Although well-established as Asia’s leading financial services and trading hub, Hong Kong has never truly been globally competitive in the innovation and technology space, despite piecemeal initiatives to bolster its standing in the field. However, with the publication of a comprehensive new Innovation and Technology Development Blueprint, the time might finally have come now that a plan – and a wealth of new funds – to propel the city towards global I&T relevance are in place.
As CY Leung, the Hong Kong Special Administrative Region’s chief executive between 2012 and 2017, notes, this I&T Blueprint has been over a decade in the making. “During my tenure as chief executive, I wanted to establish a new bureau to take charge of science, innovation and technology. Now it has the word industry in it as well, since last year. I tried several times to get it set up but there was political opposition in the Legislative Council (LegCo). I finally succeeded, two and a half years late, and I count that as one of the feathers in my cap in the innovation and technology space. I wanted to push for that also because of the social impact of scientific advancement on the grassroots and wanted to create a knowledge-based economy.”
Hong Kong’s I&T prioritisation is clearly part of a wider national strategy. Indeed, part of China’s 14th National Five-Year Plan, which is set to run between 2021 and 2025 specifically lays out the development of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) into an international centre for science and technology innovation. Moreover, President Xi Jinping has publicly proclaimed his support for Hong Kong to develop into an international centre for I&T.
Support from the Top
President Xi made a highly publicised visit to Hong Kong in June/July 2022, which took in a trip to the city’s Science Park and a speech to local scientists, researchers, and entrepreneurs. For many stakeholders, this was a clear indication of Hong Kong’s renewed positioning and importance as an I&T hub within China’s wider economic goals. “[President Xi] attaches great importance to Hong Kong’s I&T development and progress,” said Hong Kong University of Science and Technology (HKUST) Vice-Chancellor Nancy Ip, speaking at the time.
Moreover, as an editorial in the Hong Kong-based Chinese language newspaper Ta Kung Pao added, the President’s visit “demonstrated the importance and acknowledgement placed on Hong Kong’s I&T development and the expectation of Hong Kong contributing to the country’s development in science and technology.”
Tech entrepreneur and investor Duncan Chiu, who now represents the technology and innovation sector within LegCo, was even more effusive, calling the visit “monumental” and “a shot in the arm for Hong Kong’s I&T development. President Xi’s visit to the park has shown his confidence and support for Hong Kong to be an I&T hub.”
To this end, 2022 saw the publication of the Hong Kong Innovation and Technology Development Blueprint, outlining a plan for the ramping up of activities across upstream basic research, midstream technology transfer, and downstream industrial development in life and health technology, advanced manufacturing and new energy technology, AI and data science, and FinTech
“This important work represents the first time that a single, systematic document charting Hong Kong’s path towards becoming an I&T centre has been created”, says the Blueprint’s author, Hong Kong Secretary for Innovation, Technology and Industry Professor Dong SUN.
The Blueprint has come with some ambitious targets. These include increasing gross domestic expenditure on R&D (GERD) as a percentage of gross domestic product (GDP) up from less than one percent in 2020 to 1.3 percent in 2025 and further to two percent in 2030. This represents a promising commitment to increasing R&D intensity, but still places Hong Kong far behind the leading countries on this metric, including Israel (5.35 percent), South Korea (4.80), Sweden (3.49), Belgium (3.46), and the USA (3.42), according to UNESCO data for 2020.
Other lofty goals include almost doubling the number of start-ups in the city by 2030, almost tripling the amount of ‘unicorn’ companies with a valuation of over USD one billion, more than doubling the amount of I&T practitioners, and boosting the contribution of the manufacturing sector to GDP from one percent in 2020 to five percent in 2030 (see below chart).
Challenges and Synergies
Such a transformation away from the city’s established areas of specialisation will not happen overnight, nor will it be without hurdles. However, Professor SUN feels that it is a necessary step in securing Hong Kong’s future.
“Hong Kong’s traditional strength is as a financial centre, with lower levels of attention granted to I&T, he begins. “However, based on the experiences of other cities in the GBA as well as in countries such as Singapore, it has become clear that I&T is a cornerstone of successful development. Therefore, if Hong Kong wants to maintain its leading position in the region, besides the continuous development of its status as an international financial centre, there is also the need to develop a deeper I&T footprint. Additionally, Hong Kong is trying to answer several fundamental questions, including how to provide more job opportunities for young generations as well as increase economic prosperity and compete with other regional and global hubs.”
Synergies with Hong Kong’s existing fundamentals can also be developed within its I&T transformation. “The sectors selected within the I&T Blueprint touch on certain common areas — for example, life sciences and biotech touch on citizens’ health data; FinTech touches on monetary data, and AI and big data on privacy and personal data,” says Chiu. “These are all things that Hong Kong can develop, not only because of the technological human capital here, but also because of the rule of law and the domain expertise that we have built up here, and therefore provide a foundation for good companies to emerge in these areas.” He adds that “Hong Kong also has a long tradition of adhering to regulatory standards, which both our financial and legal industries are a testament to.”
Chiu also pushes back on the suggestion that Hong Kong has missed the boat on some of these technologies compared to its international competitors. “I do not believe there are ‘latecomers’ when it comes to technology because if you invest in the next big thing, you can still be successful and be the first to build the next big thing,” he proclaims. “Shenzhen, for example, started from nothing; it was farmland 30 years ago. It is more about whether you want to have strategic involvement in building futuristic technologies in one place, and every government has a role to play in that.” Chiu cites Japanese and Korean automobiles and mobile phones, Israeli cybersecurity, Canadian AI and quantum computing, Singaporean successes in several industries and even US companies like Tesla as examples of government-led technological transformation which Hong Kong could look to emulate.
Whether Hong Kong will be able meet the ambitious I&T targets it has set itself remains to be seen, the fact that this transformation has – for the first time – been laid out in writing and received public backing from the government in Beijing seemingly represents a significant milestone.