HONG KONG – Hong Kong’s government insisted on Friday that months of social unrest had not impacted business activities in the special-status Chinese territory just after Fitch Ratings lowered its rating for Asian financial hub from AA+ to AA with a negative outlook.
In a letter sent to foreign consulates in Hong Kong, Commerce and Economic Development Secretary Edward Yau said that “Hong Kong remains safe and business activities continue as normal despite the occasional inconvenience and disruptions in certain areas.”
The letter, sent Friday to the international press by the Information Services Department, stated that the city’s business sectors “are vigilant in maintaining their best in serving our clients locally and overseas.”
“The Hong Kong Government will continue to uphold law and order and good governance. We will continue to uphold the freedoms so proudly protected here, including our freedom of the press and demonstration,” the statement added.
The commerce secretary highlighted the fact that operations at Hong Kong International Airport, the main gateway to the territory, continued uninterrupted despite protests on Sunday. Previous demonstrations in mid-August forced the cancellation of hundreds of flights.
The high-ranking government official also said that the decision by Chief Executive Carrie Lam to yield to one of the five demands of the demonstrators and officially withdraw the contentious extradition bill that sparked the protests will help to “foster dialogue that can help society move forward.”
The other four demands include the establishment of an independent commission to investigate alleged police brutality, the release without charge of those arrested in the protests, the withdrawal of the so-called “riot” definition on the demonstrations, and the implementation of universal suffrage.
Huge demonstrations erupted in June when Hong Kong’s chief Lam unveiled plans to pass an extradition bill that critics said would have enabled fugitives to be transferred from Hong Kong to mainland China to stand trial under the latter’s opaque legal system.
Hundreds of thousands have mobilized in the months since.
The reassurances from officials came after Fitch revised Hong Kong’s Long-Term Foreign-Currency Issuer Default Rating (IDR).
In a statement published late Thursday, the agency highlighted several driving factors behind its decision.
Fitch said that Hong Kong’s gradual rapprochement with mainland China with regards to its economy, finance and socio-political landscape would produce regulatory challenges in the future.
“These developments are consistent with a narrowing of the sovereign rating differential between Hong Kong and mainland China (A+/Stable),” it said.
“Ongoing events have also inflicted long-lasting damage to international perceptions of the quality and effectiveness of Hong Kong’s governance system and rule of law, and have called into question the stability and dynamism of its business environment,” it added.
It said it had attached a negative outlook to the territory’s creditworthiness because, despite some concessions from the government, protesters are likely to persist.
“The potential for renewed eruptions of social unrest could further undermine confidence in public institutions, and tarnish perceptions of Hong Kong’s governance, institutions, political stability, and business environment.”
The US-China trade war was an external factor bearing down on Hong Kong’s outlook, too. Fitch predicted growth in real GDP of 0 percent in 2019, meaning a contraction in the second half of the year, and of 1.2 percent in 2020.
A resolution to the socio-political conflict in Hong Kong and an improvement in China’s credit outlook could improve the special-status territories outlook, Fitch said.