The Safeguarding National Security Ordinance (the Ordinance) was unanimously passed by the Legislative Council on March 19, fulfilling the Hong Kong Special Administrative Region’s constitutional duty under Article 23 of the Basic Law. As a member of the legislature, I am proud to contribute to this historic mission and witness a new milestone in the “one country, two systems” cause. On the journey from stability to prosperity, the legislation marks a new starting point for the city and ensures a more stable environment for development, allowing the HKSAR government to concentrate its efforts on the city’s economic development and long-term prosperity.
How should we achieve prosperity? Many voices in society suggest that rebuilding confidence among foreign investors is the most urgent task. The World Investment Report, published by the United Nations, indicates that FDI inflows to Hong Kong have declined since the end of the pandemic period, from $140.2 billion in 2021 to $111.5 billion in 2023, resulting in Hong Kong falling from second place in the world to fourth, behind the United States, the Chinese mainland and Singapore. Furthermore, the number of regional headquarters decreased to a record low of 1,336 in 2023. Many of my friends in the business sector are concerned that this trend will undermine Hong Kong’s position as an international financial and trade center.
The government is certainly aware of the importance of foreign investment. The Office for Attracting Strategic Enterprises, led by the financial secretary, has so far attracted about 50 high-potential enterprises from around the globe, bringing in investment of at least $40 billion and creating 13,000 jobs. Many of those companies are from industries of strategic importance, including life and health technology, artificial intelligence and data science, fintech, and advanced manufacturing.
Moreover, InvestHK and the Hong Kong Economic and Trade Offices organize and sponsor an array of activities worldwide, including conferences, roadshows and roundtables, to promote Hong Kong’s unique advantages and the huge opportunities in various industries.
The above work is definitely worthy of recognition. Over the years, the government has attached great importance to proactively telling the good stories of Hong Kong, such as its world-class infrastructure and competitive tax system, and the distinctive advantages of enjoying strong support of the motherland and being closely connected to the world. Hong Kong residents are also known for their “Lion Rock Spirit”. These factors contribute to enormous competitiveness and should be maintained. However, as the world economy and technological trends are changing rapidly, new content is required to present the government’s new mindset and new route to achieve prosperity.
The new content can be presented from two perspectives. The first is to restore global investors’ confidence in Hong Kong. Since the implementation of the Ordinance, collusion with external elements or support for anti-China forces have been eradicated. The vast majority of foreign investors come to Hong Kong in good faith to conduct regular business activities. It is therefore essential that officials show a gesture of goodwill and active support to them.
Currently, the government is disseminating positive news narratives to counteract negative propaganda and allay any misunderstandings that international investors may harbor about Hong Kong. It also arranges overseas visits in conjunction with the business sector and organizes various mega events to allow foreigners to experience our social conditions directly.
In terms of initiative, speed and publicity, the current-term government has made significant progress. However, some foreign investors are still concerned about the suitability of the political environment for business development. To address this, the government must demonstrate a receptive and enlightened attitude to engage with external concerns and criticism. The government can, on the one hand, relieve the pressure on its efforts of publicity and attracting enterprises, and, on the other hand, take practical actions to demonstrate that Hong Kong has always been a liberal cosmopolitan city.
The government needs to solidify the new narrative by implementing follow-up policies and measures, and providing clear policy interpretation. Once these steps have been taken, the global investors will take action to cast their vote of confidence in the city
The above methods neutralize the risk aversion among global investors. However, it is important to note that their primary focus remains on profits and business opportunities. Therefore we need to present another side of the new content. It should be forward-looking and pioneering. When the government sets a development direction that is ahead of the rest of the world, global investors would anticipate success in the future, hence seizing the opportunity for development in Hong Kong in the present.
In fact, Hong Kong has such experience. In 1993, Tsingtao Brewery pioneered a unique way for mainland companies to raise capital outside the Chinese mainland with the issue of H-shares. This not only attracted global capital to invest in “China concept” stocks, but also fostered the growth of the Hong Kong stock market. However, our capital market has been lacking in innovation since then. For instance, the GEM board and listing regime for special purpose acquisition companies were introduced in 1999 and 2022 respectively, following the success of overseas markets, but their performance has been mediocre.
By contrast, the Nasdaq in the US exhibits the winner-take-all market dynamics. Its soaring market capitalization attracts tech companies and capital from all over the world, while similar markets in other regions can compete only for what’s left. This illustrates the drawback of trying to make a “Hong Kong version” based on the innovation of others — we will only end up competing with a large number of imitators for the remaining market share. Thus, Hong Kong must be bold enough to make breakthroughs.
The second example is the virtual asset (VA) market. As a medium of exchange and value storage leveraged by blockchain technology, its development is expected to offer huge opportunities. Now Hong Kong has a comprehensive regulatory framework for VAs. It would be beneficial to encourage the launch of innovative products and new applications in this area.
In addition to existing products in overseas markets, Hong Kong can actively develop itself as a VA trading and standards center. This will involve exploring the development of VAs in new areas such as tokenized real-world assets and decentralized physical infrastructure.
The third example is that Hong Kong has the potential to develop into an AI and data services hub in the Asia-Pacific region. High-value-added services in the data industry include data asset management, big data analysis, AI training, data trading platforms, etc. Hong Kong must take the initiative to gain the upper hand in this field.
Xia Baolong, director of the Hong Kong and Macao Work Office of the Communist Party of China Central Committee, stated earlier on the National Security Education Day that “The advance from stability to prosperity is essentially a path for innovation and changes.” I concur that Hong Kong should pursue and embrace change, whether it is for the capital market, innovation and technology sector or traditional industries.
“Change” will encourage international investors to consider new opportunities and reinforce the perception that “Hong Kong is Back!” and is destined to be brilliant tomorrow. To this end, the government needs to solidify the new narrative by implementing follow-up policies and measures, and providing clear policy interpretation. Once these steps have been taken, the global investors will take action to cast their vote of confidence in the city.
The author is a Legislative Council member representing the technology and innovation functional constituency, a tech entrepreneur, and a tech investor.
The views do not necessarily reflect those of China Daily.
