On a recent weekday afternoon, twelve employees sat awaiting shoppers in a luxury jewelry store in Hong Kong’s prime tourist district, Tsim Sha Tsui—known to locals simply as “TST.” Next door, in a high-end watch shop, seven workers chatted with each other, no customers in sight.
The area is home to luxurious hotels, gourmet restaurants and designer boutiques, but it has also been the site of several violent clashes between police and pro-democracy protesters, who have staged weekly rallies across the city since early June calling for greater political freedoms for the former British colony. A recent weekend demonstration on TST’s main strip, the so-called “Golden Mile” of Nathan Road, ended with heated scuffles between protesters and police, who fired tear gas to disperse them. Slogans like ‘Free HK!’ and ‘Revolution!’ remain daubed on walls in the area.
A smattering of shoppers still pop in and out of the glitzy stores — where long lines snaking out of the front doors were, until recently, a common sight — but there is decidedly less buzz these days.
What started as a bad year for businesses in Hong Kong, due to the damaging trade war between Washington and Beijing, has now become a terrible one. With protests entering their third month, many businesses in the culinary hub and retail mecca are in deep trouble.
“It’s very, very bad for customers,” said Jimmy, a tailor who works on Nathan Road, told TIME. He estimates that his shop’s customer numbers have dropped by 60% in recent weeks. “If it stays like this, Hong Kong is dead.”
Read More: Then and Now: 79 Days of Protest in Hong Kong
The unrest has, at times, crippled key infrastructure, like tunnels and highways, the international airport, and the city’s subway trains—so much so that Hong Kong’s beleaguered top official, Chief Executive, Carrie Lam, said that protests have hurt the economy more than the 2003 SARs epidemic and the 2008 financial crisis. But she has refused to acknowledge protesters’ demands, which include her own resignation.
Tourism, which accounts for about 5% of the city’s GDP and is designated one of “Four Key Industries” by the Hong Kong government, has taken a massive hit. A Hong Kong Tourism Board spokesperson told TIME that preliminary figures show a double-digit percentage decline in the number of visitor arrivals in the first half of August compared with the same period in 2018, and that the number of bookings in September and October has “dropped significantly.”
The board says that declines in tourism are due to a combination of factors, but several countries, including the U.S. and Australia, have issued travel warnings for the city and a Tripadvisor travel forum called ‘Is HK save to travel?’ has drawn almost 600 responses.
Tourism arrivals from mainland China, which normally account for almost 80% of Hong Kong’s tourists, have been particularly hard hit, with many travelers understandably deterred by anti-Chinese attitudes in Hong Kong. During one night of protests in August, a mainland citizen that protesters suspected of being an undercover police officer, and another who is a reporter for a state-run newspaper in China, were both held hostage, assaulted, and abused for several hours.
Workers in related sectors say it’s been a tough few weeks.
“Across the board we’ve seen a decline compared to last year, especially on Saturdays and Sundays which are the typical protest days,” William, a manager for a major restaurant group in Hong Kong, told TIME. “Sundays have especially been hit hard … we’ve seen around a 15% drop compared to last year.”
Hong Kong’s hotel occupancy rate had already dropped to 86% by the end of July, down from 91% a year earlier, and retail sales dropped 13% between July and the same month last year, according to a government press release. Sales of items like jewelry and watches declined 24.4% over the same period. Retailers are struggling so much that the Hong Kong Retail Management Association, which represents over 8,000 retail businesses, wrote a letter in August urging landlords to offer rental reductions to retail outlets.
While tourism accounts for only a relatively small portion of the city’s economy, other sectors like financial services and professional services, which make up more than 30% of the city’s GDP, may also be risk if the situation deteriorates and the city’s reputation is damaged further.
“There has been significantly creeping concern about Hong Kong integrity as a financial center for some time,” says Christopher Balding, an associate professor at Fulbright University Vietnam, who also taught business and economics for almost a decade at the HSBC Business School in Shenzhen. He says that the freedom and rule of law protesters are fighting for are directly related to Hong Kong’s ability to maintain its position as a global financial hub.
Some businesses are considering leaving the city altogether. “A number of startups, including fintech companies, are actively exploring alternative markets, particularly Singapore, as a base for their future operations in an effort to hedge their exposure to the ongoing social unrest in the city,” Benjamin Quinlan, CEO and managing partner of independent strategy consultancy Quinlan and Associates, who also sits on the board of a fintech association, tells TIME.
Other companies have been caught directly in the crosshairs of the spiraling political crisis. The city’s flagship airline, Cathay Pacific, saw its share price drop to its lowest point in nearly a decade as a controversy over staff involvement in protests unfolded. Several staff members were fired and the company’s CEO resigned over the issues. According to local media reports, dozens of cabin crew staff from flights where mysteriously depleted or empty emergency oxygen bottles were found before take-off in recent weeks have also been temporarily suspended while the airline and authorities investigate the matter.
Protesters say that corporate chaos and an economic downturn is just what they want. “The protesters are going to use the economy to force the government to reply our requests,” Joseph (a pseudonym), 24, who has worked as a flight attendant for Cathay Pacific for the last two years and was among the black-clad face-masking-wearing protesters who shut the international airport down for two days in mid-August, tells TIME.
He says he’s not worried about potential harm to his company’s bottom line, or the economy. “I always think that the freedom is much more important than the economy.”
The city’s Financial Secretary Paul Chan — who recently introduced a stimulus package for more than $2.4 billion targeting students, small and medium enterprises and low-income families — warned on August 15 that the city is on the verge of recession and job cuts.
Some prominent business people agree. “The next worry is the loss of jobs because of the high rents and operational costs for businesses in Hong Kong,” says Allan Zeman, a Hong Kong developer who owns property, restaurants, and bars in the fashionable Lan Kwai Fong quarter.
Despite the relief measures, economists say a recession is likely. “I think we are one foot in recession already,” says Kevin Lai, chief economist at Daiwa Capital Markets in Hong Kong. He believes that the protests are just one reason for the downturn, and other factors like a slowdown in China, a drop in domestic consumption driven by Hong Kong’s high debt burden, and an overall global slowdown are also important contributors to the city’s current economic malaise.
Still, the protests have worsened an already bad economic situation in Hong Kong, and some businessmen like Zeman think the protesters campaigning against Beijing’s control over the city may be short-sighted. “Hong Kong without China is just another city without raw materials, just a service industry. It’s so dependent on China.”
But more demonstrations are planned for the coming weeks, and Hongkongers like Cathay Pacific flight attendant Joseph have no plans to stop fighting. He thinks that a bad economy is a price worth paying, if it means some of the protesters demands might be met.
“Between freedom and a job, I will choose freedom,” Joseph says. “Maybe tomorrow I am not Cathay staff anymore, but I am still a Hongkonger, forever.”
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