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Hong Kong: The high risk and cost of ‘zero Covid’ policies
Hong Kongers have shown a surprising reluctance to get vaccinated against Covid-19. File photo: Reuters.

Hong Kong may be the world’s worst offender in having more than enough supply of vaccines, but not enough of the city’s population bothering to take them, with 2 million unused doses sitting idle and barely 20% of residents have even had a first dose

When 2021 began five months ago, Covid-19 still seemed to be a far bigger risk to US cities than to strict quarantine bubbles like Hong Kong. When Hong Kong reported 53 new cases in one day in January, authorities extended school closures by another month, while at the same time the US state of New Jersey, with a population slightly higher than Hong Kong’s, was averaging daily case numbers 100 times higher.

Now, as we approach summer, the US already seems to have fully re-opened with travel back at pre-pandemic levels, while most Hong Kong residents have no idea when it might be possible to travel again without being subject to prohibitive quarantine requirements on return. This US reopening is happening even as 8 million strong New Jersey still reports double-digit numbers of daily deaths, while Hong Kong remains sealed despite reporting days with zero cases.

In this article, I outline some of the challenges Hong Kong faces in trying to re-open while continuing to aim for a “zero Covid” target, and how trying to be “too safe” against the virus may actually be putting the city at much greater risk than appreciated.

Hong Kong’s Covid vaccination chicken-and-egg problem

Hong Kong may be the worst offender in having more than enough supply of vaccines, but not enough of the city’s population bothering to take them, with 2 million unused doses sitting idle and waiting to expire soon, with barely 20% of residents having even received a first dose. The shots are free here and very easy to get, and with almost no natural immunity due to our low case numbers, getting vaccinated seems like a ‘no-brainer’ way to get the city immune to future waves, while allowing the borders to re-open.

Although I hear many excuses for why many are hesitating or avoiding inoculation, the most rational I can think of is a simple, personal cost-benefit calculation:

# The risk of catching Covid-19 is “almost zero”, and vaccines have yet provide any other benefits such as exemptions from quarantine or mask requirements, while..

# Even though Hong Kong may be one of the least expensive and most convenient places to get a vaccine, many still see a real cost in taking even a few hours from work, and real risks from reported side-effects.

In other words, although the costs and risks of getting vaccinated in Hong Kong seem very low, Hong Kong’s continued anti-Covid measures and low case numbers have managed to make the apparent individual benefits of getting vaccinated even lower than those costs.  While some may argue that getting vaccinated should be more about the community than about the individual, so long as this Special Administrative Region remains so well protected by the quarantine bubble, low vaccine rates may remain a “single raindrop never feels responsible for the flood” type of problem.

Trust in vaccines and re-opening go hand-in-hand

Between Hong Kong and New Jersey, it clearly seems that New Jersey is simply willing to accept far higher Covid numbers in order to get back to normal life.  The balance between these metrics explains how the US has risen to #13 on the Bloomberg Covid resilience score, just three places from overtaking Hong Kong.

Hong Kong’s HK$156 billion question is how vaccines might allow the Fragrant Harbour to have its reopening cake while eating its “zero Covid” cake too. (HK$156 billion is roughly how far Hong Kong’s 2020 GDP was below its 2019 GDP of HK$2.84 trillion). This trade-off between zero Covid and zero economic growth cannot be addressed without answering some basic, and unavoidably political, questions about what can be expected of vaccines and what policies should be regarding them.

The most basic purpose of a vaccine is to protect the person receiving the vaccine from becoming dangerously ill. When a large enough percentage of a population is vaccinated, there is the second order benefit in protecting our healthcare infrastructure from the risk of being overwhelmed with too many dangerously ill patients at the same time, who are then more likely to die due to a lack of care.

Hong Kong has very successfully avoided any cases of overwhelmed hospitals in this pandemic, but that has unfortunately left the city in a stalemate where 80% of residents seem unafraid of the virus, and the borders are impractical to open when those 80% have no protection from the virus.

The “individual self-interest” solution here would be for the government to announce a specific date, by which point every resident who wants a vaccine has had plenty of opportunity to get both doses, and after that date the borders would be fully opened. Residents would be free not to get the vaccine, but they would do so at their own risk, and the few vaccinated residents who still get sick are likely to very well covered by our healthcare capacity.

Although I have little doubt that such an announcement would very quickly get vaccination rates here much closer to the 70-85% level needed for “herd immunity”, I do not know of a single person who believes the Hong Kong government would even consider this approach.

A secondary purpose of a vaccine is to prevent the vaccinated person from spreading the disease to other people. This is the rationale behind requiring vaccines to travel or engage in other activities, but runs counter to the rationale of requiring vaccinated persons to wear masks or quarantine.

Hong Kong finance execs test re-opening

Perhaps the biggest head-scratcher of recent moves by the Hong Kong government is the recent plan to allow senior executives of licensed financial firms to apply for quarantine exemptions.  While this has been met with the expected criticism of this policy being “elitist”, a few reasons for this policy might include:

1/ These executives represent a relatively small number of individuals over which the government has an above-average amount of visibility and control;

2/ As outlined in the SFC circular, the requirements to apply for the quarantine exemption are still quite strict, for example, requiring detailed documentation on the planned travel itinerary, approved activities, and forms of transport;

3/ This is a group that is already used to complying with a very detailed set of rules, and, perhaps most importantly

4/ The sponsoring licensed firms and their executives all have a lot to lose for failing to comply with these demands.

Of course there is the risk that one of these vaccinated executives still manages to bring back another wave, but if Hong Kong is going to re-open, it is going to need to start somewhere and at some time. The optimist in me hopes that not too many weeks into this program we may see comfort expanding these quarantine exemptions step-by-step until we either reach herd immunity vaccination levels, or have proven that even traveling with these strict requirements is better than not traveling at all.


Investors know that bonds may seem safer than stocks in the short term, but that what was safe in the short-term can end up being much riskier in the long run. In US markets, for example, since 1871 there have, of course, been 20-month periods where stocks have fallen a lot more than bonds, but there has not yet been a 20-year period where stocks have lost money, or even made less money than bonds.

As we approach 20 months of the Covid-19 pandemic, it seems we are starting to see that turning point where Hong Kong’s initial success in almost completely eliminating Covid risk may be leaving it at greater risk than places like New Jersey, where people have been willing to accept more cases in exchange for getting back to normal.

We should all hope that the test case of quarantine exemptions for finance executives and vaccine incentives will be enough to get life in Hong Kong back to normal in the coming months.


# Tariq Dennison TEP runs GFM Group, a Hong Kong based cross-border wealth management firm. The views expressed here are his own.


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