In the Media

Prof. Heiwai Tang, Associate Dean of the HKU Business School and Director of the Asia Global Institute, has highlighted the need for Hong Kong to diversify its economy beyond its current narrow structure. To drive sustainable growth, he calls for the development of "new industries" and introduces a groundbreaking method to assess their economic contributions. This innovative approach enables the government to track industrial trends, design targeted policies, and measure their effectiveness with precision. Applying this method, Prof. Tang’s research uncovers the substantial potential of new industries to expand Hong Kong’s GDP. Fueled by rapid advancements in innovation and technology, sectors like "research, design, testing, and environmental engineering" saw their value added soar from HK$3.3 billion to HK$13.3 billion between 2000 and 2023. Similarly, "computer programming, data, and industrial internet services" has surged from HK$5 billion to HK$25.5 billion in the same period. Beyond these emerging sectors, Prof. Tang underscores Hong Kong’s pivotal role in the global supply chain. He notes that productive services, ranging from logistics to legal services, are essential in supporting not only local industries but also worldwide supply networks, making them a vital component of Hong Kong’s economic future.

Earlier, the U.S. and China engaged in tariff talks in Geneva and unexpectedly reached a consensus for a truce, temporarily lowering tariff rates to levels prior to the so-called "Liberation Day" in the U.S. However, the global situation remains difficult to restore to its previous state. U.S. President Trump has been employing so-called negotiation tactics, fluctuating offers between high and low, and using both genuine and deceptive strategies to create negotiation space for his side. Yet, due to a lack of confidence and logical inconsistencies, the trade war resembles a poorly executed circus act, pushing the global economic policy uncertainty index to a historic high.

Currently, public housing tenants earning more than HK$60,000 per month can use the Green Form to apply for flats under the Home Ownership Scheme (HOS). The Green Form is reserved for people already living as public housing tenants. On the other hand, people not living in public housing but earning the same income level are barred from applying for the White Form Secondary Market Scheme to purchase HOS flats, as their income exceeds the eligibility limit. Next, although the Housing Department aims to encourage upward mobility through the purchase of HOS or private flats, the threshold for evicting tenants living in public housing is set at a cumulative HK$125,500 for a three-person household’s monthly income. So long as they collectively earn less than HK$125,500 per month and can pay their rent, they can stay and then buy a flat. Dr. Vera Yuen, Lecturer in Economics at HKU Business School, commented, “Those earning HK$20,000 to HK$40,000 per month and renting privately can struggle to pay their rent, exhausting their monthly income. But in public housing, even those earning over HK$100,000 can remain—it’s actually very difficult for the Housing Department to evict these people earning a relatively high income from their public housing flat.”

How can Hong Kong’s creative industries shine on the global stage? Hong Kong has long been renowned for its intellectual property-linked commercial industries, such as local handmade figurines and models. This, in turn, has nurtured many outstanding artists. Lung Ka-sing, for example, creator of the popular Labubu toy line, hails from Hong Kong. He was brought to fame thanks to Pop Mart, a Mainland company that picked Lung and showcases the strength of Hong Kong’s local creativity. In an interview with TVB News, Dr. Tingting Fan from HKU Business School explained that Pop Mart has fully integrated its online and offline channels. Offline stores are designed to attract consumers and introduce them to the toys. She remarked, “When someone buys [a Labubu toy], the company then uses online channels to learn more about this customer’s shopping preferences. In my opinion, this is exactly what Hong Kong needs: a more sophisticated and comprehensive business model [like Pop Mart’s].” Dr. Fan also suggested that the government should provide platforms to boost exposure for local artists, helping to propel Hong Kong’s creative industries to new heights.

Have you noticed how, historically, industrial revolutions across various nations mainly impacted low-income jobs? What’s different now is that the current wave in artificial intelligence seems different. AI not only automates entry-level positions but also has the potential to replace high-skilled, high-income roles. According to the International Monetary Fund (IMF), AI could affect up to 40% of global employment. That figure could be as high as 60% in developed economies like Hong Kong.

Hong Kong has long been successful in its four pillar industries, comprising trading and logistics, financial services, professional and producer services and tourism. According to the research by the HK government, they contributed close to 60% of Gross Domestic Product (GDP) and almost half of the total employment before COVID. However, all these four pillars have encountered the decline in their respective area – resulting from the rapid change in market need & user behavior, regional and global competition, the development in new value-chain and advanced technology, as well as geo-political environment. As a solution, ‘innovation’ has been introduced to address these pain-points of Hong Kong. The question to ask, how should we develop the innovation strategies – instead of coming up ideas for the sake of ‘innovation’? In this article, we will discuss how innovation strategy could be approached from the perspective of poverty alleviation to Web3 industry development – two topics sound not-related, but their common ground might give us the insight on how we could find the development path of Hong Kong.

Will Hong Kong continue its economic boost thanks to AI-supported manufacturing? Hong Kong's industrial sector may continue to add a major boost to the city’s economy. In a recent study commissioned by the Federation of Hong Kong Industries and conducted by the Hong Kong Institute of Economics and Business Strategy at the University of Hong Kong, the potential of "Made-in-Hong Kong" products to shine was highlighted. Specifically, this would come through technology, automation, and strategic government support. The study found that in 2023, the industrial sector added about HK$127 billion to the economy thanks to new high-end manufacturing in microelectronics, biotechnology, and the food industry. Prof. Heiwai Tang, Associate Dean of HKU Business School and Director of the Asia Global Institute, led the study that emphasised the importance of adapting to the changing global landscape. While many companies have successfully reduced their reliance on the US market, those who haven't embraced transformation face significant financial risks. The report suggested Hong Kong was on the right track by strengthening its collaboration within the Greater Bay Area, ASEAN, and other regions. Commenting on the effect of not responding to the evolving market conditions, Prof. Tang said, “The first consequence is one would incur significant financial losses, and secondly, if one were to try to set up a new factory now, it would take years before seeing profits.”

How will the recent drop in HIBOR shape the future of Hong Kong’s property market and financial landscape? In an interview with TVB News, Prof. Dunhong JIN from HKU Business School noted that the recent decline in the Hong Kong Inter-bank Offered Rate (HIBOR) could provide short-term benefits for the property market. That said, the long-term outlook will depend on sustained interest rate trends and overall confidence in Hong Kong’s economy. "It is expected that in the near future, large-scale IPOs will attract significant capital inflows,” she continued, “but given the current situation, with no immediate prospect of US interest rate cuts, it’s uncertain whether HIBOR can remain at low levels for long."

關稅豪賭  只有輸家 國際貨幣基金組織在上月發表的《世界經濟展望》，將全球經濟增長預測從今年 1 月的 3.3% 顯著調低至 2.8%。報告指出，中國和印度將成為推動全球經濟增長的主要動力，預計未來5年貢獻比例分別為 23%和超過15%；而美國因其關稅政策的不確定性，對全球經濟的貢獻率遭下調至 11.3%。