Hong Kong is losing its appeal for Westerners because of the impact of Covid restrictions, the National Security Law (NSL), an increasing requirement to speak Mandarin and negative coverage in the Western media.
In January, U.S. consul-general Gregory May said that about 20 per cent of Americans in the city had departed over the previous two years, leaving 70,000 U.S. individuals and 1,300 companies in the city.
"Companies should be aware that the risks faced in mainland China are now increasingly present here in Hong Kong," he said. "The National Security Law and actions taken by Beijing and Hong Kong authorities may negatively impact company staff, finances, legal compliance reputation and operations," he said.
In a report published on August 18, the European Union said that China's actions in Hong Kong and Macao were eroding the autonomy of those areas, as well as damaging democratic principles and fundamental freedoms. "These developments increasingly cast doubt on the state of the rule of law in Hong Kong – a cornerstone of its economic success," it said.
Marie Leblanc, a French businesswoman, said that, over the last three years, a large number of the French-speaking community had left. "The main reasons were the Covid restrictions and the NSL. The city has changed dramatically, and so fast. Parents wonder if they want their children to grow up in such a city."
The number of registered foreign lawyers in Hong Kong dropped from 1,533 in September 2018 to 1,428 in August this year, according to data from the Law Society of Hong Kong.
One reason for the exodus was the strict quarantine regulations during the Covid pandemic. "They persuaded many expats to relocate to Dubai, Singapore and other locations," said David Leung, a business consultant. "Now the pandemic is over. The expats have established homes and offices in the new place and put their children in school. Not all will return."
A second reason is the National Security Law (NSL), which has affected the law, journalism, publishing, creative arts, liberal arts and humanities faculties in schools and universities.
Leung said that the provisions of the NSL were sweeping, leaving many people uncertain exactly what was permitted and not permitted. "Perhaps that was the intention. It makes law firms avoid controversial cases and ones that might cross a red line," he said.
An editor at a publishing house said that, before the NSL, they used to produce books that could not be published in the mainland but were popular with mainlanders visiting here. "This kind of book was an important revenue earner for us. Do we dare publish them now?"
A third reason is the increasing job requirement to speak, read or write Mandarin, a skill few Westerners possess. More and more companies here are subsidiaries of mainland firms or have the mainland as their principal market, so Mandarin is a requirement of the job application.
A fourth reason is the worsening tension between China and the West, especially the United States. Before 2019, Hong Kong was considered a separate entity from the mainland, but increasingly less so. Companies and financial institutions find themselves trapped between two sets of rules and regulations, from Beijing and Washington. How do they comply with both?
Finally, Hong Kong is receiving a negative press in the Western media. This affects those people who have not come here and discourages them from doing so.
Government figures on the number of applicants approved under its Top Talent Pass Scheme showed that around 95 percent came from the mainland.
Leung said that those who successfully applied for a job here would come, as before. "But this negative image affects those looking for an overseas experience and willing to go to a new place for a new experience in the hope of finding a job. Hong Kong was a popular destination for such young people from Europe and North America. I think that is changing now."
For those with a steady job and good salary, the attractions of Hong Kong remain – high income, low tax rate, excellent medical system and public transport, good law and order, sports facilities, the sea and the mountains.