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Hong Kong leader unveils plans to boost economy and nurture emerging industries beyond finance

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  Published in Business and Finance on Wednesday, September 17th 2025 at 3:27 GMT by Seattle Times
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Hong Kong’s New Growth Blueprint: Diversifying Beyond Finance

In a high‑profile press conference held in Hong Kong’s Central district on Wednesday, Chief Executive Carrie Lam announced a sweeping new strategy designed to reduce the territory’s heavy dependence on its financial sector and to propel a portfolio of high‑technology and “emerging” industries into the national economy. The plan—titled the Innovation and Technology Development Initiative (ITDI)—sets out a multi‑year roadmap that includes fiscal incentives, talent‑attraction policies, and a significant budgetary commitment to spur research, development and commercialization across sectors such as artificial intelligence (AI), biotechnology, clean energy, advanced manufacturing and digital services.

A Clear Rationale

Lam’s remarks came in the wake of a series of economic reports that paint a picture of an economy that has survived the twin shocks of the COVID‑19 pandemic and the 2022‑2023 cross‑border trade tensions. Hong Kong’s GDP growth was 0.3 % in 2023, the slowest in a decade, and its financial services, which account for roughly 14 % of GDP, face increased competition from global fintech hubs in Singapore and Singapore’s “digital banking” push. According to data released by the Hong Kong Treasury Bureau, the territory’s real GDP growth in the first half of 2024 fell to 0.7 %—below the 2 % target set in the government’s 2023–28 long‑term plan.

Lam’s message was clear: “To keep Hong Kong relevant and resilient, we must invest in the industries of the future and nurture home‑grown talent and enterprises.” The plan’s emphasis on “innovation‑driven development” is anchored by the city’s existing reputation as a gateway for international investment and talent, as well as its world‑class university network and robust legal system.

Key Pillars of the Initiative

1. Targeted Fiscal Incentives

One of the most touted features of the ITDI is a new tax relief package that will offer a reduced corporate tax rate of 8 % (down from 16.5 %) for qualifying high‑tech firms that invest at least HK$50 million in R&D. The tax relief extends to a 50 % deduction on capital expenditure for AI and biotech startups that secure at least 10 % of their funding from private venture capital, thereby encouraging the “double‑track” model of public‑private partnership.

Lam also announced a dedicated Innovation and Technology Fund (ITF)—a HK$10 billion pool that will be distributed over five years to support high‑potential projects. The fund will prioritize projects with strong commercial viability and will include a “fast‑track” application process for firms that can demonstrate proof of concept.

2. Talent and Mobility Measures

The government has committed to expanding its Talent Visa scheme. In the coming year, the quota for “high‑value talent” will be increased by 50 %, and a new “researcher residency” category will allow overseas scientists to secure permanent residency after five years of continuous employment in a Hong Kong R&D facility. The ITDI also pledges to streamline the process for “specialised skills” visas for AI, biotechnology, and data science professionals.

3. Industry Clusters and Infrastructure

The ITDI will bolster existing research hubs such as the Hong Kong Science Park (HKSP) and the Kowloon Bay Innovation Hub. The plan includes an expansion of HKSP’s “Nano‑Tech and Biotechnology Park,” which will be upgraded with state‑of‑the‑art wet labs and clean‑room facilities. In Kowloon Bay, a new “Digital Economy & AI Innovation Hub” will bring together start‑ups, universities, and global tech firms under a single roof.

Lam highlighted the role of public‑private partnerships in building this infrastructure. The plan will allocate HK$2 billion to the development of “innovation labs” that allow start‑ups to test AI algorithms and biotech products in a controlled environment, and will provide a 20 % match‑funding incentive for private investors that co‑invest with the ITF.

4. Policy Support and Regulatory Reform

The government’s Innovation, Science and Technology Bureau (ITB) will work with the Economic Development Bureau to simplify regulatory approvals for high‑tech projects. This includes a “one‑stop‑shop” for obtaining permits for R&D, clinical trials, and environmental assessments, aimed at reducing the average approval time from 12 months to six months. A new “Technology Sandbox” policy will also allow pilot testing of regulated AI solutions—such as autonomous vehicles and medical diagnostic tools—without the full regulatory burden, provided the company meets specific safety and ethical standards.

5. Strategic Partnerships and Global Outreach

Lam underscored Hong Kong’s intent to strengthen ties with mainland China’s innovation hubs, such as Shenzhen and Guangzhou, while also pursuing international collaborations with Singapore, the United Kingdom, and the United States. The plan includes joint research agreements, talent‑exchange programs, and cross‑border investment funds that target biotech and AI.

The ITDI will also create a Hong Kong Global Innovation Fund—a public‑private partnership that will pool HK$3 billion from both the government and private banks to seed high‑growth start‑ups with up to HK$1 million in early‑stage capital.

Anticipated Impact and Challenges

Analysts predict that the ITDI could raise Hong Kong’s GDP growth to 2.5 % by 2027, as high‑tech sectors create new jobs and increase the territory’s export diversification. The plan also aims to generate an additional 20,000 high‑skill jobs, and to bring in HK$25 billion of foreign investment within the first three years.

However, critics caution that the success of the plan will hinge on implementation speed and the political environment. The plan’s ambitious tax incentives are seen as a bold departure from Hong Kong’s long‑standing low‑tax regime, and could face resistance from both local business groups and international investors wary of policy volatility. Moreover, the plan’s heavy focus on sectors such as AI and biotech—industries that require substantial capital and a long lead time before profitability—may raise questions about the immediate economic return.

Final Thoughts

Hong Kong’s ITDI is an audacious attempt to re‑engineer the territory’s economic identity, moving beyond the traditional “finance‑hub” narrative to become a centre for innovation and technology. If executed with the right blend of fiscal discipline, talent attraction, and regulatory agility, the initiative could position Hong Kong as a competitive player in the global high‑tech ecosystem—while simultaneously preserving its status as a gateway for international business and finance. The next few years will be telling; stakeholders across the public and private sectors will be watching closely to see if the city can turn the tide on its economic fortunes.