The SAR’s ambition to be a world innovation and technology pivot is helped by various initiatives to take the sector to new heights, along with the central government’s unwavering support in attaining the city’s objectives. Liu Yifan reports from Hong Kong.

The Hong Kong Special Administrative Region is going full steam ahead with its plan to be a global innovation and technology hub that chimes well with the country’s long-range goal of becoming one of the world’s leading innovative nations.

The SAR government unveiled its Innovation and Technology Development Blueprint last year, outlining the city’s ambitious targets for inno-tech development for the next five to 10 years, with a raft of initiatives to boost research strengths, woo the brightest minds and scale up funds for tech firms.

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What will Hong Kong’s inno-tech sector achieve by 2032 if everything goes according to plan? The number of startups will

reach a record 7,000, compared with 3,985 last year. There will be at least 100,000 inno-tech practitioners — more than double the 45,310 of 2020.

Such efforts would help the SAR achieve development in the twin-engine mode of ‘inno-tech plus finance’ and set up a platform for potential economic growth.

Mao Zhenhua, Professor at the University of Hong Kong’s Business School

The manufacturing sector will also be on a firm footing, driven by the push for a fourfold increase in its economic contribution to 5 percent in a decade. This will require local manufacturers to produce economic output of HK$400 billion ($51.1 billion) during that period.

The SAR’s plan for innovation came amid a significant drop in the manufacturing sector’s contribution to local GDP after the city moved toward developing a service-oriented economy.

The idea is that the Asian financial hub can simultaneously reindustrialize itself, develop a diversified economy, create quality jobs, improve residents’ quality of life, and serve the nation’s needs for technological self-reliance.

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In a sign of the inno-tech sector gaining pace, the SAR government recently set up a Northern Metropolis Co-ordination Office to champion and drive the development of the northern New Territories.

Unveiled in the 2021 Policy Address by then-chief executive Carrie Lam Cheng Yuet-ngor, the planned Northern Metropolis is expected to emerge as a new international inno-tech hub, integrating quality life, new economies, as well as culture and leisure.

The coordination office reflects Chief Executive John Lee Ka-chiu’s pledge in his maiden Policy Address last October to “take forward the development of the Northern Metropolis at full steam”.

According to the Development Bureau, the office will coordinate with the project’s advance in land development, housing supply, transport infrastructure, ecological conservation, and the development of industries and government facilities.

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An action agenda and an implementation plan for the Northern Metropolis will be formulated and promulgated by the NMCO this year.

Mao Zhenhua, a professor at the University of Hong Kong’s Business School, called the Northern Metropolis plan a “godsend” for forging the platform and space for creating a “new Hong Kong”.

“Such efforts would help the SAR achieve development in the twin-engine mode of ‘inno-tech plus finance’ and set up a platform for potential economic growth,” he said, adding that the technology drive aligns with China’s long-range goal to become one of the world’s leading innovative nations.

Institutional advantages

The report to the 20th National Congress of the Communist Party of China said that science and technology should continue to be the nation’s primary productive force, with talent as the primary resource and innovation as the main driving force.

Hong Kong, positioned as a global inno-tech center in the nation’s 14th Five-Year Plan (2021-25), is seen as a prime location for promoting technological development, given its distinct advantages.

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“From the perspective of comparative advantages, under ‘one country, two systems’, a comprehensive intellectual property protection system, an international capital market, a low tax (rate) regime, and a high-quality talent pool of Hong Kong are conducive to inno-tech development,” said Mao.

To exert Hong Kong’s advantages and mitigate its disadvantages, Tang Hei-wai, an economics professor at HKU, suggests the SAR focus on capital- and skill-intensive activities, and beef up collaboration between its businesses and those of other cities in the Greater Bay Area

According to the 2022-23 Budget, venture capital investment in Hong Kong surged to about HK$41.7 billion in 2021 from HK$1.24 billion in 2014. The private equity market, with more than $190 billion of assets under management as of June 2022, is the second-largest in Asia after the Chinese mainland.

It’s expected there will be more capital investment in the Guangdong-Hong Kong-Macao Greater Bay Area for the development of frontier technologies, contributing to the creation of an international inno-tech hub in the city cluster, says Aldous Mak, chief financial officer at Hong Kong Science and Technology Parks Corp.

“We are confident in the long-term development of Hong Kong’s investment landscape, which is backed by a robust foundation under ‘one country, two systems’,” he said.

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Zhou Xiaofang, chair professor of computer science and engineering at the Hong Kong University of Science and Technology, said he believes Hong Kong has distinct advantages in nurturing innovative minds, given the city’s top-notch tertiary education level.

Five of the SAR’s tertiary educational institutions — the University of Hong Kong, the Hong Kong University of Science and Technology, the Chinese University of Hong Kong, the City University of Hong Kong and Hong Kong Polytechnic University — were listed among the world’s top 100 universities, according to QS World University Rankings 2024.

But, Tang Hei-wai, an economics professor at HKU, said Hong Kong has its own disadvantages, such as high labor costs, limited and expensive land space, its physical and cultural distance to various mainland markets, and the lack of manufacturing capacity.

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To exert Hong Kong’s advantages and mitigate its disadvantages, he suggests the SAR focus on capital- and skill-intensive activities, and beef up collaboration between its businesses and those of other cities in the Greater Bay Area.

Local governments in the Greater Bay Area can cooperate in reducing cross-boundary inconveniences against integration, provide more information services to both employers and employees, increase business exchanges, and improve labor mobility by offering mutually acceptable medical and educational services for people willing to work in any city in the Greater Bay Area, he said. 

Contact the writer at evanliu@chinadailyhk.com