June 3, 2020 / 3:43 AM / a month ago

Breakingviews - War for Hong Kong talent is Taiwan’s to lose

Taiwan flags are seen near protesters attending a demonstration to demand the resignation of Hong Kong leader Carrie Lam and the withdrawal of the extradition bill, in Hong Kong, China June 16, 2019. Picture taken June 16, 2019. REUTERS/James Pomfret

HONG KONG (Reuters Breakingviews) - Taiwan is well-positioned to poach Hong Kong talent. President Tsai Ing-wen has pledged to resettle those fleeing Beijing’s crackdown on the former British colony. It’s a rare chance for the $600 billion economy to plug a severe labour shortage and boost investment, but warm political gestures could be offset by muddled immigration policies.

Beijing’s plans to enact a national security law in Hong Kong has sparked widespread fears that the city’s civil liberties are set to evaporate, along with its economic vitality. The brain drain risk is real. A recent survey from the Hong Kong Public Opinion Research Institute showed 70% of those polled did not have confidence in the city’s future. Beijing’s attempts to instil loyalty to the Chinese Communist Party – and to deprecate use of the local Cantonese dialect - have further estranged local residents.

Tsai now has a golden opportunity to poach talent. Hong Kong boasts a well-educated population: the OECD’s 2018 Programme for International Student Assessment ranked it fourth out of 79 economies in mathematical literacy, and ninth in scientific literacy. Moreover, the two islands, just an hour and a half flight apart, share many cultural similarities, including the use of traditional Chinese characters. The number of Hong Kong residents granted a Taiwan residency permit has already more than doubled to over 2,000 in the first four months of the year.

Economic benefits could be immense. Like its neighbours, Taiwan is aging rapidly; a 2018 study found the working-age population will shrink to less than two-thirds of the total by 2027. Thanks to an exodus of talent to mainland China, the local supply of human capital has been hollowed out. Government data show a shortage of some 218,000 workers in the industrial and services sector in 2017, of which over half were mid-level technicians. Hong Kong immigrants from the finance sector could help lift tepid foreign direct investment flows, which stood at just 18% of GDP last year, Economist Intelligence Unit data show.

So far, Tsai’s administration has resisted calls for a formal refugee law. Ad hoc measures, like case-by-case reviews and residency status that must be renewed on a monthly basis, will deter skilled migrants. As London and Washington mull opening their doors to Hong Kongers, Taipei should not take their arrival for granted.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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