‘We see hope’: Shenzhen businesses cheer China’s reopening, but roadblocks lie ahead
China is hoping for a rebound in its economy after the dismantling of its strict zero-COVID policy.
SHENZHEN: China's reopening after three years of COVID-19 isolation might have brought initial relief for businesses, but existing roadblocks such as a COVID-19 surge and trade restrictions could slow the pace of recovery, said observers.
China's economy grew by 3 per cent last year, its second slowest pace since 1976 and far short of its gross domestic product (GDP) growth target of around 5.5 per cent for the year.
It came as authorities doubled down on lockdowns and quarantines, which weighed on manufacturing and business activity for most of 2022.
However, the country is hoping for a rebound this year, after the dismantling of its strict zero-COVID policy late last year.
The Greater Bay Area, which includes Hong Kong, Macao, and nine mainland cities in Guangdong province, including Shenzhen, is positioned to play a key role.
Even before the pandemic, authorities have sought to turn the region into an innovation and technological powerhouse.
CHINA FACES CHALLENGES IN ITS RECOVERY
However, the Economist Intelligence Unit (EIU) believes the mainland’s current COVID-19 surge has to stabilise first.
"Hong Kong doesn't have an external-facing industrial sector, manufacturing sector of its own really. It's more about its links to the Greater Bay Area on the mainland side, through finance as well," said EIU's senior Asia analyst John Marrett.
“There's going to be a positive boost, if nothing else, from the sort of people-to-people exchanges that weren't possible during the last two-and-a-half to three years.”
Mr Marrett pointed out that the Greater Bay Area faces a number of challenges that have increased during the pandemic.
"It's still going to face the outcome of friction between the United States and China, for instance," he added.
These obstacles include trade tariffs and export restrictions on US chips to China, which could impact high-tech manufacturing in the bay area region.
The Hong Kong Chamber of Commerce in China expects the flow of people and goods between the mainland and the special administrative region to pick up after the Chinese New Year holiday, and possibly return to normal from the third quarter.
Tourism, retail and logistics have been the hardest hit in the last three years, it noted.
“The response (from businesses) was very good, and they welcomed the move,” said Ms Amy Siu, chairman of the mainland-based Hong Kong business group.
“Many are ready to change their development policies for the first quarter of this year. Those who are ready to invest in the mainland and have their businesses or work should come back soon to handle what they need to.”
Meanwhile, Futian checkpoint in Shenzhen has been a hive of activity. Travellers, traffic, and business activities are back as borders between the mainland and Hong Kong reopened on Jan 8, after being shut for the last three years.
HIVE OF ACTIVITY IN SHENZHEN
“Most customers (haven’t been back) for three years,” said Ms Daisy Nie, manager of a convenience shop located opposite the checkpoint. “Some of them said, ‘It’s been a long time since I’ve seen you. I thought you weren’t open anymore.’
“I told them we have been waiting for them to return.”
For real estate agent Lin Shaopan, whose brokerage firm is situated next door, it has been a long wait.
Mr Lin, who has worked in the property industry for 20 years, tried to grow his clientele online and through virtual tours but saw limited results.
“Many Hong Kong compatriots come to the mainland to buy or rent property,” said the 30-year-old. “Previously, they would come to our shop, and we would bring them to view houses.
“But after the closure of the borders, there have been very few such clients in the last two or three years.”
Over in Shenzhen’s Huanggang area, a 15-minute drive away from the checkpoint, other businesses have felt the pinch of the COVID-19 curbs. The area has many shops and eateries that are popular with visitors from Hong Kong.
But with borders between the mainland and the special administrative region closed over the last three years, many businesses have had to close.
Mr Mei Qingwu, who runs a massage and foot therapy business, has chosen to press on even as his next-door neighbours have taken a break or shut their doors due to the lack of customers.
However, it has not been easy as 70 per cent of his customers used to be from Hong Kong.
“It has been very difficult,” he said. “These three years have been really difficult.”
To keep the business afloat, the 50-year-old has had to borrow money from friends to pay the rent, lay off staff and cut wages by over US$400 per worker.
The Hubei native said he was planning to close his shop if the borders did not reopen by March.
He acknowledged it may take some time for things to get back to normal.
“Many Hong Kong visitors who come to (the mainland to) spend money have not returned yet. They are here to visit relatives, return to their hometown, or celebrate the Chinese New Year," said Mr Mei.
“We still don’t have much business, but we see hope. We just need to see a little hope.”