As the Hong Kong Special Administrative Region proceeds with the drafting of its first five-year plan, the city should ask itself a fundamental question: In the country’s next stage of high-quality development, what new and irreplaceable value can Hong Kong create?
The answer cannot simply be “more finance”, “more technology”, or “more connectivity”. These are important, but they are not enough. Hong Kong’s real advantage lies in its ability to turn uncertainty into order, risk into tradable products, and new technologies into trusted markets. In other words, Hong Kong’s future value will depend not only on how quickly it embraces new industries, but also on whether it can provide the rules that allow those industries to grow.
For many years, Hong Kong has been shaped by a rather defensive instinct: The less the government does, the more space the market has; the lighter the regulation, the greater the flexibility for business. This belief has deep roots in the city’s economic culture. Whenever new guidelines are proposed, whether on labor protection, green transformation, digitalization or emerging industries, the first reaction from some quarters is often to worry about compliance costs, the administrative burden, and possible loss of efficiency. Over time, “regulation” has too often been seen as a burden. But this view misses a more important point. Good rules do not weaken markets. In many cases, they are the very condition for markets to exist. This is especially true for emerging industries. In recent exchanges with industry players, I observed a striking contrast. In public debate, businesses often appear to ask for fewer rules. But when they actually enter a new market, what they ask for most urgently is clarity: What can be done? Who approves it? Who is responsible? Can the risk be insured? Can the project be financed? These are not bureaucratic questions. They are commercial questions. Without clear answers, capital hesitates, insurers cannot price risk, banks cannot lend, companies cannot scale, and residents will not adopt new services with confidence. Put simply, without rules, markets cannot go far.
If Hong Kong can provide trusted rules for new markets, it can once again play a role that is difficult to replace, not simply as a connector between the Chinese mainland and the broader world, but as a place where innovation becomes credible, financeable and globally accepted. The next task is therefore not only to recognize that markets need rules. It is to decide what kind of rules Hong Kong should build first: approval routes, liability frameworks, insurance mechanisms, financing channels and cross-boundary compliance pathways
In the traditional economy, many market boundaries were visible. Trade involved goods, invoices and contracts. Logistics involved routes, vehicles and warehouses. Property involved land, leases and ownership records. Retail involved shops, products and consumers. When something went wrong, responsibility could usually be traced. A delayed delivery could be attributed to a logistics provider. A contractual breach could be pursued against a counterparty. A faulty product could be traced to a seller or supplier.
The new economy is different. Whether we are talking about artificial intelligence, the low-altitude economy (LAE), low earth orbit satellite applications, data governance, virtual assets or new payment systems, value no longer lies only in a single product. It often lies in a system, a dataset, an algorithm, a platform, or a chain of trust. This changes everything. If an algorithm makes a wrong decision, who should bear responsibility: the developer, the operator, or the user? If a platform fails, how should liability be divided among the platform, the custodian, the investor and the regulator? If data collected in Hong Kong is processed, commercialized or transferred across borders, what safeguards should apply? These are precisely the questions that determine whether an emerging industry can move from trial to scale. Technology may create possibility, but institutions create markets.
The LAE offers a clear example. Drone operations should no longer be understood merely as buying a drone, hiring a pilot, and taking aerial photos. A mature LAE could include project-based aerial services for surveying, construction-site inspection and infrastructure monitoring; drone-as-a-service models that provide fleets, operators, maintenance, insurance and data delivery; and route-based operations for logistics, medical-sample transport and supplies to outlying areas, among others.
Hong Kong has already established a risk-based regime for small unmanned aircraft, covering registration, training, insurance and higher-risk operations. This provides a useful foundation for flight safety. But flight safety alone is not the same as an industrial framework. If Hong Kong wants the LAE to become a real industry, it must answer a wider set of questions: Who qualifies as a commercial operator? How should regular routes be approved? What standards should apply to maintenance, data handling, and operational control? How should third-party liability insurance be structured? What happens after an accident? How should responsibility be allocated when drones operate with artificial intelligence? Without such clarity, drone activities will remain trapped at the level of pilot programs and demonstrations. Companies will be reluctant to invest in fleets. Banks will hesitate to finance long-term projects. Insurers will struggle to price liability. Government departments may approve individual trials, but the market will not become a scalable industry.
This is not only a problem for drones. It reflects a wider challenge facing Hong Kong’s next phase of development. New industries do not emerge through technology alone. They require approval pathways, legal certainty, insurance products, financing mechanisms, data rules, and public trust. These are exactly the areas where Hong Kong should be strongest.
Hong Kong’s traditional role as a connector remains important, but the next stage should go beyond connectivity. The more important question is whether resources, capital, data, talent and technologies passing through Hong Kong can be transformed into higher-value products and services. This is where Hong Kong’s super value-adder role should be redefined. Its deepest strengths are not only its geographic position or free flow of capital. They lie in common law, international finance, professional services, insurance pricing, dispute resolution, compliance, and data governance. These may appear less glamorous than AI or drones, but they are the invisible infrastructure that allows new industries to become bankable, insurable and internationally trusted.
The difficulty is that Hong Kong’s governance system often deals with these issues in separate compartments. Technology officials look at technology. Financial officials look at capital. Lawyers look at contracts. Insurers look at risk. Regulators look at compliance. Each part matters, but emerging industries need a complete pathway, not fragmented answers.
For industry, the questions are practical and immediate: Can this business be done in Hong Kong? Which authority should approve it? What rules apply? Who bears responsibility if something goes wrong? Can the risk be insured? Can the project be financed? Can the service be exported? If these questions remain unanswered, any weak link in the chain can stop the market before it begins.
Therefore, Hong Kong’s five-year plan should not merely list promising sectors. It should identify the institutional gaps that prevent emerging industries from becoming real markets. It should set out how Hong Kong can build clear approval routes, liability rules, insurance frameworks, financing channels, and data governance standards for new industries. This is not about heavier regulation, but about smarter rulemaking as economic infrastructure. The purpose of rules should not be to control the market but to make the market possible.
Hong Kong has always succeeded when it turned institutional trust into economic value. In the next five years, that logic must be applied to emerging industries. If Hong Kong can provide trusted rules for new markets, it can once again play a role that is difficult to replace, not simply as a connector between the Chinese mainland and the broader world, but as a place where innovation becomes credible, financeable and globally accepted. The next task is therefore not only to recognize that markets need rules. It is to decide what kind of rules Hong Kong should build first: approval routes, liability frameworks, insurance mechanisms, financing channels and cross-boundary compliance pathways.
The lesson is simple but urgent: Without rules, markets cannot go far. With the right rules, Hong Kong can help new industries take off and turn its institutional strengths into the next engine of growth.
The author is a member of the POD Research Institute and serves on the Yuen Long Area Committee.
The views do not necessarily reflect those of China Daily.
