Yang Sheng says plan is designed to leverage national support to overcome local constraints, expand economic space, and benefit residents  

Given the extensive ink spilled and discourse generated during the monthslong consultation process for Hong Kong’s first five-year plan, the public can have little doubt about the imperative of the special administrative region adopting such a medium- to long-term blueprint for the city’s socioeconomic development.  

That said, some voices are trying to cast a negative light on Hong Kong’s initiative to carry out long-term socioeconomic planning. Some go so far as to portray — either implicitly or explicitly — the move as a shift to a planned economy from a capitalist market system.  

Whatever the motives, such notions play into the hands of those who have been prophesying Hong Kong’s “decline”, “demise”, or “death”, as an international financial and commercial center. Such “prophecies”, or aspirations under the guise of analysis, are conspicuously driven, either by ideological bigotry or for geopolitical ends, and are not worth the paper they were written on.

Still, for the sake of the smooth implementation of the five-year plan, it is imperative to set the record straight.

Socioeconomic planning is not exclusive to socialist economies. Various forms of transnational, national-level and region-level economic and social planning evolved simultaneously within the Western capitalist sphere to cope with crises like the Great Depression as well as the aftermaths of big wars.

The United Kingdom pioneered extensive adoption of economic planning during the mid-20th century. It was the first country to fully industrialize, which led to extensive urban slums, pollution, and public health crises. In response, the UK adopted formal spatial planning, starting with the Housing of the Working Classes Act of 1890 and culminating in the foundational Town and Country Planning Act 1947.

Following World War II, most developed Western nations adopted some variant of state development or macro-level planning.

Under the economic doctrine of indicative planning dirigisme — which highlighted the constructive role of market intervention, state-guided investment, and the strategic use of nonmarket instruments such as taxes and subsidies to encourage economic actors to align with national development goals — in addressing inefficiencies and market failures, France set national production targets for core industries such as steel, cement and transport under the Monnet Plan (1946). The plan fostered government-led economic planning while allowing for private enterprise to participate. It ultimately helped establish France as a significant industrial competitor globally.

The Monnet Plan was later adapted in 1948 and served as part of the Marshall Plan requirements that recipient nations must devise economic plans, including long-term, four-year production and investment forecasts, to use the aid money in the most efficient way, according to economic historians.

The United States also implemented massive regional and industrial planning, such as the Tennessee Valley Authority, to modernize a multistate region in the 1930s. The New Deal, implemented under the first and second administrations of then-president Franklin Roosevelt, unleashed a series of social, economic, and political reforms to cope with the aftermaths of the Great Depression under a demand-side economic theory. Roosevelt fully utilized federal government power to increase spending and introduce programs to stimulate growth and tackle depression-related issues, such as unemployment, social welfare, and financial reform.

Hong Kong is not confronted by immediate crises. But for the city, the challenges arising from unprecedented geopolitical rivalry and technological revolution are daunting. The old laissez-faire style of governance can no longer cope with the situation, not least to sustain the city’s competitiveness as well as to tackle its deep-seated problems.  

Indeed, the laissez-faire, or “hands-off”,  approach — the once dominant economic orthodoxy in the West — has been completely dumped by major capitalist economies in favor of aggressive, state-driven tech agendas.  A few examples:

In its attempt to re-shore high-end manufacturing, especially semiconductor manufacturing, to American soil, and establish unchallengeable dominance in artificial intelligence and other high-tech fields, the US continuously launched major policies, including major legislation or initiatives. These include the CHIPS and Science Act, the AI Opportunity Statement, funding domestic AI infrastructure alliances with the commitment of over $52 billion in direct subsidies, plus massive targeted tariff frameworks restricting advanced technology exports, among others.

In line with its core strategy in the global tech race, the European Union aims to achieve “chip sovereignty” by doubling Europe’s global semiconductor market share to 20 percent. This is to be accomplished by building dedicated AI “gigafactories” through initiatives such as the European Chips Act 2.0, the InvestAI initiative, and the provision of over 43 billion euros ($49.65 billion) for chips, paired with aims to mobilize up to 200 billion euros for investment in AI.

South Korea is no less impressive in ensuring its dominance in the global AI hardware supply chain through state intervention by aligning its national budget to back massive, nationwide physical tech layouts with the objective of transforming regions into massive semiconductor hubs and AI data centers, developing domestic neural processing units, and anchoring its status as the world’s leading supplier of AI hardware. Measures announced include the Three Mega Projects, the Chip Windfall Fund, and funding of $880 billion in state infrastructure backing and private investments.

A global trend is notably emerging with major economies like the US, the EU and South Korea decisively abandoning the hands-off model by aggressively deploying state-backed industrial policies to maintain competitiveness by anchoring cutting-edge fields like AI and semiconductors. They have proved that strategic, long-term state blueprints are no longer optional — they are the modern benchmark for survival.

Against this global macro shift in development approach, people who portray Hong Kong’s five-year blueprint in a negative light are not above suspicion of being part of political maneuver.  

Achieving the new industrial layout strategy of south-north dual engine — finance in the southern part of the city, and innovation and technology in the northern part — is a core part of Hong Kong’s blueprint. The strategy, which can be achieved only through long-term planning, government-coordinated efforts, and whole-society participation, is designed to tackle the entrenched problems, including a narrow economic base, overreliance on finance and property market cycles, low upward mobility for young people, and wealth inequality.    

Every industrial strategy (particularly those for the Northern Metropolis), livelihood initiative, and zone development measure within the plan is designed to leverage national empowerment and support to overcome local constraints, expand economic space, and benefit residents.

With the benefit of hindsight, future generations will view the rollout of the five-year blueprint as a historic milestone in Hong Kong’s socioeconomic development.

The author is a current affairs commentator.

The views do not necessarily reflect those of China Daily.