Zero-Covid Policy Shakes Hong Kong’s Economy and Its ‘Soul’

HONG KONG — Perry Lam felt confident that his business had weathered the worst of the pandemic. Several rounds of bar closures in Hong Kong had dimmed the city’s vibrant nightlife, threatening to destroy his brewery. But things seemed better late last year.

After the government’s relentless effort to stamp out the virus, there were no local infections, bars began ordering kegs of his lager again and money was coming in. “You saw the silver lining,” said Mr. Lam, 34.

That changed this month when Omicron started spreading, and officials returned to the trusted zero-Covid playbook that Hong Kong shares with mainland China. Restaurants were forced to shut down by 6 p.m. Small animals were culled. Flights from eight countries were suspended. Imports came to a standstill.

Hong Kong is chasing the same dogged virus strategy as China, hoping this will strengthen ties to Beijing and allow it to declare victory over Covid-19. But in the process, a place once known as “Asia’s World City” has cut itself off from the outside world, crushing an economy reliant on international trade at a time when the global supply chain is already deeply strained.

Now, local businesses that held on through several outbreaks are trembling as their highflying metropolitan hub transforms into what feels more like another isolated Chinese city.

Hong Kong has reported around 300 cases of Omicron, most detected from overseas visitors during their quarantine. In recent days, however, local infections have jumped and emerged from unexpected origins, putting health officials on edge. In all, it has recorded 13,096 virus cases and 213 deaths since the start of the pandemic.

These low numbers have been too much for Beijing’s zero-tolerance line, a seeming prerequisite for Hong Kong to reopen its border with China — a top priority for local officials who are under pressure to make the former British colony more like the mainland.

The fallout for local business has been staggering. Economists at Wall Street banks have lowered their estimates of the city’s economic growth for the year. Fitch, the ratings agency, warned that the ban on foreign travel would severely threaten Hong Kong’s economic future.

In the days after the city announced its latest virus measures, several small businesses, including a rotisserie chicken chain, a popular wine bar, a craft beer shop and a gastro pub, said that they would close. Mr. Lam said he is determined that H.K. Lovecraft, his brewery, is not next.

“I’ve tried to hold out as long as possible,” he said, “but we are losing money.”

Just a few years ago when he was studying to become a brewmaster in Germany, Mr. Lam had much bigger dreams: “I wanted to have something that belongs to Hong Kong, that is locally made,” he said.

He returned to the city and with his own money built a brewery with special equipment shipped from Germany. If he had known what was to come, he might have waited, he said. “It seems like it’s not getting any better and there have been times when I have been pondering how we should proceed.”

Even before the latest round of virus measures in Hong Kong, the cost of…