As Hong Kong prepares for its 2026–27 Budget announcement on February 25, expectations are running high. A budget is far more than a financial plan — it is a statement of direction, a reflection of priorities, and a declaration of confidence in the city’s future. At this critical juncture, one thing is clear: Hong Kong must continue positioning itself not only as a global financial center but as an innovation powerhouse driving growth for the region and beyond.

For decades, Hong Kong’s reputation has rested on its strengths in finance, trade, and logistics. These pillars remain vital, yet the global economy has entered an age defined by technology, data, and rapid transformation. Hong Kong’s economic future will hinge on how effectively it integrates innovation into every aspect of its development strategy. The upcoming Budget offers a timely opportunity to strengthen that commitment — to make innovation not an add-on, but the essential engine powering new growth.

Innovation beyond finance

Recent years have shown that Hong Kong is successfully moving beyond its longstanding identity as a financial intermediary. Artificial intelligence, biotechnology, green technology, fintech, life sciences, digital assets, and advanced manufacturing are no longer peripheral pursuits. They are fast becoming central to Hong Kong’s economic ecosystem.

The latest Global Innovation Index report offers compelling evidence. The Shenzhen–Hong Kong–Guangzhou cluster now ranks as the world’s top innovation hub, surpassing Tokyo–Yokohama for the first time. This achievement underscores how Hong Kong’s innovation environment — bolstered by strong research institutions, a robust intellectual property framework, and close collaboration with Shenzhen — has reached truly world-class levels.

But the Budget must sustain and deepen this momentum. Innovation thrives where investment, infrastructure, and imagination converge. This means continued SAR government support for research funding, startup incubation, and cross-border partnerships, particularly within the Guangdong-Hong Kong-Macao Greater Bay Area. When policy and private capital align toward nurturing innovation, breakthroughs follow.

Hong Kong possesses unique advantages that few global cities can match. Its trusted legal system, independent Judiciary, deep capital markets, and open business environment form the sturdy institutional framework that innovation requires. Entrepreneurs and investors trust Hong Kong because its rule of law offers predictability and protection.

This foundation remains one of the city’s greatest strengths. While geopolitical challenges persist, Hong Kong’s legal and financial infrastructure continues to outperform many Western jurisdictions. This confidence allows the city to attract international talent and investment. The Budget should reaffirm these institutional pillars while introducing strategic incentives to channel capital into emerging industries.

By framing innovation through this human-centered lens, the Budget can demonstrate that technology is integral to social well-being. Investments in healthtech, clean energy, and digital governance, for instance, would show that innovation enriches both the economy and everyday life

True innovation must serve people, not just profit. Recent local challenges, such as the Tai Po fire last November, remind us that technology can enhance not only economic productivity but also public safety and community resilience. Smarter urban infrastructure, advanced emergency response systems, and data-driven safety monitoring are tangible examples of innovation improving lives.

By framing innovation through this human-centered lens, the Budget can demonstrate that technology is integral to social well-being. Investments in healthtech, clean energy, and digital governance, for instance, would show that innovation enriches both the economy and everyday life.

Hong Kong’s innovation narrative cannot be separated from the broader story of the Greater Bay Area. As part of this vast economic ecosystem, linking Hong Kong and Macao with nine Guangdong cities, Hong Kong is uniquely positioned to act as a “superconnector”. The Greater Bay Area provides not only a huge consumer base but also a network of industrial capacity, research collaboration, and cross-border synergies unmatched anywhere else.

The central government’s 15th Five-Year Plan (2026–30) once again highlights Hong Kong’s role as both a global financial center and a driver of technological advancement. Initiatives such as the digital yuan, fintech development, wealth management expansion, and environmental, social, and governance finance integration can all benefit from deeper Greater Bay Area collaboration. The Budget should reinforce policies that align with these opportunities and further integrate Hong Kong’s innovation growth into national and regional frameworks.

A key challenge lies in bridging the “innovation gap” that often exists between early-stage research and commercial viability. Startups and scale-ups frequently struggle to secure funding as they transition from laboratory to market. Hong Kong’s Budget can play a catalytic role here by expanding co-investment programs, matching funds, and providing incentives that mobilize private capital for innovation ventures.

Given Hong Kong’s sophisticated financial sector, such plans are entirely achievable. Financial institutions possess the tools and expertise to manage risk, while the government can provide strategic direction and seed funding. Public–private collaboration is the formula that will propel the city’s innovation ecosystem into its next phase.

The road ahead

Global economic uncertainties, from supply chain disruptions to shifting regulatory landscapes, continue to reshape the competitive environment. Yet Hong Kong’s resilience and adaptability remain among its defining traits. The city has weathered political, economic, and health crises while maintaining its connectivity and credibility. Now is the time to use those strengths to push forward with long-term, innovation-led growth.

If the 2026–27 Budget places innovation squarely at its center, it will send a powerful signal — to investors, to entrepreneurs, and to the world — that Hong Kong’s revitalization is underway. Innovation anchors confidence, fuels opportunity, and ensures sustainability.

Hong Kong is already ranked among the world’s leading innovation centers; the challenge now is to build on that success and accelerate it. By embedding innovation into every layer of policy — from education and finance to technology and welfare — the city can ensure that its next chapter is one of inclusive, forward-looking prosperity. The foundations are strong. What comes next depends on how boldly Hong Kong chooses to invest — in creativity, in technology, and in itself.

The author is a fintech adviser, a researcher and a former business analyst for a Hong Kong publicly listed company.

The views do not necessarily reflect those of China Daily.