Hong Kong Migration Shifts in Sight?

Hong Kong is one of the most extraordinary cities in the world. Having the privilege to earn a Masters degree in International and Chinese Law, making regular business trips as a immigration lawyer, and just out right touring Hong Kong, I have spent a lot of time in the city. It’s fascinating to see the mixing of the cultures, generally the western business community and the local Hong Kong business community. To complement the cutting edge business and legal community, there is a wealth of art and culture. As one person put it, Hong Kong is New York City on steroids. The recent protests in Hong Kong raise the question, what is the attraction to Hong Kong. Why do so many business people, lawyers, artists, and tourists come to Hong Kong? Why do local Hong Kongers choose to live in Hong Kong? As an immigration lawyer, this topic is particularly interesting as it perhaps sets the table for an upcoming migration trend. In the late 1990’s around the time of the handover from Great Britain to China, many local Hong Kong people migrated to Canada for reasons often related to the fear that life that they know it in Hong Kong would change. Since then, many Hong Kong people returned from Canada as things had not seemed to have changed, at least not for the worse, and in some cases for the better. For the most part, life in Hong Kong had a lot of positives. Strong economy, low taxes, good social services, lots of culture, strong anti-corruption rules, and plenty of things to do. Like any society, there were likely negatives such pollution, and cost of living increases. The cost of living likely increased because Hong Kong had become such a desirable place to be. Western Corporations often made Hong Kong headquarters and mainland Chinese Citizens often immigrate for a variety of reasons. Consequently, a city designed for 7 million people became the gateway to China with people and companies from around the world competing for limited resources.

What is the attraction? Perhaps it’s the “one country, two systems” model. Hong Kong has been looked at as independent of China, while being the gateway to China. Hong Kong has it’s own rule of law, based on the British common law system that is understandable to western companies, efficient business formation rules, low taxes, efficient banking policies, close proximity to China (just a short commuter train away to the border or a short flight to many major Chinese cities). The Hong Kong system is a way to transition into the Chinese economy.

    With the recent protests, a few key questions are:

  1. After the 50 year transition period, will there no longer be “one country, two systems”?
  2. If there eventually will not be “one country, two systems”, what will happen? Will Hong Kong simply be another populated Chinese city? Will there be no more british common law legal system, separate banking rules, open internet policies, separate tax scheme, etc? Will Hong Kong leaders be a part of the Chinese political community?
    For some in Hong Kong, being a part of China will be welcomed. For others, it will too much of a life change. For Western companies, they may no longer have incentives to set up business in Hong Kong. Less business, would mean, less employment. Less employment, would likely mean a smaller population. Will mainland Chinese no longer look to migrate to Hong Kong? Or, could the opposite happen, mainland Chinese will eventually move (not migrate) to Hong Kong?

The above questions are simply not answerable right now. This article is not intended to make any bold predictions, but rather pose questions that many are likely thinking about. I do believe that just the perception of these questions will likely lead to various migration shifts. If western companies will no longer set up shop in Hong Kong, where will the western companies and their employees go? Will it be easier to do business in China? If so, perhaps Western companies will simply open companies in the mainland. If not, will they go to Singapore? The downside of Singapore is the proximity. Singapore has a 6 hour flight to Beijing compared to Hong Kong’s 3 hour flight. How about Tokyo? Tokyo only has a 3 hour flight to Beijing but a 5 hour flight to Guangzhou. Perhaps Bangkok could be a central hub for doing business in China given the cheap cost of labor and short flight times to China (ie. Bangkok to Beijing and Guangzhou is approximately 4 1/2 hours and 3 hours respectively). Still, the ease of doing business in Tokyo and Bangkok compared to Singapore may not be as desirable. Perhaps the western companies wanting to do business in China may just need to figure out ways to assimilate in the “one china, one system”.

As a US immigration lawyer, the current “perception” of fear in Hong Kong seems like a wonderful opportunity for the United States through investment. China is currently 80% of the EB5 market. This 80% number does not include Chinese investors. With the above concerns, perhaps many Hong Kong nationals will want to relocate to other parts of the world. While Canada has discontinued their investment immigration program, Australia has a $5 million requirement, and Europe’s economy currently struggling along with a very high tax system, the US should consider wooing Hong Kong investors. Under the current EB5 scheme, EB5 investment equals jobs. What country in the world does not want the creation of more jobs. But Hong Kong Citizens to the US (and other parts of the world, but this article is just about Hong Kong) should not just be limited to investment. For example, the current E2 visa is not available to Citizens of Hong Kong because there is not a treaty available between the US and Hong Kong, among other countries. So why not create a new start up visa? As mentioned above, the formation of companies and contribution of capital just creates jobs. And what free country in the world does not want the creation of jobs? For working professionals, why not add H1B numbers. As I have repetitively written, the cap on H1B numbers has stifled business and employment in the US. Stifling business reduces productivity and hinders job creation. Some may argue that our unemployment rate is at 6% and we do not need more job creation. Again, what free country in the world would not more jobs? In Switzerland the Citizens protest if the unemployment rate gets above 3%.

While it’s not possible to predict what the future holds in Hong Kong, it’s fair to say that the uncertainty will create fear and possibly more migration. And it would seem in the best interests of the US economy to attract Hong Kong Citizens, as well as other parts of the world to the United States. Some simple measures taken by Congress and the President could attract capital, top talent, and ultimately create jobs.