Hong Kong

National Security Law:  The imposition of the National Security Law (NSL) by Beijing in July of 2020 on Hong Kong has created some uncertainty regarding the business and investment climate that could affect Hong Kong’s long-term attractiveness as an international business hub.  On July 16, 2021, the Department of State, along with the Department of the Treasury, the Department of Commerce, and the Department of Homeland Security, issued an advisory to U.S. businesses regarding potential risks to their operations and activities in Hong Kong. 

Talent Shortages: Hong Kong’s labor force has experienced a downward trend since 2019, when the city experienced social unrest after introducing a bill that would have allowed the extradition of Hong Kong residents to Mainland China.  The city’s working population dropped 0.2 percent year-on-year in 2019 and 1.7 percent in 2020.  In 2022, its labor force shrank by another 2.4 percent (or 94,100 people) to 3.78 million, its sharpest drop since 1985, according to official statistics.  The declining labor force and outflow of talent can be attributed to structural factors including an aging population, low birth rates, and political factors such as the city’s strict Covid-19 policies and concerns related to the Beijing-imposed NSL. 

The Hong Kong government is keenly aware of talent shortages and has put in place talent schemes aimed at attracting professionals to Hong Kong.  In December 2022, the Hong Kong government launched a quota-free Top Talent Pass Scheme to provides two-year visas to high-earning individuals and graduates from top-100 global universities.  The government also introduced a labor importation scheme in June to allow the import of up to 20,000 workers in the construction, aviation, and local transportation sectors.

Macau

Gaming and tourism eclipse other sectors: The pandemic significantly impacted Macau’s tourism and gaming sectors.  During the first six months of 2023, Macau’s GDP surged to MOP159 billion (US$19.8 billion), a 71.5 percent increase from the previous year.  This significant growth was primarily driven by Covid-19 policy changes starting in January 2023, which eliminated quarantine mandates and subsequently amplified tourism and gaming revenues. There are opportunities in non-gaming sectors for U.S. firms, including smart building, healthcare, themed entertainment, and architecture and design services.  

Pandemic-driven restrictions push more expats to join exodus: After more than two years of living in Macau, with some of the world’s strictest pandemic travel restrictions, including mandatory quarantine for overseas arrivals, a substantial number of foreign professionals decided to leave the city.  Macau saw a reduction of some 28,500 non-resident workers in the two years from the first quarters of 2020, down to a record low of 155,000 of which non-resident specialized workers had dropped by 17 percent to less than 5,000 in 2022, according to Macau’s statistics service. The broad-based shortage of talent will inevitably restrict Macau’s efforts in diversifying the city’s economy.