Hong Kong faces 'tough balancing act' as it looks to ease some border restrictions, official says

Hong Kong faces a tough balancing act as the city aims to lift some border restrictions for international travelers starting next month, according to a government official. 

The Chinese territory intends to ease a travel ban on flights from nine countries, including the U.S., U.K. and Australia, and allow those travelers to quarantine in a hotel for seven days rather than 14. The changes will take effect on April 1.

"It's very important that we have to cater to the needs of the international businessmen, but equally we also have a very large population in Hong Kong that needs the relaxation of the border restriction to the mainland of China, because that's also a very important part of Hong Kong for family reunion and businesses as well," Bernard Chan, convenor of the Executive Council, told CNBC's "Squawk Box Asia" on Monday. 

"So it's a very tough balancing act," he said, especially as China continues to see pockets of Covid outbreaks.

Hong Kong's executive council is a cabinet-like body that advises the city's chief executive.

China has been battling its worst Covid outbreak since early 2020, with local governments blaming the new omicron BA.2 variant for the current wave sweeping across the country. The biggest city Shanghai began a two-stage lockdown Monday.

Hong Kong has stuck firmly to a "dynamic zero" coronavirus policy, like in mainland China, seeking to stamp out all outbreaks with sweeping restrictions and quarantine.

The city reported 7,685 new Covid infections on Monday and 168 deaths, according to official data, as the latest wave of omicron infections continues to abate.

Between March 22 and 28, an average of 4,217.4 cases were reported per day, a decline from the average of 8,704.4 cases per day reported in the previous 7-day period, according to government data.

Still, Hong Kong lags behind regional peers — especially rival financial hub Singapore, which said last Thursday it will lift nearly all border restrictions for vaccinated travelers starting next month.  

"As the rest of the world is opening up, we need to try to figure a way out," said Chan. "Starting from April 1, we start to reduce the hotel quarantine time from 14 days to 7 days. Obviously, it's not good enough, but still it's a big improvement," he added.

According to a recent report from the European Chamber of Commerce in Hong Kong, the city's zero- Covid strategy "has come at a very high cost for Hong Kong's business community."

The survey found 49% of the companies polled said they are considering relocating their offices fully or partially in the next 12 months.

Moreover, existing restrictions have hampered the corporate strategy or hiring plans for 2 out of 3 companies in Hong Kong, the report added.

Acknowledging "these are trying times" for Hong Kong, Chan said he remains confident the city will regain its status as a global business hub when the pandemic ends. 

"I do believe Covid will be over. It's a matter of when it's over," he said. "Hong Kong still is very attractive being a center of the Greater Bay of China and the economy of China continues to grow. I think people will come back."