"Living in Low-Rent China While Commuting to Low-Tax Hong Kong" Surge in Hong Kong Yamchejok

Residents Leaving Hong Kong as High-Speed Rail Opens
Rent in Shenzhen Only One-Third of Hong Kong Prices
Also Subject to Hong Kong Tax Rates, One-Third of China's

As the high-speed railway connecting Shenzhen and Hong Kong becomes more active, a recent phenomenon has emerged where many Hong Kong residents are moving to Shenzhen due to its lower rent. While actually residing in Shenzhen, the number of freeloaders who maintain Hong Kong permanent residency and benefit from an income tax rate one-third lower than that of mainland China is increasing, causing deep concern for Chinese authorities.

[Image source=Reuters Yonhap News]

According to Bloomberg on the 23rd (local time), posts with the hashtag "Shenzhen-Hong Kong work travel" have surged recently on Xiaohongshu, a major Chinese social networking service (SNS) often called the "Chinese Instagram." Bloomberg reported that these posts mainly contain information on how to find housing in Shenzhen, popular restaurants, and commuting methods to Hong Kong.

It is known that many Hong Kong residents actually live in Shenzhen while commuting to and from Hong Kong. Bloomberg stated, "The average apartment rent in Shenzhen is about 108 yuan (approximately 20,000 KRW) per square meter (㎡), which is only about one-third of the price in Hong Kong," adding, "As fears of the COVID-19 pandemic subside, the number of Hong Kong residents moving to Shenzhen in mainland China is increasing significantly."

Hong Kong residents commute from Shenzhen without giving up their Hong Kong permanent residency. This is because Hong Kong's maximum income tax rate is 15%, only one-third of mainland China's maximum income tax rate of 45%. The Chinese State Taxation Administration restricts the application of Hong Kong income tax rates to residents who live in Hong Kong for at least 180 days annually to prevent such freeloaders, but Bloomberg pointed out that there is not even a proper survey on residents who already hold Hong Kong permanent residency.

Ice Lian, an office worker who shares an apartment with other employees in both Hong Kong and Shenzhen to maintain Hong Kong permanent residency, told Bloomberg in an interview, "I moved to Shenzhen in August, and I share an apartment in Hong Kong with two other people," adding, "The routes between Shenzhen and Hong Kong continue to increase, and living in Shenzhen greatly improves my quality of life, so I will try to maintain my current lifestyle."

According to Hong Kong residency laws, to be recognized as a Hong Kong permanent resident, one must continuously reside in Hong Kong for at least seven years, but the Chinese government is not properly enforcing this. Furthermore, since comprehensive income tax has only been levied since 2020, the Chinese government has yet to establish a systematic income tax information network. Bloomberg reported that the Chinese government is also struggling to resolve these issues.

This content was produced with the assistance of AI translation services.