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Thursday, October 2, 2014

Economic sanctions feared as Hong Kong protests enter sixth day

Economic sanctions feared as Hong Kong protests enter sixth day

Scenes from the Occupy Central movement in Hong Kong's Admiralty district on Oct. 1. (Photo/CNS)
Scenes from the Occupy Central movement in Hong Kong's Admiralty district on Oct. 1. (Photo/CNS)
Beijing may begin to impose economic sanctions against Hong Kong if the ongoing democracy protests continue, reports our Chinese-language sister paper Want Daily.
The movement, started by students and bolstered by the Occupy Central campaign, has spread across Hong Kong to districts such as Causeway Bay and Mong Kok. It is still going strong entering its sixth day as tens of thousands of protesters continue to demand the right to choose their leaders without interference from Beijing starting from 2017.

China's central government is said to be growing impatient over the resolve of the demonstrators, with sources claiming that harsh economic sanctions could soon be forthcoming as the Hong Kong Stock Exchange plunged to a three-month low this week.
The Communist Party mouthpiece People's Daily published an ominous editorial on Wednesday calling for protesters to cherish the "positive growth" in Hong Kong since the territory was handed over to China by the British in 1997, and warned of "unimaginable" negative consequences if the "illegal" Occupy Central movement is allowed to continue "disrupting social order and harming Hong Kong's economic livelihood."
American wealth manager Merrill Lynch estimates that based on the typical 15% contribution to annual GDP from Hong Kong's financial and insurance sectors, the disruptions caused by the Occupy Central movement have already caused a loss of US$500 million, equal to about 0.18% of the region's GDP for all of last year.
ANZ senior economist Raymond Yeung also said that Hong Kong will likely suffer a technical recession in the third quarter due to the protests, while UBS analysts raised concerns over the effects on Hong Kong's retail and travel industries.
Hong Kong's Oriental Daily newspaper, citing local legislators, claimed that several mainland provinces and major cities such as Yunnan, Hainan and Shenzhen already froze tour groups to Hong Kong over China's "Golden Week" National Day holiday from Oct. 1-7. Coupled with the reported tightening of mainland visas and entry permits to Hong Kong, the economic impact of these moves alone is said to have already cost the region in excess of HK$1 billion (US$128.8 million).
Analysts believe the travel restrictions may just the first step, and predict that Beijing will begin to initiate wave after wave of economic sanctions to punish Hong Kong, including steps to paralyze its financial markets.
Legislator Ng Leung-sing added that he fears one of the measures China's central government may impose to counter Occupy Central will be to delay the roll-out of the Shanghai-Hong Kong Stock Connect, the new pilot program establishing mutual stock market access between Hong Kong and mainland China set to launch this month.

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