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2021 February
New Opportunities for Hong Kong: Integrating into the “14th Five-year” Plan and Echoing with the “Dual Circulation”

At the Fifth Plenary Session convened at the end of last year, the focus was placed on the “14th Five-year” Plan, “dual circulation”, and the 2035 vision goals. How should Hong Kong leverage its strengths and proactively take part in these to foster complete economic recovery?
 

 

Tam Yiu-chung: “14th Five-year” Plan Offers Broad Development Space that Benefits Hong Kong

The National People’s Congress (NPC) will be held in March to discuss the content of the plan. Looking back at the “13th Five-Year” Plan period, Tam Yiu-chung, NPC Standing Committee Member and NPC Deputy, noted that the country has achieved brilliant results in driving economic and technological strengths as well as overall national strength to a new level.

 

Nine objectives for turning vision into reality

The “14th Five-year” Plan set out long-range objectives in nine areas to be achieved by 2035, including: achieving major breakthroughs in key and core technologies, modernizing the economic system, basically achieving modernization of the national governance system and capabilities, significantly bolstering the country’s cultural soft power, realizing a beautiful ecological environment, building new bastions for opening up to the rest of the world, raising the per capita GDP to the level of middle-income developed countries, basically achieving modernization of national defence and armed forces, and making obvious and substantive progress in people’s lives and prosperity.

 

To achieve the above objectives, the country will launch 12 initiatives for adhering to innovation-driven development, accelerating the development of modern industrial systems, forming a strong domestic market, building high-level mechanisms for the socialist market economy, comprehensively promoting rural revitalization, optimizing the spatial pattern of the nation’s land, developing cultural undertakings and cultural industries, promoting green development, putting high-level external opening up into practice, improving the quality of people’s lives and raising the level of social construction, building a Peaceful China of a higher level, and accelerating the modernization of national defence and armed forces. Tam believes that how Hong Kong will act in concert with the plan going forward will be the key to accelerating economic recovery.

 

Implement “One Country, Two Systems” and safeguard national security

Tam said that the “14th Five-year” Plan document explicitly mentions that the country will fully and accurately implement the guiding principles of “One Country, Two Systems” and implement the legal system and enforcement mechanisms for defending the nation’s sovereignty and safeguarding national security. He noted that only by safeguarding national security can Hong Kong’s society be stable and people have opportunities for development.

 

He added it is very important that the country has stressed to fully and accurately implement the guiding principles of “One Country, Two Systems”, as it can provide a solid foundation for Hong Kong’s overall interests and stable social development. He specifically mentioned that the National Security Law passed by the NPC Standing Committee is an important measure to resolve national security issues and restore the stability of Hong Kong’s society. Moreover, patriotism is a fundamental duty of citizens, so patriotic education should be one of the future priorities.

 

“14th Five-year” Plan is critical to Hong Kong’s development

Tam believes that in order for Hong Kong to stand out in the new situation, it must actively improve its competitiveness, especially by investing more resources in the field of innovation and technology (I&T), to support its better integration into the country's overall development landscape. In addition, Tam is very encouraged by the “14th Five-year” Plan making mention of supporting Hong Kong’s inclusion in the high-quality construction of the Guangdong-Hong Kong-Macao Greater Bay Area (Greater Bay Area) and refining the policy measures to facilitate Hong Kong residents’ development in the Mainland. He looks forward to further concrete measures from the Central Government to support Hong Kong in carrying out closer exchanges and cooperation with the Greater Bay Area, as well as other provinces and cities in the Mainland.

 

Tam stressed that as Hong Kong shares a common destiny with the country, its future can be better safeguarded if the country develops well. Hong Kong should actively explore ways to open up a broader space for its long-term development in line with the country’s “14th Five-year” Plan.

 

Tam’s part is an abstract of the Chamber’s webinar for Committee Members.

 

 

Wang Chunxin: Embrace New Changes and Integrate into Overall National Development

Wang Chunxin, Head of Hong Kong Economic and Policy Research Division at Bank of China (Hong Kong), said that the “14th Five-Year” Plan needs breakthroughs in innovative areas such as fundamental research, innovative finance and intellectual property rights protection, which happen to be Hong Kong’s strengths. In his view, Hong Kong needs to embrace this shift and work with it, actively establishing its new roles as an international science and technology innovation center, a domestic demand promoter, an opening-up accelerator and a green development role model to integrate into the overall national development.

 

Building an international science and technology innovation center

“In the future, Hong Kong should better allocate resources to build an international science and technology center.” Wang is convinced that Hong Kong can strengthen its cooperation with the Mainland, explore the connection of the intellectual property protection legal system and the coordination protection mechanism, and assist the Mainland in establishing an intellectual property protection system that is in line with international standards.

 

Domestic demand is the most important engine for building “dual circulation”, and Wang believes that consumption will become the biggest pillar. Investment will become another major driving force, and it is estimated that total investment will at least be doubled by 2030. Therefore, in the future, Hong Kong can facilitate domestic demand expansion in the Mainland by promoting the sales of Hong Kong businesses’ superior products in the Mainland, expanding import distribution business, enhancing the support from special government funds, providing financial services for Hong Kong businesses to expand sales in the Mainland market, and assisting the Mainland in improving consumer protection.

 

Serving as the Mainland’s opening-up accelerator

Wang added that as the Mainland will speed up overcoming the shortcomings in municipal projects and people’s livelihood as well as expand investment in strategic emerging industries, there will be plenty of investment opportunities for Hong Kong in this regard. Hong Kong is expected to have the opportunity to provide USD500 billion in FDI to the Mainland in the next five years. “Jointly building a high-quality living area should provide Hong Kong residents with financial conveniences in the Guangdong-Hong Kong-Macao Greater Bay Area to drive the domestic demand in the area to reach a new stage.”

 

“The biggest difference during the ‘14th Five-Year’ period is that China will unswervingly continue to implement broader opening-up even though the external environment is becoming increasingly complex. Hong Kong can help the Mainland build a new open economic system of higher standard and create a world-class business environment. “He added that Hong Kong can provide useful experience for the country to prudently promote RMB internationalization by improving the “interconnection” mechanism.

 

Jointly developing green finance

The development of green finance is a major task in the “14th Five-Year” Plan. Wang noted that the Mainland will need to invest at least USD2 trillion in green projects in the next five years. Therefore, developing green finance is a top priority. In the future, Hong Kong can provide funding support for the construction of a green and low-carbon bay area through the issuance of benchmark “green bonds”, holding global conferences on green finance and investment, setting up the “Green Finance Labelling Scheme” for green finance projects and securities, and vigorously nurturing green finance talents.

 

Wang suggested that Hong Kong should establish the new ideas of focusing on development as the top priority and people’s livelihood as a basis, efficient markets and effective government, and abandon outdated concepts and rigid policy practices, taking a proactive role in transforming Hong Kong into an innovative economy, driving the new Home Ownership Scheme to solve housing problems, getting Hong Kong out of the current difficulties, and rebuilding Hong Kong’s new glory in the country’s new journey.

 

 

Fang Zhou: Time to Fortify Strengths in Innovation and Technology and Maintain the Super Connector Role

Self-sufficiency and self-reliance in technology is one of the main objectives proposed in both the “14th Five-year” Plan and the 2035 Vision Goals. In other words, innovation will be lifted to a core position. According to Fang Zhou, Chief Research Officer of the One Country Two Systems Institute, China will strengthen its technology setup, augment its investment on technology resources, and commit to instrumental national technology projects. It is now an important historic opportunity for Hong Kong to develop into an international innovation and technology center.

 

Hong Kong must strengthen its development in innovation and technology

According to the World Intellectual Property Organization, “Shenzhen-Hong Kong-Guangzhou” is a science and technology cluster that ranks the second globally, only after the Tokyo-Yokohama cluster. As such, Hong Kong is one of the core cities in the construction of international technology and innovation within the Guangdong-Hong Kong-Macao Greater Bay Area (Greater Bay Area).

 

A number of strategic emerging industries were proposed in the “14th Five-year” Plan. While Hong Kong does not have a particularly strong industrial foundation in these areas, it can still align with national strategies in certain aspects. For example, the moon rock sampling technology in China’s lunar mission was developed by the Hong Kong Polytechnic University. Besides, Hong Kong has also developed a certain research basis in the scopes of artificial intelligence and biomedical science.

 

Hong Kong does attract international technology and innovation talents. However, Fang reminded us that, “The technology and innovation industry in Hong Kong has had a rather late start. Elementary research is somehow detached from the industry. The integration of industry, academia and research is also quite weak. Further improvement and guidance are much needed for developing innovation and technology.”

 

Capitalizing on Greater Bay Area cooperation opportunities

Based on the above, Fang believed that Hong Kong should seize all cooperation opportunities with other Greater Bay Area cities. “By taking part in the setup of nationally significant science platforms and cooperating with other Greater Bay Area cities, Hong Kong can further help with consolidating the innovative resources and strengths in the region and to create a favorable environment.”

 

Fang pointed out that “The Loop is currently the only technology and innovation cooperation platform jointly constructed and managed by Hong Kong and Shenzhen. The Hong Kong-Shenzhen Innovation and Technology Park in the Loop has the potential to become an internationalized research and innovation center and to attract high-end talents from around the globe.”

 

Playing the role of “super connector”

At present, the State has proposed the strategy of “dual circulation”. Fang reckoned that Hong Kong can contribute in some areas, including connecting domestic and international markets, raising product quality and the standard of inspection and testing, the internationalization of RMB, and lifting the standard of professional services, as well as in talent recruitment.

 

According to Fang’s analysis, China will face two main challenges as it strives to actualize the new development setup by mainly relying on internal circulation. The first is to strengthen and to broaden the domestic demand market and to enhance self-directed brands. The second is to drive the manufacturing sector to grow towards the high end of the industry chain and to earn independence and control. He pointed out that, “In terms of domestic demands, Hong Kong can nurture new consumption growth points and craft consumption brands for the State to materialize an enriched and upgraded domestic demand market. In terms of upgrading the industrial supply chain, Hong Kong can join hands with the mainland and to tackle the upstream core technology in the industrial chain, as well as to contribute to industrial upgrading.”

 

Besides, since Hong Kong is a highly internationalized city, it can take up the role of “super connector”. Fang provided an example that Hong Kong can become the international financing platform for the “Belt and Road Initiatives” (B&R) to attract more global investors to take part in project investment. “At the same time, Hong Kong companies can join mainland companies in ‘going out’, and to improve the risk management ability for B&R projects.”