Blog

Industrialisation as the driver of development

Last week, the Chief Executive delivered his second Policy Address. It outlines forward-thinking plans and charts a blueprint of implementation for Hong Kong’s future development, thus opening new horizons for the city. The Policy Address continues to stay closely aligned with the “four musts” and “four proposals” set forth by President Xi Jinping; and with building a vibrant economy for a caring community at its core, it is leading Hong Kong to embark on a new journey.

Building a vibrant economy and striving for development are the broad consensus and mainstream view of our community. It is true that Hong Kong’s economy has been gradually recovering since the beginning of this year, but heightened geopolitical tensions and tightened financial conditions may linger for a longer while. These ongoing challenges in the external environment will inevitably exert pressure on our economy. Although advance estimates for the gross domestic product in the third quarter, scheduled to be released this week, would indicate a continued rise, the pace of growth is slower than anticipated.

Given Hong Kong’s status as a small, externally-oriented and fully open economy, we are vulnerable to various external factors. That said, by accurately grasping global trends, capitalising on our strengths, promoting growth in industries with competitive advantages, and nurturing emerging sectors with potential, Hong Kong can sustain its growth momentum, advance towards high-quality development, and effectively address the challenges posed by economic volatility.

Last week, several policy secretaries joined me in attending a press conference to cover economic and financial development as well as property demand management measures in relation to the 2023 Policy Address.

On building a vibrant economy and striving for development, the Policy Address continues to underscore the importance of actively aligning with the national development strategies, and promoting the development of the “eight centres” outlined in the 14th Five‑Year Plan. The Government will also adopt an industry-oriented approach to drive development, with a view to expediting the growth of sectors in which Hong Kong possesses a competitive edge, and exploring new areas of growth. These include innovation and technology (I&T), life and health as well as pharmaceutical research and development (R&D), creative industries, Chinese medicine and new energy transport. The goal is to leverage our existing strengths and establish a more robust and extensive industrial system through policy support and resource allocation. This approach aims to cultivate a more dynamic and diversified economy, thus generating more high-quality employment opportunities for the people of Hong Kong.

Take I&T for example. Over the past few years, the Government has made substantial investments and achieved notable progress in enhancing the domestic I&T ecosystem. The Policy Address outlines the direction for expediting the development of the I&T industry in Hong Kong through various measures. They include – (1) strengthening the policy drive and implementation structure. To this end, the Digital Policy Office and New Industrialisation Development Office will be established. These offices will be responsible for promoting the digitisation of public services and driving the development of new industrialisation in Hong Kong, respectively; (2) enhancing hardware facilities. This includes phased establishment of an Artificial Intelligence (AI) supercomputing centre from next year onwards, and the commissioning of the Microelectronics Centre next year. They will expedite the development of AI and microelectronics in Hong Kong; (3) creating a $10 billion New Industrialisation Acceleration Scheme. The Scheme will provide additional financial assistance to enterprises in such fields as life and health technologies, AI and data science, advanced manufacturing and new energy technologies. The funding will support the set-up of new production facilities. Moreover, the feasibility of allowing enterprises under the Scheme to employ non-local technical personnel more flexibly will be explored. These all aim to promote the downstream development of new industrialisation; and (4) strengthening cooperation with the Mainland. Efforts will be made to foster secure cross-boundary flow of Mainland data within the Greater Bay Area as soon as possible. The synergistic development of the Hong Kong Park and the Shenzhen Park of Hetao will also be promoted in collaboration with Shenzhen.

Life and health, as well as R&D in drugs and medical devices, are important areas of I&T, offering considerable economic value added. Hong Kong has a high-quality healthcare system, with our two medical schools ranked among the top 40 globally. In addition, several universities possess considerable strengths and edges in basic research and development. Meanwhile, since the reform of the listing regime in 2018, a large number of biotechnology companies have listed in Hong Kong to raise capital. This year, the Office for Attracting Strategic Enterprises has successfully attracted a number of life and health technology companies to settle in Hong Kong. Concrete proposals will soon be made too on facilitating cross-boundary data flow in the Greater Bay Area. It is evident that the industrialisation of R&D in drugs and medical devices, as well as life and health technology, is ready for take-off.

The catalyst for industrialisation in this area is the building of local clinical trial capacity and a robust local drug registration system. The Policy Address puts forward progression towards the "primary evaluation" approach for drug registration, and it is a crucial step in promoting Hong Kong's development as a health and medical innovation hub. In the short term, we will establish a new "1+" drug approval mechanism and facilitate clinical research and trials by the Hospital Authority. In the longer term, we will strive to establish the "Hong Kong Centre for Medical Products Regulation" as a standalone statutory body, thus realising the “primary evaluation” approach. Together, these initiatives will attract more local, Mainland and overseas pharmaceutical companies to conduct R&D and clinical trials in Hong Kong, and better integrate our strengths in healthcare and I&T so as to drive the relevant industries to become sectors with a competitive edge.

Apart from the industry-oriented development approach, we will step up efforts in attracting enterprises, talent and capital. That includes developing "headquarters economy" to attract enterprises from outside Hong Kong to set up headquarters or corporate divisions in Hong Kong; and the introduction of a mechanism to attract more overseas companies to re-domicile to Hong Kong. As regard talent attraction, we will expand the list of eligible universities under the Top Talent Pass Scheme; while the non-local student quota of publicly-funded post-secondary institutions will be doubled. We will also introduce pilot schemes to facilitate more non-local talent to work in the city, thus encouraging them to stay and pursue their careers in Hong Kong after graduation.

To support the industry-oriented approach and sustain economic growth, we need to provide adequate land and infrastructure. This will ensure that we have sufficient space and capacity for development. I will lead the newly established Committee on the Financing of Major Development Projects, which will study and examine viable investment and financing options for projects, including leveraging market forces and capital participation. Our goal is to ensure the Government’s fiscal sustainability as development projects progress.

The Policy Address has injected more energy to Hong Kong’s growth in the short, medium and long terms, while also reinforcing the resilience of development. We will press ahead at full team with implementing the various measures outlined in the Policy Address, so as to take the city’s development in various areas to a new level, and provide our people with a better living environment and greater room for development.

October 29, 2023