Promoting the development of innovation and technology and related industries has been one of the Hong Kong Special Administrative Region government’s priority measures for bolstering the city’s socioeconomic development since the fourth-term administration.
The establishment of the Innovation and Technology Bureau in 2015 was the first step in that direction, followed by the injection of HK$150 billion ($19.1 billion) for I&T development by the fifth-term administration. It is expected that the sixth-term administration, headed by John Lee Ka-chiu, will give I&T industries a shot in the arm in his first Policy Address.
In devising its own I&T policies, the Lee administration should show a propensity for continuity from the previous two administrations, yet take into account the dissimilar macro environment that warrants modifications.
I&T development started off on a bumpy ride during the fourth-term administration, with policymaking so clobbered by local Sinophobes and subversives that it took three years to set up the Innovation and Technology Bureau alone. Serious internal friction caused local I&T development to lose out on the favorable international environment at the time.
Six months into the Carrie Lam Cheng Yuet-ngor administration, or the fifth-term government, then-US president Donald Trump anointed China as one of America’s major rivals. Since then, the favorable environment for I&T development in Hong Kong has deteriorated sharply with the onset of the “black-clad riots” in 2019 and the onslaught of the COVID-19 pandemic. It was therefore an arduous period for the local I&T industries.
Fortunately, with the promulgation of the National Security Law for Hong Kong and the revamped electoral system, the political and social order in Hong Kong has since returned to normalcy. Nevertheless, the accelerating paradigm shift in the global power balance and the decoupling of the US from China in the technology field, with other major Western countries likely to follow suit, have created unfavorable conditions for the city’s I&T development.
As a mid-to-long-term strategy, the city should turn to the Chinese mainland, especially the cities in the Guangdong-Hong Kong-Macao Greater Bay Area, for collaborative opportunities aimed at grooming a self-reliant I&T ecosystem
Innovation and technology are underpinned by modern information and communication technology and its associated industries. In particular, semiconductor technology is of paramount importance. When Trump was in power, he made every effort to blockade Huawei and deprive China of the supply of integrated-circuit chips. His successor, Joe Biden, who apparently wants to outdo Trump, has gone all-out to cement America’s dominance in the global semiconductor technology and industry. The formation of the US-led Indo-Pacific Economic Framework and the Chip 4 alliance are the latest examples of maneuvers aimed to exclude China from the global semiconductor industry chain. Meanwhile, the CHIPS and Science Act is intended to propel the US semiconductor industry into global supremacy.
The US’ decoupling campaign will not just be limited to the semiconductor industries. It will expand to encompass other I&T-related sectors in due course. If Hong Kong wishes to advance its I&T development amid foreseeable hindrances from the decoupling campaign, it will have to commit to the following action plans to bolster its resilience.
First, as a mid-to-long-term strategy, the city should turn to the Chinese mainland, especially the cities in the Guangdong-Hong Kong-Macao Greater Bay Area, for collaborative opportunities aimed at grooming a self-reliant I&T ecosystem.
The US and its allies will forbid the acquisition of core technologies by Chinese companies from Western peers, as evidenced by the fact that the British government has recently forestalled a Hong Kong company, Super Orange HK, from acquiring the British software development company Pulsic on grounds of “mitigating the risk to national security”, citing that the software developed by Pulsic could be used to facilitate the building of cutting-edge integrated circuits that could be used in a civilian or military supply chain to build defense and technological capabilities. Since the holding company of Super Orange HK is a mainland-registered company partially owned by the Ministry of Finance of China, if the UK is blocking its innovative technology firms from being taken over by Chinese companies, it is for sure the US will not do anything less. Hong Kong, therefore, will have to play its part in assisting the country to develop its own leading technologies in the 21st century.
Second, the city must make full use of the short “window period” to attract talent and assimilate technologies from the West.
US House Speaker Nancy Pelosi’s visit to Taiwan has strained Sino-US relations, which is set to hasten the shake-up of the global political and economic landscape. It will quickly shorten the window period for China to attract scientific research talent from the West. The window period for Hong Kong, in contrast, will last longer thanks to the deep economic ties between the city and the West. Indeed, the American Chamber of Commerce in Hong Kong has announced its 10-month plan to hold a series of seminars from September this year to help the city maintain its international status. Chambers of commerce from other Western countries also want to safeguard the business interests of their member companies by cushioning the rapidly cooling relationship between China and the West. The HKSAR government, business and professional sectors should leverage the assistance of these chambers of commerce to extend the window period for procuring technologies and I&T specialists. With the exception of the US, other major Western countries could give Hong Kong a longer window period, on which the city cannot afford to miss out.
Last but not least, Hong Kong’s role in international finance should deserve no less attention than the I&T industry as the two largely complement each other.
The unicorn startup companies, which are an indispensable driver of the I&T sector, will need capital from the financial market to grow and move up the value chain. Judging from the fact that Washington blacklisted SenseTime, a Chinese artificial-intelligence startup, prior to its initial public offering on the Hong Kong Stock Exchange, it can be deduced that the US’ decoupling campaign will likely extend to the financial sector. Hence, there is a need for the city to devise inherently neutral financial products and services that will indirectly link up international capital with China’s (including Hong Kong’s) I&T industries.
The author is a senior research fellow of China Everbright Holdings.
The views do not necessarily reflect those of China Daily.