Yang Sheng says Hong Kong’s economic well-being now depends on national development more than ever

When running through the 2026-27 Budget released by Financial Secretary Paul Chan Mo-po on Wednesday, one can hardly overlook the main thread: Prepare for the future.

The finance chief doled out some tax relief and social benefits to residents and enterprises, which reflects the “from the people and for the people” public-finance philosophy, and thus is appropriate and commendable given that the special administrative region’s public finances have seen significant improvement over the past fiscal year.

These benefits, dubbed as “sweeties”, are moderate when compared with the handouts in previous years, reflecting fiscal prudence. Such a public finance philosophy is fully justifiable given that economic uncertainty looms on the horizon as the global political and economic landscape remains fraught with volatility amid geopolitical maneuverings.

The long-term vision adopted by the finance chief in the new Budget thus is perfectly logical. It takes into account the city’s current situation as well as both the local and global outlooks.

Being a small and open economy, Hong Kong has always been vulnerable to external shocks. But the city is now more vulnerable than ever given the United States’ growing geopolitical maneuverings against China, with the special administrative region being treated by Washington as a mere pawn on the chessboard.

Hong Kong’s economic well-being now depends on national development more than ever. The Chinese mainland not only remains the hinterland the city can count on but also serves as a strategical anchor for the SAR as it sails through uncharted geopolitical waters. This explains Chan’s emphasis on proactive alignment with the national 15th Five-year Plan (2026-30).

The mainland economy remains the leading contributor to global economic growth, serving as the key driver for both regional and worldwide economic momentum. The robust economic growth and steady development on the mainland will continue to provide firm support for Hong Kong’s economy.

Meanwhile, the proactive macro policies envisioned in the proposals for the 15th Five-year Plan, such as expanding domestic demand and steadfastly advancing high‑quality development, will create vast opportunities for Hong Kong’s economic growth and social development.

Alignment with national development strategy is also in line with the SAR’s strategy to fend off external shocks by meaningfully diversifying the local economy.

Chan’s proposed strategies to promote new industrialization through innovation and technology development, with an aim of nurturing emerging and future industries in Hong Kong, are essentially part of the diversification strategy.

Dozens of emerging and future sectors are identified in the new Budget, including the low altitude economy, life and health technology, biomedicine technology, development of traditional Chinese medicine, semiconductors, new materials, aerospace, autonomous driving, and artificial intelligence.

While Hong Kong boasts its strengths in innovative scientific research and commercialization of research outcomes, it needs to closely collaborate with the mainland to be able to play a significant role in these advanced areas. This is because the mainland is not only one of the global leaders in these areas but also the most reliable hinterland for Hong Kong.

Although Chan seems to be ambitious in mapping out a vision for Hong Kong’s innovation and technology development, he must pragmatically prioritize his strategical targets by taking into account the city’s strengths and capabilities.  

Another strand of the diversification strategy elaborated by the finance chief in the new Budget is to pay more attention to the Global South markets as protectionism rises in some major economies — Hong Kong’s traditional markets. The rise of the Global South and the reshaping of the global trade and investment landscape will unlock new markets and new growth areas for Hong Kong, the finance chief explained.

The move to speed up the development of the Northern Metropolis, as suggested in the Budget, is crucial to the realization of the long-term blueprint of the Budget. The mega development project will provide the massive land resources that are necessary for innovation and technology development and new industrialization in Hong Kong.

The progress of the Northern Metropolis development has been less than desired, according to some experts. The measures proposed in the Budget to accelerate its development, including adopting a largescale land-disposal approach in land allocation and expediting the bringing in of enterprises and industries, are comforting to hear. And the HKSAR government’s plan to introduce dedicated legislation for the project by the middle of this year is reassuring.

While being enthusiastic about diversification, the Budget seeks to consolidate — with various measures — the city’s traditional pillars of economic growth, especially its role as an international financial, trade and logistic center, and rightly so. After all, it takes time for diversification to bear fruits.

The new Budget embodies pragmatism and reflects fiscal prudence, while embracing long-termism for Hong Kong’s development.

The author is a current affairs commentator.

The views do not necessarily reflect those of China Daily.