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Regina Ip

In the Year of the Snake, Hong Kong enters a world that is more perilous than ever, with US President Donald Trump threatening tariffs against key trading partners and intensifying technological competition with China. Comments from Chinese officials that there are “no winners” in a trade war drop strong hints that China would not hesitate to retaliate if it is targeted.
Hong Kong is powerless to put brakes on a trade or tech war, but when it comes to the troubles roiling Hong Kong, the worst might be over.
Top on the list is the controversy over national security. Although Hong Kong is constitutionally required to implement national security legislation, the national security law Beijing enacted for Hong Kong in 2020 sparked a spate of sanctions, travel warnings and a precipitous plunge in Hong Kong’s relationship with the West.
Nearly five years after the enactment of the law, Hong Kong could be close to turning the corner. “National security first” remains the government’s credo, but hints of change could be seen in Secretary for Security Chris Tang Ping-keung’s letter to The Wall Street Journal on some comments former US vice-president Mike Pence made at a business conference in Hong Kong last month.
After complaining about Pence’s “despicable” attempt at “political manipulation”, Tang concluded his letter by saying, “The above notwithstanding, the Hong Kong Special Administrative Region government always strengthens ties and exchanges with different countries, including the US.
“Indeed, despite political differences in recent years, Hong Kong and the US continue to enjoy mutually respectful and beneficial business and social ties. Our city will continue to serve as the most effective bridge linking our motherland with the rest of the world for years to come”. This is a significant change in tone portending a more nuanced strategy towards the city’s critics.




On the economic front, Hong Kong is on the mend. The stock market is bouncing back. According to Bonnie Chan Yiting, CEO of Hong Kong Exchanges and Clearing, a pipeline of 100 companies are waiting to be listed. Visitor arrivals are up more than 30 per cent compared to 2023, and various talent admission schemes have helped to fill Hong Kong’s talent gap. In addition, Hong Kong has regained leading rankings in many international financial and competitiveness surveys.
The government deserves credit for going into overdrive to mitigate the city’s housing woes. The worst might not be not over for the property sector, yet a painful correction is good for improving the city’s long-term competitiveness.
The government has invested billions into research and innovation to jump-start its technological development. The high costs and many hurdles are to be expected given Hong Kong’s late start. There are three areas the government must prioritise to catch up with global developments.
First, priority must be accorded to the adoption of generative AI in and outside government. The government has spared no expense in supporting AI research at universities and industrial application under “new industrialisation” schemes. As AI applications thrive on open data and algorithms, the government should accelerate the implementation of its open data and cross-boundary data transfer policies agreed with the rest of the Guangdong-Hong Kong-Macau Greater Bay Area, to enable promising sectors such as healthcare and finance to flourish.
Second, to fortify Hong Kong’s position as a global financial centre, Hong Kong must not lose out in financial innovations, especially in digital finance. As the only part of China authorised to trade, invest and manage digital assets, Hong Kong should make full use of its mandate to play a greater role in stimulating the cryptocurrency industry.

One million cryptocurrency tokens are created every week, according to Coinbase CEO Brian Armstrong. The frenzy around cryptocurrency shows no sign of abating despite its significant risks. The government needs to push ahead with suitable relaxation of its regulatory regime to protect investors as well as attract more blockchain talent and cryptocurrency start-ups to Hong Kong.
Finally, innovation is not possible without the necessary talent. The government has tried to bring in talent with more diverse skills since the introduction of an accountability system for key government officials in 2002.
Yet despite the further development of the system through creating new positions of deputy directors of bureau and political assistants in 2008, the accountability system has failed to live up to expectations. Many directors and deputy directors did not last beyond one term, while some have grossly underperformed.
Part of the problem stems from the concession the government made to the civil service to preserve their grip on power when the accountability system was expanded in 2008. A 2007 consultation paper states squarely that the new deputy directors and political assistants “have no direct line of command vis-a-vis the permanent secretaries”. They were intended to assist bureau directors in the discharge of political duties, seen at that time as comprising mainly lobbying for legislative support, handling the media and attending ceremonial events on behalf of bureau directors.

Because of this limitation, many deputy directors were unable to use their time in government to pick up more knowledge of government business or exert control over government departments. Those who joined the government without the relevant professional knowledge or background were particularly weak and disadvantaged.
The world is changing so rapidly that more forward-thinking leaders with up-to-date technological know-how, international experience and political skills are necessary to assist the chief executive to implement reform and stay competitive. All governments need reinforcement and, from time to time, a shake-up.
While a sweeping, Trump-style Department of Government Efficiency might be counterproductive, an appropriate dose of creative disruption at this critical time would do the government much good.


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The story begins …

Hong Kong economy

Why the worst may be over for Hong Kong

People visit the Lunar New Year fair at Hong Kong’s Victoria Park on January 25. Photo: Elson Li

People walk past an illustration featuring then US president-elect Donald Trump holding bitcoin, outside a cryptocurrency exchange store in Hong Kong on December 5, 2024. Photo: Reuters 

Lunch time at Hong Kong’s government offices in Tamar on December 17, 2024. The government must work harder to recruit the best talent to lead the city. Photo: Sun Yeung

Why Hong Kong need not get defensive about national security

Chief Justice Andrew Cheung Kui-nung inspects the ceremonial guard mounted by the Hong Kong Police Force at Edinburgh Place ahead of his speech to mark the opening of the legal year, on January 20. Photo: Dickson Li

Chief Executive John Lee Ka-chiu speaks to the media at the government offices in Tamar on January 21. Photo: Nora Tam

Social worker Eddie Tse Sai-kit speaking to press at the High Court on November 11. He has applied for a judicial review of the San Tin Technopole project on environmental grounds. Photo: Jelly Tse

Fortune stick offers Hong Kong financial advice it should not ignore

A rural chief has drawn the No 24 “neutral” fortune stick. Photo: Dickson Lee


Hong Kong to ‘innovate, reform and seek development’ in Year of Snake: John Lee

Chief Executive John Lee says Hong Kong will innovate and reform in the Year of the Snake. Photo: Handout

Hongkongers depart for Lunar New Year, but analysts upbeat on economy

A Lunar New Year fair at Victoria Park. The holiday starts on Wednesday in Hong Kong. Photo: Sam Tsang

Flowers for sale at a Lunar New Year Fair in Victoria Park. Photo: Sam Tsang

First-time stall owner Christy Kwan says she has already broken even. Photo: Oscar Liu

Can law of unintended consequences temper Trump and his team?

US President Donald Trump signs executive orders on January 6. Photo: AFP

Migrants walk into Mexico after being deported from the US at the El Chaparral pedestrian border bridge in Tijuana, Mexico, on January 21. Photo: AP

Opinion

Hong Kong Opinion

News

Hong Kong

Politics

Hong Kong’s economy is bouncing back, but the government must be committed to technological and political innovation to see the city thrive


Hong Kong’s economy is bouncing back, but the government must be committed to technological and political innovation to see the city thrive.


Hong Kong political reform

Hong Kong reopens: life after quarantine

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China

United States

Hong Kong national security law (NSL)

Hong Kong politics

Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


Why the worst may be over for Hong Kong

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Hong Kong’s economy is bouncing back, but the government must be committed to technological and political innovation to see the city thrive

Hong Kong’s economy is bouncing back, but the government must be committed to technological and political innovation to see the city thrive