appConfigEntityId

bodyType

customContents

entityId

entityUuid

isVideo

articlePageQuery

article

articleSchemaContent

content

hooksArticlePageAdvertisementConfigArticle

hooksArticlePageFloatingButtonConfigArticle

appConfig

filter

json

liveArticle

Mike Rowse

I am not sure everyone in Hong Kong has taken fully on board the breadth and depth of the city’s intended role in the future economic development of the nation. It is right there in the budget speech delivered by Financial Secretary Paul Chan Mo-po, and it is being fleshed out in the 15th five-year plan now under discussion in Beijing.
Sometimes the things that are presented most prominently are the ones most easily overlooked. In an early part of the speech, Chan stated that the government’s objective is “to enhance our influence as a global source of original innovation”. This is a seismic shift.
One way of looking at economic progress is to divide it into two main phases: first comes creation of a new product. The second phase covers widespread roll-out of the new product until it becomes a commodity which everyone takes for granted. The objective is to maximise efficiency in production, reduce costs and in the process make incremental improvements to the original invention.
The first phase is sometimes described as “zero to one”, i.e. there was nothing there before, and now there is something. The second phase covers subsequent development from one to an infinite number, otherwise known as “one to n”.
Much of China’s economic progress in the past 40 years has been in the second phase, taking an item that has been designed somewhere else then proceeding to mass production with economies and efficiencies of scale and progressive improvements. Examples include solar panels, electric cars and battery power storage.
In recent times, more emphasis has been placed on innovation from the beginning of the process. This is essential if the country is to deliver high-quality, high value-added industrial development and achieve diversified economic growth.


Historically, Hong Kong has had a supportive role in this development. We provided the financial, business and professional services, marketing skills, management of logistics and so on. We served to help phase 2. Now we are being called on to go beyond that and contribute more directly to the early stages of product development in phase 1.
Much of the media coverage in the wake of Chan’s latest budget speech focused on the planned increasing use of artificial intelligence in industrial development, giving rise to the concept of AI training for all. Such an emphasis is eye-catching and natural.
However, the budget also lays out the infrastructure to support our projected enhanced role in innovation. The aim is to boost Hong Kong’s position as a key regional intellectual property trading centre. This will involve a review of our existing arrangements, including the tax regime. How much more compelling will that status be when we are seen to be the original source of much new intellectual property? We will need to review how we allow tax deductions around intellectual property (IP) to ensure we remain competitive.
Chan also reported on the operation of the IP financing sandbox. Launched late last year, this includes three major Hong Kong banks and clients in the key sectors of biotech, electronics and technology. The government has set aside funds for the Hong Kong Technology and Innovation Support Centre to help companies evaluate patents and expand the number of patent examiners. There are also plans to establish an Intellectual Property Academy to provide proper training for the different professions involved.


Taken together, these initiatives provide the necessary support. What we need now is the innovation itself.
Our education system should be influenced by the new direction. Hong Kong already has five of the world’s top 100 universities and they have a good reputation for research. They are open to, and increasingly attractive to, the best and brightest students from around the world, particularly mainland China. Young people from Southeast Asia and Belt and Road Initiative countries are also showing interest.
Local universities are now permitted to make up to 40 per cent of the places available to non-local students. Not surprisingly, the percentage of students from outside Hong Kong is increasing. This is great news for Hong Kong’s aspiration to be an education hub, and it promises a bright future for Hong Kong as an economic entity.


However, Hong Kong the city is not just an economic body like a corporation – it is home to more than 7 million people. What we have to do now is ensure that we equip our own young people at the secondary school level with the skills and aptitudes to be competitive in applying for university places.
In this context, it is striking how many local parents are prepared to spend substantial sums to send their children to an international or English Schools Foundation (ESF) school in Hong Kong, or even overseas, instead of a highly subsidised local school. Given that our economic course has been set, we must produce more creative free thinkers rather than rote learners geared to a demanding examination schedule.
The message to our young people and their families is clear: Hong Kong has a bright future, with all the existing paths to success still open, plus the addition of technological innovation. They just need the right language and IT skills and, equally important, the right mindset. This should be food for thought for our education authorities.


Physical moves by online financial firms unlikely to pump up property market: analysts

Chinese banks, Ant International push instant cross-border digital yuan transfers

Hong Kong workforce to shrink by 20,000 yearly as key sectors face shortages

Hong Kong on way to securing green fuel supply to safeguard aviation hub status

Hong Kong economy

As Hong Kong doubles down on innovation, Hongkongers must too

Financial Secretary Paul Chan Mo-po leaves the Legislative Council chamber after his 2026-27 budget speech on February 25. Photo: Sam Tsang

After celebrating its surplus, Hong Kong must work on sustaining it

Illustration: Craig Stephens

Elderly residents congregate in Hong Kong’s North Point district on January 15. Photo: Jelly Tse

People walk past Hong Kong stock exchange in Central on February 6. Photo: Jonathan Wong

Commuters take the MTR in Sai Wan Ho on December 16, 2025. Photo: Sun Yeung

Hong Kong budget 2026-27: what’s holding back the city’s tech and talent schemes?

Paul Chan (right) is given a robot technology demonstration. Photo: Jonathan Wong

The AI and Robotics Fest in 2025 showcased humanoid robots and AI technologies. Photo: Karma Lo

Hong Kong must attract more global talent to enhance its international profile, an economist has said. Photo: Sam Tsang

The Hung Shui Kiu development area is part of the Northern Metropolis scheme. Photo: Sam Tsang

Hong Kong budget 2026-27: minister defends cuts to kindergarten subsidy

“Hong Kong’s population structure is undergoing changes, with a decline in birth rate and a fall in the school-aged population,” a minister says. Photo: Sam Tsang

Hong Kong budget: everything you need to know from tax breaks to a big bet on AI

Financial Secretary Paul Chan delivers his budget. Photo: Sam Tsang

The budget also proposed increasing tax allowances from 2026-27, with the basic allowance and the single parent allowance rising from the current HK$132,000 to HK$145,000. Photo: Jelly Tse

Hong Kong’s lightshow fixture will come to an end this year. Photo: Dickson Lee

Hong Kong’s renewed push to strengthen its position as an international financial centre has been welcomed. Photo: Felix Wong

Hong Kong held an AI and Robotics Fest last November. Photo: Karma Lo

Opinion

Hong Kong Opinion

News

Hong Kong

Hong Kong Economy

The budget outlines support for Hong Kong’s role in the nation’s innovation drive. Now the city must deliver the innovation


The budget outlines support for Hong Kong’s role in the nation’s innovation drive. Now the city must deliver the innovation.


Hong Kong budget 2026-27

Education in Hong Kong

Paul Chan

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


As Hong Kong doubles down on innovation, Hongkongers must too

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The budget outlines support for Hong Kong’s role in the nation’s innovation drive. Now the city must deliver the innovation

The budget outlines support for Hong Kong’s role in the nation’s innovation drive. Now the city must deliver the innovation