Keep Hong Kong relevant through system innovation

Yang Sheng says SAR can ensure prominent role in nation’s development by upgrading regulatory regime to better facilitate cross-boundary collaboration

The central government has made an unprecedented decision to place sci-tech innovation at the core of China’s modernization strategy in the

14 th Five-Year Plan (2021-25) period and treat it as the primary driving force behind quality economic growth in the next five years and beyond. That means the country will invest more than ever in sci-tech innovation through international cooperation as well as self-reliance. That will also lead to major system transformation aimed at improving the efficiency of drawing investment, talent and execution mechanism knowhow. Amid this innovation-driven system upgrade to achieve quality development that the nation has never seen before, the best way for Hong Kong to avoid falling by the wayside would be a system innovation strategy of its own that will let the special administrative region play a complementary role and thrive in the process. To do so, Hong Kong needs to pursue system innovation from three approaches.

One of the three approaches is to remove institutional and regulatory barriers to ensure institutions and companies in the Guangdong-Hong Kong-Macao Greater Bay Area easy and unrestricted access to the pool of international talent. Hong Kong should try to attract top talent of science and technology and research teams to work in the country — through institutional reform and innovation. President Xi Jinping pointed out in his video address to the Third World Laureates Forum that China will implement a strategy of international sci-tech cooperation that is more open, inclusive and mutually beneficial. The county is willing to work with top scientists and international sci-tech organizations around the world to strengthen the research on major scientific issues, make breakthroughs in common sci-tech problems and deepen cooperation and coordination in key strategic sci-tech projects.

Meanwhile, Minister of Science and Technology Wang Zhigang vowed in his speech that China will not pursue innovation behind closed doors. Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor also said recently that Hong Kong and Shenzhen were discussing a “joint policy package” to attract overseas talent and investment to the two neighboring cities. This is undoubtedly a constructive step in terms of institutional innovation, but Hong Kong obviously needs to go one step further to attract the top minds and research and development teams in the world, to provide sufficient support to its residents pursuing their careers on the mainland, and to enhance exchanges with the rest of the world as well as the mainland and Macao.

Secondly, Hong Kong should more proactively provide financial support for sci-tech innovation — also through institutional reform and innovation. The Stock Exchange of Hong Kong has reformed its listing rules and made remarkable progress in permitting listings of companies with weighted-voting-right structures, allowing yet-to-beprofitable biotech companies to list on the exchange, and welcoming secondary listings of US-listed mainland firms. The next step lies in three major aspects — setting up the mechanism to interact with the Shanghai Stock Exchange’s sci-tech innovation board STAR Market, developing venture capital funds in line with the nation’s financial opening policies, and advancing cutting-edge fintech services. Hong Kong should have the vision and creativity to initiate further institutional innovations.

Thirdly, Hong Kong should clear institutional hurdles and help its professional services, the strength of the city, to align with the rest of the Bay Area in terms of regulatory requirements and compliance. Hong Kong has been striving for years to be a leading intellectual property rights trading center and international arbitration center in the Asia-Pacific region. By setting up branches in the Bay Area, the universities in Hong Kong have introduced their innovations, sci-tech research and advanced university education practices to their counterparts in the area. Some Hong Kong-based universities, including Hong Kong Baptist University, the Chinese University of Hong Kong and the Hong Kong University of Science and Technology, have already established cooperative ties with other cities in the Bay Area in running joint-venture schools, quality sci-tech research and world-class higher education through all-round collaboration and integration of resources. For the next stage of development in building a global IPR trading center, international arbitration center and a global innovation and education center, however, Hong Kong needs to pursue whatever system reform necessary to cement its leading role in such efforts.

Lam, accompanied by five principal officials of the SAR government, is on a duty visit to Beijing. Afterward, they are scheduled to stop in Guangzhou and Shenzhen to discuss matters concerning regional cooperation and development in the Bay Area. Apart from seeking more favorable policies from the central authorities, as a matter of course right now, the chief executive cannot afford to miss the bigger picture that the country’s pursuit of greater success in all respects in the next stage of national development is at a critical juncture, and Hong Kong must do everything necessary and possible to make contribution to, and benefit from, the historic endeavor by pursuing new ideas, policies and action plans — or institutional innovations in short — by leveraging its advantages facilitated by the “one country, two systems” framework.

Amid this (14th Five-Year Plan) innovation-driven system upgrade to achieve quality development that the nation has never seen before, the best way for Hong Kong to avoid falling by the wayside would be a system innovation strategy of its own that will let the special administrative region play a complementary role and thrive in the process.