Wong Kam-fai says AI-assisted industrial upgrading will help the city better serve the nation’s development strategy

The strategy of positioning innovation and technology (I&T), education and talent as the core drivers of Hong Kong’s future economic and social development, as articulated by Financial Secretary Paul Chan Mo-po in the 2026-27 Budget, is laudable.

Transform industries with AI

The Budget reaffirms the Hong Kong Special Administrative Region government’s commitment to the Hong Kong I&T Development Blueprint, highlighting areas such as artificial intelligence and robotics, as well as life and health sciences, through InnoHK research platforms that have already shown results. It proposes accelerating the third InnoHK platform focused on advanced materials and new energy, while also investing in aerospace and quantum technologies. These initiatives align with the national 15th Five-Year Plan (2026-30) on building a modern industrial system, and Hong Kong — leveraging its international research strengths — can contribute meaningfully to the country’s global technology ambitions.

To support the development of I&T industries, intellectual property (IP) is particularly important. The Budget allocates HK$52 million ($6.64 million) to establish an IP academy offering accredited vocational training. While Hong Kong has many outstanding IP assets, there is a shortage of professionals in valuation and commercialization. Strengthening the IP management talent pool will reinforce Hong Kong’s role as a regional IP trading center. For example, universities and research institutions need to secure IP protection, monitor for infringements, and take legal action when necessary. In addition, patents can be used for commercial licensing and technology transactions. Companies can generate revenue through licensing, and when seeking financing, patents help demonstrate their core technologies and competitiveness, thereby influencing their valuation. Therefore, I believe this initiative is pivotal to advancing Hong Kong’s innovation ecosystem.

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The Budget also proposes creating a Committee on AI+ and Industry Development Strategy to guide AI-driven industrial transformation. This echoes my 2024 AI+ strategy proposal, which emphasized developing vertical large language models tailored to specific industries, and recommended piloting applications across government, finance, healthcare, and education sectors.

Boost investment in I&T and education

Despite fiscal constraints, the Budget commits long-term investment in I&T and education. It allocates HK$10 billion each to the Hetao Hong Kong Park and the San Tin Technopark, and reserves another HK$10 billion for campus construction in the Northern Metropolis University Town. These measures will strengthen industry-academia-research collaboration and foster integration between Hong Kong and Shenzhen, as well as within the Guangdong-Hong Kong-Macao Greater Bay Area.

However, under the Productivity Enhancement Program, schools and universities face a 2 percent budget cut this academic year, which may affect education quality. To mitigate this, the government should help schools adopt AI+ Education initiatives to maintain standards and reinforce Hong Kong’s position as an international education hub.

Upskilling talent for the AI Era

Concerns about machines replacing humans are growing. To address AI’s impact on the labor market, the Budget proposes upgrading the Employees Retraining Board into “upskill Hong Kong” to provide AI-related training. The government should further support employees by subsidizing AI training programs, helping them upskill or reskill to adapt to the evolving human-machine collaborative workplace.

Civil servants also deserve attention. Although Hong Kong’s fiscal outlook is improving, long-term constraints remain, and the Budget proposes reducing the civil service establishment to 188,000 posts. To maintain efficiency, the government must accelerate AI adoption in public services. The Budget earmarks HK$100 million for the AI Efficacy Enhancement Team to introduce advanced AI technologies, including locally developed solutions. These funds could be used to develop AI civil servant systems incorporating both embodied intelligence and disembodied intelligence, thereby driving internal AI transformation. For example, beyond deploying generative AI to create clerical AI civil servants, the government could also develop frontline AI civil servants such as firefighting robots and patrolling robots.

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Chief Executive John Lee Ka-chiu has announced the formulation of Hong Kong’s first five-year plan to align with the 15th Five-Year Plan (2026-30). The national plan emphasizes “accelerating high-level technological self-reliance and driving the development of new quality productive forces,” while fully implementing the “AI+” initiative. By placing AI at the heart of industrial upgrading and economic transformation, this year’s Budget will help Hong Kong better integrate into and serve the nation’s development strategy.

The author is a member of the Legislative Council of the Hong Kong Special Administrative Region.

The views do not necessarily reflect those of China Daily.