Recently, United States and Western “experts” and media have repeatedly spread negative information, false comments and pessimistic views about Hong Kong’s economic prospects. They have aroused serious concern among government and community leaders of China’s Hong Kong Special Administrative Region, spurring them to issue rebuttals.
I recently pointed out on this page that under the increasingly complex and severe international political and economic situation, mainly because the US and the West, which used to be close to Hong Kong, are determined to impair the city’s stability and prosperity, Hong Kong has had no choice but to chart a new development strategy under the active and farsighted intervention and leadership of the government.
Essentially, it aims to strengthen Hong Kong’s economic and trade relations with the Chinese mainland and countries involved in the Belt and Road Initiative and nurture new economic growth points.
These two aspects are complementary. To strengthen economic and trade ties with those partners, Hong Kong must be able to provide them with high-tech and high-level products and services. To be able to do this, Hong Kong needs to ensure that its development strategy is aligned with the national development strategy, and hence, cooperation with the mainland in critical areas must be enhanced.
No matter how good the HKSAR’s new development strategy is, whether it can ultimately drive the city’s economy toward high-quality, sustained growth is contingent on the development prospects of the mainland. Because of this, those US and Western “experts” who talk negatively about Hong Kong also denigrate the mainland’s economic prospects and use this to “prove” that Hong Kong’s economic prospects are gloomy.
In the past two decades, China has been forced to implement a new development strategy in an increasingly complex and severe domestic and international environment. This is an environment where globalization is rapidly losing momentum, the US and the West are pursuing all-around strategies to contain China’s rise, the global economy is lackadaisical and increasingly fragmented, and protectionism, unilateralism and populism are rampant.
China initially relied on infrastructure construction, product exports, and mid- to low-end technologies to grow its economy. That development strategy has become increasingly unsustainable and may even drag China into the so-called middle-income gap. Despite these headwinds, China is still determined to become a world-class technological, economic and military power.
To promote Chinese-style modernization and achieve the rejuvenation of the Chinese nation, China has adopted a new strategy prioritizing building a large national market, significantly boosting domestic consumption, relying heavily on science, technology and innovation, and developing new quality productive forces. China’s most significant difference from the US is that it insists on developing the real economy, and the primary function of the financial industry is to serve the real economy. The transition from the old development strategy to the new one will undoubtedly be challenging and can only be accomplished after arduous efforts and uncertainties. The process will have ebbs and flows, and many difficulties and obstacles will be encountered.
In the harsh environment in which the US-led West continues to suppress China in technology, trade, investment, talent and capital, there are also a slew of structural contradictions in the country, such as insufficient domestic demand, labor shortages, surplus production, and massive corporate and local debts. The difficulty of realizing the new development strategy can be imagined.
Nonetheless, the central government is determined to defy the challenges and firmly implement its new development strategy. In the 2024 Government Work Report, Premier Li Qiang underscored the need to “vigorously promote the construction of a modern industrial system and accelerate the development of new quality productive forces, give full play to innovation’s leading role, promote industrial innovation with scientific and technological innovation, accelerate new industrialization, improve the productivity of all factors, constantly shape and develop new momenta and advantages, and promote social productivity to achieve a new leap forward”.
Politicians, “experts” and media in the US and the West have deliberately exaggerated China’s difficulties stemming from the transitioning between the old and new development strategies to downgrade China’s economic prospects. Immersed in their arrogance, prejudice and ignorance, they are oblivious to the evidence that China’s new development strategy has already achieved impressive initial results.
The Chinese mainland’s GDP growth rate in 2023 was 5.2 percent, while the expected growth rate in 2024 is about 5 percent. Even though these hard-won growth rates are modest, they are still higher than those in Western countries. What deserves particular attention is the significant growth of China’s new quality productive forces. At the end of 2023, Chinese economist Ren Zeping analyzed mainland economic figures. The data clearly shows that the mainland’s economic structural transformation is progressing well. The service industry and consumer demand dominate, new momentum displaces the old momentum, and the importance of new infrastructure and new energy has increased significantly. Artificial intelligence and new quality productive forces construction are becoming new growth points. At the same time, the share of real estate in the economy continues to decline; the proportion of new infrastructure (digital economy, AI, big data, internet of things) and new energy has increased significantly, and AI and new quality productive forces are becoming new growth points. In the future, new quality productive forces will stimulate the growth momentum of traditional industries and consolidate the results of industrial transformation and upgrading.
Although there are still many difficulties to overcome, China’s new development strategy will eventually complete the historic mission of Chinese-style modernization and the rejuvenation of the Chinese nation. Since the success or failure of the HKSAR’s new development strategy depends heavily on the country’s development, the bright future of the country will also bring bright prospects to the city. If the HKSAR wants to thrive, it must fully utilize its unique advantages, follow the dictum of “using Hong Kong’s specialties to serve the country’s needs”, and accelerate its integration into overall national development.
Premier Li has made a clear commitment to support the HKSAR in developing its economy, improving people’s livelihoods, giving full play to its advantages and characteristics, actively participating in the construction of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), better integrating into the overall development of the country, and maintaining the city’s long-term prosperity and stability.
The national 14th Five-Year Plan (2021-25) lays out those aspects of the HKSAR’s development that can meet the country’s needs by leveraging the city’s strengths. It states, “support Hong Kong to enhance its status as an international financial, shipping, trade center, and international aviation hub, and strengthen its functions as a global offshore RMB business hub, international asset management center, and risk management center; support Hong Kong in building an international innovation and technology center, the Asia-Pacific international legal and dispute settlement center and the regional intellectual property trade center; support the development of Hong Kong’s service industry in a high-end and high-value-added direction and support Hong Kong’s development as a Chinese and foreign cultural and artistic exchange center”.
The content of the 14th Five-Year Plan about the HKSAR results from joint exploration and planning by the central government and the HKSAR. This mode of cooperation will continue. Xia Baolong, director of the Hong Kong and Macao Work Office of the Communist Party of China Central Committee, pointed out lately that the central government will work with the SAR government and all sectors of society to plan a new development for Hong Kong. Many development opportunities for the city have come from the latest national development strategy outlined by Premier Li. They include, among others, promoting industrial innovation through scientific and technological innovation, rejuvenating the country through science and education, promoting the steady growth of consumption, focusing on stabilizing and expanding private-sector investment, accelerating the construction of a unified national market, expanding high-level opening to the outside world, increasing efforts to attract foreign investment, and actively promoting new urbanization.
In recent years, the SAR government and all sectors of society have agreed to integrate into the country’s overall development, especially by participating in the construction of the GBA. Chief Executive John Lee Ka-chiu’s Policy Address in October focused on building the eight significant centers designated in the 14th Five-Year Plan.
On Feb 28, Financial Secretary Paul Chan Mo-po released the government budget for the 2024-25 fiscal year, putting forward many specific policies and measures to implement Hong Kong’s new development strategy. He pointed out, “The national 14th Five-Year Plan has set a clear positioning for Hong Kong’s development of the eight centers. Prospects will be bright as long as Hong Kong steadily forges ahead by leveraging its unique advantages under ‘one country, two systems’, proactively integrates into the overall national development, aligns with national development strategies, and continues to perform the role of an important node in the domestic and international dual circulation of our country.”
The specific policies and measures that he proposed include: attracting enterprises, capital and talents; building a Hong Kong brand; promoting green development; developing an international innovation and technology center; accelerating the construction of the Hong Kong-Shenzhen Innovation and Technology Park; growing an international financial center, especially an offshore RMB business hub and deepening economic cooperation in the GBA; developing an international trade center, especially the construction of a multinational supply chain management center and participating in the Belt and Road Initiative; developing a regional intellectual property trading center; developing an international shipping center and international aviation hub; building a center for international legal and dispute resolution services in the Asia-Pacific region, especially the establishment of the International Organization for Mediation; developing an East-meets-West center for international cultural exchange; and cultivating local talents in innovation and technology, healthcare, maritime and aviation, and patent and international law.
For a long time, because of the obstruction of the political opposition and the fact that the SAR government was hampered by the obsolescent tenets of “small government, big market”, the HKSAR was slow in integrating into the country’s overall development. It started too late and missed many development opportunities, resulting in sluggish economic growth and difficulty accelerating the industrial transformation and upgrading. The COVID-19 pandemic and years of turmoil made matters worse. Following the end of the pandemic and quelling of the 2019 riots, the complete reshaping of the governance structure, the containment of internal and external hostile forces, and the increasingly dangerous international environment, the SAR government and all sectors of society have begun to be more proactive in charting new development strategies and meeting the expectations of the central government. However, notwithstanding the strong support from the central government, the intensity, speed, scope and depth of Hong Kong’s integration into the country’s overall development are still less than satisfactory.
In future, the central government will introduce more powerful and effective policies to accelerate the HKSAR’s integration into the country’s overall development, play a leading role in coordinating the developments of Hong Kong and the mainland, and resolve the conflicts of interests among cities in the GBA. The national 15th Five-Year Plan will put forward relevant arrangements and measures.
To better align with the national development strategy, the SAR government needs to increase its understanding of the national development strategy, formulate a Hong Kong development strategy that can tightly align with it, and actively mobilize and coordinate public and private resources to better implement the SAR’s development strategies, introduce industrial policies based on Hong Kong’s unique advantages through top-level design, and make the necessary changes in the city’s institutions, policies, laws, and product and service standards after discussions with the mainland.
There is an urgent need to accelerate the interflow of people, goods, capital, information, enterprises, and services between the two places. As the SAR government will face financial constraints for some time, strengthening its ability to mobilize and utilize societal resources in accelerating the HKSAR’s integration into the overall development of the country will be a critical test of its governance capabilities.
The author is a professor emeritus of sociology, the Chinese University of Hong Kong, and a consultant to the Chinese Association of Hong Kong and Macao Studies.
The views do not necessarily reflect those of China Daily.
