Hong Kong Is Showing Symptoms of a Failed State

With empty supermarket shelves and rising public distrust, the coronavirus-hit city is ticking most of the boxes.

Clara Ferreira Marques

Grocery runs in Asia’s financial powerhouse have begun to remind me of shopping in Russia in the chaotic summer of 1998. You grab what you can find, and if there is a queue, you consider joining it. Surgical masks and sanitizer gel are bartered for; detergent shelves are bare. A run on toilet paper last week, after an online rumor, was reminiscent of Venezuela.

Crowds are irrational everywhere, and social media hardly helps. Yet the palpable anxiety in coronavirus-hit Hong Kong these days suggests worrying levels of distrust in a city where citizens have always expected private enterprise at least, if not the state, to keep things ticking over. Both have failed miserably, preparing inadequately even after the SARS outbreak that killed almost 300 people in the city in 2003. 

A fragile state is usually defined by its inability to protect citizens, to provide basic services and by questions over the legitimacy of its government. After an epidemic and months of poorly handled pro-democracy demonstrations, Hong Kong is ticking most of those boxes. Add in a strained judicial system, and the prognosis for its future as a financial hub looks poor.

A snapshot of the situation first. Hong Kong is not, at least for now, as grim as parts of mainland China, where the outbreak of novel coronavirus has people building barricades, or being followed around by drones. This isn't Wuhan. Yet after 26 confirmed cases and one death, the semi-autonomous territory of more than 7 million people is in lockdown, with schools, universities and museums closed. A $360 billion economy, torn apart by months of anti-government protests, is in tatters. Masks are in such short supply that some clinics have closed, and queues snake daily outside pharmacies. Official declarations, meanwhile, have attracted derision on social media: One senior politician argued in the Legislative Council that disposable masks could be steam-cleaned, ignoring the remonstrations of the city’s Centre for Health Protection.

For someone who arrived recently from orderly Singapore, it’s a mess that’s hard to comprehend. Indeed, it has become hard not to think of creaking states I have studied and reported on, in Africa and the former Soviet Union. The problem isn’t the epidemic, or indeed Hong Kong’s health system. Rather, it’s the mishandling of the situation by the administration of Chief Executive Carrie Lam, left with so little legitimacy and social capital that citizens simply no longer believe it will act in their interests. That’s particularly true when the crisis comes from the mainland.

Lam’s fumbling over the question of masks is indicative of  the government’s mismanagement. Having banned masks last year to stop protesters concealing their identities, officials began asking people to wear them to prevent the virus from spreading. Then, on the day of Hong Kong’s first coronavirus death, Lam appeared in public without one and said her officials shouldn’t wear masks to save them for medical workers. Senior civil servants ignored the directive, opposition lawmakers accused her of sowing panic and health experts panned the idea as unsafe. Lam eventually apologized for creating confusion.

That debacle was followed by the toilet-paper panic, unthinkable in any other international powerhouse. All of this should worry executives, bankers and traders almost more than street clashes: It suggests deterioration. The next shock will be worse.

It’s indefensible for a city that lived through severe acute respiratory syndrome to have failed to stock sufficient masks for its population, or to put in place clear, practiced quarantine measures. In an indication of ill-conceived priorities, consider that this time last year, the chief preoccupation of health authorities was to ban e-cigarettes, a concern that now seems almost frivolous.

Lam was quick to bring in draconian measures — briefly shuttering even parks and the postal service — but those weren’t matched by efforts to calm the population, isolate visitors or hand out cheap masks. Travelers from mainland China were only to be quarantined as of 12:01 a.m. Saturday, weeks after the seriousness of the outbreak became clear.

The comparison with Singapore is unflattering. If official statistics are accurate, the Southeast Asian city currently has more cases than Hong Kong. A higher alert level on Friday did prompt Singaporean shoppers to clear supermarket shelves, but not with Hong Kong’s sustained levels of frenzy, at least not yet. For now, school events there are curtailed, companies have been told to consider contingency plans and to cancel large-scale events —  in accordance to a clear system laid out after SARS — but otherwise life continues. Face masks are not only stocked, but handed out free, and earlier last week, at least, there were no queues to claim them. 

The city-state has had its own bungled moments, such as the Zika virus outbreak, and is hardly known for its liberal leanings. It undoubtedly could have handled Friday’s announcement better. But it still looks far more competent and prepared. Hong Kong’s wealthy clients were only opening accounts in Singapore before. They may now start to move money.

Consider what centers of banking and trading need. They require money to move freely, a dependable legal system, and ultimately the ability for their staff, expatriate and otherwise, to travel and work safely. Hong Kong is becoming increasingly unable to provide those. A relative advantage remains, so long as China keeps constraints on financial and information flows, but it is shrinking.

This isn’t Caracas,  at least not yet.  But watching a group of women jostle for the last packet of antibacterial tissues, I am back in Moscow, watching people panic-shop as the currency collapses, eroding their life savings. Failed states, as with Anna Karenina’s unhappy families, each fail in their own way.\

Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.

The article was originally published on Bloomberg.  
Views in this article are authors own and do not necessarily reflect CGS policy.   

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