Hong Kong Says It's Back Open For Business. Will The World Buy It?

See how Hong Kong is trying to recover from Covid-19

At this week's Well-Financed Hong Kong summit, the city's chief triumphantly declared to a room full of Wall Street executives that the Asian hub was back on track. “The worst is over,” he said.

Two days later, thousands of rugby fans gathered at the city's largest stadium, the Hong Kong Sevens, the biggest (and usually biggest) sporting event of the year. It has been extended since 2019 due to political instability and then due to COVID-19. 19.

Two high-profile international events sent a clear message: Hong Kong has finally reopened after nearly three years of border closures, mandatory quarantines and restrictions on business and social gatherings.

For most outbreaks, the semi-autonomous Chinese city has maintained some of the region's strictest restrictions, including the world's longest mandatory quarantine for foreign immigrants. As the world develops, Hong Kong's economy is deteriorating and worries are rising as the government finally opened the city's gates in September, bringing relief to millions of people and ending the official lockdown.

“We were, are and will be one of the world's leading financial centers,” Hong Kong Governor John Lee said at a conference of more than 200 investors from 20 countries on Wednesday. – You can take it to the bank.

Speaking ahead of Friday's tournament, Hong Kong Rugby Union chief executive Robbie Marubi called the tournament's return "an encouraging tipping point", a sign that "Hong Kong remains a strong and vibrant city".

But while Hong Kong's revival efforts are ambitious and long-term, experts warn it faces many challenges.

According to them, the isolation, combined with the long political repressions of recent years, had an effect. Lee and other leaders stressed that the reopening of Hong Kong is not the city the world knew before the pandemic, and the true impact of these changes remains unclear.

Click to open again

Last year, with many destinations reopening to travelers and restrictions lifted, Hong Kong seemed to be stuck in a different reality.

Restaurants, bars and gyms have often been forced to close or limit opening hours. Residential buildings were closed for the day. At one time, the general meeting was limited to only two people. Most residents did not leave the city for years, unable or unwilling to spend up to three weeks in a hotel at their own expense after leaving.

Institutions have been hit hard. Sevens competitions account for 95% of rugby union revenue in Hong Kong, so "we've had three years of layoffs and layoffs," McCrob said.

Many desperate residents decided to leave forever. Last year, the city recorded its largest population decline since registration began in 1961. Companies began to look elsewhere, in particular Singapore, Hong Kong's longtime regional rival.

But as Hong Kong officials eager to reopen the border with mainland China – still showing no signs of easing strict virus control policies aimed at eradicating infections – are unwilling to ease restrictions, cases are popping up and those doors are closing.

Then a major outbreak of the highly contagious Omicron strain earlier in the year ended Hong Kong's hopes of maintaining zero daily cases.

Under growing public pressure, the government eased quarantine measures at hotels in March, lifting flight restrictions with some countries, but those small concessions did little to help people return.

Media reports emerged in August that some Wall Street bank executives warned that their executives would attend Wednesday's financial meeting if there was a move towards neutrality, and are widely believed to be behind the government's final decision to cancel neutrality.

The city's financial leaders breathed a sigh of relief upon hearing the news.

“We have been closing our doors for a long time,” said Sebastian Paredes, chief executive of the Hong Kong division of Singapore-based DBS Bank. “We will start opening after other parts of the world have already opened. This is a clear sign of the return of Hong Kong.”

Alicia García Herrera, chief Asia-Pacific economist at the French investment bank, agreed that the week's two highlights were "significant signs that Hong Kong is moving away from Covid restrictions and moving into a new world."

However, the remaining constraints create a competitive advantage.

Foreign visitors must take a Covid test for seven consecutive days after arriving in Hong Kong and are prohibited from entering restaurants, bars and gyms for the first three days. But testing doesn't stop there: Bars and clubs that don't serve food require immediate antigen test results for all customers.

While photos from the financial summit show them sitting at a table with their faces uncovered, orders for masks – both indoors and outdoors – are also in effect. Among them, health officials have declared city finance minister Paul Chan a "return case" after he tested positive for the virus on Tuesday after arriving from overseas.

Hong Kong rugby chief McCrob said the rules "continue to seriously block the overseas tourism market." Before the epidemic, almost half of the Seven's fans came from abroad. According to him, this year the figure is "insignificant".

Long-term lockdowns and financial difficulties have also created problems for companies looking to return. McCrub added that over the past few years, many people have left the sports and events sector in search of stable jobs, leaving the industry understaffed.

This partial recovery has put the city in a difficult position, said Vera Yun, an economics professor at the University of Hong Kong.

If we want to open our borders with China, our restrictions are very lenient… that's why they are prohibited. "However, when we want to open up to the world, we are still very stubborn. Right now we are stuck in this and we hope to see better policies in the future."

oppression and fun

Others warn that political challenges will increase. “The clouds are definitely coming over Hong Kong from different directions,” banker Garcia Herrera said of the Western reaction to Beijing’s sweeping national security laws for 2020.

By law, pro-democracy activists have been imprisoned or exiled, independent newsrooms have been shut down, and former lawmakers have been attacked. Meanwhile, officials have changed curricula to emphasize Chinese history and culture and pushed for greater economic cooperation in the Greater Bay Area, a national plan to connect southern China's Guangdong province with Hong Kong and Macau.

The law has been heavily criticized by foreign governments and human rights groups, and the United States has imposed sanctions on Li and other senior Hong Kong officials in connection with the crackdown. Hong Kong authorities have confirmed that the law has restored order and stability following anti-government and pro-democracy demonstrations in the city in 2019.

For the United States and the European Union, the National Security Act and the measure represent the "game-changing agent in the deal," Garcia Herrera.

This escalation in tension could strain Hong Kong's trade and diplomatic relations with other countries. Hong Kong has more freedom than other Chinese cities, which is why it has long been seen as a gateway between the mainland and the West, a situation that looks increasingly worrisome as civil liberties are eroded.

“The West is now realizing that Hong Kong is not only part of China, but closer to China than before,” the economics teacher said. In the worst case, the West will treat Hong Kong as mainland China, and then Hong Kong will be subject to the same sanctions.

This agreement may continue. To stem the brain drain, Yong said the Hong Kong government is spending $30 billion ($3.8 billion) to attract international companies and new talent, which should "attract a lot of key workers" who want to avoid the worst. The labor market is out of control.

Again a normal person

Despite these geopolitical struggles, some argue that Hong Kong's natural advantages are driving the renaissance, even as the city moves in a different direction than before.

There aren’t many other financial centers in Asia that match Hong Kong’s open regulatory environment, low payroll taxes and existing financial infrastructure – “so the picture is a bit skewed, but there aren’t many other places to go.” Garcia Herrera said. .

Yong echoed this sentiment, saying that the city's proximity to China is attracting companies and investors looking to enter the mainland's vast and lucrative market.

“We can have a certain degree of autonomy and (different) attitude towards China in terms of a different Covid policy and (systemic) governance,” he said.

But both experts acknowledge that the road ahead is now fraught with new dangers. International companies may flock to Hong Kong, but be more careful about how much they invest in the city given the threat of US sanctions and regional conflict.

Today, Beijing controls Hong Kong, and as leader Xi Jinping completes his third term as president, surrounded by his loyal followers, China is becoming more assertive on the world stage. García Herrera said the escalating tensions between China and its rivals have "exacerbated a rift that has been growing as the world has contracted" and its consequences will inevitably spill over into a Hong Kong stuck in the middle.

“In my opinion, Hong Kong will never be the same because it is open to both the West and the East,” he said.

CNN's Jaden Sham and Jon Jensen contributed to this report.

For more CNN news and newsletters, create an account at CNN.com.