In late June, Hong Kong’s coronavirus outbreak seemed largely under control. Few new cases were recorded daily, and it had reached three weeks with no new local cases, the city’s longest streak to date. Amid the relative containment of COVID-19, bars, cinemas, schools, and Disneyland reopened, and commuters—nearly all of whom wore face masks—stood shoulder-to-shoulder on crowded trains.
Hong Kong was celebrated for its coronavirus response, heralded as a region that had gotten it right.
Then local cases started to spike in a vicious and ongoing third wave of infection. Hong Kong has recorded more than 500 new cases—nearly a third of its 1,886-case total—in the last two weeks. On Sunday, authorities reported 108 new infections, a record daily high. Eighty-three of the new cases were locally-transmitted, meaning the source of infection came from within Hong Kong, rather than being imported from outside by someone traveling to the region. The city’s staggeringly-low coronavirus death count has ticked up too; from four as of mid-June to 12 on Sunday.
Subscribe to Eastworld for weekly insight on what’s dominating business in Asia, delivered free to your inbox.
“I think the situation is really critical and there is no sign the situation is being brought under control,” Hong Kong chief executive Carrie Lam told reporters on Sunday.
Hong Kong Disneyland is closed again; so are schools, bars, clubs, cinemas, gyms, beauty parlors, and karaoke and mahjong establishments. Rather than a coronavirus success story, Hong Kong now is a prime example of how small slip-ups in containment strategy can give the coronavirus room to advance and curb the best-laid plans of rebounding economies.
Experts point to three factors that might have led to the city’s new onslaught of infections:
1. At-home quarantine
In an effort to tame its first and second waves of coronavirus, Hong Kong closed its border to non-residents on March 25, and on April 8 made on-arrival COVID-19 testing mandatory for all incoming travelers. Almost everyone arriving in Hong Kong is also subject to a 14-day quarantine.
Residents of Hong Kong are allowed to quarantine in their own homes, but the people they live with are not subject to quarantine and can move freely—a loophole that some experts consider one of the possible sources of the new wave of infections.
One woman became infected in early July from family members who had returned from the U.S. and were quarantining at home with her. That woman later infected another person.
On Sunday, the government announced a new rule that people returning to Hong Kong from seven high-risk countries—Bangladesh, India, Indonesia, Nepal, Pakistan, the Philippines, South Africa—must spend the on-arrival quarantine in government-approved hotels rather than at home, and must provide a health certificate showing they tested negative for coronavirus before coming to Hong Kong.
2. Quarantine exemptions
Hong Kong was also generous with quarantine exemptions. Certain groups have been excluded entirely from the city’s quarantine rules, including 11,730 sea crew members who’ve arrived in Hong Kong since February to board ships to other destinations. In early July, nine sea crew members who stayed in Hong Kong for one to three days tested positive for coronavirus.
Drivers transporting goods across the mainland China-Hong Kong border, airline crews, and foreign consular staff were exempt from quarantine too. People in these groups are tested on arrival and required to wear masks and report their temperature daily to the health department, but they do not need to self-isolate.
The government on Sunday released a statement refuting criticisms of the quarantine exemptions and calling claims that the exemptions caused the current wave of cases “a misunderstanding.” It said sea crew members must now undergo coronavirus tests and yield a negative result within 48 hours of travel to Hong Kong.
The government said the exemptions are “essential to maintain the necessary operation of society and the economy and to ensure and uninterrupted supply of daily necessities.”
3. Limited social distancing
What’s more, densely-populated Hong Kong never imposed a full lockdown on the scale of those seen in the U.S., Europe, and mainland China.
In early April, the government ordered the city’s bars, clubs, beauty parlors, and gyms to close, but restaurants stayed open. The government’s decision last week to order restaurants to close every day between 6 p.m. and 5 a.m. is the tightest restriction so far on eateries. Dine-in service is still available for breakfast and lunch times.
On July 15, in response to the ongoing wave, public gatherings were capped at four people. The limit had previously been four, then eight before jumping to 50 in June.
Of Sunday’s 83 locally-transmitted new cases, 48 could not be traced to a known source. Some of the infected people had visited restaurants, markets, and parks every day.
Hong Kong’s early success in managing the coronavirus outbreak was especially impressive given its proximity and cross-border links to mainland China, where the virus first appeared, and the high-density living arrangements of its 7.5 million residents. Its current case total—under 2,000—remains exceptionally low compared to cities of similar size. New York City, for instance, has a population of 8.3 million, and has recorded 226,000 coronavirus cases and 22,872 deaths. Even so, the resurgence of the virus in Hong Kong and the return of a semi-locked-down state is an abrupt regression for a city that had largely returned to ‘normal.’
More must-read international coverage from Fortune:
- What U.S. companies should consider following the bombshell EU Privacy Shield ruling
- The downfall of Wirecard is stirring an epic shareholder revolt in Germany
- “A real bind”: Banks that carry out Trump’s new sanctions could violate Hong Kong security law
- The one element of Hong Kong’s new security law that concerns business the most
- Wirecard shows auditing is broken. Here’s why—and how to fix it