Mass exodus fears may be overdone

China's resumption of sovereignty over Hong Kong was widely predicted to trigger a massive exodus of people and money. With fewer than 100 days to go until the handover, the most pessimistic predictions have been confounded; but it remains unclear whether talk of an exodus was mere panic-mongering.

It is difficult to come by accurate estimates of the numbers of people leaving. However, the Hong Kong government produces figures which show that during this decade an average of more than 1,000 people emigrated each week.

At its peak, in 1992, 66,200 left the colony. Most of those applied to leave in the wake of the 1989 Tiananmen Square massacre, which sent thousands of people scurrying to consulates for immigration applications, which take an average of two to three years to process. Last year, the outflow had fallen to 40,300 people, a low for the 1990s.

The government estimates that at least 12 per cent of those who leave return. Most do so with foreign passports firmly tucked in their back pockets. The favoured countries for emigration, principally Canada and Australia, do not offer the kind of economic opportunities which Hong Kong people enjoy back home.

Nevertheless, the outflow from Hong Kong is proportionately very high and concentrated among people with money and skills in high demand. Employers are reporting difficulties in filling skilled jobs to an extent that the government has been forced to devise labour importation schemes for a number of employment categories.

This may be the tip of the iceberg. A study by the Hong Kong University, conducted two years ago, concluded that 13 per cent of the population would leave before the handover of power in July.

Research by the Hong Kong Transition Project shows that an unusually high proportion of the non-expatriate population, up to 10 per cent, hold foreign passports and could leave at any time. The project's surveys show that as many as two in every five people would seek the means to leave Hong Kong if the situation became intolerable. Bearing in mind tight immigration rules in most countries, this may not be a realistic objective.

The large number of Hong Kong people living overseas and the existence in most countries of family reunification programmes means that as many as one in five of the population have a realistic chance of emigrating if they need to.

If exact emigration figures are hard to find, data about the outflow of capital is even more sparse. Superficially it would appear that there is no cause for concern. The stock market keeps hitting new highs, the property market is booming and the local currency is stable.

There is little doubt, however, that Hong Kong money is going abroad in large quantities. United Nations figures show that the colony of six million people is the world's fourth largest source of overseas investment funds.

A survey by the Credit Lyonnais investment house found that 23 per cent of those questioned had over half their savings in foreign currencies.

The lack of foreign-exchange controls makes it difficult to determine whether there is any significant degree of capital flight. Anecdotal evidence suggests that both individuals and companies are hedging their bets by making investments overseas, particularly in property, but are maintaining the bulk of their assets in Hong Kong. The property-buying spree is significant enough to have an impact on prices in central London, for instance.

People with the means to leave and cash to take away are playing a wait- and-see game.

For the time being, there is no massive exodus - but neither is there a firm commitment to stay.