbers reveal that the demonstrations are delivering a devasting blow to the economy of Hong Kong.”

Impact of the outbreak

In January 2020, Hong Kong welcomed an average of 100,000 visitors daily, a 53% decline from the 200,000 daily arrivals recorded in the first half of 2019.  The outbreak of Covid-19 has compounded the loss of mainland Chinese visitors, as the Hong Kong government has restricted the flow of individuals between Hong Kong and the mainland. From late January onwards, the number of visitors in Hong Kong plunged to 65,000 per day, and the number further dropped in February to below 3,000 visitors per day. Of these, 75% were non-mainland visitors.

Hong Kong has more than 350 confirmed Covid-19 cases as March 20. Hong Kong’s Financial Secretary Paul Chan Mo-po argues the economic impact of the coronavirus outbreak could be more severe than that of 2003’s SARS ordeal. As he highlights, the city’s growing reliance on tourism and retail would put the occupational security of employees in these sectors at risk.

The contribution of travel and tourism to the city’s GDP was 17.4% in 2018, the year prior to the massive outbreak of socio-political unrest. For context, travel and tourism’s contribution to Hong Kong’s GDP was some 9.0% in 1998. The data demonstrate that Hong Kong has been growing overly dependent on tourism. In specific, Hong Kong’s economic growth has primarily relied on the influx of mainland tourists. Just before the crises occurred, 78% of arrivals were mainland visitors, ecas compared with 41% from 2002, the year before the outbreak of SARS.

Status quo

Due to the combination of socio-political and health crises, according to data from the Census and Statistics Department, the retail sales dropped 21.4 percent YoY to US$37.8 billion in January 2020, as compared to the retail performance in January 2019. The reduction in retail sales in this January marked the 12th consecutive month of decrease in the value of retail sales in Hong Kong.

In addition, several countries have issued travel bans or restrictions against Hong Kong nationals. The Philippines, for example, announced that arrivals from Hong Kong would be banned. Alternatively, the United Kingdom, Israel, Thailand, and other countries announced a 14-day self-quarantine order for all visitors coming from Hong Kong. International travel bans and restrictions on individuals coming from Hong Kong hint the city may become less appealing for visitors due to the widespread Covid-19, where local tourism and retail industries may be further hit in the coming months.

Recommended policies

In response to both socio-political and health crises, the Hong Kong government should increase the amount of one-time cash handouts distributed to local businesses within the retail industry as economic stimuli. These should even include local small and medium-sized businesses, such as Lung Mun Cafe and Fu Kee Noodles, that offer advantages to customers who support the anti-extradition bill demonstrations. These businesses have been hit the hardest in this critical period. The delivery of one-off economic stimuli, as an olive branch, is particularly conducive to the sustainability of small and medium sized retail businesses and minimization of anti-governmental sentiments among local entrepreneurs. In doing so, retail companies’ decisions to liquidate might decrease despite the financial hardship and uncertainty citywide. Fewer employees might therefore be laid off and the government’s subsidies to unemployed Hong Kong citizens could be minimized.

Moreover, the Hong Kong government should incentivize alternative business opportunities within the retail industry. Hong Kong’s revenue in the e-commerce market is projected to amount to $5.511 billion in 2020. Revenue is expected to show an annual growth rate of 6.8% from 2020 to 2024. The government should therefore lower the profit tax rates charged toward newly registered e-commerce businesses in this fiscal year. As a result, more retail companies are motivated to establish their online businesses, minimising the decline in sales revenues due to the plunge of the numbers among mainland and non-mainland visitors. In the long-term, the transition from in-store to online sales can benefit Hong Kong’s economic sustainability as the retail industry would be less dependent on the tourism performance.

Jason Hung (sociowriting@jasehung.com) is a visiting researcher at Stanford University and a Clinton Global Initiative University (CGI U) fellow at Clinton Foundation.

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PacNet #5 – Hong Kong hurts itself by financially excluding foreign domestic workers

Some 385,000 foreign domestic workers (FDWs) are employed in Hong Kong. A total of 69.9% were from the Philippines. FDWs comprised 10% of the local workforce. Statistics from the Hong Kong government revealed that the number of FDWs citywide will rise to 600,000 by 2047. The soaring number of FDWs in Hong Kong is partially due to the city’s relatively liberal policy toward foreign workers—the government does not impose any quota on FDW intake so long as employers and employees fulfil the requisite conditions set out in the standard contract.

The Hong Kong government has permitted FDWs to work in the city since the 1970s in order to meet the shortage of local full-time domestic workers. The arrangement has been in line with the fundamental principle of the government’s labor policy, in which employers are entitled to hire imported laborers if they cannot recruit suitable local workers in Hong Kong.

Alternatively, a shortage of an estimated 7 million domestic workers has been reported in mainland China, predominantly due to the growing intensity of work for urban families and, therefore, an increasing need to hire domestic workers. In contrast to Hong Kong’s situation, on the mainland most chores are performed by migrant workers from within the country rather than FDWs.

The influx of FDWs within Hong Kong, alongside the increasing educational attainment of local women, enables Hong Kong women to join in the labour market and seek paid work. This is because FDWs are subject to time-consuming, physically demanding household duties that local women disdain, thus facilitating the economic activity of the local female workforce. Figures published by the World Bank indicated that female labour force participation rate (LFPR) in Hong Kong grew from 49% in 2000 to 54% in 2018.

Aside from indirect economic contributions, Hong Kong parents favor hiring Filipino FDWs due to their English proficiency relative to FDWs from other Southeast Asian countries. Bilingualism is an important asset helping Hong Kong develop as a major commercial and economic centre at the crossroads between West and East. Hiring domestic helpers from the Philippines, who use English in everyday communication, is conducive to aiding Hong Kong children to read and write English, an intellectual and cultural capital helping generate economic value in the long-term.

A report, entitled “The Value of Care: Key Contributions of Migrant Domestic Workers to Economic Growth and Family Well-being in Asia,” was commissioned by Experian, a global information services company, in partnership with Enrich, Hong Kong’s leading educational organisation promoting the economic empowerment of migrant domestic workers. According to the report, FDWs in Hong Kong contributed an estimated $12.6 billion to the city’s economy, or 3.6% of local GDP. Additionally, only 49% of Hong Kong’s mothers aged 25 to 54 would be able to participate in the labour market if they did not employ FDWs. After hiring FDWs, however, the female LFPR increases to 78%.

Aside from directly contributing to family wellbeing, employing FDWs also indirectly adds $2.6 billion to Hong Kong’s economy. Hiring FDWs for childcare, alternatively, is at least three times cheaper than sending children to childcare centres and finding private tutors, further securing Hong Kong households’ financial wellbeing.

Despite their significant financial contribution to local economy, FDWs are exploited to a substantial degree. Hong Kong’s foreign domestic workers are entitled to a minimum wage and protected under the Employment Ordinance and the Standard Contract for the Employment of a Foreign Domestic Helper. However, FDWs are paid a low salary. The minimum wage was set at HK$4,310 (US$551) per month in 2017, excluding food allowance, a rise of 2.3% from the previous year. The wage, with the food allowance included, amounts to HK$5,205. Despite a yearly adjustment of FDWs’ salary level, the adjustment is often below FDWs’ expectations. The Hong Kong government should adjust the minimum wage yearly as per the inflation rate, in order to maintain the financial wellbeing of FDWs. This helps minimise their need to seek second, informal, and illegal job opportunities, thus increasing the likelihood of their being fined or deported.

One statistic highlights the demeaning financial exclusion of FDWs within the city: only 18% of Hong Kong’s FDWs have local bank accounts, far lower than FDWs in Singapore (51%) and Malaysia (86%). Taking the Singaporean government as a reference, the Hong Kong government should consider applying public policies mandating that employers pay FDWs through bank accounts and encourage more banks to offer no minimum amounts when opening a bank account.

According to Secretary for Labor and Welfare Dr. Law Chi-kwong, Hong Kong needs an extra 240,000 FDWs in the next three decades. FDWs are a crucial asset to help Hong Kong sustain its economic prosperity. However, the Hong Kong government is treating FDWs from the Philippines and other Southeast Asian countries as foreigners and low-class workers. The government financially isolates FDWs from the wider population. Local academics and journalists dub the government’s practices an exercise in modern-day slavery.

Without the employment of FDWs, local household revenues would decrease while expenses would increase significantly. If the Hong Kong government continues its financial limitation and exclusion against FDWs, FDWs may relocate to neighboring countries, putting the economic sustainability of Hong Kong at stake.

At the end of 2019, the secretary for labor and welfare warned that mainland China’s recent labor policies, of opening up to workers from the Philippines, pose a significant threat to Hong Kong’s economic development. As he noted, if wages for FDWs in the mainland were double those of the city, half of Hong Kong’s 190,000 Filipino FDWs would leave to seek work across the border.

It is noteworthy that in the recent months of Hong Kong’s political unrest, the Filipino Migrant Workers’ Union (FMWU) and Indonesian Migrant Workers’ Union (IMWU) announced FDWs are concerned about the disrupted transportation systems and their arbitrary, irregular day-off schedules. This socio-political interruption has barred FDWs from meeting and socialising with relatives and friends during the statutory holidays, resulting in a rise in their anxiety levels.

Financial limitation and exclusion, political unrest and uncertainty, and mainland China’s recent policies of increasingly opening up to FDWs would all affect the economic landscape of Hong Kong. Substantial economic reforms benefitting FDWs—raising economic inclusion and benefits for these migrant cohorts—should be prioritised, or else the economic performance of Hong Kong will be jeopardized in the coming decades.

Jason Hung (LinkedIn: https://www.linkedin.com/in/jase-h-y-s-929415110/) is a visiting researcher at Stanford University, a Clinton Global Initiative University (CGI U) fellow (2019 cohort) and a freelance columnist at South China Morning Post. He previously worked as a country director of China at Global Peace Chain.

PacNet commentaries and responses represent the views of the respective authors. Alternative viewpoints are always welcomed and encouraged. Click here to request a PacNet subscription.