TAIPEI (Taiwan News) – The Mercator Institute for China Studies (Merics), a Germany-based think tank, believes the ongoing protests in Hong Kong have caused “irreparable damage” to its financial center status, which will hurt China.

Max Zenglein, a senior economist at Merics, said Hong Kong is facing an unprecedented crisis and visitor numbers have dropped to a level similar to the 2003 SARS outbreak. Hongkongers are mostly pessimistic about the future as the city’s autonomy continues to be jeopardized.

The recent resignation of Cathay Pacific’s CEO and the sackings of its employees who supported the protests have alerted foreign companies who previously had not considered Beijing’s influence in Hong Kong, Zenglein said. As Hong Kong loses the advantages of an independent judiciary and freedom of speech, becoming just another “normal Chinese city,” this may drive companies to relocate their headquarters to Singapore or Tokyo.

Zenglein said Hong Kong has already reached its peak as a global financial center. He emphasized “irreparable damage” is not being caused by protesters but by the tough stance of the Chinese government, which has brought fear to the city through gathering forces at the border.

Hong Kong accounts for 71 percent of foreign direct investments (FDI) to China, 18 times more than Singapore, which ranks second in FDIs to China, according to China's Ministry of Commerce. Chinese companies rely on Hong Kong to gain access to the international capital market, but capital is now fleeing to Singapore or London, as Hong Kong is no longer considered safe, which in the end will hurt China, Zenglein pointed out.

While there is speculation that Beijing is planning to replace Hong Kong with Shenzhen or Shanghai as a financial center, Zenglein believes the lack of an independent judiciary and free flow of capital makes this unlikely. He added that Singapore and Tokyo are more likely to benefit from the decline of Hong Kong.