The Hong Kong Special Administrative Region government outlined its first guidelines on the responsible use of artificial intelligence (AI) in the financial market on the opening day of Hong Kong’s 2024 FinTech Week (Oct 28 to Nov 1), aimed at addressing the challenges brought by AI and encouraging AI development.

In this sense, Financial Secretary Paul Chan Mo-po said during the opening of the event that the government will promote the use of AI in finance to accelerate the development of new quality productive forces tailored to Hong Kong’s conditions.

The government said that it is both open to and prudent toward the application of AI, while saying it wants the sector to use it in a responsible manner, noting issues such as cybersecurity and intellectual property rights.

Moreover, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said the Hong Kong University of Science and Technology will allow financial firms to use its AI language model, called InvestLM. Hui added that around 38 percent of institutions in the local financial sector use AI, about 12 percentage points higher than the global average. He said that the government “will work hand in hand with financial regulators and industry players to foster a healthy and sustainable market environment”. There is undoubtedly great potential for Hong Kong in the area of AI. AI is a foundational technology with the capacity to increase productivity, boost competitiveness and help cope with challenges, and therefore countries are willing to leverage this technology.

China’s AI market was projected to expand to $29.02 billion in 2023 and $104.7 billion by 2030 at an annual growth rate (CAGR 2023-2030) of 20.12 percent. In comparison, the United States has the world’s largest AI market ($87.18 billion in 2023).

It is safe to project that China can become an AI world leader by 2030, given the number of its AI companies, the number of people working in the sector, and the advanced AI infrastructure and supportive policies of the government.

Hong Kong can enormously benefit from the Chinese mainland’s strong AI industry, while the latter can also benefit from Hong Kong playing a key role  the nation’s AI development. Chan said a few months ago that the city can contribute to the nation’s AI development by providing talent and funding. Chan said at the World Artificial Intelligence Conference held in Shanghai in early July that Hong Kong has advantages when it comes to attracting talent in the current geopolitical landscape.

In Hong Kong, as per Statista data, the AI market is projected to expand to $770 million in 2024 and $3.43 billion by 2030 at an annual growth rate (CAGR 2024-2030) of 28.27 percent.

Back in November last year, the Hong Kong Productivity Council unveiled the key findings of its Hong Kong AI Industry Development Study, highlighting the current state of Hong Kong’s AI industry.

The study, conducted in collaboration with the Hong Kong Institute of Economics and Business Strategy and the Business School of the University of Hong Kong, presented a comprehensive overview of the challenges, opportunities and needs faced by the AI sector.

To understand the overall situation of AI application in Hong Kong, this study collected data from 267 companies, of which 81 percent were SMEs, and 19 percent were large companies, covering multiple industries, including retail and catering, personal services, and professional service industries. Of all companies surveyed, 41 percent are or will be using AI, with 32 percent of them already applying the technology in multiple levels, such as marketing (58 percent), operations (44 percent), and internal management (34 percent). The average cumulative investment in AI has reached HK$830,000 ($106,800). For the remaining 9 percent of companies preparing to integrate AI technology into their business operations, their average investment budget is approximately HK$140,000. In terms of plans to expand the use of AI, 59 percent of the companies that have already integrated AI stated that they will further expand their AI applications and increase their investment. Sixty-one percent of them were considering expanding their investment by HK$300,000, and the average expected additional investment amount was as high as HK$1.22 million.

AI has rightly become the focus of the ongoing FinTech Week, one of the most important and successful fintech events in the world.

Indeed, the event is expected to attract over 30,000 participants from more than 100 economies as well as 800 speakers, and 700 sponsors and exhibitors.

Themed “Illuminating New Pathways in Fintech”, the event, which aims to solidify Hong Kong’s position as a leading global financial and fintech hub, featured a main conference at Hong Kong AsiaWorld-Expo on Monday and Tuesday, with a focus on the latest fintech innovations and trends, including artificial intelligence (AI).

The event follows Hong Kong’s strong bet on fintech. In his recently delivered Policy Address, Chief Executive John Lee Ka-chiu focused on Hong Kong’s ongoing economic transformation, with an emphasis on fintech development, under the chapter “Establish a New Fintech Innovation Ecosystem”, in which he said that the government will continue to promote the development of innovative financial services, including central bank digital currencies, mobile payments and virtual banks.

The Policy Address mentioned that the Digital Policy Office (DPO) will endeavor to fortify information systems of the government and public organizations, including spearheading the pilot use of a locally developed generative AI document processing copilot application in government departments. About 20 digital government and smart city initiatives will also be launched this year, including using blockchain technology to issue electronic certificates for designated civil service examinations and electronic licensing by the Fire Services Department, as well as the use of AI for handling public inquiries.

Fintech wise, Hong Kong and the rest of the Guangdong-Hong Kong-Macao Greater Bay Area are certainly increasing their role as fintech hubs. The Fintech 2025 blueprint aims at pivoting the HKSAR toward a friendlier regulatory regime for digital assets, proving that the city is positioning itself to become a virtual assets center/crypto hub, but also an AI powerhouse.

All this proves that Hong Kong’s resilient nature has made the city not only remain one of the world’s most important financial centers, but has kept enhancing this status while diversifying its economy.

To sum up, Hong Kong, as the FinTech Week will show, has the potential not only to maintain its role as one of the world’s most important financial centers but to enhance it, thanks to the city’s international role, expertise in the financial industry and related industries, and also thanks to tapping into newer industries like AI, all this in the midst of Hong Kong’s involvement in the GBA and other relevant projects. Hong Kong has recently been placed high in rankings such as the 2024 Economic Freedom of the World by The Fraser Institute (Hong Kong ranked as the freest economy in the world) as well as the Global Financial Centres Index (GFCI) 36 Report, published by Z/Yen from the United Kingdom and the China Development Institute from Shenzhen, showing that the policies set out in the previous policy addresses are working.

The HKSAR government’s efforts to promote the use of AI in finance to accelerate the development of new quality productive forces tailor to Hong Kong’s conditions while taking the risks into consideration; this seems to be a wise approach that can undoubtedly benefit Hong Kong.

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

The views do not necessarily reflect those of China Daily.