Hong Kong eases travel restrictions—but only for its business elite

June 8, 2020, 11:23 AM UTC

Hong Kong is lifting restrictions on travel to mainland China—but only for premier business executives. And the easing of mandatory quarantine rules only works one way.

On Monday, the city’s financial services secretary Christopher Hui Ching-yu relaxed travel restrictions for executives at the top 480 companies listed on the Hong Kong stock exchange, providing more leeway to firms whose corporate travel between the mainland and Hong Kong has been curtailed by 14-day mandated quarantines as a result of the coronavirus pandemic.

The companies getting the free pass include Chinese tech giants like Alibaba and Tencent, state-owned enterprises like the Chinese oil giant Sinopec, and the international bank HSBC. In total, the 480 firms represent roughly 95% of the total market capitalization of the 2,107 companies listed on Hong Kong’s exchange.

In a Monday press release, the Hong Kong government said that two directors or executives per company will be eligible to travel from mainland China to Hong Kong every month for “essential business activities” such as board meetings, seeing clients, and signing documents. Executives arriving in Hong Kong from mainland China will be exempt from the city’s mandatory two-week quarantine. Yet Hong Kong executives must still undergo quarantine upon reaching the mainland, though the Hong Kong government is working with authorities there to remove this requirement by way of predeparture COVID-19 testing, according to the release.

“We want to open the border step-by-step, and it will be better to allow a limited number of people first, before expanding it further,” Hui said in an interview with the Hong Kong newspaper Sing Tao Daily. “It is, however, an important step to allow large companies to resume cross-border business travel to handle their business activities.”

Hong Kong has largely contained the virus. Revitalizing the economy of the global financial hub hinges, to a great degree, on reopening its borders to foreign business personnel and tourists, even as the pandemic maintains its grip elsewhere.

A nudge for the economy

The new measure will prove a small relief to the Hong Kong economy that’s been battered by the pandemic as well as a year of pro-democracy protests. In 2019, Hong Kong fell into its first depression in a decade owing, in large part, to months of social unrest. The pandemic slowed the economy further, with output contracting by nearly 9% in the first quarter of 2020, compared with the same period in 2019.

The policy also reflects the interdependence of the two economies. Mainland China is Hong Kong’s largest trading partner and accounts for 51% of its total trade volume. Hong Kong is mainland China’s fourth-largest trading partner, but the city is more important for its financial markets. Hong Kong’s relatively open and free markets in comparison to the mainland’s make it particularly attractive to Chinese companies looking to access foreign capital, and Chinese companies make up roughly half of all companies listed on the Hong Kong stock exchange.

Daily Life In Hong Kong
The Guangzhou-Shenzhen–H­ong Kong Express Rail Link has been largely unused as the coronavirus pandemic has limited travel.
Harry Wai—NurPhoto/Getty Images

Hong Kong has recorded 1,107 coronavirus cases and four deaths from the virus since the onset of the pandemic in January, and the city has gradually reopened its economy over the past few months as local spread of COVID-19 has subsided. Hong Kong has recorded just over 100 cases in the past two months after reaching 1,000 cases on April 11.

Restaurants, bars, offices, and schools have all reopened in Hong Kong, though social distancing guidelines still mandate capacity limits in places like movie theaters and ban gatherings of more than eight people.

Yet even as Hong Kong has relaxed many outbreak-era rules in the city, it’s kept in place travel restrictions for nonresidents.

Hong Kong announced last week it is extending compulsory quarantines on travelers from mainland China, Macau, and Taiwan until at least July 7 and to Sept. 18 for travelers from any other country.

This means that even as some business travel resumes, Hong Kong’s tourism sector (which contributes roughly 5% to the city’s annual economic output) will likely lag behind.

A time of increased tension

The gradual reopening of the vital business travel corridor comes as the relationship between the mainland and Hong Kong shifts, with Beijing set to impose a new national security law in Hong Kong.

Beijing says that the law, which was passed on May 28 at the country’s annual Two Sessions conference, will prevent and punish acts of terrorism, secession, and foreign interference that jeopardize China’s national security, but critics say it will erode Hong Kong’s relative autonomy and independence from the mainland that has helped it flourish as an international business center.

The Chinese government is expected to release text of the law by August.

In recent days, large companies in Hong Kong and international banks like HSBC and Standard Chartered have voiced support for China’s new measure, even as some foreign businesses look to scale down operations in the city because of the law.

In the Sing Tao interview on relaxing the restrictions for cross-border business travel, Hui voiced support for China’s national security law. “The social unrest that started a year ago shows there is a need for a security law to bring stability, and to strengthen the confidence of the business sector,” Hui said.

More must-read international coverage from Fortune: