Hong Kong’s manufacturing industry has been shrinking for many years, and now only accounts for 1 percent of GDP.

Currently, Hong Kong’s economic growth is mainly driven by a few sectors which provide the most highly-paid jobs in the city. The narrow economic base has contributed to the widening wealth gap.

In 2016, the city launched its reindustrialization campaign, which has attracted some manufacturing companies to move their production lines back to Hong Kong. But so far, the campaign has been mainly focused on encouraging the return of traditional manufacturing.

Hong Kong’s high land and labor costs have curbed the reindustrialization effort. To tackle these cost constraints, Hong Kong should focus on promoting the development of advanced manufacturing to be supported by innovation and new technologies, especially in the areas of microelectronics, artificial intelligence and intelligent equipment, new energy vehicles, and biotechnology and medical health.

The Hong Kong Special Administrative Region government should leverage the city’s strong scientific research capabilities, global connectivity and market-oriented advantages, to proactively promote reindustrialization, develop advanced manufacturing supported by new technology and intelligent production that doesn’t require too many land and labor resources. This would create more high-paid jobs and facilitate economic diversification.

The incumbent administration is also keen to assist the Hong Kong manufacturing industry to further develop by leveraging innovation and technology. The Hong Kong I&T Development Blueprint, which was launched at the end of last year, set clear targets for the Hong Kong manufacturing industry: By 2032, it should account for 5 percent of the local GDP. At the same time, the administration encourages the use of innovation and technology to achieve intelligent manufacturing and improve production efficiency, and supports local enterprises as they shift to high-value-added production and develop high-value-added industrial chains, as well as upgrade and transform, to facilitate the city’s reindustrialization drive.

The State Council has released a plan to boost the high-quality development of the Shenzhen part of a sci-tech innovation cooperation zone being jointly developed by Shenzhen and Hong Kong, requiring high-quality, high-standard, and high-level development of the zone, and setting a timetable: By 2025, it should establish an efficient Shenzhen-Hong Kong technology innovation synergistic mechanism; and by 2035, the Shenzhen-Hong Kong innovation cooperation zone should be transformed into the world’s premier international innovation hub.

If Hong Kong is to develop advanced manufacturing, it should choose areas with local development potential and have better division of labor and cooperation with Guangdong province along the entire industrial chain, and strengthen and expand the advantageous links in their respective industrial chains

In fact, the plan is beneficial to Shenzhen improving its innovation and technology management mechanism, docking with international innovation rules, and carrying out international collaborative innovation; it is also beneficial to Hong Kong  enhancing the integration of its advantages in science and technology innovation and financial openness with Guangdong’s complete industrial chain; and it is beneficial to Hong Kong’s further integration into the overall national development, promoting the high-quality development of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), and building a world-class innovation platform.

Guangdong is a manufacturing powerhouse. The total output value of Guangdong’s manufacturing industry exceeded 16 trillion yuan ($2.22 trillion), and the total added value of all manufacturing industries reached 4.4 trillion yuan in 2022, accounting for one-eighth of the country’s total. Advanced manufacturing is becoming the focus of global competition. The development of advanced manufacturing can greatly facilitate the country’s high-quality development. If Hong Kong is to develop advanced manufacturing, it should choose areas with local development potential and have better division of labor and cooperation with Guangdong province along the entire industrial chain, and strengthen and expand the advantageous links in their respective industrial chains. For example, Hong Kong’s universities focus on “0-1” basic research, and the Science and Technology Park provides support for enterprises to tackle “1-10” problems; while “10-100” and further scale-up are difficult to achieve independently in Hong Kong, they need to be integrated with Guangdong’s development, so as to play the role of a strong alliance and create a win-win situation.

Although the HKSAR government has the determination, resources, and support from the central government, its current industrial policy for advanced manufacturing is relatively weak and lacks overall planning. Therefore, the Internet Professional Association commissioned the One Country Two Systems Research Institute to conduct research on Hong Kong’s advanced manufacturing industry. We hope that through this in-depth research, we can provide the HKSAR government’s industrial policy for advanced manufacturing with a series of suggestions. First, we hope to promote a comprehensive enhancement and deep transformation of the government’s role in industrial development. On the basis of doing well as a “supporter” and “facilitator”, we hope the government can take on the new roles of “leader” and “proactive participant”.

Moreover, we hope that through a series of policy suggestions, in the context of the global rise of reindustrialization, the changes in the international supply chain structure amid the China-US trade war, the impact of the COVID-19 pandemic on the international economy, as well as the GBA and the Belt and Road Initiative, we can assist the HKSAR government to respond to the challenges of the new situation and seize the development opportunities therein. We also aim to replan and optimize Hong Kong’s industrial cooperation relationship with other cities in the GBA, to promote and assist the industry in deepening the local market while more proactively playing Hong Kong’s unique advantage of “backed by the motherland, connected to the world”, to reorganize and expand the city’s business territories internationally, and to achieve the goal of building Hong Kong into an international innovation center.

The author is a Hong Kong deputy to the National People’s Congress and president of the Internet Professional Association.

The views do not necessarily reflect those of China Daily.