The national five-year planning process represents opportunities for Hong Kong, and it should be seen within the context of the Chinese mainland’s governance model.
The mainland model is unique in that it has a large and strong State sector, it is socialist in orientation, and has a well-established planning mechanism that is constantly testing ways to combine government mandates with market tools.
While it has evolved into a very large economy, China is still a developing country, not only because its per capita GDP is still relatively low but also because it still has a way to go to improve its institutions, laws, and regulations to better manage the economy and society.
Chinese leaders know there are many deficiencies and gaps to fill. The edge of the Hong Kong Special Administrative Region is that it has some institutions that are more advanced, and it has a large group of well-trained private-sector professionals who can help the nation improve its management systems.
The 14th Five-Year Plan (2021-25) marks out international finance, shipping, aviation, and trade as specific areas where Hong Kong can help. Arts and culture, as well as innovation, are also noted in the plan.
How should the Hong Kong authorities and business sector think about these areas? Obviously, Hong Kong can play its role well only if it looks beyond what it can do today to where trends are heading. Innovation comes from taking a bold forward-looking view.
Despite the hackneyed expression, our leaders really need to think outside the box to explore and exploit all possibilities. Hong Kong has the talent to play leading roles in innovation and technology, as well as in operating and managing many types of facilities and services spanning across a wide range of economic and social activities
In finance, the emphasis has been on Hong Kong strengthening its functions as a global offshore renminbi center, an international asset management hub, and a risk management center. However, looking further ahead, incremental change to do a bit better here and there won’t suffice, as fundamental changes are required.
Apart from looking at the 14th Five-Year Plan, China’s planning system takes place within a longer-term cycle that goes out to 2035, 2050 and 2060 to become a fully developed country that is carbon neutral by 2060.
How does this affect Hong Kong as an international finance center? Companies, industries, and investors are assessing their carbon-related risks, as governments consider how to price carbon. The mainland took many years to learn and test emissions trading in order to price carbon, and the power sector is the first to be part of the recently launched national emissions trading system, which Beijing intends to expand to other sectors in the coming few years.
Decarbonization is not something the market can do on its own. Government policy is vital. Hence, the Hong Kong authorities must become conversant about every aspect of carbon risk management, as well as work closely with the mainland to internationalize its emissions market in the years ahead.
As for shipping, Hong Kong has a strong private maritime industry but a weak public sector. The government has advisory bodies but no coherent policy about the future of shipping, nor the growing global demand for green shipping.
Decarbonizing international shipping is being decided upon by the International Maritime Organization, which Hong Kong is a member of. However, Hong Kong’s representative is from the Marine Department, which focuses on marine safety and doesn’t participate in discussions on climate change and decarbonization. This is a unique opportunity the government needs to correct immediately.
Hong Kong is home to the world’s second-largest air cargo port. Prior to the pandemic, it was also a major passenger airport. The government has a high degree of control over the Airport Authority but it won’t be enough for the AA to become just a greener airport, as its post-pandemic future for cargo and passengers is tied to the carbon transition, which requires a clear and ambitious policy.
As for trade, the Commerce and Economic Development Bureau does not appear to have a climate-related policy. As a large segment of Hong Kong businesses are tied to trade and logistics, where a “circular economy” has become the name of the game, the bureau should help companies by providing guidance and assistance in that transformation.
Moreover, just because the 14th Five-Year Plan has not named a particular sector does not mean Hong Kong cannot actively pursue a leadership path. The local economy, though small, provides an excellent testing ground for innovation.
For example, Hong Kong has a large and profitable property development sector. What if the Hong Kong authorities make it a priority for buildings — both new and retrofits — to be zero-carbon?
Indeed, leading developers in the world are looking at regenerative design and operation, so that buildings can help to make the city more sustainable. Regenerative buildings generate energy, reuse water, use compost toilets, recycle waste, regenerate clean indoor air, and contribute to lowering urban heat, include biodiversity, and enable smart living.
The government as a facilitator in society can use public buildings, including arts and cultural buildings and spaces, to galvanize society, and to take what it learns to set new codes and regulations. It can also use public procurement to create new skills for the contracting and engineering sector.
The mainland is ramping up services too, such as in finance, insurance, health, food, environment, law, education, welfare, culture, and sports. These are all areas the government can coordinate with industries, companies, universities, and professional bodies to make Hong Kong a leader, which can then contribute to the betterment of the nation through identifying where it can play an active role.
This has not been the way the government sees its work, but in the new world of climate transformation, it has to play a skillful convening and galvanizing role. Despite the hackneyed expression, our leaders really need to think outside the box to explore and exploit all possibilities. Hong Kong has the talent to play leading roles in innovation and technology, as well as in operating and managing many types of facilities and services spanning across a wide range of economic and social activities.
The author is chief development strategist of the Institute for the Environment, Hong Kong University of Science and Technology, and a board member of the CDP (Carbon Disclosure Project) Worldwide, London.
The views do not necessarily reflect those of China Daily.
HONG KONG NEWS