The wait for exam results can be unsettling. Yet many who have been through it come to realise that while exam scores may define a moment in time, they do not define one’s future.

Students today enjoy more diverse pathways. Even if they cannot secure a place in their preferred programme, there are many other options for pursuing further studies, including associate degrees, higher diplomas and applied learning courses, as well as vocational training. Those who complete such courses or training can then choose to articulate to bachelor’s degree programmes. While these pathways have long existed, it is worth noting in particular that artificial intelligence (AI) is opening up new branches further along these traditional routes. This will offer students more avenues for development and job opportunities in the future, whichever path they choose.

Today, even if one doesn’t know how to write code, large language models allow you to instruct computers to complete tasks using natural language. This means the threshold for adopting AI is getting lower. Whether you study business, design, nursing or the humanities, the key question is no longer whether you have programming skills, but whether you have the ingenuity to combine your interests and knowledge with AI tools.

For this reason, whether at innovation and technology (I&T) companies or traditional enterprises undergoing transformation, the most sought-after employees are cross-disciplinary talents—people who possess expertise in a professional field and know how to use AI tools to amplify their abilities. By identifying their interests, keeping a curious mind, and combining these with a knowledge of AI, students can find a breakthrough point for enhancing their own capabilities.

The development of AI applications is both expanding and deepening. Over the years, the HKSAR Government has stepped up its investment in this area, while continuing to strengthen two-way interaction with the Mainland and overseas markets. These efforts aim to create more opportunities for all sectors of the society amid this new wave of technology, and to provide broader points of access and entry for local young people and working professionals.

Take LEAP, the Middle East’s largest flagship I&T event, as an example. The event made its Asian debut in Hong Kong. The three-day exhibition attracted more than 25,000 participants, over half of whom came from outside Hong Kong. Investors attending the event represented US$6.5 trillion in assets under management. One key feature of this Saudi Arabian event is that it brings together cutting-edge I&T enterprises, technology parks, and investment and financing communities from more than 30 countries and regions. It will continue to be held in Hong Kong over the next three years.

In fact, after several years of deeper exchanges and engagement with the Middle East, the two sides have gradually built stronger mutual trust and friendship. We have also forged closer ties in trade and the economy, finance, innovation and technology, and people-to-people exchanges. Trade between Hong Kong and the Gulf Arab states grew by about 5% last year, and in the first five months of this year, it rose by more than 35% year on year. Bilateral trade with the United Arab Emirates, in particular, surged by more than 52%. In terms of capital flows, Gulf sovereign wealth funds invested mainly in the European and US markets in the past. Yet of the tens of billions of US dollars they allocated globally last year, about 40% went to Asia. This reflects a clear shift in their asset allocation, with a more diversified investment strategy gradually taking shape.

For young people, world-class technology events and related activities held in Hong Kong offer a valuable window onto the latest cutting-edge developments around the world, especially the application of AI in areas such as healthcare, finance, energy and industrial production. Hong Kong is a hub that connects the world, and the exploration of personal interests and career directions has never been confined to the city alone. The Mainland and international markets also offer rich platforms for career development.

AI is set to define the future competitiveness of every economy across a wide range of fields. The HKSAR Government is deepening its work on all fronts to enhance local AI literacy and promote AI training for all. On the academic side, universities and post-secondary institutions are progressively increasing the number of relevant programmes, while primary and secondary schools are promoting school-based AI education. For working adults, professional bodies across various sectors are offering more courses on AI applications. The Employees Retraining Board will also be upgraded and renamed Upskill Hong Kong to provide the public with greater support for AI training.

For DSE candidates, no matter where your interests lie—whether in business, design, nursing or the humanities—and regardless of whether you gain direct admission to your preferred field of study at the next stage, you can still seek to combine those interests with AI tools, with the aim of exploring unique applications that benefit both yourself and the society. Identifying pain points and finding practical uses for them can lead to new solutions. This journey of exploration may even unlock new horizons, new imagination and new possibilities for the future.

In the face of rapidly evolving technology, human interests and preferences are constantly shifting, and new challenges keep emerging. Yet one thing is certain: no one can navigate an entire career on the strength of a single result slip alone. Continuous learning, perseverance and curiosity are the most essential qualities in this era—the qualities that will help you carve out a fulfilling career with no regrets.

July 12, 2026

Over the past 105 years, the history of the CPC has been closely intertwined with that of the Chinese nation. The Party has led the country in achieving national independence and the liberation of the people, advancing socialist construction, and, in particular, steadfastly promoting economic development since reform and opening-up. Through the hard work and dedication of successive generations, our country has completed, in just a few decades, an industrialisation process that took developed countries several centuries to achieve. It has realised a historic leap in people's living standards — from inadequate access to food and clothing, to moderate prosperity overall, and then to the building of a moderately prosperous society in all respects. Our country's economic, technological, defence and overall national strengths have been comprehensively enhanced, creating the dual miracles of rapid economic development and long-term social stability.

What we feel most deeply is that our destiny has always been inextricably linked with that of the Motherland. Despite facing a complex and volatile international environment, as well as diverse internal and external challenges, the country has continued to overcome obstacles and maintain steady development under the leadership of the CPC. Every stage of this progress and every leap forward have opened up new horizons for Hong Kong. Indeed, every step of Hong Kong's development has been inseparable from the nation's solid and unwavering support.

In the magnificent landscape of our country's development, there is one uniquely distinctive stroke: "one country, two systems." Conceived more than 40 years ago as a visionary concept advanced by the CPC, it has since evolved into an institutional strength of our country, providing a solid foundation for Hong Kong's unique advantages, prosperity, stability and development. No other city in the world is quite like Hong Kong. We are deeply integrated into the country's economic development and governance framework, while remaining seamlessly connected with international rules and markets. Established under the authorisation of the "one country" framework, we continue to uphold the common law and free port system under "two systems." We participate actively in the Mainland's domestic circulation while also serving as a vital node in international circulation.

General Secretary Xi Jinping has explicitly pointed out that "promoting the long-term prosperity and stability of Hong Kong and Macao is an inherent requirement of the great rejuvenation of the Chinese nation." Under the strong leadership and support of the Central Government, Hong Kong is advancing towards a future of greater prosperity and development.

It has become evident that Hong Kong is not only a beneficiary of the country's development, but also a contributor to the advancement of national strategies. We must combine the institutional, international, financial and professional advantages built through the hard work of generations under the "one country, two systems" framework with the new opportunities arising from the country's steady, high-quality development. By doing so, we can transform these strengths into more solid, long-term and sustainable contributions to the country's overall development in this new stage, while ultimately carving out a new growth trajectory for Hong Kong's future.

Specifically, there are several areas in which we can accelerate progress, deepen engagement and further consolidate our work.

First, we should promote the internationalisation of the Renminbi (RMB) and deepen mutual access between the Mainland and Hong Kong financial markets. As a global hub for offshore RMB business, Hong Kong currently handles more than 70% of global offshore RMB settlements. In terms of interbank clearing and settlement services, Hong Kong's monthly RMB settlement volume exceeds RMB41 trillion, equivalent to about RMB2 trillion per business day.

As our country continues to advance high-level opening up, more foreign enterprises are choosing to invest in and expand their businesses on the Mainland. At the same time, the country's high-end manufacturing, consumer goods, technology products and business services are gaining increasing recognition in overseas markets, prompting more Mainland enterprises to expand their global operations. This will further increase two-way flows of people and goods, trade settlements, and demand for cross-boundary fund allocation and management.

With the efforts of the HKSAR Government and various financial regulators, an increasing number of enterprises have chosen to establish their international or regional headquarters in Hong Kong and use RMB as their principal settlement currency. With the support of the People's Bank of China, the Hong Kong Monetary Authority has launched the RMB Business Facility, enabling banks to obtain RMB funds at lower interest rates and better meet enterprises' financing and working capital needs. We have also seen banks in Hong Kong progressively adopting this enhanced model to serve more clients and create new business opportunities. Looking ahead, we will step up efforts to encourage enterprises to make greater use of offshore RMB in trade, investment and financing, while strengthening collaboration with more central banks in the region. The Hong Kong Fixed Income and Currency (FIC) and Bond Connect Summit to be held this Tuesday will not only discuss the development of Hong Kong's bond market, but also explore key issues such as the growth of the offshore RMB market.

Second, we should actively participate in building the country's modernised industrial system. The development and application of technological innovation are the result of the long-term integration of talent, scientific research, capital, manufacturing capabilities and real-world use cases. Hong Kong enjoys an international research environment and talent pool, practises the common law system, and maintains a robust intellectual property protection regime as well as a mature capital market. It is also advancing the development of the Northern Metropolis and actively fostering an ecosystem for patient capital, venture capital funds and other forms of investment. If Hong Kong's strengths in basic research, talent, capital, international innovation resources and market networks can be more effectively integrated with the industrial capabilities and application scenarios of the Guangdong-Hong Kong-Macao Greater Bay Area and the country as a whole, the city will be well positioned to play a more active role in building the country's modernised industrial system.

Third, we should support broader regional and global co-operation by leveraging our international character and professional services capabilities. The world continues to face significant development imbalances. Many regions are still striving to advance infrastructure development, industrial upgrading and improvements to people's livelihoods, while countries in the Global South face challenges such as financing constraints and lagging infrastructure development. With years of experience in financing, risk management, ESG compliance, project management, legal services and dispute resolution, Hong Kong can, through the Belt and Road Initiative, multilateral development banks and various international cooperation platforms, apply these professional strengths to concrete projects and help more enterprises and regions identify sustainable and viable cooperation opportunities.

29 years after Hong Kong's return to the Motherland, sustained efforts across various sectors have laid a solid foundation and given the city a distinctive leading edge. Under the strong leadership of the CPC, the country is advancing with confidence and determination along the Chinese path to modernisation. As a unique node on this journey, Hong Kong has not only the capability, but also the responsibility and confidence, to seize every opportunity and contribute to the great rejuvenation of the Chinese nation.

July 5, 2026

Our itinerary began with the Summer Davos Forum, officially known as the Annual Meeting of the New Champions, in Dalian, where I joined political and business leaders from around the world in discussions centred on innovating at scale and the current challenges facing global development. From there, I travelled to Xi'an to take part in the First Western Commercial Space Conference. These trips gave me valuable opportunities to engage in in-depth exchanges with representatives from the political and business communities, the technology sector and universities in Liaoning and Shaanxi, including the heads of more than 100 local enterprises.

Through these intensive exchanges and visits, we not only witnessed the solid industrial foundations of the Northeast and the vibrant innovation momentum of the Northwest, but also gained a deeper appreciation of Hong Kong's role under the country's "dual circulation" development strategy. Beyond serving as an important channel for attracting businesses and investment, we also act as a key bridge for Mainland enterprises and products to go global, and as an "adapter" of standards and rules that connects technological innovation to international markets.

To sum up this visit, I would like to share three observations on how Hong Kong and these regions can further strengthen collaborative development:

First, the efficient synergy between the Mainland's outstanding I&T capabilities and Hong Kong's international connectivity. Both Liaoning and Shaanxi boast deep foundations in research and development (R&D), strong industrial bases and rich resources in science and education. They have long focused on frontier innovation, pursued the integrated development of technology, education and talent, and worked to deepen the integration of technological and industrial innovation to drive high-quality regional development. At the industry level, the two regions each have their own strengths: Liaoning excels in heavy industry, equipment manufacturing and shipbuilding, while Shaanxi enjoys distinct advantages in hard technology and the aerospace industry.

Indeed, through years of sustained investment, R&D and perseverance in overcoming challenges, many of the I&T enterprises I visited have steadily built up their capabilities over time, bringing their technologies to the forefront of their respective industries. The challenge that remains, however, is how to translate research outcomes, products and technological applications into overseas orders as these enterprises expand globally and scale up their operations around the world. Whether in expanding customer networks, building brands, meeting international standards, or testing and refining products, Hong Kong can play an important role in helping the Mainland's R&D align with global application.

Hong Kong's international character is our unique advantage. Our common law system, robust protection of intellectual property rights, free flow of capital and other factors of production, and the convergence of international capital and talent — together with our internationally aligned professional services in fields such as accounting, law and corporate governance — all help these enterprises accelerate the growth of their cross-boundary business, while enabling them to do so steadily and sustainably.

This leads to my second observation: the interplay between capital and technology. Going global has now become a key strategy for the continued growth of Mainland enterprises. Whether at the going-global promotion conference for Mainland enterprises in Dalian, the seminar for enterprise leaders in Xi'an, or the exchange session for technology enterprises in Nanjing the week before, entrepreneurs consistently expressed a keen interest in raising international capital to support their global expansion. This stems not only from a practical need for funding, but also from a desire to enhance their international visibility, recognition and appeal to talent by bringing international investors on board.

Furthermore, they are also seeking the support of patient capital. This is particularly important in many hard technology sectors, where R&D requires substantial investment and long cycles, calling for long-term investors who are willing to share the risks. Here too, Hong Kong can play a leading role. We can help mobilise international long-term capital to co-invest in small-scale, early-stage and long-horizon projects, thereby helping promising technology enterprises, along with those in emerging and future industries, to grow and thrive.

My third observation concerns the vibrant and frequent interplay among technology, education, talent and industry. Underpinned by their strong capabilities in basic research, universities in Liaoning and Shaanxi have brought together top-tier scientific research talent. Xi'an, in particular, stands out in space science and aeronautical engineering. It has launched a number of industry-academia-research collaboration projects in areas such as lasers, testing, industrial intelligence, semiconductors, energy storage, new materials, and life and health. In recent years, through institutional reforms, Xi'an has gone further in encouraging researchers to translate their findings into real-world applications. Entrepreneurship is thriving on its campuses, with many doctoral students in science and engineering having founded one or two technology enterprises of their own to bring their research to market.

This aligns well with the direction we are pursuing for the Northern Metropolis (NM). The fast-developing NM will be home to our future university town, while also providing space for enterprises to establish a presence and for industries to grow. We welcome closer co-operation with institutions and enterprises from the two regions to bring together more world-class research teams, international experts and talent. This will help create a virtuous cycle in which education, technology, talent and industry reinforce one another, driving technological and industrial innovation to advance in greater depth, breadth and across multiple dimensions.

In the face of today's complex and ever-changing global landscape, our country is creating "China Opportunity 2.0" through its mega-sized market and technological innovation. With our international connectivity, capital, talent and institutional strengths under the "one country, two systems" framework, Hong Kong can translate these opportunities into development prospects that are more tangible and accessible to overseas investors. In doing so, we can turn technological strengths into asset value recognised by global capital.

Whether it is Dalian's heavy equipment or Xi'an's hard technology, Hong Kong is playing the roles of "super connector", "super value-adder" and "super adapter" — empowering Mainland enterprises and adding value to them, while at the same time achieving continued development and functional enhancement for itself.

June 28, 2026

These hard-tech enterprises rest on solid technological foundations. Many are genuinely at the cutting edge, with business models already proven in the Mainland market and products now entering markets overseas. The questions they are grappling with are practical ones: how to tap into global capital, find more partners and potential customers around the world, plan their production capacity, and manage their treasury. They are keen to seize this critical period of rapid AI development—consolidating their position at home while accelerating their push abroad—and to map out the optimal global footprint for their business.

For Mainland technology enterprises, going global no longer means simply exporting products. By bringing in international capital and talent and by building their brands and sales networks, they are turning overseas business into a new engine of growth. What struck me most was hearing one executive after another describe the same ambition: to become true multinationals. That means connecting with the world not only in their markets, but also in their capital structure, governance systems, talent, research and development (R&D), and production and supply chains. Many have chosen Hong Kong as the strategic base from which to adapt to international expansion. This reflects their trust in Hong Kong's international investor network and global platform—and their recognition of Hong Kong as the bridge linking Chinese technological innovation with global capital.

What these enterprises expect of Hong Kong now goes far beyond a simple financing platform. Our common law system, free flow of capital, financial reporting and corporate governance standards aligned with international norms, worldwide investor networks, world-class professional services, and the everyday convenience of working in both Chinese and English—these are precisely the support and infrastructure that such rapid adaptation requires.

For Mainland technology enterprises, Hong Kong is a gateway to the world. For international capital, it is the best window to access China's innovation and technology (I&T) sector. As more and more hard-tech enterprises choose to launch initial public offerings or secondary listings here, international investors can take part more directly in the rapid growth of China's I&T industries, while the enterprises themselves are tempered by Hong Kong's regulatory framework and market discipline into stronger global competitors. This two-way dynamic is exactly what makes Hong Kong both a "super connector" and a "super value-adder".

Hong Kong is one of the core cities of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA). As the GBA and the Yangtze River Delta pursue closer regional coordination during the 15th Five-Year Plan period, Hong Kong is becoming the international anchor point for both of these fast-growing regions. From listing and fundraising to trade finance and treasury operations, and from intellectual property protection and trade to the deployment of international talent, Hong Kong's professional services—and our regulators' deep understanding of I&T enterprises—help these companies to be better understood, recognised and valued.

Seen in this light, Hong Kong's journey over the 29 years since its return to the Motherland comes into sharper focus. Our role as an international platform has grown steadily stronger, and its substance richer and deeper. With the country's firm backing, Hong Kong has kept moving forward over the past four years. The economy has expanded for three years running, growing by about 3.6% in 2025 to reach a total of $3.3 trillion, and growth in the first half of this year was both faster and more broad-based. International recognition has been rising too. In the latest World Competitiveness Yearbook 2026, published by the International Institute for Management Development in Lausanne, Switzerland, Hong Kong climbed to second place worldwide—up five places in three years. In the Global Financial Centres Index, we remain first in the Asia-Pacific and third globally, and the Fraser Institute of Canada continues to rank Hong Kong as the world's freest economy.

Our financial market keeps evolving and reinventing itself, growing ever deeper and broader. Since the listing regime reforms of 2018, new economy companies' share of total market capitalisation has surged from 2.8% that year to around 25%. The number of exchange-traded products rose to 243 by April this year, with assets under management approaching HK$700 billion—a gain of more than 80% in just over three years. In wealth management, total assets under management reached HK$35.1 trillion at the end of 2024, equivalent to 11 times our GDP, and continued to grow last year; the number of single-family offices passed 3,380, up more than 25% from the end of 2023. In I&T, the Office for Attracting Strategic Enterprises has brought in over 120 strategic enterprises, expected to deliver around HK$73 billion in investment and create some 25,000 jobs, while the number of start-ups exceeded 5,200, an 11% rise year-on-year and yet another record high. Trade also performed well: total merchandise exports reached HK$5,240.3 billion in 2025, a record high and up 15.4% year-on-year. Hong Kong's air cargo throughput has ranked first in the world for many years running. Although air freight accounts for less than 3% of our total export volume, it represents around 45% of total export value—and the value of air exports has climbed by nearly 35% so far this year, a sign of Hong Kong's central role in high value-added supply chains and e-commerce.

Hong Kong's commitment to I&T shows in many ways. Beyond the steady growth in R&D spending and the research workforce, and the rising number of I&T enterprises we are nurturing and attracting, it is also evident in how we cultivate and gather talent. Thanks to our sustained efforts to strengthen STEM education, the proportion of undergraduates enrolled in science, engineering and technology programmes at post-secondary institutions rose to over 52.3% in the 2025/26 academic year, up 5.5 percentage points from three years ago. Our higher education sector has also become more international: in the recently released QS World University Rankings, for instance, five Hong Kong universities ranked among the world's top 50 for their international faculty ratio. Many leading scholars from around the world have come to Hong Kong to set up research centres or pursue collaboration.

Looking ahead, we launched the public consultation on Hong Kong's first five-year plan last week, designed to align the city with the positioning set out in the National 15th Five-Year Plan: consolidating and enhancing Hong Kong's status as an international centre for finance, trade, and shipping; developing it into an international I&T centre; and building it into a magnet for top-tier talent, among other goals. We will also use "Finance+" to empower the real economy and "AI+" to drive industrial upgrading.

As we approach the 29th anniversary of Hong Kong's return to the Motherland, tracing the path we have travelled over these years—and seeing just how rapidly things have moved forward — I am confident that a still more prosperous and stable future awaits us. This confidence is well founded: it rests on the country's steady progress and the firm support of the Central Government, as well as on the concerted efforts of the HKSAR Government and the community at large. Hong Kong's institutional strengths and international outlook, together with the country's prowess in innovation and industry, reinforce one another—giving the city a unique and irreplaceable place in the global landscape of competition and cooperation in technological innovation.

June 21, 2026

Some may ask: in an era of rapid change, is a five-year plan too long a horizon? Five years ago, no one could have foreseen that AI would reshape industries at such speed. Five years from now, we likewise cannot predict what the next disruptive technology or pivotal shift will be. Yet macro trends tend to follow clear and stable patterns. As our country progresses steadily, and digital and intelligent technological advancement gathers pace across the board, the direction ahead has been set amid an uncertain future. A five-year plan will give the business community, enterprises and members of the public a clearer framework to plan for the future. It will also help the society build consensus, pool resources and channel collective energy into shared development.

We look forward to sparking richer insights and broader perspectives through continued exchanges and discussions. By staying responsive to changing times and local circumstances, we can fully unlock Hong Kong's potential and, working together in common purpose, achieve something great.

The National 15th Five-Year Plan sets out a clear and forward-looking vision for Hong Kong: to reinforce and enhance its status as an international financial, shipping and trading centre; develop into an international innovation and technology (I&T) centre; strengthen its role as a global offshore Renminbi business hub; build an ecosystem for commodities trading; and grow into an international hub for high-calibre talent, among others. These priorities have given Hong Kong clear strategic directions. But how do we translate these directions into concrete advantages—playing to Hong Kong's distinctive strengths while addressing its gaps? How do we map out practical pathways and maximise the returns on development? These are precisely the issues the consultation needs to address. Drawing a clear line of connection—from national positioning through industrial opportunity and sectoral pathways to development of individuals—requires not only a thorough review of where we have been, but a broad and ambitious vision of where we are headed.

Hong Kong’s development has consistently benefited from the country’s long-term planning and sustained progress, while we also contribute distinctively to national development in return. In finance, leading enterprises from the country's I&T sector have continued to raise the "technology quotient" of Hong Kong stocks. New economy companies now account for around 25% of the total market capitalisation of the Hong Kong stock market. Stock market liquidity has also continued to grow, with average daily turnover exceeding HK$270 billion in the first five months of this year, up 14% year on year. In trade, as the country's industrial base expands—supported by the broadening regional footprint of industrial and supply chains and manufacturers' push into new markets such as Southeast Asia and the Middle East—Hong Kong's goods exports have shown tremendous resilience in a challenging and volatile global environment. They grew by more than 15% for the whole of last year and rose a further 35% in the first four months of this year. The five-year plan consultation is not merely about sustaining these positive trends, but about consolidating and enhancing them, opening up new growth frontiers, and generating new engines of development.

Industrial development, as well as economic upgrading and transformation, will be our key priorities. We must accelerate the development of the Northern Metropolis as a strategic platform for building emerging and future industries. Over the past few years, we have made encouraging progress in attracting business and investment, as well as drawing frontier technology enterprises to Hong Kong. Across the different dimensions of "AI+", we have also laid a solid foundation—building computing power infrastructure, supporting frontier research, encouraging industrial applications, attracting high-calibre talent, and developing a comprehensive financing ecosystem. The next questions facing us are: how can these technologies and capital take deeper root in Hong Kong, scale up and create more high-quality employment? How can industrial space planning better respond to the needs of enterprises at different stages, from early-stage R&D and start-ups through to maturity and expansion? How can we further strengthen the AI literacy of members of the public, so that they can better understand, embrace and make effective use of AI? To address these questions, we must listen carefully to the industry, investors, research institutions, academia and every stakeholder.

“AI+” and “Finance+” are two strategic directions worthy of deeper exploration. AI is no longer simply an I&T sector in its own right; it plays a crucial role in raising the competitiveness of various industries. In trade, it can be integrated with business data to improve the efficiency of trade finance. In finance, it can strengthen data analytics, risk management and customer service. "Finance+", meanwhile, means making full use of Hong Kong's end-to-end fundraising and financing capabilities—including building a more comprehensive patient-capital ecosystem to fuel the growth of frontier technology enterprises. We look forward to hearing public views during the consultation on how these efforts can be further strengthened and deepened.

We must also strengthen coordinated development with regions across the country. On a global level, the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) is the only city cluster that combines strengths in AI, advanced manufacturing, international application environments, and is home to an international financial centre. We need to further promote alignment of rules and mechanisms, as well as the more efficient flow of various factors of production within the GBA. Besides, the Yangtze River Delta and the Beijing-Tianjin-Hebei region are likewise important engines of regional development for the country. The 15th Five-Year Plan calls for stronger efforts to promote coordinated regional development. This week, I will travel to Shanghai and Nanjing. In Shanghai, I will attend the Lujiazui Forum to discuss further financial cooperation between Shanghai and Hong Kong, and to advance more concrete, mutually beneficial collaboration. In Nanjing, I will visit I&T enterprises to strengthen exchanges in science and technology, and to explore how finance can better support and empower that development.

Hong Kong’s Five-Year Plan is not only about generating stronger economic momentum and enabling the wider application of technology; it is also about building a more inclusive society, creating more high-quality employment opportunities for our people, and enabling a better life for all. The public consultation will last for two months, during which public views will be gathered through various channels. Let us join hands and move forward together, so that Hong Kong can advance on a stronger foundation.

June 14, 2026

The imminent debut of a humanoid robot store manager in Hong Kong points to an accelerating trend: artificial intelligence (AI) is entering people’s everyday lives in more tangible ways. In vigorously promoting AI development, we aim not only to empower industries and strengthen economic competitiveness, but also to deliver convenience that residents can truly experience, while creating new areas of growth and opportunity.

Over the past few years, we have advanced AI development at full speed across key areas including computing power, basic research, talent and application scenarios. Hong Kong’s overall computing power currently stands at 5,000 PFLOPS, while the Sandy Ridge Data Facility Cluster has entered the construction stage and is expected to deliver 180,000 PFLOPS by 2032 — equivalent to 36 times the city’s current computing capacity. To date, the Artificial Intelligence Subsidy Scheme has approved more than 30 projects, covering areas such as large language models, medical large language models and embodied intelligence. The Hong Kong AI Research and Development Institute will officially commence operations in the second half of this year. Meanwhile, The Hong Kong Science Park and Cyberport are now home to nearly 1,000 AI companies. Through collaboration among the Government, industry, academia, as well as the research and investment sectors, we are attracting more top-tier international AI talent to use Hong Kong as a base for research and development, exchange and entrepreneurship.

The above measures form part of our supply-side planning. As AI capabilities are rolled out more broadly, technologies evolve at pace, and the market develops rapidly, demand-side momentum is equally important: how AI is used, who uses it, whether it is well understood and how effectively it is applied. In technology adoption, scenarios often shape the market, while applications determine value. Progress on these fronts will determine how quickly Hong Kong can advance in AI development.

The dual-track approach of “AI + Industry” and “AI Training for All”, as proposed in the Budget, is designed precisely to build bridges between AI and different sectors. It encourages the integration of technological and industrial innovation, promotes product innovation and value creation, and strengthens training to enhance residents’ adaptability to, and mastery of, AI applications. This will enable people from all walks of life to participate in and benefit from AI in ways, and at a pace, that suit their needs, while building broader social consensus and support.

The Committee on AI+ and Industry Development Strategy, announced in the Budget, has been successfully established. Its members include experts, academics, and representatives from chambers of commerce, enterprises, park companies and other sectors. The Committee will hold its first meeting later this month. Given the broad scope of AI empowerment, the Committee will initially focus not only on life and health technology, and embodied intelligence, but will also examine strategies for applying AI across a range of sectors, including transport, the cultural and creative industries, as well as sustainable development.

To implement “AI Training for All”, we have allocated $50 million and invited three organisations — Cyberport, the Hong Kong Science and Technology Parks Corporation, and the Hong Kong Productivity Council — to work with technology companies, tertiary institutions, industry chambers and others to organise AI application classes, seminars, competitions and other activities. The programme is expected to deliver more than 200 activities in the current and next financial years, benefiting around 50,000 participants in total. In addition, various education and publicity initiatives targeting a wider set of community groups will also be launched.

“AI Training for All” will necessarily take diverse forms to meet the needs of different groups. For students, for example, training can place greater emphasis on hands-on practice. Popular formats in recent years, such as hackathons and techathons, provide students with opportunities to test their ideas and learn through real-world market applications. Meanwhile, to help elderly people develop a basic understanding of AI tools, use them more effectively, and avoid being deceived, we will first provide training to community members and students, enabling them to become AI learning ambassadors for the elderly. This will not only promote intergenerational inclusion, but also help build a closer and more caring community.

Take vocational training as another example. The Higher Diploma programmes of the Vocational Training Council have already made AI a compulsory module, with AI application elements tailored to different industries. For the transformation and upskilling of working individuals, the Budget announced that the Employees Retraining Board would be upgraded into “Upskill Hong Kong”, providing various types of skills-based training, including in AI applications. Together, these three levels — the popularisation of AI across society, vocational pathways for young people, and transformation and upskilling opportunities for working individuals — will enable residents of different ages and circumstances to find a pathway suited to their needs.

We also attach importance to the needs of small and medium-sized enterprises (SMEs) in their technological and operational upgrading. This year, $300 million will be allocated to promote the enhanced Digital Transformation Support Pilot Programme, with a focus on supporting SMEs in adopting off-the-shelf AI and cybersecurity digital solutions. These solutions will help SMEs better anticipate consumer trends, optimise their marketing strategies, and automate more of their day-to-day operations.

Hong Kong has always grown through transformation and advanced through innovation. The AI era will test the society’s readiness for technological innovation across multiple dimensions, including digital infrastructure, regulatory regimes, technology application, the innovation ecosystem and talent development. We must take a forward-looking approach and make thorough preparations to seize the opportunities that lie ahead.

June 7, 2026

The report estimates that Hong Kong's cross-boundary wealth under management grew by 10.7% year on year to approximately $23 trillion last year, enabling Hong Kong to Switzerland to become the world's largest cross-boundary wealth management centre — achieving our original target ahead of schedule. The report further projects that, from now to 2030, cross-boundary wealth managed in Hong Kong will grow by around 9% annually, outpacing Switzerland.

This represents a vote of confidence from capital in both the Mainland and overseas in Hong Kong's institutions and investment environment. Under the "one country, two systems" framework, Hong Kong upholds the common law system, the free flow of capital, the free convertibility of its currency, a simple and low tax regime, and a regulatory framework aligned with international standards. These institutional strengths continue to attract sustained inflows of capital.

According to the Asset and Wealth Management Activities Survey published annually by the Securities and Futures Commission, the total value of Hong Kong's asset management business has exceeded $35 trillion, with 54% of assets coming from investors outside the Chinese Mainland and Hong Kong. This reflects the continued strengthening of Hong Kong's international profile as an asset management centre. Hong Kong's asset management business has recorded substantial growth over time. Over the decade from 2015 to 2024, assets under management doubled, while the number of Type 9 licensed corporations — for asset management — rose from 1,135 to 2,212, representing an increase of nearly 100%. In recent years, the HKSAR Government has introduced a series of support measures, including tax concessions for eligible family office businesses, providing sustained impetus for the industry's development.

Equally important is the vibrant development of different market segments — from equities and bonds to fixed income, private equity and venture capital — which continues to drive the overall advancement of the financial market. By offering a richer and more diversified range of investment products and risk management tools, Hong Kong's ecosystem enables international capital to find suitable allocation opportunities. This is also one of our key competitive advantages. Over the past decade, Hong Kong's stock market has grown steadily, with total market capitalisation rising from $23 trillion to more than $47 trillion. Average daily turnover this year has exceeded $270 billion, nearly 10% higher than the figure for last year as a whole. Fundraising activity has also remained very active. Since the beginning of this year, IPO proceeds have exceeded $165 billion, while listed companies have raised more than $241 billion through follow-on fund-raising. The market's liquidity provides a fertile ground for enterprises to grow and thrive.

With the rapid development of AI, related industries and listed companies have become highly sought-after investment targets for global capital. In Hong Kong's stock market, a number of stocks connected to AI large language models or AI hardware have recorded multi-fold gains this year. Finance and innovation and technology are increasingly forming a mutually reinforcing cycle.

In the Budget, I proposed the development strategies of "AI+" and "Finance+" to accelerate the integration and mutual reinforcement of these two key forces. As the HKSAR Government's flagship for patient capital investment, the Hong Kong Investment Corporation Limited (HKIC) demonstrates how investment can support development in practical terms. As at the end of March, the HKIC has invested in more than 200 projects across strategic sectors, including hard and core technology, biotechnology and health technology, as well as new energy and green technology. Among its portfolio companies, 10 have already listed in Hong Kong, while more than 30 others have either submitted, or planned to submit, their listing applications in Hong Kong this year.

To strengthen this virtuous cycle, we are taking forward the capital injection into the HKIC and actively considering the launch of a new offshore Renminbi (RMB) venture fund. This initiative will help channel and leverage offshore RMB funds into frontier technologies and emerging industries, while supporting the steady internationalisation of RMB. In addition, the Northern Metropolis' integrated strategic framework of "R&D–translation–mass production" will provide a solid foundation for enterprises within the HKIC's innovation and technology ecosystem to further develop and expand in Hong Kong.

A new wave of technological revolution and industrial transformation is gathering pace. Breakthroughs in technology, product innovation and advances in design are driving investment and sales, and have become key engines of economic growth. Supported by strong exports of AI-related electronic products, the value of Hong Kong's total merchandise exports grew at an even faster pace in April, rising by 42.9% year on year. Retail sales figures for April, which are due to be released this week, are also expected to show solid growth, marking 12 consecutive months of increase and reflecting the steady recovery momentum of Hong Kong's retail sector.

Hong Kong's strong investment in innovation and technology is generating a new momentum for economic growth at an accelerated pace. However, these efforts must be pursued with even greater intensity and speed. We are already seeing the powerful pull effect of this positive cycle: finance supports innovation and technology, while innovation and technology, in turn, drive the development of finance. By accelerating the interaction between the two, we can inject stronger momentum into Hong Kong's high-quality economic development.

May 31, 2026

Against this backdrop, there is significant room for Hong Kong and Europe to pursue pragmatic cooperation in trade, investment as well as innovation and technology, with a view to creating mutual benefits.

Take investment as an example. Some representatives from the European financial sector pointed out that their current asset allocations were overly weighted towards US dollar assets, thereby resulting in excessive risk concentration. At the same time, households across the European Union possess wealth amounting to tens of trillions of euros, with savings rates among the highest in the world. Yet, much of their wealth remains parked in bank deposits and fixed-income products that only offer conservative returns. It has not been sufficiently channelled into capital markets with stronger growth potential. Nor has it been used effectively to support local technological innovation and strengthen economic momentum. Europe also faces funding gaps amounting to trillions of euros in addressing climate change and investing in strategic industries. Mobilising this wealth and channelling capital into the real economy to support technological innovation and application have become one of Europe's most pressing priorities. For Europe, Hong Kong's value proposition is particularly compelling in three areas.

First, Hong Kong remains an under-allocated market for European financial institutions and investors. As one of the world's most active stock markets, a hub for venture capital and private equity funds, as well as a centre for cross-border asset and wealth management, Hong Kong offers a diverse range of investment products and risk management tools, covering securities, bonds, currencies, derivatives and digital assets. Hong Kong is also closely connected to the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and the Mainland's frontier innovation, technology and advanced manufacturing capabilities. These present diversified asset allocation opportunities with strong potential returns. To European investors, the opportunities in Hong Kong are highly attractive. In fact, during my exchanges with local representatives from asset management, venture capital and private equity sectors, their questions were practical and specific. They asked about various issues such as the licensing requirements in Hong Kong, the right timing for setting up operations, the local investment ecosystem, and the communication channels with regulatory authorities.

Second, Hong Kong and Europe can explore cross-border investment and regulatory cooperation to help each other expand market access. In recent years, Hong Kong has actively promoted connectivity between the Mainland and overseas capital markets. This has improved market liquidity and broadened investment choices (e.g. mutual listing of ETF products with Saudi Arabia and Korea). Hong Kong has also supported high-quality companies seeking dual listings and has promoted cross-border regulatory cooperation. At the same time, Hong Kong is gradually building an ecosystem for "patient capital", providing stronger long-term support for emerging and future industries. During my discussions with European financial institutions, they expressed strong interest in Hong Kong's experience in these areas, and agreed that both sides should work together to advance cooperation.

Third, financial innovation. The use of blockchain and AI will be an inevitable trend in the future development of finance. Yet these technologies also bring real governance challenges. Criminals and terrorists may attempt to exploit differences in regulatory regimes across jurisdictions for money laundering and fundraising. At this year's "No Money for Terror" Ministerial Conference, preventing financial innovation from being misused for illegal purposes was a major topic of discussion. During the conference, I shared Hong Kong's principles, practices and experience in the development and regulation of digital assets. In these areas, Hong Kong is indeed ahead of Europe, and there is considerable room for cooperation and mutual learning. This not only can support the healthy development of the industry, but also contribute to stronger global governance.

Hong Kong and Europe, of course, do not see eye to eye on every issue, and this underscores the importance of maintaining communication and dialogue. Europe is concerned about its trade balance with our country, particularly on the trade deficit in goods. However, trade is fundamentally a process of division of labour based on comparative advantages. It is also a matter of consumer choice. Even if Europe records a trade deficit with China, it should be noted that European companies investing in China export nearly 40% of the goods produced back to Europe. In other words, while the trade surplus is in China, the profits go to European investors. Moreover, Europe still restricts exports to China in certain areas. Beyond trade in goods, Europe has recorded a trade surplus in services with our country for more than a decade. Many European companies are family-owned and perform well in their home markets. But their knowledge and understanding of China and the wider Asia-Pacific market can be further deepened. This region is where opportunities for their future development lie, and Hong Kong is the best entry point for them to seize these opportunities and expand their business. Meanwhile, high-quality Mainland enterprises are accelerating the development of their global industrial and supply chain networks, including in Europe. Hong Kong is well positioned to play a key bridging role in supporting their expansion overseas.

In passing, the International Monetary Fund published an assessment report last week that commended Hong Kong's resilient and stronger-than-expected economic growth. It also reaffirmed Hong Kong's position as an international financial centre. The report highlighted Hong Kong's "super connector" role as a key advantage. It also recognised our policies to advance digital finance, and acknowledged that initiatives such as the development of the Northern Metropolis can strengthen cross-boundary integration, support innovation and promote high value-added services.

Some representatives from the European Union and international organisations whom I met during this visit to Europe had not visited Hong Kong since the pandemic. Through these face-to-face meetings, candid exchanges and briefings, their understanding of the Hong Kong market was deepened and their positive expectation for Hong Kong's future development strengthened. Some previous misconceptions and misunderstandings were also addressed.

There were European representatives who said that they welcomed investment by Mainland enterprises, which could bring capital, technology and local jobs, but at the same time harboured concerns that European companies may face increased competition as a result. I invited them to organise delegations to visit Hong Kong and the GBA. Such visits will help them get a better grasp of the opportunities here and explore flexible models of cooperation, creating opportunities for both sides to foster more stable, long-term and mutually beneficial development.

May 24, 2026

Strengthening international engagement through direct, face-to-face dialogue enables us to answer questions and address concerns in person. This helps the overseas business and financial communities gain a fuller understanding of Hong Kong’s current situation and development trajectory, as well as its strategic value for those seeking to expand their business in China and across Asia.

Several years ago, Hong Kong, China became the first jurisdiction in the Asia-Pacific region to achieve overall compliance in the fourth-round mutual evaluation conducted by the Financial Action Task Force (FATF) on anti-money laundering and counter-terrorist financing. This recognition by the FATF, an organisation established under the auspices of the Organisation for Economic Co-operation and Development (OECD), has provided a solid foundation for Hong Kong to strengthen its voice and influence in discussions in this field.

Last week’s summit between the leaders of China and the United States, and the forthcoming visit of the President of Russia to China, have sent positive signals for the evolving international landscape. At a time of geopolitical turbulence, such high-level dialogue can inject much-needed stability into the global order and create a more favourable environment for Hong Kong to strengthen its external connections.

Recent objective recognition by a range of international bodies also points to growing international awareness of Hong Kong’s latest developments and future potential. The International Monetary Fund, in its latest report, reaffirmed Hong Kong’s role as an international financial centre and a “super connector”, and noted that policy initiatives, including the development of the Northern Metropolis, would support innovation and high-value services, thereby fostering economic growth and structural transformation. Moody’s and Fitch have also recently reaffirmed Hong Kong’s credit ratings with “stable” outlooks.

These assessments not only affirm Hong Kong’s sound economic fundamentals, positive outlook and robust public finances, but also show that proactive and sustained engagement helps international institutions gain a fuller understanding of the city’s latest conditions, development direction and opportunities. Their evaluations provide a valuable reference for global investors and the business and financial community, and will help attract more long-term international capital to Hong Kong.

Recent market developments have further affirmed the appeal of Hong Kong’s business environment and economic prospects. More institutions are setting up or expanding their operations in Hong Kong — hiring additional staff, increasing their office space, and launching innovative services and products. A survey conducted earlier by the Hong Kong Academy of Finance found that financial institutions, industry associations, family office principals and market practitioners regard Hong Kong’s well-developed regulatory framework, mature financial markets, competitive tax regime and free flow of capital as the key foundations of their confidence in the city.

From a macro perspective, the country is making vigorous efforts to cultivate new quality productive forces, accelerate the development of strategic emerging industries such as artificial intelligence (AI) and biomedicine, and take a forward-looking approach to planning for future industries. Leveraging its strengths in "finance+, trade+, scientific research+ and AI+”, Hong Kong is actively aligning with the 15th Five-Year Plan and further integrating into the overall development of the country. In this process, Hong Kong will continue to perform its dual role as an international gateway and an efficient exchange platform for innovation and technology (I&T) development in the Greater Bay Area (GBA), thereby further unleashing its own development potential.

Over the past two weeks, I attended a series of seminars organised by university business and medical schools, as well as think tanks. These exchanges offered valuable first-hand insights into how “AI+” is bringing together professional talent and creating new business opportunities. From medical innovation to financial technology, and from academic research to real-world applications, Hong Kong is increasingly becoming a preferred destination for leading talent to gather, exchange ideas and pursue cross-sector collaboration. The interaction between talent and capital, powered by the combined strengths of “AI+” and “Finance+”, is generating a virtuous cycle and opening up new business and investment opportunities. Through my visit to Europe this week, I hope to present Hong Kong’s vibrant I&T and financial ecosystem, together with its deep talent pool, to international investors, and help turn these strengths into tangible opportunities.

Our dedicated efforts to strengthen external ties are aimed at helping the international community better understand and have greater confidence in Hong Kong’s openness, stability and development prospects. We are pressing ahead at full speed to consolidate and enhance our strengths, open up new horizons for Hong Kong’s development amid a changing global landscape, and contribute to the overall development of the country. As international capital converges with Hong Kong’s development momentum and connects with frontier innovation in the Greater Bay Area, the resulting synergy will enable Hong Kong to make its unique contribution to shared global prosperity in the years ahead.

May 17, 2026

Last week, with the joint support of the Hong Kong SAR Government and the Dongguan Municipal Government, sustainable aviation fuel company EcoCeres signed an Investment Letter of Intent to establish its first supply chain operation in Dongguan. The company is a homegrown startup. The initiative exemplifies the synergy between Hong Kong’s strengths in upstream R&D and international green finance certification, and the GBA’s large-scale advanced manufacturing capabilities. It vividly illustrates the integration of technological and industrial innovation, demonstrating how the region’s cutting-edge green technologies can expand onto the global stage. It also highlights Hong Kong’s role as an international gateway for innovation and technology development in the GBA. Notably, EcoCeres is one of the projects backed by Hong Kong Investment Corporation Limited, underscoring the strong support of the Government’s patient capital flagship for the green technology sector and its commitment to nurturing emerging industries.

To translate innovation into tangible outcomes and support their sustained growth, adequate space and infrastructure are essential. We are pressing ahead at full speed with the development of the Northern Metropolis, particularly the Hong Kong Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Co-operation Zone and the San Tin Technopole, to promote the commercialisation and industrialisation of R&D outcomes. This year’s Budget has already earmarked resources to expedite the development of the key sites, with a focus on emerging industries such as AI and biomedicine. Together, these initiatives will enable our upstream R&D capabilities to forge deeper complementarities and closer collaboration with the GBA’s industrial strengths.

Industrial innovation cannot flourish without strong financial support. This year’s Budget introduced the “Finance+” strategy with a view to enabling the financial sector to better serve the real economy and support the development of a modernised industrial system. The strategy aims to provide technology enterprises with a full-cycle financing support, covering the startup, growth, listing and post-listing stages. Better leveraging this advantage will help accelerate the GBA’s all-round development. Later this month, the Shenzhen-Hong Kong Financial Cooperation Committee, jointly established by Hong Kong and Shenzhen, will convene to discuss key issues including financial market connectivity in the GBA during the 15th Five-Year Plan period, as well as deeper collaboration in fintech and green finance. These efforts will further strengthen the scale, depth and overall competitiveness of the GBA’s financial markets.

The deepening of industrial development and the flow of capital both require greater alignment of rules and standards to ensure smooth and efficient progress. With its common law system under the “one country, two systems” principle, internationally aligned regulatory framework, and mature professional services sector, Hong Kong plays an indispensable and pivotal role in advancing the alignment of rules and mechanisms within the GBA. This not only facilitates the cross-boundary flow of innovation-related elements and enhances the efficiency of resource allocation, but also provides critical support for promoting the internationalisation of the country’s advanced standards.

The construction sector provides a compelling example. The recently opened eastern section of the Fanling Bypass features a pedestrian footbridge that is the world’s first to be built using S960 high-strength steel produced in our country. With a strength three times that of ordinary steel, the material significantly reduces both material consumption and structural weight, lowering the footbridge’s construction cost by around 30% while also enabling more flexible and innovative design. This achievement reflects coordinated efforts on multiple fronts. Hong Kong’s academic sector conducted a systematic comparison of steel parameters used in the Chinese Mainland, Europe and the United States, and established a database of “equivalent steel grades” to help align high-end Mainland products with international standards. At the same time, the practical engineering work of Government departments has enabled high-end construction materials and technologies from our country to be applied in local infrastructure projects. This case marks the first validation of our country’s high-end manufacturing standards within Hong Kong’s engineering regulatory system, which is aligned with international practice, and provides an important reference point for interoperability between Chinese and international standards.

In the medical sector, standards alignment has also seen encouraging progress. Experts from Hong Kong and the Mainland have jointly developed hospital accreditation standards that integrate both international and national benchmarks, and these have already been adopted in some public hospitals. In addition, Hong Kong has established facilities such as chest pain centres and stroke centres in accordance with national accreditation standards. The Chest Pain Centre at Queen Mary Hospital is a notable example. After obtaining accreditation last year, its median door-to-balloon time fell significantly from 105 minutes to 53 minutes, helping to improve survival rates and treatment outcomes. These initiatives not only enhance Hong Kong’s overall healthcare standards, but also provide a valuable demonstration to the international community of the country’s healthcare standards, thereby supporting their international adoption.

Guangdong, Hong Kong and Macao are jointly advancing the development of the “GBA Standards” for voluntary adoption by industry, with the aim of enhancing the quality of products and services, promoting the integrated development of the GBA, and creating more favourable conditions for Mainland products and services to reach wider international markets. As of March this year, 270 standards had been promulgated, covering a broad range of areas, including electrical and mechanical engineering, transport, healthcare, education and more.

Looking ahead, in the 15th Five-Year Plan period, our country is vigorously fostering new quality productive forces, accelerating the development of strategic emerging industries such as AI, the low-altitude economy, and biomedicine, while making forward-looking plans for future industries including quantum technology, biomanufacturing, embodied AI and brain-computer interfaces. We are confident that, under the “one country, two systems” framework, Hong Kong will leverage its unique advantage of being backed by the Motherland and connected to the world, to deepen co-operation with its sister cities in the GBA, accelerate technological innovation and application, and make greater contributions to the mutual reference of national and international rules and standards.

May 10, 2026

Over the past year, the local consumption market has shown a clear recovery trend. Businesses have actively upgraded and adapted to changing consumption patterns, while improving service standards and product quality. The Government has also continued to stage mega events to attract more visitors. At the same time, local spending by residents returned to growth in the second quarter of last year, and has strengthened further since the start of this year. Data from a major electronic payment platform in Hong Kong show that residents’ daily consumer spending has increased year-on-year for six consecutive quarters. In the first quarter of this year, retail- and dining-related spending rose by 5.2%, while spending at non-fast-food restaurants increased by nearly 8%.

Asset market sentiment has remained positive. Stock market turnover stayed active, while the residential property market continued to improve. In the first quarter of this year, the unemployment rate fell to 3.7%, and the latest figures show that full-time employees’ income rose by more than 3%. Inbound tourism also remained strong, with visitor arrivals up 17% year on year to more than 14.3 million—a new post-pandemic quarterly high. For the full year, arrivals may exceed the original estimate of 53.8 million, lifting inbound tourism-related spending to over HK$240 billion, up 9.5% from last year. Together, these trends should further improve the outlook for the local retail and catering sectors, and continue to support overall economic growth and employment.

With private consumption continuing to improve, and exports and fixed investment remaining strong, the advance estimate for the first-quarter GDP, to be released this week, is expected to grow faster than the revised 4.0% recorded in the fourth quarter of last year. It will be the strongest quarterly expansion in nearly five years.

As one of the region’s major re-exports hubs, Hong Kong has long counted on exports as a key driver of economic growth. In the first quarter of this year, exports remained strong, rising 32% in value terms—the 25th consecutive month of growth and the best quarterly performance in five years. In March alone, export value increased by nearly 36%. Strong global demand for AI-related products and electronic goods has helped to offset, at least in part, the impact of geopolitical tensions on Hong Kong’s exports and economy.

By product category, growth was especially strong in two areas. Exports of “electrical machinery, apparatus and appliances, and electrical parts thereof” rose by more than 40%, driven by demand for integrated circuits; while exports of “telecommunications and sound recording and reproducing apparatus and equipment” increased by over 63%, supported by demand for communications equipment. By market, amid the deep reconfiguration of regional production and supply chains, Hong Kong’s exports to the Mainland and ASEAN grew by nearly 35% and 38% respectively. The Mainland’s industrial chain remains the world’s largest, most comprehensive and most efficient, with advantages that are difficult to replace. Against this backdrop, Hong Kong’s exports to the United States and the European Union also rose by more than 47% and 15% respectively.

While geopolitical developments have created challenges, Hong Kong, as an international trade centre, continues to gain new growth drivers and fresh opportunities, with both the pace and quality of growth improving. Under the National 15th Five-Year Plan, the country is accelerating the development of a modernised industrial system, deepening the integration of technological and industrial innovation, upgrading industries towards greater intelligence, greenness and integration, and strengthening complementarity and division of labour across regional production and supply chains. By leveraging its distinctive strengths to serve the country’s development needs, Hong Kong is playing an even stronger and more effective role.

We are accelerating efforts to develop Hong Kong into a global centre for high value-added supply chain management. By building a smarter, more data-driven and efficient port, expanding innovative trade financing channels, and strengthening high value-added professional services—including legal, accounting and ESG advisory services—we aim to enhance Hong Kong’s role as an international trade centre. We are also working to attract more Mainland and overseas enterprises to establish international or regional headquarters and treasury centres in Hong Kong, further strengthening the city’s headquarters economy.

At the same time, we are advancing an “AI+” and “Finance+” development strategy to accelerate industrial upgrading, strengthen economic momentum and resilience, and better prepare Hong Kong for potential headwinds. Geopolitical tensions are weighing on the global economy, with the prolonged conflict in the Middle East adding to the risks. Last month, the International Monetary Fund (IMF) revised its global growth forecast for this year down to 3.1%, 0.2 percentage point lower than its projection at the start of the year and below the 3.4% growth recorded in 2025. The IMF also warned that a prolonged or escalating conflict could have a more serious impact on global growth and inflation.

We are closely monitoring developments in the Middle East and the impact of rising international oil prices on Hong Kong’s key sectors, SMEs, and the wider economy. To ease pressure on industries with high fuel costs, particularly transport, the Government has announced a targeted short-term support package of about HK$2 billion, including diesel and liquefied petroleum gas subsidies, as well as a 50% reduction in government tunnel tolls for commercial vehicles. In addition, to help local SMEs navigate rapidly changing market conditions, we have asked the Hong Kong Monetary Authority and the banking sector to introduce a new round of support measures, including larger dedicated SME funds, credit relief for affected sectors, and more flexible loan repayment arrangements.

Despite a complex and fast-changing external environment, Hong Kong’s economy is advancing with stronger momentum and higher-quality growth. To sustain this progress, we must stay firmly anchored in stability while pursuing development proactively. In particular, we should accelerate the adoption of artificial intelligence across sectors and strengthen talent development, so that digital and smart transformation is more deeply embedded in industries and business operations. By building on its resilience and steady development, Hong Kong will be better placed to withstand global uncertainty and external shocks, and to achieve faster, higher-quality economic growth.

May 3, 2026

Building on its strong performance last year, Hong Kong has remained the world's leading IPO market so far this year. As of last week, funds raised through IPOs in Hong Kong had exceeded HK$140 billion. More high-quality companies are seizing the opportunity to leverage the city's vibrant fundraising platform to accelerate their global expansion. Since March, average daily turnover in the Hong Kong stock market has surpassed HK$280 billion. These developments show that, despite external uncertainties, Hong Kong's financial market continues to demonstrate strong momentum. This is the result of the concerted efforts of both the Government and the industry.

At a time of rapid technological change and heightened geopolitical risk, global investors are accelerating the diversification of their asset allocation, reducing reliance on any single market or asset class. Meanwhile, Hong Kong is actively developing an international gold trading market, further deepening its financial ecosystem in response to evolving market demand. The listing of the city's largest gold ETF last week, which supports physical gold subscriptions and redemptions as well as trading and custody in Hong Kong, marks an important step in helping the city gradually build a comprehensive gold industry and value chain. Hong Kong's distinctive strengths — including its stability and security, its concentration of capital and talent, the free flow of key factors such as capital and data, and a legal system and rule of law that are well understood and trusted by the global business and financial community — are making it increasingly attractive to international investors.

As investment themes continue to evolve, the range of underlying assets for ETFs is steadily expanding, encompassing products linked to the spot and futures markets for precious metals, technology and semiconductor companies, and even digital assets. These thematic ETFs, including products with varying leverage features, provide investors with efficient and transparent investment options.

The features of ETF products also make them particularly well suited to cross-boundary collaboration. In recent years, we have advanced the mutual listing of ETFs with the Saudi Exchange. We also introduced a joint index with the Korea Exchange and promoted the listing of related ETF products. HKEX has also partnered with Bursa Malaysia to launch a co-branded benchmark index tracking the 60 largest listed companies by market capitalisation across the two markets. It has also authorised asset managers to issue related ETFs. This marks another important step forward in expanding cooperation in cross-market investment products.

In fact, the diversified development of the broader exchange-traded product (ETP) segment, which includes ETFs, underscores growing investor recognition of the themes, structures and trading efficiency of such products. By trading volume, Hong Kong's ETP market now ranks behind only the United States and the Mainland. In February this year, the average daily turnover in the ETP market reached HK$38.6 billion, reflecting robust trading activity.

The underlying assets of ETP products extend across the Mainland, the United States, Europe, Japan, Korea, Southeast Asia, the Middle East and South America. This broad coverage helps cater to the diverse investment strategies and risk appetites of international investors, enhances overall market liquidity, and provides an important liquidity buffer during periods of market volatility.

Looking at the longer-term trend, global investment in Asia doubled between 2014 and 2024 to around US$6 trillion. Since 2000, Asia's capital markets have expanded fourfold, surpassing US$34 trillion by the end of 2024. Global institutional investors are actively seeking diversified and long-term growth opportunities. At the same time, Asia is seeing the rise of leading companies and projects in sectors such as green energy, advanced manufacturing and digital finance. This growth is broad-based and robust. As a leading international financial centre in the region, Hong Kong will continue to play its role as a "super connector". It will facilitate the efficient matching of capital with opportunities across Asia for mutual benefit and shared success.

At present, Hong Kong has signed mutual recognition agreements with 20 exchanges worldwide. This has facilitated dual listings by companies and fostered a broader network of market collaboration. We are also actively exploring the inclusion of Bursa Malaysia in the list of recognised stock exchanges. This would create favourable conditions for the development of Islamic finance. It would also help attract new sources of capital and new listing candidates.

We are continuing to deepen cross-boundary financial exchange and cooperation. Last week, Hong Kong hosted the annual conference of the Asian and Oceanian Stock Exchanges Federation (AOSEF), which brought together 18 Asian exchanges and more than 100 industry leaders. At the conference, I encouraged exchanges across Asia to strengthen collaboration and move from fragmented market development towards a higher level of coordinated regional growth. This will enhance the region's overall appeal to global capital. As the host of the event, HKEX also took the opportunity to showcase in detail the new opportunities emerging from Hong Kong's market development.

The steady improvement in the financial markets, together with the recovery in asset markets such as residential property, has supported the local economy and, to some extent, lifted consumer confidence. Data released in recent months for the retail, food and beverage sectors indicate that the overall situation continues to improve. The latest unemployment rate for the first quarter of this year stood at 3.7%, down by 0.1 percentage point from the preceding period. The decline was particularly notable in the accommodation services sector.

This week marks the start of the Mainland's Labour Day Golden Week. The Immigration Department estimates that around 980,000 Mainland visitors will enter Hong Kong during the period, about 7% more than in the corresponding period last year. This will bring significant business opportunities to the retail, catering, hotel and tourism sectors. We will ensure that all supporting arrangements are in place. We will also strengthen crowd management at popular attractions. Our aim is to enhance the visitor experience and enable sectors such as catering and retail to continue to benefit.

April 26, 2026

Take AI as an example. From large language models to agentic AI, and from chatbots to embodied intelligent robots, human–machine collaboration is already delivering substantial productivity gains for businesses. A comprehensive push to deepen AI adoption, application and innovation will not only create new industries, but also inject fresh momentum into existing sectors. This will strengthen the core competitiveness across finance (intelligent risk management and compliance), healthcare (drug discovery and clinical solutions), trade (smart supply chains), shipping (smart port and logistics operations) and professional services (AI-assisted analysis). In this year's Budget, we have proposed establishing the Committee on AI+ and Industry Development Strategy. Bringing together academics, experts, enterprises and park companies, the Committee will develop strategic priorities and foster enabling conditions with a view to accelerating industrial upgrading and transformation.

On the green transition, sustainable development must remain at the core. Amid energy-supply uncertainties heightened by geopolitical turbulence, the global demand for greater energy resilience and autonomy has become more pressing. Technologies such as new energy vehicles, high-efficiency energy storage (batteries), smart grids and green hydrogen are not only tools for reducing emissions; they will become the essential foundations for future industrial production and economic activity. Together, they will deliver energy solutions that are more reliable, cost-effective and compatible with environmental stewardship.

This year marks the opening year of the National 15th Five-Year Plan. As set out in the Plan's Outline, building a modernised industrial system, and accelerating the realisation of high-level technological self-reliance, are among the top priorities. Our country's science and technology innovation capacity now ranks among the world's leaders, and deeper integration between technological and industrial innovation is advancing across the board, accelerating development in all sectors.

Hong Kong is proactively aligning with the National 15th Five-Year Plan. As we deepen our integration into and contribution to the overall national development, we will take root in the Greater Bay Area while remaining connected to the world. We will focus on high value-added industries, fully leveraging the unique strengths of the "one country, two systems" framework. Hong Kong's advantages are clear. Our standards are aligned with international best practices, and key factors of production flow freely. We also offer strong basic research capabilities, outstanding professional services, a deep pool of talent, and a comprehensive chain of financial services. In recent years, these strengths have attracted many strategic enterprises to establish a presence in Hong Kong. This is accelerating the development of a more dynamic innovation ecosystem in the city.

The Office for Attracting Strategic Enterprises (OASES) has successfully attracted over 100 strategic enterprises, with a focus on life and health technology, AI and data science, fintech, advanced manufacturing and new energy, as well as cultural and creative technology. These enterprises come from the Mainland as well as Europe and the United States. This has underscored Hong Kong's robust business and innovation environment, and its appeal as a two-way platform connecting the Mainland and the rest of the world.

Multiple indicators have shown that these enterprises are positioning Hong Kong as an international hub for R&D and operations, and are making steady progress in their development here. For example: (1) more than half of them have already been listed in Hong Kong (52 companies), with another 16 preparing for listing; (2) about 90% (89 companies) have established, or are in the process of establishing, R&D centres; and (3) around three quarters (76 companies) have set up global or regional headquarters in Hong Kong.

Their tangible contributions to Hong Kong's economy are gradually becoming evident. To date, their combined cumulative actual investment has reached HK$22.5 billion, more than 30% above the expected figure for the relevant stage. They have also created over 8,000 jobs. These positions span a range of high value-added fields, including research, AI, healthcare, cybersecurity and professional services. As of March this year, the total commercial and industrial floor area occupied by these strategic enterprises reached 2.6 million square feet, representing a 40% year-on-year increase. This reflects their continued expansion of R&D, production and operational activities in Hong Kong.

Beyond their direct economic contributions, it is equally important that most of these enterprises have begun collaborating with local universities, research institutions and businesses. This is fostering closer industry–academia–research collaboration in Hong Kong. At the same time, these enterprises are advancing the application of technologies across a wide range of local use cases and stepping up internationalisation efforts. In doing so, they are contributing to technology upgrading across local industries and to smart-city development.

For example, an intelligent driving enterprise has selected Hong Kong as its international R&D centre, obtained a pilot licence under the new local regulatory framework, and completed cross-district autonomous driving tests. A smart logistics enterprise has successfully deployed its technologies at the Hong Kong International Container Terminals and air cargo terminals, enhancing the efficiency and competitiveness of Hong Kong as a logistics hub while demonstrating cutting-edge R&D outcomes to the international community. In addition, a number of enterprises have established R&D centres, laboratories and pilot production lines at the Hong Kong–Shenzhen Innovation and Technology Park in the Northern Metropolis, laying the groundwork for future advanced manufacturing facilities. This will also add higher value-added content to "Made in Hong Kong" and help strengthen the foundation for Hong Kong's new industrialisation.

Tomorrow, we will announce a new batch—the sixth batch—of strategic enterprises. The list will include several companies with market capitalisation of over HK$100 billion, spanning frontier areas such as life and health technology, the low-altitude economy, artificial intelligence, new energy materials, cross-boundary financial infrastructure and fintech. Among them are globally leading life and health technology enterprises that will conduct clinical research in Hong Kong, further strengthening Hong Kong's position in international medical R&D. Several enterprises will also establish R&D centres, treasury centres and regional headquarters in Hong Kong, reinforcing our role as a key hub connecting the Mainland and global markets and further energising the local innovation-and-technology ecosystem.

Looking ahead, we will continue to attract more high-quality enterprises at full speed and provide more targeted policy support to facilitate their development in Hong Kong. We will promote deeper integration across the innovation, industrial and capital chains. Through a dual-track approach—attracting enterprises from outside Hong Kong while strengthening support for local start-ups—Hong Kong will accelerate the development of a more diversified, more resilient and more internationally competitive industrial structure. This will enable Hong Kong to play a more proactive role in the country's high-quality development and inject sustained momentum into our own economy.

April 19, 2026

The theme of this year’s National Security Education Day is: “Proactively Align with the 15th Five-Year Plan Follow a Holistic Approach to Development and Security”. Security underpins a nation’s survival and progress, and it is essential to social stability and people’s well-being. Development and security reinforce each other: security is the prerequisite for development, while development provides the guarantee for security. Only by advancing both in a coordinated way can we ensure lasting stability and sustained prosperity.

Profound changes unseen in a century are accelerating, and the international landscape is growing more complex and volatile. In some regions, wars continue and flashpoints remain unresolved; in others, social unrest persists. These developments underscore that national security extends across multiple interconnected domains—including finance, energy, science and technology, food security and overseas interests. We must therefore firmly uphold a holistic approach to national security and strengthen our capabilities in risk prevention and contingency response.

The 15th Five-Year Plan Outline identifies “Following a holistic approach to development and security” as one of the six guiding principles for advancing economic and social development during the 15th Five-Year Plan period. The same principle is also highlighted in the white paper Hong Kong: Safeguarding China’s National Security Under the Framework of One Country, Two Systems, published this February, as one of the six principles Hong Kong should follow in safeguarding national security. In practice, as a free and open international centre for finance, trade, shipping, and innovation and technology, Hong Kong must strike a proper balance between development and security. This means safeguarding security while remaining open, and, as we consolidate and strengthen our advantages and promote innovation, placing strong emphasis on preventing risks before they materialise.

Take the financial sector as an example. Hong Kong’s financial system has long been robust and efficient, supporting smooth market operations and strong growth. At the same time, we have consistently safeguarded stability by closely monitoring market conditions and interlinkages, and by maintaining strong buffers. The Linked Exchange Rate System provides a reliable anchor for monetary and financial stability. Banks’ capital adequacy and liquidity ratios are well above international standards, and securities brokers maintain adequate capital and orderly trading.

At the same time, we attach great importance to innovation. As the country advances high-quality development, Hong Kong has long served as both a “testing ground” and a “firewall” for reform and opening up. We support the Mainland in deepening capital market reforms, while guarding against the spillover of external risks. Only by pursuing innovation in a secure, well-controlled risk environment can we build a more resilient, dynamic and competitive financial system that is better able to withstand external shocks and sustain long-term growth.

The Hong Kong Monetary Authority (HKMA) recently granted the first batch of stablecoin issuer licences under the Stablecoins Ordinance, demonstrating how security can be balanced with innovation. The HKMA recognises that stablecoins have significant potential to address pain points in economic activity—especially in cross-border transactions and payments—while maintaining clear safeguards for financial stability, anti-money laundering, and user and consumer protection. To achieve this balance, the HKMA has adopted a prudent, phased approach to licensing, with a strong emphasis on issuers’ robust compliance capabilities.

Energy is another case in point. Geopolitical developments have disrupted global energy supplies, and some regions have even experienced shortages. By contrast, the country’s energy self-sufficiency rate has remained consistently at above 80% in recent years. The energy mix has also become more balanced. Non-fossil energy—such as hydropower, nuclear, wind and solar, as well as natural gas, now account for over 30% of total consumption, while oil accounts for less than 20%. In addition, import sources have become more diversified. This structure has strengthened the country’s resilience and its ability to absorb shocks amid volatility in global energy markets.

Stable energy supply is essential to people’s livelihoods and the smooth functioning of the economy. Around 80% of Hong Kong’s oil products are sourced from the Chinese Mainland. With the country’s steadfast support, Hong Kong’s energy supply has remained stable. In response to the latest supply and demand conditions, the HKSAR Government has set up an Inter-departmental Task Force on Monitoring Fuel Supply to closely track market developments. The task force has proposed four short-term measures, including diesel price subsidies, to support industries and livelihood services that have been significantly affected. The Legislative Council has swiftly approved the necessary funding, and we are expediting the implementation details.

Over the medium to long term, we must continue to drive the green transition of Hong Kong’s energy sector. This includes strengthening regional cooperation to steadily increase the use of zero-carbon energy, working towards the “net-zero electricity generation” target set out in the Hong Kong’s Climate Action Plan 2050, and improving the diversity and resilience of Hong Kong’s energy mix. The HKSAR Government plans to raise the share of zero-carbon energy in electricity generation to around 60–70% by 2035. With the Clean Energy Transmission System enhancement works expected to be completed within this year, Hong Kong will be able to progressively import more zero-carbon electricity.

In today’s fast-changing international environment, geopolitical competition is intensifying. Risks and challenges are present across various domains, from financial markets to energy supply. As circumstances continue to evolve, Hong Kong must place security at the heart of development, while strengthening the foundations of security through high-quality development. Only by pursuing development and security in a coordinated manner can Hong Kong seize new opportunities amid change and write a new chapter of greater prosperity, stability and momentum.

April 12, 2026

Meanwhile, global competition in frontier technologies such as artificial intelligence has heated up. Breakthroughs in core technologies, the development of upstream and downstream segments of the industrial chain, and the exploration of broader application scenarios all require substantial capital support. Whether these companies and industries have smooth, stable, sustained and efficient access to financing is therefore critical. Hong Kong’s listing platform is playing a pivotal role in this regard—supporting the nation’s technological advancement and establishment of a modernised industrial system while also attracting global capital into these future-oriented sectors.

Taking initial public offerings (IPOs) as an example, Hong Kong’s IPO market maintained the strong momentum from last year in the first quarter. As of March 27, fundraising had exceeded HK$103 billion, ranking first globally. Taking into account other funds raised including through follow-on fundraising, the total amount of funds raised reached approximately HK$237 billion. More importantly, more companies listing in Hong Kong now come from emerging industries—AI, semiconductors, robotics, autonomous driving, biotech, and more. Applications currently in the pipeline for listing in Hong Kong have already surpassed 500 cases. In other words, the more uncertain the external environment becomes, the more companies see Hong Kong as a key gateway for fundraising and overseas expansion.

Hong Kong’s financial markets have long contributed to the country’s reform, opening-up and economic development. Through the “Finance+” strategy, we are supporting the development of new quality productive forces and actively contributing to the building of a modernised industrial system in our country. Recently, Hong Kong was once again affirmed as one of the world’s top three international financial centres, with a rating closely trailing the top two—New York and London. This underscores that the Mainland’s continued economic growth and the country’s strong support for Hong Kong provide the firmest foundation for Hong Kong’s status as an international financial centre.

The financial markets have performed well, and Hong Kong’s real economy also showed general improvement in the first quarter, with some areas recording notable results.

On the export front, supported by a recovery in global demand for electronic products and the reconfiguration of regional production and supply chains, merchandise exports rose by nearly 30% year on year in value terms in the first two months, demonstrating a remarkable performance. This indicates that despite uncertainties in the external trade environment, Hong Kong’s role as a trade hub remains solid.

While many residents are travelling abroad these days with the Easter long holiday underway, the overall trend suggests that the foundation for recovery in the retail sector has become increasingly evident. In the first two months of the year, total retail sales value rose by 11.8% year on year, marking the tenth consecutive month of growth and accelerating from the growth in the fourth quarter of last year. The increase was not limited to high-end spending, but also seen in livelihood-related categories such as furniture and clothing, indicating that local consumer confidence is steadily strengthening.

Online sales have also been buoyant, surging by 27.5% year on year in the first two months. This shift in consumption patterns promotes the development of supporting digital industries such as e-payments, logistics, and data analytics, etc., injecting new impetus into the retail ecosystem.

The labour market has remained stable, with the unemployment rate edging down to 3.8%. Unemployment situation in the retail and food and beverage service activities sectors has improved, and overall employment earnings have continued to rise. This, along with the improving sentiment in both the stock market and the residential property market, renders support to local consumption.

April 5, 2026

This flagship arts event has been staged in Hong Kong for 14 consecutive years. It continued even during the pandemic by switching to an online format. Many art lovers, collectors and visitors have long set aside this time of the year to visit Hong Kong and attend this renowned art fair, while exploring the city and enjoying its culinary delights. A number of major conferences and investment forums targeting family offices and high-net-worth individuals have also been scheduled to take place in Hong Kong at this time, allowing financial conferences and cultural and arts events to reinforce each other and create synergy.

Yesterday, I paid a visit to Art Basel, where participating artists and gallery directors told me that this year had seen an increase in attendance, with better art sales. They value Hong Kong’s openness and inclusiveness, its distinctive culture that bridges the East and the West. They regard Hong Kong as an ideal platform for expanding into the regional and even global market.

At the Wealth for Good in Hong Kong Summit hosted by the HKSAR Government early last week, representatives from a number of family offices told me that their stay in Hong Kong would be longer this time as they would like to attend the art fairs to be held immediately afterwards. They were keen to gain a deeper understanding of the rich cultural heritage underpinning Hong Kong’s status as an international financial centre.

Art is an expression of human thought and emotion, fostering connections across geographies, cultures and eras. Works of art also carry transaction value and can generate high value-added services and industries. Hong Kong is among the world’s top three art trading centres. To solidify Hong Kong’s brand as a premier events destination in this area, we have entered into a five-year collaboration arrangement with the organiser of Art Basel, thereby reinforcing Hong Kong’s position as the exclusive host city in the region.

We will continue to promote a wide range of major events covering finance, arts and culture as well as sports to attract more high value-added visitors and to offer members of the public a wider range of cultural, leisure and entertainment programmes. Following this month’s LIV Golf, major tournaments such as the Hong Kong Sevens and the UCI Track World Cup will be held in Hong Kong next month.

Major events and sporting competitions are injecting greater momentum into the tourism sector. As of 27 March, visitor arrivals have exceeded 13.7 million so far this year, representing an increase of around 17% year-on-year. The recovery of the tourism sector is gaining traction, lifting sentiment in the domestic market. Together with the continued improvement in the stock market and the residential property market, this has supported continued growth in sectors such as catering and retail, further strengthening market confidence. Against this favourable backdrop, the total retail sales value for February—scheduled for release this week—is expected to record a solid increase and achieve year-on-year growth for the tenth consecutive month, reflecting the strengthening local consumption momentum.

Hong Kong’s overall economy continues to improve. On the export front, Hong Kong’s merchandise exports surged by nearly 30% year-on-year in value terms in the first two months of the year, extending growth for 24 consecutive months and exceeding market expectations. This was mainly driven by increased exports of electronic products to the Mainland and ASEAN. It reflects that external demand is steadily recovering, and Hong Kong is playing a pivotal role as a “super connector” amid the reconfiguration of regional production and supply chains. Investment also maintained growth: the Purchasing Managers’ Index (PMI) in February rose to its highest level in nearly three years and stayed in the expansionary zone for the seventh consecutive month, indicating increasing confidence among businesses on the operating environment and future prospects.

In the residential property market, both prices and transaction volumes rising have continued their uptrends so far this year. Over the first two months, the flat price index recorded a cumulative rise of about 2.6% , marking nine consecutive months of increases. Average monthly transaction volume was 18% higher than the monthly average last year, at more than 6,100 transactions per month—a favourable performance, alongside positive and vibrant market sentiment.

Hong Kong’s economy is demonstrating solid resilience and momentum; public finances are also continuing to improve. The Government will pursue a dual-track approach of “AI+” and “Finance+” to drive upgrading and transformation across industries and to cultivate new growth engines. These efforts will help reinforce the market’s positive expectations on Hong Kong’s economy, though the external environment remains challenging. In my recent engagements with domestic and international political and business leaders, representatives of international organisations, and rating agencies, many have noted the improving economic and fiscal circumstances in Hong Kong, while also paying close attention to the potential impact of rapidly shifting global landscape.

Indeed, the ongoing conflict in the Middle East, heightened geopolitical uncertainty, and sharp rises in fuel prices are weighing on the global economic outlook. How to diversify investment allocations and strengthen the security of energy, trade and production and supply chains have become a core concern for businesses, investors and governments worldwide.

We are closely monitoring the situation in the Middle East and the potential impact of rising oil prices. In the short term, because Hong Kong’s economy is services-oriented and the share of merchandise exports to the Middle East is relatively small, the direct impact is limited for now. While global investment sentiment may be affected, Hong Kong’s financial markets have continued to operate smoothly and orderly, with stable and ample liquidity.

In the medium term, if the conflict persists, it will inevitably affect the global macroeconomic environment, interest rate trends and capital flows. Hong Kong’s energy supply remains relatively stable, supported by the strong backing of the country.

However, any rise in fuel and energy costs could impose additional burdens on the shipping, logistics and other related sectors in the economy. The HKSAR Government is closely monitoring and assessing market conditions.

The country’s steady development remains Hong Kong’s strongest support. Amid a complex external environment, our country has maintained strong strategic resolve and pursued stable, predictable and open economic and trade policies, serving as a “cornerstone of certainty” for the global economy. In recent years, rapid progress in areas such as artificial intelligence, robotics and new energy—and sustained efforts to advance emerging and future industries—has created opportunities and optimism for investors around the world and further enhanced the willingness of all parties to deepen cooperation. Hong Kong’s distinctive role as a “super connector” and “super value-adder” will become increasingly prominent.

With local economic conditions improving steadily, the country’s steadfast support is the “ballast stone” of Hong Kong’s economic development—helping us better withstand external headwinds and stay on a steady course.

March 29, 2026

The Director of the Hong Kong and Macao Work Office of the Communist Party of China (CPC) Central Committee and the Hong Kong and Macao Affairs Office of the State Council, Mr Xia Baolong, has shown great care and support for Hong Kong's development. He has also provided important guidance on Hong Kong's efforts to proactively align with the 15th Five-Year Plan. Central ministries and financial regulators have attached great importance to Hong Kong's unique functions and positive roles in contributing to the nation's vision of becoming a financial powerhouse, and have consistently offered strong support.

We have been deeply impressed by the care, understanding and support for Hong Kong shown by various ministries and institutions. We have also recognised that only by having a more accurate understanding of the direction, priority areas and strategies of the country's development can Hong Kong accelerate its integration into and service of the overall national development, and make the most of its own strengths.

The country is accelerating its high-quality development and high-level two-way opening up through new quality productive forces, while upholding the principles of win-win co-operation and inclusive development. This commitment is a right one. As a two-way gateway linking the country with the world, Hong Kong's roles and functions as a "super connector" and "super value-adder" will become increasingly important amid today's complex international environment. Sustained efforts are required to further solidify Hong Kong's distinctive international role as a global connector, while strengthening connectivity and synergy with the Mainland. Recently, the Hong Kong Trade Development Council, together with business chambers from Hong Kong and the Mainland, held a seminar in Beijing on the 15th Five-Year Plan and new opportunities for Hong Kong, facilitating more in-depth discussions and exchanges on these issues.

In fact, with escalating international geopolitical conflicts and soaring energy prices, the global economic outlook has become even more uncertain. Enhancing trade flexibility, strengthening the resilience of industrial and supply chains, and promoting more proactive bilateral and regional co-operation have become universal aspirations. This is particularly important for enterprises planning cross-border business expansion.

The China Development Forum 2026, which opened this morning in Beijing, clearly reflects this shared vision through its theme: "China in its 15th Five-Year Plan Period: Advancing High-Quality Development and Creating New Opportunities Together". Key discussion topics include expanding consumption, taking forward green transition, Healthy China, technological innovation and future industries, all of which are issues of interest to global businesses. This afternoon, I will take part in a thematic session at the Forum to share Hong Kong's contributions to the global green transition. In particular, as energy resilience has become a real and urgent issue worldwide, Hong Kong's strengths in green finance and green technology will have a broader room for growth.

The China Development Forum has brought together hundreds of international business leaders, academics and think tank representatives. Over the past few days, I took part in exchanges with guests from different places and markets, who all agree that Hong Kong, as an energetic city, is entering a period of strategic opportunity. Compared with other financial centres, Hong Kong has solid security backing from the country and the free port status under the "one country, two systems" framework. Amid an intricate and rapidly changing geopolitical landscape, Hong Kong has been increasingly viewed by investors, capital and talent as a rare "safe haven" and investment destination, with funds, enterprises and talent converging at an accelerated pace.

Data also speak for themselves. The total deposits in Hong Kong's banking system, after rising by 11.8% for the whole of last year, have continued to grow since the start of this year, with the total now exceeding $19 trillion. In the first two months of this year, the average daily turnover in Hong Kong's stock market rose by 17% year-on-year to more than $260 billion, with amounts exceeding $300 billion on multiple days in March. Last year, the number of companies established in Hong Kong by enterprises from the Mainland and overseas increased by 11%. Visitor arrivals in the first two months of this year were near 10 million, a substantial year-on-year increase of 18%. These figures underscore Hong Kong's unique attractiveness and international character.

We must grasp this window of opportunity, accelerate Hong Kong's own high-quality development, and help the international community better understand the city's distinctive strengths and opportunities. This week, Hong Kong will host a series of conferences from finance to technology, including the fourth Wealth for Good in Hong Kong Summit organised by the HKSAR Government. The summit will bring family office decision-makers and successors from around the world to Hong Kong, allowing them to experience for themselves the city's charm and explore investment opportunities here. It will help advance Hong Kong's development into the world's largest cross-boundary asset and wealth management hub.

We are pursuing a strategy to foster the synergistic development of "AI+" and "Finance+". In particular, the development and application of open-source frameworks in artificial intelligence (AI) will help Hong Kong pool talent and technologies from across the globe. On the hardware foundation of open-source frameworks, the RISC-V instruction set is viewed as a mainstream in future. Last week, the Hong Kong Investment Corporation Limited, together with a number of leading enterprises and institutions, formally launched the RISC-V Alliance to accelerate the building of the related industry and ecosystem, and to promote international collaboration. In addition, agentic AI has recently become a hot topic of discussion. This week, Cyberport will host the first Agentic AI Innovation and Security Forum to explore ways to ensure safe applications while fostering robust development.

All these are initiatives outlined in the Budget last month and are being implemented. On local talent development, I proposed in the Budget to pool the strengths of technology companies, tertiary institutions and technology parks to provide cutting-edge AI training for both our students and teachers. Earlier, I attended an event jointly organised by a leading technology company and a local university, where I witnessed the industry and academia joining hands to promote the wider adoption and effective use of AI in Hong Kong. Collaboration of this kind allows young people and educators to have early access to cutting-edge technologies, laying a solid foundation for AI to empower the development of all sectors in Hong Kong in future.

March 22, 2026

Taking the development of a modernised industrial system as an example, the Plan clearly sets out directions such as upgrading traditional industries, fostering emerging industries, planning ahead for future industries, and promoting high-quality and efficient development of the service sector. It also underscores the importance of advancing original innovation and achieving breakthroughs in core technologies in key fields, thereby accelerating self-reliance and strengthening science and technology capabilities. Regarding the development of Digital China, the Plan aims to build a strong digital and intelligent foundation, co-ordinate computing power and algorithmic models, and deepen the use of data resources to support the "AI Plus" initiative and drive progress across all sectors.

As a Special Administrative Region, Hong Kong must continue to study and fully grasp the guiding principles of the National 15^th Five-Year Plan. By understanding the country's macro-level approach, we can align with the Plan more effectively; and by appreciating its development needs, we can better contribute to overall national development. It is important that we leverage Hong Kong's unique strengths – including the institutional advantages of "one country, two systems", the common law system, our role as an international platform, a strong cluster of leading enterprises and high-end talent, and our functions as an international financial centre – to unlock greater growth potential.

Hong Kong, with its world-class financial markets and professional services, is well positioned to provide stronger support for accelerating the development of a modernised industrial system and for deepening the integration of technological and industrial innovation. We should step up efforts to enhance our full-chain fundraising ecosystem, intellectual property financing, and testing and certification capabilities. We should also strengthen technology services tailored to the needs of technology companies throughout their development journey. To promote co-ordinated regional development, we must work with our sister cities in the Guangdong–Hong Kong–Macao Greater Bay Area. Together, we will advance concrete, feasible measures on regulatory and regime alignment and on facilitating cross-boundary flows of innovation elements.

Under the Chief Executive's leadership, the preparatory groups previously established by various policy bureaux have been converted into formulation teams to align with the National 15^th Five-Year Plan. Working at full speed, they will compile Hong Kong's first-ever five-year plan this year. With clear and shared goals, bureaux will coordinate closely to develop a comprehensive action plan. Throughout the process, we will strive to combine an effective government with an efficient market, move beyond conventional approaches, embrace innovation, and pursue reform with determination—advancing our work with a proactive and pragmatic mindset.

Participating in national development is both Hong Kong's responsibility and a significant opportunity for its future. With its extensive scope, the National 15^th Five-Year Plan clearly sets out how Hong Kong can better leverage its strengths over the next five years. Our objectives are clear, and our tasks are well defined. We must step up our efforts—driving policy implementation with determination and committing all necessary resources—to deliver high-quality development that is goal-oriented and results-driven.

March 15, 2026

The current international landscape is fraught with turbulence and uncertainties, with geopolitics becoming increasingly complex and volatile, and global economic momentum slowing down. That said, under the strong leadership of the Central Government, our country has stood up to external challenges and pressure, maintained overall economic stability and progress. The outlook of our country, which always focuses on managing our own affairs well, remains highly promising in terms of policy consistency, technological innovation and integrated sustainability.

The intricate global landscape, compounded by regional conflicts, underscores an important message: to safeguard its strategic initiative amid accelerating changes unseen in a century, our country must be strong and prosperous, with great technological capability and economic strength. This also underlines the importance of understanding the strategic direction of the 15^th Five-Year Plan, making it a guiding principle and aligning proactively with its strategies. Accordingly, we will press ahead with formulating and implementing Hong Kong's own five-year plan to drive the city towards high-quality development.

As an international hub for finance, shipping and trade, Hong Kong possesses a wealth of talent and enjoys the distinctive advantage of being backed by the Motherland and connected to the world. During this golden strategic period under the 15^th Five-Year Plan, Hong Kong is well placed to do even more. Thanks to its unique institutional strengths and international character under the "one country, two systems" framework, Hong Kong has long served as a platform for and strategic partner of international investors entering the Mainland market. We are also an ideal gateway for Mainland enterprises to go global. Hong Kong can make positive contributions to the high-level opening-up under the dual circulation strategy, in respect of leveraging the Mainland's vast market and mobilising international resources.

The country is striving to develop new quality productive forces and advance future industries such as artificial intelligence (AI), low-altitude economy and biomedicine. Hong Kong can fully leverage its international research platforms, professional services and capital markets, both to attract global innovation resources to the country and to inject fresh impetus into the local economy. We are advancing the development of the Northern Metropolis at full speed, with a particular focus on major projects such as the Hong Kong Park of the Hetao Shenzhen–Hong Kong Science and Technology Innovation Co-operation Zone and the San Tin Technopole. These initiatives will deepen innovation and technology collaboration across the Guangdong–Hong Kong–Macao Greater Bay Area, enabling better integration of the factors of production, including technology, capital, talent and materials, and maximising the benefits of our connectivity with the Mainland and the world.

In the financial sector, we are committed to solidifying and enhancing our strength as an international financial centre. More importantly, while ensuring security and effective risk control, we will pursue a "Finance+" approach to empower a broad range of industries, accelerate innovation and technology development as well as commercialisation, and enable finance to better serve the real economy in unleashing its potential. Specific priority areas include: improving financing support for technology start-ups and developing "patient capital"; strengthening Hong Kong's role as a premier offshore Renminbi business hub; advancing green finance; and building a vibrant ecosystem for gold and commodities trading.

In preparing the Budget which was delivered recently, we had given deep thoughts to the trajectory and overarching macro direction of development from the 14th Five-Year Plan to the 15^th Five-Year Plan. Our goal is to align Hong Kong's strengths proactively with the broader national development agenda. Against this backdrop, we set "AI+" and "Finance+" as the main themes. To meet the challenges brought by the rise of "AI+", we will roll out AI Training for All through multiple channels. Through partnership with local universities and professional bodies, we will provide structured AI skills training for working professionals across different age groups and sectors. This will ensure that our workforce can adapt to, and benefit from, future shifts in the economic structure. These initiatives represent our response to the national "AI Plus" initiative, while also securing for us an early advantage in technological competition and developing new quality productive forces. At the same time, they will help our working population adapt to and capture new job opportunities emerging from "AI+", bringing investment in technology closely together with investment in people.

The 15^th Five-Year Plan sets a clear direction for Hong Kong's future and strengthens confidence across the community. It brings vast opportunities, and Hong Kong has much to contribute—and much to achieve. We need concerted efforts from the community, so that by better integrating into and serving the country's overall development, Hong Kong can secure even stronger growth for itself.

March 8, 2026

A major focus of this Budget is to press ahead with the synergistic development of “AI+” and “Finance+”. We are now at a pivotal juncture in technological innovation. Artificial intelligence (AI) is not only a core technology for the future, but also a transformative force capable of reshaping every sector and industry. Accelerating “AI+” development is, in practice, about transforming and upgrading our industries with competitive edge and scaling up emerging ones. As an international financial centre, Hong Kong must deeply integrate cutting-edge AI technologies into its services. This will expand and strengthen our financial services while extending AI technologies into a wider range of application scenarios, with a view to achieving two-way empowerment and positive interaction. During this process, deep integration and rapid execution are of paramount importance.

“AI+”

On the “AI+” front, we are pursuing a multi-pronged approach. Regarding the top-level design, I will establish and chair the Committee on AI+ and Industry Development Strategy, bringing together experts, academics and business representatives to formulate strategies for accelerating AI-powered growth across different industries, thereby serving as a catalytic force for industrial transformation.

We are also pressing ahead with the development of multiple industrial parks in the Northern Metropolis—including the Hong Kong Park of the Hetao Co-operation Zone, San Tin Technopole, and the Hung Shui Kiu Industrial Park—and accelerating the build-out of computing-power infrastructure at the Sandy Ridge data facility. These efforts will support R&D and application of frontier technologies such as AI as well as life and health technologies, while providing space for high-end manufacturing. Our overall objective is to attract more high value-added segments of the innovation and technology value chain—R&D, pilot production, commercialisation, and advanced manufacturing—to establish a presence in Hong Kong, thereby generating greater economic value and fostering higher-quality industries.

Talent development is equally critical to the success of “AI+”. We must closely align investment in infrastructure with investment in people. Accordingly, one Budget measure is to allocate $50 million to support public institutions, technology companies and tertiary institutions in organising activities to promote AI learning, application and responsible use by all, thereby raising the overall AI literacy across the community.

“Finance+”

When “AI+” converges with “Finance+”, the resultant synergistic effect will be enormous and far-reaching. This is not merely a simple addition of two forces, but rather a mutually reinforcing “flywheel effect”, as well as a development strategy that is tailored to local conditions and built on deep integration with one another. As the two forces keep driving each other forward, new values and opportunities will be created.

Several aspects of “Finance+” merit emphasis. First, finance provides a robust foundation for technological innovation and real-economy development. Hong Kong’s vibrant financial market and active capital ecosystem can offer end-to-end financing support—from venture capital and private equity through to initial public offerings (IPOs). Over the past year, Hong Kong’s stock market has performed strongly. Many leading Mainland technology enterprises are making full use of Hong Kong to raise international capital, accelerating their global expansion and strengthening overseas industrial and supply-chain networks.

Emerging and future industries highlighted in proposals for the National 15th Five-Year Plan will likewise require sustained capital support. In aerospace, for example, the Budget announces that the Office for Attracting Strategic Enterprises will take the lead in identifying suitable aerospace companies to develop in Hong Kong. HKEX will also review relevant listing requirements to facilitate and attract more aerospace companies to list in Hong Kong.

Second, innovation within financial services itself can help the real economy scale up, expand capacity and address pain points. Advances in AI, blockchain and other technologies are continuously enhancing financial services, enabling more efficient and convenient transaction systems and opening new channels for trade, fundraising, financing and risk management. Financial innovation will also create substantial opportunities for the industry, helping market participants explore new markets and develop new products.

Third, the development of technology services. Professional services tend to track closely fast-growing industries and economic activities. As AI drives industrial transformation and upgrading, and integrates deeply with finance, market demand for new professional services will spring up. Examples include valuation and risk assessment of technology assets and data assets, as well as related accounting, auditing, and certification services.

It is foreseeable that we will need enterprises that are more proficient in the application of AI, as well as financial and professional service providers that are more conversant in AI and innovation and technology. This will enrich Hong Kong’s role as an international financial centre, while enabling the combination of finance with technological and industrial innovation to support the building of our country’s modern industrial system.

Leveraging Hong Kong’s strengths in accordance with local conditions and proactively aligning with national development strategies are essential to achieving better development for our city. The two main themes of “AI+” and “Finance+” proposed in the Budget aim to help Hong Kong scale new heights in high-quality development in the course of accelerated economic transformation.

March 1, 2026

However, the strategies and pathways for achieving our goals – and the allocation of resources – are often shaped and constrained by current realities. We must set priorities, and difficult choices may have to be made. We have listened carefully to views and ideas from the community, and have adopted a holistic approach in preparing the Budget. In our proposals, we have sought to strike an appropriate balance among competing needs and considerations.

Building on the sustained economic growth recorded last year, Hong Kong has made a good start this year. Nevertheless, amid a volatile external environment and uncertainties arising from economic transformation, we must exercise fiscal prudence. We will take into account the needs of our society in the short, medium and long term, while maintaining adequate reserves to meet unforeseen circumstances.

The colour of this year’s Budget cover is purple, symbolising Hong Kong’s strengthening economic momentum amid a rapidly changing external environment. Let us work together, with unwavering dedication, to advance higher-quality, more inclusive social and economic development for Hong Kong.

February 22, 2026

The Food and Environmental Hygiene Department has set up 14 Lunar New Year Fairs across various districts, each with unique local characteristics. Among them, the Victoria Park Fair remains the largest and most vibrant. Visitors were seen carefully selecting orchids, while others were drawn to the beauty of peach blossoms. The knowledgeable guidance of stallholders helped us choose and take care of festive flowers.

While speaking with several stall operators, many shared that this year's fair felt livelier and more vibrant than the last one. Notably, some stalls were run by tertiary and secondary school students, who brought fresh energy and creativity to the event. These young entrepreneurs designed a range of horse-themed festive products and catchy slogans, blending seasonal charm with inventive ideas. From warming mugs and cushions to decorative items and handwritten couplets, their creations were not only visually appealing but also emotionally resonant — bringing joy to shoppers. Our young people are truly bursting with creativity!

Hong Kong's Chinese New Year celebrations encapsulate a unique blend of tradition and modern flair. With a wide array of large-scale events and performances, both residents and visitors have plenty to enjoy. Since the beginning of the year, visitor arrivals have continued to climb. From January 1 to last Friday, the total number of visitors reached 7.23 million — a 9.6% increase year-on-year — with overseas arrivals rising by 16.4%. During the upcoming Spring Festival Golden Week, the number of Mainland visitors to Hong Kong is expected to reach 1.43 million, with daily arrivals projected to grow by about 6% compared to last year.

This coming Tuesday marks the first day of the Chinese New Year. During the three-day public holiday, a range of celebratory activities awaits. The dazzling float parade in Tsim Sha Tsui, under the theme of "Best Fortune. World Party.", will feature 16 local and overseas performance groups, 13 of which are making their debut in Hong Kong. Besides performances from the city's two major theme parks, this year's parade will also feature appearances from popular IP characters such as Labubu and Molly. The second day will feature a spectacular fireworks show under the theme of "Prosperity Gallops Across Hong Kong", with 31,888 fireworks lighting up the sky, accompanied by lighting effects for an enhanced viewing experience.

From the New Year Raceday on the third day to the Chinese New Year Cup 2026 football match on the fifth day, and the bustling traditional temples across districts, Hong Kong will be filled with celebrations throughout the festive period.

As we bid farewell to the Snake and welcome the Horse, may the New Year bring you great fortune, good health, blooming prosperity and boundless happiness!

February 15, 2026

In fact, institutions and organisations across different sectors have shown keen interest in how Hong Kong can better seize the opportunities arising from the 15th Five-Year Plan. They have been organising different forums and seminars, exploring ways to align with and contribute to the national development strategies more proactively while seeking broader development prospects for their respective industries.

Recently, I attended a forum organised by the Hong Kong Productivity Council (HKPC) under the theme "Bridging Opportunities with the 15th Five-Year Plan". The event brought together over 500 representatives from the Government, the business community, and various sectors both on-site and online. It was also livestreamed on Mainland platforms and received an enthusiastic response. Both local and overseas industry representatives expressed interest in leveraging Hong Kong as a springboard to identify partners for collaboration and to promote industry-wide cooperation—jointly advancing the deep integration of technological and industrial innovation.

At the forum, the sharing by several I&T enterprises which recently established a presence in Hong Kong was particularly significant. A representative of a Mainland I&T enterprise, introduced to Hong Kong through the Office for Attracting Strategic Enterprises (OASES), noted that beyond convenient fundraising and financing and talent aggregation, Hong Kong's recent vigorous efforts to develop a smart city were equally crucial. These efforts have provided application scenarios that align with international rules for their technologies, allowing them to adapt regulations and standards, make technical adjustments, and conduct market promotion in Hong Kong—paving the way for overseas expansion.

In addition, another representative from a microelectronics enterprise with a presence in Hong Kong shared that they had successfully applied for funding under the New Industrialisation Acceleration Scheme to establish a new production line in the city. This line focuses on the production and verification of semiconductor equipment, with a total investment amount exceeding HK$800 million. In addition to introducing cutting-edge technologies and nurturing talent, these production lines help attract upstream and downstream supply chain partners to develop in Hong Kong—contributing to the creation of a relevant industrial ecosystem and speeding up industry development.

Under the leadership of the HKSAR Government, different departments and public organisations are actively working in close partnership, combining efforts to accelerate the cultivation of Hong Kong's new quality productive forces. Whether it is supporting Mainland I&T enterprises to "go global", attracting them to establish R&D centres in Hong Kong, or fostering the clustering of target enterprises in the city, the efforts are yielding increasingly evident results.

HKPC is one such example. As a member of the HKSAR Government's "Mainland Enterprises Going Global Taskforce," HKPC operates "The Cradle – Going Global Service Centre" (The Cradle), which focuses on offering a wide range of funding support and complementary services to enterprises pursuing international expansion. These include services in smart manufacturing, technical research and assessment, international standards and testing, professional services, as well as training and study mission, etc. supporting enterprises in entering global markets more efficiently. Since its establishment in April last year, The Cradle has received indication of interest from over 350 enterprises, with more than 100 projects progressing to the stage of concrete follow-up. Including projects already supported by HKPC prior to The Cradle's formation, the cumulative project total now exceeds 450.

To further drive the clustering of I&T enterprises, we are stepping up the efforts to attract enterprises to set up in Hong Kong. In recent years, the Innovation, Technology and Industry Bureau, OASES, Invest Hong Kong, etc. have been working hard in this regard. For example, over the past three years, OASES has attracted more than 100 enterprises to establish a presence in Hong Kong, with expected total investment amount exceeding HK$60 billion, creation of 22,000 R&D or management positions, and occupancy of 1.85 million square feet of space.

In advancing industrial development, we should also leverage Hong Kong's strengths as an international financial centre—empowering industries to grow through financial support. Hong Kong's full-chain capabilities in fundraising and financing as well as financial services enable the city to meet the needs of I&T enterprises at different development stages. Last year, Hong Kong's IPO market ranked first globally: 119 companies were listed and raised over HK$280 billion, with sectors such as information technology, biotechnology, new energy, and advanced industry accounting for approximately 70% of the funds raised. The Hong Kong Investment Corporation Limited (HKIC) has played a strategic role in channeling patient capital into smaller, early-stage, long-term and hard and core technology projects. To date, the HKIC has invested in more than 170 projects, with each dollar invested attracting over six dollars of long-term capital in the market.

Through the concerted efforts of all sectors over the past few years, Hong Kong's I&T development has been gaining stronger momentum. We will fully seize the opportunities presented by the 15th Five-Year Plan, taking a more proactive approach to integrating into and contributing to the overall national development, promoting the deep integration of technological and industrial innovation, further strengthening the link between technology and industry, and driving our economy forward towards higher quality, greater value-added, and enhanced diversification.

8 Feb 2026

Looking back at January, Hong Kong stocks delivered a strong performance. The Hang Seng Index closed at 27,387 points last Friday, marking a monthly gain of nearly 7%. Average daily turnover exceeded HK$272 billion, representing a year-on-year increase of 90%. Despite heightened external volatility, Hong Kong’s financial system remained robust and functioned smoothly, with total bank deposits surpassing HK$19 trillion.

The developments in January have further reinforced market expectations that global financial conditions will remain turbulent this year. In particular, unpredictable geopolitical shifts are likely to influence both the direction and velocity of international capital flows. In the face of inevitable volatility and external market fluctuations, it is essential that we maintain strong buffers within our financial system and allocate sufficient fiscal resources to effectively respond to potential shocks.

Last week, the Government released its fiscal position for the first nine months of the 2025–26 financial year (April to December), recording a consolidated surplus of HK$43.9 billion. This outcome reflects, in part, seasonal factors—including the peak collection period for profits tax and salaries tax—as well as proceeds from bond issuance. As in previous years, Government revenue is expected to taper off between January and March, while recurrent public expenditure continues at a steady pace.

Our fiscal position is improving, both in the Consolidated Account and the Operating Account which reflects recurrent revenue and expenditure. On the operating front, the strong financial market performance last year—particularly the doubling of average daily turnover in the stock market to around HK$250 billion—has resulted in higher-than-expected stamp duty revenue. Coupled with ongoing fiscal consolidation efforts that have effectively contained the growth of government spending, we now expect the Operating Account to return to surplus within this financial year (2025–26), one year ahead of the original schedule. For the Capital Account, the Government will continue to scale up infrastructure investment, including in strategic initiatives such as the Northern Metropolis. As such, bond issuance will remain necessary to support such commitments.

That said, even with an improving fiscal position, we must continue to manage public resources with prudence, ensuring that the growth of public expenditure does not exceed the growth of revenue. During the Budget consultation, representatives from various sectors and members of the public across different segments of the society have expressed calls for enhanced support to address their needs. At the same time, in light of the profound challenges and opportunities presented by technological transformation—particularly in areas such as artificial intelligence—the market expects the Government to scale up investment, accelerate the development of high value-added industries, and create more quality job opportunities. These efforts are essential to driving economic growth and ensuring its benefits are more broadly and equitably shared across the community.

The aspiration to build a vibrant economy and advance development is widely shared across the society. Growing the economic pie will equip us with more resources to address a broad range of social needs more effectively. With the staunch support of our country and the concerted efforts of the Government and the community, Hong Kong’s economy grew by 3.5% in 2025, outperforming the initial forecast. Overall investment also picked up notably, registering a year-on-year increase of 10.9% in the fourth quarter, marking the fourth consecutive quarter of positive growth and resulting in an increase of 4.5% for the year as a whole.

Boosted by a series of mega events and a rebound in asset markets, private consumption increased by 1.6% last year, reversing the decline recorded in the previous year. The value of retail sales for December, scheduled for release this week, is also expected to show continued growth, with the pace of expansion slightly accelerating compared to the preceding month.

Confidence among overseas enterprises and investors in Hong Kong continues to strengthen. Last year, the number of companies in Hong Kong with parent companies in the Chinese Mainland and overseas increased by more than 10%, surpassing 11,000. The start-up ecosystem also expanded, with the number of start-ups rising by over 10% to exceed 5,200. According to recent surveys conducted by foreign chambers of commerce, a majority of member companies expressed optimism about Hong Kong’s business outlook, with the proportion holding positive expectations reaching a recent high. During the 19th Asian Financial Forum last week, I met with political and business leaders from Europe, the US and the Middle East, as well as representatives from the Mainland and multilateral organisations. Across the board, they shared positive views on Hong Kong’s outlook and recognised the emergence of new opportunities in our market.

As the global political and economic landscape continues to evolve rapidly, risks and volatility in the year ahead are expected to remain significant. We will press ahead with efforts to align with the country’s 15th Five-Year Plan and accelerate our integration into, and contribution to, the nation’s overall development. To this end, we must leverage finance to power technological innovation and support the upgrading of traditional industries, promote deeper integration between innovation and industrial development, and enhance the training for the workforce—particularly in skills development and technology application. These efforts will help raise the quality and expand the scale of Hong Kong’s economic growth.

1 Feb 2026

Over the past year or so, we have all witnessed and experienced the intensification of unilateralism and hegemonism, now reaching a critical point where choices must be made. Against this backdrop, this year's meeting exhibited a distinct yet more profound tension compared with previous ones: given the severe disruption to the existing international order, leaders from around the world raised many questions about where the world is heading and what direction it should take, while also putting forward their own proposals. Whether advocating for Europe's strategic independence or calling for "middle powers" to act together, these voices all point toward diversifying economic relationships — and even security relationships — in order to strengthen strategic resilience.

Indeed, fragmentation and divisions in the international community were more pronounced at this Annual Meeting. However, for the vast majority of countries and regions, the world must not revert to the "law of the jungle" where the strong prey on the weak; instead, mutual respect, seeking common ground amid differences, and shared development remain as deep-seated aspirations of the people. Many political and business leaders I met at the meeting expressed a common view: as the world is now confronting complex development and governance challenges, we should work together to uphold multilateralism and resolve issues through dialogue and cooperation.

In his address at the Annual Meeting this year, Vice Premier He Lifeng of the State Council highlighted four key points: firmly supporting free trade and jointly advancing a universally beneficial and inclusive economic globalisation; firmly safeguarding multilateralism, making the international order more just and equitable; adhering to win-win cooperation, working to make the "pie" bigger and resolve development challenges together; as well as upholding mutual respect and equal-footed consultation, making good use of dialogue to properly manage differences and resolve problems. He also noted that China would actively expand domestic demand, steadfastly widen opening-up, accelerate technological innovation, and pursue green development. All these represent China's consistent and unequivocal stance, demonstrating our nation's strategic resolve, as well as policy coherence and predictability.

China's rapid development remained as a focal point of attention at the meeting this year. In fact, with improvements in workforce capabilities, leapfrogging advancement in technology, and people's growing aspirations for a better life, developed economies should recognise that China's previous growth model, which was driven by the exports of labour-intensive products, has been undergoing a qualitative transformation. Its high-end industrial and technological products are rapidly gaining market share internationally. Meanwhile, China's middle-income groups are expanding quickly, offering enormous consumption potentials and creating substantial opportunities for foreign-invested enterprises. In observing China, they are undergoing a "paradigm shift."

Beyond geopolitics, another focus of the Annual Meeting was the direction of technological transformation. During this year's meeting, it was not difficult to see that various countries showed great interest, anticipation and concern regarding the development of cutting-edge technologies and the ways in which technology is profoundly reshaping traditional industries. There is a consensus that the ability to master and advance innovative technologies has become a "make-or-break" factor for sustaining economic momentum and competitiveness. Focal points of discussion included how to leverage artificial intelligence (AI) to support economic growth, and how to address employment challenges arising from AI's development.

At this Annual Meeting, I, together with other members of the "Hong Kong Inc." (including representatives from public organisations, the finance and innovation and technology (I&T) sectors, academia and the media), actively engaged with global leaders through public speeches, roundtable discussions and bilateral meetings, briefing them on Hong Kong's latest developments and publicising its competitive advantages. The continued inflow of international capital into Hong Kong and the positive momentum in its financial markets have captured the attention of these leaders, who expressed strong interest in Hong Kong's steady and promising development outlook. Overall, participants were generally positive about China's and Hong Kong's economic development and prospects—a marked shift from their attitude in the past few years.

As countries around the world adjust their strategies to develop more diversified and resilient economic, trade and industrial and supply chain partnerships, Hong Kong, as a "super connector" and "super value-adder" linking China and the world, is expected to benefit from this trend and open up new opportunities.

Take the I&T industry as an example. Through years of efforts by the HKSAR Government and the industry, Hong Kong has achieved solid progress in areas such as AI and biomedicine, where the global investment community is paying heightened attention to, as investors compete to identify start-ups with the greatest breakout potential. Together with its sister cities in the Guangdong–Hong Kong–Macao Greater Bay Area, Hong Kong possesses one of the most dynamic I&T clusters with multiple top-100 universities, strong research capabilities, a well-developed production system, and a vibrant venture-capital ecosystem—making it an important region that international capital cannot overlook when seeking investment opportunities.

Green transformation is another example. Although some countries are stepping away, the international community is generally sustaining its efforts towards carbon neutrality. China's frontier technologies and vast production capacity in the green energy sector are powerful drivers enabling the implementation of energy transition around the world. Hong Kong can actively strengthen its role as an international green finance centre by further diversifying and innovating green finance products, while channelling more capital into decarbonisation to help narrow the funding gap.

As changes unseen in a century accelerate, and competition among major countries intensifies, we must remain highly vigilant against geopolitical risks and strengthen our sense of preparedness. Equally important is seizing the new opportunities arising from the country's efforts to boost high-level two-way opening-up and advance high-quality development. We should fully leverage Hong Kong's unique advantage of being connected to both the Mainland and the world to create greater room for our own development, while contributing to fostering dialogue and cooperation at the international level.

January 25, 2026

The theme of this year’s Meeting is “A Spirit of Dialogue”, which resonates deeply with the current international climate. Since the beginning of 2026, we have witnessed a troubling rise in unilateralism, protectionism and hegemonism, with some countries even flagrantly infringing on the sovereignty of others to pursue their own economic interests, severely undermining international norms. These actions have seriously eroded mutual trust, and will inevitably have far-reaching implications for the global economy and trade landscape. How to rebuild co-operation through dialogue is an urgent task that political and business leaders worldwide must address immediately. The Meeting will also focus on the paradigm shifts brought by innovative technologies such as artificial intelligence (AI), and how to better invest in people and enhance the skill levels of the workforce.

Amid the rapidly evolving international landscape, Hong Kong’s unique roles as a “super connector” and a “super value-adder” under the “one country, two systems” arrangement have become even more prominent, particularly in the context of a fast-shifting global economic and trade environment. While we continue to strengthen and enhance the efficiency and competitiveness of our traditional pillar industries, it is equally important to foster new drivers of growth. A prime example is the accelerated development of an international gold trading centre.

In recent years, international investors have shown a growing appetite for diversified asset allocations beyond US dollar-denominated holdings. As a result, gold has seen its role further solidified—as a central bank reserve asset, an investment vehicle and a hedge against risk. In 2025, gold prices surged by over 60%, marking the largest annual increase since 1979. By the third quarter of last year, the total value of global gold demand had risen 44% year-on-year, reaching US$146 billion. At the same time, there is strong global demand, particularly in Asia, for more diversified and reliable platforms for gold storage, trading, clearing and even pricing.

With the concerted efforts of the HKSAR Government and industry stakeholders, Hong Kong’s spot gold trading market has become significantly more active. As of last November, the average daily turnover of 99 gold on the Hong Kong Gold Exchange more than doubled year-on-year, reaching HK$2.9 billion. However, spot over-the-counter (OTC) gold transactions in Hong Kong currently require both counterparties to handle the clearing by themselves, which presents clear inefficiencies. To address this, we are expediting the establishment of a central clearing system for gold as a key financial infrastructure. This initiative aims to enhance the reliability and efficiency of gold trading and physical delivery in Hong Kong, lower transaction costs and boost market liquidity. It is our goal to commence trial run within this year, and we will invite the Shanghai Gold Exchange to participate in this important development.

At the upcoming 19th Asian Financial Forum next week, we will sign a memorandum of cooperation with the Shanghai Gold Exchange and announce our latest plans to take forward the establishment of a central gold clearing system—laying the foundation for mutual market access with the Mainland in the future.

The geopolitical landscape is not only changing global asset allocation strategies, but also fundamentally reshaping global trade patterns, restructuring industrial and supply chains, fostering new trade partnerships, and driving the emergence of innovative economic models. Hong Kong must accelerate the upgrading and transformation of its entire trade ecosystem to reinforce and enhance its position as an international trade centre.

While supporting Mainland enterprises in accelerating their pace of “going global”, we are also fast-tracking the digitalisation of Hong Kong’s logistics infrastructure and trade ecosystem. By leveraging innovative technologies and consolidating relevant data in a holistic manner, we aim to enhance the efficiency and management of trade logistics. This will also make it easier for enterprises to secure financing, enabling them to flexibly adjust their business strategies and effectively seize emerging business opportunities.

We are driving progress on multiple fronts. In the area of smart logistics, a major government-led digital infrastructure—the Port Community System—was officially rolled out last week, with participation from over 2,300 companies. Leveraging artificial intelligence and blockchain technology, the system provides one-stop, round-the-clock, real-time cargo tracking, significantly improving transparency and efficiency across Hong Kong’s logistics chain. The availability of more comprehensive and accessible data also opens up new opportunities for innovation in trade finance.

Under the leadership of the HKSAR Government, the Hong Kong Monetary Authority (HKMA), in collaboration with multiple government departments, is actively advancing Project CargoX. By effectively leveraging cargo and trade data and streamlining trade finance processes, the initiative aims to support SMEs in accessing trade financing more easily. This week, we will release the latest CargoX roadmap, built around three strategic pillars: data, infrastructure and connectivity. The roadmap will put forward 20 concrete recommendations to enhance Hong Kong’s digital trade finance ecosystem—paving the way for a more digitalised, efficient and competitive environment.

No matter how the international geopolitical landscape evolves, Hong Kong will remain committed to free and open policies, drawing on our collective strengths and unique advantages. We will continue to enhance the development of our traditional pillar industries through practical and targeted measures. Public consultation on the upcoming Budget is now underway, with a focus on key areas such as empowering the growth of various industries, creating more diverse and high-quality employment opportunities, strengthening public services, and improving people’s livelihoods. In evaluating different proposals, we must take a balanced and holistic approach, carefully considering a range of factors—including the external political and economic environment, the challenges of local economic transformation, the development needs of the community in the short, medium and long term, as well as the importance of managing public expenditure prudently.

January 18, 2026

In fact, feedback from various consultation sessions reflects a general consensus that, from a macro perspective, Hong Kong's economy has been developing steadily in the years following the pandemic. One notable example is the financial sector, which accounts for 26% of our GDP and remains one of our largest industries. The local financial market performed strongly last year, boosting market demand and fostering positive expectations for the sector. On the other hand, the trade sector, which contributes 15% of our GDP, benefited from robust export performance, providing solid support to the overall economy. In addition, a series of mega events attracted more visitors to Hong Kong, injecting energy into the city and creating a vibrant, dynamic atmosphere.

However, geopolitical tensions around the world are intensifying, with unilateralism and hegemonism on the rise. As global uncertainties grow, the possibility of increased market volatility cannot be ruled out. We must stay vigilant and proactively guard against the potential impact of external market fluctuations on Hong Kong's financial markets and capital flows. At the same time, as Hong Kong's economy undergoes transformation, there will inevitably be imbalances and uneven development. Certain industries and residents are indeed facing challenges.

Over the past few decades, Hong Kong's economy has undergone several rounds of transformation. The reform and opening-up of our country, combined with the flexibility, innovation and unwavering efforts of our enterprises and people, have driven continuous progress. The steadfast support from the nation and the steady growth of the Mainland economy remain Hong Kong's strongest pillars. This year marks the beginning of the National 15th Five-Year Plan. The country is advancing high-level two-way opening-up, fostering technological self-reliance and strength, deepening the integration of technological and industrial innovation, and more. These national strategies present new opportunities for Hong Kong as an international centre for finance, trade, shipping, and innovation and technology. To seize these opportunities, our traditional industries must focus on enhancing quality and competitiveness, while emerging sectors should pursue rapid expansion. Together, these efforts will drive Hong Kong's economic development forward with greater momentum and resilience.

In this era of accelerated transformation driven by "AI+", the widespread and high-quality application of technology will be a key determinant of an economy's core competitiveness. A question we must address—through collective wisdom and joint efforts—is how to better harness technology to empower industries, businesses and the public, enabling them to fully benefit from the rapid advancement of AI. By doing so, we can help enhance their creativity and competitiveness, while advancing new business models and markets.

As we undergo economic restructuring, it is equally important to focus on cultivating new engines of growth and creating more diverse, high-quality employment opportunities—ensuring that the benefits of development are more widely shared across various sectors of the society.

High-quality economic development provides a solid foundation for addressing the challenges and needs that emerge throughout the development process. At the same time, we must continue to exercise prudent management of public finances. Last year, we implemented a reinforced fiscal consolidation programme, which helps contain the growth of government expenditure. With the support of a buoyant financial market, the overall revenue—including stamp duty receipts—has increased, enabling the Government to achieve an operating surplus earlier than anticipated. However, the total government expenditure continues to rise. Spending on education, healthcare and social welfare now accounts for nearly 60% of recurrent government expenditure. It is therefore essential for the Government to allocate resources with precision and enhance efficiency, ensuring that our limited public resources are used wisely and that public services remain financially sustainable.

We must continue to invest proactively in the future—particularly by accelerating the development of the Northern Metropolis, seizing emerging opportunities, and strengthening the drivers of long-term growth. As returns on infrastructure investments typically materialise gradually after project completion, the capital account is expected to remain in deficit this year due to increased capital works expenditure. To support ongoing infrastructure development, we will leverage market forces, including the issuance of bonds at an appropriate scale. Currently, the HKSAR Government's outstanding debt stands at approximately 12% of GDP—a level that remains very healthy by international standards.

In the coming month and so, we will continue to engage in extensive consultations and in-depth dialogue with stakeholders across various sectors, drawing on the collective wisdom of the community. Our goal is to ensure that the upcoming Budget more effectively unleashes Hong Kong's economic potential, strengthens development momentum, and delivers tangible benefits to the public. Together, we can build a better and brighter future.

January 11, 2026

On the first trading day of the year, a strategic enterprise – among the first batch of such companies attracted to Hong Kong – was listed on the Hong Kong Stock Exchange. Recognised as one of the "Four Little Dragons of Domestic GPUs (Graphics Processing Units)", the company is also Hong Kong's first listed GPU stock. As China advances towards high-level self-reliance and strength in science and technology, Hong Kong's open and international financial market is well-positioned to provide strong funding support for Mainland frontier tech enterprises. In recent years, we have continuously pushed forward stock market reforms, including the introduction of Chapters 18A and 18C, as well as the Technology Enterprises Channel (TECH) announced in last year's Budget. These initiatives have accelerated the optimisation of Hong Kong's stock market structure in line with the rise of new quality productive forces, while also meeting growing demand from both domestic and international investors for access to cutting-edge technology sectors. As of the end of last year, more than 400 new economy companies had listed in Hong Kong. Although they accounted for only around 15% of all listed firms, they represented approximately 30% of total market capitalisation and turnover. It is expected that more frontier tech companies will seek listings in Hong Kong in the year ahead.

We not only welcome these companies to list and raise capital in Hong Kong, but also encourage them to establish a broader presence in the city – by setting up research and development (R&D) centres, commercialising research outcomes, and developing advanced manufacturing facilities. This enables full leverage of Hong Kong's strengths in foundational research and its rich pool of international scientific talent. Through close collaboration and accelerated growth, these enterprises will further enrich and strengthen Hong Kong's I&T ecosystem and related industries. At the same time, we support them in establishing regional or international headquarters in Hong Kong, using the city as a strategic springboard to expand into global markets, including Southeast Asia and beyond.

Take the newly listed GPU company as an example. During a visit to Shanghai in 2023, I met with the company's leadership and highlighted the many advantages Hong Kong offers under the "one country, two systems" framework. Later that year, the company became one of the first strategic enterprises attracted to Hong Kong. It has since established both an R&D centre and its regional headquarters at Cyberport.

Over the past two years, the company has collaborated with local AI firms and research institutions to co-develop innovative solutions. Last year, it launched a strategic partnership with Cyberport, supporting the establishment of an Artificial Intelligence Laboratory and actively contributing to the development of Hong Kong's computing infrastructure through Cyberport's AI Supercomputing Centre. In addition, the company co-founded the Shanghai–Hong Kong AI Industry Acceleration Alliance with Cyberport, connecting upstream, midstream and downstream players in the AI industry across both cities. This initiative promotes deeper integration between the AI ecosystems of Shanghai and Hong Kong, fostering mutual learning and accelerating the development of AI-related industries.

In fact, in recent years, numerous I&T enterprises with cutting-edge capabilities have emerged across various regions of the Chinese Mainland, including the Greater Bay Area, the Beijing-Tianjin-Hebei region, the Yangtze River Delta, as well as the central and western regions. These companies are key drivers of China's technological and industrial innovation. Leveraging its unique position as a bridge between the Chinese Mainland and the rest of the world, Hong Kong is well-placed to connect innovation ecosystems and harness the comparative strengths of different regions. In particular, Hong Kong excels in mobilising international capital, attracting top global research talent, facilitating the flow of information and data, protecting intellectual property rights, enabling international patent licensing and offering globally relevant application scenarios – all of which can provide strong support for these enterprises in expanding to international markets.

For instance, in recent years, Cyberport and Jiangsu Province jointly established the Hong Kong-Jiangsu Science and Technology Innovation Centre to promote a collaborative model of "R&D in Hong Kong, application in Jiangsu", fostering I&T development in both regions. In addition, Cyberport partnered with the National Torch Academy of Innovation and Entrepreneurship (Zhongguancun) to establish a Hong Kong Branch, aimed at strengthening talent development and business incubation between Beijing and Hong Kong. In 2024, the Hong Kong Science and Technology Parks Corporation signed a Co-incubation Programme Agreement with the Hangzhou Innovation Incubation Center. To date, 12 I&T companies from Zhejiang and Hangzhou have established a presence in the Hong Kong Science Park.

The Hong Kong-Shenzhen Innovation and Technology Park at the Lok Ma Chau Loop has recently opened, marking a major milestone in collaboration between Hong Kong and other Greater Bay Area cities in I&T. The first three buildings in the park have been completed, including two wet labs, which have already leased out 80% of their floor area. To date, over 60 companies and institutions – both local and international – have established a presence in the park. By sector, approximately half of these companies specialise in artificial intelligence and data science, while around 40% are engaged in life and health technology.

With the synergistic development of finance and I&T, Hong Kong's unique strengths are becoming increasingly prominent in this era where technological advancement defines competitiveness. We will build on this momentum to further strengthen our I&T and industrial ecosystem, thereby driving forward high-quality economic development.

January 4, 2026

On asset markets, Hong Kong stocks performed strongly, rising for the second consecutive year. As of last week, the Hang Seng Index closed at 25,818 points, up by about 29% from the end of last year. In terms of gains, this is set to be the best year since 2017, and the performance ranks among the top of the world’s major stock markets. This rally has been supported by active trading. Funds raised through initial public offerings (IPOs) more than doubled year-on-year; both market turnover and post-listing follow-on fundraising rose by about onefold year-on-year. In the first 11 months of 2025, the average daily turnover in the Hong Kong stock market was close to HK$260 billion. By mid-December, IPO fundraising ranked first in the world – exceeding HK$270 billion, with four listings among the global top ten this year. Over the same period, follow-on fundraising by listed companies exceeded HK$510 billion. For asset and wealth management, in the first nine months of the year, net inflows into SFC-authorised funds domiciled in Hong Kong exceeded US$41 billion, more than 1.5 times last year’s full-year figure.

The residential property market has also become active. In the first 11 months of the year, transactions were close to 57,000, up about 16% year-on-year, marking the second consecutive year of increase. Residential property prices rose by about 3% cumulatively, and rents rose by about 4%. Overall, the market holds a positive outlook for the residential sector. Sentiment in the office market has also improved: transaction volume in the first ten months of 2025 increased by 74% compared with the same period last year, and Grade A office vacancy rates had edged down slightly.

In fact, Hong Kong’s economy has maintained growth momentum for a third consecutive year, and the three drivers of the economy all delivered solid performances. Exports grew markedly in the first three quarters and remained a major contributor to growth. Fixed capital investment rose by 2.5% in the first three quarters; in the third quarter alone, the increase was 4.3%, the best in four quarters. This was mainly supported by a significant rise in investment in machinery, electronic equipment, software and other equipment, and intellectual property products, plausibly reflecting businesses’ growing focus on automation, digitalisation and data-driven transformation. Private consumption also benefited from the recovery in asset markets and improved overall sentiment, rising by 0.9% in the first three quarters, reversing the decline seen in the same period last year.

Looking ahead to next year, Hong Kong’s economy is expected to maintain positive momentum. While the market generally expects the global economy to maintain a moderate, albeit slower, expansion, the Chinese Mainland and Asia as a whole will remain major growth engines, providing important support to our economy. In addition, expectations of interest rate cuts across major markets will likely boost business and investment sentiment.

More importantly, 2026 marks the first year of the country’s 15th Five-Year Plan. We will more proactively align with national development strategies, with finance, innovation and technology, and trade serving as Hong Kong’s three key engines of development.

First, we will work to comprehensively enhance Hong Kong’s functions and substance as an international financial centre. This includes strengthening our advantages in the financial markets by enhancing the competitiveness of the stock market and attracting more high-quality companies – from Southeast Asia, the Middle East, the Global South and beyond – to list in Hong Kong. At the same time, we will diversify our financial offerings by accelerating the development of fixed income and currency markets, green finance, fintech, etc., while actively pursuing new opportunities, including commodities trading and international gold trading. Furthermore, the Renminbi (RMB)’s role in global cross-border trade and investment is increasing. Hong Kong, as the offshore RMB business hub, will continue to support the prudent advancement of RMB internationalisation in three aspects: enhancing offshore RMB liquidity, improving relevant financial infrastructure, and expanding the range of investment products and risk management tools.

Second, we will accelerate the development of a world-class innovation and technology (I&T) hub, particularly through close collaboration with sister cities in the Guangdong-Hong Kong-Macao Greater Bay Area. Globally, breakthroughs in artificial intelligence (AI) and biomedicine technology are major focal points for the investment community. Hong Kong must fully leverage its strengths and strive to take a leading role in this wave of innovation-led development. AI will define the core competitiveness of economies in the future and reshape the global economic landscape. We are accelerating efforts to develop AI as a core industry in Hong Kong and to empower the upgrading and transformation of traditional industries through an “AI+” strategy. We will advance AI development across six dimensions: computing power, algorithms, data, application development, funding support and talent cultivation. In biomedicine, Hong Kong’s advantages are even more pronounced. We will continue to attract more world-class pharmaceutical companies and medical research institutions to establish a presence in Hong Kong, and we will introduce the “primary evaluation” registration mechanism for drugs and medical devices, thereby solidifying Hong Kong’s position as a regional hub for medical research and development.

Third, we will enhance Hong Kong’s functions as an international trade centre. In response to a new global economic and trade landscape and the ongoing reshaping of industrial and supply chains, Hong Kong will continue to perform its role as a “super-connector” and “super value-adder.” The country encourages Mainland enterprises to go global and participate more deeply in international industrial division of labour and collaboration. Hong Kong is actively building itself as a multinational supply chain management and trade financing hub. We will provide Mainland enterprises intending to go global with services such as supply chain management, trade financing, treasury management, professional services, compliance consultancy and corporate training. To facilitate this, we have established a GoGlobal Taskforce, bringing together resources from both the public and private sectors to provide more comprehensive support for these companies.

Building upon the good foundation laid in 2025, we are about to enter a new year. While new challenges are inevitable, greater opportunities will also arise. In the course of better integrating into and serving the country’s overall development agenda, Hong Kong will also achieve better progress, creating more high-quality jobs and allowing the benefits of economic growth and diversification to benefit the community more broadly. At the same time, we will maintain a high degree of vigilance. Given the persistent uncertainties in the external environment, we will guard against “black swan” and “grey rhino” risks, and carefully balance the dual priorities of security and development. This will allow Hong Kong to continue moving forward steadily on both the social and economic fronts in 2026.

December 28, 2025

When the other section of the bypass — the "Kowloon Bay Section" — is completed next year, the entire new route will form Route 6, together with the Tseung Kwan O–Lam Tin Tunnel, to become the third major trunk road crossing Kowloon. Travel time between Tseung Kwan O and Yau Ma Tei will then be significantly reduced from currently around 65 minutes to about 12 minutes.

The Central Kowloon Bypass (Yau Ma Tei Section) spans 4.7 km in total, with over 80% (3.9 km) consisting of underground tunnels that run underneath 240 buildings. To avoid underground foundations, the excavation of the project reached depths up to 150 metres below ground level. 2,400 blasting operations were carried out without affecting daily operations on the surface or the safety of other underground utilities. To take forward the project, facilities such as the Jade Bazaar in Yau Ma Tei and several community services, including a maternal and child health centre and a public library, had to be reprovisioned. From planning and design to local consultation and construction, this massive infrastructure project faced many challenges throughout its journey. Given the densely populated, complex construction environment and numerous constraints, public support and cooperation were crucial. Through the planning of this project, the community environment has also been beautified, with more green open space provided. This includes the on-going construction of a landscape deck of over 30,000 square metres near the tunnel's western entrance in Yau Ma Tei, providing more public green space.

Smart, green, and efficient transportation infrastructure plays a vital role in improving residents' quality of life and promoting social and economic development. It also enhances Hong Kong's overall competitiveness, including strengthening economic integration with Chinese Mainland, especially within the Guangdong-Hong Kong-Macao Greater Bay Area — a key element in aligning with national development strategies.

In 2025, the British magazine "Time Out" conducted an index survey where locals rated their city's public transport, including buses, trains, and trams. Hong Kong's public transport system ranked first in the world. In the Urban Mobility Readiness Index 2024, developed by an international consulting firm and an American university, Hong Kong's public transport system ranked second among a number of global cities, while our green transport system ranked first in Asia. Many visitors and locals who have travelled abroad also praised the efficiency and convenience of Hong Kong's transit system. In fact, reports including the World Competitiveness Yearbook and Global Financial Centres Index also consider transport network an essential factor in assessing competitiveness.

We will continue to adopt the principles of "infrastructure-led" and "capacity-creating" to accelerate the implementation of projects outlined in the Hong Kong Major Transport Infrastructure Development Blueprint, including new railway lines, major highways, as well as smart and green mass transit systems.

In terms of road network, key projects in the coming years include the remaining section of Route 6, the Trunk Road T4 in Sha Tin and the Northern Metropolis Highway. With the completion of these major highways, the total length of trunk roads is expected to increase by 46%, from the current about 260 km to nearly 380 km.

In terms of railway network, we are pressing ahead with projects such as the Tung Chung Line Extension, Oyster Bay Station, Tuen Mun South Extension, Kwu Tung Station, and Hung Shui Kiu Station. They are expected to be completed progressively from 2027 onwards. Detailed planning and design of the South Island Line (West) also commenced this month, aiming for commissioning by 2034 or earlier. The construction of the Northern Link Main Line will be implemented together with the Spur Line, with a view to advancing the simultaneous commissioning by 2034 or earlier. Upon the progressive completion of these railway projects, the total length of Hong Kong's railway network will increase by 44%, from currently about 270 km to nearly 390 km.

During the period of the 15th Five-Year Plan, Hong Kong will continue to actively integrate into and contribute to the national development agenda. The Greater Bay Area is a major national development strategy in this new era, and deeper integration of transportation infrastructure with neighbouring cities will facilitate more efficient flow of key production elements, including people and goods. In this connection, apart from the Northern Link Spur Line, we are also pressing ahead with the Hong Kong–Shenzhen Western Rail Link (Hung Shui Kiu to Qianhai) (HSWRL), striving for completion of the construction works in 2034, followed by integrated testing and commissioning to realise the goal of commissioning both the Hong Kong and Shenzhen sections of HSWRL in 2035. This will further promote economic and high-end services collaboration between the two cities.

Beyond hardware, smarter and greener transport software — including the use of advanced technology to improve efficiency and digital management — will enable more precise and effective transport systems and offer a better user experience. Our upcoming Transport Strategy Blueprint will embrace the vision of "Implementing a People-centric Approach, Strengthening Connectivity with Both the Mainland and the World, Promoting Efficient Travel, and Embracing a Green Lifestyle". It will highlight areas such as the application of technology and AI, promotion of autonomous vehicles, smart motorway management, improved public transport efficiency, and stronger integration with the Greater Bay Area. These efforts will make Hong Kong's transport network and urban management more intelligent, continuously improving residents' quality of life and travel convenience — and enhancing our city's overall competitiveness.

December 21, 2025

I also visited the Expo at Victoria Park yesterday, where I purchased health food, local snacks, products from social enterprises and smart home appliances—many of which were from Hong Kong brands. It was clear that many exhibitors are placing greater emphasis on product innovation and technological applications. Some cooked food vendors introduced snacks with new and creative flavours, offering visitors a refreshing culinary experience. Meanwhile, several local companies showcased upgraded smart home appliances and electronic products, including those equipped with sensing technology that monitors environmental data and automatically adjusts their operating modes – making household tasks more efficient. These innovative products and technologies are sparking consumer interest and driving sales.

For years, we have emphasised the importance of brand building as a key driver of high value-added development. A strong brand reflects a commitment to quality and value, encouraging customers to pay a premium for superior products, services and experiences. This is especially crucial in the "AI+" era, where there is growing demand for smarter, more innovative products. Indeed, technology not only enables new design possibilities but also expands the scope of applications. Manufacturers that can align with emerging technological trends – by developing cutting-edge products, strengthening brand identity and improving operational efficiency – and leverage the unique strengths of "Hong Kong Design" and "Made in Hong Kong", can unlock greater business potential and open up new avenues for growth. These efforts also contribute to the development of new quality productive forces, supporting the broader goal of high-quality development.

Recent data indicates that Hong Kong's exports of goods have experienced double-digit year-on-year growth since the beginning of this year. The domestic demand has improved, with a moderate uptick in private consumption. The retail, catering and residential property markets have stabilised, while business investment has also risen. Together, these factors have contributed to the steady expansion of Hong Kong's economy, despite ongoing external uncertainties. In the first three quarters of the year, the economy grew by 3.3% year-on-year, and the full-year growth forecast has recently been revised upward to 3.2%.

Exports of services have also benefited from a vibrant financial market and a post-pandemic high in visitor arrivals. Thanks to the joint efforts of the Government and the industry, Hong Kong welcomed over 45 million visitors in the first 11 months of this year. This figure, marking a 12% year-on-year increase, has already surpassed the total for the whole of last year. Notably, more than 23% of these visitors were from outside the Chinese Mainland, totalling 10.77 million, which represents a 16% rise compared to the same period last year. The increase in visitor numbers has provided additional support to the retail and catering sectors.

With the Christmas and New Year holidays just around the corner, a wide range of festive activities and industry-led promotions are set to create joyful moments for members of the public to enjoy with family and friends and exchange seasonal blessings. These celebrations are also expected to attract more tourists and inject renewed momentum into the consumer market and the broader economy.

As Hong Kong's tourism industry continues to evolve, transform and strengthen, ongoing improvements to related infrastructure are also progressing well and delivering impressive results. Recently, Hong Kong International Airport was named the "World's Leading Airport for Customer Experience" at the 32nd World Travel Awards, a globally recognised top honour in the industry. According to international market research, Hong Kong currently ranks second worldwide in terms of international visitor arrivals. The city's unique blend of East and West, vibrant cultural scene, close proximity between urban and rural areas, diverse cuisine catering to all budgets, and excellent law and order are among the many advantages that are gaining increasing international recognition.

Investors and the business community remain optimistic about Hong Kong's economic prospects, with investment spending gaining momentum. A recent survey by a local chamber of commerce indicates a significant improvement in business confidence among local enterprises. In recent months, financial institutions and major e-commerce platforms have leased or acquired multiple floors of commercial space – or even entire buildings – to expand their presence in Hong Kong, as part of their efforts to tap into both the Mainland and international markets. These developments reflect the market's positive expectations for the future.

Over the years, comprehensive policies promoting innovation and technology (I&T) and economic development have progressively created favourable conditions for Hong Kong's continued advancement and enhanced our resilience in the face of external challenges. Public consultation for the upcoming Budget is about to begin. Key areas of focus include further expanding the scope of economic development, accelerating the growth and application of I&T, optimising the industrial structure, creating more high-quality employment opportunities, and injecting new momentum into high-quality development. We look forward to receiving concrete and constructive suggestions, as we work together– through collective wisdom and concerted efforts – to build a better future for all.

December 14, 2025

I visited and offered my condolences to the families of those who lost their lives in the fire; I also visited the injured who are still hospitalised, and the victims now residing in temporary housing. I sought to understand their circumstances and needs firsthand. My heartfelt gratitude goes to the firefighters, police officers, healthcare professional and civil servants from various Government departments who took part in the rescue efforts. In the face of this sudden and devastating fire, over a thousand frontline personnel risked their lives to save others. Many support staff members also worked tirelessly behind the scenes to provide vital assistance to the victims.

During my hospital visits, the injured victims expressed deep gratitude to the firefighters who bravely entered the most dangerous places to save lives. One elderly man shared that he was only able to escape because a firefighter had carried him down more than ten floors. Others recounted how perilous the fire scene was, saying their lives were saved only through the firefighters' relay efforts – carrying them down, floor by floor. The selfless courage and dedication of the firefighters have earned the survivors' heartfelt admiration. The injured also conveyed their sincere thanks to the medical staff for their attentive care and the psychological support they have provided throughout this difficult time.

I also visited colleagues from the Hong Kong Police Force, including members of the 600-strong Disaster Victim Identification Unit (DVIU), who continue to work tirelessly at the disaster site to recover the remains of the deceased. They are carrying out their duties with unwavering dedication, striving to retrieve and identify the remains so that the families can reclaim their loved ones and bid them farewell.

Doing one's utmost for the deceased while easing the burden of the living is an exceptionally difficult task. Members of the DVIU described to me the harrowing conditions at the site: stifling air thick with the smell of smoke, narrow and dark passageways, and floors littered with water and debris. Dressed in protective suits and carrying heavy equipment, they combed through dozens of floors, leaving no corner unchecked. With painstaking care, they sifted through debris and ashes by hand, striving to preserve any remains they might find, and to maintain the integrity of the bodies wherever possible. It was a gruelling test of both physical strength and mental endurance. Their profound respect for the deceased and compassionate commitment to reuniting families with their loved ones — across the divide of life and death — are deeply moving. Throughout the process, they endured immense psychological pressure. One member shared that even a small closet — a place no one would normally hide — was thoroughly searched, in case someone had desperately sought refuge there. Some scenes inside the flats were truly heartbreaking. Another member admitted that when leaving a flat empty-handed after an exhaustive search, they would pause, haunted by the thought that they might have missed something — wondering if there was more they could have done.

During the disaster relief operations, the unwavering support of the Central Government has been of immense importance. The country, along with various sister provinces and cities across the Mainland, has provided Hong Kong with substantial material and equipment support. A notable example is the assistance received by the DVIU. The exoskeleton devices supplied by the Mainland have proven to be highly useful, significantly reducing the physical strain on officers as they climbed and descended dozens of floors. This not only improved their search efficiency but also enabled the faster recovery of bodies from the fire-damaged flats.

All departments across the HKSAR Government are making every effort to provide comprehensive support to the victims, addressing both their immediate needs and long-term housing arrangements to ensure their overall well-being. Recently, I also convened another coordination meeting with financial regulators to further enhance collaboration and encourage the local financial sector to introduce more compassionate and flexible measures to support those affected. (See the relevant press release for details.)

In addition, the Government has increased the living allowance for each affected family from $50,000 to $100,000. We are also granting waivers on various fees and charges for those affected, including salaries tax, profits tax, rates, Government rent, water and sewage charges, as well as medical fees. (See the relevant press release for details.)

During my visit to the disaster area, I spoke with victims and members of the rescue and support teams. They all expressed a strong hope – and confidence – that the Government will conduct a thorough and impartial investigation to determine the cause of the fire. The Chief Executive has announced the establishment of an independent committee led by a judge to lead the investigation. Beyond uncovering the causes, we must also pursue comprehensive reforms to address prevailing gaps and strengthen our system to prevent similar tragedies from happening again in the future.

Public support and unity are essential to driving effective, system-wide reforms. These reforms also require the backing and cooperation of the Legislative Council. Only through constructive collaboration between the executive and legislative branches can we accelerate comprehensive reforms.

The Legislative Council General Election is being held today. I urge all voters to actively cast their ballots to elect responsible, capable and visionary representatives to the Legislative Council, who can work hand in hand with the HKSAR Government to advance reforms, drive continuous progress in Hong Kong society, and strive for the well-being of our people and the prosperity of our city.

December 7, 2025

Amidst intense flames and thick smoke, brave and resolute firefighters risked their lives to enter the most perilous areas of the blaze, doing everything they could to save lives. Paramedics gave their all in caring for the affected residents. These scenes remain deeply etched in our minds. Firefighter Ho Wai-ho died heroically in the line of duty.

During these difficult days, the support from the Central Government, along with the outpouring of compassion from all sectors of the society, have brought people together and strengthened our collective solidarity. An elderly man in his eighties volunteered to assist in relief efforts, while children asked their families to take them along to make donations for the victims. The neighbourly spirit within the community, the empathy shared among people, and the deep sorrow felt by all have ignited a profound sense of unity. Government departments have been actively involved in providing assistance, while social organisations and businesses have generously contributed funds and supplies. The society as a whole has responded swiftly, in the hope of bringing comfort, care and support to the victims and the injured.

The entire team of the SAR Government, including various departments such as the Home Affairs Department and the Social Welfare Department, is fully committed to providing comprehensive support to meet the needs of affected residents. This includes assigning a dedicated social worker to each household to follow up on their individual circumstances and help them cope with challenges during this difficult period. I also convened a special coordination meeting with financial regulators to strengthen efforts in mobilising banks, insurance companies and Mandatory Provident Fund trustees. They will adopt more flexible and compassionate service arrangements to support those affected. (For details, please refer to the relevant Government press release and Hong Kong Monetary Authority press release.)

Yesterday, I visited two transitional housing units in Tai Po which provide emergency accommodation for people affected by the fire. I met with the displaced residents to better understand their needs and future housing arrangements. The Government is fully committed to managing the aftermath of this incident and ensuring the proper resettlement of those impacted. Our immediate priority is to provide residents with stable and secure living conditions during the winter months. After that, we will continue to offer comprehensive support throughout the transition period and beyond.

It is equally important to identify the cause of this fire, in order to prevent similar tragedies from happening again. The inter-departmental Fire Investigation Task Force established by the Government has convened its first meeting and will proceed with the investigation at full speed. Any unlawful conduct uncovered in the process will be rigorously punished in accordance with the law.

November 30, 2025

For instance, a global economic conference hosted by an international financial media outlet brought together hundreds of local and international leaders in the financial, business, and innovation and technology sectors. The forum explored future development in terms of finance, the economy, technological innovation, talent, etc. At the conference, I pointed out that the ever-changing international geopolitical landscape had presented new opportunities for Hong Kong. As an international financial centre connecting the Chinese Mainland and global markets, Hong Kong is evolving from a springboard for international companies entering the Mainland market to a multifunctional two-way platform for both the Mainland and overseas enterprises to access each other's markets. This evolution has been enriching Hong Kong's role as an international financial centre and highlighted its distinctive functions.

Amid geopolitical tensions, global investors are reassessing the risks in their asset portfolios, adjusting investment strategies, and diversifying risks. Hong Kong has emerged as a safe destination for capital. Following a 7% increase last year, total bank deposits in Hong Kong have grown by over 10% this year to over HK$19 trillion. Hong Kong's leading position in initial public offering (IPO) fundraising in the world, its thriving wealth management industry, and deepening financial co-operation with global partners all reflect international capital's preference for the Hong Kong market. Several major IPOs launched this year have attracted cornerstone investors from the West and the Middle East. Many international financial leaders attending conferences in Hong Kong recently have indicated their plans to expand their teams and operations in Hong Kong.

In the shipping and trade sector, in face of rising unilateralism, the restructuring of global supply and industrial chains has accelerated, and China's economic and trade relations with ASEAN and the Global South have also deepened. Against this background, Hong Kong's exports of goods have not only withstood the impact of tariff wars but also recorded year-on-year growth for 19 consecutive months. In the first three quarters of this year, total exports of goods rose notably by 11.3% in volume terms.

To seize new opportunities in the maritime industry amid global shifts, we are actively promoting Hong Kong's maritime strengths worldwide. One key event was the Hong Kong Maritime Week 2025, held last week, which is one of the industry's flagship events this year.

This year marked the 9th edition of the Maritime Week, which set a record by attracting over 18,000 participants from around the world. During the event, we announced the first batch of strategic partner ports in the Chinese Mainland and Belt and Road regions, witnessed the official establishment of the Hong Kong P&I Club, and facilitated two industry cooperation agreements — all of which are milestones in advancing Hong Kong as an international maritime centre and promoting global industry collaboration.

Take maritime insurance as an example: while 11 P&I Clubs already operate in Hong Kong, the newly established Hong Kong P&I Club is the first of such headquartered locally. This further strengthens Hong Kong's maritime insurance ecosystem, boosts industry communication, and deepens collaboration in various maritime sectors. It also enhances the industry's adaptability and resilience in today's complex geopolitical environment.

We will continue working with the industry to solidify Hong Kong's international port advantages and promote the upgrade and transformation of the maritime sector. This includes developing high value-added maritime services, promoting more commodity trading, expanding into new markets and further applying innovative technologies. Moreover, we will closely follow global trends and work with the industry to drive the digitalisation, greening, and intelligentisation of Hong Kong's ports. Our goal is to build a green smart port, making Hong Kong a strategic hub for global maritime innovation and tech application.

Another notable event last week was the UFI Global Congress 2025 held at the AsiaWorld-Expo. As this year marks the 100th anniversary of the UFI, the return of this major international event to Hong Kong after 25 years symbolises the global recognition of Hong Kong's status as an international MICE (meetings, incentive travels, conventions and exhibitions) hub. The four-day congress brought together over 600 decision-makers in the exhibition industry from more than 50 countries and regions worldwide, including the Chinese Mainland, the Asia-Pacific region, Europe, the US and the Middle East, to explore innovation and collaboration opportunities for the industry.

In fact, the core of the exhibition industry lies in building business connections and promoting global trade in products and services. Hong Kong boasts extensive international connectivity, with over 1,100 daily flights to and from more than 200 destinations worldwide. Its favourable business environment has led many exhibition industry players and major international event organisers to regard it as a strategic hub. In recent years, events like Art Basel, the Hong Kong Sevens and LIV Golf have established partnership with Hong Kong. Last year, over 350 events were held at the AsiaWorld-Expo and the Hong Kong Convention and Exhibition Centre, attracting more than 9 million participants. This year, with the increase in the number of both the Mainland and overseas visitors, the outlook for the convention and exhibition sector is even brighter. When co-ordinating major events, the HKSAR Government and industry stakeholders will try to make arrangements for such events to be held in succession, thereby creating greater synergistic effects and economic benefits.

While continuing to expand into emerging markets, we are also committed to strengthening ties with traditional ones. This is a core strategy for enhancing Hong Kong's competitive edge as an international city. Early this week, I will visit London in the UK and Milan in Italy to attend major events organised by the Hong Kong Trade Development Council. There, I will explain Hong Kong's strengths, new developments and emerging opportunities to local businesses and political leaders, engage in exchanges on matters of interest to both sides to deepen mutual understanding, and explore further opportunities for win-win co-operation.

At this crucial juncture when Hong Kong is fully committed to fostering economic growth and pursuing development, we need more dedicated, capable and visionary representatives in the legislature to work with us in driving Hong Kong towards greater prosperity. To select the right persons to serve Hong Kong, please encourage your family, friends and colleagues to join you and vote in the Legislative Council Election on December 7.

November 23, 2025

Looking back at the first half of this year, despite significant pressure and uncertainties in the external environment — with the new US administration taking office and imposing unilateral tariffs globally — we remained committed to our free port policy, responding to challenges with coherent, consistent and predictable policies. With steadfast support from the Central Government and the joint efforts of the HKSAR Government and various sectors, we have made notable positive progress.

Take external trade as an example: Hong Kong's exports of goods saw a notable year-on-year increase of 11.3% in real terms in the first three quarters. Within which, exports to the Chinese Mainland and ASEAN were particularly robust, rising by 14.6% and 27.1% respectively in volume terms. This reflects not only favourable regional developments but also the fruits from years of solid work, including forging relationships with new trading partners, actively supporting Mainland enterprises in going global, and strengthening Hong Kong's function as a two-way platform. Hong Kong has emerged as a key node in the increasingly integrated economic and trade networks of the Asia-Pacific region.

In the broader context of global trade flow and supply chain restructuring, Asia — especially the Chinese Mainland and ASEAN as the world's major production bases for diverse products and raw materials — has demonstrated a high level of resilience, competitiveness and complementarity amid the tariff war. Meanwhile, the surge in global investment in artificial intelligence (AI) has created strong demand for advanced technology products, which has further boosted regional exports. Looking ahead, the new phase of "AI+" development is expected to spur innovation in product and service design and applications, stimulate robust demand for electronic consumer goods and open up new growth potential for future export trade.

Hong Kong's economic growth in the last quarter was driven not only by accelerated growth in exports but also supported by continued increases in fixed investment and domestic consumption. Continued capital inflows, a buoyant stock market, and a stabilising property market have all lifted market expectations for our economic outlook.

In recent years, we have implemented a series of financial market reforms, including optimising the listing regime, enhancing market liquidity, and actively attracting capital, family offices and high-value-added investors to establish a presence in Hong Kong. Our unique advantages under the "one country, two systems" framework have made Hong Kong a safe harbour for attracting international capital amid a complicated global geopolitical and economic landscape. Many investors also hope to use Hong Kong as a base to better seize opportunities from our country's steady economic progress as well as rapid innovation and technology development.

This year, stock trading, IPO activities, and the refinancing market have all been very active. The Hang Seng Index has surged by over 30% so far this year, with the average daily turnover in the first 10 months reaching HK$258 billion — nearly double the full-year average for 2024. During the same period, 81 companies went public, raising nearly HK$216 billion in IPO proceeds — more than double year-on-year, ranking first globally. Furthermore, follow-on fundraising by listed companies reached HK$475 billion in the first 10 months. Moreover, since 2022, InvestHK has helped over 200 family offices to set up or expand in Hong Kong. At the end of last year, Hong Kong's total assets under management exceeded HK$35 trillion, representing a year-on-year increase of 13%. These positive developments have led Hong Kong's financial services exports to increase by 11% in real terms in this year so far, contributing over 10% of GDP growth during the same period.

With a thriving local economy and financial markets, as well as the interest rate cuts by the US Federal Reserve since September, local property market sentiment has turned positive. Residential property prices rose by 1% during the second quarter and another 2% during the third quarter, marking two consecutive quarters of increases. Flat prices have reverted to an increase of 1.1% so far this year. Rentals stayed solid, rising by 3.9% so far this year. Transactions in October remained active (about 5,700 cases), staying above the five-year average for eight consecutive months.

As for the non-residential property market, while prices and rentals are still relatively soft, transactions have increased compared to a year ago. Recently, some companies have purchased multiple floors of office space or even entire office building blocks in Hong Kong, and some foreign financial institutions have increased their leasing of Grade A office space. A senior executive from a foreign financial institution that had recently leased office space told me they hope to expand their Hong Kong operations further, riding on the city's current positive momentum. Market data also shows that vacancy levels of retail shop space in some core districts have shown improvement compared to the beginning of the year.

With many sectors of the economy performing well, and with visitor arrivals reaching 41 million in the first 10 months — a 12% increase year-on-year — we have also seen gradual improvement in the catering and retail sectors. Private consumption expenditure picked up slightly in the third quarter, with year-on-year growth rising to 2.1% in real terms, reflecting a gradual recovery in the local consumption market. Given the overall economic improvement and positive market expectations, we anticipate that labour market data to be released this Tuesday will show signs of stabilisation.

With this year included, Hong Kong's economy will have achieved positive growth for three consecutive years. Looking ahead to next year, the Hong Kong economy is expected to continue expanding. International institutions generally forecast moderate global economic growth in 2026, with the Chinese Mainland and Asia as a whole being the key growth drivers. This, together with recent easing of trade tensions, will further support our export performance. Locally, consumption and business sentiment are improving, and both consumption and investment activities are expected to keep expanding. Although external uncertainties remain — such as the pace of US interest rate cuts and possible shifts in global trade policy — we will remain vigilant of risks while also seizing emerging strategic opportunities.

Last month, the Fourth Plenary Session of the 20th Central Committee of the Communist Party of China (CPC Central Committee) adopted the Recommendations of the CPC Central Committee for Formulating the 15th Five-Year Plan for Economic and Social Development (15th Five-Year Plan), which outlines our country's social and economic development over the next five years. To seize the vast opportunities brought by the country's development and align with the key strategies of the 15th Five-Year Plan, we will proactively strengthen and enhance Hong Kong's status as international financial, shipping and trading centres. We will also accelerate the development of an international innovation and technology hub, and actively build Hong Kong into a global hub for high-calibre talent. Hong Kong will better serve as a bridge connecting the Mainland with the world by continuing to serve as a gateway for attracting external resources and a strategic platform for Mainland enterprises to "go global". All these efforts will help Hong Kong better integrate into and serve the overall national development, while driving significant economic and social growth for the city.

Hong Kong's economy is gaining momentum, with new competitive advantages emerging amid changing circumstances. One of the preconditions for these hard-earned achievements is the constructive interaction between the executive and legislative branches in recent years, which has allowed us to focus on development and keep our economy on the right track. To further sustain this momentum, it is crucial that we all support the Legislative Council Election by casting our votes on December 7. Please encourage your family members, friends and colleagues to join you and vote for a better future together!

November 16, 2025

This year marked the 10th anniversary of both the FinTech Week and the StartmeupHK Festival. For the first time, the two events were held in conjunction, creating notable synergies. Together, they attracted 45,000 attendees from 120 economies, 800 exhibitors and over 30 trade delegations from the Chinese Mainland and overseas. The events brought together technology enterprises and start-ups, financial institutions, investors, potential clients, policymakers, experts, academics and representatives of regulators from fields such as fintech, artificial intelligence (AI), life and health technology, green technology and new energy. They also drew numerous entrepreneurs or prospective business starters from the Chinese Mainland and around the world. Many participants from the Chinese Mainland, ASEAN, the Middle East, Europe and America expressed that they were deeply impressed by the high level of international participation in these two events, fully showcasing the appeal of Hong Kong as a global hub. Our continued I&T investment and incubation efforts, together with our experience in such aspects as technological innovation, application promotion, standard setting, regulatory frameworks and market development, have also provided valuable reference for international peers.

During FinTech Week, the Hong Kong Monetary Authority (HKMA) announced its "Fintech 2030", focusing on four key areas: data and payment infrastructure, artificial intelligence, tech resilience, and tokenisation of finance. The strategy outlines over 40 specific measures aimed at developing Hong Kong into a robust, resilient and future-ready global fintech hub. This aligns with the government's long-standing efforts and investments in fintech infrastructure, policy, resources, and talent development—boosting global confidence in Hong Kong's fintech development and providing a clearer and more concrete roadmap.

Another major event for Hong Kong's I&T sector, namely the Elevator Pitch International Competition (EPIC) 2025, a flagship I&T pitch competition of the Hong Kong Science and Technology Parks (HKSTP), took place last week. The event, now in its ninth year, has continued to grow in scale. This year's Grand Finale, with the presence of over 1,500 guests, was filled with electrifying moments. Competing start-ups were required to present succinctly and accurately their innovative ideas, core technologies, market analysis and commercialisation plans and respond to the judging panel's questions within three minutes, keeping the competition fast-paced and dynamic.

It's encouraging to see EPIC gradually becoming a major event in the global startup scene. This year saw a record-breaking 1,200+ applications from over 70 economies, with 87% of entries from non-locals. Among the top 100 finalists, startups from Hong Kong and the Chinese Mainland, Europe, the Americas, and non-China Asia-Pacific regions each accounted for around 20–30%, marking the highest level of international participation to date. This reflects the enthusiastic pursuit by global startups to leverage Hong Kong's international platform for greater development opportunities. In fact, several past EPIC finalists have achieved remarkable success. For example, one startup received backing from a Middle Eastern sovereign wealth fund to support their technology application locally, while another evolved into one of Asia's leading digital health platforms, expanding into Vietnam and Indonesia etc.

Thanks to years of collaborative efforts between the government and various sectors, Hong Kong's innovation and technology ecosystem has seen significant growth. In the past five years, the number of startups in Hong Kong has increased by 40% to around 4,700. Hong Kong provides a robust financing environment for startups at all stages—from angel investment to multiple funding rounds and IPOs.

For instance, the HKSTP and Cyberport, two of Hong Kong's flagship innovation hubs, saw their resident startups raise HK$6 billion in funding over the past year. Additionally, several of these companies also successfully went public, raising a total of HK$5.2 billion.

The thriving financial and I&T ecosystems are mutually reinforcing, serving as key engines for accelerating high-quality economic development in Hong Kong. They also play a pivotal role in Hong Kong's deep involvement in and positive contribution to the development of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA). During his visit to Guangdong, President Xi emphasised the importance of strengthening collaboration in technological innovation and infrastructure connectivity, as well as promoting "soft connectivity" in regulatory mechanisms. We must fully leverage our role as an international two-way platform to make more profound contribution to the GBA's development, and support the further unlocking of the benefits of market integration in the GBA. This will help Hong Kong achieve more substantial, diverse and promising development in future.

As we strive to accelerate Hong Kong's economic development, we need more constructive forces to offer insights and suggestions for the good of the city. The Legislative Council Election, which is crucial to Hong Kong's development, will take place in less than a month. More than 160 candidates were nominated during the nomination period. Let us all cast our votes on December 7 to build a better future for Hong Kong!

November 9, 2025

Among the agreements signed, four focus on key innovation and technology areas: artificial intelligence (AI), smart sensing technology, robotics research and development, and environmental technology. Tech companies from Hong Kong and the Chinese Mainland will work closely with their respective Saudi partners on technology deployment, application development, and business expansion in the Middle East. Several tech company representatives noted that last year's visit by the Hong Kong delegation to Saudi Arabia significantly enhanced local stakeholders' understanding of the I&T strengths of both Hong Kong and the Chinese Mainland, laying a strong foundation for this year's agreements. Others remarked that this visit helped accelerate the signing of framework agreements with their Saudi counterparts, marking an important step forward in cross-regional collaboration.

In addition, the Hong Kong Trade Development Council (HKTDC) signed a Memorandum of Understanding (MoU) with the Digital Cooperation Organization (DCO), which is headquartered in Saudi Arabia. The MoU aims to support start-ups and small and medium-sized enterprises (SMEs) from DCO member economies in leveraging Hong Kong as a gateway to the Asia-Pacific market. At the same time, it helps Hong Kong enterprises promote digital transformation and advance innovation and technology (I&T) development within DCO member countries. Together, these efforts lay a strong foundation for deeper and more strategic cooperation between Hong Kong and Saudi Arabia in the years ahead.

Through our visits to Saudi Arabia and other parts of the Middle East in recent years, we have gained a deeper understanding of the region's development priorities and strategic preferences. Take Saudi Arabia as an example. Under its Vision 2030, the country is making significant progress in diversifying its economy beyond oil. Major efforts are being directed toward developing infrastructure, tourism, and I&T to attract foreign investment. In Riyadh, large-scale projects are transforming the urban landscape. With each visit in recent years, we have witnessed the emergence of new landmarks and developments. Urban planning and architectural design are increasingly embracing green, sustainable and people-centric principles. Moreover, great emphasis is being placed on the adoption of innovative technologies and the nurturing of a dynamic start-up ecosystem.

The composition of this delegation was thoughtfully tailored to align with the development priorities of the region. It included representatives from financial institutions in Hong Kong and the Chinese Mainland, as well as founders and executives from enterprises in sectors such as AI, biomedicine, e-commerce, green energy, construction technology and new materials. For some start-up representatives visiting the Middle East for the first time, the trip has already yielded promising results — with follow-up negotiations now underway. These engagements mark an important first step toward entering new markets and advancing their international expansion.

In summary, our engagements with political and business leaders in Saudi Arabia and the broader Middle East have revealed significant potential for collaboration across at least three key areas as follows.

First, financial co-operation. Saudi Arabia and other Middle Eastern countries are accelerating their development, driving forward major infrastructure projects at full speed. These ambitious initiatives call for diversified funding sources and innovative financing models. Hong Kong, as a global financial hub where international and Mainland capital converge, offers a wide array of financial instruments and services. We host the world's largest IPO market this year, Asia's leading green finance market, and a robust bond market. In addition, Hong Kong provides innovative financing solutions such as infrastructure loan securitisation, catastrophe bonds, and public-private partnership models. Complemented by a deep pool of skilled professionals in the financial and professional services sectors, Hong Kong is well positioned to support the Middle East's development while creating new growth opportunities for our own economy.

Preparations for the HKSAR Government's second economic and trade office in the Middle East – the Economic and Trade office in Riyadh – are well underway. Meanwhile, the Hong Kong Exchanges and Clearing Limited (HKEX) has officially commenced operations at its new office in Riyadh. Financial regulators from both Hong Kong and Saudi Arabia have signed MoUs, further strengthening bilateral cooperation. In addition to the existing mutual listings of Exchange-Traded Funds (ETFs) on the stock exchanges of Hong Kong and Saudi Arabia, we will soon witness the first Middle Eastern company listed in Hong Kong. With a solid foundation built over the years, we anticipate that more Middle Eastern companies will explore listings in Hong Kong — or pursue dual listings in both markets — further deepening financial collaboration between the two regions.

Second, I&T collaboration. During our visits to local start-up incubators and organisations promoting digital transformation, we observed a strong synergy between Hong Kong and Saudi Arabia in advancing innovation, technology, and digitalisation. Since the signing of a Memorandum of Understanding (MoU) by Hong Kong Science Park during our visit to Saudi Arabia last year, several Saudi start-ups have established a presence in Hong Kong, becoming part of our vibrant start-up ecosystem. Saudi Arabia has expressed keen interest in Hong Kong's technology companies and start-ups — particularly in areas such as AI, healthcare, fintech, construction technology, green technology and smart city management. This sets a solid foundation for deeper collaboration and future growth.

Third, going global together. Under the "one country, two systems" framework, Hong Kong stands out as a truly international city with unique advantages. Its high concentration of global capital, talent and enterprises positions it as a strategic two-way platform — facilitating Mainland companies' expansion into the Middle East, and enabling Middle Eastern enterprises to access the Mainland and broader Asian markets. This delegation represented a joint effort by both local and Mainland enterprises to "go global" and explore new markets together. Several Mainland start-ups successfully opened new market opportunities during the trip, with some signing Memorandums of Understanding (MoUs) along the way. Significant efforts were also made to invite major development companies to visit Hong Kong, conduct roadshows, and seek suitable local partners for collaboration.

While strengthening our ties with traditional markets, we are also proactively expanding into emerging ones. This dual-track strategy is broadening Hong Kong's international connectivity and market access. At the same time, our economy continues to gain positive momentum. In the third quarter, GDP grew by 3.8%, supported by strong export performance and a faster recovery in local consumption. Visitor arrivals have also maintained robust double-digit growth. We remain confident in achieving our growth targets for the year.

This week, Hong Kong will host two major financial events — the Global Financial Leaders' Investment Summit and Hong Kong FinTech Week. The Summit will bring together around 300 international financial leaders, including more than 100 group chairpersons and CEOs, to explore key global issues in economics, trade, finance, and digital development. We look forward to engaging in in-depth discussions with these leaders. We will encourage them to seize the new opportunities emerging from the continued development of both Hong Kong and the Chinese Mainland — through fostering stronger partnerships and shared growth.

As Hong Kong continues to advance along the path of stability and positive development, it is crucial that we further strengthen the effectiveness of our governance. A more constructive and collaborative relationship between the executive and the legislature will be a key driver of progress.

The nomination period for the 2025 Legislative Council Election has commenced, with many patriotic, dedicated and capable individuals already stepping forward to serve. Let us all cast our votes on December 7 to elect the best and the brightest to shape Hong Kong's future!

November 2, 2025

From the adoption of the 15th Five-Year Plan at the Fourth Plenary Session to the rapid development of the Xiong'an New Area and other regions across the country, it is evident that our country has established a governance system and development model that aligns with national realities through the continuous summarisation of experiences and enhancement of standards.

The scientific formulation and consistent implementation of Five-Year Plans has been our country's key governance experience and a political strength of socialism with Chinese characteristics. Social and economic development goals established through scientific reasoning ensure strong continuity. Each Five-Year Plan builds upon its predecessors while adapting to new circumstances and embracing innovation.

The strengths of the country's policy continuity, powerful execution, as well as meticulous organisation and co-ordination are evident in areas from the holistic planning of national development, the systematic implementation of major infrastructure projects and the complete success in the fight against poverty to the leapfrog advancement in industrial structures. With the strong leadership of the Central Government and the concerted efforts of the entire country, China's development over the past five years has made outstanding achievements with many highlights. On economic development, the size of our country's economy grew at an average annual rate of 5.5% between 2021 and 2024, maintaining its contribution to global economic growth at 30% or so. Innovation and technology (I&T) has become a major driver of economic development, and our country has constantly made achievements in this respect. With continuous breakthroughs in frontier areas such as artificial intelligence and biomedicine, coupled with the accelerated cultivation of new quality productive forces, China now ranks first in terms of the number of the world's top 100 innovation clusters. Additionally, significant accomplishments have been made in green transformation and ecological environment protection. A convenient and secure living environment together with a warm and harmonious social atmosphere have continuously enhanced people's sense of achievement, happiness and security.

Over the past five years, despite the complex and turbulent global political and economic landscapes marked by escalating unilateralism and protectionism, our country has remained committed to high-level two-way opening up. By actively contributing Chinese strength and wisdom to global governance and development, it has demonstrated its responsibility as a major country and injected more certainty into an uncertain world.

The Fourth Plenary Session has set forth a number of forward-looking objectives for the 15th Five-Year Plan. These include establishing a modernised industrial system, accelerating high-level technological self-reliance, building a robust domestic market, vigorously boosting consumption, increasing effective investment, promoting high-level opening-up, and facilitating co-ordinated regional development. Such initiatives were formulated, through scientific analysis, to offer a precise response to the current internal and external challenges and hence ensure our country's steady advancement towards high-quality development. It is also essential that Hong Kong gets a good grasp of these strategic directions and seizes the opportunities they bring about for achieving breakthroughs in future.

Guided by the spirit of the Fourth Plenary Session, Hong Kong will take proactive steps to align itself with national development strategies and integrate into the overall national development. The Northern Metropolis serves not only as a platform for deepening co-operation within the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), but also as a key vehicle for attracting enterprises and investment. Accelerating the development of the Northern Metropolis is vital to Hong Kong's future and is one of the most important policy objectives of the HKSAR Government.

Under the co-ordination of the Hong Kong and Macao Work Office of the CPC Central Committee and the Hong Kong and Macao Affairs Office of the State Council, as well as the thoughtful arrangements of the People's Government of Beijing municipality and the People's Government of Hebei Province, I led a delegation of over 40 members to visit the Beijing Municipal Administrative Center and the Xiong'an New Area. In addition to HKSAR government officials, the delegation included representatives from non-governmental organsations, the business, finance and I&T sectors, as well as senior management from all eight publicly-funded universities in Hong Kong. Over the course of three days, we visited 12 locations, including business districts, I&T bases, transportation hubs, university campuses, cultural facilities and integrated service centres. We were deeply inspired by the strategic planning, foresight and rapid development demonstrated by both places.

Regarding the development of the Northern Metropolis, several key issues warrant further efforts to explore ways to achieve prompt implementation. First, we should accelerate development and unleash greater potential through institutional innovation and removing systemic barriers. Second, we should develop and adopt policies more flexibly to anchor target industries and attract global talent. Third, we should strengthen the construction process and integrated management of development areas through technological application and digitalisation for delivering higher-quality, more efficient, and people-centred public services. Fourth, we should pursue in-depth planning and enhanced coordination to promote collaborative development across cities within the GBA. Fifth, we should fully leverage Hong Kong's unique advantages under the "one country, two systems" arrangement and its roles as a "super-connector" and "super value-adder" to strengthen industrial alignment, I&T collaboration and academic exchange with the Beijing-Tianjin-Hebei region, thereby achieving resource sharing, complementary strengths, coordinated development, and mutual success.

It is essential that we remain steadfast in our vision and see the blueprint through to completion. Whether it is accelerating the development of the Northern Metropolis or strengthening Hong Kong's role as a leading international centre for finance, trade, shipping, and innovation and technology, we must stay true to our direction and objectives, uphold strategic focus, and advance with unwavering determination. As highlighted in the communique of the Central Committee's plenary session, China continues to be in a stage of development marked by both strategic opportunities and growing risks and uncertainties. In the face of an increasingly complex and volatile global environment, it is all the more vital that we stay committed to managing our own affairs well—moving forward with steadfast resolve, pragmatic action, and a clear sense of purpose—to write a new and promising chapter in this new era.

October 26, 2025

At this year's IMF and WBG Annual Meetings, there were prevalent concerns about the global economic outlook. Amid persistent geopolitical tensions and escalating tariff disputes, the global economy remains highly uncertain. The IMF has revised its global growth forecast for this year to 3.2%, down 0.1 percentage point from last year, and anticipates further slowdown to 3.1% in 2026. Across the world, there is hope that current tensions in international trade can be eased to create a more stable environment for growth.

Another key topic at the Annual Meetings was the rising debt pressure faced by many economies. With interest rates remaining high, some advanced and emerging economies with already high debt levels are facing an increasing debt servicing burden. This has raised mounting concerns over the long-term sustainability of their public finances. Coupled with slowing economic growth, various governments are facing tightened fiscal space, which may limit their ability to increase public spending and improve livelihoods.

Despite the challenges, new opportunities are also emerging. In response to trade tensions, the global economy has shown resilience. At the same time, global supply and value chains are being restructured, and regional cooperation is gaining momentum. For instance, as the IMF has noted, many Asian economies are adjusting their economic structures, boosting domestic demand, and enhancing regional trade linkages to mitigate the impacts of external shocks. In the medium to long term, regional economic integration is expected to boost the region's GDP by 1.4%. In fact, Asia is projected to remain the largest contributor to global growth this year and next, at around 60%.

As for digital assets, which have been rapidly emerging in recent years, there is a growing recognition among economies that the influence of these assets is expanding expeditiously. The underlying blockchain technology has also been applied in numerous real-life scenarios, particularly in enhancing regional trade and addressing the efficiency issue and pain points of cross-border settlements. While digital assets such as stablecoins hold great business potential, there is a consensus that international collaboration should be strengthened to manage the risks posed by these innovations to the stability of financial systems.

Whether at the IMF and WBG meetings or in my exchanges with US business leaders and think tank representatives, there was generally a shared view that maintaining stable China-US relations was not only beneficial to the development of both countries, but also vital to the future of the global economy. There are high hopes for continued constructive engagement between the two countries.

In the near future, the global economy is expected to advance amid twists and turns. New forms of economic globalisation are being explored and regional economic integration is gaining momentum. History shows that no matter how the world evolves, it remains certain that mutual respect and win-win co-operation are the principles for achieving successful development. Even in disagreement, we must keep striving for common ground through communication, dialogue and mutual understanding.

With the unique advantages under the "one country, two systems" framework, Hong Kong plays the role of a "super connector" and "super value-adder" in connecting China and the rest of the world. Given the current international landscape, we must take the opportunity, be bold to make breakthroughs and embrace innovation. By strengthening co-operation through forging new networks and connections, we can make greater contributions to regional and global connectivity and prosperity.

At various luncheons and roundtables with the business community, I briefed participants on Hong Kong's latest economic situation and future development directions. The areas which I focused on included our efforts to promote financial and innovation and technology (I&T) development, support regional integration of industrial and supply chains, attract enterprises and talent, accelerate the development of the Northern Metropolis, and foster industrial collaboration in the Guangdong-Hong Kong-Macao Greater Bay Area.

During the exchanges, many local business representatives noted the rapid advancements made by Chinese Mainland enterprises in various I&T fields this year. This has prompted them to reassess our country's I&T capabilities. Biomedical science has emerged as a major area of focus for expanding co-operation, given that human health is a universal issue that transcends national borders and geopolitics. Many also expressed a desire to use Hong Kong – with an institutional framework and market environment with which they are familiar – as a springboard for entering the Chinese Mainland and wider Asian markets, and exploring new opportunities.

In recent years, Hong Kong has made solid progress in finance and I&T development, and in attracting businesses and talent. The city has also achieved encouraging results in various international rankings. This trip allowed me to present these developments personally to the local business and think tank communities, enabling them to better understand Hong Kong's situation and opportunities, and paving the way for more mutually beneficial co-operation.

October 19, 2025

This week, the Annual Meetings of the International Monetary Fund and the World Bank Group will be held in Washington, D.C. I will attend the meetings as a member of the Chinese delegation. The event brings together officials responsible for finance and economic affairs, representatives from central banks, leaders of businesses and non-governmental organisations, as well as academics from around the world to discuss a wide range of pressing global issues. These include the latest developments and outlook for the global economy, finance, international trade, global supply chains, climate change and digital transformation.

While the global economic and market outlook faces a range of uncertainties each year, growing geopolitical tensions, protectionism, unilateralism, tariff disputes and financial market volatility in major economies have heightened concerns about the risks facing international markets in the year ahead. Although global financial markets have generally performed well this year, record-high gold prices and significant fluctuations in digital asset values reflect a trend toward diversification away from USD-denominated assets as a means of mitigating risk.

Despite persistent geopolitical and economic uncertainties in the international environment, we remain convinced that candid communication and exchange help dispel misunderstandings, enhance mutual understanding and build trust among economies.

During my stay in the US, I will also meet with local financial institutions, representatives of investment funds, major chambers of commerce, academics and think tanks. In addition to exchanging views on current trends and developments in international finance and trade, I will brief them on Hong Kong's latest developments and competitive advantages — particularly the potential of the Northern Metropolis and the thriving opportunities presented by the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) — while addressing topics of interest to them.

Despite global uncertainties, Hong Kong will, as always, uphold its status as a free port under the "one country, two systems" arrangement. We remain committed to maintaining a simple and low tax regime, and to implementing open, stable and predictable economic and trade policies. We welcome foreign investors — including those from the US — to invest in and grow their businesses in Hong Kong, sharing in the opportunities the city offers. Hong Kong's unique strengths — its connectivity with the Chinese Mainland and the world, a high degree of internationalisation, and the convergence of global capital, institutions, and talent — are particularly pronounced in the current climate. The city offers a familiar, business-friendly environment that aligns seamlessly with international best practices.

According to the World Investment Report 2025 released by the United Nations Conference on Trade and Development, Hong Kong recorded US$126 billion in foreign direct investment inflows last year, rising to the third place globally. In the same year, the number of Hong Kong companies with parent companies based overseas or in the Chinese Mainland reached nearly 10,000 – a historic high. Among them, nearly 1,400 had their parent companies based in the US, marking a 9% increase from the previous year.

US government data also show that in the second quarter of this year, US exports of services to Hong Kong rose by more than 15% year-on-year, reflecting the significant growth of American financial and professional services in Hong Kong.

In fact, Hong Kong's financial markets have been vibrant this year, with active initial public offering (IPO) activities. The stock market has risen by around 30% year-to-date, offering investors substantial returns. Participation by international investors in Hong Kong's equity, bond, foreign exchange and wealth management markets has increased notably. In particular, both the amount and proportion of cornerstone investments by foreign investors in IPOs have reached a five-year high.

At the same time, the dynamic development of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) presents opportunities that are not to be missed by global investors. Wealth management is a prime example. As one of the wealthiest regions in the country, residents in the GBA have shown strong interest in diversified asset allocation — serving as a key driver for Hong Kong's development into the world's largest cross-boundary wealth management centre. We are pleased to see many overseas financial institutions in the asset and wealth management sector expanding their teams — and even increasing their office space severalfold — in Hong Kong this year, reflecting their strong confidence in the city's business prospects.

Furthermore, the innovation and technology (I&T) industry in the GBA is booming. With enhanced collaboration among cities in the region, their comparative advantages can be further leveraged, boosting the momentum of industries such as artificial intelligence, biomedical sciences and new energy. This presents significant appeal to overseas I&T enterprises. For example, in the field of biomedicine, companies can accelerate the research and market launch of new drugs through clinical trial institutions established in the Hetao Co-operation Zone, which spans both Shenzhen and Hong Kong. We will continue to promote initiatives in the Hetao Co-operation Zone to facilitate the flow of people, capital, materials and data — thereby supporting greater innovation and R&D activity.

Last week, we announced the fifth batch of strategic enterprises landing in Hong Kong, marking a milestone as the number of such enterprises attracted by the Office for Attracting Strategic Enterprises surpassed 100. Over the years, the number of overseas enterprises setting up operations in Hong Kong has been steadily increasing. In this batch alone, nearly 40% are overseas firms — including three of the world's top ten pharmaceutical companies and leading players in artificial intelligence. Their decision to establish or expand operations in Hong Kong reflects strong confidence in the city's access to capital, talent, a vibrant I&T and manufacturing ecosystem, and a market conducive to rapid scaling.

Openness, cooperation, mutual learning and win-win collaboration have long been the cornerstones of global economic prosperity and stability. This shared belief continues to guide the path forward for many. We will continue to deepen our strong ties with traditional markets, while actively exploring emerging ones and broadening our network of partners — fostering development through diversified and multi-level exchanges and collaboration.

October 12, 2025

When planning their holiday itineraries, both locals and visitors are drawn to unique attractions that tell a story, offering them a deeper understanding of the city, as well as its history and culture. During these explorations, they often gain new perspectives and even delightful surprises about Hong Kong.

A few days ago, I explored a trending short walking route through Central and Sheung Wan, an itinerary popular with both locals and visitors. The route combines elements of Hong Kong's development history, local culture and festive charm. Together with its accessibility and convenience, the route is an ideal choice for a "city walk".

The first stop of the "city walk" route was the Hong Kong Museum of Medical Sciences, a popular spot in recent years which showcases the development of medical and health sciences in Hong Kong. An array of its creative IP plushies have also been highly sought after by visitors. I happened to see some visitors buying a number of "Dopamine" plush toys as souvenirs for friends to bring them joy. Others bought several "Fat Cell" to encourage their friends to work harder to stay fit. These souvenirs are probably available only at this particular attraction in Hong Kong.

The museum building is a declared monument carrying deep historical significance. Its exhibits and thematic exhibitions encompass a wealth of knowledge on medical development. Together with the IP plushies, they offer a more engaging and visualised approach to medical education, a subject that is typically more serious. Some visitors told me that they visited the museum specifically for the plushies after seeing recommendations on Xiaohongshu. This demonstrates the powerful synergy in publicity created by combining creative IP products with social media platforms.

Walking downhill from the museum, I stopped by a traditional Chaozhou sticky rice dumpling shop in Sheung Wan, where the staff were busy crafting traditional Chaozhou-style mooncakes. With a history of over 60 years, the shop has bustled with activity in the days leading up to Mid-Autumn Festival. Their commitment to quality, combined with their traditional craftsmanship and a strong human touch, has cultivated a loyal customer base and attracted patronage from both locals and visitors.

From a commitment to quality to IP products, "tradition", "quality", "uniqueness" and "innovation" are the keywords driving consumers' purchasing power.

According to the provisional figures released recently, the value of total retail sales in August reached $30.3 billion, up by 3.8% year-on-year, exceeding market expectations. This marks the fourth consecutive month of positive growth and the largest increase in 20 months. Supported by a stabilising local property market, a buoyant stock market, increasing visitor arrivals and more, Hong Kong's retail sector is showing signs of steady recovery. Notably, 80% of surveyed businesses expect a sales boost during this year's National Day Golden Week, with some even anticipating double-digit increases.

Looking ahead, a series of mega events will continue to support the economic momentum in the remainder of the year. These include the Tai Hang Fire Dragon Dance during the Mid-Autumn Festival, the Hong Kong Wine   Dine Festival to be held later this month with extended opening hours until midnight, the 15th National Games in November, as well as a diverse range of Christmas festivities, all of which are expected to boost foot traffic and consumer spending. Meanwhile, high-profile business events such as the Global Financial Leaders' Investment Summit and the Hong Kong FinTech Week in November, and the Business of Design Week in December are expected to attract high-spending, high value-added business visitors. These occasions will bring significant benefits to the local retail, catering and hotel sectors. The Government will continue to work with industry stakeholders to strengthen collaboration and synergy across mega events, with a view to maximising their economic impact.

This year's Policy Address outlines an array of initiatives to promote the integrated development of "Mega Events + Tourism", including local thematic immersive tours. Relevant bureaux and departments are working at full pace to upgrade Hong Kong's tourism infrastructure, products and services to bring in more visitors, encouraging them to stay longer and pay repeated visits to the city.

Meanwhile, efforts to attract strategic enterprises and investment will continue, supporting Hong Kong's economic upgrade and transformation. This week, we will host a signing ceremony for a new batch of strategic enterprises, welcoming over 10 companies to establish or expand their presence in Hong Kong. The group includes three of the world's top ten pharmaceutical firms, as well as, for the first time, cultural and creative enterprises integrating innovation and technology – a direction set out in this year's Budget. With their inclusion, the total number of strategic enterprises brought in by the Office for Attracting Strategic Enterprises will exceed 100.

September 28, 2025

At this critical juncture, Hong Kong is in a favourable position. With the strong support of the nation and the relentless efforts of both the HKSAR Government and the industry, Hong Kong's status as an international financial center continues to be strengthened. In the recently released Global Financial Centres Index^*, the score gaps between Hong Kong and the top two centres – New York and London – have further narrowed to just 2 and 1 points respectively. Hong Kong maintains its position as the third in the world and the first in the Asia-Pacific region. Hong Kong ranks first in the world in several sub-categories, including "fintech offerings", "business environment", "infrastructure" and "reputational and general". These achievements demonstrate that, with the Central Government's strong support and the concerted efforts of the HKSAR government and the industry, Hong Kong's financial strength continues to grow and gain international recognition.

In fact, Hong Kong's financial markets have been performing strongly since the beginning of this year. For example, the total amount of funds raised through initial public offerings (IPOs) has reached nearly HK$150 billion – ranking first in the world – with a notable increase in participation from international long-term funds. Market sentiment has been buoyant, with the Hang Seng Index rising more than 30% year-to-date. Trading activities in the stock market have reached record highs, with the average daily turnover (ADT) exceeding HK$250 billion. In the first eight months of this year, the amount of refinancing of listed companies was close to three times that of IPOs, reflecting the depth and vibrancy of Hong Kong's financial market.

It is worth highlighting that the surge in IPO activity, strong capital inflows and heightened trading volumes have also supported the performance of A-shares, reflecting a healthy synergy between the capital markets of Hong Kong and the Mainland. According to data from the Hong Kong Exchanges and Clearing Limited (HKEX), since September last year, following the listing of 14 H-share companies in Hong Kong, the ADT of their corresponding A-shares on the Mainland has increased by 28% overall, while their A-share prices have risen by 15% on average. An increasing number of high-quality Mainland enterprises are choosing to list in Hong Kong as part of their international expansion strategies. These listings not only accelerate their global business development, enhance revenue generation and boost international visibility, but also foster mutual growth of the financial markets in Hong Kong and the Mainland.

These encouraging market developments have reaffirmed the unique role of Hong Kong's financial system as a vital bridge between capital from the Chinese Mainland and the world. Amid profound shifts in the global political and economic landscape, it is crucial that we seize the current momentum and, through more forward-looking reforms and initiatives, convert these positive trends into sustained drivers of higher-quality and more diversified development of Hong Kong's financial sector. This is not only essential to strengthening and elevating Hong Kong's position as an international financial centre, but also a key path to unlocking growth potential and contributing to the nation's vision of becoming a financial powerhouse.

To sustain this lasting momentum, Hong Kong must find its accurate position within the broader context of national development. Currently, the combined market capitalisation of the stock exchanges in Hong Kong, Shanghai and Shenzhen is roughly equivalent to China's gross domestic product (GDP). Meanwhile, the total market capitalisation of the two major US stock exchanges is more than twice the size of the US' GDP. This comparison highlights the substantial growth potential of China's capital markets and their capacity to serve the real economy more extensively and effectively. It also underscores the important mission that Hong Kong shoulders, as well as the vast potential it holds.

To this end, we are driving the development of all segments of the financial market with a clear and strategic macro perspective. At the heart of our approach is a dual-track strategy: strengthening our traditional advantages while pursuing diversification and expansion. As we continue to enhance established segments, such as the stock market, asset and wealth management and green finance, we are also fully committed to developing emerging sectors – including fixed income and currency (FIC) markets, commodity trading and digital assets – into powerful new engines of growth. Through these efforts, we aim to build a more resilient, diversified and comprehensive financial ecosystem.

This is a long-term endeavour that requires unwavering perseverance. And we are making steady progress. Take the FIC markets as an example: they are not only vital tools for financing and investment, but also play a crucial role in helping investors manage risk, enabling them to operate with greater confidence and ambition. The demand for such instruments is particularly strong in Asia, where international bond issuance has grown at an average annual rate of 16% over the past 15 years – far outpacing the global average of about 4%. Against this backdrop, Hong Kong has firmly established itself as Asia's leading hub for international bond issuance, accounting for nearly 30% of the region's total. Notably, green and sustainable bonds issued through Hong Kong represent about 45% of the regional total—clear evidence of the tangible results delivered by our forward-looking strategies and sustained efforts.

To further develop the FIC markets, under the coordination of the HKSAR Government, the relevant financial regulators have jointly formulated the Roadmap for the Development of Fixed Income and Currency Markets, which was released last week by the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA). The Roadmap comprises 10 initiatives centred around four key pillars – primary market issuance, secondary market liquidity, offshore RMB business and next-generation infrastructure – all aimed at establishing Hong Kong as a major global hub for FIC products.

The development of the FIC markets is fully aligned with our long-standing strategy to reinforce Hong Kong's role as a leading offshore RMB business hub. In 2024, RMB-denominated "dim sum bond" issuance in Hong Kong exceeded RMB 1 trillion, doubling the amount in 2021. The issuer base has become increasingly diverse, reflecting a growing global demand for diversified asset allocation, particularly in RMB-denominated products. We will continue to enhance cross-boundary connectivity, deepen RMB liquidity and broaden the range of available products. We will expedite the launch of offshore RMB treasury bond futures and other risk management tools; secure support from Mainland authorities to expand RMB liquidity facilities. We have also rolled out cross-boundary bond repurchase (repo) business. Together, these efforts aim to foster a more robust and efficient market environment for international investors to hold RMB assets over the long term, while also broadening the practical use cases for offshore RMB.

At the same time, we are actively upgrading Hong Kong's financial infrastructure. The CMU OmniClear, under the HKMA, is working with the HKEX to explore the development of a single platform that enables investors to centrally manage and cross-collateralise a range of assets –including stocks, bonds, etc. – including assets under the "Connect Schemes". We are also strengthening connectivity with international markets, including Switzerland, the United Arab Emirates and other jurisdictions, while actively promoting the recognition of Chinese Government Bonds as collateral by more clearing houses. Meanwhile, the SFC is assessing the feasibility of an electronic bond trading platform to be built and operated by the market. It is also spearheading the development of a commercial repo market and the introduction of a central counterparty clearing mechanism in Hong Kong. These initiatives are aimed at enhancing market liquidity and operational efficiency.

The implementation of these measures will help build a more effective offshore RMB yield curve, providing issuers with more accurate pricing benchmarks and better meeting the asset allocation needs of global investors. These efforts will elevate Hong Kong's offshore RMB ecosystem to a new level.

As we celebrate the National Day on 1 October, we are reminded that amid a complex and ever-evolving international landscape, our country's strategic resolve and developmental resilience remain the strongest pillars supporting Hong Kong's prosperity, stability and accelerated progress. With its steadfast commitment to high-quality development, and its growing leadership in global governance, international trade, and the green transition, our country has demonstrated its responsibility as a major country. It is also actively promoting a more inclusive and universally beneficial model of economic globalisation. All these efforts have created new and diverse development opportunities for Hong Kong. We will continue to harness the unique strengths of the "one country, two systems" framework and fully leverage our own advantages—placing the development of the international financial centre at the core of our efforts to serve the country's needs. As a "super connector" and "super value-adder", Hong Kong will make greater contributions to the country's prosperity and the great rejuvenation of the Chinese nation.

*Note: The report was jointly compiled by the Z/Yen Group from the United Kingdom and the China Development Institute from Shenzhen.

September 28, 2025

To accelerate economic growth, the Policy Address sets out strategic plans to leverage Hong Kong's unique strengths by reinforcing traditional industries while fostering the development of emerging sectors. On the one hand, for example, it aims to solidify Hong Kong's status as an international financial centre by enhancing the related infrastructure and overall competitiveness. On the other hand, the Policy Address places a strong emphasis on nurturing emerging industries, especially by harnessing the rapid advancement and broad application of artificial intelligence (AI) in innovation and technology (I&T). The Policy Address also highlights the need to accelerate the development of the Northern Metropolis development through optimising the top-level governance structure, driving institutional innovation, and implementing a comprehensive strategic blueprint. These efforts are designed to better accommodate I&T enterprises in Hong Kong, promote industrial transformation, and inject fresh momentum into Hong Kong's economic development.

The Northern Metropolis is a key driver of Hong Kong's industrial restructuring, and the vehicle to better realise the synergistic development of financial services, I&T and trade. According to the Policy Address, the Chief Executive will chair the Committee on Development of the Northern Metropolis, under which three working groups have been established. They include the Working Group on Devising Development and Operation Models, led by me; the Working Group on Planning and Construction of the University Town, led by the Chief Secretary for Administration; and the Working Group on Planning and Development, led by the Deputy Financial Secretary.

The three working groups have distinct focuses. The two working groups led by the Chief Secretary and myself respectively are primarily tasked with driving the development of specific industries; while the working group led by the Deputy Financial Secretary will coordinate the efforts of various policy bureaux and departments – including those overseeing planning, works, transport, environmental protection and housing – to ensure that land and supporting infrastructure will be made available in a timely manner to tie in with the landing of industries. At the heart of this approach is having clear targets and flexible approaches. For clear targets, we mean linking the development of the Northern Metropolis with strategic industries, and this will serve as a guiding objective for all related work. Flexible approaches involve exploring innovative, flexible and pragmatic options across various aspects, such as legal frameworks, administrative procedures and financing models, with a view to expediting the development of the Northern Metropolis and associated industries.

The Working Group on Devising Development and Operation Models will hold its first meeting this month. The goal of this working group is to design development and operational models based on the nature and scale of the designated development areas in the Northern Metropolis. This includes setting up one or more dedicated companies, or statutory or non-statutory bodies, for various industrial parks, and devising appropriate public-private partnership approaches. It will also introduce a shift in land tendering from "highest bidder wins" to industry-linked "two-envelope approach".

The "two-envelope approach" differs from the traditional "highest bidder wins" approach in land tendering. It requires bidding enterprises to submit technical proposals and development plans, allowing the Government to comprehensively consider both the investment and technology that can be brought by the enterprises; their facilitation of mid- and downstream industries; economic and tax contributions; job creation; as well as the overall strategic planning of the Northern Metropolis. This is an important means for the Northern Metropolis to become "industry-linked".

Furthermore, considering the substantial financial investments required by the Government and enterprises when developing large-scale industries, the working group will design various financing options. These will include different types of equity, bonds, market financing, public-private partnership models, as well as government injections and provision of land as a form of capital participation. For example, in the case of provision of land as a form of capital participation, one approach is to establish a company for individual projects, with the Government injecting land while the enterprise would be responsible for funding, construction and operation, thereby carrying out the development together. The target is to fully leverage market resources to accelerate land development and project advancement, while alleviating the financial burden on the Government for advanced works such as site formation and infrastructure engineering.

To accelerate the institutional development and infrastructure advancement of the Northern Metropolis, we plan to introduce a dedicated legislation that, through appropriate authorisation, will expedite decision-making, enhance efficiency and simplify statutory procedures. This includes speeding up the approval of building plans, relaxing planning restrictions, handling land compensation more flexibly, and better managing the cross-boundary flow of production factors.

Another key point in the Policy Address is the formulation of "preferential policy packages" to enrich our toolbox for attracting investments. In today's highly competitive global landscape, the race to attract high-quality, leading enterprises is intense. Many neighbouring economies are actively deploying preferential policies to strengthen their own competitive edge. In Hong Kong's case, building on our simple and low tax regime, we will adopt a flexible approach through policy innovation. Depending on the specific merits of each case, we will consider applying targeted measures from the preferential policy packages – such as land allocation, concessional land premiums, tax incentives, priority access to government procurement, talent admission schemes, and even subsidies. When assessing individual cases, key considerations will include the potential economic benefits to Hong Kong, the enterprise's contribution to industrial upgrading and transformation, job creation and the prospects for future tax revenue.

During the process, InvestHK and the Office for Attracting Strategic Enterprises (OASES) will engage in negotiations with the relevant enterprises, conduct due diligence, and secure support from the appropriate policy bureaux before submitting their recommendations to me for a final decision.

The Policy Address also proposed a number of concrete measures to further support industrial development, including initiatives to advance the AI and life and health technology sectors – both of which align closely with the development of the Northern Metropolis. OASES will soon announce a new batch of strategic enterprises, including several world-class pharmaceutical companies. Their decision to establish a presence and invest in Hong Kong is a strong vote of confidence in the city's future development.

There is broad consensus across the community that accelerating the development of the Northern Metropolis is essential to diversifying Hong Kong's industrial structure. The Northern Metropolis plays a pivotal role not only in strengthening Hong Kong's core competitiveness, but also in creating quality employment opportunities for our future generations. Let us stay focused on our goals and act with a sense of urgency—there is no time to lose. Together, we can drive Hong Kong toward better development, with brighter career prospects for our people, and a more fulfilling life for all.

September 21, 2025

The green transition and sustainable development are crucial to the well-being of each of us and future generations. With extreme weather events becoming increasingly frequent, the importance of this issue is self-evident. It is not only about striving for a better future, but also about seizing significant business opportunities. In particular, the real-world application of frontier technologies will foster the growth of emerging and future industry clusters.

One of the highlight events of this year's Hong Kong Green Week was the AVPN Global Conference 2025. Held in Hong Kong for the first time in six years, the conference attracted over 1,500 global leaders in philanthropy, impact investing, sustainable finance, and other related fields. The lively atmosphere at the event reflected Hong Kong's status as an international financial centre and a leading green and sustainable finance hub in Asia — particularly in the field of impact investing.

When I spoke with participants at the Green Week events, they collectively pointed out that while some Western countries have seen a decline in enthusiasm and responsibility in addressing climate change, the Asian region – especially China – remains firm and active in advancing sustainable development. The region is taking on a significant leadership role and earning respect.

In fact, investment in sustainable development in the Asia-Pacific region is steadily increasing. Take the energy transition as an example: it is estimated that the region's investment in this area surpassed US$1 trillion for the first time last year, accounting for about half of global investment in this field and doubling that of the Americas. In particular, China is a major contributor to and innovator in the global green transition. Beyond its firm commitment to the "3060" dual carbon goals and its contribution of nearly 40% of the world's total investment in the energy transition, China's leading technologies and vast production capacity in new energy sectors — such as lithium batteries, photovoltaic panels and electric vehicles — provide strong support for advancing the global green transition.

It has been 10 years since the United Nations (UN) proposed the 2030 Agenda for Sustainable Development in 2015. The 17 Sustainable Development Goals (SDGs) — including climate action, affordable and clean energy, poverty eradication and reduced inequalities — still face a significant financing gap. For example, to address climate change, the UN estimates that emerging markets and developing countries (excluding China) will need US$2.4 trillion per year by 2030 to meet climate goals. That is four times what is currently invested.

Faced with a global funding gap of trillions of dollars, no single country or region can fully bridge this shortfall by relying solely on governments or philanthropic organisations. Private market capital must play a role. This is one of the reasons why impact investing has attracted increasing global attention in recent years.

Last year, assets under management in impact investing funds were estimated at approximately US$1.6 trillion, and are projected to grow to around US$6 trillion by 2031. The key lies in finding how impact capital can be effectively connected with high-quality projects that generate social impact. Hong Kong, as an international financial centre, can actively contribute in the following ways:

First, building a thriving impact investment ecosystem. Today, many global wealth holders no longer focus solely on maximising financial returns – they also emphasise creating a positive impact on human society. Hong Kong brings together numerous family offices, charitable organisations and foundations, as well as regional and international impact investment networks. We must facilitate collaboration among different stakeholders, encourage cross-sectoral linkages, and connect them with socially impactful projects to generate greater benefit and impact. The iLink Online Portal, launched by the Hong Kong Academy for Wealth Legacy, has brought together nearly 50 family offices and internationally recognised strategic partners to help promote philanthropic investments.

It is worth noting that startups play an important role in this ecosystem. Whether they are local startups nurtured by the Hong Kong Science and Technology Parks or Cyberport, startups attracted from Europe and the US, or globally leading firms, their frontier technologies and innovation and technology (I&T) products and solutions — in areas such as green transition, healthcare, financial services, and education — can help drive more equitable and sustainable development, both regionally and globally. They also offer investors promising investment opportunities. By combining Hong Kong's dual strengths in finance and I&T — and enabling them to reinforce each other — we can inject new impetus into Hong Kong's development.

Second, helping to establish internationally trusted standards and rules to facilitate investment. For example, in green and sustainable finance, developing internationally recognised taxonomies as well as financial reporting and disclosure standards helps strengthen investor confidence in target projects and reduce communication costs across sectors and regions. The Hong Kong Monetary Authority (HKMA) launched a public consultation last week on Phase 2 of the Hong Kong Taxonomy for Sustainable Finance, which proposes to cover "transition activities" — such as assisting high-emission industries to decarbonise. This will help channel capital more effectively towards relevant projects and respond to the actual needs of many developing regions.

Third, promoting more product innovation. Hong Kong is a leader in green and sustainable finance in Asia. But beyond scale, we should offer innovative products to meet the development needs of different countries and regions. Catastrophe bonds and infrastructure securitisation are good examples. The Hong Kong Monetary Authority (HKMA), through Project Ensemble, is exploring how tokenisation could enhance the issuance and trading of carbon credits, thereby increasing the liquidity and depth of carbon markets. I am also pleased to see that during this year's Hong Kong Green Week, there were discussions on blended finance, which leverages public sector guarantees or support to channel more market capital into related projects.

We will continue to work in unity, striving to enrich the substance and ecosystem of our financial services. In doing so, we can enhance the vibrancy and influence of Hong Kong as an international financial centre, enabling the city to make new and greater contributions to the country's development as a financial powerhouse, the betterment of human life, and the sustainable development of the world.

September 14, 2025

During the War of Resistance, Hong Kong residents joined forces with compatriots across the country to fight gallantly against the Japanese army without any hesitation or fear for their own safety. Anti-Japanese salvation groups and patriots, such as the Hong Kong-Kowloon Brigade of the Dongjiang Column, took on varying roles including front-line operations, intelligence collection and logistical support. The Holy Family Chapel served as one of the Brigade's regular bases at that time. The adjoining grey-brick mansion bears a plaque above its main entrance inscribed with four Chinese characters "Tin Shui Lau Fong". The buildings had significant strategic values as they were remotely located, surrounded on three sides by mountains and accessible by water routes to South China. This made the site an operation base for the Brigade, a liaison point for intelligence exchanges between our forces and the international anti-Japanese front, as well as a co-operation site for the relocation of prisoners-of-war.

To commemorate the heroic resistance of the Dongjiang Column against Japanese invaders in Hong Kong, the HKSAR Government has compiled information on over 40 local historic sites of the War of Resistance. Restoration and environmental maintenance works, alongside with installation of information boards or commemorative plaques have also been carried out at many of the locations. These sites are not merely historical sites of the War of Resistance, but also vivid, living textbooks that bring history to life. They remind us that during the War of Resistance, countless compatriots fought in unity against the enemy, advancing one after another, defending our homeland with their blood and lives, and fighting for the dignity and survival of the nation. They also remind us that the destiny of Hong Kong has always been closely linked with that of our country.

By remembering history and honouring the martyrs, we understand more deeply that peace is hard-won, and must be safeguarded and cherished with greater devotion.

The Chinese nation has never feared violence, and it is part of our traditional wisdom that "stopping a war is the true military accomplishment". The Grand Gathering Commemorating the 80th Anniversary of the Victory in the Chinese People's War of Resistance Against Japanese Aggression and the World Anti-Fascist War, held in Beijing last Wednesday, served as a clear demonstration of safeguarding peace with strength. In his important speech at the Grand Gathering, President Xi Jinping emphasised that the destiny of mankind is interconnected. He stressed that only when all nations and peoples treat each other as equals and live in harmony can common security be safeguarded, the roots of war be eliminated, and historical tragedies be prevented from recurring. This speech serves as a timely wake-up call in the current international landscape.

The world today is marked by frequent geopolitical conflicts and rampant unilateralism and hegemonism. While protectionism is causing significant impact on the global economy, the shadow of tariff wars lingers on. Global development and governance are facing greater challenges than ever. Against this backdrop, President Xi Jinping has successively put forward the Global Development Initiative, the Global Security Initiative, the Global Civilisation Initiative, and the Global Governance Initiative. While each of these initiatives has its own focus, they all run in parallel and share common ground, namely upholding mutual respect, equal participation, mutual benefit and win-win co-operation, as well as practising genuine multilateralism through extensive consultation and joint contribution for shared benefits, thereby building a community with a shared future for mankind.

Take the Belt and Road Initiative as an example. Since it was proposed in 2013, it has become one of the largest and most extensive international economic cooperation platforms in the world, bringing tangible benefits to Belt and Road countries and regions. China has signed more than 230 cooperation documents on the Belt and Road Initiative with over 150 countries and more than 30 international organisations, supporting and promoting thousands of projects and creating hundreds of thousands of jobs. The World Bank forecasts that by 2030, Belt and Road-related investment is expected to lift 7.6 million people in participating countries out of extreme poverty and 32 million people out of moderate poverty.

Hong Kong has been contributing actively to the Belt and Road Initiative. In finance, for example, over the past two years we have established cross-listing of exchange products with the financial markets in the Middle East, promoting two-way capital flows. Last week, a development bank from a Central Asian country made an inaugural issue of Renminbi dim sum bonds in Hong Kong. Last year, over US$80 billion of green and sustainable debt was issued in Hong Kong, with green bonds accounting for 45% of the regional total in Asia. At the same time, we are promoting transition financing to help the region achieve green transformation. Since 2021, we have also issued seven catastrophe bonds totalling around US$800 million, helping relevant countries in Asia and the Americas mitigate the losses caused by natural disasters. In addition, by securitising infrastructure loans, we have supported relevant regions in attracting more capital to accelerate infrastructure development.

To further enhance Hong Kong's role in the Belt and Road Initiative, the HKSAR Government and the Hong Kong Trade Development Council will jointly host the 10th Belt and Road Summit at the Hong Kong Convention and Exhibition Centre in Wan Chai this Wednesday and Thursday. The Summit will bring together more than 90 senior officials and business leaders from 18 Belt and Road countries and regions to conduct in-depth exchanges on cooperation and vast business opportunities in areas such as investment and financing, innovation and technology, infrastructure, shipping and logistics and professional services.

"Might may rule the moment, but right prevails forever." Moving towards a fairer, more reasonable and mutually beneficial pattern of global governance, and jointly building a more sustainable world, are the shared aspirations of people worldwide and the irresistible trend of history. By fully leveraging our role and function as both "super-connector" and "super value-adder" between the Mainland and the international community, Hong Kong can contribute more deeply, injecting new momentum and opening up new opportunities for our own development while actively supporting the national development strategies.

September 7, 2025

Let me briefly introduce the two WIPO events taking place tomorrow. In the morning, the HKSAR Government will sign a Memorandum of Understanding with WIPO, enabling the Judiciary of HKSAR to share its leading IP judgments on the "WIPO Lex-Judgments" database. This database currently contains some 2,200 judgments from over 40 jurisdictions, serving as a key reference for the legal profession, IP owners, the I&T community, academics and research institutions, while also fostering global co-operation in IP. By contributing to this platform, Hong Kong will help stakeholders gain a clearer understanding of its IP legal protection regime, thereby strengthening their confidence in using Hong Kong as a base for R&D and related investments.

In the afternoon, WIPO will release the Global Innovation Index Ranking of World's Top 100 Innovation Clusters. Formerly known as the "Science and Technology Clusters" ranking, it evaluates the innovation capacity of urban clusters around the world with two main metrics: the number of patent applications and scientific articles. This year, venture capital deals have been introduced as a new assessment metric, reflecting the vibrancy of I&T investment activities in a region and their role in driving technological advancement. The "Shenzhen-Hong Kong-Guangzhou" cluster has held the second position for five consecutive years. With Hong Kong and our fellow Greater Bay Area (GBA) cities continuing to increase investment in I&T and enhance collaboration, I am confident that our results this year will be even more impressive.

The two WIPO events carry profound symbolic and substantive significance. The GBA's top-tier position in the innovation cluster rankings, on the one hand, highlight the quantitative outcomes of its I&T advancement: the volume of patent applications, research publications and venture capital deals objectively demonstrate the region's robust innovation capacity. On the other hand, these metrics also reflect the qualitative excellence of GBA: its outstanding higher education and R&D capabilities, concentration of international talent, and strong capital market support for talent and projects. As for the sharing of IP judgments, it enables Hong Kong's high-standard, internationally aligned IP protection regime under the common law system to serve as reference for global markets on a broader scale.

It is fair to say that, after years of dedicated effort, Hong Kong has not only become a hub for the output and accelerated growth of I&T, but also a highly efficient platform for global innovation resources to create value – enabling the translation of technologies, facilitating tech-related transactions, and ensuring the protection of investments. In fact, IP is increasingly evolving into a high-value industry on a global scale. Beyond safeguarding the R&D investments and value created by inventors and tech companies through patent applications, professional valuation further allows IP rights to be traded or used as collateral for financing. As a promising emerging industry, IP also exemplifies the synergistic development between I&T and finance.

Building on strong institutional strengths and a robust value-creation system, Hong Kong's I&T development is also reflected in the growing convergence of talent, capital and enterprises. In terms of talent, Hong Kong's free, open and highly internationalised environment, complemented by high-quality education and living amenities, continues to attract more and more of the world's top scientific research talent. For example, the inaugural "AI Global Talents Connect", hosted by the Hong Kong Investment Corporation Limited (HKIC) last week, brought together over 350 experts, scholars and industry representatives in artificial intelligence (AI) from around the world. At the event, I also witnessed the official launch of the Hong Kong Qingyuan Club, which marks the formation of a network of elite young AI scholars based in Hong Kong with global reach.

Hong Kong has also made significant strides in leveraging investment as a key driver of growth. A case in point is the HKIC which functions as patient capital: for every $1 it invests, it has successfully attracted over $5 from long-term capital in the market for investment. This has further invigorated the venture capital and private equity ecosystem in the city. In addition, various thematic funds established by the government are also playing a catalytic role in developing strategic sectors.

On attracting tech enterprises, the number of start-ups in Hong Kong reached a record high of 4,700 last year, up 10% year-on-year. Among them, around 20 unicorns have been nurtured by the Hong Kong Science and Technology Parks Corporation (HKSTP) and Cyberport. These figures reflect the dynamism of Hong Kong's I&T ecosystem. Multiple government bodies and organisations – including the Innovation, Technology and Industry Bureau, the Commerce and Economic Development Bureau, the Office for Attracting Strategic Enterprises, Invest Hong Kong, HKSTP and Cyberport – have been proactively reaching out through diverse initiatives and channels to attract innovative companies to establish a presence in Hong Kong. These efforts are continuously drawing new enterprises, generating significant investment and creating numerous high-end jobs.

Looking ahead, Hong Kong will further leverage the unique advantages of the "one country, two systems" framework, deepen collaboration with fellow GBA cities, enhance its function as an international innovation hub, and exert greater influence in the global innovation chain. This will enable Hong Kong to make greater contributions to building our country as a science and technology powerhouse.

August 31, 2025

Hong Kong's engagement with the Middle East has been deepening and broadening in recent years, not just in finance and trade but also in arts, culture and sports. In the past two years, in addition to mega sports events like the Saudi Super Cup and LIV Golf, there have been more reciprocal visits among cultural and arts practitioners. For instance, this March, we held a Hong Kong film screening event in Dubai featuring a local film that grossed over HK$100 million in Hong Kong. The event attracted very positive response. These exchanges have deepened our understanding of each other's culture, history and customs, and laid a more solid foundation for future co-operation between Hong Kong and the Middle East across various fields.

In fact, travel between Hong Kong and the Middle East is also increasing. Last year, the number of visitor arrivals from countries in the Gulf region rose by 70% year-on-year. In the first seven months of this year, the figure rose by more than 50%. The Hong Kong-Riyadh direct passenger service, relaunched last October, is full from time to time, and there is potential for more frequent service. Last year, bilateral trade between Hong Kong and the Gulf region reached HK$150 billion, with an average annual growth of around 11% over the past five years. Hong Kong was also the United Arab Emirates' (UAE) seventh-largest trading partner. Besides having an Economic and Trade Office (ETO) in Dubai and Invest Hong Kong's consultant offices in Cairo, Egypt and Izmir, Turkey, we are actively working to open an ETO in Riyadh to further strengthen our economic, trade and cultural ties with the Middle East and North Africa.

Hong Kong's deepening engagement with the Middle East comes at an opportune time. Our country has been actively promoting and stepping up co-operation with the Global South for common development and mutual benefit. This has allowed Hong Kong to fully leverage its role as a "super connector" and ‘super value-adder' under the "one country, two systems" arrangement. Many Middle East countries have formulated visionary development strategies aimed at economic diversification beyond the energy industry, as well as accelerating infrastructure and industrial development, particularly in finance as well as innovation and technology (I&T). These would bring new opportunities to Hong Kong in finance, I&T and other professional services.

At the same time, recent geopolitical developments have prompted investors in the Middle East to diversify their allocations beyond the US and EU. Being internationalised and highly connected with the Mainland market, Hong Kong has market operations and regulatory standards that are seamlessly aligned with the best international practices. This has made us an ideal platform for diversified asset allocation and wealth management.

The HKSAR Government has been stepping up efforts to deepen ties with the Middle East. In May this year, the Chief Executive led a business delegation to Qatar and Kuwait, and 59 memoranda of understanding (MoUs) and co-operation agreements were signed. In recent years, I also visited countries in the Middle East and North Africa such as Saudi Arabia, Bahrain and Morocco. I attended the Future Investment Initiative (FII) conference twice in Saudi Arabia; in 2023, we successfully invited the FII to host its Asian edition in Hong Kong – the first time it was held in Asia. Last year, I led a delegation of over 100 financial and tech representatives to Saudi Arabia, and we witnessed the signing of various co-operation project agreements and MoUs in finance and I&T. Currently, two exchange-traded funds (ETFs) tracking the Saudi Arabia market are listed on Hong Kong Exchanges and Clearing Limited (HKEX), and two ETFs tracking Hong Kong stocks are listed on the Saudi Exchange. They symbolise the capital market connectivity between the two economies. As of last week, the two Hong Kong stock ETFs had a combined market value of over HK$16 billion, having gained around 30% since their listing.

Hong Kong's stock market has performed well since late September last year, and this has drawn the interest of capital from the Middle East in the Hong Kong financial market. They participated as cornerstone investors in a number of recent initial public offerings in Hong Kong, with commitments of over US$100 million. This indicates that Hong Kong stocks are attracting more diverse sources of new capital. According to data form the International Monetary Fund, investment positions in Hong Kong securities held by Saudi Arabia, Kuwait and Bahrain rose to US$6.3 billion in 2023, with a five-year compound annual growth rate of about 17%.

Co-operation between regulatory authorities and market stakeholders in Hong Kong and the Middle East has also continued to deepen. During the visit to Saudi Arabia last year, I held roundtables with the Saudi Capital Market Authority and industry representatives of the two places. This year, there have been multiple reciprocal visits to Hong Kong. Notably, in May this year, HKEX and the Saudi Tawadul Group co-hosted the "Hong Kong-Saudi Capital Markets Forum". In the same month, the Securities and Futures Commission entered into an MoU with the Abu Dhabi Financial Services Regulatory Authority to enhance regulatory information exchange.

Countries in the Middle East are seeking to accelerate infrastructure development, adopt more innovative technologies and promote industry development. This would create ample opportunities for Hong Kong's start-ups, tech firms and professional service providers, thereby opening up broader scenarios for the transformation and commercialisation of research and development outcomes for tech firms. Last year, several local tech start-ups joined my delegation to Saudi Arabia, and those engaged in green technology, smart cities and renewables have done especially well in expanding into the Middle East market. One such local start-up, which offers smart sensing solutions, has expanded its business into the Middle East subsequent to last year's visit. It will take part in the largest regional infrastructure project.

Beyond the Middle East, Hong Kong's ties with Central Asia are also growing. This week, a natural resources company based in Kazakhstan will list in Hong Kong. It will be the first simultaneous listing on HKEX and the Astana International Exchange (AIX), and the first RMB-denominated stock in Central Asia. It is a new page of co-operation between the financial markets of Hong Kong and Central Asia as well as RMB internationalisation.

Looking forward, in the second half of the year, HKSAR Government officials will continue to promote to the world the strengths of Hong Kong and the Mainland, and the business opportunities we offer. That includes leading delegations to overseas regions to strengthen multi-level and cross-sector engagement and co-operation with emerging markets, thereby creating new opportunities for our enterprises and institutions.

August 24, 2025

Take merchandise export as an example. While geopolitical tensions and tariff wars are reshaping global trade patterns and supply chains, Hong Kong, as a transshipment hub, has recorded double-digit year-on-year growth in merchandise trade over the past few months. This growth, on the one hand, reflects that some exporters might have expedited shipments during the temporary easing of the tariff war. On the other hand, it highlights the opportunities arising from the changing international trade landscape, particularly the deepening of regional trade co-operation. For instance, in the first half of this year, Hong Kong's total merchandise exports to Vietnam and Malaysia increased by over 50% and 30% respectively, while imports from these two countries rose by about 70% and 30%. Notably, the Association of Southeast Asian Nations (ASEAN), Hong Kong's second-largest trading partner, accounted for 14.8% of Hong Kong's total merchandise trade in the first half of this year, up from 12.1% in 2021.

The consolidation of supply chains and reshaping of trade patterns will create new development opportunities for Hong Kong's trade, shipping, financial and professional services sectors. For example, commodities – particularly non-ferrous metals – play a critical role in the global industrial and economic development, accounting for around half of the total global shipping volume. As a leading industrial powerhouse as well as a major consumer and producer of non-ferrous metals, China occupies a key position in the global metals value chain. In the current geopolitical environment, enhancing the stability and resilience of non-ferrous metal supplies for both our country and the region is of strategic significance.

The Chief Executive's Policy Address last year proposed the creation of a commodity trading ecosystem, and relevant efforts are progressing steadily. Earlier this year, Hong Kong joined the global warehousing and delivery network of the London Metal Exchange (LME), further linking China to the world's most active metals trading market. This marks a significant milestone.

The establishment of LME-approved warehouses in Hong Kong helps enhance the efficiency of non-ferrous metal allocation, reduce logistics time and costs, and strengthen the stability of key metals supplies in the region. This initiative fully leverages Hong Kong's advantages under the "one country, two systems" framework, including our status as a free port with zero tariffs, efficient customs clearance and a globally connected logistics network. Furthermore, commodity trading and delivery activities in Hong Kong will not only increase demand for related shipping services but also drive the development of financial services such as trade financing, insurance, risk management, hedging and derivatives trading. In the long run, we are well-positioned to promote more commodity transactions denominated and settled in the Renminbi (RMB). That will inject new momentum into the development of Hong Kong's offshore RMB business and contribute to the prudent advancement of RMB internationalisation.

Since Hong Kong became an LME-approved delivery point in January this year, all eight approved warehouses have commenced operations within just seven months. By early August, over 8,000 tonnes of LME-registered warehouse warrants had been issued to support LME contract deliveries.

The Government has also established a dedicated working group to review various aspects of gold financial transactions and to promote Hong Kong's development as an international gold trading centre. This includes facilitating the physical delivery of gold. Relevant initiatives will be announced within the year.

Another area we are actively promoting is multinational supply chain management centre. With the restructuring and consolidation of global trade and supply chains, the upgrading and transformation of industries on the Mainland, and our country's high-level two-way opening-up strategy, many Mainland enterprises are accelerating their plans to "go global", including establishing industrial and supply chains in the Global South and the Belt and Road regions. For these enterprises, Hong Kong is an attractive platform for establishing offshore corporate treasury and multinational supply chain management centres. In Hong Kong, international capital converges and flows freely, supported by robust and comprehensive financial services, a globally connected airport and port, a trade network featuring global suppliers and buyers, and professional expertise well-versed in international business.

To allow this platform to function more effectively, Invest Hong Kong and the Hong Kong Trade Development Council (HKTDC) have jointly established a high value-added supply chain service mechanism to provide one-stop consulting services for enterprises aiming to "go global" through Hong Kong. Institutions such as the Hong Kong Productivity Council (HKPC) and the Hong Kong Export Credit Insurance Corporation are also actively involved.

For instance, many outstanding Mainland tech enterprises face multiple challenges when they expand overseas. Such challenges include how to align with technical standards, localise their products, and protect intellectual property. In this context, the HKPC launched the "The Cradle – Going Global Service Centre" in April this year. In collaboration with Mainland innovation and technology institutions, the centre provides research and development support, evaluation on technologies and applications, as well as professional consulting services on overseas regulations to Mainland enterprises that have set up offices in Hong Kong and seek to expand globally.

From the reshaping and consolidation of the international trade landscape to our efforts in establishing Hong Kong as a multinational supply chain management centre, we are proactively adapting to the evolving global market. In this process, Hong Kong's role and advantages as a "super connector" and "super value-adder" are becoming increasingly prominent. By continuously exploring new business areas and growth drivers, leveraging our strengths and serving the country's needs, we can create a broader path for Hong Kong's sustained economic development.

August 17, 2025

For instance, to date, OASES has attracted a total of 84 strategic enterprises engaged in cutting-edge technologies. In the coming years, they are expected to bring about $50 billion in investments to Hong Kong and create over 20,000 jobs. They will also utilise a combined total of 1.68 million square feet of I&T, industrial and commercial floor space.

As the patient capital of the HKSAR Government, the HKIC not only nurtures local start-ups and enterprises but also leverages its international and regional networks to identify and invest in quality teams and enterprises from the Mainland and abroad. It encourages these entities to establish a presence in Hong Kong. Currently, the HKIC has invested in over 100 projects, with more than 10 companies having submitted or preparing to submit applications for listing in Hong Kong. The HKIC actively guides and leverages market capital to invest in early-stage, small high-tech enterprises on a long-term basis. For every $1 invested by the HKIC, more than $5 of long‑term co‑investment has been attracted from patient capital institutions, such as sovereign wealth funds, pension funds, corporate venture capital and family offices.

Our efforts to attract enterprises are enhancing the value of Hong Kong's I&T brand and fostering a more diversified and robust I&T ecosystem, which in turn contributes to the transformation and upgrading of the economy.

In fact, the ITIB, OASES and HKIC are all striving to foster greater synergy and co-operation among the Government, industry, academia, as well as the research and investment sectors. These efforts include encouraging tech companies attracted to Hong Kong to collaborate with local universities, and establish research institutions and laboratories. The Von Neumann Institute at the Hong Kong University of Science and Technology, which focuses on artificial intelligence research, and the joint laboratory for innovative soy research established last month at the Hong Kong Polytechnic University, are good examples. Meanwhile, the various enterprises we have brought to Hong Kong are promoting the transformation and application of basic research outcomes through working with their upstream, midstream and downstream partners, establishing innovation and research and development (R&D) centres, etc., and partnering with domestic academic institutions.

The internationalised application scenarios in Hong Kong have attracted many enterprises from the Mainland and abroad to test and implement their frontier technologies. This helps accelerate the transformation and upgrading of our industries as well as smart city development. For instance, a strategic enterprise has been testing its autonomous driving technologies in Hong Kong since the end of last year, and its test routes and scale of vehicles involved are continuously expanding. Several strategic enterprises are actively participating in the Low-altitude Economy Regulatory Sandbox in order to test and evaluate their technologies and business models. In addition, some strategic enterprises are promoting their sensing systems, digital twin technologies and integrated information management platforms with a view to enhancing smart city management in Hong Kong.

Hong Kong's unique advantage as a global connector has established us as a platform for local and Mainland enterprises to "go global". In this process, we are promoting Hong Kong's professional services as well as our country's standards and technical services to the world. The Government is in keen support of this process. For example, the HKIC has invested in a joint green energy project between companies from Hong Kong and Thailand, thereby facilitating the export of Hong Kong's electric vehicle charging technology to overseas markets. The HKIC has also assisted a local fintech enterprise in entering the Indonesian market to provide more inclusive financial services.

OASES will soon announce the fifth batch of over 10 strategic enterprises, bringing the total number of such enterprises to about 100 since its establishment at the end of 2022. Many of the enterprises in this new batch are from overseas, including several leading international pharmaceutical companies. Hong Kong's advanced medical services and R&D system; the market and cooperation opportunities in medical technology and clinical trials within the Guangdong-Hong Kong-Macao Greater Bay Area; and the Government's efforts in establishing a "primary evaluation" system for medical products, make Hong Kong an ideal base for these companies to explore development in the Mainland and Asian markets.

As highlighted in this year's Budget, apart from the four key industries – artificial intelligence and data science, life and health technology, fintech, as well as new energy and advanced manufacturing – OASES will broaden its focus to attract more cultural and creative enterprises that integrate I&T. We believe this will further promote the development of the local cultural and creative industries, and fast-track Hong Kong's rise as an East-meets-West Centre for International Cultural Exchange.

Efforts to attract strategic enterprises and talent are mutually reinforcing. A more diversified industrial landscape, combined with quality job opportunities, education and living environment, will offer talent promising development prospects and help our city retain them. This will create a virtuous cycle in which both industries and talent thrive concurrently. The Government will continue to adopt a multi-pronged approach to attract enterprises, capital and talent, with a view to expediting the upgrading and transformation of Hong Kong's economy.

August 10, 2025

The latest economic data released last week also shows that Hong Kong's economy continues to maintain growth momentum. The overall economy grew by 3.1% year-on-year in the second quarter, driven by positive growth in all three major engines—exports, domestic consumption and fixed investment, and marked the tenth consecutive quarter of positive growth. The value of retail sales recorded mild year-on-year increases in May and June, and rose modestly by 0.3% in the second quarter. Total restaurant receipts also showed slight year-on-year growth in the second quarter. The above figures indicate signs of stabilisation in sectors including retail and catering, but it is undeniable that they are still under greater pressure. We hope that the industry will continuously strive to explore new ideas and bring forth new growth through innovation.

It is worth noting that residential property prices have continued to stabilise, while rental performance is resilient and trading has turned significantly more active. The monthly average number of transactions increased to about 5 600 cases in the second quarter, rising by around 37% quarter-to-quarter. As property prices stabilise, the number of negative equity cases fell by 7% quarter-to-quarter to around 37 000 cases last quarter. The Government's active efforts to attract investments and talent have increased the overall demand for properties. For example, the 84 strategic enterprises attracted by the Office for Attracting Strategic Enterprises have collectively occupied 1.68 million square feet of office space.

We can say that the stabilising residential property market, the thriving financial market, along with the steady growth of the economy and real income growth of workers, will render support to local consumption. At the same time, while the economy is undergoing transformation, we must continue to support affected groups, including enhancing employment support and retraining services.

Various recent mega events in Hong Kong have enlivened the community's atmosphere. The two much-anticipated matches of the Hong Kong Football Festival at the Kai Tak Sports Park attracted nearly 100,000 fans, with one match setting a new attendance record for the stadium.

In fact, since its opening, the Kai Tak Sports Park has become a key venue for both local and international events. The Kai Tak Stadium has attracted over 1 million attendees to date. Among the events, over 20 major concerts by internationally renowned artists and bands have drawn around 750,000 attendees, with more than 50% of them being visitors. The large number of participants, both locals and visitors, has not only boosted consumption but also showcased Hong Kong's image as a vibrant city and mega events capital to the world, thereby injecting new energy to the tourism sector.

Local tourism, retail and catering sectors are actively seeking changes and innovations, while the Government, public institutions and businesses are working together to capitalise on the advantages brought by increased participation in events and activities, thereby transforming them into economic benefits. For example, a popular cultural IP has recently collaborated with local enterprises and the MTR to promote Hong Kong's tourism highlights, offering fresh experiences for fans of the IP. Additionally, some local hotels have teamed up with Hong Kong Tramways to launch onboard dining services, leveraging the city's unique features to explore new business opportunities.

The upcoming National Games and the Wine & Dine Festival at the end of this year are key opportunities for the industry. The HKSAR Government will continue its efforts in organising a variety of mega events across different domains to attract more visitors from the Mainland and overseas. We look forward to providing visitors with refreshing and enjoyable experiences with our quality services and innovative products, and creating a wonderful scene for their happy moments and memories.

In addition to the pleasure in travelling, we are also actively promoting the pleasure in shopping. The Hong Kong Trade Development Council (HKTDC) has again launched the Hong Kong Shopping Festival, a month-long campaign on popular Mainland e-commerce platforms including Xiaohongshu, Douyin, Taobao and JD.com, to promote Hong Kong products. The Festival has attracted the participation of 260 brands, featuring over 500 great products. HKTDC has also organised a series of thematic seminars, with a view to enhancing the knowledge of Hong Kong enterprises in cross-boundary e-commerce operations and marketing.

We hope to further showcase Hong Kong's strengths and unique characteristics, such as adding a romantic touch to the vibrant and dynamic atmosphere of Victoria Harbour. Many locals also hope to enjoy the harbour's beauty in air-conditioned comfort during the hot summer, or stroll along the waterfront with a coffee as autumn approaches. This not only provides residents and tourists with a relaxing and leisurely space for enjoyment but also stimulates nearby economic activities, creating a synergy effect. The Government will actively explore more facilitating measures to unleash greater economic vitality for local communities.

The Government will continue to work hand-in-hand with the industry and the public to create more opportunities and occasions to boost consumption in Hong Kong. We hope to leave visitors with delightful memories through more innovative and enjoyable experiences, offer enterprises with greater business opportunities, and provide residents with an array of exciting major events and consumption choices.

August 3, 2025

Taking a closer look at the situation, Hong Kong's economy resumed growth since 2023, and expanded by 3.1% in the first quarter of this year after a 2.5% increase last year. Despite a complex external environment, Hong Kong's economy has demonstrated remarkable resilience. Advance estimates for the grow domestic product in the second quarter will be released this week, with growth anticipated to be driven by export activities, overall investment and private consumption. The growth momentum is expected to continue, marking the 10th consecutive quarter of growth.

Private consumption is worth noting. The sustained economic momentum, continuous capital inflows, a buoyant stock market and a stabilising property market, along with the Government's vigorous efforts to promote major events and high-value tourism which were echoed actively by the private sector, have collectively bolstered private consumption and market sentiment. Recent events such as the "Hong Kong Football Festival" held at the Kai Tak Sports Park and the "Ani-Com & Games Hong Kong" at the Hong Kong Convention and Exhibition Centre, attracted large crowds of fans, including enthusiastic participants from the Guangdong-Hong Kong-Macao Greater Bay Area. These gatherings have boosted sales of related products and created new business opportunities. I will be visiting the "Ani-Com & Games Hong Kong" today to experience firsthand the vibrancy and business potential of this event.

In fact, retail sales in May recorded their first year-on-year growth in 14 months, signaling initial signs of stabilisation in the consumer market. We are cautiously optimistic about the figures for June. Overall, private consumption, which had declined for four consecutive quarters, is expected to show an increase in the second quarter of this year.

Amid an economic cycle that has lasted for over two years, characterised by the transformation and upgrading of industries as well as structural adjustments to the economy, different industries have responded at varying paces. This has impacted on the labour market conditions of the relevant industries. Overall, the local labour market remains largely stable, with employees' earnings showing notable increases. From March to May this year, the median monthly earnings of full-time employed persons rose by 6.8% year-on-year, reaching $25,000.

As with previous episodes of economic upgrading and transformation, some emerging industries in Hong Kong are now accelerating their development, while many enterprises in traditional sectors are also actively transforming and advancing. These industries and businesses are hiring more staff, with increased salaries for their employees. However, disparities between different industries and enterprises are inevitable. Some labour-intensive sectors, such as retail and catering, face greater pressure. Nonetheless, the improvement in consumer sentiment is expected to provide support to these industries. In specific sectors such as construction, the employment situation is anticipated to gradually improve due to a stabilising property market and the acceleration of government construction projects. Overall, the medium- to long-term outlook for Hong Kong's economy remains solid, with steady progress expected. While certain industries continue to face challenges, we anticipate that the labour market will remain broadly stable. We will also enhance our efforts to support local employment through initiatives such as vocational retraining and technology literacy training.

In recent years, the HKSAR Government has been making great strides to identify new areas for economic growth and vigorously support the development of innovation and technology (I&T). The goal is to capitalise on the opportunities brought by technological advancements, attract more enterprises to establish presence in Hong Kong, and encourage local companies to expand their operations. This will create more high-quality and high-tech jobs while supporting the demand for other types of employment. Meanwhile, we are committed to exploring new overseas markets, seeking new partners, developing Hong Kong as a supply chain management centre, and more. This strategy will enable Hong Kong to flexibly seize development opportunities amid a complex geopolitical landscape. By steadfastly advancing these efforts, we anticipate that as more enterprises choose to develop or expand their operations in Hong Kong, the city's overall competitiveness will be further enhanced, which will also provide greater support to the job market over time.

The Hong Kong Investment Corporation Limited will lead a delegation of I&T enterprises to visit Malaysia and Brunei Darussalam tomorrow. The delegation will meet with patient capital institutions and industry representatives to explore co-investment opportunities in Hong Kong and the Greater Bay Area. This initiative aims to help more enterprises in Hong Kong diversify their investor base and explore opportunities for the application of their products.

Economic transformation and upgrading are an inevitable and ongoing dynamic process. Adapting flexibly to the geopolitical landscape, vigorously promoting the development and application of I&T, attracting global capital and cultivating future talent are essential for enhancing competitiveness and upgrading the economic structure. As long as we remain confident, and leverage the advantages of our country's stable development and policy support, and consistently promote a more diversified and high-quality development of the Hong Kong economy, we will inject renewed growth momentum and allow our residents to benefit.

July 27, 2025

To encourage students to expand their knowledge of science and technology, I presented them with interesting books about physics, hoping to extend the inspiration they gained from the Book Fair and help the seeds of innovation take root in their hearts. At the Book Fair, we also saw the newly released traditional Chinese editions of three books by President Xi Jinping, namely "On Education", "Outline for Studying Xi Jinping Thought on Culture" and "Xi Jinping among the People: Moments in Focus". I highlighted President Xi's care for young people and his encouragement for them to study hard, realise their potential and contribute to the country in the future. President Xi once remarked, "The hope of the country lies in the youth, and the future of the nation depends on the youth."

Technological innovation and the cultivation of young talent are intimately connected, with education serving as the foundation that fosters a vibrant environment where talent can emerge, be fully utilised to their full potential, and thrive. In this era of rapid technological advancement, individuals must possess an acute sense, curiosity, the ability to quickly grasp new concepts, and a relentless drive for continuous learning and research. More importantly, they should have the courage to experiment, a spirit to innovate and the resilience to face failure without fear.

A few days ago, I had a discussion with a group of young people at Science Park, including representatives from startups. Some of these young entrepreneurs shared that Hong Kong's investments in innovation and technology (I&T), support for startups, diverse and inclusive environment for attracting both local and international talent, and close ties to the Guangdong-Hong Kong-Macao Greater Bay Area market and production bases were the key reasons why they chose to pursue I&T in Hong Kong. This year, the internship programmes organised by the Hong Kong Science and Technology Parks Corporation received a record 5,000+ applications, with only 450 candidates selected. Notably, two-thirds of the interns were from universities ranked among the global top 50, including leading institutions in Europe and the US. Nearly 30% were international students. These reflect the international appeal of Hong Kong's I&T ecosystem.

Hong Kong's advantages in attracting talent are remarkable. Since the end of 2022, around 500 000 applications have been received under various talent admission schemes, with 330 000 approved and around 220 000 talents having arrived in Hong Kong.

In addition, several large tech companies and startups have responded to a proposal in the Budget by bringing their cutting-edge expertise and resources into primary and secondary schools, thereby benefiting more students and teachers. This initiative not only enriches STEM education but also enhances its depth and vibrancy.

We have positioned artificial intelligence (AI) as a key industry, recognising its potential for widespread application across various sectors, scenarios, products and services. AI serves as a core driver for industrial upgrading and transformation, and enhancing the overall economic competitiveness. Indeed, "AI+" has become one of our key strategies in recent years to attract global investments, encourage leading tech companies to list in Hong Kong, and accelerate the growth of the local startup ecosystem.

From providing robust support for basic research to promoting the commercialisation of research outcomes; from nurturing local startups to attracting cutting-edge global tech companies; and from accelerating the development of the Northern Metropolis to strengthening I&T collaboration with our sister cities in the Greater Bay Area – Hong Kong's I&T development is guided by a concrete blueprint. We will remain focused on our goals and see this blueprint through to completion. I&T will also provide our young people with diverse and high-quality career opportunities, enabling them to realise their aspirations and dreams.

July 20, 2025

Since September last year, Hong Kong's financial market has shown strong performance with vibrant initial public offering (IPO) activities. This has captured the attention of Korea's financial sector. Their keen interest in investing in the financial markets of Hong Kong and the Chinese Mainland is driven by their optimism regarding Hong Kong's securities market, the need to diversify asset allocation risks, and confidence in the development and commercialisation potential of the I&T sector in the Greater China region. For instance, in the first five months of this year, the total trading volume in securities by Korean licensed institutions in Hong Kong exceeded HK$1.5 trillion, which is 2.8 times the total trading volume for all of last year. Moreover, Korean investment banks have been cornerstone investors in several IPOs in Hong Kong.

The rapid advancements in the technology sector in China, along with our country's support for tech companies to accelerate their listings in Hong Kong, have fuelled interest among Korean investors in increasing their asset allocation to Hong Kong and Mainland enterprises. Local venture capital and private equity funds are also increasingly interested in investing in Hong Kong; however, their understanding of the I&T developments, investment opportunities in Hong Kong and the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), as well as the latest trends in the securities market, remains insufficient.

I have repeatedly emphasised that innovation drives growth; indeed, Hong Kong's financial product innovation has attracted Korean capital to the Hong Kong stock market. One of the topics discussed during my visit was a recently listed leveraged and inverse product in Hong Kong that tracks a major Korean technology company. Being the first product of its kind globally, it means that Korean investors wishing to trade related derivatives can do so only in Hong Kong. The product innovation capabilities of Hong Kong's market have been recognised by the Korean financial community, which is now exploring how to apply similar concepts to other suitable companies.

The developments of the digital asset sector in Hong Kong, as well as the upcoming implementation of the Stablecoins Ordinance, are of significant interest to both the trade and regulatory authorities in Korea. We had in-depth exchanges on regulatory experiences and strategies for industry development, as well as the potential applications of stablecoins.

During my visit, I also underscored that the long-term implementation of the "one country, two systems" arrangement in Hong Kong is a solemn commitment from the country. The Korean business community values Hong Kong's advantages, such as our international character, free market principles, and in particular the Linked Exchange Rate System, the free flow of capital, as well as our common law system.

At the same time, the rapid development of tech companies in the Mainland has heightened the urgency for Korean enterprises to enhance their competitiveness and strengthen mutually beneficial co-operation, although geopolitical tensions have also deepened their concerns. Market competition is inevitable and often drives progress. Collaboration can foster shared growth and advancement. This visit has reinforced our understanding of the necessity for open communication and mutual understanding, which form the basis for trust and the starting point for co-operation.

Throughout a series of exchanges, the Korean business community expressed strong interest in Hong Kong's role as a "super connector" and recognised that there are opportunities for collaboration in multiple fields. For instance, the two economies can enhance financial market connectivity and co-operate on financial innovation. The recent robust development of exchange-traded funds (ETFs) in Hong Kong represents an immediate opportunity for collaboration. Cross-listing more products between our markets—such as listing ETFs tracking the Korean stock market in Hong Kong or vice versa — can enhance market connectivity and liquidity, while broadening the investor base. In fact, Hong Kong is a market that attracts capital from both the Chinese Mainland and the rest of the world. Mechanisms promoting financial market connectivity between Hong Kong and Korea can draw more global investment into companies listed in both markets, creating new asset allocation options for investors.

Beyond finance, fostering collaboration in I&T and strengthening development of the industries were also key themes of my visit. While in Korea, I visited local a technology park and a number of I&T companies.

As both a "super connector" and a "super-value-adder", Hong Kong boasts world-class universities and exceptional research capabilities. With the thriving I&T and advanced manufacturing ecosystems of the GBA, we can facilitate collaboration among tech companies, particularly those engaged in artificial intelligence, biomedicine, smart cities and green technology. By connecting Korean enterprises with Hong Kong and the GBA, we can help innovative ideas and cutting-edge technologies find more application scenarios and better commercialisation opportunities. We welcome Korean enterprises and universities to explore more collaborative projects with Hong Kong and leverage the advantages of the GBA to create new opportunities together.

In the current changing international landscape, regional co-operation is becoming increasingly important. Building new partnerships, exploring new markets, attracting new capital, and pursuing mutually beneficial development will enhance the resilience and competitiveness of economies. Looking ahead, we will continue to promote multifaceted interactions between Hong Kong and other Asian economies by hosting more exchange activities in such areas as finance, I&T, trade, arts and culture, and education. This will broaden and deepen mutual understanding, and lay a more solid foundation for friendship and collaboration.

July 13, 2025

A closer look at the trading data of Hong Kong stocks reveals that innovation has driven growth and fostered better development.

The recent surge in Hong Kong equities has been primarily fueled by investments in technology stocks, which, in turn, has boosted trading in related derivatives. Exchange-Traded Products (ETPs), which are linked to various asset classes, have emerged as a vital force driving product innovation and supporting market liquidity in recent years.

While the term "ETP" may not be too often heard, many are familiar with its major category — Exchange-Traded Funds (ETFs). The Tracker Fund of Hong Kong is a well-known example. Currently, ETPs listed in Hong Kong are anchored to a wide range of assets, including equities, fixed income instruments, commodities, currencies and even digital assets. These assets originate from regions such as the Mainland, the US, Europe, Japan, Korea, Southeast Asia, the Middle East and South America.

ETPs offer issuers greater flexibility in selecting underlying assets, structuring product returns and managing risk exposure. Such flexibility enables them to better capture investors' interests and meet their hedging needs, and devise innovative products that are tailored to rapidly changing market trends. For instance, Hong Kong introduced Asia's first batch of single-stock Leveraged & Inverse Products in March this year, tracking popular US stocks such as NVIDIA, Tesla, Coinbase and MicroStrategy. These products, which focus on daily leveraged returns, have enriched market diversity and provided more tools for short-term trading and hedging.

Currently, over 210 ETPs are listed on the Hong Kong Stock Exchange. As of May this year, these products collectively managed nearly HK$510 billion in assets, representing a 30% increase compared to 2020. Their average daily turnover has surged sixfold during the same period, reaching approximately HK$40 billion.

It is worth noting that, despite fluctuating investor sentiment in recent years, the growth momentum of Hong Kong's ETP market has remained strong. The proportion of ETP trading relative to total market turnover has risen from less than 5% five years ago to around 17% in the first five months of this year. Clearly, continuous innovation in Hong Kong's ETP market has stimulated growth in volume, met evolving investment needs, and injected greater vitality and liquidity into the broader market. It has effectively served as a liquidity buffer during times of volatility.

Among ETPs, ETFs are the most widely recognised products in the market. They have also seen notable new developments, such as the cross-listing of overseas ETFs in Hong Kong. In February this year, the world's fifth-largest ETF, listed in the US with assets under management (AUM) exceeding US$300 billion, chose to cross-list in Hong Kong to broaden its investor base and trading volume. Meanwhile, Asia's first batch of digital asset spot ETFs were listed in Hong Kong last year. Together with other structured products linked to digital assets, the total AUM of digital asset ETPs listed on the Hong Kong Stock Exchange reached HK$4.7 billion as of June this year, representing a 74% year-on-year increase.

The Hong Kong Exchanges and Clearing Limited is actively promoting the listing of more thematic ETFs, covering areas such as innovation and technology (I&T), climate change response, renewable energy and biotech. These products not only cater to investors' interests and risk appetites but also help channel capital towards high-quality development in the real economy. Through further institutional and product innovation, we aim to better leverage global market resources and reinforce Hong Kong's position as the premier ETP hub in the Asia-Pacific region.

We will also step up efforts to promote Hong Kong's financial markets to overseas audiences, with a view to helping international investors better understand and appreciate Hong Kong's strengths, development opportunities as well as prospects and potential. This week, I will visit Seoul, Korea, to engage with local fund managers, institutional investors and financial institutions. We will explain the latest developments in Hong Kong's financial markets, including IPOs, ETPs and digital assets. In fact, the interest of Korean investors in Hong Kong's financial markets has been on the rise. For example, their investment in Hong Kong stocks in February this year reached a near three-year high. We hope that this visit will deepen their interest in and engagement with our market.

In fact, apart from the financial markets, Hong Kong offers a favourable business environment, as affirmed by various recent international rankings and surveys. It is also an ideal platform for foreign enterprises to expand their businesses in the Guangdong-Hong Kong-Macao Greater Bay Area, Southeast Asia and beyond. This week, InvestHK will announce its strong progress in attracting investments and businesses during the first half of the year, with notable achievements in finance, I&T and family offices. In the second half of the year, we will launch more thematic promotional trips to deepen and strengthen our efforts in showcasing Hong Kong's advantages to the world.

July 6, 2025

1. How can we sustain global economic momentum amid rising headwinds against globalisation and mounting challenges to multilateralism?
2. How can developing countries respond to challenges such as tariff wars and climate change?
3. How do we seize the opportunities of technological revolution, especially in artificial intelligence (AI) and digitalisation, and the transformation of industries?
4. How can we build a more equitable, orderly and inclusive global governance system?

Participants expressed strong interest in China's economic prospects, recognising the country as a vital force for global economic stability and growth, particularly within Asia. Many were also inspired by China's technological innovation and entrepreneurial spirit.

In his opening address at Summer Davos, Premier Li Qiang noted that in the evolution of the international economic and trade landscape, there are both destructive factors that keep creating shocks, and many positive forces that seek to counter the risks of instability and uncertainty. He said that economic globalisation will not be reversed; more likely, it will carve out a new path, and forge ahead amid twists and turns.

Indeed, the Asian region has demonstrated remarkable economic resilience, even in the face of geopolitical tensions. Asia currently contributes around 60% of global economic growth. According to the International Monetary Fund, the economic growth rate of developing Asia is projected to be 4.5% to 4.6% this year and next, substantially higher than the 1.4% to 1.5% average growth rate of advanced economies. As trade and non-trade barriers continue to rise globally, regional economic and trade cooperation within Asia is expected to deepen. For example, in May, China and ASEAN concluded negotiations on the "China-ASEAN Free Trade Area 3.0", with a focus on digitalisation and the green economy.

As a free port and a vital gateway connecting the Mainland and the rest of the world, Hong Kong's recent external trade performance reflects these broader trends to a certain extent. In May, the value of Hong Kong's total merchandise exports increased by 15.5% year-on-year, marking 15 consecutive months of growth. Particularly notable is the 59% increase in exports to Vietnam in the first five months of this year, along with 20% and 18% increases to Japan and the Mainland respectively.

In this era of sustained and rapid growth across Asia, Hong Kong is well positioned to discover new opportunities, new momentum and new pathways forward. In the financial sector, for instance, Hong Kong's comprehensive financial services can play a more important and diversified role in the region's development.

As trade volumes within the Global South continue to grow, economies in Asia and beyond increasingly prefer using local currencies for trade settlement. Since 2017, China has been the world's largest trading nation for eight consecutive years. It accounted for 12.5% of global trade last year. This is expected to drive further demand for the renminbi (RMB) in international trade. As the world's largest offshore RMB hub, Hong Kong is actively enhancing RMB liquidity, enriching RMB-denominated investment products and risk management tools, and strengthening financial infrastructure to support financing, payments, investments and fund allocation needs.

Fintech holds immense potential for application in cross-border trade. It can help resolve long-standing pain points such as slow and costly cross-border payments, and better serve the real economy. One of the four pillars of the "Policy Statement 2.0 on the Development of Digital Assets in Hong Kong", released last week, is "Advancing use cases and cross-sectoral collaboration". The statement notes that stablecoins offer a cost-effective alternative outside the traditional financial system and could transform payment and capital market activities, including cross-border transactions. The Stablecoins Ordinance will take effect on August 1, and the Hong Kong SAR Government and financial regulators will work together to create a conducive market environment, with necessary regulatory measures, to encourage issuers to apply stablecoins across various use cases, and address real-world needs in both business and daily life.

Currently, the global political and economic landscape is being reshaped, and emerging economies are facing ongoing challenges. Hong Kong's strengths in investment, innovation and technology (I&T), knowledge and networks can help Asian emerging economies accelerate their development in a more prosperous and inclusive manner through technology and innovation. During the AIIB meeting in Beijing, I witnessed the signing of a strategic partnership agreement between the Hong Kong Monetary Authority (HKMA) and the AIIB. Under the partnership, the two parties will collaborate to invest in a portfolio of venture capital funds focused on emerging markets in Asia. The partnership will support green transition and infrastructure development through innovation in technology and business models.

In addition, we will further strengthen our collaboration with the AIIB through financial innovation. Examples may include issuing bonds in a wider range of currencies and tenors, securitising infrastructure-backed loans, and issuing catastrophe bonds to meet the funding needs of infrastructure and other developments in the region.

During my visit to Tianjin, I was accompanied by representatives from over 20 startups affiliated with the Hong Kong Science and Technology Parks Corporation, Cyberport, and the Hong Kong Investment Corporation Limited. These startups come from different fields including AI and big data, microelectronics, robotics, biomedicine, green and smart energy, e-commerce, fintech, insurtech and edTech. Tianjin has robust research and development capabilities in biomedicine, synthetic biology and advanced manufacturing, and has a strong industrial base encompassing nearly all of the industrial categories classified by the United Nations. In recent years, the city has been actively nurturing I&T and startups through its high-tech industrial development zones. This visit offered Hong Kong startups the opportunity to engage with their Tianjin counterparts, explore collaboration and share innovation resources. It also allowed us to tell the Hong Kong I&T story, expand networks and showcase the new facets and strengths in this area.

Deeper regional integration in Asia has now become one of the world's most important and irreversible economic trends. In this new era for Asia, Hong Kong will continue to play a vital role and contribute to the prosperity and development of both the region and itself.

June 29, 2025

Hong Kong has further reinforced and enhanced its status as an international financial centre. Over the past year, the stock market has regained an upward trajectory, with market trading volume increasing significantly. Since the beginning of this year, the average daily turnover has exceeded HK$240 billion. Hong Kong also ranks first globally in IPO fundraising so far this year. Beyond quantitative growth, qualitative improvements are evident: since the introduction of the "Chapter 18A" reform in 2018, the number of listed new economy and biotech companies has risen to approximately 370, accounting for 14% of all listed companies, over 27% of total market capitalisation and over 30% of market turnover. The "Chapter 18C" reform, introduced in 2023, together with the recent "technology enterprises channel" (TECH) and measures facilitating the return of China Concept Stocks listed in the US, highlight our commitment to keeping pace with changing circumstances and upholding the spirit of reform. These initiatives continuously enhance the attractiveness and competitiveness of the stock market and strengthen Hong Kong's role as a platform for innovation and technology (I&T) financing.

Hong Kong's financial centre status is also reflected across various sectors. For instance, in asset and wealth management, the number of registered funds reached 976 as of March 2025, with net capital inflows exceeding US$44 billion, an year-on-year increase of 285%. Within the next two to three years, Hong Kong is expected to become the world's largest cross-boundary wealth management hub. For the insurance sector, the number of new long-term insurance policies issued in 2024 exceeded 1.08 million, with total premiums approaching HK$220 billion which showed an increases of more than 40% and 70%, respectively over 2022.

Despite global political and economic uncertainties, Hong Kong's status as a free port, coupled with its robust legal system, makes it a trusted and stable financial safe harbour for international investors. As of April 2025, the total deposits in Hong Kong banks exceeded HK$18 trillion, representing a 19% increase compared to June 2022.

I&T has emerged as another key driver of Hong Kong's economy. In 2023, the gross domestic expenditure on research and development increased by 10% year-on-year to around HK$33 billion, while the number of local startups reached a record high of 4,700. The two I&T flagships, namely the Hong Kong Science and Technology Parks Corporation and Cyberport, have nurtured and supported 22 listed companies and about 20 unicorns, collectively holding over 700 intellectual property assets. With increased investments in I&T, the accelerated development of the Northern Metropolis, and closer collaboration with cities in the Greater Bay Area, greater achievements are anticipated in the future.

The growth of both the financial and I&T sectors hinges on two critical factors: "quality enterprises" and "high-end talent". These two elements are mutually reinforcing: quality enterprises attract high-calibre talent, and the gathering of talent, in turn, drives the growth of more quality enterprises, thereby creating a virtuous cycle. The current-term Government has taken proactive steps to attract both enterprises and talent. Since its establishment in late 2022, the Office for Attracting Strategic Enterprises has successfully attracted over 80 strategic enterprises that are engaging in cutting-edge technologies to Hong Kong. These enterprises are expected to invest around HK$50 billion and create more than 20,000 jobs in the coming years. From July 2022 to date, InvestHK has attracted and assisted a total of nearly 1,400 Mainland and overseas companies in setting up or expanding their operations in Hong Kong, which is expected to bring in over HK$100 billion in investments and nearly 20,000 jobs.

Various talent admission schemes have attracted over 210,000 individuals to Hong Kong since late 2022. The city's world-class higher education system further enhances its global appeal. The "Study in Hong Kong" initiative has gained increasing recognition, helping attract talent worldwide. Over the past three academic years, the number of non-local students enrolled in Hong Kong's tertiary institutions has steadily increased, reaching over 79,000 in the 2024/25 academic year, a 45% rise compared to 2022/23.

While Hong Kong's economy continues to grow, certain sectors, such as retail and catering, face challenges due to changing consumption patterns of visitors and residents. Nonetheless, taking food and beverages services sector as an example, while total restaurant receipts fell slightly by 0.6% year-on-year in the first quarter of 2025, receipts of fast food shops recorded an 11th consecutive quarter of growth, at 1.9%. Receipts of non-Chinese restaurants and bars also saw increases of 2.4% and 6.5% respectively. Businesses are actively seeking new opportunities to adapt to shifting consumer preferences, such as introducing limited-edition menu offerings in specific locations for customers to try. Continuous innovation and creating new experiences are key to sustaining business growth.

The retail sector, which is also facing challenges, is proactively exploring new avenues as well, such as developing e-commerce locally and internationally. In August this year, the Hong Kong Trade Development Council will host the "Hong Kong Shopping Festival" to help local businesses leverage e-commerce platforms to develop the Mainland market, and enhance the awareness and visibility of consumer products and brands of Hong Kong enterprises.

Similarly, while the non-residential property market remains subdued it was noted that an experienced investor acquired an entire commercial building in Tin Hau for establishing a hub for the development of Web3 ecosystem, capitalising on Hong Kong's latest developments in this sector. More and more Web3 enterprises are leasing office space in the city for launching their business, with continued demand anticipated.

Hong Kong's economic fundamentals remain sound on the whole, with continuous growth in population since 2022 and significant year-on-year increases in visitor arrivals. In addition to pursuing economic growth and improving people's livelihood, it is also essential to tell good stories of Hong Kong both at home and abroad. Tomorrow, I will lead a delegation comprising some 30 representatives of startups to attend the World Economic Forum Annual Meeting of the New Champions 2025 (also known as "Summer Davos") in Tianjin. Our goal is to showcase Hong Kong's research and development, as well as application examples of I&T, to international investors and leaders in the industry. Themed "Entrepreneurship for a New Era", the meeting is expected to bring together around 1 700 participants from over 90 countries and regions to explore how entrepreneurship and innovation can drive economic growth in rapidly changing geopolitical and economic landscapes. I believe that through this event, Hong Kong's startups, known for their vibrancy, flexibility and agility, will be able to engage with their global peers, forge new connections, and create new room for their own business development as well as for cross-sector and cross-regional collaboration.

Changes unseen in a century are accelerating. Despite great uncertainties in the external environment and rising tides of unilateralism and protectionism, Hong Kong has always been able to identify new opportunities, redefine its role and demonstrate its strengths in alignment with the development of our country. In face of challenges, we would make every effort to change; in face of opportunities, we would seize them with the best endeavour. On the occasion of the 28th anniversary of our return to the Motherland, with the staunch support of our country as well as the collective efforts of the government and the community, let us stand united and march forward with courage and confidence.

June 22, 2025

Hong Kong's asset and wealth management sector has also witnessed steady growth. As at the end of March this year, the number of registered funds in Hong Kong reached 976, with a net inflow of over US$44 billion over the year, representing a 285% year-on-year increase. It is expected that within the next 2 to 3 years, Hong Kong will become the world's largest cross-boundary wealth management hub. With the continued growth of financial markets, the number of individuals and firms joining the financial industry is also on the rise. This year to date, there has been a double-digit increase in the number of individuals and institutions applying for licences under the Securities and Futures Ordinance, as compared to the same period last year.

Beyond traditional areas such as the stock market and asset management, Hong Kong has made significant strides in digital finance, green finance and the offshore RMB market. Product innovation is an effective way to create market demand, increase market liquidity and accelerate industry transformation. Since the publication of our first policy statement on the development of the digital asset market at the end of 2022, the relevant sector in Hong Kong has grown significantly. Many enterprises in the field have established or expanded their presence in Hong Kong. To date, 10 virtual asset trading platforms have been licensed, and the Securities and Futures Commission is currently processing 8 more licence applications. We are also advancing regulatory arrangements for custody and over-the-counter trading.

The development of digital assets has also spurred related business activities for financial institutions. For example, last year, local banks facilitated total digital asset and related product transactions worth HK$17.2 billion, while the total value of digital assets under bank custody reached HK$5.1 billion by the end of last year.

In response to the latest developments and evolving circumstances, we are about to issue a second policy statement on digital asset development in Hong Kong. It will outline our visions and next steps, including measures to better integrate the advantages of traditional financial services with the technological innovations of digital assets, enhance the security and flexibility of digital assets in real economic activities, and encourage local and international enterprises to explore innovation and applications in digital asset technologies.

The Stablecoin Ordinance has recently been passed by the Legislative Council and will come into effect on August 1. The Ordinance establishes a licensing regime for fiat-referenced stablecoin ("FRS") issuers, and has become a focal point of market interest lately. The global market capitalisation of stablecoins is estimated to be approximately US$240 billion, with the total transaction volume for last year exceeding US$20 trillion. As the digital asset market continues to flourish, the demand for stablecoins is expected to grow further.

Stablecoins are digital assets which are "pegged" to the value of fiat currencies or linked to specific assets to maintain price stability. In particular, by combining the security and efficiency of blockchain technology with the stability of fiat currencies, FRS holds great potential as a tool for integrating the financial system with the real economy, thereby reducing costs and enhancing efficiency. Stablecoins can also serve as a medium of exchange unencumbered by conventional payment timeframes or geographical constraints. Additionally, their programmability features can enable various innovative solutions to automate and streamline financial services. As a result, stablecoins have garnered considerable interest from various market participants. Upon the implementation of the Ordinance, the Hong Kong Monetary Authority will promptly process licence applications to facilitate qualified applicants to commence their operations, with a view to bringing new opportunities to Hong Kong's economy and financial services sector.

Hong Kong is charting a prudent course in stablecoin development, providing a new paradigm for the global stablecoin market, while harnessing its "firewall" and "testing ground" functions under the "one country, two systems" framework to contribute experience and insights to the country's financial development. A notable aspect is the adoption of a more open model, allowing licensed issuers to peg their stablecoins to different fiat currencies for the purpose of stablecoin issuance. This approach is conducive to attracting a diverse array of institutions from around the world to issue stablecoins in Hong Kong driven by real-world use cases. This will significantly enhance liquidity and the competitiveness of the Hong Kong market.

In addition to complying with a range of requirements related to risk management and anti-money laundering, issuers are also required to propose concrete and practical business use cases for their stablecoin, demonstrating how it can effectively address specific pain points in economic activities, thereby bridging financial innovation and the real economy, and promoting the sustainable growth and development of the industry.

In this era of challenges and opportunities, we must capture the opportunities, and enhance Hong Kong's competitiveness and improve the local business environment. Over the past year, with the joint efforts of the HKSAR Government and various sectors of society, Hong Kong has done well in international rankings, including competitiveness, economic freedom as well as status as a financial centre. International rating agencies have given Hong Kong positive ratings, and surveys by foreign chambers of commerce in Hong Kong show continued optimism about Hong Kong's development prospects. These reflect widespread and objective recognition of Hong Kong's progress. We must continue to work hard, while telling the good stories of Hong Kong and China, both domestically and internationally. With these efforts, we will gain even broader recognition, and I firmly believe that more positive commentaries will follow.

Finally, today is Father's Day. How challenging it is to be a father! I wish you all relaxing and joyful moments with your family and loved ones.

June 15, 2025

At the same time, with the opening of the Kai Tak Sports Park, performers now have more venue options. The iconic Hong Kong Coliseum, traditionally a go-to concert venue, offers more slots for a wide variety of performances. Among them, an upcoming stand-up comedy show at the Hong Kong Coliseum has become a hot-ticket event. The performer, a Hong Kong resident raised in the United States, is returning to Hong Kong for his first ever performance in Asia, making it particularly meaningful. On the sports front, events such as the Hong Kong Sevens in March and the recent match between the Hong Kong, China team and Manchester United at the Hong Kong Stadium were thrilling, and attracted enthusiastic local and international fans. In arts and culture, events like Art Basel in March, and the Hong Kong Pop Culture Festival organised by the Leisure and Cultural Services Department during April to July, have enriched the city's cultural scene, drawing many art enthusiasts from the Mainland and abroad.

A wide range of events under different themes have bolstered Hong Kong's appeal and attracted enthusiasts from both the local community and neighbouring regions, including over 80 million of our compatriots living in the Greater Bay Area, as well as visitors from the Chinese Mainland and across Asia. This growing audience base has enhanced the scalability of concerts and other events, helping Hong Kong attract more world-class performers. These events would also create a shared tapestry of memories for all participants.

Since the beginning of this year, visitor arrivals in Hong Kong have continued to grow, with notable increases in both Mainland and non-Mainland visitors. In the first five months of this year, Hong Kong welcomed approximately 20 million visitors, three-quarters of whom were from the Mainland, representing a year-on-year increase of about 10%. Non-Mainland visitor growth was even higher, at 18%.

It is estimated that the mega events held in the first half of the year will attract around 840,000 visitors, generating HK$3.3 billion in spending and contributing an economic value added of HK$1.8 billion. We actively bring together different mega events during the planning process and integrate them with Hong Kong's tourist attractions to maximise synergy. This approach not only enhances the tourism experience but also encourages visitors to stay longer and explore more. The industry has also stepped up promotion efforts. For instance, during a recent international pop concert at the Kai Tak Sports Park, hotel packages were launched and met with a very positive response. The West Kowloon Cultural District and other performance venues have also been working closely with the tourism sector, connecting concert organisers with nearby hotels, shopping malls, shops, restaurants and tourist spots to offer promotional packages and discounts. Thereby they capitalised on the opportunities brought by mega events. The Mega Events Development and Advancement Division of the Hong Kong Tourism Board has taken a proactive role in promoting Hong Kong's unique advantages to global event organisers, encouraging them to stage performances in the city.

Yesterday, I attended the opening ceremony of the Hong Kong office of Xiaohongshu, a Mainland enterprise with deep ties to Hong Kong. The platform started as a shopping guide for Hong Kong and then gained popularity and expanded rapidly. They chose Hong Kong for opening its first office outside the Mainland. This once again underscores the model where quality companies from the Mainland use Hong Kong as a springboard for going global. Xiaohongshu now has over 300 million monthly active users, making it one of the fastest-growing startups on the Mainland in recent years. It also has approximately 2 million users in Hong Kong. During my visit to Shanghai in November last year, I toured their headquarters and was impressed by the team's youthful energy, innovative spirit and thorough understanding of young people's preferences. Recommendations on their platform are highly valued by users. At that time, I invited them to establish a presence in Hong Kong. Both the Office for Attracting Strategic Enterprises (OASES) and Invest Hong Kong offered substantial assistance.

People's desire for a quality lifestyle, pursuit of new experiences, and exploration of urban culture and uniqueness, represent significant business opportunities that can be transformed into immense value. This highlights the importance of staying attuned to – and even leading – changes in consumer behaviour, whether through reimagining the design and marketing of products and services, launching new products from time to time, enriching narratives, or leveraging the power of social media.

Looking ahead to the second half of 2025, a variety of cultural, sports and tourism events will continue to unfold in Hong Kong, including spectacular football matches, the Wine & Dine Festival, concerts and more. Combined with new tourist attractions, rural and urban highlights, and unique spots in different neighborhoods, these events are expected to attract a large number of visitors. We are confident that the number of visitors will continue to rise throughout the year. It is equally important to ensure that visitors have a memorable experience – whether playing, dining or shopping – so that they leave with fond memories and a desire to return and recommend Hong Kong to others. This will help tell the good story of Hong Kong and turn visitors into fans of the city.

June 8, 2025

During the Signing Ceremony, Member of the Political Bureau of the Central Committee of the Communist Party of China and Foreign Minister, Mr Wang Yi, said that the birth of the IOMed is an example of a civilisational belief in harmony. The IOMed helps transcend the "you-lose-I-win" zero-sum mentality, promote the amicable resolution of international disputes, and foster more harmonious international relations. In fact, the IOMed not only implements the purposes and principles of the United Nations Charter and bridges gaps in mediation within international dispute resolution mechanisms, but also meets the practical needs of countries worldwide seeking to accelerate common development.

An efficient, fair, just and trusted dispute resolution mechanism is key to promoting more international investment and trade. It helps to enhance investor confidence. In recent years, more bilateral and multilateral investment and trade agreements have included mediation as one of the means of dispute resolution. According to various international studies, roughly one-third of the world's 4,000 international investment agreements include mediation provisions. Such agreements include more recent ones like the Regional Comprehensive Economic Partnership (RCEP) and the ASEAN Comprehensive Investment Agreement (ACIA).

Compared to arbitration, mediation is more flexible, cost-effective, efficient, and convenient. It can help disputing parties maintain long-term relationships with each other. Over the past three decades, the global economic centre of gravity has gradually shifted eastward, with the GDP of developing Asia, including China, increasing from less than 7% of the global total in 2000 to about 24% today. These countries hope that their perspectives will receive greater attention in the global governance system. In recent years, more Asian and African countries have expressed a preference to use mediation as an alternative to arbitration for resolving disputes.

The establishment of the IOMed headquarters in Hong Kong fully reflects the trust that Hong Kong has gained from various parties under the "one country, two systems" framework, bolstering our unique role and function. As the only common law jurisdiction in our country, with excellent rule of law as well as comprehensive legal and dispute resolution services, coupled with a biliterate and trilingual environment and cultural diversity, Hong Kong is the ideal location for the IOMed.

The IOMed will operate at multiple levels, including mediating disputes (1) between countries, (2) between a country and investors of another country, and (3) in the realm of international commerce. These disputes can be mediated according to the wishes of the parties involved, opening a new path to resolving international disputes. This not only reinforces Hong Kong's development as a centre for international legal and dispute resolution services in the Asia-Pacific region, but also strengthens our competitiveness as an international financial, trade and shipping centre. This complements our efforts to deepen ties with the Global South.

In recent years, our economic and trade connections with the Global South have been accelerating. For instance, at the Hong Kong-Saudi Capital Markets Forum held last week, the first Shukuk exchange-traded fund (ETF) was listed in Hong Kong. This is the first ETF in Asia tracking Sukuk issued by the Saudi Government. Over the past two years, we witnessed the listing of the first ETF tracking Saudi equities in 2023; the listing of two ETFs tracking Hong Kong stock indices on the Saudi Exchange last year; and now the ETF investing in Saudi Shukuk. These milestones underscore the growing and reciprocal financial market ties between Hong Kong and Saudi Arabia. They also show Hong Kong's continuous exploration of cross-border financial innovation. Beyond finance, Hong Kong's exchanges and collaborations with the Global South in such areas as trade, investment, innovation and technology (I&T), the digital economy, law, education and tourism have seen continuous progress over the past two years or so.

On the other hand, the local technology sector held an international summit focusing on the data industry last week. It gathered government and industry representatives from a number of ASEAN countries, as well as many experts and scholars. They shared experiences and discussed topics such as industry cooperation and cross-boundary data flow; harnessing data to promote the development of SMEs and smart cities; the future of artificial intelligence (AI); and bridging the digital divide. Hong Kong is a convergence point for data from different places, with application scenarios aligning closely with international standards. We can play a positive role in building regional and international data standards and fostering the robust development of the global digital economy. Many passionate startups in Hong Kong are eager to share their advanced technologies in finance, construction, healthcare, AI and other fields, with a view to assisting developing countries in the Global South to leverage data for leapfrogging development.

ASEAN and the Middle East, which are members of the Global South, have young populations, and their political environments have been relatively stable in recent years. People in these countries are eager to focus their efforts on developing the economy by driving diversified development. They are also willing to invest in infrastructure development, green transformation and the digital economy, as well as improving public services such as healthcare and education. As an international financial centre and a world-class professional services hub, Hong Kong is naturally their ideal partner for collaboration. When I met with the visiting Indonesian Finance Minister, Dr Sri Mulyani Indrawati, last week, we had in-depth exchanges and discussions on the relevant issues.

Whether it is in the field of law, finance, I&T or other professional services, so long as Hong Kong continues to leverage the advantages under the "one country, two systems" framework; gives full play to our role as a bridge between the Mainland and the rest of the world; and maintains our openness and inclusiveness, we can explore new development opportunities for Hong Kong, and contribute to a more prosperous, inclusive and sustainable future for the Global South.

June 1, 2025

As a "super connector" between the Mainland and the world, Hong Kong is actively seizing opportunities in this era. Last week, two major thematic financial forums were held in Hong Kong, marked by robust fundraising activities and an impressive gathering of domestic, Mainland and international guests from various sectors. Many seasoned foreign investors indicated their intention to leverage Hong Kong to expand their asset allocations in the Mainland and across the Asian region.

The London Metal Exchange (LME), a subsidiary of the Hong Kong Exchanges and Clearing Limited (HKEX), organised a seminar in Hong Kong last week, bringing together around 400 industry peers from across the globe. While supply chains are facing significant challenges amid the shifting global trade landscape, new opportunities are also emerging. As Mainland is one of the world's largest metal markets, there is a real and substantial demand for establishing warehouses in Hong Kong to support the efficient delivery of non-ferrous metal trades in the market. Since LME's inclusion of Hong Kong as an approved delivery point within in its global warehousing network early this year, seven warehouses have already been approved. Industry experts have pointed out that Hong Kong, under "one country, two systems" arrangement, not only has a legal system and financial services that facilitate business operations, but also possesses the unique advantage of connecting with both the Mainland and the world. In particular, its superior logistics network and transportation capabilities have enabled the fast and reliable delivery for various metal transactions. This has encouraged clients and warehouse operators to expand their operations in the city.

Meanwhile, Hong Kong's IPO market has been bustling. Last week, it welcomed the largest global IPO of the year so far. Since the beginning of this year, the total funds raised through IPOs in Hong Kong have exceeded HK$76 billion, an increase of more than seven times compared to the same period last year, and approaching 90% of last year's total IPO value.

Meanwhile, the inaugural International Forum for Patient Capital, organised by the Hong Kong Investment Corporation Limited ("HKIC"), gathered patient capital institutions from 15 jurisdictions, covering Europe, the US, Japan, and the Global South including the Middle East. The Forum brought together 80 institutions with a total asset under management of over US$20 trillion. These patient capital managers expressed optimism about the development of technology and innovation in our country and the Asia-Pacific. They considered that it is now an opportune time for investing into this region. They aim to connect with high-potential tech companies through the HKIC. Many participating tech representatives said that they were able to engage with potential investors and long-term capital. The event sought to connect capital with tech companies with a view to supporting the commercialisation of research outcomes.

Furthermore, we are actively enhancing Hong Kong's appeal as the preferred location for international headquarters. Last Friday, the legislation that introduces a company re-domiciliation regime officially came into operation, allowing companies incorporated outside Hong Kong to apply for re-domiciling to Hong Kong in a more convenient and cost-effective manner. On the day of the announcement, a major international insurance company indicated its intention to re-domicile to Hong Kong. The market expects that companies in such sectors as maritime may follow suit.

Notably, another significant development is on the horizon: the Signing Ceremony of the Convention on the Establishment of the International Organization for Mediation (IOMed) will take place in Hong Kong this Friday. The IOMed headquarters will be located in Hong Kong, a key initiative supported by the Central Government to establish the city as a centre for international legal and dispute resolution services in the Asia-Pacific region. The event will be attended by high-ranking officials and representatives from nearly 60 countries and regions, along with 20 international organisations, including the United Nations. An international mediation forum will also be held in the afternoon, discussing topics such as "State-to-State Dispute Mediation" and "International Investment and Commercial Dispute Mediation". This event marks a significant milestone for Hong Kong's mediation professional services on the international stage.

We will fully support the establishment of the IOMed, which will enhance Hong Kong's attractiveness in international trade and commerce. This will also facilitate economic and trade cooperation among countries along the Belt and Road, further reinforcing and elevating Hong Kong's position as an international trade centre.

In the face of a complex and evolving geo-economic landscape, we will continue to safeguard the integrity of Hong Kong's financial markets. Thanks to the collective efforts of the HKSAR Government, regulatory bodies and the industry over the years, Hong Kong's financial system has built up strong buffers and resilience, capable of withstanding various external risks. Last week, Fitch Ratings published a report which affirmed Hong Kong's strong credit fundamentals, and maintained its credit rating with a "Stable" outlook.

Some rating agencies had previously expressed concerns and even held a negative outlook regarding the Mainland's economy and local governments' fiscal conditions; they made similar assessments about Hong Kong's credit ratings based on the city's close economic and trade ties with the Mainland. However, facts and data have demonstrated that the Mainland's economy has continued to progress steadily amid global uncertainty. Our country possesses ample policy room and tools to address various challenges. In light of the current geopolitical challenges, China has maintained a stable and predictable policy environment, and continued to pursue high-level opening-up. It has achieved many breakthroughs in technological innovation, green transformation and the digital economy, thus serving as a crucial driver of global growth. Strengthening ties with the Mainland is a significant advantage for Hong Kong's long-term development.

From the impressive performance of the Hong Kong stock market this year, to the rising number of domestic and international companies establishing international headquarters, R&D centres and regional offices in the city – these reflect the confidence of global investors and businesses in Hong Kong. Amid profound shifts in the global landscape, we will remain agile. We will strive to strengthen ties with traditional markets while actively expanding into emerging markets in the Global South. This will amplify our role as a "super connector" and "super value-adder".

May 25, 2025

Since the beginning of this year, the Hong Kong stock market has shown a generally upward trend amid volatilities. Despite temporary pressure in early April due to the tariff war, the market has since rebounded. The Hang Seng Index closed at 23,345 points last Friday, marking a cumulative rise of about 16%, outperforming other major markets. Trading activity has also picked up significantly. For example, in April, the average daily turnover exceeded HK$270 billion, representing a 1.4-fold increase compared to the same period last year.

The initial public offering (IPO) market is thriving. This Tuesday, the Hong Kong Stock Exchange will welcome the highly anticipated listing of a leading Mainland new energy company, which will mark the world's largest global IPO this year. This listing will push Hong Kong's total IPO proceeds since this year to over HK$60 billion, more than six times compared to the amount in the same period last year, ranking first globally so far this year.

For the banking sector, as of March this year, Hong Kong's total bank deposits banks reached nearly HK$18 trillion. This marks a further 3.5% increase since this year, after a 7% increase in 2024.

International capital flows reveal investors' strategic positioning for future trends. They also serve as a barometer of market sentiment, reflecting assessments of political and economic conditions. Currently, markets are concerned not only about how US unilateral policies may impact on the global economy and future growth prospects, but also about the long-term risk of rising interest rates stemming from the mounting debt of the US Government.

Amid a global economic outlook fraught with multiple uncertainties, the measures implemented by our country under the strong leadership of the Central Government to stabilise the economy and expectations have gradually yielded results. Adhering to a development path of openness and mutual benefit, our country has upheld the principle of "neither provoking nor fearing troubles" in its response to the tariff war, earning widespread international recognition and support. At the same time, the country's innovation and breakthroughs in cutting-edge technologies, such as artificial intelligence, have continued to accelerate, with expanding application scenarios and ongoing improvements in the industrial ecosystem. These advancements not only create new value for the domestic economy but also contribute significantly to promoting global stability and inclusive development.

Looking across major global markets, capital is increasingly flowing toward leading tech companies at the forefront of innovation and strategic future industries. We are continuously strengthening the synergistic development of our dual engines, namely finance plus innovation and technology (I&T), to nurture high-potential tech enterprises while driving more comprehensive growth in financial markets. This mutually reinforcing dynamic will propel Hong Kong's development as both an international financial hub and a global I&T centre to new heights.

Hong Kong's efforts in driving research and development (R&D) and the commercialisation of innovation outcomes, supporting tech enterprises, and attracting key enterprises to establish a presence here are delivering increasingly tangible results. In fact, our strengths under the "one country, two systems" framework – including the common law system, robust intellectual property rights protection, free flow of capital and information, a concentration of global talent, and world-class academic and research capabilities – serve as key attractions and catalysts for economic development. Our vision is to bring together top scientific minds, leading tech giants, and outstanding startups and entrepreneurs in Hong Kong. At the same time, we are continuously expanding and streamlining financing channels to ensure that capital effectively supports technological innovation, thereby injecting new momentum into the economy and creating higher-quality, more diverse job opportunities for our residents. This financing chain operates across different stages: the early stage relies on "patient capital" from sources like venture capital and sovereign wealth funds; while the middle-to-late-stage is supported by private equity, mergers and acquisitions, IPOs and refinancing.

Beyond policy-level guidance, the Hong Kong Special Administrative Region Government is leveraging the Hong Kong Investment Corporation Limited (HKIC) to deploy "patient capital", including the adoption of strategies such as "investing early, investing in small, and investing in hard tech", to bolster the development of Hong Kong's innovation and technology ecosystem. These efforts actively contribute to accelerating the cultivation of new quality productive forces and advancing high-quality development. To date, the HKIC has invested in over 100 projects, achieving a 1:4 leverage ratio – every dollar invested by the HKIC has attracted 4 dollars of investment from long-term capital. This approach mobilises global patient capital to empower technological innovation, thereby enhancing Hong Kong's economic growth and competitiveness.

This Thursday, the HKIC will host its first "International Patient Capital Forum" with the theme "Uniting the Power of Patient Capital, Collectively Building a Bright Future". The Forum will bring together hundreds of representatives representing patient capital – from sovereign wealth funds, pension funds, university endowments, family offices, and corporate venture capital entities from the Global South and other regions – as well as startups and investment institutions. Participants will focus on building collaborative platforms, exploring cooperation opportunities and harnessing the power of investment to drive better regional development.

In a complex and volatile external environment, we can achieve high-quality development despite uncertainties – so long as we remain committed to our goals, remain open and inclusive, and continue to leverage our unique advantages and focus on our priorities.

May 18, 2025

Faced with the uncertainties brought by unilateralism and tariff wars, many member economies expressed concerns about the global economic prospects, and the challenges of maintaining and enhancing economic growth. We also had in-depth discussions regarding how to better utilise multilateral cooperation mechanisms. Throughout the meetings of the Board of Governors as well as bilateral meetings and exchanges, several common points of concern emerged.

First, governors were concerned about the global economic outlook, and recognised the pressing need for development. The United States has unilaterally launched a tariff war against the world, casting a huge shadow over the global economic landscape. Amid the dual challenges of a weak external environment and tight public finance, boosting the local economy and improving people's livelihood have become a pressing issue for many economies. The Joint Statement of the 28th ASEAN+3 Finance Ministers' and Central Bank Governors' Meeting, held concurrently in Milan, indicated that escalating protectionism weighs on global trade, leading to economic fragmentation. The Asian region needs to promote more intra-regional trade and investment flows to strengthen its resilience against external shocks.

Many ADB members expressed a desire to attract more international investments, and acquire mature technological solutions and talent to assist with their infrastructure development and community projects. They include some Central Asian countries which possess considerable advantages and potential, such as young populations and abundant natural resources. They have good prospects in foreign trade, the minerals industry and renewable energy. It is their common wish to engage in more international cooperation to expedite development and enhance competitiveness. In various meetings, I explained Hong Kong's full spectrum of financial services, particularly our innovative financing solutions such as infrastructure loan securitisation and catastrophe bonds. I elaborated on how we, as a "super connector" and "super value-adder", can bring together investors, professional service providers and companies from different industries worldwide to take part in projects in these countries and meet their development needs.

During the Annual Meeting, I also briefed my counterparts on the latest developments and business opportunities in Hong Kong and the Guangdong-Hong Kong-Macao Greater Bay Area. Many representatives noted that, under the prevailing complex and volatile geopolitical situation, diversifying risks is a strategic consideration. With Asia continuing to be a significant source of economic growth in the world, they have planned to increase investments into this region. They generally agree that Hong Kong's steadfast commitment to its free port status; free flow of capital, goods and information; as well as open and friendly business environment, make it highly attractive to them. We can serve as their base to explore the Chinese Mainland and Asian markets.

Second, there was a deepening consensus on the importance of multilateral cooperation mechanisms. In the light of a rapidly changing international landscape, it is the collective appeal from the vast majority of member economies that the international community must uphold multilateralism and promote mutually beneficial cooperation. China, our country, has reiterated the principles of extensive consultation, joint contribution and shared benefits, emphasising the spirit of win-win cooperation and its firm support to inclusive development. Many participants expressed their support for the ADB to continue fulfilling its role as a multilateral cooperation platform, through strengthening dialogues among members, and promoting cooperation and experience sharing in response to global challenges.

Third, there was an emphasis on digital development. Indeed, promoting digital transformation is a key theme of the Annual Meeting. In the era of artificial intelligence (AI), many countries and regions have recognised the need to improve the AI readiness of their societies. To achieve this goal, a comprehensive strategy is required to promote digital infrastructure development, broaden application scenarios and enhance the AI literacy of citizens. Besides, many developing member economies agree that innovation and technology are essential to leapfrogging economic development. They are working hard to advance relevant development and regulatory frameworks. In particular, they are highly interested in the fintech sandboxes in Hong Kong, which expedite faster adoption of technologies and enable the early launch of more inclusive financial services.

In recent years, Hong Kong has made significant progress in financial innovation, the digital economy, green finance and other fields. In fintech, for example, by supporting data sharing and the application of technologies, risk assessments can be carried out more quickly and with greater accuracy, thereby helping more small and medium-sized enterprises obtain funding and address their pain points.

As we strengthen exchanges and cooperation with markets in various regions, it is crucial that we understand each other's culture, history, customs and traditions. That said, the love of family and friendship are common values that transcend diverse cultural backgrounds, whether in Asia, the Middle East, Europe or the US. For instance, the movie "The Dumpling Queen", now in cinemas, vividly portrays the story of a woman struggling for a better life in Hong Kong. The narrative evokes touching feelings of love among family members, friends and neighbours while highlighting Hong Kong's development trajectory filled with abundant opportunities. On this Mother's Day, I would like to pay tribute to all mothers, and wish you all a happy holiday with your loved ones.

May 11, 2025

To accommodate the continuous increase in visitor numbers, we are actively expanding our hardware facilities while placing great emphasis on enhancing the travel experience for each visitor. This is key to shaping the "Hong Kong brand", and represents a path to both increased visitor numbers and business.

Hong Kong possesses a rich array of attractions—stunning vistas along Victoria Harbour, a unique blend of Eastern and Western cultures, diverse and exquisite food and wine, vibrant festivals as well as beautiful natural landscapes. We need to better leverage these natural and cultural characteristics to create more appealing destinations and memorable experiences that encourage repeat visits.

The beautiful and vibrant Victoria Harbour is one of Hong Kong's iconic features. The West Kowloon Cultural District (WKCD) showcases a strong cultural and artistic atmosphere along the harbourfront, perfectly merging world-class artistic ambiance with the magnificent harbour scenery to create a unique cultural and leisure experience.

During this Labour Day holiday, a four-day event called "Sip and Groove" was hosted at the Art Park of WKCD, blending elements of international wines, smooth jazz, Bossa Nova and street music performances. Coupled with cultural and pet-friendly facilities, a chill harbourfront space was created for residents and tourists.

The West Kowloon Cultural District Authority (WKCDA) is committed to capitalising on the enchanting cityscape of Victoria Harbour and WKCD's unique advantage of integration of culture and arts, launching more distinctive activities that integrate art, culture, dining and entertainment. For instance, the recent introduction of the internationally renowned coffee culture event, the "Tokyo Coffee Festival", brought together specialty coffee brands from Hong Kong, the Greater Bay Area and Japan, merging coffee culture with creativity and providing a fresh experience for residents and tourists. The event attracted over 50,000 participants and resulted in more than a twofold increase in overall foot traffic to the Art Park of WKCD compared to the previous year.

Similarly, Hung Hom, located along the Kowloon waterfront, will offer new experiences for residents and tourists. This year's Budget has proposed to transform the waterfront and former pier area south of Hung Hom Station into a new seaside landmark, seeking to create an innovative entertainment, dining and leisure complex. The overall plan includes adventure facilities to be built on the outdoor areas of upper levels of a tall building (such as aerial walkways, slides and zip lines) and fully utilises the coastline for yacht facilities and water leisure activities, combined with retail, dining and entertainment options on land. We have just proposed preliminary planning concepts for the waterfront area south of Hung Hom Station, focusing on entertainment experiences, water usage and pedestrian accessibility to create a new Harbourfront landmark.

In the future, we will continue to enhance the attractiveness of Hong Kong's Harbourfront through two main strategies: optimising infrastructure and enhancing experiences. The East Coast Boardwalk in North Point, which opened earlier this year, has already earned positive acclaim from many residents and tourists. Projects such as the eastern section of the East Coast Broadwalk, Hung Hom Urban Park (Phase 2), and the Open Space at Eastern Street North in Sai Ying Pun will also be completed this year. Moreover, we will set up refreshment stalls at Harbourfront locations in Central, Wan Chai, North Point and Tsim Sha Tsui, allowing visitors to enjoy a more convenient and comfortable leisure time while appreciating the beautiful views of Victoria Harbour.

In fact, optimising harbour planning is not limited to both sides of Victoria Harbour. We are taking forward the construction of a "Round-the-Island Trail" of approximately 60 kilometers in length. This trail will connect numerous significant landmarks, historical and cultural buildings, beautiful beaches and country parks on Hong Kong Island, forming a distinctive sightseeing route. Visitors will be able to walk through the urban and countryside areas of Hong Kong, savouring the past and present, and experiencing its rich cultural heritage and humanistic charm. To date, 80% of the trail sections have been connected, with a view to connecting 90% by end 2027 and substantially completing the remaining works by end 2031.

The Hong Kong Special Administrative Region Government is fully committed to promoting "tourism is everywhere". By actively enhancing infrastructure, increasing capacity and optimising the tourism experience, we aim to strengthen Hong Kong's competitiveness as a tourist city and its appeal as a global metropolis, as well as ensure that residents enjoy a higher quality of life and leisure space.

May 4, 2025

To continuously enrich the experience of travellers to Hong Kong, the Tourism Board will launch a series of celebration activities centered around festivals and culture during the Labour Day Golden Week, following the "Super March" series. For instance, this Thursday evening at the Wan Chai Temporary Promenade, there will be a drone performance themed around three major intangible cultural heritage festivals: Tin Hau Festival, Tam Kung Festival and Cheung Chau Jiao Festival, offering a contemporary interpretation of these cultural traditions. It will be followed by celebrations for Buddha's birthday, featuring the Bathing Buddha Festival at Po Lin Monastery on Lantau Island and the Buddha's Birthday Carnival at Victoria Park. Meanwhile, the Bun Scrambling Competition and the Floating Colors Parade from the Cheung Chau Jiao Festival are must-see events for many tourists.

The past two months have featured a vibrant array of culture-related thematic events. Among them is the "Hong Kong: Through the Looking Glass" miniature exhibition at the Peak Tower, which showcases the city's landmarks, customs and lifestyle through miniature models. Meanwhile, a shopping mall has created a colorful garden using over 120,000 building blocks, and there will be a themed drone show over the sea featuring floral displays. Another highly anticipated cultural highlight is the annual "French May Arts Festival".

Thanks to a series of thematic events and large-scale international conferences, visitor arrivals in the first quarter of this year increased by 9%, reaching 12.2 million. Among them, non-Mainland visitor arrivals accounted for about 2.98 million, representing a significant year-on-year increase of 18%, while Mainland visitor arrivals also saw a 6% rise. This reflects how thematic and innovative activities are helping to attract more visitors from both overseas regions and the Mainland to the city.

The increase in visitor arrivals not only supports exports of services but also boosts the performance of the consumption market, including the retail and catering sectors. In fact, the value of total retail sales recorded a month-on-month increase on a seasonally adjusted basis in both January and February.

On the export front, the value of merchandise exports saw accelerated growth in the first quarter of this year. Exports to several major markets, including the Mainland and ASEAN, saw strong increases, while exports to the United States (US) also rose moderately.

With the support of these positive factors, the advance estimates of GDP for the first quarter, to be released this week, are expected to reflect solid performance.

Yet, looking ahead, the US' bullying acts and unilateralism will continue to weigh on the global economic outlook. Last week, the International Monetary Fund (IMF) downgraded its global economic growth forecast for this year from 3.3% to 2.8%. This figure is significantly below the average annual growth rate of 3.7% in the two decades prior to the pandemic. The IMF also warned that escalating trade tensions could disrupt global supply chains, dampen consumption and investment, and increase financial market volatility.

As a small, externally-oriented economy, Hong Kong will inevitably be affected by the tense external environment. However, the stable growth of our country and its steadfast support will provide strong backing for Hong Kong's economic development. We have implemented a series of policy measures to assist businesses in addressing current challenges. At the same time, the Hong Kong SAR Government is fully committed to accelerating technological innovation and leveraging it to empower the transformation of traditional industries, thereby injecting new impetus into the high-quality development of the economy in the future.

In the face of a complicated and changing external environment, we must remain highly vigilant at all times, manage risks with bottom-line thinking and strive to accelerate steady economic development. Beyond achieving economic growth, we must also firmly advance the fiscal consolidation programme to ensure fiscal prudence and the sustainability of public finance. In this year's Budget, we have proposed a series of stringent measures to control expenditure growth, while moderately increasing government revenue based on the principles of "user pays" and "affordable users pay more". The goal in mind is to maintain Hong Kong's core competitiveness and minimise the impact on the general public as far as practicable. This is a target-oriented, phased and gradual approach to restoring fiscal balance. During this process, trade-offs are inevitable; however, we have ensured the appeal and competitiveness of Hong Kong's business environment while minimising the impact on the community as a whole. This is a challenging yet essential task that must be pursued with determination.

April 27, 2025

Judging from the reactions from countries around the world, the unilateral provocation of a tariff war by the US is not only backfiring on its own economy but also pushing it toward isolation. This sentiment has been particularly evident in our recent discussions with business leaders from various countries. They have unanimously criticised the current actions of the US authorities. They have emphasised that in today's turbulent geopolitical climate, global businesses are striving to expand in a transparent, open and stable policy environment.

In this complex external environment, Hong Kong, as a highly externally-oriented economy, will inevitably be affected. We must acknowledge that the current shifts in the international trade landscape will be structural in the medium to long term. It is essential to harness the strengths of our community and respond with the support of our country. By adopting proactive and targeted policy measures, we will turn challenges into opportunities, and continue to advance high-quality and sustainable economic development amid these changes.

At this moment, the most effective strategy for addressing challenges is to do our work well with full speed and determination. First, we must ensure a safe and stable environment in Hong Kong that protects national security and financial stability. Economic security is the foundation of Hong Kong's prosperity and stability, and we should demonstrate to the international community that Hong Kong is a safe haven for global capital.

Second, we need to effectively communicate Hong Kong's unique status and advantages under the "one country, two systems" arrangement to the international community. This includes our role as a tariff-free port with a common law system and the characteristics of an international financial centre. We must also continue to enhance Hong Kong's business environment. Many multinational companies invest in Hong Kong precisely because they recognise our strengths in connectivity, robust rule of law, international character, a welcoming business environment, an inclusive culture, and our link to the Mainland, which is the largest and most dynamic consumer and innovation market globally. As the tariff war disrupts the global economy and trade, Hong Kong is playing a crucial role as a "super connector", providing new development opportunities for global businesses and capital.

Many friends in the business community have shared with me that, given the challenges presented by the tariff war, it is crucial for Hong Kong to maintain its status as a free port and implement free trade policies. This will provide a stable and predictable business environment, allowing businesses to operate in Hong Kong with confidence. In fact, many companies are adjusting their strategies, shifting from primarily linking the Mainland with Europe and the US to exploring trade opportunities between the Mainland and emerging markets in Asia. They are particularly optimistic about ASEAN, a market characterised by its large size, youthful population, and rapidly growing middle class and consumer markets.

As a free port, Hong Kong facilitates flexible logistics and warehousing, allowing companies to execute their plans for market expansion. The strong relationship between our country and the ASEAN region, coupled with the deep integration of industrial and supply chains, positions Hong Kong as a key player in areas such as supply chain management, trade financing as well as Environmental, Social and Governance (ESG) consultancy.

Moreover, many friends in the financial market have recently indicated that international capital has been accelerating its allocation to the Hong Kong and the Mainland markets over the past few months. Some newly listed Mainland companies have seen a substantial increase in foreign capital subscription compared to the past two years. Meanwhile, some foreign financial institutions have reported expanding their scale of operation and hiring in Hong Kong; some others have transferred senior personnel from other regions to the city. These developments reflect two major trends: first, the resilience of our country's economy, breakthroughs in innovation and technology, and the continued deepening of high-level opening-up policies have resulted in a "fear of missing out" among international investors regarding investment opportunities on the Mainland. Second, the unilateralism and policy uncertainties of the US have prompted international capital to accelerate risk diversification and increase their allocations in the Mainland and Hong Kong markets. Undoubtedly, this shift in investment dynamics from West to East is gradually becoming more pronounced.

Amid global changes, both our country and Hong Kong offer a wealth of new investment opportunities. We also maintain a leading position in various cutting-edge technologies. By hosting more large-scale thematic summits, international conferences and mega events that cater to the prevailing trends, Hong Kong can help business communities and investors around the world better understand the vast opportunities available in our country and the city, thus enabling them to join in and share the fruits.

Last week, Hong Kong hosted two large international conferences on different themes — the World Internet Conference Asia-Pacific Summit and the 2025 World Tourism Cities Federation Hong Kong Fragrant Hills Tourism Summit. Both events attracted keen participation from political and business representatives, industry leaders and scholars from numerous countries and regions.

The World Internet Conference, which has been held in the Mainland since 2014, hosted its Asia-Pacific Summit outside the Mainland for the first time this year, marking Hong Kong's inaugural hosting of a state-level summit of this kind. The theme of the summit was "Integration of AI and Digital Technologies Shaping the Future - Jointly Building a Community with a Shared Future in Cyberspace", where participants discussed various developments and trends in the fields of the Internet, digital technology and innovation. Additionally, the Fragrant Hills Tourism Summit, held for the first time in Hong Kong, underscored the city's significant role as an international tourism hub.

Many participants at the two summits expressed similar optimistic views on the development prospects of both our country and Hong Kong. Leveraging the advantages of the "one country, two systems" arrangement, Hong Kong can enhance its roles as a "super connector" and "super value-adder". This will not only promote pragmatic co-operation between the country and the rest of the world in relevant areas, creating more opportunities for economic and social progress; but also deepen ties and friendships among all parties involved.

April 20, 2025

As President Xi Jinping noted, there are no winners in a tariff war, and going against the world will only lead to self-isolation. Regardless of changes in the external environment, China will remain confident and determined, focusing on managing its own affairs. Our country will maintain a firm and clear stance, continuing to advance high-level opening-up while promoting fairer and more inclusive economic globalisation and free trade. By emphasising co-operation, mutual benefit and win-win outcomes, this approach will provide strong support for global development and serve as a solid foundation for our country's response to the tariff war.

Since last week, the Hong Kong dollar has remained strong against the US dollar, with the exchange rate against the US dollar trading on the strong side of the Convertibility Zone, which indicates that funds are staying in the local market. After a dip on Monday, the Hong Kong stock market largely stabilised. The Hang Seng Index closed at 20,914 last Friday, slightly above its level at the beginning of January this year. The average daily turnover last week increased to $427.6 billion, up around 68% from the previous week. Overall, the market has continued to operate smoothly and orderly throughout the week.

In response to the drastic changes in the external trade environment and significant financial market volatility, the market surveillance mechanisms we implemented have continued to function effectively. In fact, we have strengthened our "round-the-clock, coordinated and cross-market" real-time monitoring systems in recent years to guard against risks that emerge suddenly, especially during periods of fragile market confidence. The Government remains highly vigilant and well-prepared to address potential market shocks, supported by enhanced monitoring, forecasting and contingency planning.

We have been closely monitoring the operating conditions across various industries in Hong Kong, particularly small and medium-sized enterprises (SMEs). Recently, the Hong Kong Monetary Authority (HKMA), in collaboration with the banking sector, introduced additional sector-specific support measures to further assist more SMEs in obtaining bank loans and in their upgrading and transformation.

In light of the current environment, the banking sector has reaffirmed its commitment to the SME support measures previously launched. It will provide more targeted assistance to various industries, guided by the principle of prudent risk management. Among other measures, banks have agreed to provide flexible extensions to trade facilities and other suitable credit arrangements for the import-export and manufacturing sectors, helping corporations facing short-term cashflow pressures due to trade frictions. The total amount of dedicated funds for SMEs set aside by the participating banks in the Taskforce on SME Lending in their loan portfolios has increased to more than HK$390 billion.

Additionally, the Hong Kong Export Credit Insurance Corporation has introduced three support measures for SMEs: (1) extending free pre-shipment risk coverage under "Small Business Policy" (SBP) until the end of June next year; (2) offering 50% premium discount on pre-shipment risk coverage to non-SBP holders; and (3) lowering insurance premium rates for exports to emerging markets to align with those for traditional major markets, thereby helping exporters expand into markets such as ASEAN. These measures are expected to benefit around 2 700 policyholders, including around 1 200 SBP holders.

The US's extreme tariff measures violate World Trade Organization rules and have seriously undermined the confidence of trading partners and investment markets. In a globalised model of efficient industrial and supply chain distribution, cooperation is essential to achieving mutual benefit. Differences should be resolved through communication based on mutual respect.

Countries worldwide are responding to the US's extreme measures by reassessing the risks of investing in the US market and assets, accelerating the exploration of lower-risk asset allocations, discussing trade cooperation with other partners, and investigating the increased use of local currencies for bilateral trade settlements.

As global market conditions evolve and new demands emerge, we will fast-track efforts to attract non-local capital, talent and enterprises to develop in Hong Kong.

Recently, many major international financial institutions and patient capital from other regions have been paying closer attention to Hong Kong. They seek to explore ways to increase their participation in the local market. Meanwhile, many overseas researchers and academics are thinking of relocating to Hong Kong to continue their work. An increasing number of technology companies are also choosing Hong Kong as a base from which to expand into international markets.

Furthermore, we are also proactively attracting high-quality issuers from around the world to list in Hong Kong. The city already has a regulatory framework that facilitates dual or secondary listings for companies listed overseas. In light of recent global developments, I have instructed the Securities and Futures Commission and the Hong Kong Exchanges and Clearing Limited (HKEX) to be fully prepared for the potential return of Chinese Concept Stocks listed abroad. HKEX will also enhance its outreach and promotion in the ASEAN and the Middle East markets to attract more quality enterprises from these regions to list in Hong Kong, while drawing in additional international capital and further strengthening Hong Kong's position as a global financial centre.

With the strong support from the country and the advantages under the "one country, two systems" arrangement, Hong Kong stands out for its stability and appeal during uncertain times. As long as we work together to manage our responsibilities effectively, Hong Kong will be able to create new and favourable opportunities in this era of great change.

April 13, 2025

As repeatedly emphasised by the Central Authorities, there are no winners in trade and tariff wars. There is no viable path for protectionism. We firmly believe that trade differences can be resolved only through consultations with all countries, including China, conducted equitably and with mutual respect and benefits.

The actions of the US have triggered widespread worries in the market that the era of a rules-based multilateral trading system is coming to an end; and that the global trade and economy will enter a more uncertain and turbulent period. Given the escalating risks of international trade conflicts, the global economy and trade are now under significant pressure, leading to an increasingly pessimistic market atmosphere. At this moment, we must remain vigilant and be fully prepared with a bottom-line mindset.

Openness and cooperation are the historical trend, and achieving mutual benefit is a common aspiration. We will continue to maintain our status as a free port, implement free trade policies, and ensure the free and convenient movement of goods, capital and information, all of which are safeguarded by the Basic Law.

While geopolitics poses challenges to the global trade outlook, Hong Kong, as an international trade centre, will inevitably be affected in the short term. The Hong Kong Special Administrative Region Government has been closely monitoring and assessing the relevant situation and developments, and will provide support to local enterprises on various fronts. They include (1) liquidity support, such as strengthening export credit insurance for trade companies through the Export Credit Insurance Corporation, while the Hong Kong Monetary Authority actively coordinates with the banking sector to assist small and medium-sized enterprises (SMEs) in meeting their funding needs; (2) market expansion, such as supporting Hong Kong enterprises in developing brands, upgrading and transforming business operations, and exploring new markets through the Dedicated Fund on Branding, Upgrading and Domestic Sales (BUD Fund); (3) digital transformation, such as assisting enterprises in accelerating their digital transformation and seizing opportunities in e-commerce through various funding schemes; and (4) market information, i.e. providing up-to-date information to help businesses better understand market conditions and manage risks.

In response to the rise of unilateralism in recent years, Hong Kong businesses have adjusted their export markets. Data shows that the market share of goods exported from Hong Kong to the US has decreased from 8.6% in 2018 to 6.5% last year. Meanwhile, the market shares of ASEAN and the Middle East have risen from 7.4% and 2% to 8.7% and 2.9% respectively. Since 2019, ASEAN has surpassed the US to become Hong Kong's second largest goods export market, following only the Mainland. Over the years, economic and industrial cooperation among the Mainland, Hong Kong and ASEAN has strengthened significantly.

Furthermore, in recent years, we have made significant strides to spur the development of innovation and technology (I&T) in Hong Kong. This includes accelerating the transformation of research outcomes into practical applications, and engaging in the synergistic development with the Guangdong-Hong Kong-Macao Greater Bay Area in I&T and high-end manufacturing. By doing so, we have expedited the creation of a new development momentum for Hong Kong, opened up new markets and enhanced the resilience of the city's economy. Meanwhile, our country's economy is steadily growing. Its promotion of consumption and pursuit of domestic circulation are providing immense opportunities for Hong Kong businesses, thereby reinforcing our confidence.

It is certain that despite the disruptions and uncertainties facing the global economy, industrial and supply chains will continue to cluster in regions with higher productivity and cost advantages. Moreover, capital will flow into markets and tech sectors with greater growth potential. Cooperation will be strengthened among economies that are willing to respect one another, establish mutual trust as well as maintain relatively stable economic, trade and diplomatic policies.

The industrial and supply chains established by China with ASEAN and other regions are an efficient and comprehensive industrial cooperation system. Our country possesses robust innovation capabilities, and has made significant breakthroughs in cutting-edge technologies such as artificial intelligence (AI) and robotics this year. As a result, international capital has increased its allocation to both the Mainland and Hong Kong markets. In the first quarter of this year, Hong Kong's stock market experienced a year-on-year increase of 15%, with an average daily turnover exceeding $240 billion, representing an increase of 140%. From the Third Plenary Session last year to the National Two Sessions in March, our country has emphasised its commitment to high-level opening up, to creating a friendly and predictable investment environment for international investors, and to forging reliable cooperative relationships. The recent China Development Forum saw a record number of multinational companies participating for the first time.

In this historical moment, marked by both challenges and opportunities, we must continue to strengthen our connections with traditional markets while increasing our engagement with emerging markets in the Global South. This approach aims to develop new channels and markets for Hong Kong and Mainland enterprises. Moreover, it will facilitate the deep integration and optimisation of the regional industrial and supply chains.

We must also enhance our efforts in attracting investments, encouraging enterprises from the Mainland and around the world to leverage Hong Kong as an international platform that connects domestic and international markets. We are a city where capital and talent converge, characterised by the free flow of information. It is a place where businesses can grow, manage their finances and explore new markets.

This Tuesday, we will announce the fourth batch of strategic enterprises, during which the Office for Attracting Strategic Enterprises will sign co-operation agreements with more than ten strategic enterprises. Among this new batch of enterprises is a firm engaged in high-precision AI. Its intelligent transport solutions have been adopted in over 50 cities across the country. Another enterprise which specialises in commercial service robots has exported its products to over 40 countries and regions. The batch also includes a medical technology enterprise producing surgical equipment that has successfully treated over 300,000 tumor cases globally. The company has filed more than 900 patents worldwide. The technologies, products and services of these strategic enterprises are highly competitive internationally.

Over the past two years, Hong Kong has successfully attracted more than 80 strategic enterprises, which are expected to bring about $50 billion in investment and create over 20,000 jobs for Hong Kong in the coming years. They will support Hong Kong's progress in new industrialisation, creating new impetus for our economy.

April 6, 2025

The Hong Kong Sevens, concluding today after three consecutive days, have elevated the festive atmosphere to an entirely new level. The Kai Tak Sports Park, which was opened earlier this month, has provided a larger venue and world-class facilities for the tightly packed and exciting events. With strong support from the Government and coordinated promotional efforts from various sectors, this year's event is projected to achieve a record-breaking attendance of 140,000 people. The venue's 60+ corporate boxes have already been sold out. Numerous corporate executives who travelled to Hong Kong to attend financial events this week have expressed their eagerness to catch the matches and participate in other cultural events after a series of intensive business meetings. They all want to experience the vibrancy and diversity of Hong Kong.

Beyond the venue, areas such as Tsim Sha Tsui, Central and Wan Chai have welcomed many residents and tourists who watched the matches at restaurants and bars, enjoying drinks and cheering together. This has connected people and sparked exchanges, allowing people to better appreciate the charm of this dynamic city.

I took part in the events and immersed myself in the vibrant atmosphere. I paid a visit to Art Basel at the Hong Kong Convention and Exhibition Centre in Wan Chai, which was bustling with guests from around the world, as well as residents who brought their children and teachers who accompanied students to appreciate the art on display. The organisers anticipate that the five-day exhibition will attract more participants than last year's total of 75,000.

This year's Art Basel features 240 galleries from 42 countries and regions, with more than 20 galleries from Europe, Australia, Central America and Africa making their debut. A gallery owner from Europe told me that they have been participating in Art Basel Hong Kong for several years. He believes that this event is a great opportunity to connect with art lovers and buyers from Asia and around the world, serving as a vital platform to deepen their ties with this region and the international market. Many galleries have also reported impressive sales this year, with some artworks already sold out during the preview.

Equally successful was the recently concluded ComplexCon, a global pop culture festival which recorded a total attendance of 35,000 people this year, reflecting a 16% year-on-year growth. Related products and specialty merchandise were highly sought after, and the lively atmosphere encouraged extensive consumer spending, with total sales exceeding $87 million during the three-day event.

In addition to cultural, sports and art events, a series of large-scale financial conferences were held last week, including the Wealth for Good in Hong Kong Summit organised by the Government, as well as various summits hosted by different financial, academic, media and international organisations. These activities attracted thousands of business and financial representatives, family offices, international organisations and academics from various regions. In addition to delivering keynote speeches at these events, I participated in multiple panel discussions and dinner receptions. Through these interactions, international guests were able to better understand Hong Kong's latest developments, as well as the economic conditions and development directions of the Mainland. The exchanges also provided us with valuable insights into their perspectives, ideas and concerns.

During my interactions with these international guests, one consistent piece of feedback was that Hong Kong has regained its vitality and energy, and that they are increasingly positive and optimistic about the city. In particular, the atmosphere in the financial markets has notably improved since the start of this year, with a rising stock market, a significant increase in transaction volumes, and more active fundraising activities for new stocks. Coupled with continuous breakthroughs and innovations in our country in cutting-edge technologies such as artificial intelligence as well as in the cultural and creative industries, international investors are reassessing both Hong Kong and the Mainland's financial markets. They are increasing their investment allocations in this region, and hope to use Hong Kong as a platform to explore more investment opportunities in the Mainland and beyond.

Hong Kong's "Super March" has drawn an influx of visitors, fuelled by the momentum of high-profile events held across the city. As at last Friday, visitor arrivals in Hong Kong in March reached 3.4 million – a 12% year-on-year increase – including about 960,000 visitors. According to the hospitality sector, occupancy rates of hotels in prime districts was near 90%. The retail sector has also reported a marked increase in foot traffic, which benefits business.

Building on this momentum, Hong Kong will further leverage the "mega event economy" by curating high-impact, thematically focused events, summits and exhibitions designed to attract global high-value business travellers and unlock cross-industry opportunities. Concurrently, we will strengthen cross-sector partnerships to empower businesses in delivering innovative offerings and elevating customer experiences, thereby ensuring that our city thrives as a dynamic hub where people, business opportunities and joy converge.

March 30, 2025

Since its inaugural session in 2000, the CDF, hosted by the Development Research Centre of the State Council, has the mission of "Engaging with the World for Common Prosperity". Through high-level interactive discussions, it seeks to foster broader international co-operation, knowledge exchange and experience sharing. I have been invited to attend this year's CDF in Beijing, where I will deliver a keynote speech at one of its thematic seminars focused on igniting growth momentum through reform.

Currently, global economic and social development is facing multiple challenges. Protectionism and policy flip-flopping of certain Western countries have heightened geopolitical risks and increased economic fragmentation. Technological innovation is driving disruptive changes in business operations and models. Aging populations are leading to gradual yet profound shifts in consumer demand and investment preferences. Although these trends pose significant challenges to development, they also present opportunities for Hong Kong.

For instance, the cultural and creative industry has flourished in recent years. Popular intellectual property (IP) products have become vital conduits for cultural identity and emotional connections. These IPs have spawned a multitude of products and sparked a wide range of cross-sector creations, including animation, film, music, toys, theme parks and catering services. When combined with the power of smart devices and online marketing, these products generate vast business opportunities. A "Guzi Economy" has emerged in the Mainland, with products and entertainment offerings immensely popular among young people. The market size is estimated to reach hundreds of billions of RMB.

While in Beijing, I visited a leading pop culture and entertainment company, and studied the incubation of cultural IP products. I also learnt about the company's extensive experience in IP product management and marketing. It is evident that its success hinges on several key elements: (1) effective communication of concepts and emotions between products and customers; (2) ability to provide diverse experiences for customers; and (3) inherent potential for the products to evolve.

The stories conveyed through various characters and designs of products express a wide range of thoughts and emotions, forging strong connections with people. These connections would translate into consumers' affection for the products and their brands. Indeed, the popularity of certain IP products stems not only from meeting consumers' needs but also from the enjoyment and experiences associated with the purchase.

Hong Kong possesses numerous unique advantages in the development of cultural and creative industries. In addition to being a melting pot of East and West with a diverse and inclusive creative space, our creators possess an understanding of the Mainland market and international perspectives. This has enabled them to create content and characters that resonate deeply with the public. In the latest Budget, I proposed that the Government will support cultural and intellectual property creators and producers in advancing over 30 cultural IP projects over the next five years. To accelerate the development of IP-intensive industries, the Budget has also announced that we would review the tax deduction arrangements for various expenditures, including the lump sum licensing fees for acquiring the rights to use IP, and related expenses incurred on purchase of IP or the rights to use IP from associates.

Furthermore, the Office for Attracting Strategic Enterprises will broaden the scope of targeted business sectors to strategically attract more cultural and creative enterprises that integrate innovation and technology into their work. This initiative will drive the vibrant development of local creative industries. We encourage more enterprises in these sectors to make use of Hong Kong as an international platform and capitalise on our strengths in funding, talent, information, global presence and professional services to expand their business worldwide.

In fact, we have been reinforcing the advantages of Hong Kong as an international financial centre. According to the latest Global Financial Centre Index released by the Z/Yen from the United Kingdom and the China Development Institute from Shenzhen, Hong Kong's overall score increased by 11 points, ranking third globally and further narrowing the gap with champion New York. We rank first in the Asia Pacific. Even more encouraging is the notable 30-point rise for Hong Kong in "fintech", where our ranking has leapt five places to fourth. This is strong evidence that our efforts to develop the fintech ecosystem are bearing fruit.

Currently, Hong Kong Exchanges and Clearing Limited (HKEX) is processing over 100 listing applications, including global leading enterprises in the new energy sector as well as emerging stars from the Mainland. The atmosphere is vibrant. While in Beijing, I visited a company that specialises in applying artificial intelligence to intelligent traffic management, autonomous driving, perception robotics, etc. The company shared plans to establish its international business headquarters as well as global research and development centre in Hong Kong. They are also preparing for an initial public offering in the city to further expand their international business presence.

In the future, we will continue to enhance the publicity and promotion efforts in both traditional and emerging markets. We will encourage enterprises from around the world to take advantage of Hong Kong's comprehensive fund-raising capabilities, as well as the vibrant innovation and technology ecosystem across the entire Guangdong-Hong Kong-Macao Greater Bay Area. This will enable companies to expedite their business expansion and achieve greater development.

March 23, 2025

Yesterday, I attended an event focused on nurturing talent in I&T. There, I interacted with a group of primary and secondary school students. Some secondary school students shared the coding techniques they had learnt, including how to use artificial intelligence (AI) to optimise and enhance programme interfaces and operations using simpler commands.

Encouraging students to apply the technology and AI knowledge they have gained to solve everyday problems can inspire their interest in science and ignite their passion for pursuing their I&T dreams.

Therefore, in this year's Budget, we have proposed inviting large-scale tech companies in Hong Kong to provide resources, technical guidance and practical scenarios for technology education, such as coding and AI learning in schools. Moreover, we will invite the Hong Kong Investment Corporation Limited (HKIC), the Hong Kong Science and Technology Parks Corporation (HKSTPC) and Cyberport to coordinate efforts among partners and startups to showcase their products in schools or arrange site visits for students, sharing their experiences in cutting-edge technology exploration and entrepreneurship.

The purpose of these two initiatives is to bring together the most advanced talent, knowledge and experience from the tech sector to the education frontlines, thereby stimulating young people's curiosity for innovative exploration, igniting their dreams and encouraging them to become future leaders in I&T.

The event also marked the establishment of the first youth I&T academy by a large tech company, created to align with the Budget's measures. The academy aims to support coding training and AI learning in schools. It features a one-stop cloud development learning space equipped with engaging teaching tools that integrate AI coding and large language model (LLMs) applications. It would enable teachers and students to better grasp AI development skills through practical experience. Furthermore, the academy will host a global youth coding challenge. That initiative will encourage young people to identify real-world problems and propose innovative tech solutions based on their coding knowledge.

We encourage more tech companies to participate in nurturing young talent in Hong Kong and to provide them with quality employment and development opportunities. In fact, many tech companies that have established a presence in Hong Kong or plan to expand their operations are actively seeking to hire more staff. For example, HKSTPC hosted a thematic job fair last month, with over 150 AI-related companies participating. Together, they offered more than 1 000 I&T positions across various fields, such as software development, data analysis, LLMs and algorithms. Cyberport will also hold a two-day career fair focusing on AI starting this Friday, featuring over 580 companies and institutions that will offer more than 2 000 positions, with about 60% related to AI.

This year, the HKIC will host the "International Young Scientist Forum on Artificial Intelligence", bringing together top talent in the industry to promote technology exchange and industrial development of AI, including open-source technologies. A key focus of this initiative is the design and application of RISC-V open-source chips, which are a key to the strategic planning for Hong Kong's I&T future.

All smart electronic products, along with many other devices, rely on chips for their hardware and software. The underlying design logic of chips undergoes significant transformation approximately every decade. Many industry players believe that the chip sector is currently at another critical point of innovation. The open-source instruction set architecture RISC-V, known for its openness and flexibility, is considered the most promising option for development. Its open-source nature allows companies to save on patent fees, significantly reducing the cost of innovation. With global players actively exploring this area, it is anticipated that developments in this domain will accelerate further in the future.

As "patient capital", the HKIC will announce a strategic partnership with a tech company specialising in RISC-V technology this Friday, aiming to fast-track the development of related industries and talent in Hong Kong. The HKIC will also host the inaugural "Hong Kong RISC-V Development Summit" in collaboration with this strategic partner, showcasing Hong Kong's unique role and potential in this field. Secondary school students will be invited to participate. This event will provide them with an opportunity to learn more about the latest development and trends in the chip industry.

Enhancing the nurturing and pooling of I&T talent, promoting practical applications, stimulating innovation, as well as fostering the deep integration of technology and industry, will inject vital and invigorating momentum into the high-quality development of Hong Kong's economy.

March 16, 2025

"Technological and industrial innovations are the fundamental pathways for developing new quality productive forces." Indeed, from large artificial intelligence (AI) models to online gaming, and from robotic applications to animations, it is heartening to witness many of the Mainland's breakthroughs in technology as well as in the cultural and creative sectors. Indeed, the rise of numerous innovative enterprises on the Mainland has surprised the world. The innovations that are occurring in enterprises, products and services are not only generating substantial value but will also accelerate the transformation and upgrading of traditional industries. All of these are clear indication that technological and industrial innovations are key to driving economic growth and accelerating development.

Hong Kong will closely align with the direction and trajectory of national development, and steer our work around the priorities outlined by the Central Government. As Hong Kong further integrates into the overall national development, we need to accelerate efforts in the following three areas:

First, we should expedite technological innovations and their applications to create new impetus for the economy and enhance the quality of development. In this process, we are committed to both advancing the transformation and upgrading of traditional industries, and nurturing strategic emerging sectors and future industries. We will also take into account Hong Kong's local conditions and better leverage our role as an international financial centre to match capital with technology. Through the efficient allocation of funds via our financial markets, we will inject momentum into Hong Kong's innovation and technology (I&T) ecosystem, enterprises and industry clusters.

Hong Kong's extensive investments in scientific research in recent years, along with our endeavours to nurture startups and attract large-scale I&T enterprises to establish their presence in the city, are bearing fruit. Efforts in this regard will be strengthened so as to enable emerging industries to make greater contributions to our economic growth. At the same time, through various policies, we can guide traditional sectors to unleash creativity and enhance competitiveness.

Hong Kong's financial markets provide critical support for technological and industrial innovations. In turn, these innovations are reinforcing the momentum of Hong Kong's equities market. Driven by the robust performance of technology shares, the Hong Kong stock market has seen substantial rise since the start of this year, with the average daily turnover nearing HK$300 billion in February. The initial public offering (IPO) market has also become more active, with over 100 applications currently being processed by the Hong Kong Stock Exchange. The total IPO funds raised in Hong Kong this year are projected to be between HK$130 and HK$160 billion. The dedicated "technology enterprises channel" (TECH) for IPO applications, announced in this year's Budget, aims to address market needs by providing targeted services to expedite the early-stage preparation for IPO applications.

Second, by creating unique experiences across various themes, we will adopt innovative approaches to unleash the market's consumption potential. This will strengthen domestic demand and boost consumption. In light of changes in the consumption patterns of residents and visitors, the local retail market has been affected. However, past practices from the Mainland have suggested that by crafting new experiences and scenarios in culture, sports and tourism, it is possible to reach a broader and more diverse consumer base. With effective digital marketing and promotion, this can help stimulate consumption power, thereby achieving a virtuous cycle of creating value for industries and helping them expand market capacity. By leveraging Hong Kong's distinctive East-meets-West cultural appeal, we can provide more novel consumption experiences. This will be key to maintaining our competitive edge and driving future development.

Meanwhile, consumer demand is also driven by innovations on the supply side of products and services. In the Mainland, brand new smart appliances and advanced electronic home products are gaining popularity. These products help address many daily life pain points for consumers. As smart appliances become more accessible and undergo upgrades, they will stimulate even greater consumer demand.

Third, we will deepen international engagement and cooperation. Under the "one country, two systems" arrangement, Hong Kong plays the unique role of connecting with both the Mainland and the rest of the world. We need to seize the opportunity to strengthen our international ties, under the strategy of forging closer partnerships with the Greater Bay Area and opening up more overseas markets. We will reinforce connections with traditional markets while building new ones with emerging economies. Taking major international conferences as an example, we will host the inaugural "Hong Kong Global Financial and Industry Summit" this year, which will bring together global enterprises, funds and technologies, thereby elevating the level of international co-operation in various industries. It will also attract more leading companies in advanced industries, as well as Mainland and overseas enterprises and investors, to establish their presence in Hong Kong. Moreover, we will organise the "International Young Scientists Forum on Artificial Intelligence" and "International Conference on Embodied AI Robot", which will gather top talents in the relevant fields and promote Hong Kong as a hub for collaboration in the AI industry.

The trends are clear: technology is driving innovation; good experience will boost consumption; and exchanges promote more co-operation. We will integrate the spirit of the National Two Sessions into our efforts in advancing social and economic development, with a view to supporting Hong Kong's high-quality economic growth and better sharing the economic fruits with the community. Above all, Hong Kong will be proud to make greater contributions to the building of China into a great country and its great rejuvenation through Chinese modernisation.

March 9, 2025

The rapid advancement of AI is reshaping the medium- to long-term landscape of the global economy. "AI+", which emphasises the deep integration of AI across various industries, is transforming traditional production, business and consumption models, thereby redefining the core competitiveness of economies worldwide.

Our country introduced the "AI+" initiative last year, focusing on the comprehensive adoption of AI in research and development (R&D) and the establishment of a globally competitive digital industry cluster.

Thanks to the "one country, two systems" framework and its unique international characteristics, Hong Kong serves as a convergence point for data from both the Mainland and abroad. Coupled with the strong research capabilities of five of the world's leading universities, we are well-positioned to advance cutting-edge AI research and applications, and establish ourselves as an international hub for exchange and collaboration in the AI industry.

The Budget underscores the importance of AI development, committing additional resources to enhance five key elements: computing power, algorithms, data, talent and capital. We are also dedicated to exploring new application scenarios. Good progress has been made thus far.

For instance, the AI Supercomputing Centre at Cyberport has recently commenced operation. On R&D, the "AIR@InnoHK" research platform has gathered 16 dedicated laboratories. For the newly established Hong Kong Microelectronics Research and Development Institute, two pilot lines will be assembled at the Microelectronics Centre in Yuen Long this year. Operations are expected to begin next year, thereby promoting the transformation of research outcomes from "one to N".

Building on this foundation, we must accelerate AI applications to achieve the "AI+" goal to empower the development of industries. The Budget has set aside $1 billion to establish the Hong Kong AI Research and Development Institute, aimed at expediting the upstream R&D, as well as the midstream and downstream transformation of research outcomes into industry applications.

On the capital front, the Hong Kong Exchanges and Clearing Limited will launch a "technology enterprises channel" (TECH) to facilitate the listing process for specialist technology companies. The Hong Kong Investment Corporation Limited will also leverage its role as "patient capital", guiding and driving more international patient capital to invest in our key industries.

We have proposed to host the inaugural "International Young Scientists Forum on Artificial Intelligence" to promote AI research and its industrial development. The forum will focus on open-source technologies, particularly the design and application of RISC-V open-source chips. It also aims to gather the world's most creative young minds to discuss the future of the industry and its benefits to humanity.

Meanwhile, the Hong Kong Investment Corporation Limited will organise the inaugural "International Conference on Embodied AI Robots", allowing top Mainland and international robotics companies to showcase their products while connecting the industry, academia and investment sectors. They will engage in focused discussion on embodied AI, which is a key area of development. This event will facilitate cross-sectoral exploration and exchanges as well as enhance Hong Kong's international influence in related fields.

To help nurture talent, we have engaged several leading tech companies in Hong Kong. We will connect over 100 local cutting-edge tech firms and startups with primary and secondary schools, providing teachers and students with access to their valuable resources. This initiative aims to encourage students to engage with technology through interactive exchanges and field trips, allowing them to gain hands-on experience with tech products and see AI applications in action. The enthusiasm of young people for technology will be their greatest motivation to learn and embrace change. We have received positive responses from the tech industry, with major companies such as Tencent, Alibaba, Lenovo and SenseTime already on board. The Hong Kong Investment Corporation, Science Park, and Cyberport will also coordinate various tech startups to participate.

In response to shifts in the international environment, we must respond to challenges through reform, drive development through innovation, and embrace technology to lead our future. By developing AI as a core industry, Hong Kong can break free from old development models, create new job opportunities and propel economic growth, thus fostering a more diversified and advanced economic structure and industrial landscape.

March 2, 2025

Making good use of public resources is crucial for driving sustainable social development, enhancing the quality of life and improving efficiency. In light of the fiscal deficit resulting from various challenges in recent years, we will introduce an enhanced "Fiscal Consolidation" strategy in the upcoming Budget. This approach aims to maintain and improve public services while rigorously controlling public expenditures. We will appropriately increase revenue, having regard to Hong Kong's competitiveness and the "user-pays" principle. Besides, we will leverage other public resources and market forces to accelerate development and invest in the future.

The international environment is complex and ever-changing, presenting us with new opportunities, particularly those driven by technological advancements that foster innovative applications and growth. By stimulating economic growth, facilitating the transformation and upgrading of traditional industries, and nurturing new economic momentum, we can continuously adapt and gain competitive advantages in a dynamic landscape, thereby infusing vitality into sustainable economic development.

The colour of this year's Budget cover is Lake Blue, symbolising a vast ocean of opportunities as we ride the waves of high-quality economic development. The lake is filled with boundless possibilities. Even in the face of occasional storms, with the steadfast support of our country and the collective efforts of various sectors in Hong Kong, we remain confident and hopeful about our future.

February 23, 2025

To harness technology as the core driving force of economic development, it is necessary for us to support both the transformation and application of scientific research outcomes as well as the clustering of and collaboration among enterprises. This will help us build a vibrant ecosystem of industries that will accelerate the exploration of new products and services, and speed up the iteration of technologies as well as nurturing of new quality productive forces.

Accelerating the development of the Northern Metropolis is crucial for Hong Kong to seize the opportunities presented by technological change. The Northern Metropolis serves as the carrier of a new economic growth engine, providing a platform for the advancement of cutting-edge technologies like "AI+", fostering the growth of emerging industries, and facilitating the transformation and upgrading of traditional sectors. By establishing a comprehensive I&T ecosystem, and leveraging the advantages of high-end manufacturing industries and the market scale of the Guangdong-Hong Kong-Macao Greater Bay Area ("GBA"), we will promote collaborative development within the GBA.

The Northern Metropolis development area spans 3,000 hectares and is divided into four major zones from west to east. One of these zones is the "I&T Zone", which includes two key hubs: the "Hong Kong Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Co-operation Zone" ("Hong Kong Park") and the "San Tin Technopole", each serving distinct roles.

The "Hong Kong Park" covers 87 hectares and features the advantage of "one zone, two parks". It will collaborate with the adjacent "Shenzhen Park" of the Hetao Co-operation Zone to serve as a platform for promoting the transformation of research outcomes and development of I&T in both Hong Kong and Shenzhen. The first three buildings under the Batch 1 development of the Hong Kong Park are being completed and will begin operation within this year. The development of five more buildings is progressing in full speed. We are also working to implement measures that facilitate the flow of cross-boundary innovative elements within the Hetao Cooperation Zone.

The 210 hectares of I&T land in the "San Tin Technopole" will support research activities and the transformation of outcomes from the "Hong Kong Park", with a strong emphasis on an "industry-oriented" approach. We will leverage Hong Kong's unique advantages in connecting with both the Mainland and the world to attract strategic tech enterprises from around the globe, thereby building a robust I&T industrial chain and a base for emerging I&T industries.

To capitalise on the opportunities presented by the rapid development of frontier technology, we need to accelerate the development of the Northern Metropolis. It will provide ample space and infrastructure to attract tech enterprises to set up business in Hong Kong and expand their research and development or high-end manufacturing activities in the city. Such efforts will invigorate related economic activities.

In the coming years, projects related to the Northern Metropolis will be rolled out progressively, and land for various industries gradually released. Together with other important infrastructure projects aimed at improving people's livelihood (such as the expansion of North District Hospital, the New Acute Hospital at Kai Tak and public housing development site formation works), government spending on capital works is expected to reach its peak.

To ensure that these projects can proceed on schedule and deliver early benefits to the economy and the people, we will leverage market resources, including adopting diverse development models. They include public-private partnerships, in-situ land exchanges, pilot areas for "large-scale land disposal". For "large-scale land disposal", we have invited expressions of interest for three pilot areas in the Northern Metropolis, with plans to invite tenders starting in the second half of this year. Besides, we will issue government bonds to ensure that the progress of the Northern Metropolis, which is crucial to the future development of Hong Kong, remains unimpeded by the fiscal position.

Issuing bonds to support infrastructure projects and invest in the future is a common practice worldwide. Many governments finance infrastructure initiatives through bond issuance to promote economic development. A report from an international organisation indicates that while Hong Kong plans to issue bonds to fund infrastructure projects, its debt level will remain low. A research report from a local university suggests that it can be a wise move to suitably issue debt under the bond programme to support projects that benefit public welfare and long-term social development.

To implement strategic infrastructure projects and expedite the rollout of new land for industries, Hong Kong has the necessary conditions and capability to suitably increase bond issuance, thereby effectively utilising market forces. In many advanced economies, government debt-to-GDP ratios have exceeded 100%. In contrast, Hong Kong's current ratio stands at approximately 9.3%. Even with a moderate increase, it would be significantly lower than that of other advanced economies, and remain at a stable level.

The Government has all along maintained strict fiscal discipline: capital raised through bond issuance is dedicated to future investments and not to meeting operating expenses. As certain infrastructure projects reach completion, the demand for and scale of bond issuance will decline accordingly. On the other hand, economic activities and development of industries driven by infrastructure investments will generate new development opportunities and tax revenues to Hong Kong. Issuing longer-term bonds to support longer-term projects could also align cash flow duration with project requirements.

Bonds issued by the Hong Kong SAR Government in the past have been well-received by global institutional investors, including banks, central banks, sovereign funds and international organisations, as well as fund managers, private banks and insurance companies. For example, in the 2024-25 financial year, institutional green bonds and infrastructure bonds issued by the Hong Kong SAR Government registered subscription amounts nearly three to seven times their issuance sizes, reflecting strong market demand for quality fixed income assets and confidence in Hong Kong's long-term development. Several insurance companies and asset managers have also indicated a preference for the Hong Kong SAR Government to issue more bonds across various tenors and currencies to meet their investment demand for local bonds. This will help establish more comprehensive yield curves, providing benchmarks for other issuers and promoting the further development of Hong Kong's bond market, thereby achieving multiple benefits.

February 16, 2025

The Marathon has a history of more than 20 years in Hong Kong. Every year, it attracts many local and international runners. This year, about 15,000 runners from over 100 countries and regions participated in the event, making up around 20% of the total number of participants.

While the Marathon is essentially a competition, it integrates sports with the cityscape of Hong Kong. Together with the enthusiastic cheers from local residents along the way, participants can experience the city more vividly from another angle. This is an exemplar case of "shaping tourism with sports". Meanwhile, a few hundred local shops took part in supporting the event, and sought to seize the business opportunities and maximise the economic benefits of the occasion.

The Kai Tak Sports Park will be opened in March, and will host several major international sports and cultural events. The economic benefits brought by the Park, and the opportunities it present for the promotion of a vibrant Hong Kong, are truly exciting.

Apart from the activities at Kai Tak Sports Park, a number of highly anticipated events are also on the horizon, including a globally influential Web3 event, the first-ever "Consensus" conference held outside the United States (February 18-20), as well as Art Basel and LIV Golf Hong Kong in March.

These events will enrich the substance of the "Hong Kong Brand". The unique blend of Eastern and Western cultures, along with Hong Kong's international and diverse environment, has created a distinctive cultural atmosphere. Indeed, Hong Kong is a city that harmonises the Chinese and Western culture, past and present, fast and slow, and old and new. From visual arts to performing arts, and from sports to experiencing nature, Hong Kong's diverse activities have enabled vibrant cultural and intellectual exchanges. The "Hong Kong Brand" is not merely about products and services; it represents unique experiences that showcase the value of inclusiveness, and promote cultural exchange and mutual learning.

From this perspective, it is clear that the cultural and creative industries are an essential part of social and economic progress. They are a crucial component of the "Hong Kong Brand". In recent years, the global collectible toy industry and the "goods economy" have rapidly risen, where various types of animations, video games and toys have captured the attention of young people and unleashed their spending power, estimated to reach hundreds of billions of dollars. Several local artists and designers have emerged as leading figures in this global trend.

Recently, several popular art toys and trendy characters have taken hold in Hong Kong, the Mainland and the Asian market, and such characters indeed originated from local designers. Their works were deeply inspired by the local comics and animation culture, while integrating international design elements. This has made their toy characters distinctive. Each time a new product was released in collaboration with world-class brands, a buying frenzy was ignited. These intellectual property (IP) products have created billions of dollars in value, setting new benchmarks for the creative industries.

These local success stories have demonstrated how we can effectively leverage the "Hong Kong Brand" to further develop our cultural and creative industries. Designers and creators in Hong Kong possess broad perspectives and understanding of the cultures and needs of the Mainland, Asia and international markets. By taking advantage of Hong Kong's convenient connections to the vast Mainland and global markets, market players can break new grounds by creating unique and distinctive IP products that resonate emotionally with the public.

To enhance the promotion of Hong Kong's cultural and creative industries, the "CreateSmart Initiative" has continued to provide funding for projects that can support the development of the industry, while assisting with their market promotion. In recent years, the funding scheme has supported a number of projects aimed at helping the local comics, animation, gaming and trendy toy sectors promote their work in Southeast Asia and expand into new markets.

Hong Kong's cultural and creative industries boast exceptional talent, and the Government is collaborating with the industry to host more events. Last year's events, such as "Hong Kong Fashion Fest", "Business of Design Week" and "DesignInspire Creative Design Expo", received positive feedback, and showcased Hong Kong's creative strengths and enhanced the visibility of local industries. These events had gathered regional and international elites for mutual exchange, and enriched Hong Kong's role as the East-meets-West centre for international cultural exchange.

February 9, 2025

Over the past few days, my family members and friends remarked on the city's positive market sentiment, with crowds surging in traditional tourist attractions, shopping districts and major malls. From the Chinese New Year's Eve to the third day of the New Year (i.e. 28 to 31 January 2025), Hong Kong welcomed nearly 680,000 visitors, registering a 6% year-on-year increase. Mainland visitor arrivals rose by 4%, while overseas travellers saw a 16% jump. Hotels across the city nearly reached full occupancy, and retailers rolled out promotions and discounts to delight shoppers and capitalise on the festive momentum.

New Year's Eve reunion dinners saw packed restaurants across the city. Some friends in the catering industry reported business growth of more than 10%. Some said in popular tourist districts, spending by families soared by 20% compared to regular days. The Chinese New Year Raceday on the third day of the New Year drew roaring crowds to the Sha Tin Racecourse, with betting turnover exceeding HK$1.9 billion, representing a 10% jump from last year. Theme parks were also bustling during the festive period.

The bustling crowds and upbeat market sentiment signal steady recovery in consumer confidence. Hong Kong's diverse Chinese New Year offerings—from iconic Chinese New Year flower markets and fireworks over Victoria Harbour, to temple visits at Che Kung Temple, the Raceday and the star-studded Chinese New Year Cup football tournament—have captivated both local and international visitors. These festivities have highlighted Hong Kong's vibrancy with the unique fusion of tradition and modernity as well as East-meets-West energy.

For retailers and the catering sector, success hinges on drawing crowds and driving spending. Observations from industry contacts have revealed strong sales for high-end products as well as those targeting the budget market. Locals and tourists are increasingly drawn to unique products and novel experiences, which they can share with friends and family on social media platforms. Curating joyful memories and unforgettable moments for customers is the key to turning flows of people into revenues.

Hong Kong is doubling down on signature events to attract crowds and visitors. Among them, the Standard Chartered Hong Kong Marathon, popular among locals and international runners, will take place next Sunday (9 February). Over 70,000 participants have registered. Many shops and restaurants are offering special sports gear and themed menus to leverage the buzz. Next month, the Kai Tak Sports Park, boasting a 50,000-seat main stadium, will be officially opened. It will significantly enhance Hong Kong's ability to host major events. Together with marquee events such as the Hong Kong Sevens, Art Basel, and financial conferences and events such as the Wealth for Good in Hong Kong Summit, we will create the opportunities to draw in more visitors and drive economic returns.

We all hope to accelerate economic growth for Hong Kong. However, repeating existing models will not be sufficient to keep pace with emerging trends and the dynamic business environment. The key to achieving growth lies in experimentation and innovation—venturing into new markets and fostering new growth areas by developing novel products and experiences. These efforts are crucial for driving more robust and rapid economic growth in Hong Kong.

Over the past few years, the rapid advancement of frontier technologies, particularly artificial intelligence (AI), has captured global attention and significantly impacted the global political and economic landscape. Technological innovation is essential for enhancing competitiveness, and fostering product and service development. The Hong Kong SAR Government's ongoing and substantial investments in innovation and technology are gradually bearing fruits. Going forward, we will continue to promote AI development in Hong Kong by focusing on talent, data, computing power, algorithms, application scenarios, and more. We will also further promote transformation and application of AI-driven research outcomes to create tangible social and economic benefits.

The advance estimates of GDP for the fourth quarter and full year of 2024 will be released tomorrow. The data will show the steady progress of Hong Kong's economy. The quarterly figures, reflecting more recent trends, continue to show improvement. Visitor arrivals notably increased, and private consumption also stabilised during the quarter. In the stock market, trading has remained active since the end of September last year, with the average daily turnover in January reaching HK$147.6 billion, about 12% higher than last year's full-year average and up approximately 4% from last December. Trading activities in the property market were also generally stable. Moreover, the labour market has remained positive, and inflation stayed moderate. These indicators suggest that the Hong Kong economy is on a stable footing. However, in light of the external political and economic situation, as well as a persistent high-interest-rate environment, we must remain cautious and vigilant.

February 2, 2025

During the Annual Meeting, I had the opportunity to share Hong Kong's experiences and viewpoints on combating climate change, advancing green finance and financial innovation, and more, during official thematic sessions, seminars, luncheons and dinners. I also held bilateral meetings with a number of political and business leaders, where we exchanged views on various economic and financial issues. Through these interactions, I articulated Hong Kong's strengths and latest development directions from multiple angles; we also explored ways to strengthen cooperation and create mutually beneficial opportunities. Below are some key takeaways from the event.

First, participants expressed great interest in the global development landscape, particularly the economic conditions of China and the United States (US), as well as the future trajectory of Sino-US relations.

This year, Vice Premier of the State Council, Mr Ding Xuexiang, attended the meeting in person and delivered a special address. Using solid facts and data, he outlined the trends and characteristics of our country's economy, providing foreign businesses and investors with a deeper understanding of its development directions and paths, as well as its economic momentum. This has reinforced their confidence in China's growth.

Vice Premier Ding also articulated China's stance on global governance, emphasising our country's commitment to jointly promoting inclusive economic globalisation, upholding and practising true multilateralism, strengthening international cooperation in technological innovation to foster new drivers and strengths for economic development, and tackling major global challenges such as climate change and energy security. These proposals provide more stability and certainty for the world, demonstrating the responsibility of a major country.

Another focus of the Annual Meeting was the economic and foreign policies of the new US administration, particularly its stance on global trade, international relations and climate change. Notably, two distinct approaches to global governance were evident at this year's meeting, which, to some extent, have foreshadowed the future of the international landscape. Amid rising unilateralism and protectionism, the international economic system is facing increased risks of fragmentation, and the uncertainties confronting global development are likely to grow.

However, if cooperation is no longer a given norm, we will have to work together to make it the best choice for all. In an increasingly multipolar and fragmented global economy, it is crucial to partner with economies which still believe in the benefits of multilateral cooperation, and this will allow us to achieve better and faster development. Bilateral, multilateral and regional cooperation will become increasingly important in the years ahead.

Second, the opportunities and challenges brought by technological innovation are a critical issue of global concern. The theme of this year's Annual Meeting, "Collaboration for the Intelligent Age", underscored how cutting-edge technologies, particularly artificial intelligence (AI), are profoundly transforming and empowering industries; it also highlighted the acceleration of the evolution of related technologies. Establishing a global governance framework for AI to ensure that its development would be safe, orderly and beneficial to humanity, and addressing associated risks and ethical issues, require cross-border collaboration.

Third, while the international landscape evolves, humanity is facing imminent threats such as climate change. In combating climate change, there is a significant funding gap. Many participants agreed on the need for Public-Private-Philanthropic Partnerships (4Ps) to leverage and gather funds for impact investing, thus providing greater support for climate, transition and sustainable development projects.

Fourth, active participation was observed from Japan and countries of the Global South, including India as well as economies from the Middle East and the Association of Southeast Asian Nations. Some economies sent their largest delegations ever, underscoring the Global South's growing role in shaping the international agenda and influencing reforms in global governance. It is fair to say that profound changes are underway in the landscape of global governance.

Leveraging the institutional advantages of the "one country, two systems" framework, Hong Kong continues to play a pivotal role in connecting the Mainland with the rest of the world. By contributing to the country's high-level opening-up and creating new growth areas for itself, Hong Kong also adds value for global enterprises and investors. In such fields as technology development and green finance, Hong Kong can facilitate connections among the Mainland, developed economies and emerging markets in the Global South, and drive collaborative development.

For technological transformation, Hong Kong is committed to developing its AI sector and accelerating the expansion of its digital infrastructure. The first phase of the Artificial Intelligence Supercomputing Centre began operations at the end of last year. By leveraging its unique advantage in gathering data from both the Mainland and the world, Hong Kong provides a fertile environment for the work of global research institutions and companies engaged in AI and biotechnology. Coupled with its comprehensive financial services and efforts to attract global tech talent, this will drive the rapid growth of the related industry ecosystem.

Hong Kong is also a leading green finance hub in Asia, with experienced financial institutions, a concentration of professional talent, and a key role in developing green standard frameworks. The thriving ecosystem of family offices, private equity funds, and asset and wealth management businesses helps match global wealth with green and transition projects worldwide, contributing to sustainable development at both regional and global levels.

This year's Annual Meeting also provided a valuable opportunity for us to share the good stories of our country and Hong Kong, and expand our circle of friends. In addition to engaging in discussion about deeper cooperation with senior financial officials, business leaders and corporate executives from various regions, I also invited them to lead business delegations to Hong Kong to explore opportunities in the city, the Guangdong-Hong Kong-Macao Greater Bay Area and the Mainland.

Hong Kong's institutional advantages, geographical location and international competitiveness are widely recognised. Over the past few years, the Hong Kong SAR Government and various sectors in Hong Kong have actively engaged in inviting guests and reaching out, with a view to strengthening the understanding of Hong Kong's actual situation, new advantages and emerging opportunities. These efforts have yielded remarkable results in attracting investment and talent. At this year's Annual Meeting, a leading European fintech company revealed plans to establish operations in Hong Kong as a base for expanding into Asia. We will enhance our efforts to promote Hong Kong and invite more friends from around the world to explore the city, leverage its opportunities and contribute to its growth.

In just two days, we will welcome the Chinese New Year, the Year of the Snake. As this time of the year, the Hong Kong SAR Government team has been visiting districts across Hong Kong to share joy with our residents. Yesterday, I visited the Yau Tsim Mong District, and had good conversations with residents about their daily lives, their children's education and the environment of the community. I conveyed Chinese New Year greetings and blessings to them.

I would like to take this opportunity to wish everyone a Happy Chinese New Year. May you and your families enjoy good health and happiness, and may Hong Kong prosper in the Year of the Snake!

January 26, 2025

This year marks the 18th edition of the AFF, which brought together 3,600 financial, political and business leaders from over 50 countries and regions. Participants engaged in in-depth discussions on topics such as sustainable development and artificial intelligence. Fruitful outcomes were achieved. Among the heavyweight participants were the Governor of the People's Bank of China (PBOC), Mr Pan Gongsheng, and the former Chief Economist and Senior Vice President of the World Bank, Professor Lin Yifu. They shared valuable insights on the latest economic, social and financial developments in the Mainland, and illustrated China's steady economic growth and promising prospects, both at present and in the medium to long term, with solid facts and data.

At the AFF, I met and exchanged views with many political and business leaders from Europe, the US and emerging markets along the Belt and Road. Today, I would like to share with you some of my observations.

First, both returning and new guests at the AFF noted the large scale of the event and the high level of international participation, which had exceeded their expectations. The AFF provided them with the opportunity to engage directly with officials and financial leaders from different regions and backgrounds. This facilitated further collaboration.

Second, leaders of financial institutions from Europe and the US told me that Hong Kong indeed plays an unparalleled role in helping them enhance connections to the Mainland and global markets. For instance, in the asset and wealth management sector, the rapid growth of the middle class and affluent individuals in the Mainland and Asia has led to an increasing demand for diversified asset allocation. This trend helps position Hong Kong as an ideal platform and base for these institutions to expand their operations. Indeed, some institutions have already initiated their expansion plans.

Third, representatives from some "Global South" countries acknowledged Hong Kong's standing as an international financial centre and the comprehensive range of fundraising options it provides. They aim to leverage Hong Kong's diverse fundraising services to accelerate their domestic infrastructure and economic development, facilitate green transition and share disaster risks. Moreover, they seek to draw on Hong Kong's knowledge and experience in professional services and strengthen cooperation in talent training to enhance their financial systems as well as support local economic and social development.

With the staunch support from our country, Hong Kong continues to accelerate its development and expand its role as an international financial centre. This has instilled greater confidence by different sectors, local and abroad, in Hong Kong's future. Last week, the Governor of the PBOC, Mr Pan Gongsheng, announced at the AFF various measures to deepen mutual market access between the Mainland and Hong Kong. They will focus on four key areas: first, to support the development of Hong Kong's capital market and continuously deepen the mutual access between the financial markets of the two places; second, to expand and strengthen Hong Kong's position as an offshore Renminbi business hub; third, to enhance Hong Kong's functions as an international asset and wealth management centre; and fourth, to resolutely safeguard Hong Kong's financial stability and security.

To support the development of Hong Kong's capital market, the Central Government will increase the asset allocation of the country's foreign exchange reserves to Hong Kong. Further deepening mutual market access will attract more international capital to invest in the Mainland through Hong Kong, thereby promoting the growth of various industries in the Mainland and accelerating the formation of a new development pattern. These measures will create greater opportunities for the development of Hong Kong's capital markets.

We are actively enhancing the content and depth of Hong Kong as an international financial centre, through undertaking continuous reforms and innovation that attract capital, investors and financial products from both traditional and emerging markets. By doing so, we will promote better regional cooperation and development to achieve mutual benefits.

Tomorrow morning, I will depart for Davos, Switzerland, to attend the World Economic Forum (WEF) Annual Meeting. The theme of this year's Meeting is "Collaboration for the Intelligent Age". Given the prevailing geopolitical tensions, it is essential to explore how jurisdictions can enhance cooperation to harness the opportunities for development presented by artificial intelligence and innovation, and advance towards green transition to address the challenges of climate change.

This year, Vice-Premier of the State Council, Mr Ding Xuexiang, will also attend the WEF Annual Meeting and deliver a highly anticipated Special Address. The current situation, strategic directions and focal areas of the Mainland's economic development have emerged as key topics of interest at recent WEF Annual Meetings. Many satellite events held during the Meeting have also centered on themes related to the Mainland, reflecting the significant attention our country has received on the world stage.

During my visit to Davos, I will be invited to speak at several thematic seminars and luncheons, as well as participate in bilateral and roundtable sessions. Many regional political and business leaders are eager to use these occasions to gain insights into Hong Kong, the regional political and economic landscape, and regional perspectives on international issues. I will take this opportunity to explain the strategies and measures Hong Kong has adopted in various areas, while promoting our advantages and value as a "super connector" and "super value-adder."

January 19, 2025

Overall, the Indonesian economy is vibrant, brimming with business opportunities and significant growth potential. The country is very welcoming to Hong Kong and Mainland enterprises. As ASEAN's largest economy, Indonesia has experienced rapid economic growth in recent years, averaging a remarkable 4.2% annual growth rate over the past decade. Its youthful population, as well as an expanding middle class and burgeoning consumer market, have made it a key destination for many foreign investors.

Under the strategic framework of "Golden Indonesia 2045," the country is actively advancing initiatives in infrastructure, digital economy and green transformation, while attracting more foreign investments to accelerate modernisation and promote leapfrogging economic development. It is clear that Indonesia will have a substantial demand for infrastructure investments and a strong need for innovative and green technologies.

Hong Kong and Indonesia enjoy a close economic and trade relationship. In fact, Hong Kong is the second largest source of foreign investment in Indonesia. Statistics indicate that from 2018 to 2022, over 8,400 investment projects originated from Hong Kong, amounting to a total investment of approximately US$18.5 billion. Many entrepreneurs and investors from the Mainland and beyond are utilising Hong Kong as a gateway to invest in Indonesia.

During this visit, through speeches, meetings and networking activities, we took the opportunity to explain how Hong Kong can support Indonesia's development and create value across various key sectors. As an international financial centre, Hong Kong offers a full range of fund raising options. Through Hong Kong's mutual market access arrangements with the Mainland, Indonesian enterprises can list on the Hong Kong Stock Exchange and access both Mainland and international capital. For infrastructure and green projects, there are numerous fundraising avenues available, including issuing bonds in various currencies, establishing real estate investment trusts and securitising projects. In light of the disaster risks posed by climate change, they can also consider issuing catastrophe bonds in Hong Kong to transfer part of the risks to interested international investors.

Innovation and technology are also an area in which they are highly interested. Hong Kong has made impressive strides in recent years in fields such as artificial intelligence, green technology, construction technology and digital assets, with many local startups successfully expanding to overseas markets with their innovative solutions.

During our trip to Indonesia, over 20 startups from Cyberport and the Hong Kong Science and Technology Parks (HKSTP) participated, showcasing their innovative products and services to the local market. The innovative technologies, experiences, and development visions of these companies attracted many potential business partners eager to explore collaborative projects.

Among them, 10 startups from the HKSTP engaged in over 50 business matching sessions in Indonesia, with more than 30 projects entering the contract negotiation stage, representing a potential business volume exceeding US$5 million.

Furthermore, 14 startups from Cyberport also engaged in exchanges with local government and business leaders, with significant interest from local developers in applying Hong Kong's smart city solutions to their projects. Notably, 3 startups in the fields of artificial intelligence and Web 3.0 signed memoranda of understanding with Indonesian companies, with a view to implementing collaborative projects there within this year.

Beyond finance and innovation and technology, Hong Kong serves as a crucial bridge connecting our country with the rest of the world, and plays an essential role in promoting trade and bilateral investments. In recent years, our country's relationship with Indonesia has deepened, with both sides advancing a comprehensive strategic partnership and a community with a shared future. Many Mainland enterprises are increasing their investments in Indonesia. They recognise the country as a pivotal link in their global industrial and supply chain strategies, while also supporting the country's industry diversification and technological enhancements, thereby creating more job opportunities there. During our discussions with executives of local Chinese enterprises, they acknowledged that when Mainland companies "go global", Hong Kong can provide robust support in areas such as supply chain management, trade financing, corporate treasury management, professional consulting, and talent development. With the advantages under the "one country, two systems", Hong Kong can also serve as a base for Indonesian companies looking to expand into the Mainland and North Asian markets.

In terms of cultural and educational exchanges, both parties are making significant strides. From January to November last year, the number of visitors from Indonesia to Hong Kong surged by nearly 50%, while visitors from other Southeast Asian countries like the Philippines, Malaysia, and Vietnam also increased by around 60%. Deeper people-to-people bonds will foster greater economic and trade collaboration, and help showcase and exemplify Hong Kong's soft power. Indeed, during this visit, both sides expressed a desire for more Indonesian students to study in Hong Kong, and to promote more youth exchange programmes, thereby reinforcing the future economic, business, cultural exchanges and mutual understanding between our two economies.

Besides going on duty visits outside Hong Kong, we also continue to invite guests to come to the city, showcasing Hong Kong's new advantages and potential. The first major event will be the "18th Asian Financial Forum" opening this week, where some 3,600 financial, political and business leaders from about 50 countries and regions will gather. This year, the Forum will introduce a new session, namely the "Gulf Cooperation Council Chapter", to explore new ways to deepen financial cooperation between Hong Kong and the Middle East, as well as promoting more bilateral capital flows.

Emerging markets in the Middle East, ASEAN and other regions in the "Global South" are currently experiencing rapid economic growth. Many governments are eager to accelerate economic development and invest heavily in infrastructure. These all present new development opportunities for Hong Kong's businesses, and we must seize them.

By effectively leveraging our unique role to connect with both the Mainland and the world, we can support the development of enterprises in emerging markets and promote faster and higher-level regional economic growth. In doing so, Hong Kong stands to benefit and achieve sustained and better development.

January 12, 2025

We are fully committed to strengthening the economy and pursuing development, aiming to accelerate economic growth that benefits all. Given the challenges we face in public finance, it is essential to adopt a comprehensive strategy. During the budget consultation, members of the public have shown great interest in these two key issues.

Yesterday, I participated in RTHK's programme "Voices from the Hall". Many participating members of the public expressed interest about Hong Kong's economic situation and development. They offered concrete suggestions for promoting the growth of various industries and creating more business opportunities. Many emphasised the need for Hong Kong to attract more tourists, and encourage both visitors and residents to spend in the city. They also recognised the need to draw in more capital, thereby reinforcing the positive momentum observed in recent months.

Only through better economic development can we generate the resources needed to support various social services, and create more and better job opportunities for our residents. At the same time, we must address issues related to the sustainability of public finance. These are crucial for the stability of our economy and society, as well as for the ongoing enhancement of social services.

In the past two financial years, we experienced budget deficits primarily due to the significant spending related to the pandemic. The high-interest environment and geopolitical factors influenced capital flows and constrained the local asset market, adversely impacting revenues from related sources. On the other hand, the structure of certain expenditure areas requires review. Given the cumulative effects of these factors, the projected consolidated deficit for this financial year (2024-25), including proceeds from bond issuance, is expected to be under HK$100 billion.

The key to improving the public finance situation lies in identifying new revenue sources while managing expenditure growth. Our strategy focuses on the latter. On the premise that public services would be maintained and improved, it is essential to control the growth of recurrent expenditures. As a matter of fact, many countries facing significant deficits after the pandemic have opted to control expenditure as their main approach to gradually narrowing the fiscal gap.

Meanwhile, we will prioritise public works projects based on their urgency and significance, and adjust implementation timelines as appropriate. In terms of resources, priority will be given to the Northern Metropolis and other initiatives related to economic development and housing. We will also make good use of debt issuance and public-private partnerships to harness market capital for advancing these infrastructure projects. These measures aim to capitalise on development opportunities and create avenues for new economic growth drivers that can be translated into taxes and other revenues.

In last year's Budget, we proposed a comprehensive fiscal consolidation programme which includes reducing recurrent expenditures by 1% annually for this financial year and the next two. Given the current economic and fiscal circumstances, we are considering enhancing our fiscal consolidation efforts to further contain expenditure growth. These include requiring various government departments to reassess their resource allocations and work priorities in order to better meet societal needs.

On the other hand, the expenditure growth associated with individual subsidy schemes has created significant long-term pressure on the Government's fiscal position. This necessitates a review of their operational models. We have received a range of opinions from the community on this matter, including suggestions on how to ensure the sustainability of these schemes.

In light of advancements in innovation and technology, we are promoting the broader application of technologies within the Government and enhancing civil servants' related skills, with a view to optimising service efficiency and improving service delivery.

In terms of seeking new revenue sources, we have several important considerations when weighing different options. We must take into account the actual situation in the society and avoid moving too quickly to prevent undermining the momentum of economic recovery. It is crucial to maintain Hong Kong's competitive advantage of a simple and low tax system. However, it is equally important to adhere to the principle that those who could afford should pay more, thus minimising the impact on ordinary members of the public. The hotel accommodation tax and the two-tiered standard rates regime for salaries tax, announced in last year's Budget and now implemented, reflect this approach.

I firmly believe that by embracing diverse perspectives, collaborating with the community, and continuously engaging in reform while seizing the opportunities presented by challenges, we can unlock new horizons for Hong Kong's future development.

January 5, 2025

While the US entered a rate-cutting cycle in the second half of the year, the Mainland also introduced various policy measures to stimulate the economy and stabilise expectations. Alongside measures rolled out by the Central Authorities to support Hong Kong and the efforts by the Hong Kong Special Administrative Region (HKSAR) Government and various sectors, the atmosphere in the local asset market has improved. So far, the Hong Kong stock market has surged by around 18% this year, with the Hang Seng Index reclaiming the 20,000-point mark. Market turnover has also significantly increased, reaching a historic high of over HK$ 600 billion in a single day this October. The average daily turnover for this year thus far has surpassed HKD 132 billion, marking an increase of more than 25% compared to last year. The initial public offering (IPO) market has rebounded as well, with funds raised from new listings exceeding HK$ 80 billion, ranking fourth globally.

The financial services sector continues to thrive. For instance, in the asset and wealth management sector, the total assets under management surpassed US$ 4 trillion last year, with net fund inflows increasing by 3.4 times year-on-year. The family office sector is also expanding, with around 2,700 single-family offices operating in Hong Kong, over half of which manage assets exceeding US$ 50 million.

The property market has gradually stabilised in recent months, and the number of transactions has increased. In the first 11 months of this year, the average monthly number of residential property transactions was about 4,450, representing a year-on-year growth of 22%.

This year, the total number of Hong Kong companies with parent companies from the Mainland or overseas reached nearly 10,000, and the number of startups approached 4,700, both up by 10% year-on-year, achieving record highs. Applications from talent for coming to Hong Kong continued to grow, with around 410,000 applications received under various talent admission schemes over the past two years. Of these, over 260,000 applications have been approved, and around 170,000 individuals have already arrived in Hong Kong. These figures reflect the effectiveness of the HKSAR Government's initiatives to attract businesses and talent, as well as enhance external promotion. As more enterprises and top talent settle in Hong Kong, the demand for office and residential space is expected to rise.

The retail and catering sectors still face relatively greater challenges. So far this year, the number of inbound visitors has exceeded 44 million, an increase of over 30% year-on-year. We anticipate even more visitors around New Year's Eve. Earlier this month, after the Central Government resumed and expanded the multiple-entry Individual Visit Scheme for Shenzhen residents, the number of Mainland visitors to Hong Kong has notably increased. The streets were bustling during the Christmas holiday, and that would provide support for the retail and catering sectors. Just yesterday, Hong Kong hosted its first pyrotechnics drone show in the West Kowloon Cultural District, attracting large crowds of residents and visitors. It further enhanced the festive atmosphere as the year is drawing to a close.

Over the past year, after we strengthened the defence in safeguarding national security, the society as a whole has focused on building a vibrant economy and advancing development. We made sustained and steady progress. Economic growth for the year of 2024 as a whole is projected at 2.5%, with unemployment rate remaining low at around 3.1%, moderate inflation, and real increases in employment earnings.

Looking ahead to 2025, uncertainties such as geopolitical tensions and a prolonged high-interest rate environment may bring volatility to the market. However, with the steadfast support from the Central Government and the ongoing efforts of the HKSAR Government over the years, Hong Kong has built up a robust economic foundation and strong market resilience. We will navigate changes and forge new paths in the evolving landscape. We will expedite our efforts in the following three areas:

1. Leveraging Hong Kong's unique advantages as an international city, we will enhance our connectivity with both the Mainland and the world to further solidify our role as a "super connector" and "super value-adder." Over the past year, the HKSAR Government has made great strides in encouraging Mainland enterprises to establish high value-added multinational supply chain management centres, corporate treasury centres, research and development centres, as well as regional and international headquarters in Hong Kong. These enterprises can capitalise on Hong Kong's strong international character and its common law system to expand their international presence. We have also been extending and deepening ties with overseas regions, focusing efforts on enhancing economic, trade and financial cooperation with emerging markets such as the Middle East, ASEAN and the Global South. Meanwhile, we have been strengthening our collaboration with traditional markets like Europe and the US. In the coming year, we will partner with cities in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and other Mainland provinces to "go global", and explore business opportunities together, maximising our collective impact.

2. We will strengthen investment in innovation and technology (I&T) in a systematic manner to accelerate the cultivation of new quality productive forces. This includes harnessing "patient capital" from the Hong Kong Investment Corporation Limited to guide and leverage market funds in support of the clustering and development of strategic industries. Over the past two years, the Office for Strategic Enterprises has attracted nearly 70 strategic enterprises to Hong Kong. They are expected to invest over HK$42 billion and create around 17,000 quality jobs over the coming year. These enterprises will also bring their upstream, midstream and downstream partners from their industry chains to Hong Kong. Next, we will take forward more innovative policies to enhance cooperation on the I&T front with Shenzhen and other GBA cities, fostering mutual benefits and economic development. Together, we will make greater contributions to the country's goal of high-level technological self-reliance.

3. In light of the profound restructuring of the global political and economic landscape, we will adopt a more comprehensive strategy to reinforce and enhance Hong Kong's position as an international financial, trade, and shipping centre, while promoting the city as an international hub for high-calibre talent. For example, in the financial sector, we will continue to foster all-round development across various segments, including the stock market, bond market, insurance, private equity and venture capital, asset and wealth management, offshore Renminbi business, green finance, digital finance, and commodity trading. This will enable Hong Kong to better fulfill its comprehensive fund-raising functions, and serve the real economy. Hong Kong can play to its strengths in such areas as supporting the financing needs of high-quality I&T enterprises, promoting regional green transformation, and providing financial and other professional services to Mainland enterprises seeking international expansion.

As we approach 2025, with the solid support of our country, we will continue to pursue reform and innovation, and seize new opportunities. We will accelerate our integration into overall national development and proactively align with national development strategies. These efforts will enable Hong Kong to achieve greater progress in its economy, society and the livelihood of its people, thereby enhancing its appeal as Asia's World City.

December 29, 2024

President Xi's important speech outlined the directions for the steadfast and successful implementation of the "One Country, Two Systems" principle in Hong Kong in the new era, along with four key principles to be observed:

1. Staying committed to the fundamental policy of "One Country" and fully delivering the benefits of "Two Systems";
2. Ensuring high-standard security and pursuing high-quality development;
3. Leveraging our unique advantages while reinforcing our connectivity with both the Mainland and the world; and
4. Carrying forward core values to boost inclusiveness and harmony.

Practising these four principles will enable Hong Kong to make greater contributions to national development, and better harness our potential to achieve economic progress. Staying committed to the fundamental policy of "One Country" and fully delivering the benefits of "Two Systems" are the essence of this institutional advantage. Only by ensuring high-standard security can we establish the foundation for pursuing high-quality development. With solid security in place, we can focus our energy and resources on economic development, thus creating a brighter future for the city while contributing greater "Hong Kong strength" to the great rejuvenation of the Chinese nation.

President Xi emphasised the need for us to be more open and inclusive, to expand international linkages, and raise our global standing and appeal, so that the reputation of "Hong Kong, China" and "Macao, China" as international metropolises will grow stronger. We should fully align ourselves with national development strategies, accelerate our integration into the country's overall development, and better play our role as a bridge in building a new development paradigm.

So, how can we build on the existing foundation to strengthen and promote Hong Kong's development as an international city? And how can we reinforce our connectivity with both the Mainland and the world, and better leverage Hong Kong's unique advantages in line with local conditions?

Taking the "mutual market access" mechanism in finance as an example, the connection between the capital markets of the Mainland and Hong Kong has been established for ten years. This mechanism is gradually expanding market connectivity from stocks to bonds, exchange-traded funds (ETFs), as well as risk management and wealth management products. It has become the most important channel for foreign capital to invest in the Mainland market and provides a secure and efficient pathway for Mainland capital to allocate assets offshore. Looking ahead, we must promote further institutional innovations, product innovations, and advancements in cross-boundary cooperation. This includes expanding connections between the Mainland and emerging markets through Hong Kong, while reinforcing cooperation with traditional markets. Such efforts will enhance the scale and liquidity of Hong Kong's financial market, better meeting the financing needs of enterprises and institutions in the face of technological advancements and the geopolitical landscape. Ultimately, this will enrich Hong Kong's role as an international financial centre, strengthening its advantages and global influence.

Over the past few years, the HKSAR Government has actively engaged in visits to various regions, including the Mainland, traditional markets in Europe and the United States, as well as the Middle East, ASEAN, and other 'Global South' markets. These efforts aim to bolster cooperation between Hong Kong and these regions in financial services, commerce, and trade, while also enhancing business-to-business connections. In the past year, the number of companies in Hong Kong with parent companies located in the Mainland and overseas has increased by around 10% year-on-year, reaching a historic high. Foreign enterprises are eager to use Hong Kong as a foothold for developing the Mainland and Asian markets, while many Mainland companies also choose Hong Kong as their primary platform for expanding international business.

As long as we keep moving forward, the future will be promising. In the face of challenges such as protectionism and unilateralism, our country's commitment to promoting high-level bilateral opening-up remains steadfast. As a "super connector" and "super value-adder", Hong Kong can effectively leverage its unique position to connect with both the Mainland and the world. We will actively promote bilateral and even multilateral exchanges and cooperation with various regions, particularly through reciprocal visits of business delegations. This includes organising more joint roadshows and investment promotion activities with sister cities in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) to explore mutually beneficial new business opportunities together.

With the staunch support of the country and the collaborative efforts of the HKSAR Government and various sectors of the community, Hong Kong consistently ranks among the top in international rankings. We are recognised as the freest economy in the world, one of the three major international financial centres, and among the top five globally in competitiveness. By continuously solidifying and enhancing Hong Kong's advantages as an international city, promoting a smoother and more orderly flow of capital, people, goods, and information, and facilitating the seamless alignment of international and national standards, we can enable Hong Kong to play a crucial role in the development of the GBA and the joint pursuit of high-quality "Belt and Road" development. These efforts would not only support the sustained prosperity and development of Hong Kong, but are also our responsibility and duty.

In terms of innovation and technology (I&T) development, each city within the GBA has unique advantages. Close collaboration will drive more comprehensive and rapid progress. The "Hetao Shenzhen-Hong Kong Science and Technology Innovation Co-operation Zone" serves as an important platform that facilitates the convenient and secure cross-boundary flow of people, materials, capital and data between Hong Kong and Shenzhen through groundbreaking and proactive policy innovations. This initiative will enhance the efficiency of R&D in I&T, as well as accelerate the development of industries such as artificial intelligence and life and health sciences. It will not only speed up the cultivation of new quality productive forces but also attract investments and enterprises.

In the future, we will enhance our promotional efforts by sharing the good stories of China, including those of Hong Kong. Our goal is to provide foreign political, business, and financial communities with a comprehensive understanding of the realities and vast opportunities in both Hong Kong and the Mainland. By broadening our network and expanding our "circles of friends", we aim to create the greatest synergy that fosters mutually beneficial development.

With the Christmas and New Year holidays approaching, the streets of Hong Kong are infused with a festive atmosphere. Many visitors from the Mainland and abroad have come to the city to view the holiday light displays, take part in various celebrations, and experience the festive spirit. Hong Kong, as an international metropolis, exudes a unique charm. By working together and embracing innovation and change, the distinctive brand of Hong Kong under "One Country, Two Systems" will continue to shine, and grow in value and significance.

December 22, 2024

We welcome members of the public to share their views on the new Budget (Note). As we work together, Hong Kong will reinforce its strengths and achievements, and accelerate advancement towards better goals amid the challenging external conditions and the evolving socio-economic circumstances.

To promote the better development of Hong Kong, we have been striving to identify new areas of economic growth, develop new markets and step up our efforts to promote innovation and technology (I&T). In addition to fast-tracking the development of I&T as an industry, we are also committed to enhancing productivity across various sectors through technological empowerment. These efforts are bearing fruit, laying a more solid foundation to expedite Hong Kong's high-quality development in the future.

As we approach the end of the year, the Central Government has continued to roll out robust measures to stabilise the economy and facilitate business operations. Coupled with various initiatives to support Hong Kong, market sentiment has gradually improved in recent months. In October, the total retail sales value recorded a month-on-month increase, and restaurant revenues had also remained largely stable. Two weeks ago, after the resumption and expansion of multiple-entry Individual Visit Scheme for Shenzhen residents, the number of Mainland visitors to Hong Kong increased significantly. Last weekend, the average number of Mainland visitors exceeded 130,000, up over 15% from the average number in the previous month, and more than 20% compared to the first weekend of December last year. The number of visitors from Southeast Asian countries has also returned to nearly pre-pandemic levels. The local retail, dining and tourism sectors are becoming notably more vibrant. The Kai Tak Sports Park is scheduled to be officially opened in March 2025, and there will be more large-scale international events and conferences held in Hong Kong in the first quarter next year. We believe they will further stimulate the market and enhance positive expectations for investment in Hong Kong.

In fact, while strolling along the streets or visiting shopping malls, one should have already noticed that renowned or new brands from the Mainland and overseas have set up or expanded their business in Hong Kong. Whether it is popular fashion brand from Korea, famous gallery from Switzerland, or enterprises in the catering business from around the world, these additions will provide tourists and local consumers with richer, higher quality and novel choices and experiences.

Many Mainland and overseas enterprises have pointed out that they decided to expand in the city because of the diversity of the clientele in Hong Kong, and their pursuit of quality products and services. These fit their business development needs well. Moreover, Hong Kong, serving as a key link between the Mainland and international markets, can attract consumers from around the globe. Hong Kong is an ideal international showroom for them to build and enhance their brands' image, and explore new markets.

In addition to the retail and catering sectors, the financial services industry, being a traditional pillar of our economy, is also under a bright spotlight. For instance, the asset and wealth management sector has seen robust growth, with net fund inflows increasing approximately 3.4 times last year to around HK$390 billion. In the last quarter, the number of licensed asset management companies in Hong Kong increased by 5% year-on-year, and the number of open-ended fund companies surged over 132% compared to the previous year. Driven by positive expectations, many international asset management firms and banks are expanding their manpower and scale in Hong Kong, including renting larger office spaces.

On the other hand, the local I&T ecosystem is becoming increasingly vibrant. According to the latest data, the number of startups in Hong Kong has reached a new high, with the proportion of startups with non-local founders rising to 28%. Many founders of startups from the Mainland, Europe and the United States, as well as other Asian regions, have recognised Hong Kong's unique advantages in I&T development, along with its comprehensive fund-raising market and government policy support. They are keen to realise their ambitions here.

In fact, the total number of companies in Hong Kong with parent companies located outside Hong Kong has also reached a record high. This reflects that, despite ongoing geopolitical pressures, both Mainland and international enterprises remain confident in Hong Kong. They have chosen this city as an important base for their regional and global operations. This has indicated that our efforts to promote Hong Kong's advantages and share its true stories with the world are bearing fruit.

These new companies, whether startups or large enterprises, and regardless of whether they are in the traditional or emerging industries, will contribute to Hong Kong's economic development through investments and creation of more job opportunities. They have cast a vote of confidence in Hong Kong's future.

By focusing our efforts on economic growth and creating more opportunities and wealth for the community, we can establish favourable conditions and a conducive environment for addressing various issues in the society. Challenges are inevitable at every stage of development. While facing them head-on, we should also set our sights on bigger opportunities and brighter prospects. Our experience over the past few decades suggests that Hong Kong has always remained resilient during highs and lows, and found the right direction and opportunities despite changes and challenges. In this spirit, we will break new grounds for development and scale new heights.

Note: Members of the public can share their views through various channels, including the website at www.budget.gov.hk or the dedicated Facebook page for the Budget, or by email (budget@fstb.gov.hk), phone (2810 3768), fax (2147 5770) or post (Budget Consultation Support Team, 24/F, Central Government Offices, 2 Tim Mei Avenue, Tamar, Hong Kong).

December 15, 2024

DesignInspire is a flagship event for Hong Kong's cultural and creative industries. A highlight of this year's event was its collaboration with the prestigious international design trade fair in France, Maison&Objet (M&O). The M&O Design Factory, spanning over 10,000 square feet, provided an immersive experience showcasing innovative concepts and trends in design, interior decoration and lifestyle from a global perspective.

This strategic partnership with an internationally renowned exhibition has opened new horizons. Works from top brands and designers from around the world served as the key for dialogues between East and West, and between tradition and innovation. Exhibits ranged from blue and white porcelain chandeliers co-designed by Hong Kong designers and French brands, to Chinese-style chairs made with new materials, and various home décor items crafted from natural or recycled materials. During my visit, I was deeply impressed by how these exhibits embodied inclusivity and cultural exchange. They have really enriched the essence of Hong Kong as an East-meets-West centre for international cultural exchange.

Securing M&O's debut at a large-scale exhibition in Hong Kong was the result of extensive preparation and effort. During my visit to Paris last year, I toured M&O's design concept store and extended an invitation for them to bring their exhibition to Hong Kong. Since then, the HKSAR Government and other members of the Hong Kong Team had actively followed up on this initiative. That included sending local designers to participate in M&O's exhibition in Paris. In September this year, the Cultural and Creative Industries Development Agency also signed a Memorandum of Understanding with M&O. These efforts have laid a solid foundation for our collaboration in promoting the cultural and creative industries.

Designers, brand owners, and entrepreneurs in the cultural and creative industries who participated in relevant large-scale international exhibitions and conferences in Hong Kong have commonly praised our exceptional ability in curating and organising high-quality events. Hong Kong is renowned not only for its open, inclusive culture that blends the best of East and West, but also for its extensive trade and transport network as well as the strong people-to-people connections that link the Mainland with international markets. By staging exhibitions in Hong Kong, they can conveniently connect with potential clients and partners from around the world, fostering collaboration and facilitating deal-making.

In recent years, I travelled to Europe, the United States, the Middle East and other regions to attract businesses and investments and tell the good stories of Hong Kong. During these trips, I took the opportunity to connect with the organisers of major events. From exhibitions in the cultural and creative industries to financial and tech conferences, we actively extended invitations for them to host their events in Hong Kong. One notable example is the Future Investment Initiative PRIORITY Asia Summit, which took place for the first time in Hong Kong in November last year. By organising events in our city, they can leverage Hong Kong as a springboard to access markets in the Mainland and Asia, reaching clients throughout the region. These events will also enhance mutual understanding and cooperation.

As an international financial, trade and shipping centre, Hong Kong thrives on vibrant business activities. For a long time, we have been a magnet for enterprises and talent from around the world. The city hosts numerous exhibitions, covering a wide range of professional themes, and provides an ideal platform for business connections and talent exchanges. The availability of quality creative content, along with the city's rich and diverse cultural and creative industries, fosters understanding and interaction among people while facilitating the exchange of ideas. The combination of business platforms and creative content enhances Hong Kong's reputation as a world city and amplifies its appeal to businesses and talent worldwide.

To maximise synergy, we will enhance the coordination of schedules for various major events. For instance, in March next year, we will host the annual Wealth for Good in Hong Kong Summit, a flagship event for family offices. During that period, events such as Art Basel, ComplexCon Hong Kong 2025, the Hong Kong International Film and Television Market, the Hong Kong Sevens, and several other financial conferences and summits, will also take place. Together, these events will provide visitors with a vibrant and diverse experience, allowing them to see and feel for themselves the dynamism and vibrancy of Hong Kong.

December 8, 2024

The Hong Kong economy has been growing moderately overall this year, though the performance of local consumption and exports of services still need to be further enhanced. The Central Government has rolled out a series of measures to support the development of Hong Kong's tourism industry. The local retail, catering and other industries have been proactive in driving innovation and improving their efficiency and services, with a view to providing more high quality products, services, and experiences to visitors from around the world and local residents. These will inject vibrancy into Hong Kong's economy.

Proactively developing new industries, exploring new markets, and seeking new partners will create new economic growth areas for Hong Kong. The Hong Kong SAR Government is striving to promote the city on the global stage and tell good stories of Hong Kong. Over the past two years, we have visited Europe, the US, the Middle East, Southeast Asia and other "Belt and Road" regions to attract enterprises and investment, expand connections, and strengthen the promotion of Hong Kong's advantages and latest developments in finance, trade, professional services, and innovation and technology (I&T). We have also been promoting our blend of Chinese and Western cultures, a wide range of Eastern and Western cuisines, picturesque natural environment, and the proximity of urban areas to the countryside. Hong Kong's blend of international metropolis and high-quality outdoor lifestyles is rarely found elsewhere.

In fact, through our efforts in "reaching out" to the world and "bringing in" visitors in the past few years, international leaders in the I&T sector and academia, as well as senior executives of financial institutions and multinational corporations, have gained a deeper understanding of the vast opportunities in Hong Kong and the Guangdong-Hong Kong-Macau Greater Bay Area (the GBA), and of Hong Kong's unique role and functions therein. The GBA has emerged as a global leading urban development cluster, with high-level integration of financial services, I&T ecosystems and advanced manufacturing. Thanks to its technological and product innovation, as well as strong I&T momentum, the GBA has successfully brought together a lot of professional talent and enterprises.

With the growing success of our investment promotion initiatives, there has been substantial growth in the number of Mainland, Asian, and even European and American companies operating in Hong Kong. The advantages of doing business in Hong Kong are increasingly recognised by entrepreneurs from around the world, as evidenced by their moves to make investments, setting up business and buying a home in the city, which reflect their confidence in Hong Kong.

With the convergence of talent, businesses and capital in our city, we are enhancing our connectivity with international markets in terms of both "hardware" and "software". Hong Kong remains a unique gateway to the Mainland and global markets, a key advantage that we continue to leverage. The Hong Kong International Airport (HKIA) is among the most efficient airports in the world, offering excellent experience for passengers and covering half of the global population within five hours' flight. This is particularly beneficial for professionals and business people who frequently travel to the Mainland for work and need to return on the same day.

Currently, HKIA connects to nearly 200 destinations, and we anticipate that its passenger volume will return to pre-pandemic levels by the end of this year. The recent launch of HKIA's Three-Runway System will better accommodate the expected increase in passenger and cargo traffic, further solidifying Hong Kong's status as an international aviation hub. We project a 50% increase in the airport's handling capacity by 2035, accommodating 120 million passengers and 10 million tons of cargo annually.

In addition to enhancing our infrastructure, we are actively expanding Hong Kong's aviation network. Over the past two years, we have signed, updated or expanded bilateral air arrangements with more than 10 countries and regions, covering the Mainland, Europe, the Middle East, Southeast Asia, and Australia. The total number of air services agreements and arrangements has now reached about 80.

Meanwhile, we are encouraging airlines to launch more routes and increase flights to support Hong Kong's overall development. Last month, direct flights between Hong Kong and Riyadh, Saudi Arabia, resumed. This will promote closer exchanges and cooperation between the two places. Local airlines have introduced, from this year to the first half of 2025, new services to Xining, Zhoushan and Huangshan in the Mainland; Vientiane, Laos; Dallas, the United States; and Hyderabad, India. The increase in the number of international destinations will enhance our aviation network, thereby reinforcing Hong Kong's position as a leading international aviation hub and promoting economic and cultural exchanges.

December 1, 2024

We are living in an era of remarkable change driven by novel technologies. Artificial intelligence (AI) is transforming various industries. Generative software is streamlining paperwork, while large-scale data computing and predictive models are becoming increasingly prevalent in our daily lives. The application of AI and deep learning is expanding beyond the digital realm into the physical world, with robotics emerging as a key area of advancement.

Whether it involves cutting-edge innovations in the I&T sector or the practical application of research and development (R&D) outcomes, there is often a critical need for entrepreneurs and researchers to engage in dialogue with various stakeholders. This collaborative approach allows us to consider potential challenges and opportunities from multiple perspectives, fostering greater collaboration across sectors and industries.

Technological development has opened up new opportunities for young people to innovate and start their own businesses. Young people in Hong Kong and the sister cities of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) are in a uniquely advantageous position. According to the Global Innovation Index published annually by the World Intellectual Property Organization (WIPO), the "Shenzhen-Hong Kong-Guangzhou" cluster has ranked second globally for five consecutive years. Hong Kong benefits from the technological support of the GBA while also serving as an international financial centre. Technology and finance have become the two core pillar industries driving Hong Kong's development.

In recent years, during my visits to advanced economies in Europe and America, as well as emerging markets in the Middle East and the Association of Southeast Asian Nations (ASEAN), I have met with numerous foreign companies interested in Hong Kong's I&T development and its potential opportunities. They are keen to explore cutting-edge research and applications in the GBA, as well as the development of related manufacturing industries, in search of collaboration opportunities.

Hong Kong and its neighboring cities in the GBA are accelerating their collaborative development in I&T. Last week, the Hong Kong SAR Government released the "Development Outline for the Hong Kong Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Co-operation Zone". A key focus of the Development Outline is about the "one zone, two parks" arrangement in the Hetao Cooperation Zone, namely the Hong Kong Park and the Shenzhen Park. Through proactive policy innovations, we aim to facilitate smoother, more efficient, and secure flows of personnel, materials, funds, and data between the two Parks. This will enhance the overall effectiveness of R&D, create better conditions for attracting enterprises, and accelerate the cultivation of new quality productive forces.

For instance, to enhance the flow of materials and promote industry-academia-research activities, the Development Outline suggests mechanisms such as "green lanes" and a "white list" to streamline clearance procedures for research materials and equipment entering and leaving the two Parks. This includes facilitating the transfer and handling of Mainland samples (including clinical biological samples) to the Hong Kong Park for research or testing purposes.

Regarding capital, a smoother and more convenient flow of funds is essential for attracting Mainland I&T enterprises to establish international headquarters or global research centres in the Hetao Cooperation Zone. The HKSAR Government will continue to actively collaborate with the relevant Mainland authorities to implement facilitation measures for the cross-boundary transfer of funds for Mainland enterprises settling in the Hong Kong Park. This aims to support the mutual financing of projects in the two Parks.

Moreover, in fields such as biotechnology, AI, and big data, the smooth flow of data will be crucial for industry growth. Provided that relevant national data security laws and regulations are adhered to and risks are managed, the HKSAR Government will explore expanding the cross-boundary flow of research data from the Mainland to Hong Kong. The data will be made available for use by research institutions and enterprises in the Hong Kong Park.

The construction of the first three buildings in Phase 1 of the Hong Kong Park development will be completed in stages starting at the end of this year. The initial group of tenants, representing industries such as life and health technology, AI, and data science, will begin moving in next year. The Greater Bay Area International Clinical Trial Institute (GBAICTI), wholly owned by the HKSAR Government, was opened last week in the Hong Kong Park, while the Greater Bay Area International Clinical Trials Centre in the Shenzhen Park was also officially opened on the same day. Through this joint collaboration platform and with a population base of 87 million in the GBA, we will be better able to attract more pharmaceutical and medical device enterprises, both locally and globally, to conduct clinical trials and apply for product registration in Hong Kong. It will also support the transition to a "primary evaluation" mechanism for drug application approvals, supporting the development of Hong Kong as an international health and medical innovation hub.

The rapid development of the Hong Kong Park within the Hetao Cooperation Zone is supported by the substantial resources and policy initiatives we have implemented for I&T in recent years. This includes the efforts of the Office for Attracting Strategic Enterprises, which focuses on drawing key enterprises and investment, as well as the Hong Kong Investment Corporation, which utilises "patient capital" to facilitate access to market funding. Furthermore, recent initiatives announced in the Chief Executive's latest Policy Address, such as the I&T Industry-Oriented Fund and the I&T Accelerator Pilot Scheme, will play a crucial role. These efforts have fostered the establishment of a more comprehensive I&T ecosystem that integrates enterprises, funding, technology, and talent networks, facilitating I&T as a key industry that will drive the sustainable economic growth of Hong Kong.

November 24, 2024

The Connect Schemes have demonstrated robust vitality by adhering to the principles of respecting local market rules, accommodating cross-border investment needs, and ensuring that risks remain controllable. Their content and scope of covered products have continued to expand, now encompassing a wide range of offerings, including stocks, bonds, investment products under the Cross-boundary Wealth Management Connect, exchange-traded funds (ETFs), derivatives for risk management, and more. Recently, it was announced that real estate investment trusts (REITs) would also be included in the Connect Schemes. This ongoing interconnected development of the Hong Kong and Mainland markets has further enhanced Hong Kong's unique and attractive role in the international market.

Expanding Depth and Breadth in Numbers

Over the past decade, the number of eligible stocks under Stock Connect has grown from around 800 at the launch of the Shanghai-Hong Kong Stock Connect, to over 3,300 now under both the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect. These stocks account for 90% of the total market capitalisation of listed companies on the three markets.

The average daily turnover of Southbound trading by Mainland investors reached HK$38 billion in the first three quarters of this year, a 40-fold increase compared to the first month after the launch of the Shanghai-Hong Kong Stock Connect in 2014. Southbound trading now accounts for 16.9% of total market turnover in Hong Kong. In fact, it has become a key channel for Mainland long-term capital, such as mutual funds, insurance funds, and pension funds, to allocate assets offshore. The value of assets held by Mainland investors through the Southbound Stock Connect has exceeded HK$3.3 trillion.

For offshore investors trading Mainland stocks through the Northbound Connect, the average daily turnover reached RMB 123 billion in the first three quarters of this year, a 21-fold increase compared to the first month after its launch ten years ago. It accounted for 6.7% of the total turnover in the Mainland's market. Notably, around 77% of offshore investors' Mainland stock holdings were acquired through Northbound trading. Meanwhile, two-thirds of cross-border bond transactions by international investors were conducted via the Bond Connect. Through the Connect Schemes framework, Hong Kong has firmly established itself as the premier hub for international capital to allocate and trade Mainland financial products.

Over the past decade, the Connect Schemes have steadily deepened and expanded, facilitating the interconnected development of the financial markets in both places. The total market capitalisation of the Hong Kong stock market has reached HK$35 trillion, an increase of about 40% compared to 10 years ago, and equivalent to 11 times of Hong Kong's GDP. Since the beginning of this year, the Mainland authorities have introduced a series of measures to bolster economic and financial market development, with the average daily turnover in the Hong Kong stock market reaching HK$255 billion in October. The Connect Schemes have not only greatly enhanced the liquidity and vitality of Hong Kong's capital market but also solidified Hong Kong's competitiveness and status as an international financial centre, while supporting the gradual opening up of the Mainland capital market with risks under control.

Looking Ahead

Reflecting on the experiences of the past ten years on the Connect Schemes, there are three main areas we need to focus on for further strengthening their development.

First, we should continue to develop the Connect Schemes as the link between the Mainland and international markets. Apart from connecting traditional markets in Europe and the US, we need to expand ties with emerging markets with large populations and rapidly growing economies and incomes. This will meet the diversified asset allocation needs of both international and Mainland investors. To this end, Hong Kong is striving to strengthen ties with markets in the Global South, including attracting more quality enterprises from those regions to list on the Hong Kong Stock Exchange, and launching more cross-border investment products, thereby enabling more win-win outcomes using Hong Kong as a connecting platform. Over the past year, the listing in Hong Kong of an ETF investing in Saudi Arabia, and ETFs investing in Hong Kong on the Saudi Exchange, have been a case in point.

Second, we should continue to promote the deepening and expansion of the Connect Schemes, enabling Hong Kong to enhance its role as a "firewall," "testing ground," and capital allocation platform in the opening and development of our country's financial markets. As our country strives to become a financial powerhouse, it is actively pursuing financial reforms and promoting high-level openness. By building on the Connect Schemes, we aim to further diversify product offerings, expand the range of eligible assets, and continuously introduce innovative policies and products while keeping risks under control, all in support of the country's development.

Third, we should capitalise on the unique advantages of the Connect Schemes to support the prudent internationalisation of the renminbi (RMB). In recent years, initiatives such as "Bond Connect," "Swap Connect," and the inclusion of RMB trading counters under the Stock Connect have enriched the range of offshore RMB investment and risk management products. These developments have provided offshore RMB holders with more investment options and risk management tools, contributing to an increased share of RMB in investment and trade settlements, as well as enhancing its status as a reserve currency.

Hong Kong serves not only as a hub for capital between the Mainland and international markets but also as a platform for sharing expertise in financial development and risk management. This week, we are hosting the third Global Financial Leaders' Investment Summit. I proposed this summit over two years ago in the Budget, and it has since earned a strong reputation in the global financial community, becoming a signature annual event both regionally and internationally.

This year's summit will welcome several hundred senior executives from international financial institutions, including over 100 group chairpersons and CEOs. Under the theme "Sailing through Changes," the summit will explore emerging industries, trends, and models within a rapidly evolving global landscape. We are grateful for the strong support from Central Government leaders and relevant Mainland authorities, and the insightful addresses from these officials will offer a comprehensive and accurate overview of the latest economic and financial developments and opportunities in the Mainland.

November 17, 2024

Tomorrow, we will hold a signing ceremony with the third batch of OASES partners. The 17 participating strategic enterprises come from the Mainland, the United States and Europe, and engage in fields including artificial intelligence and data science, life and health technology, fintech, and advanced manufacturing and new energy technology. 90% of them have planned to set up their international or regional headquarters in Hong Kong. Together with the first two batches of OASES partners, these 60-plus strategic enterprises are expected to bring in $42 billion in investments and create over 17,000 jobs. In addition, as of September this year, Invest Hong Kong has assisted 470 companies in setting up or expanding their businesses in Hong Kong. They are expected to bring in over $45 billion of direct investments, and create over 5,700 jobs.

Last week, I attended the "China International Import Expo" in Shanghai and participated in the "2024 Hong Kong Investment Promotion Conference – Shanghai Forum" organised by the HKSAR Government and the Hong Kong Trade Development Council, and introduced Hong Kong's strengths to over 400 Mainland enterprise representatives. In fact, for Mainland or overseas enterprises, whether having settled in Hong Kong in recent years or considering to establish presence in Hong Kong, they generally understand the challenges faced by Hong Kong. Yet, more importantly, they could see the opportunities with the city alongside with these challenges, and value our strengths that could create vast opportunities for them. These strengths include robust support from the Central Government, a highly transparent and business-friendly regulatory system, the clustering of international financial institutions and capital, a global business network, a diverse talent pool and a multicultural environment. Furthermore, supportive government policies and an efficient capital market provide much assistance to enterprises seeking to expand their regional and global reach.

During my visits to Europe, the United States, and the Middle East, I noticed that many enterprises are actively exploring or advancing the idea of establishing presence in Hong Kong, with a view to accelerating their development in the Mainland and Asian markets. In particular, during our trip to Riyadh, Saudi Arabia, several Hong Kong institutions and enterprises signed a series of cooperation agreements with local partners, further deepening the financial, innovation, and professional service connections between Hong Kong and the Middle East. This has enhanced Hong Kong's international network and potential to serve as a "super connector" and a "super value-adder" for the Global South.

Riding on Hong Kong's competitive edge as an international financial centre, along with its drive to promote the application and development of innovation and technology, a technology-driven investment ecosystem is taking shape and thriving with our continuous efforts on all fronts, from research and development activities to outcome transformation, and from the growth of startups to the establishment of industry chains. This is conducive to accelerating the development of new quality productive forces.

The economy of our country is also making steady progress. The recently concluded Standing Committee meeting of the National People's Congress passed a series of measures totaling RMB 10 trillion to effectively address local debt. These measures will effectively reduce local governments' interest expenses and enhance development momentum. The steady growth of the national economy will continue to be Hong Kong's strongest support for its economic advancement.

On the international front, the US Federal Reserve decided to cut interest rates further by 25 basis points last week, marking the second rate cut in three months. The market generally expects another rate cut by the end of the year. The expectation of lower interest rates by the investment market should continue to benefit asset market sentiment and increase investors' risk appetite. Meanwhile, following the conclusion of the US election, many analyses indicate that the election outcome will have a profound impact on the future global political and economic landscape. Regardless of how the international environment would evolve in the future, it would be most important for us to get prepared and equipped, and to "understand changes accurately, respond to changes scientifically, and embrace changes proactively". This will allow us to flexibly cope with challenges and seize opportunities, and enhance economic resilience through more stable and rapid development.

The HKSAR Government recently announced that the real GDP growth rate for the first three quarters of this year was 2.6%, according to advance estimates. While the growth pace has moderated in the third quarter, the gradual decline in external interest rates, coupled with the Mainland's introduction of a series of measures to stabilise the economy, has improved market sentiment and injected energy to the stock and property markets. We expect the local economy to maintain its growth momentum for the remainder of the year, and the economic growth for the full year to come in near the lower end of the prevailing forecast range.

November 10, 2024

Key achievements from this trip include:

1. We witnessed the listing of the first two exchange-traded funds (ETFs) tracking Hong Kong stocks on the Saudi exchange, which marks a significant milestone for two-way capital flow. Notably, one of these ETFs is the largest of its kind in the Middle East. The listing of the first ETF in Hong Kong that invests in the Saudi market last November, along with the recent listing of the two Hong Kong stock ETFs in Saudi Arabia, serves as an excellent example of financial connectivity along the Belt and Road.

2. The Hong Kong Monetary Authority signed a memorandum of understanding (MoU) with the Public Investment Fund (PIF) of Saudi Arabia to jointly establish a US$1 billion investment fund. This fund will focus on investing in companies connected to Hong Kong and the Guangdong-Hong Kong-Macao Greater Bay Area engaged in sectors such as manufacturing, renewable energy, fintech, healthcare, etc. to expand in Saudi Arabia. This initiative will provide a platform for these companies to expand their international business.

3. At the institutional level, the Hong Kong Science and Technology Parks Corporation (HKSTP) and the Hang Seng Indexes Company Limited each signed a cooperation agreement with their Saudi counterparts, including the FII Institute and the Saudi Tadawul Group respectively, to enhance collaboration, exchange, and knowledge sharing.

4. At the corporate level, over 20 startups from Hong Kong pitched their ideas during FII. Several have already received invitations from Saudi investors to further explore potential business cooperation. Among them, seven startups signed MoUs with Middle East enterprises and institutions to jointly investigate development opportunities and application scenarios. In addition, a fintech company from Cyberport signed business agreements with its local partners.

5. We actively engaged with Saudi investors and financial regulatory authorities, and both sides will explore opportunities for cooperation in financial services, product development, and talent training in greater depth.

Two years ago, I embarked on a business trip to Saudi Arabia. Since then, both the HKSAR Government team and representatives from the business and financial sectors have made numerous visits to Saudi Arabia at various levels, striving to enhance mutual understanding and deepen our friendship. Building on this foundation, along with the advancements of Saudi Arabia's 2030 Vision and the evolving geopolitical landscape, our recent visit has yielded more substantial outcomes, enabling us to facilitate broader collaboration.

As various sectors in Saudi Arabia have gained a deeper understanding of Hong Kong's role, strengths, and value, we have established a solid foundation of mutual trust for co-operation between our two regions. Whether participating in FII events or engaging in meetings with local counterparts from the finance and I&T sectors, our delegates felt a strong eagerness from the local participants and partners to collaborate with Hong Kong, and to firm up details of collaboration and expedite the process. In fact, some members of the delegation are still in Riyadh, or are planning to return to the Middle East in the coming weeks to continue their discussions with local partners.

The first FII Priority Asia Summit was successfully held in Hong Kong in 2023. We are actively discussing with the FII Institute about hosting the second summit in Hong Kong in 2025, which will once again attract global financial and investment leaders to our city.

This visit has deepened our appreciation for the unique value of the "Hong Kong brand."

In our discussions with representatives from various institutions in the Middle East, they consistently highlighted Hong Kong's mature and efficient financial market, its diverse and innovative products, high standards of professional services, and alignment with international standards across multiple areas. They also noted our regulatory system, which has evolved through various cycles and challenges. These attributes make Hong Kong an important reference point for them in driving financial market reform and development, helping them better prepare for risks and challenges.

In the realm of I&T, where new products and solutions from Hong Kong have been certified and commercially applied, they provide assurance to our Middle East partners for large orders and collaborations. In infrastructure, Hong Kong excels in design, construction, and operation, and our professional services firms, developers, and contractors are welcomed in Saudi Arabia. In fact, some construction-related professional services providers from Hong Kong have already secured contracts and commenced operations in the region.

Moreover, during our meetings and exchanges, many Middle East investment institutions indicated that Hong Kong's international character and diversity, along with our respect for various cultural values, create a solid foundation for deeper co-operation based on mutual respect and benefit. For them, Hong Kong serves as a "super connector" that not only links the Mainland with traditional Western and Middle East markets, but also extends to emerging markets with diverse backgrounds and cultures.

Looking ahead, we will intensify our efforts to leverage the city's potential and strengths in this area. In addition to establishing bilateral connections with various emerging markets, we aim to weave these connections into a broader and tighter network of relationships, thereby building a more robust business, financial, and I&T ecosystem.

In fact, we share many commonalities with Saudi Arabia in our development approaches and strategies. For instance, Hong Kong is actively guiding technological research and development and industry clustering through co-investment, aiming to support industry growth with "patient capital." This includes fostering a vibrant ecosystem for economic diversification. Many Middle East countries, including Saudi Arabia, have also been promoting economic development, technological applications, green transformation, and industry diversification through strategic investments in recent years.

Take finance as an example. The diverse financing needs of various development projects in the Middle East present opportunities for us to develop infrastructure financing, revive Islamic financial products, and enhance the promotion of asset and wealth management services. Accelerating the dual listing of companies on exchanges in both regions could attract Middle East enterprises to list in Hong Kong, drawing capital from the Middle East market, including its offshore Renminbi (RMB) holdings. This approach will enhance Hong Kong's market liquidity, further boost our offshore RMB business, and offer Hong Kong investors more opportunities to invest in projects in the Middle East.

Our deepening cooperation with the Middle East certainly extends beyond finance, I&T and investment. The Islamic culture of the Middle East has deep historical roots, with over a thousand years of exchanges and dialogues with our country. As an East-meets-West centre for international cultural exchange, Hong Kong can play a vital role in promoting people-to-people interactions and cultural exchanges, thereby fostering closer ties between the two regions.

November 3, 2024

Face-to-face interactions and exchanges enable us to better understand each other's thoughts and perspectives. They also allow us to showcase Hong Kong's unique characteristics of being free and open, with a blend of Eastern and Western cultures and vast development opportunities. Building friendships with more people from around the world also helps to advance cross-regional cooperation in trade and innovation, as well as cultural exchange.

Tomorrow, I will lead a business delegation comprising representatives from the financial services and innovation sectors to Riyadh, Saudi Arabia, for a three-day visit. This time, we will attend the eighth edition of the Future Investment Initiative (FII) and promote deeper exchanges and discussions between Hong Kong's financial and innovation sectors, and relevant institutions and representatives from the Middle East, through a series of activities, including bilateral meetings, breakfast meetings, roundtable discussions, and cross-sector investment presentations. These are expected to help Hong Kong businesses expand their networks in Saudi Arabia and other Gulf countries, making future business development and collaboration more focused and convenient.

This trip to Riyadh is particularly meaningful as we will be taking the first direct flight resuming after over four years of suspension due to the pandemic. It symbolises a closer connection between Hong Kong and Saudi Arabia, and marks a new phase of deeper and more diverse cooperation between Hong Kong and the Middle East.

One of the key activities during this visit will be witnessing the listing of the first two exchange-traded funds (ETFs) tracking Hong Kong stocks on the Saudi Exchange. This means that Saudi investors will be able to invest in the Hong Kong stock market more conveniently, through locally-listed ETFs in a trading and regulatory environment familiar to them.

In fact, at the end of last year, we facilitated the listing of the first ETF tracking Saudi stocks in Hong Kong, enabling Hong Kong funds to invest in the Saudi market. A year later, we are welcoming larger-scale Hong Kong stock ETFs to be listed in Saudi Arabia, which showcases the mutual flow of funds between the two markets, and enriches the financial connectivity under the Belt and Road Initiative. It is anticipated that after the listing of these two Hong Kong stock ETFs, more bilateral financial products will be introduced, boosting the flow of funds between the two regions and gathering more capital from the Middle East for the Hong Kong market. They will also allow investors in the region to become more familiar with our market.

Another focus of this visit is to accelerate and deepen cooperation in innovation and technology between the two regions. In recent years, Saudi Arabia has engaged in its Vision 2030 to promote diversified economic development, and is committed to attracting more overseas investments as well as technological input for various types of projects. This time, companies from the Hong Kong Science and Technology Parks will bring over 20 tech startups and stage roadshows in Saudi Arabia, while partners from the Hong Kong Investment Corporation Limited will also participate in some of the activities to showcase the achievements of Hong Kong's robust innovation and technology development, along with an increasingly comprehensive innovation ecosystem. They will engage in exchanges with Saudi investment institutions. This is expected to help businesses explore more opportunities for collaboration.

The theme of this year's FII is "Infinite Horizons: Investing Today, Shaping Tomorrow", and the event will gather important political and business leaders from the Middle East and around the world to discuss how to use investment to drive a more prosperous and sustainable future for humanity. Many members of the delegation, including myself, will speak at the plenary and other sub-forums. We aim to showcase Hong Kong's highly internationalised character, and its unique role and advantages as a "super connector" and "super value-adder" under the "one country, two systems" arrangement. We will actively telling the good stories of China and Hong Kong.

Reflecting on the past few years, it is evident that building friendships, reinforcing trust, and pursuing win-win outcomes can foster more interactive exchanges and cooperation with the Middle Eastern market. The Hong Kong SAR Government team visited the Middle East multiple times over the past two years, including my participation at the FII meeting in Saudi Arabia in 2022, where we successfully lobbied for the first FII Priority Asia Summit to be held in Hong Kong last year, during which the first Saudi ETF was listed on the Hong Kong Stock Exchange. And now, it has come to the listing of Hong Kong stock ETFs in the region. This step-by-step progress involved the efforts and dedication of many friends and institutions from various sectors. Development always has its process; by engaging in deeper and broader bilateral exchanges and mutually beneficial development, we can gradually open up new dimensions for Hong Kong businesses to expand into overseas regions, and attract more long-term funding sources for the Hong Kong market. All these will solidify Hong Kong's position as an international financial, shipping and trade centre.

October 27, 2024

[Gold Trading Centre]

Gold serves as a crucial anchor within the precious metals category, possessing multiple attributes as a commodity, a reserve asset, and an investment product. At a time of increasing global political and economic uncertainty, gold acts as one of the key hedging tools. With the geopolitical environment becoming more complex and regional situations remaining unclear, it is foreseeable that global demand for gold will remain substantial. Meanwhile, gold, as a reserve currency asset, operates under a pricing mechanism that differs from other commodities, and it is highly significant in financial markets.

Hong Kong's gold trading market has a long history. Due to its proximity to the Mainland and India, two of the world's largest gold consumer markets, Hong Kong's geographical location is advantageous. Hong Kong ranks among the world's largest import and export markets for gold by volume. The city's gold trading volume has continued to increase, with the total turnover of 99 Tael Gold on the Chinese Gold and Silver Exchange growing steadily over the past decade, achieving a compound annual growth rate of more than 18%. In the first quarter of this year alone, it grew by about 20% compared to the same period last year.

In response to an increasingly complex geopolitical environment, many investors now wish to store their gold in different regions, leading to a surge in demand for world-class storage facilities. This presents an opportunity for Hong Kong to develop the gold market. In fact, given the global market's trends, there is significant growth potential for Hong Kong's spot gold trading. Industry professionals estimate that the current daily trading volume of approximately US$100 million has the potential to grow a few folds.

As a first step, we plan to expand Hong Kong's gold storage facilities and rapidly scale up related support services such as trading, insurance, and logistics. Following this, we aim to extend into related derivative transactions such as collateral, loan, and hedging, and gradually build a complete ecosystem. The Financial Services and the Treasury Bureau will establish a working group, including industry professionals, by the end of the year, to formulate plans for optimising the market's trading mechanisms.

Once the infrastructure for gold storage and trading is firmly in place, we can further explore strengthening connections with the Mainland's gold market. Under the unique "one country, two systems" framework, Hong Kong can connect the Mainland with international markets. On the premise that the risks are manageable, we can develop more risk management tools and derivative products tailored to market needs. In the long run, this will greatly enhance our country's influence in the global gold market and strategically enhance Hong Kong's status as an international financial centre.

[Commodity Trading]

Beyond gold, trading in commodities like base metals is also a critical component of the economy, driving demand across sectors such as trade, shipping, logistics, and storage. For manufacturers in various industries, it plays a crucial role in ensuring a stable supply of key raw materials. In essence, commodity trading entails a long industry chain, which would generate a significant demand for financial services such as risk management and hedging.

For this reason, the development of a commodity trading ecosystem could become a new pillar supporting the interconnected growth of Hong Kong as an international financial, shipping, and trade centre. It will also help drive more robust shipping and trade development within the Greater Bay Area, and help stabilise the supply chains of regional manufacturers. In the short to medium term, our priority is to increase the volume of trade and promote value-added services derived from commodity trading. Within the commodity ecosystem, the buyers and sellers of commodities are cargo owners. Therefore, we must compete for goods as well as cargo owners, striving to attract commodity trading companies to establish headquarters or regional offices in Hong Kong. By building the core markets and trade structures, we will naturally boost demand for high-value-added services and supply chain services, attracting more professional service providers to Hong Kong. We will also explore tax and other support measures to provide incentives for these companies to establish their presence in Hong Kong.

Moreover, the London Metal Exchange, a subsidiary of the Hong Kong Exchanges and Clearing Limited, recently announced that it is studying the establishment of accredited warehouses in Hong Kong for delivery of commodities, including non-ferrous metals, thus further enhancing its warehouse network in Asia. The Mainland's demand for commodity trading is immense, and having accredited warehouses in Hong Kong will offer the most convenient, more cost-effective, and safer transshipment channels for users in the Mainland and across Asia. It will also better leverage Hong Kong's advantages in trading, shipping, and financial services.

From the development of an international gold trading market to the creation of a commodity trading ecosystem, they can bring fresh impetus and new opportunities to various industries. Hong Kong has enormous development potential in these areas, and we are pressing ahead with full steam along the path. By identifying the right development objectives, formulating sound development strategies and advancing firmly and steadily towards our objectives, we will certainly be able to provide new growth momentum, accelerate the economic transformation and development of Hong Kong in a new era, and make new and greater contributions to the country's development.

October 20, 2024

Since the signing of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) in 2003, it has effectively opened up convenient channels for various sectors and enterprises in Hong Kong to have priority access to the Mainland market for business development. In response to market demand and sectoral developments, as well as the overall economic development needs, CEPA has undergone continuous enhancements, ranging from facilitating trade in goods to deepening the liberalisation of trade in services. In 2015, under the CEPA framework, the Mainland and Hong Kong signed the Agreement on Trade in Services (the Agreement), which was an important milestone by essentially achieving liberalisation of trade in services between the two places. In 2019, further progress was made with the signing of the first amendment to the Agreement, with the inclusion of more liberalisation measures across multiple sectors.

Last week, the HKSAR Government and the Ministry of Commerce signed the second amendment to the Agreement. The Mainland has further lowered the market access thresholds in a number of service sectors in which Hong Kong enjoys competitive advantages, such as construction and related engineering, testing and certification, telecommunications, television, film, financial services, tourism services, etc. In addition, for most sectors, the requirement for Hong Kong service suppliers to engage in substantive business operations in Hong Kong for three years has been removed, allowing local start-ups and foreign companies established in Hong Kong to benefit from CEPA earlier.

The new amendment agreement provides more preferential treatment for Hong Kong businesses and professionals to enter the Mainland market. More convenient, streamlined and efficient arrangements on trade in services will promote greater interaction between the two places – especially within the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) – in terms of the flow of people, goods, and information. It also creates more business opportunities and growth prospects for related service sectors and professional service suppliers.

For example, for the financial services sector, the new arrangement removes the asset requirement of not less than USD2 billion in the immediate past year for a Hong Kong financial institution to invest in the shares of a Mainland insurance company. This will facilitate financial institutions of smaller scales to enter the Mainland's insurance market.

The amendment agreement also introduces "allowing Hong Kong-invested enterprises to adopt Hong Kong Law" and "allowing Hong Kong-invested enterprises to choose for arbitration to be seated in Hong Kong". In essence, they support Hong Kong-invested enterprises registered in pilot municipalities in the GBA to adopt Hong Kong law as the applicable contract law, and Hong Kong-invested enterprises registered in the nine municipalities in the GBA to choose Hong Kong as the seat of arbitration for resolving disputes. These new measures will help solidify Hong Kong's status as the centre for international legal and dispute resolution services in the Asia-Pacific region.

The relaxation of the requirement on the period of substantive business operations, and the introduction of "allowing Hong Kong-invested enterprises to adopt Hong Kong Law" and "allowing Hong Kong-invested enterprises to choose for arbitration to be seated in Hong Kong", will all encourage foreign enterprises to choose Hong Kong as their premier base in developing the Mainland market. This will facilitate the attraction of investments and bring more employment opportunities to Hong Kong.

Regarding the tourism industry, two major enhancement measures will strengthen Hong Kong's position as an international tourism hub. First, the 144-hour visa-exemption policy for foreign tour groups entering Guangdong via Hong Kong, which previously applied only to the Pearl River Delta region and Shantou, has been expanded to cover the entire Guangdong Province. The number of inbound control points where this visa-exemption policy applies has also increased. In view of this enhancement measure, the Hong Kong tourism industry can develop more diversified "multi-destination" tourism products targeting foreign visitors, thereby attracting more international tourists. Second, Mainland visitors entering Hong Kong to participate in international cruise itineraries involving port-of-call in the Mainland cruise ports can enjoy more convenient immigration procedures. This will attract cruise companies to develop more cruise itineraries with Hong Kong serving as the homeport, and promoting cruise cooperation between Hong Kong and the Mainland.

It is worth noting that, since July this year, non-Chinese Hong Kong permanent residents have been able to apply for a card-type travel permit allowing multiple entries to the Mainland over a five-year period. This facilitates business trips and visits to the Mainland for tourism purpose. According to the National Immigration Administration (NIA), as of early this month, the China Travel Service (Hong Kong) Limited had received around 48,000 applications for the card, and approximately 16,000 cards had been issued by NIA.

This measure, combined with the new CEPA amendment agreement, will further enhance Hong Kong's competitiveness as the regional headquarters for companies. By lowering the market access thresholds for Hong Kong-invested enterprises and relaxing qualification requirements in professional services sectors such as financial services and legal and arbitration services, more foreign companies and professional service firms will be attracted to use Hong Kong as a base for entering the Mainland market. Meanwhile, providing entry convenience for non-Chinese Hong Kong permanent residents will attract more overseas talents to choose Hong Kong as their base to access the Mainland.

During my recent overseas trips to promote Hong Kong's business environment and its advantages as a talent hub, I found that our international partners widely recognise the "one country, two systems" arrangement as Hong Kong's most significant and unique edge. It encourages overseas enterprises to actively consider Hong Kong as a regional base for expanding into the GBA, the entire Mainland, ASEAN, and other Asian markets. The latest amendments to the CEPA Agreement on Trade in Services further highlight Hong Kong's strengths and attractiveness in services trade and professional services. It will enhance Hong Kong's role in deepening economic and trade cooperation between the Mainland and the world, and strengthen our functions as a "super connector" and "super value-adder."

October 13, 2024

Multiple factors are contributing to the market's ongoing improvement. Among them, the strong economic support measures recently announced by the Mainland authorities are playing a crucial role. At the same time, the market believes that the United States has commenced its interest rate cut cycle, leading to an increased risk appetite among investors. For many fund portfolios, buying demand had been triggered based on position indicators. Coupled with the very attractive valuations in both the Hong Kong and Mainland markets, investors have become cautiously optimistic about outlook of the market.

The market rebound and investors' cautious optimism about future market performance are expected to drive more companies, including innovative and technology enterprises, to accelerate their listing processes in Hong Kong. At the same time, this will encourage more businesses to establish a presence in the city. This trend also reflects that the Hong Kong SAR Government's efforts in enhancing market competitiveness are beginning to bear fruit.

For example, a tech company followed up by the Office for Attracting Strategic Enterprises (OASES) has recently leased 8,000 square feet of Grade A office space as its international business headquarters. It has set up its corporate treasury centre and research and development (R&D) centre in Hong Kong with a view to better expanding its business in the ASEAN region. As more companies set their foothold in the city, this will help boost demand for office space and other professional support services.

In November, OASES will announce a new batch of strategic enterprises, including more than ten companies, with over half of them coming from the artificial intelligence and big data analytics sector. These companies come from the Mainland, the United States, Europe, and more, and some are market leaders in their respective fields.

A vibrant capital market helps facilitate the efficient allocation of funds, and channel capital towards supporting innovations in technology, industries and business models. This would not only inject new impetus to the economy and allow investors to achieve better returns, but also enable the community to better share the benefits of economic development.

For this reason, continuous reform and innovation of market regimes are crucial.

Over the past few years, Hong Kong's listing regime has undergone continuous innovative reforms. In 2018, we allowed pre-profit and pre-revenue biotech companies, as well as new economy companies with weighted voting rights structures, to list in Hong Kong. To date, more than 330 new economy companies have listed on our stock exchange. Although they represent only about 13% of the total number of listed companies, their combined market capitalisation exceeds HK$9.6 trillion, accounting for over 26% of the total market capitalisation of Hong Kong stocks. Moreover, they contribute to nearly 23% of the daily turnover in Hong Kong's stock market, taking it to new heights. Last year, we further introduced Chapter 18C to support innovative companies engaged in specialist technologies to raise funds. These reforms have not only enhanced the attractiveness and vitality of Hong Kong's stock market but also made Hong Kong the preferred listing destination for many innovative tech companies.

The listing of more innovative and high-quality companies in Hong Kong will enhance the diversity of Hong Kong-listed companies and attract more long-term investors who focus on new growth drivers in the economy. A thriving capital market will, in turn, attract more high-quality companies, thus creating a virtuous cycle.

At the end of this month, I will lead a delegation comprising representatives from the financial and innovation and technology (I&T) sectors to the Middle East to promote the latest developments of Hong Kong as an international financial, trade and I&T centre. We will showcase Hong Kong's unique strengths and functions under the "one country, two systems" arrangement, as well as the new opportunities arising from the Guangdong-Hong Kong-Macao Greater Bay Area and the Belt and Road Initiative. Deepening multi-level exchanges and co-operation between Hong Kong and the Gulf Arab States will bring more win-win business opportunities for investors and companies in both regions. This will further reinforce Hong Kong's role and the contributions we can make as a "super connector" and "super value-adder".

October 6, 2024

Conducting overseas visits to promote Hong Kong's latest developments and advantages has enabled friends abroad to gain a deeper understanding of the resilience and opportunities within Hong Kong's economy. Face-to-face exchanges allow us to grasp how overseas political and business figures view Hong Kong, particularly regarding their impressions and understanding of the city. The insights we have gained will help us formulate strategies and messaging more accurately, allowing us to address concerns, correct misunderstandings, and tell the good story of Hong Kong more effectively.

Both the political and business circles in Spain and the UK recognise Hong Kong's important status as an international financial centre, and have expressed great interest in Hong Kong's recent developments and applications in I&T, especially in fields like artificial intelligence, biotech, fintech, and renewable energy. We all agree that technological application, along with research and development, is crucial to accelerating future economic growth.

The delegation included founders and senior executives from startups in artificial intelligence, biotech, fintech, green tech and Web 3.0. These startups focus on addressing pain points and difficulties faced by their respective industries, as well as the everyday issues encountered by residents. We engaged in in-depth discussions with local stakeholders in the I&T sector, including innovation institutions, accelerators, universities, and the investment and business community. Many European countries appear well-positioned to provide application scenarios for the technological solutions offered by these Hong Kong startups, and some delegation members have already initiated business discussions with potential local partners.

Europe attaches great importance to green transformation. During this trip, I outlined our efforts to establish Hong Kong as an international green tech and green finance centre. In fact, Hong Kong is a leader in green and sustainable finance in Asia, and plays a pivotal role in setting green standards. This includes the introduction of a green taxonomy that aligns with the standards of both the Mainland and the European Union, enabling financial institutions to better assess the "greenness" of various projects, and facilitating financing for more quality green projects. Recently, the Hong Kong Institute of Certified Public Accountants released exposure drafts for financial reporting standards on sustainability disclosure, which align with the standards set by the International Sustainability Standards Board (ISSB). Such standards would assist investors in obtaining more reliable ESG (environment, social and governance) information.

I also briefed the political and business communities in Spain and the UK on the developments in Hong Kong's traditional and emerging financial services, and they showed considerable interest. They expressed enthusiasm about leveraging Hong Kong — the only global financial market that integrates both the Mainland and international advantages — to advance their business in China and other regions of Asia.

On various exchange occasions, I could feel the eagerness among the business communities in Spain and the UK to establish deeper ties with Hong Kong, along with a strong willingness to collaborate. They are particularly keen to explore and expand into the rapidly developing GBA.

In recent years, the Hong Kong Special Administrative Region Government has implemented various policies and initiatives to attract enterprises and investments while supporting local businesses in their global expansion. These efforts aim to broaden our markets and create new business opportunities for Hong Kong, generating fresh momentum for development. As our economy steadily progresses, we will continue to reinforce and enhance Hong Kong's unique advantages as an international financial centre, and dare to innovate and seek change. With the onset of an easing interest rate cycle and the announcement of several major stimulus measures by the Mainland, the financial market atmosphere has significantly improved. Our stock market, for example, achieved a record daily turnover of over $400 billion recently.

As we celebrate the 75th anniversary of the founding of the People's Republic of China, let us unite in our efforts for the development of our country and the future of Hong Kong. May our nation and people continue to thrive in prosperity and enjoy lasting peace on this new journey in a new era!

September 29, 2024

The sentiment in the stock market is improving, and the initial public offering (IPO) market is also gradually picking up. Last week, we saw a large-scale listing raising HK$31 billion, making it the second largest IPO in the world this year. Taking into account this new offering, the amount of IPO funds raised in Hong Kong this year has exceeded that of last year, taking us to the fourth place in global ranking. Currently, there are about 100 listing applications under processing in Hong Kong, some of which are seeking to raise funds of up to US$1 billion. In addition to the IPO market, follow-on fundraising activities of listed companies are also active, with over US$20 billion raised so far this year.

In fact, Hong Kong has continued to record a net capital inflow. In the first seven months of this year alone, total bank deposits increased by about 4% to $16.8 trillion as compared with the end of last year. As the general environment gradually turns favourable, we need to further step up our efforts to promote the Hong Kong market, and also strive to open up broader and more diversified capital sources for the Hong Kong market when investment risk appetite is recovering and investors are chasing higher returns.

Following the listing of the Asia-Pacific's first exchange-traded fund (ETF) tracking Saudi Arabian stocks in Hong Kong at the end of last year, the Capital Market Authority of Saudi Arabia recently announced its approval for the first ETF investing in Hong Kong stocks to list on the Saudi Stock Exchange. The listing will not only facilitate local and Middle East capital to directly invest in stocks listed in Hong Kong, it will also deepen local investors' knowledge of Hong Kong stocks. I will lead a delegation to visit the Middle East at the end of next month, hoping to promote deeper exchanges and cooperation in different areas.

We will continue to strengthen promotion and initiate more cooperation in various traditional and emerging markets. As interest rates fall, we believe our efforts could better leverage funds from different places and inject new impetus into Hong Kong's capital market.

I departed for Europe in the early morning today in a trip to attract enterprises and investments, and will visit Madrid and London. In addition to meeting with representatives of the local political and business circles and visiting enterprises, I will also attend a series of luncheon and dinner receptions and roundtable discussions to promote Hong Kong's advantages. We have formed a delegation of Hong Kong startups to join the visit so that they could exchange views with local innovation and technology (I&T) institutions and venture capital funds, with a view to exploring more collaboration opportunities.

Exchange activities, whether conducted overseas or on the Mainland, or intra- or cross-industry, can often deepen mutual understanding, stimulate new ideas, and bring opportunities for cooperation. The 27th Beijing Hong Kong Economic Cooperation Symposium and the Hong Kong Investment Promotion Conference recently held in Beijing was well received. A signing ceremony for a number of key co-operation projects between Beijing and Hong Kong was held, covering a number of sectors including finance, technology, smart manufacturing, etc. About 170 bilateral investment and business promotion projects were concluded, with a total investment of around RMB42 billion.

By actively promoting I&T development and encouraging entrepreneurship, as well as fostering closer cooperation among industries, we are striving to capitalise on the enormous opportunities arising from technological changes, and nurture more entrepreneurs with aspirations, motivation and execution capability. We will encourage more enterprises to engage in innovation and exploration to provide clients and consumers with more new products and services, creating more room for business. This will be key to bringing about more vitality and momentum to our economy.

September 22, 2024

Last week, I attended the inaugural "Hong Kong Start-up Investment and Development Summit" ("the Summit") organised by the Hong Kong Investment Corporation Limited ("HKIC"). The Summit attracted over 400 attendees and received enthusiastic response. Representatives from venture capital funds were optimistic about the development prospects in Hong Kong, highlighting the city's unique institutional advantages and a vibrant I&T ecosystem. In essence, HKIC's role as "patient capital" has attracted the attention and interest of more venture capital funds with similar goals. Furthermore, factors such as geopolitical considerations and the need to access international markets have led some promising startups to consider establishing themselves in Hong Kong. They aim to leverage Hong Kong as a platform that caters for their business in the Mainland while being connected to international markets. They also hope to make use of Hong Kong's outstanding academic and basic research capabilities. It can be anticipated that Hong Kong's investment, industry, academia, and research ecosystem will become increasingly dynamic.

Driving more concrete and impactful I&T development requires not only cutting-edge technologies but a young and entrepreneurial workforce. The Summit invited dozens of secondary school students to participate, giving them the opportunity to learn from entrepreneurs. We took selfies with students with a new model drone, hoping they will see how I&T can tangibly change lives and bring more fun. Vision is the stage for thought and the source of innovation. We hope that these learning experiences, exchanges and activities can ignite their aspirations for the future.

While innovation requires the support of financial services, the power of finance needs to be leveraged for accelerated infrastructure development. By issuing bonds of different types and tenors, we aim to channel funds seeking long-term and stable returns into a range of infrastructure projects, thereby expanding development capacity and promoting better overall economic growth.

Last week, the Government announced the upcoming issuance of retail Silver Bond, which will provide our senior residents with a low-risk, stable and reliable investment option. Considering the current interest rate environment and market conditions, including expectations that the United States Federal Reserve will initiate an easing cycle after its meeting this week, this batch of Silver Bond offers attractive conditions and arrangements, such as an interest rate linked to inflation with a guaranteed minimum of 4%. In fact, in this year's Budget, we stated that $50 billion worth of retail Silver Bond and $20 billion worth of retail green bonds and infrastructure bonds would be issued in this financial year. In addition to making financial services more inclusive, this initiative will enhance our residents' sense of "participation" and "benefit" from infrastructure and sustainable development projects. Details of the issuance of the remaining retail bonds will be announced in the coming months.

Proceeds from this Silver Bond issuance will be credited to the Capital Works Reserve Fund to support the implementation of various infrastructure projects. Senior residents who subscribe to the Silver Bond will not only receive stable interest income but will also contribute to the development of their communities and Hong Kong as a whole, making it a win-win investment.

With the Government's support, more public organisations are raising funds through bond issuance or other means to better utilise market capital and advance their various initiatives. Since the beginning of this year, organisations such as Airport Authority Hong Kong, the Urban Renewal Authority, and the Hong Kong Housing Society have taken this route. Leveraging market resources for financing also enables organisations to draw on market expertise and experience to assess the financial viability and soundness of their projects.

In fact, bonds issued by both the Hong Kong SAR Government and public sector entities in Hong Kong have been well received by local and institutional investors, and they were often oversubscribed by multiple times. These investors include banks, asset management companies, insurance companies, pension funds, government agencies and family offices, among others.

By continuously promoting financial services to support the real economy and initiatives in various areas such as I&T industries, infrastructure development, and green transformation, Hong Kong will achieve faster and better development with a brighter future.

September 15, 2024

During my visit, I engaged with several tech companies in the fields of life and health sciences, pharmaceutical technology, fintech and green energy. These companies possess cutting-edge technologies and have significant development potential. However, to further advance their businesses, they require broader application scenarios, larger markets, and better fundraising platforms. As an international financial centre that is also actively building into an international I&T centre, Hong Kong serves as a two-way gateway connecting the GBA, the Mainland and the entire Asian region. Such advantage has made these Australian companies highly interested in developing operations in Hong Kong. Indeed, many life and health sciences and pharmaceutical companies we met posed very specific questions to me, seeking to deepen their understanding of Hong Kong. I also briefed them on the relative advantages and cooperation mechanisms of Hong Kong and its sister cities in the GBA in I&T. I also talked about future cross-boundary flows of various production factors and collaboration among I&T parks, as well as elaborating on Hong Kong's policies, measures and progress in attracting businesses and talent.

The HKSAR Government's continued investment and policy advances in I&T over the past few years, combined with the staunch support from the country and our effectiveness in attracting businesses and talent, have made Australian businesses keen to gain a deeper understanding of the development opportunities and two-way gateway functions that Hong Kong offers. Among the many initiatives is the development of clinical trial facilities and services in the Hetao Shenzhen-Hong Kong Science and Technology Innovation Co-operation Zone, which targets the Greater Bay Area and international markets. Another is the gradual establishment of a "primary evaluation" regime for medicines and medical devices. They have substantially boosted the interest of Australian medical tech companies in developing their operations in Hong Kong.

In addition, the Australian business community is eager to learn more about the development opportunities in the GBA. During my trip, I took the opportunity to highlight this in several keynote speeches. In fact, the economic scale of the GBA, including Hong Kong and Macao, has surpassed that of Australia, exceeding RMB14 trillion, while the GBA's population is more than three times that of Australia. The GBA also hosts the advantages of an international financial centre and an I&T hub, effectively merging the strengths of the San Francisco Bay Area and the New York Bay Area. As further economic integration of the GBA progresses, whether through deeper I&T collaboration or enhanced connectivity in the financial realm, new opportunities are being created for Australian I&T and financial firms.

The pandemic and geopolitics had led to a decrease in the number of Australians visiting Hong Kong and the Mainland in recent years. This time, the personal interactions and exchanges had facilitated deeper understanding. Through a series of breakfast meetings, luncheons roundtable discussions, as well as a summit hosted by a major local media agency in Australia, we took part in thematic presentations and Q&A sessions, and gave information that helped the Australian business community and public gain a better understanding of Hong Kong. This is conducive to dispelling misunderstandings. I invited our Australian friends to visit Hong Kong to participate in various thematic conferences, exhibitions, and other activities. Some fintech practitioners told me they intended to form a delegation to attend the Hong Kong FinTech Week, which will be held in late October.

Thematic conferences and events not only attract entrepreneurs and senior executives from various industries but also help boost business tourism in Hong Kong. From this Wednesday to Thursday, Hong Kong will host the 9th Belt and Road Summit, expected to attract around 6,000 participants from over 70 countries and regions, including more than 80 senior government officials and business leaders from the Belt and Road countries. During the Summit, over 800 one-on-one business matching sessions will be arranged for more than 280 projects. The Summit, themed "Building a Connected, Innovative and Green Belt and Road", closely aligns with the eight major steps our country is taking to pursue high-quality Belt and Road cooperation, and will help solidify Hong Kong's position as a key link and prime functional platform for Belt and Road projects and collaboration.

As regards I&T and investment, the Hong Kong Investment Corporation Limited will host its inaugural Hong Kong Start-up Investment and Development Summit, bringing together representatives from companies with cutting-edge technologies and senior executives from venture capital funds. Seeing from the perspectives of entrepreneurs and investors in the tech sector, this Summit will explore how to build a more comprehensive financing ecosystem to support the robust development of Hong Kong's I&T and entrepreneur ecosystem.

In the coming months, Hong Kong will host a variety of exciting mega events and large-scale activities, covering sports, arts and culture, as well as wine and dining. These events will be complemented by a series of international business conferences, providing business travellers with a richer itinerary and more programme options during their visit. This would encourage them to extend their stay in Hong Kong and bring their families along to enjoy the city.

The mega events and the large-scale activities to be held in Hong Kong this year are expected to generate more consumer spending and create greater economic value for the city. In the future, we will further enhance the promotion and marketing of these events, and better coordinate them to synergise their benefits, so that the flow of visitors and spending generated by the events can benefit the entire city more broadly.

September 8, 2024

Last week, the World Intellectual Property Organization (WIPO) published its annual Global Innovation Index that ranks the world's top 100 science and technology (S&T) clusters. The Shenzhen-Hong Kong-Guangzhou S&T cluster continued to rank second globally for the fifth consecutive year, just behind the Tokyo-Yokohama S&T cluster. The Shenzhen-Hong Kong-Guangzhou cluster saw an increase in the density of patent-filing as well as articles published in scientific research journals during the assessment period.

This ranking reflects that both Hong Kong, and the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) where Hong Kong is located, have a leading edge in innovative research. This is conducive to our collaboration in the transformation of R&D outcomes into products and services in a more effective and efficient manner. We believe that the sustained growth in the number of I&T enterprises establishing their foothold or expanding their operations in Hong Kong, together with the GBA's advantages in advanced manufacturing and innovative capabilities, will add fresh impetus to Hong Kong's economy.

This is also a testimony to Hong Kong's advantages in the GBA. With the uniqueness and flexibility endowed by the "one country, two systems" principle, Hong Kong has become one of the premier locations for Mainland enterprises to tap into the international market, and for bringing together enterprises, capital and top talents from around the world. We are making every effort to open up new markets and expand our partnership network. Following my visit to Nanjing last week to strengthen exchanges and co-operation between Jiangsu and Hong Kong, I will visit Melbourne and Sydney, Australia next week, hoping to strengthen our connection and co-operation with Australia in the areas of economy, trade, finance and I&T, and to explore more business opportunities together. This is my first visit to Australia in six years, and I seek to achieve three objectives during the trip.

The first objective is to attract enterprises and investments on a thematic basis, thus providing our emerging industries with more exchange and co-operation opportunities. One focus of my visit is to meet with the local I&T enterprises in such fields as biomedical technologies, new energy and fintech. We will brief them on the strategic advantages of Hong Kong's development. Through face-to-face meetings and exchanges, we hope to further deepen their understanding of and interest in Hong Kong, which will help them make decisions on establishing their foothold or expanding their operations in the city.

As a "dual gateway" connecting the Mainland and the rest of the world, Hong Kong provides I&T enterprises with an ideal platform for market expansion in the Mainland as well as the whole region. Hong Kong has five of the world's top 100 universities and strong capabilities in basic scientific research. In addition, it has access to both global and Mainland data; provides effective patent and legal protection for research outcomes; and is home to a vibrant, full-chain fund-raising market. These are our core advantages to attract I&T enterprises to settle in Hong Kong.

The second objective is to promote more exchanges and co-operation on green technology. In recent years, the world is working to address climate change, and green transformation has thus become an important issue. Through more cross-territory exchanges, we can discuss the challenges we face in common, which will facilitate our joint efforts in exploring the solutions in response.

I have proposed in my previous Budgets to develop Hong Kong into an international green tech and green finance centre. Steady progress has been made. As Hong Kong has pooled together quite a number of globally-competitive green technology enterprises, we are well-positioned to promote more R&D collaboration or provide solutions applicable to overseas contexts. Given the large number of Australian enterprises engaged in green technology and green energy, I believe that establishing contacts with them will help deepen mutual understanding and facilitate further co-operation.

The third objective is to fortify and extend our ties with traditional overseas markets. Apart from being a popular destination for further studies and travelling among many Hong Kong people, Australia is also one of the important markets for Hong Kong in terms of trade and business. Last year, the value of Australian goods imported to Hong Kong amounted to HK$14.8 billion, comprising mainly fruits and vegetables, seafood and beverages. Take wine as an example. The total value of wine imported from Australia last year amounted to over HK$1.4 billion, making it Hong Kong's second largest wine importer in terms of import value, and the largest in terms of volume. Hong Kong has not only served as a connector between the Australian wine industry and a vast market, but also strengthened our own position as one of the world's leading wine trading and auction centres.

Hong Kong's extensive air transportation network, comprehensive warehousing facilities, and highly efficient customs clearance procedures have made the city the most cost-effective distribution and transshipment hub for high-value products, be they wine, fruits and vegetables, or seafood. Such advantages, as well as many other potential opportunities that are yet to be fully known to the Australian business community, are the things that I want to promote during my visit.

During my stay in Melbourne and Sydney, I will participate in a number of business exchange activities organised by the Hong Kong Economic and Trade Office, Sydney and the local business community. I will also attend the Asia Summit organised by the Australian Financial Review in partnership with Asia Society Australia, where I will deliver a keynote speech introducing Hong Kong's latest developments and opportunities to representatives of the local business and financial sectors, and answer their questions during the Q&A session.

We believe that by visiting different markets, personally engaging with the local business and financial leaders, and exchanging views with representatives of I&T enterprises, we can provide a fuller picture of Hong Kong's new development advantages and potential under the "one country, two systems" framework, as well as the enormous opportunities arising from the development of the GBA. Such visits will also help promote cross-territory exchanges and co-operation.

September 1, 2024

Remarks by Fed officials in the recent month have once again raised market expectations for a retreat in US interest rates. Currently, investors generally expect that the Fed will lower interest rates at its meetings before the end of this year.

However, the timing and extent of interest rate cuts, their alleviation of pressure on asset markets, and their impact on the local investment sentiment would still need to be carefully assessed amid various uncertainties.

Our local economic data are not short of better performing segments. Take merchandise exports as an example. Hong Kong's overall exports have recorded year-on-year increases for three consecutive quarters. The 12.2% increase in the first half of this year marked the best first-half since 2022. Within the total, Hong Kong's exports to Vietnam and Thailand rose by 23.5% and 32.1% respectively, and exports to the United States also increased by 16.6%, indicating continued improvements in export conditions across multiple major markets. This week, the Census and Statistics Department will release trade statistics for July, and it is believed that this growth momentum can sustain.

As for retail sales figures, its decline has gradually narrowed during the second quarter of this year. Although the situation in July did not seem to show notable improvement, there will still be a series of mega events in the rest of the year; the US interest rate cuts may also result in some softening of Hong Kong dollar exchange rate. These will support visitor arrivals and their spending. Meanwhile, the continued increase in employment earnings of residents should also support consumption sentiment. Entering autumn, Hong Kong will be hosting numerous prominent mega events. For those related to finance, there will be "Summit on Start-up Investment and Development in Hong Kong" by the Hong Kong Investment Corporation Limited, as well as the Legacy Summit Fall Edition by the Hong Kong Academy for Wealth Legacy, in September; Hong Kong Fintech Week at end-October; and the Global Financial Leaders' Investment Summit by the Hong Kong Monetary Authority in November. These mega events will drive international business travellers to visit Hong Kong. If exports sustain a positive performance, coupled with a decline in external interest rates and an improvement in investment sentiment, economic sentiment for the rest of the year should be able to remain steady.

Looking ahead, we need to fully boost our economic momentum and make preparations for medium and long-term development. They include accelerating the development and application of innovation and technology (I&T) to empower traditional industries, as well as enhancing competitiveness through creating more innovative technology applications and new business models, thus bringing in more new customers and consumption. We also need to promote the guiding role of scientific research and innovation in economic development, to further energise Hong Kong's economy. At the same time, we should also focus on widely promoting awareness of I&T at the community level, creating a stronger atmosphere of innovation, and further building a knowledge-based entrepreneurial society. Last week, when I attended the "Innovation and Entrepreneurship Exhibition" organised by the Chinese University of Hong Kong in Shatin, I noticed the enthusiasm of entrepreneurs in using technology to improve people's lives. From the interactions between them and members of the public, I could also feel the real significance of popularising I&T.

We need to strengthen cooperation with sister cities in the Guangdong-Hong Kong-Macao Greater Bay Area and other Mainland cities, as well as enhance our international connections, in order to better leverage Hong Kong's function as an international hub for technology, talent and capital. This week, I will visit Nanjing to attend SmartHK – which seeks to foster Hong Kong-Jiangsu cooperation on high-quality development – on 28 August. The conference will bring together leaders and representatives from the business and industrial, financial services and I&T sectors as well as the cultural and creative industries in Jiangsu and Hong Kong. Together we will explore new areas and models of cooperation, and work to open up new application scenarios and markets with a view to accelerating the development of new quality productive forces. Next month, I will also visit Australia, Spain, the UK and other places, to introduce Hong Kong's business advantages to the local business, financial, and I&T communities, and hope to promote more connections and collaboration with them.

Under the "one country, two systems" principle, Hong Kong enjoys unique institutional advantages, a robust legal system, and a favourable business environment. Our business standards also align with international market rules. These strengths have created greater development space for Hong Kong's diversified and open orientation towards the global market. They have also facilitated the gathering of the world's advanced technologies, high-end talent, and multiple sources of capital, and reinforced Hong Kong's status as an international financial, trade and shipping centre. To play the "unique card" of Hong Kong, the Government and all sectors of the society must work together, make good use of the unique advantages of "one country, two systems", be pragmatic, dare to innovate, and accelerate the cultivation of new quality productive forces in accordance with local conditions. The important speech delivered by President Xi Jinping at the symposium commemorating the 120th anniversary of Deng Xiaoping's birth pointed out that we must firmly grasp the primary task of promoting high-quality development and advancing Chinese modernisation. This provides important guidance for us to integrate into the overall development of the country and contribute Hong Kong's strength to Chinese modernisation; and is our inherent mission and responsibility.

August 25, 2024

Over the past year, Hin Tsun seized the opportunities to participate in various design and STEAM competitions, and won many prizes. With just one year left before entering secondary school, he hopes to continue his development in this field in secondary school. It is truly heartening and encouraging to see Hin Tsun's growth, his desire for knowledge in innovation and technology (I&T), and his passion for his interests and perseverance to pursue them. The development of I&T in Hong Kong requires not only high-end research and development (R&D) talent and technicians, but also entrepreneurs with innovating spirit. The key to this is to nurture our young people, arouse their curiosity in I&T, ignite their passion for a career in the sector, and cultivate their willingness to engage in technological R&D and application.

To nurture I&T talent in Hong Kong, we need to continue to invest resources in education and accelerate the establishment of the I&T ecosystem, providing more opportunities to aspiring individuals to explore and excel. Attracting young I&T talent from around the world to Hong Kong is also crucial to building our I&T talent pool.

Last week, I attended the closing ceremony of "Summer Talent Fest" organised by the Hong Kong Science and Technology Parks Corporation (HKSTP). I interacted with local and overseas university students participating in HKSTP's internship programmes. This year's event was the largest ever, bringing together over 350 students from Europe, the Americas, the Mainland, Southeast Asia, Australia, etc. Around 20% of them were master's or doctoral students, and many were from the top global 50 universities.

During our interaction, many participants shared their aspirations of becoming entrepreneurs. Whether they were majoring in life an health sciences, green technology or artificial intelligence, their ambitions were aligned with a common goal – to turn ideas into reality, and transform research outcomes into products, so as to make a difference for the world and enhance the quality of our life. Some students also mentioned that the internships and the related visits allowed them to feel in particular the innovation drive of the Guangdong-Hong Kong-Macao Greater Bay Area and Hong Kong's strategic position within it. Hong Kong's distinctive advantages, including robust scientific research capabilities, convergence of talent, convenient access to capital, as well as an open and free international environment, are prominent. They believed that Hong Kong's I&T development possess considerable competitiveness and potential, which are important factors for considering further developing their careers in Hong Kong.

"Technology is the prime productive force, talent is the prime resource, and innovation is the prime driving force." The accelerated development of the I&T industry, and the nurturing and attraction of talent, complement each other. Both will benefit Hong Kong's economic vitality. They also align with the important direction of building China into a great country through Chinese modernisation with high-quality development. In recent years, the HKSAR Government has strategically invested resources to actively promote I&T development, strengthen talent nurturing, and support the organisation of more diverse I&T-themed events, so as to expedite the vibrant development of the I&T ecosystem.

An example is the Digital Entertainment Leadership Forum (DELF) 2024, the event in which I met Hin Tsun again. Hosted by Cyberport, DELF 2024 brought together more than 3000 participants from home and abroad, along with 60 representatives from leading digital entertainment companies and star speakers. Together, they explored the development and synergies in such areas as AI, high-performance computing and Web 3.0, seeking to shape a new era of digital entertainment and smart living. This carnival, blending virtual and physical elements, will conclude today, and everyone is welcome to attend.

As for Science Park, apart from its major summer internship programmes promoting exchanges between local and international I&T talent, it also hosts large-scale career expos that offer thousands of I&T positions. Since last year, HKSTP has also been making overseas visits to recruit talent to Hong Kong.

Hong Kong is fully committed to boosting the economy and promoting development. We will continue to leverage Hong Kong's advantages in various aspects, and actively forge more collaborations and exchanges in talent, I&T and other fields domestically and internationally. This will not only add momentum to Hong Kong's development but also tell the good Hong Kong story through solid co-operation and exchanges.

August 18, 2024

A paragraph in the Resolution mentions explicitly the strategic positioning of Hong Kong, which, in summary, is to serve as "three centres and a hub". This is a task that we must strive to get done well.

Regarding the "three centres", the Resolution writes, "Harnessing the institutional strengths of the One Country, Two Systems policy, we will work to consolidate and enhance Hong Kong's status as an international financial, shipping, and trade centre."

As an international financial centre, Hong Kong boasts a deep and broad financial market, and has attracted world-class international financial institutions and talent. To further reinforce and enhance Hong Kong's status, more in-depth, broader, and focused interactive developments are needed: deepening market transactions; expanding the scope of financial products and their functions; and better meeting the financing needs of corporations. We should also enhance exchanges with different regions to widen our sources of funds. Enjoying the advantages of a highly efficient market, rule of law, and an international character under the "one country, two systems" principle, Hong Kong connects both the Mainland and the world, continuing to serve as a "testing ground" and "firewall" in the country's reform of the financial sector and aid in its high-standard openness.

We should fully leverage our role as an offshore renminbi (RMB) business hub. By enhancing offshore RMB liquidity, expanding products and risk management tools, improving infrastructure, and exploring new markets, we can help with the steady and prudent advancement of RMB internationalisation.

As for the development as a shipping centre, smart shipping, green shipping as well as maritime-related professional services are our key directions of development. The Government has promulgated the Action Plan on Maritime and Port Development Strategy last December, which sets out ten major strategies and 32 action measures to support the sustainable development of the maritime and port industry in Hong Kong, particularly on accelerating the development of its high value-added maritime services cluster to enhance the long-term competitiveness of the industry. In the past few years, we have introduced a series of tax incentives to promote the development of the maritime industry, and we are conducting a study this year on further enhancements. We will also examine ways to further drive the enhancements and innovations of the related regime, with a view to reinforcing and enhancing Hong Kong's position as an international shipping centre.

As for the development of a trade centre, it is our vision to develop Hong Kong into a multinational supply chain management centre to provide one-stop support to Mainland enterprises seeking to "go global" in their overseas production and supply chain distribution. Such support services would cover supply chain management, trade financing to professional consulting services. We would assist the enterprises concerned in participating more deeply in global industrial division of labour and cooperation under a complex geopolitical situation. As more Mainland enterprises seek international development and set up their production lines overseas in order to serve the global market better, there will be a higher demand for trade services, bringing greater opportunities for Hong Kong.

These three centres have their respective focuses yet support each other. Developing financial services is about serving the real economy, including such areas as innovation and technology, trade and shipping. In turn, robust high-end maritime services and high value-added trade services will stimulate demand for financial products. Meanwhile, we are actively developing a "headquarters economy", attracting quality domestic and foreign enterprises to establish their regional or international headquarters in Hong Kong. This would place us in a better position to engage in the vibrant development of the national and international dual circulation initiative, and seize opportunities in the Guangdong-Hong Kong-Macao Greater Bay Area development and the high-quality development of "Belt and Road" initiative.

As regards "a hub", the Resolution mentions the work to support Hong Kong in building itself into an international hub for high-calibre talent. Hong Kong is the only city in the world with five of the world's top 100 universities; it is also home to more than 50 international schools. A pluralistic and inclusive society with a blend of Chinese and Western cultures, Hong Kong is characterised by good law and order, a low and simple tax regime and a quality living environment. All these characteristics have made Hong Kong a highly attractive place to talent from the Mainland and overseas. The HKSAR Government is making every effort to trawl for talent by introducing an array of measures, including the Top Talent Pass Scheme, to facilitate access for talent to work in Hong Kong. Meanwhile, our vigorous efforts in attracting enterprises and investments are creating more high value-added jobs, helping us to retain talent and leverage their expertise. Since late 2022, we have received a total of over 340 000 applications under various talent admission schemes, of which 210 000 have been approved and over 140 000 applicants have arrived in Hong Kong. Looking back, the robust development of Hong Kong's financial industry has drawn in a large pool of financial talent. A thriving industry and a vibrant ecosystem are key to attracting high-end talent, who in turn would help promote industry development and innovation, thereby forming a virtuous circle. As long as we stay committed to our goals with a clear mindset, and continue to enhance our policies and ancillary support to facilitate talent development, we will be able to attract more high-end talent from across the world. They will join hands with our local talent in empowering Hong Kong's high-quality development and contributing to our country's new quality productive forces.

On the whole, with "Chinese modernisation" as the overall development framework, the Third Plenary Session has comprehensively outlined the significance and general requirements of deepening reform. It has emphasised the importance of maintaining confidence and determination in promoting high-quality economic development, supporting technological innovation and developing new quality productive forces. It has also highlighted the need to enhance relevant institutions and mechanisms having regard to prevailing circumstances and local conditions. As our country expands institutional opening up and comprehensively deepens reform, it is crucial for us to consider how Hong Kong could effectively implement its strategic positioning as set out by the country. We must seize opportunities to integrate into the new national development landscape with a proactive attitude and commitment. By contributing to Chinese modernisation, we will achieve faster and better development. In a complex and volatile political and economic environment, Hong Kong will inevitably face challenges on its path of development. Yet, with its favourable conditions, Hong Kong enjoys unique advantages over other places. Blessed with our greatest strengths of the "one country, two systems" principle, Hong Kong will surely have a better future so long as we embrace change proactively, are united in purpose, and strive for progress in response to the ever-changing internal and external environments.

August 11, 2024

Even though we are only watching the games through live broadcasts on television, we can still feel the intensity and tension of the competitions, holding our breath as the games played out. On sports fields filled with athletes' sweat and tears, we have witnessed many heartening and touching scenes. There were moments when winning athletes embraced their team with cheers and tears; and moments when athletes whose performance did not meet expectations couldn't hide their disappointment, though they received comfort from their peers. These are all the memorable parts of the games.

In fact, every athlete has undergone long and intensive training, and only through years of perseverance and constant pursuit of breakthroughs could they finally reach the Olympic Games. They were under tremendous psychological pressure during the games, and some even had to cope with recurring injuries. Having gone through such tough times and challenges, athletes fully deserve our cheers and appreciation for their remarkable results.

Even if athletes could not achieve satisfactory results in the games, their determination and perseverance are truly inspiring stories that bring positive energy to the whole community. Only by persisting and focusing on self-improvement despite adversity and setbacks can one develop strong psychological resilience, good observations skills and decisiveness in execution. These qualities are key elements on the road to success.

As for our economy, changes in the domestic and external environments as well as fluctuations in the economic cycle have brought about various difficulties and challenges. Currently, Hong Kong's overall economic situation is rather steady, with continued economic growth. Among the three key drivers of Hong Kong's economy, export of goods continued to rise by 7.6% year-on-year in the second quarter, and investment expenditure also rose by 6%, supporting year-on-year GDP growth of 3.3% in the second quarter of this year. Yet, factors such as changes in the consumption patterns of visitors and our residents, as well as the strength of the Hong Kong dollar, have put pressure on private consumption.

Even in the face of challenges, enterprises can create new opportunities by pooling resources and innovating. By leveraging technology, they can bring breakthroughs to their operations, create new business models, and open up new opportunities. By seizing the right timing to stimulate consumption, such as during the recent Olympic Games or various themed mega-events, while offering high-quality products and services complemented by promotions and discounts, enterprises can boost their businesses by better meeting consumers' demand.

With staunch support from the Central Authorities, various measures to benefit Hong Kong have been successively implemented, promoting the development of the tourism and consumption-related industries. According to figures from the Hong Kong Tourism Board (HKTB), of the 21 million visitor arrivals in the first half of this year, approximately 700 000 were overnight MICE (i.e. meetings, incentive travels, conventions, and exhibitions) visitors, recovering to about 80% of the same period before the pandemic and representing the fastest recovery among different types of overnight visitors. The duration of their stay in Hong Kong was longer, and their per capita spending was about 20% to 30% higher than that of the overall visitors. The HKSAR Government will continue to step up its efforts in exploring such sources of high-spending visitors. The HKTB has already facilitated and bid for the staging of over 60 large-scale international MICE events in Hong Kong from this year to 2026, expecting to attract at least 220 000 participants.

The Chief Executive led a delegation to three Association of Southeast Asian Nations (ASEAN) member states last week, expanding our circle of friends and creating more business opportunities. Officials of the HKSAR government will likewise make proactive overseas visits in the time to come. For instance, I will visit Europe, the Americas, Australia and the Middle East in the latter half of the year. Through these overseas visits, we seek to secure more investors and capital from markets with which we have long established close relationships; at the same time, we will strive to explore potential new markets and new sources of funding. In fact, with its international character, Hong Kong enjoys prominent advantages in multiple areas such as financial services, business, as well as cultural and people-to-people exchanges. These advantages, coupled with Hong Kong's extensive business connections and people networks with various places, have enabled the city to play a unique role in international trade and maintain strong resilience amid various challenges. We should therefore capitalise on our strengths and give full play to our role so as to contribute continuously to our country's progress while achieving better development for ourselves.

August 4, 2024

Based on the prevailing situation of the Mainland, as well as the complex and volatile international environment, the Resolution made an objective and accurate assessment of the country's future macroeconomic and social development, and came up with a new blueprint with realistic and practical arrangements. The Resolution serves as a set of fundamental guiding principles for formulating future national policies. Hong Kong is also facing a profoundly changing domestic and international environment. We must first understand the changes before we are able to embrace them. That requires us to have a good grasp of the direction of the country's future policy development directions and the rationale behind them. By doing so, Hong Kong will be able to leverage the momentum of our country's development and capitalise on our unique characteristics and advantages, so as to accelerate high-quality development for our economy as well as add value and strength to various industries.

For instance, the Resolution calls for efforts on "improving the institutions and mechanisms for fostering new quality productive forces in line with local conditions"; "improving the systems for promoting full integration between the real economy and the digital economy"; and "harnessing the institutional strengths of the ‘one country, two systems' principle in order to reinforce and enhance Hong Kong's status as an international financial, shipping and trade centre, support Hong Kong and Macao in building themselves into international hubs for high-calibre talent, and improve relevant mechanisms to see the two regions playing a greater role in China's opening to the outside world". Taking all these directions together, it is not hard to see that our past efforts have already laid favourable groundwork in such areas. Looking ahead, we must remain steadfast and confident, and press ahead with our work solidly and gradually.

For example, on accelerating the development of new industrialisation, we will launch the $10 billion New Industrialisation Acceleration Scheme this year. It will provide funding on a matching basis for enterprises from industries of strategic importance to set up new smart production facilities in Hong Kong. The Hong Kong Investment Corporation Limited has continued to enhance its role as "patient capital" and is implementing a medium-to-long term investment strategy, with a view to actively attracting companies with cutting-edge technologies as strategic partners, and accelerating the building of Hong Kong's innovation and technology ecosystem. In addition, our singular edges include the institutional advantages under the "one country, two systems" principle, the implementation of the common law system and alignment with international standards. These edges have created the favourable conditions for expediting the development of the digital economy and its institution framework, including the promotion of data governance and data trading.

We must make full use of Hong Kong's advantages as an international financial, shipping and trading centre. Through result-oriented policies and an efficient market, we can channel capital into projects that can speed up the cultivation of new quality productive forces and attract a pool of leading talent engaged in advanced technology from all over the world.

Hong Kong is where cultures of the East and West meet. Being highly international is deep in our DNA. International mega events and exhibitions of different themes have gathered a lot of tourists and enthusiasts in the community. Following the Hong Kong Book Fair, Sports and Leisure Expo and World of Snacks, the Animation-Comic-Game Hong Kong (ACGHK), opened last Friday, has become a must-go event for comic lovers every year. I also went to the event, showing my support to this important comic mega event in the region. On the day, many people, in particular teenagers, arrived early. They spent generously to buy things they loved. Many also showed up as cosplayers, creating a lively and joyful atmosphere for this popular event.

This time, the ACGHK has continued to draw in many overseas dealers. Many of them told me that they were impressed by the passion of Hong Kong comic lovers. The event has also attracted many visitors from the Mainland and overseas, and it serves as a great platform for dealers to open the Asian market for their products. They said they would continue to join the event in future.

We hope that a series of thematic exhibitions and mega events can bring in more visitors and consumers, thus enhancing its vibrancy. It is true that changes in the consumption patterns of visitors and residents, as well as the strength of the Hong Kong dollar, have led to a rather lacklustre performance in Hong Kong's private consumption recently, while exports of travel services have been impacted as well.

However, recent figures also show that exports of goods and overall investment have increased. Total exports of goods, as one of the main drivers of the local economy, continued to perform strongly with the sustained external demand and the benefits from the faster growth of our country's overall exports. The value of Hong Kong's merchandise exports has recorded double-digit year-on-year growth for three consecutive months, rising by 12.5% year-on-year in the second quarter as a whole.

Regarding investment, while elevated interest rates have dampened the current market and investment sentiment to a certain extent, overall investment expenditure still continued to grow. There is potential for the momentum to be sustained.

The advance estimates on the gross domestic product for the second quarter to be released this week will also reflect that Hong Kong's overall economy continued to grow.

Looking ahead, despite the ongoing challenges in the geopolitical landscape, interest rates are expected to be adjusted downward later in the second half of the year, which bodes well for the performance of investment and asset markets. Meanwhile, our country's economy is progressing steadily, and its sound fundamentals of long-term growth remained unchanged. This will provide the strongest support for Hong Kong's economy. Many companies are actively planning to list in Hong Kong, and the vibrant development of innovation and technology is attracting top talent from the Mainland and overseas who are keen on starting their careers in Hong Kong. With more enterprises and talents arriving in the city, along with the gradual implementation of various policies of the country that benefit Hong Kong, the overall development atmosphere in Hong Kong is becoming more positive and dynamic. This will provide support to different economic segments.

July 28, 2024

The popular application of technology and changes in consumption patterns have made it more important to develop online sales. In addition to facilitating enterprises in expanding sales channels and potential client networks, it can also enhance brand visibility and recognition. In Hong Kong, the value of online retail sales grew by nearly 60% to 32.5 billion between 2020 and 2023. However, in 2023, online sales accounted for only 8% of Hong Kong's total retail sales value, compared to nearly 28% in the Mainland during the same year. This indicates significant room for growth.

To help promote the awareness of local small and medium enterprises (SMEs) on Mainland electronic commerce (e-commerce) platforms, familiarise them with the industry, culture and operational characteristics of the Mainland online sales market and explore more business opportunities, the Hong Kong Trade Development Council (HKTDC) will organise the first edition of the Hong Kong Shopping Festival next month.

The Hong Kong Shopping Festival will be held during the whole month of August on Mainland e-commerce platforms. Over 230 brands have participated in the Festival, covering six major categories including apparel and accessories, personal care and cosmetics, household goods, food and beverage, digital gadgets, and health and wellness products, and offering signature products and discounts during the period. HKTDC will place advertisements on major Mainland social media and e-commerce platforms for drawing higher traffic flow to online stores of Hong Kong enterprises. In late August, HKTDC will also invite about 20 celebrated Mainland livestreaming hosts to conduct live-streaming e-commerce for dozens of brands on major Mainland e-commerce platforms, so as to raise the awareness of Hong Kong products among Mainland customers.

This first edition of the Hong Kong Shopping Festival is expected to bring about positive effects on multiple fronts. On the one hand, it could capitalise on Hong Kong's advantage of enjoying strong support of the Motherland's large-scale market, and assist Hong Kong small to medium enterprises (SMEs) in reaching new Mainland customer groups and developing the Mainland market, thereby injecting new impetus into their business development. On the other hand, it could enable Mainland consumers to directly and conveniently gain access to and purchase quality and value-for-money Hong Kong products. At the same time, the Hong Kong Shopping Festival could help different Hong Kong products tap into the Mainland market more extensively and make Hong Kong brands shine. Earlier, I also took part in the promotional video of the event to support Hong Kong businesses.

At the same time, we also launched "E-commerce Easy" under the BUD Fund last week, enabling SMEs to make use of at most $1 million funding flexibly for developing the Mainland e-commerce market. SMEs could make use of the funding to establish online stores on online sales platforms, place advertisements, develop or enhance mobile applications, and incorporate online payment options on their websites. In due course, we will expand the funding scope of "E-commerce Easy" to other markets to support the business development of Hong Kong enterprises.

Leveraging technology to enhance operational efficiency, as well as the quality of products and services to better satisfy customers' needs, will facilitate the sustainable development and transformation of retail, food and beverage (F&B) and other service industries. We have allocated $500 million to Cyberport to launch the Digital Transformation Support Pilot Programme to assist retail and F&B small and medium enterprises (SMEs) to apply ready-to-use basic digital solutions under the three categories of digital payment and shopfront sales, online promotion, as well as customer management systems etc. to help expedite their digital transformation.

There are currently more than 330 listed solution packages available to SMEs. Take a subsidised small-to-medium sized restaurant for example. It has introduced a management system with QR code ordering and online payment functions. Apart from enhancing the overall efficiency from ordering to food preparation, the restaurant is able to better grasp the daily sales figures and the more popular offerings to adjust their business strategies in a timelier manner.

The Hong Kong Convention and Exhibition Centre in Wan Chai has come alive this weekend with three large-scale exhibitions opening simultaneously last Wednesday. The Hong Kong Book Fair, one of the city's annual summer highlights, is the most popular fair of them. The theme of this year's fair is "Film and Television Literature", and more than 600 cultural activities are bringing diverse and extensive reading and cultural experiences to the participants. On the opening day of the book fair, I spent some time shopping between booths, where I found many interesting children's books on science and bought some of them for the children on-site.

Other than the Hong Kong Book Fair, there are also the concurrent Hong Kong Sports and Leisure Expo and the World of Snacks exhibitions. With the Olympic Games in Paris opening on the coming Friday, the sports-themed fairs have gone with a swing. The three exhibitions will be held until this Tuesday, allowing everyone to share the fun of reading, playing sports, and having snacks at the same time. This Friday, the five-day Animation-Comic-Game Hong Kong 2024 will also be kicked off, and more exciting and thrilling events are coming. Through different forums and special exhibition booths, these events with rich content will showcase new products, initiate discussion from multiple perspectives, and gather like-minded friends, to create more experiences for enthusiasts and business opportunities for merchants.

July 21, 2024

Even though public examination results might reflect past efforts, they certainly cannot dictate one's future. Despite stellar results, pride and complacency can impose limitations on oneself. Conversely, no matter how poor one's results are, creativity and persistence can still bring boundless opportunities. Outstanding athletes, successful entrepreneurs, and excellent artists are all passionate about and relentless in pursuing their ideals and goals. Ups and downs are inevitable in life, but if we can develop a positive attitude and perseverance through successes and failures, they will serve us for life.

The economy and society are rapidly evolving with the swift development of technology. We cannot expect success in the future simply by replicating past patterns. We must continue to adapt to new circumstances and dare to innovate. Maintaining flexibility in learning and thinking is essential in this process. Engaging in lifelong learning and continuous education is a necessity rather than an option.

We have been making great strides to promote innovation and technology (I&T) development in Hong Kong as well as diversify our economic structure. This seeks to strengthen the momentum and resilience of development, provide more quality employment opportunities for our young people, and allow people with different aspirations and abilities to realise their potentials. Building on Hong Kong's comparative advantages, including its strong capability in basic scientific research, convergence of global data and talent, and robust financial services, we are focusing our efforts on promoting technological innovation in a number of fields such as artificial intelligence (AI) and big data, life and health technology, fintech, new energy and new materials, so as to accelerate the development of "new quality productive forces" according to local conditions.

In addition to investing ample resources and providing policy support to universities and research institutes, we attach great importance to popular science enlightenment and education in primary and secondary schools. In previous Budgets, I increased resource allocation to encourage schools to promote popular science education. Initiatives range from subsidising secondary schools for the procurement of technology equipment to enhancing programmes that foster primary school students' interest in information technology. These efforts aim to nurture students from an early age and strengthen the talent base needed for Hong Kong's I&T development. This year's Budget earmarked over $130 million for related popular science education in primary schools. Each publicly-funded primary school will receive subsidies up to $300,000 in the next two school years.

In fact, Hong Kong has been performing well in mathematics and science education. According to the findings of the Programme for International Student Assessment 2022, our students ranked 4th in mathematical literacy and 7th in scientific literacy among 81 participating economies. Hong Kong's overall performance was better than the international average. Through interacting with students of different ages, including those not studying mathematics and science, I was particularly impressed by their growing awareness of and interest in I&T, as well as their recognition of the importance of its development.

Enabling young people to build their interest in I&T and develop interdisciplinary skills is a key aspect of our future I&T development. Earlier, during my visit to the Hong Kong Science Park, I met the founders and persons in charge of several AI and robotics start-ups. They included young individuals from both the medical and engineering sectors.

This Friday, the Hong Kong Investment Corporation Limited (HKIC) will kick-start collaboration with a company specialising in the research and development of general-purpose AI large language model robots at a forum on AI. This company will be the third strategic partner announced by HKIC. One key element of this forum is nurturing young talent. A group of secondary school students will be invited to the event and exchange with forum guests. They will also be able to interact with robots newly developed by the company.

Today, innovative technologies are reshaping industries worldwide and the way we live. Young people can surely open up new horizons for their future if they embrace change, dare to dream, keep learning, and persevere through difficulties.

July 14, 2024

Hong Kong practises common law and boasts a robust rule of law, maintains the free flow of capital, and has a simple tax system with low tax rates and no estate duty. It is home to a wealth of talents. Combined with unparalleled access to Mainland capital markets and its strategic location within the vibrant, populous, and relatively affluent Guangdong-Hong Kong-Macao Greater Bay Area (GBA), international financial institutions hold strong confidence in the outlook for Hong Kong's WAM business. Despite geopolitical challenges, many financial institutions have expanded their operations in Hong Kong. Some have rented more office space for business growth, while others have planned to relocate their global heads of asset management to Hong Kong or substantially increase the number of wealth management positions in the city.

With staunch support from the Central People's Government, measures benefitting Hong Kong are being rolled out one after another. The GBA is developing and growing more vibrant. We are also implementing various initiatives, such as offering tax incentives to attract family offices, implementing the New Capital Investment Entrant Scheme (New CIES), and introducing measures to attract enterprises and talents. We are confident that this positive trend will continue, and Hong Kong's WAM business will secure a leading position globally.

Hong Kong's financial markets experienced a challenging year in 2022. Despite the headwinds last year, Hong Kong's WAM business displayed strong resilience. The Securities and Futures Commission will release the 2023 edition of the Asset and Wealth Management Activities Survey later this month. Against a drop of about 13.8% in the Hong Kong stock market last year, the assets under management in Hong Kong stood firmly above HK$31 trillion, growing moderately by 2.1%, with nearly two-thirds of the funds sourced from non-Hong Kong investors, similar to past levels. The private equity funds' capital under management also recorded steady growth last year, amounting to over HK$1,700 billion. Hong Kong continued to be second largest PE management hub in Asia, trailing only after the Mainland. Benefitting from robust growth in the private banking and private wealth management business, Hong Kong registered net fund inflows of close to HK$390 billion, representing a year-on-year increase of over 3.4 times. Net fund inflows were strong for Hong Kong-domiciled funds as well, increasing year-on-year by over 90% to HK$87 billion. These facts prove that concerns about outflows of funds from Hong Kong were unwarranted.

The above figures also reflect that despite uncertainties arising from international geopolitics, investors around the globe continue to view the development of the Mainland and Hong Kong markets favourably. It is important that we do our part well, and continue to explain to the outside world the steady development of our country, the strong support from the Central People's Government towards Hong Kong, and our distinct advantages under the "one country, two systems" principle.

As we worked to promote diversified fund structures in Hong Kong over the past few years, the number of registered open-ended fund companies (OFCs) more than doubled last year. I announced in this year's Budget to extend the Grant Scheme for Open-ended Fund Companies and Real Estate Investment Trusts for three years, which will attract more funds to domicile in Hong Kong. Our multi-pronged approach to fortify and enhance Hong Kong's position as an WAM centre will continue.

Beyond being an active and efficient financial market, Hong Kong's internationalised, safe and cosmopolitan living environment has made the city an ideal global hub for high-net-worth individuals.

According to a survey, there are 2 700 single family offices operating in Hong Kong, with more than half set up by ultra-high-net-worth individuals with assets exceeding US$50 million. Under the New CIES launched four months ago, more than 3 800 enquiries and over 340 applications have been received, with 117 cases approved in principle. If all the 300+ applications are approved, and taking an investment of HK$30 million per applicant, over HK$10 billion would be brought to Hong Kong. Meanwhile, non-Chinese Hong Kong permanent residents will be allowed to apply for Mainland Travel Permits starting this Wednesday. This news has excited many business executives of foreign enterprises in Hong Kong. The new arrangement is expected to attract more overseas high-net-worth individuals and professionals to come to Hong Kong and use the city as a base for developing their Mainland and Asia business.

The savings of residents in the Mainland, especially in the Guangdong-Hong Kong-Macao Greater Bay Area, are increasing. With the continuous deepening and expansion of mutual access between the financial markets of the Mainland and Hong Kong, Mainland residents will allocate some of their assets in Hong Kong. This will be conducive to the development of our asset and wealth management markets. "Cross-boundary Wealth Management Connect 2.0" came into effect in February this year. As at May 2024, the number of individual investors who participated in Wealth Management Connect had increased by about 42 000, and cross-boundary fund remittances had also increased by about RMB 44 billion.

For Hong Kong to uphold its status as a key global asset and wealth management centre, maintaining external connectivity is crucial.

The unexpected epidemic in 2020 hit the global aviation industry unprecedentedly, including Cathay Pacific Airways, a major airline based in Hong Kong. Considering the overall interests of the Hong Kong society, especially the need to safeguard Hong Kong's status as an international aviation hub, and after weighing the needs of various social and economic sectors, I decided to invest $27.3 billion in Cathay Pacific through the Land Fund, comprising preference shares of $19.5 billion and a bridging loan of $7.8 billion. Last Friday, Cathay Pacific announced that it would buy back the remaining 50% of its preference shares from the Government within this month. This marks the steady return of Hong Kong's aviation industry to full normalcy.

This special investment arrangement made during the unique period and circumstances resulted in a win-win situation. On the one hand, the Hong Kong-based Cathay Pacific gained liquidity to tide over the difficult times, and was able to restore its capacity more quickly. At the same time, the investment brought a return of around HK$4 billion to the Government.

We look to Cathay Pacific to continue to improve service quality, thus supporting and enhancing Hong Kong's position as an international aviation hub. Looking forward, local airlines should actively expand their route networks in response to the needs of economic development, business connections, and travel by members of the public. This will complement our country's development of the "Air Silk Road," facilitate visitors to come to the city, and help Hong Kong businesspeople and residents go global. This will open up greater business opportunities for Hong Kong, and make travel more convenient. As Hong Kong strengthens its ties with the Middle East, Cathay Pacific will launch direct passenger service to Riyadh, the capital of Saudi Arabia, in October. More convenient travel between the two places will certainly forge closer connections between the two markets, helping to attract new capital and create new opportunities for Hong Kong's financial markets.

July 7, 2024

At the start of this long weekend, I accompanied several secondary school students to visit a few start-ups engaged in artificial intelligence (AI) and robotics at the Hong Kong Science Park. We met and exchanged views with their founders and senior staff.

One of the start-ups focuses on surgical robots. Agile and stable surgical robotic arms and operating platforms, jointly developed by a team of top surgeons and talented engineers, allow doctors to perform precise minimally invasive surgeries using touch-sensitive wrist-like instruments.

Another company uses AI and visual technologies to scan the environment and extract geospatial data to create 3D information maps. The data collected can be used for various applications, such as building construction and drainage work. The robots can work under harsh environments, perform obnoxious and repetitive tasks, and thus minimise the danger posed to workers on construction sites. Their products have been adopted by many government departments and local organisations.

Another start-up has developed an AI robotic dog that boasts great flexibility and bounce. It can easily bounce back to a standing position even when knocked over. Combined with real-time data and AI, the robotic dog can perform various functions, including patrolling. The students and I also tried using the touch screen to give commands and completed tasks in co-operation with the robotic dog.

The visit to the three companies, which lasted for just over an hour, left a deep impression on us. I could see the students' eyes gleaming with enthusiasm and curiosity as they explored new technologies. They were delighted with their new discoveries and experiences. Hong Kong is home to many highly innovative and promising technology start-ups, as well as a large pool of talent passionate about technology. They are keen on promoting innovative research and development, serving the public, and enhancing people's quality of life. The students told me that the visit was a novel, unique and eye-opening experience for them, and it really sparked their interest in studying STEM (i.e. science, technology, engineering and mathematics) subjects and even pursuing a career in the innovation and technology (I&T) industry. During the visit, we discovered that a senior staff member of a start-up happened to be an alumnus of the same school as the students'!

"Technology is the prime production force, talent is the prime resource, and innovation is the prime driving force." Young people are our future, especially when I&T is rapidly developing and constantly evolving. Lighting up their aspirations for a promising future and guiding them to understand future trends will help accelerate the development of new quality productive forces and contribute to the high-quality development of both the country and Hong Kong.

Thanks to the staunch support of the country, Hong Kong has been steadily developing since our return to the Motherland. Leveraging the advantages of strong support from the Motherland and close connection with the world under the "one country, two systems" principle, Hong Kong has been playing a unique role and performing distinctive functions that enable us to foster new and continuous development in various fields of our economy.

In 2023, Hong Kong's per capita gross domestic product was among the highest in the world, totalling US$50,500. Serving as a distinctive "double gateway" connecting the Mainland and the rest of the world, Hong Kong is the only place in the world where both the China advantage and the global advantage converge. Hong Kong maintains its international character. Last year, there were some 9 000 local offices, regional offices and regional headquarters in Hong Kong which were set up by companies from outside the city. With the Safeguarding National Security Ordinance officially coming into effect in March this year, Hong Kong has further fortified its defence of national security. It has brought about a more stable society and business environment.

Hong Kong has continued to reinforce and enhance its status as an international financial centre. Take the securities market for example. The market capitalisation of the Hong Kong stock market currently exceeds HK$32 trillion, which is 10 times that of the market capitalisation in 1997 at the time of our return to the Motherland; and 11 times our current GDP. For bonds issued internationally by Asia-based entities, Hong Kong leads the region, ranking first for 16 consecutive years. In wealth management, we managed over HK$30 trillion of assets, and about 2 700 single-family offices operate in Hong Kong. With the growing wealth of the population in the Guangdong–Hong Kong–Macao Greater Bay Area and Southeast Asia, Hong Kong's wealth management industry is set to scale new heights.

Over the years, with our country's continuous deepening of reform and opening-up, love and support for Hong Kong, as well as our inherent strengths and hard work, our city has gradually developed into an international financial, trade and shipping centre. In the face of a changing global landscape and constantly emerging challenges, we must reinforce our strengths and enhance our competitiveness. At the same time, we need to accelerate the development of I&T, nurture new industries and empower various trades and industries so as to expedite structural transformation and the upgrading of industries. We shall not only strengthen the traditional industries where we enjoy a competitive edge, but also fast-track the nurturing of new industries. We will work to foster a more diversified and resilient economy by developing new quality productive forces having regard to prevailing circumstances and local conditions. Artificial intelligence, life and health sciences, green finance and green technology, digital economy, and multinational supply chain management are the areas to which we should devote great efforts in the future. Ultimately, it is all about making life better for our residents offering more diversified development opportunities for our young people.

Taking the perspective of looking at today from the future, we will get a better idea of our direction and positioning, and of how to better equip ourselves to march towards our goals.

To celebrate the 27th anniversary of Hong Kong's return to the Motherland, the HKSAR Government will join hands with many organisations and the business sector to launch a wide array of activities and promotional offers. Free rides and concessionary fares on certain routes will be provided by various transport operators. A number of recreational facilities and exhibitions at museums under the Leisure and Cultural Services Department will be open to the public for free. There will be promotional offers at tourist attractions, and special discounts provided by restaurants and shops. All members of the public are welcome to take part in the celebration and have fun on this meaningful and memorable occasion!

June 30, 2024

The application of large models is not limited to human language; when applied to computer programming languages, LLMs can generate codes. In biology, through the analysis of protein or molecular sequences, deep learning and understanding of the underlying elements can help researchers generate new protein structures or construct various combinations. This has broad applications in medical diagnostics, drug development, new material development, industrial innovation, and green technology. This is why both the technology community and investment circles highly value the development and application of large model technologies.

Tomorrow, the inaugural "International Bio-computing Innovation Summit" will be held in Hong Kong. It will gather international experts, scholars, and industry representatives from the fields of AI and life sciences. They will come together to explore the development opportunities of bio-computing. The application scenarios of bio-computing are vast. Besides accelerating new drug development to improve human health, it can also speed up green technology innovation, contributing to global sustainable development.

AI and life sciences are key areas of Hong Kong's innovation and technology (I&T) development. The combination of the two will create a new, vibrant industry full of opportunities in bio-computing, which is just emerging globally. With solid foundation and strategic planning in both fields, Hong Kong will accelerate innovation and strengthen talent training so as to expedite the exploration of new frontiers and seize the "first-mover advantage".

The Summit is also driven by the investment strategy of the Hong Kong Investment Corporation Limited (HKIC). Tomorrow, HKIC will sign a strategic partnership agreement with BioMap, a company specialising in AI LLMs for life sciences. BioMap, as the host of the Summit, will officially announce the establishment of its first global bio-computing innovation hub in Hong Kong. This hub will leverage BioMap's LLMs to support more teams working on bio-computing, thus accelerating research and outcomes translation in fields such as medicine and health, green technology, and industrial innovation, and providing more high-quality employment and internship opportunities.

This will be HKIC's second strategic partnership announced in two weeks. The first partner, SmartMore, focuses on industrial LLMs, while BioMap focuses on bio-computing LLMs. Whether AI is applied vertically in an industry, or on cross-domain platforms, Hong Kong is an ideal place for developing AI. An increasing number of tech companies are choosing to settle in Hong Kong with a view to enhancing their research and development, testing with new application scenarios, speeding up patent translation, and exploring broader markets and international cooperation. The unique advantages of Hong Kong under the "one country, two systems" framework allow these companies to better leverage their strengths, thus contributing to a more vibrant I&T ecosystem in the city.

With our efforts over the years, Hong Kong's competitiveness continues to improve. Recently, the World Competitiveness Yearbook 2024 published by the International Institute for Management Development (IMD) ranked Hong Kong fifth among 67 economies worldwide, up two places from last year.

The rankings are based on a comprehensive analysis of 164 hard data criteria and 92 survey criteria based on the business sector's opinion. This year, Hong Kong not only improved in a range of hard data indicators, but our ranking also rose in more than half of the survey-based indicators. For example, Hong Kong's ranking in "Attracting and Retaining Talents" rose 18 places to 14th globally, reflecting the effectiveness of the Government's efforts in nurturing local talents and attracting foreign talents.

Additionally, the rankings of Hong Kong in a number of I&T-related survey-based indicators, such as "Development and Application of Technology", "Scientific Research Legislation", "Intellectual Property Rights" and "Knowledge Transfer" also rose to within the top 10 globally. These are important areas where Hong Kong enjoys advantages in attracting I&T companies to set up here. In future, we will continue to strengthen our work in these areas to support the solid momentum of Hong Kong's I&T development.

A sound financial system and financing platform are also crucial components of an economy's competitiveness, by enabling enterprises with potential to accelerate growth and enhancing the overall economic vitality. In this year's Yearbook, Hong Kong ranks fourth overall in "Finance". Among the sub-indicators, our stock market capitalisation is about ten times of our GDP, making us the global leader in this indicator. This signifies the role of our professional financial services in serving the financing needs of Mainland and global companies. The Hong Kong Stock Exchange's "Chapter 18C" listing regime for specialist technology companies recently welcomed the listing of the first hard-tech company. This has reflected our commitment to leveraging Hong Kong's financial markets to support innovation.

Our continuous I&T efforts are gradually bearing fruit, and our competitive advantages in the area are increasingly apparent thanks to the effective promotion by the current-term Government. As more technology companies in fields such as AI and biotechnology establish their presence in Hong Kong, more opportunities for local R&D and talent growth will be created. This will contribute to a more vibrant local I&T ecosystem, lending support to Hong Kong in accelerating the development of new quality productive forces and promoting high-quality development.

June 23, 2024

But the weather doesn't always follow our plans. Rain showers before the game yesterday morning brought to mind the famous ad line "It just rains on a football day"! Yet, playing in the subsequent breeze and gentle sunlight turned out to be a refreshing and joyful experience.

Over the past few years, the Government has invested a good amount of resources in enhancing sports and recreation facilities, such as 5-a-side football pitches, for public use. The Kai Tak Sports Park, the largest sports infrastructure project in Hong Kong's history, will be opened in the first half of 2025. This development will not only provide quality, multi-purpose sports and recreation facilities for the public, but also support Hong Kong in hosting more international sports and cultural mega events. As a result, more residents and visitors will have the opportunity to enjoy quality matches and performances. And more business opportunities will be brought to the retail, catering and tourism-related industries.

Our recreational, sports, arts and cultural programmes, which beautifully blend Eastern and Western elements, are rich and diverse. We aim to offer the public a wide array of leisure, arts and cultural options. Films hold a significant place in our cultural life. Hong Kong films, in particular, vividly depict the city's urban development and unique characteristics.

I recently watched two Hong Kong films, and one of them was "Twilight of the Warriors: Walled In". It features many thrilling fighting scenes that re-create the environment of the Kowloon Walled City, and depicts some of the social situations of those days. One memorable scene, showing a plane flying over the rooftop of an old building, brought back memories of the old Kai Tak Airport. When this film was screened at the Cannes Film Festival, it received resounding applause from the audience, clearly demonstrating that cultural messages in films could resonate across time, space and regions.

Box office success reflects public's recognition of Hong Kong films. "A Guilty Conscience", which was screened last year, and "Twilight of the Warriors: Walled In", were the first two local films in Hong Kong's history to gross over $100 million. In recent years, the themes of Hong Kong films have become increasingly diverse, with new directors, actors and talents emerging in large numbers. The film industry, with its profound heritage and unique sense, is poised for more innovation, allowing more local and international audiences to appreciate the cultural charm of Hong Kong.

The Hong Kong Film Development Fund (FDF) has been supporting the innovation and production of Hong Kong films for over two decades. The HKSAR Government has also continued to support FDF, with $1 billion injection in the 2019 Budget and an additional $1.4 billion announced in the Chief Executive's 2023 Policy Address. FDF has launched various new schemes to support the film industry, such as "Directors' Succession Scheme", where veteran directors partner with young directors in a spirit of mentorship; and a funding scheme to nurture production teams for developing new content for streaming platforms. To date, over 100 emerging directors and producers had worked on some 100 films funded by FDF, which had discovered a large number of young actors and created thousands of jobs. These films had won more than 160 local and international awards. New funding schemes have been launched to help Hong Kong filmmakers and producers explore the Mainland market and exchange with film industries in Europe and Asia. The HKSAR Government has also been actively leading delegations to participate in world-renowned international film festivals such as those held in Cannes, Berlin, and Venice. In the future, the Government will also actively participate in international film festivals held in Toronto, Busan, Tokyo, etc., aiming to help local films enter more overseas markets and reach international audiences.

Let me give you a preview of one of the latest films to be released in the coming summer peak season – "Customs Frontline", which will be shown in local cinemas in early July. It had its world premiere as the closing film of the 26th Udine Far East Film Festival in Italy on 2 May, and received enthusiastic responses from the audiences. I sincerely hope that more local films will receive attention and support from the public in the future.

June 16, 2024

One objective of the Hong Kong Investment Corporation Limited (HKIC) at its first stage of work is to assist in building a vibrant innovation and technology (I&T) ecosystem, and promote effective collaboration between tech enterprises and the industry, thereby providing a more favourable environment for value creation. The HKIC seeks to channel capital and leverage market resources to draw a bigger pool of promising technology enterprises and talent, with a view to propelling more in-depth collaboration among strategic industries.

After in-depth study and careful strategic consideration, the HKIC will sign a strategic partnership agreement with a tech unicorn (i.e. a start-up with a market valuation of over US$1 billion) founded in Hong Kong this Wednesday. The unicorn is primarily engaged in the development of AI large language models (LLMs) and smart manufacturing for the industrial sector. The agreement will cover, among other things, expansion of research and development investment as well as training of talent, and promoting the use of AI LLMs in the Guangdong-Hong Kong-Macao Greater Bay Area, so as to promote the digital transformation and intelligentisation in the region.

AI application in the industrial field has been relatively scattered. It is also difficult to replicate technologies among different industries. This has become a pain point. Yet, the efficient learning and standardised LLM systems have allowed technologies to be adjusted swiftly to adapt and match the different needs of various industries. These "digital-intelligent workers" not only could take over tedious and repetitive processes, but also manage high-precision processes in mass production which cannot be matched by human labour.

As the number of HKIC's partners increases gradually, Hong Kong-based tech enterprises with expanding local investments will also grow in numbers. It is clear that Hong Kong's I&T ecosystem will become more vibrant, and its clustering effect more prominent. We believe more good news from HKIC is on the way.

In recent years, we have invested heavily in the development of I&T, and made good progress. For tech unicorns, those operating in the Hong Kong Science Park are engaged in life and health technologies, AI, robotics, intelligent driving, smart logistics, etc. Those nurtured and supported by Cyberport are in the fields of digital economy and fintech. The total market valuation of these unicorns is in tens of billions of US dollars.

We look forward to having more locally-nurtured I&T enterprises to become unicorns. We will also actively attract more start-ups to set up operations in Hong Kong, and encourage more young people to start their own businesses. According to InvestHK's 2023 Startup Survey, the number of start-ups in Hong Kong exceeded 4,250 last year, representing a year-on-year increase of about 7%, of which about 20% of the founders were from Europe, the US, etc. The convergence of people with diverse backgrounds and visions will add impetus to Hong Kong's start-up ecosystem and promote a more virtuous development cycle.

By harnessing different approaches and policy tools, we hope to catalyse new industries, new models and new momentum for the economy. By developing new quality productive forces according to local conditions, we are on the way to achieve high-quality economic development in Hong Kong.

June 9, 2024

The San Francisco Vision provided a significant backdrop for the successful organisation of the two events. Last November, President Xi Jinping and President Joe Biden of the US met in San Francisco, and they reached multiple consensuses in such areas as political and diplomatic relations, cultural exchanges, and global governance. Together, they laid out a forward-looking San Francisco Vision, which outlined the direction for the development of bilateral relations and established a pragmatic foundation for the Bay to Bay dialogue and ongoing initiatives to respond to climate change.

The Chinese participants in the conference consisted of over 100 members. They comprised delegations led respectively by Governor of Guangdong Province, Mr Wang Weizhong; Vice Chairman of the National Development and Reform Commission, Mr Zhao Chenxin; President of the Chinese People's Association for Friendship with Foreign Countries, Mr Yang Wanming; as well as delegations from Hong Kong and Macao led by myself and Secretary for Social Affairs and Culture of the Macao SAR Government, Ms Ao Ieong U, respectively. The US representatives included the Governor of California, Mr Gavin Newsom; Chairman of the California-China Climate Institute and former Governor of California, Mr Jerry Brown; the US Deputy Special Envoy for Climate, Mr Rick Duke; and representatives from other state governments.

Inside and outside the conferences, participants from both countries consistently highlighted the ample room for co-operation between the GBA and the San Francisco Bay Area. They also noted significant opportunities for further collaboration at the local level to address climate change and promote green transformation. Overall, I have a few observations.

First, adjustments and changes across the entire community and business activities are necessary to effectively address climate change, accelerate green transformation, and promote sustainable development. Long-term, multi-level co-operation across industries and geographies is essential. For example, green transformation in such sectors as aviation, shipping, transportation and construction, as well as in trade and manufacturing activities across different industries and businesses, requires funding, technology and talent support. It also necessitates the participation of stakeholders from cultural and academic fields. Together, these will raise awareness and understanding of related issues, while contributing resources and capacity to implement ideas. Given the complexity of the transformation and the need for different sectors to seek innovative solutions, cross-regional exchanges and cross-industry discussions can inspire new opportunities for co-operation and development.

The Hong Kong Team I led this time comprised over 20 members from various sectors. In addition to government representatives from the Environment and Ecology Bureau, Transport and Logistics Bureau, Financial Services and the Treasury Bureau, Commerce and Economic Development Bureau, the GBA Development Office, and Invest Hong Kong, the delegation included representatives from the Hong Kong Monetary Authority, Hong Kong Exchanges and Clearing Limited, the Hong Kong Science and Technology Parks Corporation (HKSTP), Cyberport, as well as the University of Hong Kong and the Hong Kong University of Science and Technology. We shared our experiences in addressing climate change and promoting green transformation (including green technological innovation and green finance), while gaining insights into further co-operation possibilities from participant exchanges.

Second, representatives from both China and the US shared the view that while the two bay areas have similarities, they also have distinct advantages in respect of talent, technology and capital. Besides attending the conferences, I met and exchanged ideas with entrepreneurs from innovation and technology start-ups. Whether they were from Hong Kong, selected and supported by the HKSTP for a six-month exchange in Silicon Valley; or technology companies based in in the area, they all recognised the vast opportunities in both bay areas, and showed a strong interest in reaching to new potential customers and exploring co-operation opportunities in each other's markets.

The engagement between the two bay areas is no coincidence; it is driven by mutual attraction to each other's distinctive features and advantages. Both sides realise that through candid communication and collaboration on innovation, we can create greater value, and rise to more challenges in the future.

Third, sharing experiences on green development inspired new perspectives and ideas for both bay areas. For example, Hong Kong has been a leader in issuing green and sustainable bonds in Asia, contributing to green transformation in the region. Meanwhile, California has been promoting carbon market trading and accelerating carbon reduction in relevant industries through implementing relevant policy frameworks and initiatives. The California experience is something we can learn from.

Our country has been expediting the adoption of new energy vehicles in recent years. This has prompted California to consider how they could accelerate its development in this area. Last year, over 7.4 million new energy vehicles were registered in China, accounting for more than 30% of its new vehicles. The relevant figure in California was 25%. California also appreciates Hong Kong's urban planning model, which emphasises mass transit as the backbone of transportation system, which would reduce carbon emissions from private cars.

Discussions on pragmatic matters help kick start good cooperation. Taking the opportunity, we signed letters of intent and a memorandum of understanding with our partners in the San Francisco Bay Area on carbon market development and sustainable finance, promotion of mutual investment and green development, as well as facilitating youth exchanges and talent training, thereby paving the way for deeper and closer co-operation.

The Bay to Bay Dialogue and the US-China High-level Event on Subnational Climate Action represented local efforts and contributions to realise the San Francisco Vision reached between the leaders of the two countries. Hong Kong, as a constituent city of the GBA, is proud to participate in the events, and contribute to fostering greater co-operation between the two areas.

June 2, 2024

Over the past few days, I visited France primarily to participate in the Economic and Trade Cooperation Conference jointly organised by the governments of Guangdong, Hong Kong and Macao. Our goal was to showcase to the French and European business communities the collaborative advantages of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), attract the establishment of investments and businesses in the GBA, and highlight Hong Kong's unique role in the GBA. I also took the opportunity to meet and exchange ideas with friends from the French commercial, financial, innovation and art sectors to forger closer ties and cooperation.

During the Economic and Trade Cooperation Conference and at other meetings, I reiterated to French political, business and financial leaders the unique advantages enjoyed by Hong Kong: under the principle of "one country, two systems", the common law system and the rule of law are maintained; free flow of capital, goods, talent and information is ensured; the simple, low tax regime and linked exchange rate system function well; business operations remain efficient; and we continue to align with the best international standards. Some attendees expressed that it is very important for the Hong Kong Special Administrative Region Government to go out and actively engage different sectors. Through face-to-face and in-depth exchanges, not only could they gain a more comprehensive understanding of Hong Kong, but also learn about Hong Kong's new developments at the new stage. They were the best opportunity to clarify misconceptions.

In fact, both new and old friends from France whom I met during this visit showed great interest in Hong Kong's latest developments and the opportunities in the GBA. They agreed that despite the complex geopolitical landscape, Hong Kong still provides abundant opportunities as long as it continues to leverage its advantages and positions itself rightly. Some French friends who had visited Hong Kong after the epidemic told me that they found the city just as vibrant, attractive, safe and efficient as before. Nothing had changed their affection for Hong Kong.

During the visit to France, I also sought to facilitate more business and cultural exchanges and cooperation between the two places. At VivaTech 2024, Europe's annual largest technology and startup exhibition, the Hong Kong Trade Development Council set up a pavilion for the first time, with 14 promising Hong Kong startups participating. The pavilion serves as a platform for startups worldwide to exchange ideas and explore cooperation on innovative technologies, from artificial intelligence and green technology to a sustainable future. It is expected that intensive interactions, seminars and sharing sessions at the event over the few days would spark new connections, ideas, and business opportunities. While Hong Kong will scale up its participation in VivaTech next year, I also invited the organiser to consider hosting related startup exhibitions and events in Hong Kong, capitalising on our thriving innovation ecosystem, rich experience in organising exhibitions, high level of internationalisation and extensive aviation network.

Beyond innovation and technology, there is also ample space for cooperation in culture and arts. "French May", the annual event held by France in Hong Kong, has become one of the signature cultural events in the city. During this visit, I made a special trip to the renowned Théâtre National de Chaillot in Paris to meet with the theatre's director. I watched an experimental performance combining modern dance, drama, music, and stage effects. The theatre previously performed in Hong Kong during "French May". I invited them to tour Hong Kong again and collaborate with our performing arts groups and cultural institutions. That will offer richer experiences to the audience. In fact, Hong Kong's convenient transport links with the GBA and other Asian cities have attracted many art enthusiasts to the city to enjoy outstanding performances. We are an excellent platform for international arts groups to establish their audience base in the Mainland and elsewhere in Asia.

By organising innovation and cultural events in collaboration with overseas entities, not only can we promote deeper exchange and connection with different places, we can also enrich the international content of local events, attract more tourists, boost the atmosphere in the city and inject greater momentum into our economy.

Tomorrow, I will head to San Francisco in California, the United States (US), leading a delegation from the HKSAR Government to attend the Bay to Bay Dialogue between the Guangdong-Hong Kong-Macao Greater Bay Area and the California Bay Area, as well as the China-US High-Level Event on Subnational Climate Action, together with delegations from Guangdong and Macao.

The common goal of these two events is to promote exchanges and cooperation between China and the US at the local level in addressing climate change. Despite the current complex geopolitical situation, combating climate change is a shared responsibility for the world. Countries need to establish a more solid foundation for cooperation and smoother communication channels to improve the chance of global success in achieving net-zero. The technology required and funding gap for green transformation are enormous. Hong Kong has been striving to become an international centre for green tech and green finance, and actively promoting its development as a green city and in green transport. Meanwhile, we are also strengthening cooperation with our GBA sister cities so that we could leverage on our respective advantages to contribute to regional and global carbon neutrality.

The "Hong Kong team" this time will include representatives from the Commerce and Economic Development Bureau, Transport and Logistics Bureau, Financial Services and the Treasury Bureau, Environment and Ecology Bureau, Constitutional and Mainland Affairs Bureau, Invest Hong Kong, Hong Kong Monetary Authority, Hong Kong Exchanges and Clearing Limited, Science Park, Cyberport and local tertiary institutions. During the two events, we will share Hong Kong's expertise and practical experience in addressing climate change and developing a green future, highlighting the unique contributions Hong Kong can make to climate cooperation between the two bay areas.

May 26, 2024日

With the market expecting interest rates to have peaked, together with the cancellation of all demand-side management measures for residential properties at the end of February, the residential property market has also seen visible improvement. Flat prices reversed a downtrend that lasted for ten consecutive months and trended towards stabilisation, while the number of transaction increased to over 8,500 last month. The stabilisation of flat prices and the increase in trading volume are consistent with our expectations when we introduced the relevant policy.

Overall, Hong Kong's improving macroeconomic situation and stable fiscal position have been well recognised by international rating agencies. In its latest assessment of the Hong Kong economy published in May, S&P Global maintained Hong Kong's rating outlook as stable. Its main justifications included the steady further recovery of the Hong Kong economy, the stabilisation of the property market, and the restoration of fiscal balance over the next three years or so.

Indeed, there remains an uneven recovery among different industries, with sectors such as retail and catering still striving to adapt to the challenges posed by in residents' and visitors' consumption patterns. We are responding to market changes by proactively striving to create more favourable market conditions and atmosphere in collaboration with the business community with a view to identifying new growth areas and generating additional value added for Hong Kong.

Hong Kong boasts rich, diverse, and unique characteristics in consumption and tourism. We are introducing new tourism elements and packages, along with different promotional strategies, to create new tourism experiences and highlights. Continuously creating novel and pleasant experiences for residents and tourists will spark consumer demands and business opportunities. For example, during the recent Cheung Chau Bun Festival, over 50,000 residents and tourists from around the world visited Cheung Chau and experienced for themselves this traditional Hong Kong festival. The vibrant atmosphere of parades, lion dances, and the "Bun Scrambling Competition" deeply impressed visitors from various places, and many local businesses reported sales that exceeded their expectations. From the drone show featuring a bun tower over Victoria Harbour to the physical enjoyment of the Bun Scrambling Competition, we strive to provide locals and visitors an enriched understanding and experience of the festival, and enhance Hong Kong's tourism offerings and cultural identity.

Mega events not only attract more visitors and create a lively atmosphere for the city, but also bring tangible benefits to our economy. Following the various mega events in the first half of the year, we will soon announce the exciting activities for the second half. These events are set to inject vitality to our city and help spending, and offer more attractive destinations and spending options for residents and tourists.

Ensuring a steady economic recovery in the short term, as well as generating momentum for greater and faster growth potential in the medium term, is the cornerstone for bolstering confidence. In recent years, we have invested heavily in promoting innovation and technology development. The local innovation and technology ecosystem has been growing vibrantly. This has created new growth points for the economy while driving the transformation of traditional industries.

We have seen promising progress in nurturing innovation and technology enterprises. For example, Cyberport welcomed over 400 new companies in the past year, bringing the total number of community companies to over 2,000, including 8 unicorns. Its startups have raised over HKD 40.6 billion. With the advance of artificial intelligence development and in addition to its strengths in fintech and Web 3.0 cluster, Cyberport also strives to facilitate digital transformation of our enterprises via technology adoption. The Hong Kong Science and Technology Park, another local innovation and technology flagship, hosts 1,700 innovation and technology companies from 27 countries or regions, including 12 unicorns. Last year, over 640 startups graduated from its incubation programmes, showing an annual increase of more than 40%.

To further incentivise collaboration among the research, academic and industry sectors, and accelerate the "from 1 to N" transformation of research and development outcomes and industry development, we launched the "Research, Academic and Industry Sectors One-plus Scheme" in October last year. The goal is to fund at least 100 university research teams with potential to become successful startups through a matching scheme, with their projects to be completed in phases in around five years. Over 90 applications from different universities had been received for the first round of the scheme, with funding supported for more than 20 of them. The details will be released shortly.

May 19, 2024

The National Immigration Administration announced yesterday that, with the approval of the State Council, the Individual Visit Scheme (IVS) will be further expanded to include eight cities: Taiyuan, Hohhot, Harbin, Lhasa, Lanzhou, Xining, Yinchuan and Urumqi. This expansion follows the earlier inclusion of Xi'an and Qingdao into IVS. With this expansion, the number of designated Mainland cities eligible for IVS will increase to 59, covering all provincial capitals in the country. The Hong Kong Special Administrative Region (HKSAR) Government and members of the public are truly grateful for the Central Government's support and care towards Hong Kong. This measure will attract more overnight visitors to the city, benefiting various local sectors such as catering, retail and hotels, as well as boosting the overall economy. It will also foster cultural exchanges and promote people-to-people bonds between the Mainland and Hong Kong.

We hope to create more opportunities to stimulate local consumption for the retail sector and increase visitors' spending in town. In the commercial and financial sectors, we are actively exploring new products and sources of fund. By attracting talent to pursue development and settle in Hong Kong, we are striving to further diversify and internationalise our talent pool.

The two-day "Global Talent Summit Hong Kong" (the Summit) was successfully held last week. This event marked the first talent-themed international forum and exhibition organised by the current-term Government. In addition to gathering international political, business and academic leaders to exchange insights and experiences in talent development, the Summit served as a clear demonstration of Hong Kong's commitment to engaging talent, and its welcoming attitude towards talented individuals from around the world, who are encouraged to explore career opportunities in Hong Kong.

The "International Talent Forum" and "The Second Guangdong-Hong Kong-Macao Greater Bay Area High-Quality Talent Development Conference" under the Summit drew a total physical attendance of around 4,900 participants, and garnered over 130,000 views through live webcast. The two-day CareerConnect Expo, held concurrently, attracted more than 8,600 attendees, reflecting Hong Kong's appeal to talent.

Some participants expressed their observation that the HKSAR Government and local enterprises attach great importance to talent. They considered that Hong Kong offers abundant development opportunities to them. They also appreciated the open, caring, and international environment of the city, as well as its efficient operation. A talent who came to Hong Kong via the "Top Talent Pass Scheme" (TTPS) said that Hong Kong possesses clear and unique advantages for its capital market, which acts as a crucial bridge between Greater China and the rest of the world. According to surveys, those who chose to come to Hong Kong through TTPS had primarily considered factors such as the city's low tax rate, safety, freedom, diversity, favourable employment and career prospects, healthcare services, and education for their children.

Since the implementation of the enhanced talent attraction measures over a year ago, as at the end of last month, we had received around 290 000 applications under various talent admission schemes, and already approved around 180 000 of them. Around 120 000 individuals had arrived in Hong Kong. According to surveys conducted and information available at the end of last year, the median age of approved applicants under TTPS is 35 years old. 60% of TTPS entrants were married, and many of them moved to Hong Kong with their families. More than half of the incoming talents who had arrived in Hong Kong for over six months with TTPS visas were currently employed, with a median monthly income of around $50,000. These talents, as well as their accompanying family members, will serve as new forces in driving Hong Kong's sustainable development.

For attracting capital, in addition to strengthening our connections with traditional markets in Europe and the United States, we are actively expanding into new markets, including the Middle East. Following the successful inaugural PRIORITY Asia Summit in Hong Kong, hosted by the Future Investment Initiative (FII) Institute of Saudi Arabia last year, the Saudi Exchange held its flagship Capital Market Forum overseas for the first time last week, selecting Hong Kong as the venue. The event drew around 650 attendees, with some 30% coming from the Middle East. The Hong Kong Exchanges and Clearing Limited (HKEX) also arranged around 300 meetings among enterprises and investors from the Middle East, Hong Kong, and the Mainland. These have highlighted Hong Kong's role and function as a "super-connector" between our country and the rest of the world.

Cooperation between Hong Kong and Saudi Arabia in the realms of finance, trade, people-to-people exchanges, and more, is deepening and achieving solid progress. In September 2023, HKEX added the Saudi Exchange to its list of recognised stock exchanges, allowing Saudi listed companies to have secondary listings in Hong Kong. In November, the first Saudi exchange-traded fund (ETF) in Asia was listed in Hong Kong, which had also the largest asset size among similar products globally. The HKSAR Government is working with several financial institutions to facilitate the listing of an ETF in the Middle East that tracks Hong Kong stock indices, with a view to promoting two-way capital flows between the two regions.

Since February last year, various government departments, chambers of commerce and enterprises have engaged in around 60 collaboration projects with the Arab States of the Gulf. These projects cover enhanced collaboration, mediation and arbitration, artificial intelligence, and more. Meanwhile, we are discussing an Investment Promotion and Protection Agreement with Saudi Arabia, and considering the setting up of an Economic and Trade Office in Riyadh, the capital of Saudi Arabia.

This month, the Hong Kong Tourism Board (HKTB) initiated promotional activities for Hong Kong in several Gulf countries. Notably, HKTB led the largest-ever tourism trade delegation to Dubai last week to participate in the Arabian Travel Market, the largest annual international travel industry exhibition in the Middle East region. In fact, based on last year's survey, tourists from the Gulf countries have higher spending power, with an average per capita spending of $11,300, which is 85% higher than the overall average. They also tend to have longer average lengths of stay. They are thus an important high-spending visitor segment to target in the future. In the fourth quarter of this year, Cathay Pacific Airways will resume its passenger route from Hong Kong to Riyadh, facilitating more convenient economic, trade, and cultural exchanges between the two places.

For attracting enterprises, in addition to the second batch of enterprise partners announced earlier by the Office for Attracting Strategic Enterprises, Invest Hong Kong assisted a total of 150 Mainland and overseas companies in establishing or expanding their presence in Hong Kong during the first quarter of this year. This marks a 46% increase compared to the same quarter last year. These companies mainly operate in the financial services, innovation and technology and family office sectors. Collectively, they are expected to invest around $14.7 billion and create over 2,000 job opportunities.

We are faced with various challenges ahead, such as a complex and volatile external environment, geopolitical tensions, and high interest rates. Amid new circumstances and landscapes, with the staunch support of the Central Government, and by striving to reinforce and enhance our competitiveness, it is clear that we will achieve faster and higher-quality economic growth.

May 12, 2024

One of the main drivers of economic growth in the first quarter of this year was inbound tourism. Alongside a further increase in visitor arrivals, export of services continued to record notable growth. During this year's Labour Day Golden Week, the number of inbound visitors was close to 650 000 in the first three days, a 25% increase compared to the first three days of the Golden Week last year. Also, external demand has been more favourable than expected, supporting improvement in the performance of total exports of goods in the first few months of this year.

However, the external environment remains complicated and ever-changing, and it is fraught with uncertainties. The U.S. Federal Reserve kept interest rates unchanged last week. As the progress in the deceleration of U.S. inflation has stalled in recent months, market expectations for rate cuts this year have visibly cooled compared to the beginning of the year. A prolonged period of elevated interest rates will impact on global economic recovery, Hong Kong's exports, local investment sentiment, and the performance of the asset markets.

The continued relative strength of the Hong Kong dollar also affects the willingness of visitors to spend in Hong Kong. Coupled with changes in the consumption patterns of residents and inbound visitors, this poses real challenges for the local retail, catering and other consumer sectors. To support Hong Kong's economic and tourism development, the Central Government responded positively to the Hong Kong Special Administrative Region Government's proposal to enhance the Individual Visit Scheme, and expanded the eligible cities of the scheme to Xi'an and Qingdao in February. However, in the face of changing broad trends, besides focusing on creating consumption opportunities and scenarios, such as actively promoting a mega event economy, it is equally important for enterprises to harness "new product development" and "new business models" – the two key aspects for achieving business breakthroughs during the transition phase of the consumption market. New products not only meet the evolving needs of consumers but also help create new demand and increase sales. On the other hand, new business models enable enterprises to adopt more data-based management solutions, helping them reduce costs, improve quality, and enhance efficiency. This year's Budget has set out a number of measures to assist small and medium enterprises, including those in the food and beverage and retail sectors, with their digital transformation.

In fact, digital transformation as well as green transformation are important issues of concern to different economies around the world. We all hope to seize the opportunities to achieve leapfrogging social and economic development. This is also the focus of the Asian Development Bank (ADB) Annual Meeting this year.

These few days, I am in Georgia attending the 57th Annual Meeting of the Board of Governors of the ADB. Many delegates are interested in Hong Kong's advancement in innovation and technology as well as development of the digital economy in recent years. They are particularly interested in the innovative products and services provided by Hong Kong start-ups. In the conferences and meetings, I also highlighted Hong Kong's position as an international financial centre, as well as a centre for green tech and green finance. We can share with the developing member countries of the ADB our experience in various areas, such as green financing, transferring and spreading climate risks to the capital market, and making good use of green tech to achieve decarbonisation targets.

How to leverage private sector capital more effectively to take part in projects that combat climate change is a focus of the ADB Annual Meeting this year. Hong Kong has been a leader in green and sustainable finance in Asia over the past few years. In addition to enriching the range of green finance products, we are also committed to the development of and alignment with international green standards. Our high-quality and excellent professional services can also facilitate green certification of projects, thereby reinforcing investor confidence.

We just published last week the Hong Kong Taxonomy for Sustainable Finance (Hong Kong Taxonomy), which provides the industry with a clear and transparent assessment tool for green finance and facilitates the identification of green economic activities, thereby preventing greenwashing behaviour. The Hong Kong Taxonomy aligns with the two mainstream taxonomies of our country and the European Union (EU), and currently encompasses 12 economic activities under four sectors, namely power generation, transportation, construction, and water and waste management. For the next step, we will seek to expand the coverage of the taxonomy to include more sectors and activities, including transition activities.

Besides, following the proposal in the Budget to extend the Green and Sustainable Finance Grant Scheme by three years to 2027, and expand the scope of subsidies to cover transition bonds and loans, the Hong Kong Monetary Authority has recently announced the updated guideline of the Scheme. These measures will encourage relevant industries in the region to make use of Hong Kong's transition financing platform towards decarbonisation.

Looking ahead, we will continue with our active participation in other major international or regional conferences to better showcase Hong Kong's unique advantages to the world, and share with other places our observations and experience in various areas. In this regard, we will strive to become a bridge and make positive contributions by actively developing Hong Kong into a platform for knowledge and experience exchange.

May 5, 2024

In the past week, the performance of tech stocks in the Hong Kong stock market improved, resulting in a five-day consecutive rise in the Hang Seng Index by a cumulative 8.8%, marking the best week in 13 years. The average daily turnover last week exceeded HK$125 billion, with single-day turnover on Friday reaching close to HK$160 billion. The market was optimistic about the new opportunities and business growth potential in the I&T sector and AI business. Moreover, the five new measures announced earlier by the China Securities Regulatory Commission, including the expansion and enrichment of mutual market access, and encouraging leading Mainland enterprises to list in Hong Kong, etc., triggered the influx of funds that had longed waited for opportunities. This created a positive atmosphere in the market.

By the way, the enhanced "Wealth Management Connect 2.0", launched at the end of February, has made good progress. In March, the number of individual investors participating in the scheme increased by more than 24 000; the amount of funds involved in cross-boundary remittances increased by nearly eightfold compared to February, surpassing RMB 13.1 billion. This monthly figure is equivalent to almost half of the cumulative amount of cross-boundary fund remittances since the launch of the Wealth Management Connect in September 2021!

Technological innovation continues to drive new business forms and models, as well as new industries. Apart from creating new growth momentum for the real economy, it also introduces new themes to the capital market. From AI, big data and biomedical technology, to new energy, new materials, and more, companies can leverage leading core technologies and lead innovative business transformation. By addressing pain points and creating value-adding products or services, they can gain a competitive edge and achieve exponential business growth, delivering significant returns to investors.

It is important to actively identify such enterprises, and provide them with conditions favourable to growth, avenues of development, and access to finance. It is also essential to build a comprehensive I&T ecosystem that gathers upstream, midstream and downstream industries. These are the critical path for Hong Kong to develop "new quality productive forces" according to local conditions.

The number of start-ups in Hong Kong exceeded 4,200 last year, representing an increase of more than 30% compared to four years ago. The founders of around a quarter of them are from outside Hong Kong. In the past year, we have successfully attracted around 50 strategic I&T enterprises to establish or expand their presence in Hong Kong. Recently, the Hong Kong-Shenzhen Innovation and Technology Park, located in the Lok Ma Chau Loop, also signed co-operation memoranda with some 60 partners, marking a significant milestone as the Park approaches its operational phase.

Recently, the Hong Kong Science and Technology Parks Corporation organised the "Elevator Pitch Competition 2024", an annual signature event that opens Hong Kong's doors and beckons to promising start-ups from around the world. This year's competition was the biggest ever in scale, attracting over 600 teams from more than 40 economies to participate in the event.

The winning companies are all dedicated to developing technologies that have been under the global spotlight in recent years. For example, the overall champion of the competition, tozero GmbH, is a start-up from Munich, Germany. It specialises in lithium-ion battery recycling technology that recovers their critical materials in a sustainable and cost-effective manner, thus promoting a circular economy and contributing to the green future.

The winning teams in the three industry categories also include Roboticplus.AI, an advanced intelligent robotic system company from the Mainland. By specialising in core technologies such as robotic control, algorithms and human-machine interaction, it seeks to better apply robotic systems in the manufacturing industry. Another award-winning company, BizBaz, focuses on AI and data analytics, aiming to provide crucial information to businesses and investors to make informed decisions.

The founders of these winners agree that Hong Kong not only helps start-ups develop their ideas into full-fledged business solutions, but also provides them with an important platform to showcase their achievements to both the Mainland and overseas markets. Hong Kong is also the right place for them to recruit talent, creating opportunities for their expansion into the Greater Bay Area, the Mainland and even the entire Asian market.

This week, the Government will release the advance estimates on the gross domestic product for the first quarter. The economic growth rate is expected to be within the forecast range for the full-year, indicating that the Hong Kong economy will register moderate growth for the fifth consecutive quarter. While striving to explore new sources of economic growth, we must also continuously strengthen traditional economic sectors. Starting from this Wednesday, the Labour Day Golden Week on the Mainland will begin. It is expected that during this period, there will be over 800,000 visitors coming to Hong Kong. On 1 May, we will also stage a pyrotechnic show at the East Tsim Sha Tsui waterfront, providing a diverse range of programmes for tourists and residents and boosting the festive atmosphere. In the coming months, there will be a series of exciting events, including the Pop Culture Festival, the Bun Carnival to be held in Cheung Chau, and Vinexpo Asia, a prestigious wine and spirits event held at the end of May. We will continue to make full efforts in organising mega events under different themes, creating more appealing new experiences to generate more sales and consumption opportunities. By attracting more residents, business travellers and tourists to spend in Hong Kong, we will inject energy into the local economy.

April 28, 2024

Following my visit to Hangzhou and Suzhou last week, I have come to notice that numerous local enterprises have either applied for listing in Hong Kong or are considering doing so. They recognise the institutional advantages of Hong Kong's market and our seamless alignment with international standards. They believe that offshore financing will help expedite their growth in both the Mainland and international markets. These innovative technology (I&T) enterprises, located in the Yangtze River Delta (YRD) region, also eye on synergies between Hong Kong and other cities in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), such as the I&T cooperation platforms with Shenzhen. It is their wish to fully leverage the advantages of the two national development strategies, namely the YRD Economic Zone and the GBA, in order to scale their businesses to new heights through regional collaboration.

During my visit, I had the opportunity to explore a variety of private enterprises operating in fields such as artificial intelligence, Internet of Things, biotechnology, new energy, and new materials. I also had separate meetings with leaders of the two cities. During my interactions with Mainland I&T enterprises, I was impressed was the presence of young entrepreneurs who possessed a global perspective. These enterprises have invested significant resources and manpower into research and development (R&D) and innovation. They seek to achieve technological breakthroughs and enhance the competitiveness of their products and services.

As these enterprises strive to accelerate their own development, they have also broadened their scope from the Mainland market to the international market. They aspire to utilise Hong Kong as their primary springboard and platform for accessing the global market. This includes establishing corporate treasury centres and international business headquarters in Hong Kong.

For many enterprises, Hong Kong possesses a wide range of strengths. They include the free flow of capital, goods, data and talent; the role of connecting financial markets and services of the Mainland and the world; a fair and open business environment with a simple and low tax regime; extensive international connections; efficient and high-quality professional services; familiarity with international rules and practices; as well as a deep pool of talent from around the world. Furthermore, enterprises that are eager to establish scientific research centres in Hong Kong have highlighted our robust intellectual property protection regime. They believe it will enable the development of a new business model of "patent monetization". Hong Kong, where both Mainland and international data converge, is gradually fostering cross-boundary flow of data with the GBA, providing a solid foundation for scientific research.

Next month, we will witness the establishment of a collaborative I&T platform jointly created by Hong Kong and Hangzhou. The platform will focus on collaboration on technological R&D, transformation and realisation of R&D outcomes, as well as scientific and cultural exchanges, and more. It will also establish an exchange mechanism to facilitate the sharing of premium resources. This would represent a new milestone in I&T collaboration between the two cities. Several technology enterprises based in Hangzhou will also establish their presence in Hong Kong, by setting up R&D centres or expanding their operations overseas.

Another highlight of my visit was to acquaint Hangzhou's enterprises with the advantages Hong Kong can offer in managing their multinational industrial and supply chains, financing their offshore trading activities, thereby facilitating the expansion of their international business. During the exchange session of the thematic seminar, many enterprises expressed their aspiration to proactively explore international business opportunities by extending their reach and better utilising overseas resources in logistics and transportation, marketing and sales, investing in the constructions factories, overseas procurement, and more. This will also help them navigate the challenges posed by geopolitical tensions and unilateralism. In fact, Hong Kong, with its diverse strengths, can generate greater value for Mainland enterprises in their pursuit of international business development. Hong Kong can provide one-stop services, including supply chain management, trade financing, business consultation, as well as talent and corporate training.

In the future, in addition to enhancing our efforts in the Mainland to promote Hong Kong's multifaceted advantages and latest developments, we will also strive to strengthen our ties with the international business community. This week, Hong Kong is proud to host the Second 2024 APEC Business Advisory Council Meeting (ABAC II). It has been nine years since the last time this significant event was held in Hong Kong. ABAC II will gather over 200 business and trade leaders from the Asia-Pacific Region, providing a platform for exchanging views on issues of common interest to the international business community.

We have arranged a rich itinerary for the visiting business and trade leaders. It includes tours to Hong Kong Science Park, M+ Museum, Hong Kong Palace Museum, the Hong Kong International Airport, etc. Through these visits, we aim to showcase Hong Kong's latest achievements in the fields of I&T, cultural and creative industries, and as an aviation hub, and more.

April 21, 2024

The electronic Consumption Voucher Scheme in the past few years had popularised the use of electronic payments, enabling small and medium enterprises (SMEs) to better embrace digitalisation in their daily operations. In the face of intense competition both locally and from neighbouring regions, enterprises are seeing a pressing need to digitalise their business operations. Two years ago, I established the Digital Economy Development Committee (DEDC), which has brought together experts and academics from the relevant industries, as well as representatives of Government bureaux and departments, to discuss and explore how to further advance Hong Kong's digital economy. DEDC set up a number of sub-groups to conduct in-depth research on cross-boundary data flow, digital infrastructure, digital transformation and talent development, while collating opinions from the industries and stakeholders. It has put forward 12 core recommendations to the Government. Supported by five pillars, they provide important reference to our future work. Some of the recommendations have already been reflected in the Policy Address and the recent Budget.

First, we will strengthen Hong Kong's overall digital policy. The top-level framework for policy, governance, and implementation, as well as the relevant legislation and regulatory system, are the key factors. Upon completion of approval procedures by the Legislative Council, we will establish the Digital Policy Office (DPO) in the middle of this year. The DPO will be responsible for comprehensively formulating and implementing policies to promote the development of the digital economy and smart city. On the other hand, we will also review relevant legislation and guidelines with a view to enhancing data governance and establishing clearer guidelines for collecting and processing data; while allowing room to accommodate technological developments. Meanwhile, we will also seek to address challenges in data governance, such as mitigating risks related to data security and personal data protection.

Second, we will bolster digital infrastructure. This includes enhancing the utilisation and coverage of 5G networks; encouraging the construction of high-performance computing centres and data centres; further promoting electronic payments; launching the Digital Corporate Identity ("Corp ID") (i.e. the business version of "iAM Smart"); and developing a unique geocode system to allocate digital coordinates to building addresses, among other initiatives.

Providing high computing power infrastructure is pivotal to accelerating the development of Hong Kong's digital economy. It is also a key factor in supporting the advancement of AI. In last year's Budget, I proposed establishing an AI supercomputing centre in Hong Kong. The related development work is now progressing at full speed. It is expected that the centre will launch its first-phase services within this year. In this year's Budget, I also allocated $3 billion for a three-year AI Subsidy Scheme to support local universities, R&D institutions and enterprises in utilising the computing power of the centre, so as to drive breakthroughs in scientific research.

In addition, we have announced an allocation of $300 million to set up the business version of "iAM Smart" to facilitate companies to go through corporate identity authentication and corporate signature verification in a secure, convenient and efficient manner when they conduct online business transactions or use e-government services. This will dispense with many complicated procedures. We plan to start rolling out the Corp ID platform from 2026, which will offer four main functional services to around 1.8 million Hong Kong companies. Such services include corporate identity authentication, digital signature, authorised data retrieval for pre-filled forms within electronic service systems, and storage of electronic credentials for businesses. The system will also connect with various Government departments' electronic services to enhance operational efficiency. Furthermore, it will support the operation of the Commercial Data Interchange ("CDI") of the Hong Kong Monetary Authority, facilitating financial institutions in conducting customer due diligence.

Third, we will promote local and cross-boundary data flow. On the local front, we will make efforts to encourage the public and private sectors to open up more data. We will also expand the scope of CDI to enable banks to access data more easily with the consent from enterprises, thus facilitating loan approvals, especially those for SMEs. As of the end of last year, CDI has facilitated over 13,000 loan applications, with a total loan amount close to HK$12 billion.

The presence of a highly efficient data ecosystem has become one of the considerations for many enterprises to establish a foothold in Hong Kong. Whether they are engaged in AI, big data, life and health technology or fintech, these companies commonly recognise Hong Kong's distinctive advantages of converging both Mainland and international data under the "one country, two systems" arrangement. Such convergence is important for activities such as model training, drug-related R&D, and market expansion.

We have also made good progress in promoting cross-boundary data flow with the Mainland. Last December, we launched an "early and pilot implementation" arrangement in collaboration with the Cyberspace Administration of China to facilitate the cross-boundary flow of personal information within the Guangdong-Hong Kong-Macao Greater Bay Area. The first phase of implementation involves the banking, credit referencing and healthcare sectors, and their response has been highly positive. Based on the outcomes of the first phase, we will gradually expand the facilitation measure to encourage more industries in both places to leverage cross-boundary data and provide more cross-boundary services with greater convenience for residents and businesses.

In fact, in addition to driving digital operations in industries, data itself is a distinct new industry with huge development potential. Data has been commonly recognised as a valuable asset that can assist businesses in decision-making, create new business models, serve as an asset for cross-sector collaborations, and even be a tradeable factor of production. We have commissioned an expert group to undertake an in-depth study on how to develop a robust data trading ecosystem in Hong Kong. The scope of the study includes promoting the formulation of international data trading rules, thereby unleashing the potential of data elements and exploring new growth areas for the development of Hong Kong as an international financial centre and I&T hub.

Fourth, we will expedite digital transformation. To support SMEs in digital transformation, Cyberport has launched in late March the Digital Transformation Support Pilot Programme. The Programme subsidises SMEs in the food and beverage industry to acquire ready-to-use basic digital solutions covering electronic payment, online promotion and customer management. The Programme will be further extended to SMEs in the retail industry as next step. It is expected that at least 8 000 eligible SMEs will benefit from the Programme.

Fifth, we will develop a sustainable digital talent strategy. We will nurture and retain digital talent through strengthening education and training initiatives, while also attracting talent and tech enterprises from outside Hong Kong. We will continue to enhance the digital literacy and capabilities of the whole community, fostering an environment that embraces digitalisation and digital development.

Hong Kong's digital economy is advancing fast, and the development of I&T is creating more businesses opportunities. Hong Kong is hosting the "Business of Innovation and Technology Week" ("BIT Week") this month, featuring a series of I&T signature events. From the Digital Economy Summit to InnoEX, and from the Elevator Pitch Competition to the Hong Kong Web3 Festival, these activities bring together both local and international industry leaders and pioneers, providing a platform for exchange and collaboration in the digital economy and innovation for the future. By gathering the wisdom of various parties and bringing in more insights, these activities have enriched Hong Kong's list of mega events and injected impetus to our economy.

>April 14, 2024

Amid fierce global competition in the I&T industry, advanced economies are focusing their attention on developing and making breakthroughs in cutting-edge technologies. Such endeavour requires substantial investments in capital and talent for basic research, commercialisation of outcomes, as well as innovation and application. Hence, a corresponding high level of legal protection for IP rights is indispensable to incentivising research and development (R&D) and application, and cultivating a favourable environment for I&T.

Indeed, the gravity of global IP activities has shifted towards Asia in recent years. By the end of last year, our country was home to nearly 5 million valid invention patents, topping the world. According to the "Global Innovation Index 2023" published by the World Intellectual Property Organization (WIPO), based on analysis of such factors as patent applications and scientific publications in the respective regions, the "Shenzhen-Hong Kong-Guangzhou" science and technology cluster has been the second most innovation-dense cluster globally for four consecutive years.

In Hong Kong, the Intellectual Property Department granted more than 10 000 standard patent registrations each year from 2021 to 2023, which represent an increase of more than 50% compared to the average annual number of registrations over the previous decade. This highlights the burgeoning upstream I&T ecosystem in Hong Kong and the substantial market potential for IP trading.

Many I&T companies we engaged have told us that a key factor for their decision to establish a foothold in Hong Kong is their confidence in the city's legal system, rule of law, professional services, and robust IP rights protection, which would help safeguard their technologies and products as they expand their international business. These would facilitate the licensing of their technologies to other enterprises for developing new applications, and the generation of revenue via the "patent operation" model.

Strengthening and enhancing Hong Kong's IP protection regime, as well as promoting IP management, commercialisation and trading, will enable Hong Kong to play to its strengths and thrive in the high-value segments of the entire I&T industry chain.

To expedite progress in this domain, I have introduced several measures in the recent Budget to accelerate the development of Hong Kong as a regional IP trading centre, which will complement the rise of the city as an international I&T centre.

To support scientific researchers in commercialising more technologies at different stages, we have also proposed in the Budget to establish a WIPO Technology and Innovation Support Centre (TISC) in Hong Kong. Upon commencing operation, TISC will provide local enterprises and entrepreneurs with high-quality patent-related information and services, and assist them in creating, protecting, managing and commercialising their IPs, thereby promoting IP trading.

In addition, we will also implement the "patent box" tax incentive to reduce the tax rate on qualifying profits generated from patents from 16.5% to 5%, encouraging respective industries to intensify R&D activities and create more IPs with market potential. This will accelerate our I&T development and IP trading activities. The relevant bill is scheduled for first reading at the Legislative Council this Wednesday. We are striving to complete the legislative work early.

On the other hand, strengthening IP protection and trading will also benefit the development of Hong Kong's cultural and creative industries, and facilitate the building of the East-meets-West centre for international cultural exchange. The licensing business has emerged as one of the industries worth developing.

According to industry surveys, global retail sales of licensed goods and services exceeded US$340 billion in 2022, representing an increase of over 8% from the preceding year. The rising popularity of streaming platforms and e-commerce in recent years allow characters, brands, and trendy gadgets to be carried around the globe quickly through the Internet. In short, the potential for market growth is huge. In Hong Kong, the creative works of Mr Louis Cha (Jin Yong), a celebrated writer and a household name, are an exemplar of successful IP. His licensed dramas, video games and even toys and figures have enjoyed enduring popularity, and demonstrated substantial commercial promise.

As a matter of fact, Hong Kong stands as a major licensing hub in Asia. Many international licensors and licensing agents have chosen Hong Kong as their strategic base to expand their licensing ventures in the region. In 2022, the total values of IP use-related export and import reached $5.8 billion and $16.3 billion respectively, increasing by 3% and 9% as compared to those in 2017.

In addition to fostering the creation and trading of IPs in the creative industry through the "CreateSmart Initiative", the Hong Kong Trade Development Council is actively optimising the "Asia Intellectual Property Exchange (AsiaIPEx)" platform by integrating pertinent creative content. This seeks to promote creative copyright trading and drive the commercialisation of literary and artistic works. A trial is targeted to be launched within this year. We will also explore further enhancements to the Copyright Ordinance to provide proper protection of copyright in light of the latest advancements in artificial intelligence. Consultation will be conducted within this year.

For collaboration with the Mainland, the Government is committed to maintaining close collaboration with the China National Intellectual Property Administration on various fronts, including strengthening training of patent examiners. We will also continue to promote exchanges and cooperation with sister cities in the Greater Bay Area (GBA), particularly Qianhai of Shenzhen, such as facilitating cross-boundary registrations and protection of IP rights, as well as promoting Hong Kong's professional services to support enterprises in the GBA to engage in IP trading.

>April 7, 2024

After the long weekend holiday, we will enter the second quarter of 2024. Looking back at the first quarter, the overall Hong Kong economy maintained stable growth. Unemployment rate was below 3%; inflation was generally moderate; visitor arrivals exceeded 11 million. Such macroeconomic trends provided some support to the local retail, catering and transportation sectors. However, these sectors were also affected by changes in the consumption patterns of inbound visitors as well as some Hong Kong people going north more frequently to spend. These have weakened these sectors' confidence in the outlook. Shops or restaurants located in different districts or targeting different customer groups experienced varying degrees of business recovery. It can be said that the local economic growth still requires consolidation. Rapid changes in consumption patterns and market trends have presented quite a number of challenges for the operations of some local small and medium enterprises (SMEs).

In view of the above, we have proposed a number of measures in the Budget with a view to alleviating the pressure on SMEs and creating more business opportunities for them through a multi-pronged strategy. Such measures include assisting them in dealing with cash flow needs, opening up new markets and engaging in digital transformation.

As regards addressing the cash flow needs, we have extended the application period for the 80% and 90% Guarantee Products under the SME Financing Guarantee Scheme (SFGS) for two years till the end of March 2026. The total loan guarantee commitment of the SFGS has also increased by $10 billion.

I have also instructed the Hong Kong Monetary Authority (HKMA) to maintain communication with banks and the business community to ensure that banks can assist enterprises with their funding needs in a more accommodating manner. Recently, HKMA convened the Banking Sector SME Lending Coordination Mechanism meeting again, with representatives from several banks involved in SME lending business. After considering views from different stakeholders, it announced nine measures last Thursday to support the financing needs of SMEs and help them sustain their operations and development amid a complex and changing business environment. These measures include, among others: not demanding early repayment from mortgage customers who repay on schedule, even if the value of the collateral declines; not adjusting the credit limit solely based on changes in the value of the collateral, and providing a minimum transition period of 6 months in the case of adjusting the credit limit. These measures help avoid unnecessary pressure on the funding chain of SMEs, or even trigger of chain reaction, due to any over-sensitive actions during short-term fluctuations in asset markets.

In addition, the measures also include expediting the handling of applications for the 80% and 90% Guarantee Products under SFGS; providing more flexibility in the repayment of principal under the Principal Payment Holiday Scheme to pragmatically assist SMEs with their operational and funding needs. Moreover, we are actively exploring the provision of credit products and other support services that can better serve the needs of SMEs, including expediting the approval process for unsecured loans.

Regarding the arrangement of the Principal Payment Holiday Scheme, banks will adopt a sympathetic approach to provide loans to SMEs that still face difficulties, in accordance with prudent risk-management principles. That includes restructuring of relevant loans. As for enterprises that have transitioned to partial repayment of principal under the Scheme, banks will consider customer requests to extend the duration of partial principal repayment, allow customers to choose a lower proportion of partial principal repayment, or even offer principal moratorium. The above arrangements also apply to taxi loans, public light bus loans and commercial vehicle loans taken out by personal customers.

In recent years, we have been actively promoting Fintech development so as to meet the financing needs of SMEs in a more efficient and effective manner while properly managing risks. For instance, we encourage the banking industry to make greater use of the Commercial Data Interchange launched by HKMA. By reviewing various business data that SMEs agree to share, banks can provide bespoke credit products for SMEs, as well as other services to support their business development. Examples include cross-boundary banking services, digital business services, e-commerce-related services, etc., to assist SMEs in their business expansion, upgrade and transformation.

To facilitate SMEs in obtaining loans with better terms, HKMA will establish a one-stop platform to provide information on banking services for SMEs. This will enable them to compare and choose the products and services offered by banks. Banks participating in the coordination mechanism have also undertaken to provide assistance to SMEs that intend to switch banks for their loans.

Apart from assisting SMEs with their cash flow needs, it is equally important to gather more people and spending power to create more business opportunities and sales for enterprises. In the past week, the "Financial Mega Event Week" became a hotspot, with three major financial events held along with a series of accompanying business luncheons and dinners as well as seminars. These events had successfully brought together over 1,000 global political and business leaders, high-net-worth individuals, asset owners and representatives of multinational financial institutions. The occasion allowed them to personally experience the vibrancy of Hong Kong and our development opportunities. Their extensive business and interpersonal networks would also stimulate the coming of more high-value visitors to Hong Kong.

At the same time, this month is also Hong Kong's "Art March", with a number of important arts and cultural activities being held in Hong Kong. Last week alone, in addition to "Art@Harbour 2024" and the "Hong Kong International Cultural Summit 2024" organised by the Government, there were also a number of large-scale regional arts and cultural events, including the pop culture mega event "ComplexCon Hong Kong 2024", which moved to Asia and was held in Hong Kong for the first time; as well as Art Basel and Art Central which focused on visual and modern arts. These events, having attracted tens of thousands of residents and tourists, had created a more vibrant atmosphere for the city.

I visited Art Basel last week. The exhibition brought together more than 240 internationally renowned art galleries from 40 countries and regions. The five-day event attracted more than 80 000 visitors. When I communicated with the exhibitors, I learned that the sales of artworks during the exhibition were quite good. This illustrates Hong Kong's unique advantages in the exhibition, sale, storage and appreciation of artworks in Asia. Our unique advantages are also one of the main reasons why Art Basel has been using Hong Kong as a base to access the entire Asian art market since it first landed in Hong Kong in 2013. In fact, in 2023, the value of Hong Kong's total import and export of artworks and antiques exceeded US$13.5 billion, accounting for around 1.2% of Hong Kong's total trade value. We are the centre for art trading and auctions in the region.

Financial and art mega events are conducive to attracting more business activities and tourist spending. Every 1.5 million visitors are estimated to bring about $3 billion of value added to Hong Kong, and they can also create a positive environment and an upbeat atmosphere for various industries.

Hong Kong is a free, open, diverse and inclusive society, as well as a cultural melting pot of East and West. The city also has extensive international ties, a safe and stable social environment, as well as a vibrant cosmopolitan lifestyle – together with a beautiful Victoria Harbour and countryside. These qualities have given us a real edge in attracting visitors as well as art and culture lovers from across the globe. As we press ahead with the development of Hong Kong into an East-meets-West centre for international cultural exchange, this will inject energy to the development of our retail and catering sectors as well as the economy as a whole.

March 31, 2024

Under the theme of "Growing with Certainty Amid Growing Uncertainty", the Summit this year will focus on ways to help family offices to establish their operations in Hong Kong and thrive amid a challenging external environment. The Summit will bring together influential family offices from around the world, asset owners, wealth successors and professional managers. Around 400 participants from Hong Kong, the Mainland, Asia, Europe, the Americas and the Middle East will attend the Summit to take part in discussions on such topics as philanthropy, wealth succession and green development.

Co-organised by the Financial Services and the Treasury Bureau and Invest Hong Kong (InvestHK), the Summit has stepped into its second year. It has attracted great attention from the asset and wealth management industry and the investment sector. The Summit will also demonstrate that Hong Kong is an international asset and wealth management hub, which proactively promotes the comprehensive development of the family office industry with our international network and professional platforms. In particular, we seek to explore new opportunities amid the global economic uncertainties, and channel global wealth to promote social progress.

We released the Policy Statement on Developing Family Office Businesses in Hong Kong in March last year. Since then, a series of measures have been implemented to promote the development of family offices and related businesses in Hong Kong. As at February this year, the dedicated team of InvestHK assisted 58 family offices to set up or expand their operations in Hong Kong, and more than 100 family offices indicated that they had decided or were preparing to set up or expand their operations in Hong Kong.

According to the market study of the consultant commissioned by InvestHK, there were around 2 700 single family offices (i.e. not including multi-family offices) in Hong Kong as at the end of 2023. Around 900 of which were with a wealth level of over USD$100 million. This demonstrates the attractiveness of Hong Kong as an international financial centre to the wealth management sector, including family offices.

While exploring new funding sources, we are also actively attracting more strategic enterprises to come to Hong Kong. This will facilitate the matching of funds and promising projects, and help channel funds to advance the development of innovation and technology (I&T) and a more vibrant ecosystem of relevant industries locally.

Last week, we signed agreements with the second batch of strategic enterprises that would set up or expand their businesses in Hong Kong. Together with the first batch of strategic enterprises attracted last year, these 50 or so enterprises will invest more than $40 billion in total in Hong Kong, and create over 13 000 jobs, the majority of which would be research and development (R&D) and management positions.

Around half of these enterprises are engaged in life and health technology. Hong Kong has strong basic research capabilities, supported by world-renowned medical schools and authoritative experts. In addition, we are actively encouraging more pharmaceutical and medical device enterprises – whether they are local, or from the Mainland or other places – to conduct clinical trials in Hong Kong. This seeks to facilitate new drugs and medical devices developed in Hong Kong to enter the Mainland market under the future "Primary Evaluation" mechanism. To international medical and pharmaceutical enterprises, this presents a huge and attractive development opportunity. It is fair to say that we are making solid progress towards developing Hong Kong into a health and medical innovation hub.

Other strategic enterprises came from such sectors as artificial intelligence and data science, fintech, advanced manufacturing and new energy technology.

Approximately one-fifth of the two batches of strategic enterprises are from Europe and the United States. Looking ahead, we will continue to actively reach out to cutting-edge technology enterprises from different regions. The number of strategic enterprises attracted is expected to rise.

Indeed, besides making investments, these strategic enterprises would also mobilise their upstream, midstream and downstream partners in their industry chains to come to Hong Kong. The Government will continue to encourage R&D activities, accelerate the commercialisation of research outcomes, nurture local startups and I&T talents, promote new industrialisation, as well as strengthen the cooperation with sister cities in the Greater Bay Area. These will help promote the development of a more vibrant I&T ecosystem.

Meanwhile, InvestHK assisted approximately 380 Mainland and overseas enterprises to set up or expand their businesses in Hong Kong last year, an increase of nearly 30% compared with 2022. In the first two months of this year alone, InvestHK has assisted 100 Mainland and overseas companies to develop in Hong Kong, an increase of 74% compared with the same period last year. We are actively exploring more overseas connections and encouraging more companies to land in Hong Kong. The Government is considering opening additional Economic and Trade Offices in Riyadh, Saudi Arabia and Kuala Lumpur, Malaysia. InvestHK also plans to engage consultants in Cairo, Egypt and Izmir, Turkey this year to strengthen its investment promotion work in the Belt and Road regions such as the Middle East and Central Asia.

Events in the Financial Mega Event Week also include the Milken Institute's Global Investors' Symposium. It is the first large-scale summit held in Hong Kong organised by the Institute, a US-based non-profit think tank, with the theme of "Thriving Together: Bridging Global Market". The symposium will discuss the challenges and opportunities brought about by a changing world, technological advancements and shifting capital flows, with an expected attendance of over 550 participants. More than half of whom would be coming from outside Hong Kong. In addition, there will be the One Earth Summit which focuses on green development. The event is co-organised by the Institute of Sustainability and Technology (IST) and the Giving to Amplify Earth Action (GAEA), a World Economic Forum initiative. Through promoting in-depth dialogues, the Summit aims to drive action towards achieving net-zero emissions and sustainable transition in Asia and around the world. Over 500 representatives, including government officials and business leaders, green finance experts, scholars, and international organisations from all over the world, will attend the Summit.

A stable and secure environment is conducive to investment. It is also necessary for us to take good care of both development and security. Both the financial and commercial sectors fully recognise the importance of a stable and secure social environment to their investments and operations in Hong Kong. With the Safeguarding National Security Ordinance coming into effect officially in Hong Kong yesterday, we have fulfilled our constitutional responsibility of legislating for Article 23 of the Basic Law, and further strengthened the shield to safeguard national security. For this, the whole government team felt excited and encouraged. From now on, let us be united, and focus our efforts on developing a vibrant economy and improving people's livelihoods. Together, we will build a better future for Hong Kong.

March 24, 2024

Geopolitical developments, adjustments to the division of work in the global manufacturing industry and restructuring of the supply chain, coupled with the rise of well-equipped ports in the region, are all reshaping how enterprises set up their production lines and their patterns of exports. They have impacted Hong Kong's export performance. While some large Mainland and overseas manufacturers have been adjusting their supply chain settings over the past few years, many medium-sized manufacturers have yet fully prepared themselves. Moreover, many enterprises are facing challenges arising from the introduction of more stringent environmental, social and governance (ESG) requirements by some major economies, as well as difficulties in gaining access to trade finance in a high-interest rate environment. According to a report released by the Asian Development Bank in September last year, the global trade finance gap had widened further, and was estimated to be equivalent to 10% of global merchandise trade (i.e. US$2.5 trillion).

Having a solid foundation in trade and various related professional services, Hong Kong has the favourable conditions to capture the opportunities created by these changes. The key rests with providing quality and efficient professional services for the commercial and industrial sectors to help businesses to strengthen the management of their supply and value chains, and create higher values for their multinational businesses.

This is the line of thought behind my proposal in this year's Budget to develop Hong Kong into a multinational supply chain management centre. By establishing a single window that provides one-stop services for enterprises, including supply chain management, trade financing, consulting services, talent and corporate training, etc., we seek to attract Mainland manufacturing enterprises to set up regional headquarters in Hong Kong for managing their offshore trade. It is estimated that there are at present over 50,000 medium-sized manufacturing enterprises in the Pearl River Delta and Yangtze River Delta, many of which are engaged in overseas businesses and see the need for certain parts of their manufacturing processes to "go global". Hong Kong's rich experience and favourable conditions have put us in a good position to serve their needs.

Trade financing. Hong Kong has efficient flow of reliable information, as well advanced and robust financial infrastructure. We offer a wide range of financing options to trading enterprises. More than 70 of the world's 100 largest banks operate in Hong Kong, including a number of leading banks in the global trade finance market. Mainland enterprises which have established their operations in Hong Kong would have access to more efficient and lower-cost trade financing services. In addition, the Commercial Data Interchange, launched by the Hong Kong Monetary Authority for gathering corporate data, has 26 banks and 13 data providers as participants. With authorisation from enterprises, participating banks can obtain trade-related data more quickly, thereby streamlining the loan assessment process. As at the end of last year, this arrangement had facilitated more than 13,000 loan applications and assessments, involving an estimated credit approval of over $11.7 billion.

As regards trade settlement, Project mBridge will launch its first phase of service this year. By then, Hong Kong will become one of the first places in the world to settle cross-boundary transactions for corporates using central bank digital currencies (CBDC). It will greatly enhance the speed of cross-boundary payments and reduce related costs.

To effectively help manage the credit risk of buyers, the Hong Kong Export Credit Insurance Corporation (ECIC) underwrites, in addition to goods shipped or re-exported from Hong Kong, goods procured or produced at overseas locations which are then directly shipped to buyers by Hong Kong policyholders. In January this year, we raised the statutory maximum liability of ECIC from $55 billion to $80 billion. Mainland enterprises which have got a foothold in Hong Kong may take advantage of export credit services to better manage risks and, through insurance policies, gain easier access to export finance. Moreover, enterprises may also use ECIC's buyer credit check and market information sharing services to develop their business.

Market expansion and consulting services. When considering business expansion and supply chain management, both Mainland enterprises going global and overseas companies entering the Mainland market need a wide variety of information. To facilitate Mainland enterprises in tapping into new markets and gaining a foothold in Belt and Road countries, the Hong Kong Trade Development Council (HKTDC) has been providing various services through different schemes and services. In particular, HKTDC's Transformation Sandbox (T-box) offers one-stop consulting services covering business operations, production and supply chain solutions, market information, etc., as well as a range of workshops and exchange sessions. They seek to enhance the competitiveness of Hong Kong enterprises in branding, digital transformation, manufacturing and supply chain solutions, opening new markets and achieving sustainability.

Standard certification and corporate training. Hong Kong's professional service providers have ample knowledge and experience in managing multinational supply chains, and in handling such matters as compliance as well as labour and environmental protection. By fostering collaboration between different organisations (such as education and training organisations) and industry stakeholders, we will provide Mainland enterprises seeking to "go global" with training on topics such as ESG with a view to helping them to improve their business reputation and expand their reach. In terms of standard certification, the Hong Kong Quality Assurance Agency is guided by international standards, and provides related services such as certification, assessment, verification, and training. These services can assist enterprises in enhancing their management quality and competitiveness.

In view of the evolving landscape of international geopolitics, in addition to positioning Hong Kong as the multinational supply chain management centre and trade financing centre, we are also making great strides to attract strategic enterprises to expedite the city's development into an international innovation and technology (I&T) centre. We announced in October last year that about 30 strategic enterprises had set up or expanded their operations in Hong Kong. This week, we are welcoming the second batch of about 20 enterprises. Together, they are expected to bring about over $40 billion in investment to Hong Kong, creating over 13 000 jobs, most of which would be research and development-related or management positions. Their presence in Hong Kong will attract upstream, midstream and downstream partners from their relevant industries, promoting the vibrant development of the entire I&T ecosystem in the city.

March 17, 2024

The first is on the general economic direction of "pursuing progress while maintaining stability; promoting stability through progress; and establishing the new before abolishing the old." Last year, the Mainland's gross domestic product (GDP) surpassed RMB 126 trillion, marking an increase of 5.2% and ranking it among the fastest-growing major economies in the world. The overall economic recovery and growth were boosted, with significant progress made in areas such as scientific and technological innovation breakthroughs and building of a modern industrial system. Taking into account the needs, goals, potential and supporting conditions, the Central Government has set the Mainland's economic growth target this year at around 5%. Under the current complex international environment, this is not an easy target. But the Mainland economy has a solid foundation, and the Mainland authorities have ample policy space. Coupled with strong leadership and solidarity, I believe this target can surely be achieved. The Mainland's growth will provide the strongest support for the steady and faster development of the Hong Kong economy.

The second is on "new quality productive forces".President Xi mentioned this in September last year. "Striving to modernise the industrial system and developing new quality productive forces at a faster pace" is listed as the first major task in the Government Work Report this year. This indicates that the Mainland will enhance the breadth and depth of in developing high-tech industries, and is determined to overcome various constraints and challenges. These will provide a more favourable environment for the development of innovation and technology (I&T) in Hong Kong. It will also open up deeper and broader development space that will reinforce and enhance Hong Kong's role and status as an international financial centre.

"New quality productive forces" represent a significant leap in productivity driven by technological innovation. Factors of production are being transformed towards digitalisation and intelligentisation. Some advanced economies have already achieved significant breakthroughs in certain areas, and have been taking the lead in the world. Many countries are also seeking to excel in this round of great change brought by intelligentisation so that they could significantly enhance their productivity and competitiveness.

"New quality productive forces" aim to fully realise the leading role of innovation. They encompass revolutionary breakthroughs of technology, innovative allocation of production factors, and structural upgrading and transformation of industries. They are an intrinsic element of high-quality development.

The Central Government has highlighted the need to accelerate the development of "new quality productive forces". In this regard, the Hong Kong SAR government is making strenuous efforts. Building upon the enormous investments made in the I&T sector, we must, by capitalising on our unique advantages, make greater strides in promoting the relevant key areas in the future. Specifically, we need to (1) promote the optimisation and upgrading of industry chains and supply chains; (2) actively nurture emerging and future industries such as new materials and life sciences; and (3) advance the innovative development of the digital economy, drive "digital industrialisation and industrial digitisation", and strengthen the research and development on and application of big data, artificial intelligence, etc.

Take the development of artificial intelligence (AI) as an example. We are currently promoting the development of the AI ecosystem in Hong Kong on all fronts through proper top-level design, putting in place regulations and guidelines, building infrastructure, engaging in R&D, and nurturing and attracting talent, as well as attracting enterprises and investments, etc. Cyberport is expediting the establishment of the AI Supercomputing Centre (AISC), and operation of its first phase will start this year the earliest. The recently announced Budget also allocated a funding of $3 billion for a three-year subsidy scheme to support local universities, research institutions and enterprises, etc. to leverage the AISC's computing power and foster scientific breakthroughs.

We are also committed to expediting the development of green technology and green finance. Innovation driven by green technology will enhance the application of digitalisation, networkisation, intelligentisation and other new technologies. It will also catalyse the development of new materials and standards. Indeed, Hong Kong enjoys clear institutional advantages and solid foundation on such fronts as patents, formulation of new standards and manpower development.

Technological development requires the support of financial services. Hong Kong has a leading edge in green finance. The variety of green financial products issued in Hong Kong is becoming increasingly diverse. In addition to green bonds and loans, there are many new products. The latest figures from the Securities and Futures Commission (SFC) show that over 200 environmental, social, and governance (ESG) funds have been authorised by the SFC, with a year-on-year increase of 24%. The related assets under management have also recorded a year-on-year growth of 20%, reaching over HK$1.3 trillion in scale. We are accelerating the promotion of green fintech, climate-related disclosure standards, etc., so as to enable financial services to better support the development of green technology. These will bring new opportunities to Hong Kong as an international financial centre.

Digitalisation has become a new driving force for economic development. As a new key production factor, data links different industries and sectors and empowers enterprises to boost efficacy and competitiveness. Data on its own can even be developed into an industry, creating more new business opportunities. In the Budget this year, I have set out the vision to build a data trading ecosystem, and we will expedite its development along the direction of building "new quality productivity forces". In particular, we should adapt measures to local conditions, and leverage Hong Kong's unique advantage of "one country, two systems" in bringing together both Mainland and international data. In fact, the presence of a highly efficient data ecosystem is one reason why many enterprises chose to establish a foothold in Hong Kong. Building a mechanism that facilitates data trading is the key. We have commissioned an expert group to undertake an in‑depth study on how Hong Kong could play the role of "superconnector" in data trading, and how we could contribute to the formulation of international rules on data trading, etc. We will endeavour to build a robust data trading ecosystem and platform, which will enable us to unleash the potential of data as a new industry with enormous growth prospects. This will also empower the upgrading and transformation of traditional industries.

The third is on the "expanding high-level opening-up and fostering mutual benefit". The Central Government's tasks this year include expanding high-level opening up, enhancing the synergy of resources from the domestic-international dual circulation, and raising the quality and stabilising the quantity of foreign trade. In this connection, major exhibitions such as the China International Import Expo, the Canton Fair, the China International Fair for Trade in Services and the Global Digital Trade Expo will continue to be held, and they will accelerate the development of the international logistics system. These events will provide enormous opportunities for Hong Kong, as local enterprises may participate in large-scale exhibitions and conventions in the Mainland. Meanwhile, Hong Kong may launch corresponding events or international conferences at around the time when events in the Mainland are held. This will not only further promote the development of the local convention and exhibition industry, but also help attract more business visitors, boosting our retail, catering and transport industries.

Be it economic or social development, we must have good coordination of development and security. A stable and secure environment is the prerequisite for all social and economic progress. The Hong Kong SAR Government is now pressing ahead with the legislative work on Article 23 of the Basic Law at full steam. The Safeguarding National Security Bill was gazetted and introduced into the Legislative Council (LegCo) for first reading and second reading just days ago. LegCo has been scrutinising the Bill over the past few days. We believe that early completion of legislative work will allow us to safeguard national security better and earlier, so that Hong Kong can have a more secure and stable environment. We will thus able to focus our efforts on pursuing development and economic progress, and fulfil our people's aspirations for a better and more secure life.

March 10, 2024

After registering a 3.2% growth last year, Hong Kong's economy is forecast to grow by 2.5% to 3.5% this year. Elevated interest rates and continued geopolitical tensions have kept the asset market weak throughout the past year. Changes in the spending pattern of residents and tourists have, to a certain extent, put pressure on the retail and catering industries. Bolstering short-term confidence and strengthening guidance of market expectations; enhancing strategic planning for long-term economic development; and ensuring the robustness and sustainability of public finances, are the three main lines of thought for the Budget.

The complete removal of the "cooling measures" for the residential property market is primarily the result of careful consideration of the current overall market situation and the adequate future supply of residential flats. We consider that the relevant measures are no longer necessary. As for the series of measures to enhance the listing regime and improve the trading mechanism for the equities market, they are aimed at further boosting market efficiency, liquidity and competitiveness.

In response to changing spending patterns of residents and tourists, we will implement a series of measures aimed at creating more unique tourist attractions. That would help visitors and residents better plan their trips. By providing richer and more diverse travel experiences, we encourage visitors to stay longer and spend bigger, thus further stimulating business atmosphere during daytime and at night. Various mega events and large-scale forums held in Hong Kong, whether accompanied by monthly drone and pyrotechnic shows, or themed immersive tours and other activities with local characteristics, are set to create more wonderful and exciting experience for local residents and visitors from around the world. In fact, over the past few days, different groups have expressed interest in sponsoring drone shows or pyrotechnic performances as part of their promotional campaigns. Some catering and retail businesses are also actively preparing for new rounds of promotional activities, aiming to take advantage of these events to boost sales and marketing. We are glad to see more collaborative promotional activities that will make Hong Kong's market more vibrant.

This year, we will be welcoming a yet wider array of international mega-events and thematic forums, which can quickly generate business and consumer tourism demand for Hong Kong in a short period of time. Over the past week, for example, two major events were held in the city. The inaugural "Hong Kong Green Week", featuring a series of forums and activities which integrated green technology and green finance, had attracted over 5 000 participants from dozens of regions. The Hong Kong GreenTech Summit, in particular, saw the participation of a good number of green technology companies engaged in areas such as renewable energy, hydrogen transportation, carbon capture, and green agriculture. Meanwhile, the Climate Business Forum: Asia Pacific, jointly organised by the Hong Kong Monetary Authority (HKMA) and the International Finance Corporation under the World Bank Group, brought together top decision-makers from the global business and financial sectors to discuss how unlock the potential of climate finance in the Asia-Pacific region. On the other hand, the Securities and Futures Commission (SFC) hosted the meetings of the International Organization of Securities Commissions (IOSCO) Asia-Pacific Regional Committee meetings and the EU-Asia-Pacific Forum on Financial Regulation, as well as the SFC Regional Securities Regulatory Leadership Symposium. These events had gathered hundreds of government officials, senior regulators, and financial leaders from Europe and the Asia-Pacific region, promoting dialogues and connections between regulatory bodies and the industry.

A host of international mega events and forums will be coming to Hong Kong this year, including the Hong Kong International Film Festival, Art Basel, the Hong Kong Sevens, the Hong Kong Pop Culture Festival, the Global Financial Leaders' Investment Summit organised by the HKMA, as well as a Roundtable for International Sovereign Wealth Funds and a Summit on Start-up Investment and Development in Hong Kong to be organised by the Hong Kong Investment Corporation Limited. These events coming in succession will bring in more business and leisure visitors in the short term while stimulating local consumer demand.

While bolstering confidence and guiding market expectations more closely, we have also put much emphasis on long-term planning for development. A key focus is to enhance Hong Kong's positioning for the development of the "Eight Centres" under the National 14th Five-Year Plan. Among them, financial services and innovation and technology (I&T) are the two main engines driving Hong Kong towards high-quality development. For I&T, building upon the investments we have made over the years, the Budget this year seeks to accelerate the development of such areas as artificial intelligence, life and health technology, and new industrialisation. On financial services, we will work to enhance mutual market access with the Mainland, and strengthen the development of our asset and wealth management, securities and bond markets. We are determined to further reinforce and enhance the competitiveness and advantages of various financial services segments in Hong Kong.

For our role as an international trade centre, the Budget has expressly proposed to establish Hong Kong as a multinational supply chain management centre. In line with the trend of Mainland manufacturing enterprises extending their production supply chains abroad, Hong Kong, as the leading financial and commercial centre in the region with comprehensive financial, logistics management and professional support services, is well resourced and experienced to support the overseas businesses of such enterprises, and help them overcome various challenges in the process. We will work to establish a trade single window to consolidate the resources of various sectors and take proactive measures to enable these enterprises to make full use of Hong Kong's status as an offshore trade and multinational supply chain management centre for opening up new overseas markets more effectively.

The Budget has taken into account the short-term needs of Hong Kong, while charting the direction for our long-term development. The key is to promote high-quality development of the overall economy, and make better use of technology to provide greater and more sustainable impetus for future economic growth.

March 3, 2024

Over the past year, our life has gradually returned to normal. Positive economic growth has resumed as the epidemic subsided. However, the external environment is still complex and volatile, while geopolitical tensions have persisted and interest rates remained high. These intertwining uncertainties have impacted the momentum of economic growth.

Nevertheless, with the country's steady economic development and its unwavering support for Hong Kong, we enjoy a unique position and play distinct roles in the overall development of our country. Solid backing of the country, and our connectivity to the world, are our greatest advantage. We must leverage them to turn opportunities into real benefits.

The choice of colour for the annual Budget cover symbolises our expectations for Hong Kong in the year to come. We anticipate that our economy will improve gradually this year, and expect sustained improvement in the business environment for various sectors. The colour of this year's Budget cover is a vivid reflection of our hopes.

February 25, 2024

However, economic progress based on industrialisation over the past two centuries have brought along high pollution, high energy consumption and high levels of emissions. It has resulted in a development mode without due regard to social costs. To achieve more sustainable economic development and harmony between humanity and nature, green transformation has become an international consensus. From the Paris Agreement in 2015 to the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28) last year, major economies have been attaching greater importance to climate change and seeking to expedite response. It is not hard to understand why major global markets are placing a high priority on green economic transformation, and why relevant sectors have attracted significant investments and are rapidly growing. Further increasing the share of clean energy use is one main direction on which countries have embarked.

According to data from the International Energy Agency, the world's newly installed capacity of renewable energy recorded a year-on-year increase of 50% last year, mainly concentrated in solar energy projects. China is already the world's largest manufacturer of solar energy generation modules. In addition, a research organisation has pointed out that even in the face of looming geopolitical uncertainty, high interest rates and high inflation environment, global investments in clean energy transition still reached a record high of US$1.77 trillion last year, representing a year-on-year increase of 17%. It is anticipated that vast investments will be needed in the future to achieve the goals of the Paris Agreement. It is expected that investments in such areas as green transformation and the wider application of renewable energy will continue to rise.

Advancements in green tech have been providing more viable and practical solutions for global green transformation. With the introduction of new services, equipment and products, the development of the green tech industry has brought about enormous opportunities and become an important contributor to economic growth. Hong Kong has gathered a good number of green tech enterprises and talents, as well as vast green capital and many related financial products. We are well-positioned to develop into an international centre for green tech and finance.

On green tech, we are supporting relevant research and development (R&D) through various initiatives, including the Innovation and Technology Fund, Green Tech Fund, New Energy Transport Fund, etc. Over HK$800 million has been approved from these funds for a few hundred R&D and pilot projects in net-zero electricity generation, energy-saving, green buildings, green transport, and more. In Hong Kong, there are more than 200 green tech companies, some of which have proven themselves competitive in the global arena and successfully expanded to the Mainland and overseas markets.

On green finance, with the various initiatives of the Government to support the development of green and sustainable finance, the green finance market has registered significant growth. In 2022, the total green and sustainable debt issued or arranged in Hong Kong exceeded US$80 billion, among which relevant bonds accounted for 35% of the Asian market. In recent years, both the Shenzhen Municipal People's Government and the People's Government of Hainan Province had successfully issued green and sustainable bonds denominated in Renminbi in Hong Kong. Meanwhile, taking the Common Ground Taxonomy as the basis, we are actively exploring the establishment of a green classification framework suitable for Hong Kong while in alignment with the Mainland and international standards. Hong Kong's highly efficient financing platform and technological strengths are becoming the driving forces of green transformation for the city, the country and the Asian region. Apart from accelerating the overall transformation process, they have also opened up new opportunities of development.

To better promote the cross-sectoral interaction and collaboration between green tech and green finance, and to better leverage Hong Kong's role as an international platform, we will organise the inaugural Hong Kong Green Week at the end of this month. On green tech, the Hong Kong GreenTech Summit 2024 will be held, comprising a series of roundtable forums. Dozens of start-ups engaging in frontier green tech research will also showcase their technologies and products. On green finance, the Hong Kong Monetary Authority and the International Finance Corporation, a member of the World Bank Group, will co-host the Climate Business Forum: Asia Pacific. The forum will bring together political and business leaders as well as industry representatives from the Asia-Pacific region, and cover important financial issues related to green transformation.

Be it green tech, green finance or innovation and technology as a whole, there are vast opportunities as Hong Kong and its sister cities in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) work with and render support to each other. This is precisely where the strengths and potential of the GBA lie. Today (18 February) marks the 5th anniversary of the promulgation of the Outline Development Plan for the GBA. During these years, collaboration in the GBA has seen remarkable development. Take financial co-operation as an example. The Qianhai Overall Development Plan promulgated in December last year expressly supports the deepening of integrated development of financial services in Hong Kong and Shenzhen. That includes encouraging more Hong Kong private banks, asset and wealth management institutions, etc. to establish their presence in Qianhai; supporting qualified financial institutions in conducting cross-boundary securities investment business; and commencing cross-boundary e-CNY pilots. In addition, the Cross-boundary Wealth Management Connect Scheme 2.0 will be officially launched next Monday (26 February). Apart from increasing the individual investor quota and expanding the scope of eligible products, it would also provide more policy room for cross-boundary distribution and promotion of products, thereby facilitating more diversified cross-boundary asset allocation by residents in the GBA. Collaboration and development on this front will create more opportunities for the relevant sectors in Hong Kong and benefit GBA residents better.

February 18, 2024

The Chinese New Year is an important occasion for gathering with family and friends. Shopping malls and streets are buzzing and brimming with festive atmosphere. I have also placed some New Year decorations at my home, including intricately-designed Chinese dragon toys and cushions, small pinwheels and festive potted plants, which I bought during my recent visit to the Lunar New Year market. This year's Lunar New Year markets in various districts were particularly lively, with dry goods and cooked food stalls making a bustling comeback. Some of these stalls were set up by secondary schools and run by students. They sold creatively-designed new products, ranging from Chinese dragon-themed toys and decorations to creative daily life products. These products had offered a wider variety of choices for visitors. The students there told me that their products were selling well. This demonstrated that the infusion of creativity to meet market demand is a formula for successful marketing.

Festive celebrations are a great opportunity for family and friends to get together, as well as a good time for stimulating consumption. The Chinese New Year Night Parade held last evening, featuring fantastically-decorated floats and a diversity of artistic performances, marked the beginning of a rich array of spectacular mega events in celebration of the Year of the Dragon. Tonight, a much-anticipated fireworks display will be staged, with dazzling fireworks illuminating the magnificent skylines of Victoria Harbour to create a most unforgettable night for all spectators. Over the next two days, there will also be the Chinese New Year Raceday and the Chinese New Year Cup football tournament. These festive events have been held for years and become a trademark of Hong Kong. They offer visitors unique local experiences during the Chinese New Year.

I hope everyone can take a break during this long weekend holiday and enjoy pleasant moments with family and friends. This Wednesday, 14 February, is the first working day after the Chinese New Year, as well as Valentine's Day. At Statue Square Gardens in Central, a giant floating red heart with a diameter of about 12 metres will be on display, which will certainly become a popular photo spot for Valentine's Day and the Lantern Festival.

Apart from celebrating with our loved ones during the Chinese New Year, we should also care for different groups in the community. On Chinese New Year's Eve, I visited several elderly households in a public housing estate in Kwun Tong, and brought them fresh fruits, egg rolls as well as homemade radish cakes and taro cakes. We had some chit chats and exchanged seasonal greetings. We truly enjoyed each other's company.

Earlier, I also visited a number of underprivileged elders living in a residential care home for the elderly in Mong Kok run by a non-profit organisation. I brought them some festive food and small gifts, and wrote couplets for them. We chatted and laughed together, extending warm wishes to each other.

During every festive season, we always think of our loved ones, and wish each other good health and a better life. In the New Year, let us show more care for one another. By doing so, we will gather more positive energy in the community, and create a more joyful and optimistic atmosphere. Let us work together for a vibrant economy, strive for development and embrace a better life.

February 11, 2024

The new year marks a new start. We believe that overall market conditions in the Year of the Dragon will steadily improve. It has been a market consensus that external interest rates have peaked. While expectations vary on the pace of decline in interest rates, the trend is conducive to easing pressures on asset markets. Last year, Hong Kong's real GDP was estimated to grow by 3.2%. The unemployment rate has stayed below 3% for seven consecutive months. Inflation has also remained moderate. Together with the steady development of our country's economy, they will be favourable to stabilising market expectations.

On retail, tourism and catering, we hope that a series of mega events, complemented by enhanced associated publicity and the industries' efforts to introduce innovative products and improve customer experience, will help infuse modernity and sophistication into Hong Kong's image as a hospitable and charismatic city.

On the economic front, we will focus on using innovation and technology to drive economic growth and create capacity. We will adopt an industry-oriented approach to expedite the development of various sectors with advantages, and open up new areas which can help Hong Kong's economy achieve higher-quality development. Take green transformation for example. We are striving to develop Hong Kong into an international centre for green technology and green finance. Our goal is to accelerate the development of green industries through innovation in green technology, and harness green finance as a catalyst for green transformation, serving the needs of the real economy.

On 26 February, we will hold the inaugural "Hong Kong Green Week" focusing on green technology and green finance. More than ten events comprising symposiums and various activities will take place in six consecutive days. Amongst other events, the "Hong Kong GreenTech Summit 2024" will kick start the Hong Kong Green Week. It will provide a platform to connect Mainland and overseas experts as well as industry representatives to exchange their views on the latest development and application of green technology. This event will also include an exhibition zone to showcase the technologies and solutions by dozens of start-up companies engaged in cutting-edge green technologies. The Summit will help us broaden our horizons and promote more new cross-disciplinary collaboration. Furthermore, a "New Energy Bus Experience Day" will be featured, during which participating members of the public can enjoy free rides on new energy bus at designated routes, as well as learn more about new energy through exhibition, education booths and workshops.

Another highlight of the Hong Kong Green Week is the three-day Climate Business Forum: Asia Pacific (CBF) co-hosted by the Hong Kong Monetary Authority (HKMA) and the International Finance Corporation (IFC), a member of the World Bank Group. The forum will bring together esteemed business leaders and industry representatives from the Asia-Pacific region to discuss the key steps to unlock the needed financing for achieving more inclusive green development in Asia and the Pacific, covering important subjects such as carbon markets, supply chains and green transition.

Green development, life and health sciences, pharmaceutical research and development, etc. are all key strategic directions of Hong Kong's industry-oriented development. They will bring new impetus and capacity for our economic growth. That said, a stable and secure environment is a prerequisite to economic growth and social development, as it provides the essential condition for safeguarding our hard-earned achievements.

In the year ahead, we will pursue the mutual reinforcement of governance and prosperity.

Last week, the Government officially launched the public consultation on the legislation for Article 23 of the Basic Law. Taking forward legislation for Article 23 is not only the constitutional duty of Hong Kong, but also an effort to improve the legal system and enforcement mechanisms for safeguarding national security in Hong Kong. The security of Hong Kong is premised on that of our Motherland, and the security of our home is premised on that of our country. Safeguarding national security means protecting people's safety, rights and fundamental interests. It is also an essential precondition for social stability and prosperity, as well as the well-being of the people.

The entire Government team, along with various bureaux and departments and public organisations, are in full support of the relevant legislative work. A number of briefing sessions have been held to explain the relevant legislative intent, applicable principles and specific legislative proposals, from the legal perspective and with specific examples. More such sessions will follow. We will be listening to the participants and gathering their views. We will make best endeavours to carry out explanatory work. Safeguarding national security will ensure that we maintain a conducive and favourable business and investment environment.

February 4, 2024

Another mega event last week was the annual Asian Financial Forum. The Forum attracted over 3,000 participants, including Mainland officials; investors from Europe, the Americas, the Middle East, and Southeast Asia; senior government officials from such countries, Central Asia and other places along the Belt and Road; as well as representatives of international organisations. Together, we engaged in closer, more in-depth and more multidimensional discussions and cooperation. Over 700 one-on-one investment project matching sessions were arranged at the Forum. It also facilitated the signing of a memorandum of understanding (MoU) and an agreement on tax and financial cooperation, which deepened Hong Kong's trade and economic cooperation with the Middle East and Central Europe respectively. Officials from the Hong Kong SAR government held bilateral meetings with guests from overseas, deepened our relationships with them, and paved the way for broader cooperation, striving to create more business opportunities for Hong Kong.

These two events were just part of a series of mega events planned for Hong Kong. The HKSAR Government will strengthen the coordination of major events and holistically promote the holding of a wide range of events with different themes and forms in the city. It is our goal to bring a greater variety of events and new experiences to our visitors and residents.

In the next two months, for example, there will be a wave of events related to innovation and technology and finance, as well as in the convention and exhibition industry. In February, there will be the first Hong Kong Green Week, featuring the Hong Kong GreenTech Summit 2024 and thematic speeches and roundtable meetings on green finance. The Hong Kong International Diamond, Gem & Pearl Show will also take place in the same month. In March, we will have the Wealth for Good in Hong Kong Summit targeting global family offices and asset owners, as well as the inaugural Global Investors' Symposium organised by the Milken Institute. Also in March will be Art Basel Hong Kong, Art Central, Art@Harbour, and the first-ever ComplexCon in Asia, all being attractions for global enthusiasts of popular culture.

Just in the first half of this year, there will be over 80 major events, covering culture and arts, sports, economy and finance, trade exhibitions, and more. These large-scale international activities or conferences fully reflect Hong Kong's unique strengths and advantages as a gateway to the Mainland. Enjoy our country's strong support while being closely connected to the rest of the world, Hong Kong plays the role of a "superconnector". Through a series of international conferences with different themes and features, we will further strengthen the exchange and interaction between local industries and their Mainland and international partners. By actively inviting guests to come, participants can personally experience Hong Kong's unique charm and cultural atmosphere. All these activities will enlarge Hong Kong's circle of friends.

In addition to international events, we will also organise local festivals and celebrations that will allow residents and visitors to experience and share the festive atmosphere of Hong Kong. In two weeks' time, we will celebrate the Chinese New Year with a variety of programmes that you can plan ahead and join with your friends and family:
From 4-10 February, 15 large-scale Lunar New Year Fairs will be held across the territory, where members of the public can experience the festive atmosphere and purchase New Year supplies.
On 10 February (the first day of the Chinese New Year), a spectacular International Chinese New Year parade featuring fantastically decorated floats and performances by different art groups will be held in the evening.
On 11 February (the second day of the Chinese New Year), a stunning fireworks display will light up the sky over Victoria Harbour.
On 12 February (the third day of the Chinese New Year), the Chinese New Year Raceday will bring a day of horse racing action.
On 13 February (the fourth day of the Chinese New Year), the Chinese New Year Cup (a football event) will be held.

After the four-day long weekend of the Chinese New Year holiday, the first-ever "Chubby Hearts Hong Kong" exhibition in Asia will come on Valentine's Day on 14 February, featuring a red giant heart-shaped balloon with a diameter of about 12 metres floating above the Statue Square in Central. The exhibition will last for ten days and will likely be a romantic photo spot for Valentine's Day and the Lantern Festival.

For these activities, whether they are innovation and technology events, financial conferences, festive celebrations, or sports events, it is most important to gather the support of the community and create an atmosphere of full participation. The active collaboration and participation of different industries such as the tourism sector, hotels, shopping malls, retail, and dining will help create a vibrant atmosphere and even stimulate spending, thus creating more business opportunities.

We will also strengthen internal coordination and establish effective mechanisms to ensure that the events would be smoothly and successfully held. The Deputy Financial Secretary is leading an inter-departmental coordination group, with representatives from relevant policy bureaux, departments, and statutory bodies as members, set up to ensure that the events will receive adequate support and get value-added. We will also suitably remove barriers and restrictions in different areas with a view to maximising the economic and social benefits of the events.

In this process, it is crucial to continuously improve the quality of products and services, providing a great "event experience" for both tourists and residents. To this end, we are making great strides together with the trades and industries, from enhancing capacities in manpower and facilities to better rolling out publicity, marketing, and different services.

January 28, 2024

We have achieved our objectives in this trip. First, we told the good stories of Hong Kong and China. The overall trend of China's long-term growth will not change, and China will stay committed to the fundamental national policy of opening up, and continue to provide a strong impetus to the development of the world economy. On the other hand, with the long-term implementation of the "one country, two systems" principle in Hong Kong, we will play our continued role as an important gateway, bridge and platform connecting our country with the rest of the world. We will step up efforts to promote financial services and innovation and technology (I&T) as the dual engine of Hong Kong's future growth. At the same time, we will facilitate regional green transformation through harnessing green technology and developing green finance; press ahead with developing emerging fields such as digital assets in an orderly manner; and proactively attract enterprises, investment and talent, so as to drive Hong Kong's economy towards higher quality development.

Joining me on this trip were the Secretary for Commerce and Economic Development, representatives from the Hong Kong Exchanges and Clearing Limited, the Airport Authority Hong Kong and the MTR Corporation Limited, as well as a few other members of the Hong Kong Inc. Together we exchanged views extensively with global political and business leaders, and engaged actively in publicity and promotional activities as a collaborative effort to tell the good and true stories of Hong Kong to the world.

Second, we have expanded Hong Kong's circle of friends and established a wider network of contacts, laying good foundations for future in-depth exchanges and co-operation. During this visit, I met with representatives of the political and business communities from various countries, including the Middle East (e.g. Saudi Arabia, Bahrain, Qatar), the Belt and Road countries (e.g. Kazakhstan, Mongolia), as well as Europe and the Americas (e.g. Italy, Peru). I also met with the heads of international organisations, e.g. the President of the World Bank Group and the Director-General of the WTO, to brief them on the latest developments in Hong Kong as it enters a new stage.

Our efforts of inviting visitors to come and reaching out to the world have begun to bear fruits. At this Annual Meeting, quite a number of delegates from the political and business communities proactively contacted and arranged meetings with me and other members of the Hong Kong Inc. They hoped to gain a deeper understanding of the latest developments in the Mainland and Hong Kong, and the opportunities that came with us. Officials and delegates we met generally share the view that China and the developing Asia are the key drivers of global economic growth. They were keen on exploring the markets and developments in the Mainland as well as the entire Asia through Hong Kong, an international platform that connects the Mainland with the rest of the world.

Third, the trip has paved the way for our work in the future in attracting enterprises and investment, as well as opening up new markets. During the visit, I met with business leaders from major multinational corporations and unicorn companies in the I&T sector, as well as representatives from international financial institutions, investment funds, airlines and logistics copmanies, insurance groups, professional services organisations, fintech firms, etc. I explained to them Hong Kong's advantages in financial services, professional services and I&T, as well as our first-rate business environment. More importantly, I invited them to come to Hong Kong to see for themselves the development opportunities in the relevant industries. I also encouraged them to invest and establish a presence in the city, and use Hong Kong to grow their business.

The theme of the WEF Annual Meeting 2024 is "Rebuilding Trust". The complicated global environment at present, coupled with geopolitical tensions, unilateralism, protectionism, etc., has fragmented the world economy and made it more fragile. This has put a drag on global economic growth and made recovery more difficult. As indicated by the Global Risks Report 2024 published by the WEF, most respondents took a negative view of the global economic outlook in the next two years. They also pointed out that economic uncertainties would put tremendous pressure on many economies across the globe, and people in the low and middle income groups would suffer.

In light of the challenges ahead, many political and business leaders attending the Annual Meeting agree that countries around the world should strengthen communication and rebuild trust, strive for the return of a rules-based multilateral trading system with the WTO at its core, and work together to facilitate free trade and investments. Only by doing so could we achieve better global economic recovery and mutually beneficial, inclusive and sustainable development.

As Premier Li Qiang said in his special address at the Annual Meeting, in the current global environment, countries should cherish and enhance cooperation, and work more closely in the following five areas: macroeconomic policy coordination, international industrial specialisation, technology, green development and North-South and South-South co-operation. His five proposals are in line with the trend of progressive human history, and provide specific and solid options for fostering further global economic recovery in the macro environment currently full of uncertainties.

Given the various external uncertainties, Hong Kong, as a small and fully open economy, will face challenges in the short term. In preparing for the upcoming Budget, we will continue to keep a close watch of the latest developments of our economy, and try our best to roll out appropriate and balanced measures with due regard to our fiscal position. We will endeavor to maintain our economic vitality and strengthen public confidence in the future of our economy.

January 21, 2024

In fact, since the fourth quarter of last year, some economic indicators of the Mainland have continued to improve. Industrial production, services production and retail sales, among others, have seen accelerated growth, while fixed asset investment has remained stable. Foreign capital inflows into the China Interbank Bond Market (CIBM) increased by RMB251 billion last November, the second largest monthly increase to date, reflecting the gradual improvement in the investment market sentiment, and that the market is redeploying and waiting for opportunities. The Central Economic Work Conference held last month called for continued efforts to pursue progress while ensuring stability, consolidate stability through progress, and prioritise development before addressing problems. It emphasised counter-cyclical and cross-cyclical adjustments of macro policies, and further solidified the future priorities.

Indeed, Hong Kong's asset market has been under pressure over the past year given the high interest rate environment and a number of unfavourable external factors. However, it is also true that investment opportunities have become more attractive, and capital is looking for investment opportunities. Total deposits in Hong Kong amounted to about HKD$16 trillion, increasing by 4.1% in the first 11 months of last year, of which Hong Kong dollar deposits amounted to HKD$7.6 trillion, an increase of 1.7% from the same period last year. Along with the preliminary figures in December, the projected growth of total deposits for 2023 is estimated to be over 5%. Last year, Southbound trading of Stock Connect brought an inflow of HKD$250 billion to the Hong Kong stock market. The two-way capital flow figures have indicated that there continues to be a net inflow of funds.

In fact, our wealth management business is well-positioned to bring enormous opportunities to Hong Kong's financial and professional services industry, with relevant industry report (BCG Global Wealth Report 2023) projecting a 7.6% annual growth for our wealth management business from 2022 to 2027. Hong Kong's professional, reliable and efficient wealth management services, coupled with our efforts to promote the development of the family office business, and the re-launch of the Capital Investment Entrant Scheme, etc. over the past year, will provide further impetus to Hong Kong's asset and wealth management business.

In addition, the development of industries has also accelerated. In recent years, we have actively spurred the development of the innovation and technology industry in Hong Kong, such as artificial intelligence and data science, biomedicine, fintech, green finance and Web 3.0. After years of efforts, their ecosystems have gradually taken shape. Entrepreneurs and scientists are racing hard on the new technology track, hoping to seize the first-mover advantage. With the strong support of our innovation and technology policies and resources, a number of strategic enterprises have gradually settled in Hong Kong, followed by quite some private equity and venture capital funds in search of quality investment opportunities here.

In fact, the rule of thumb in global investment is always about looking for the most worthy investment opportunities. What international investors are concerned with is not past figures but potential growth for the future, which is more crucial to them. Many of those who are familiar with the Hong Kong market agree that the city is one of the most ideal options for investment. At the WEF Annual Meeting this year, I aim to introduce the latest developments and opportunities in Hong Kong and the Mainland to investors who have not visited here for some time.

The theme of the WEF Annual Meeting 2024 is "Rebuilding Trust". There are about 200 countries across the globe, which are at different stages of development with diversified economic situations and social needs. Building an atmosphere of trust is therefore a matter of not only whether various countries could join hands to foster greater global economic growth, but also how people all over the world could benefit from such economic growth in general. This is what fostering economic growth is all about, and why rebuilding trust is so important.

January 14, 2024

From these and some other consultation sessions, we have learnt that members of the community do share some common views and concerns despite their different backgrounds. First, many residents consider that in managing public finances, the Government should seek to achieve a fiscal balance. Second, we should seize the opportunity to go all out to boost the economy and strive for development, with a view to injecting new growth impetus for Hong Kong. Third, there is a need to further improve people's livelihood.

In fact, the Government has deployed substantial resources to combat the pandemic over the past few years. At the same time, there has been a rapid increase in public expenditure. Government expenditure must now enter a period of consolidation.

We are determined to consolidate public finances and gradually restore fiscal balance by controlling expenditure and increasing revenue. Maintaining a healthy fiscal position is one of the keys to ensuring sustainable and steady development of our economy and society. The process, however, must go hand in hand with reality and with the concerted efforts of the community through ample communication. It cannot proceed too slowly or too hastily. During the process, we need to carefully assess the tolerance level of different sectors of society, and the operating conditions of different industries. For the most vulnerable groups in the community, we must ensure that they receive the necessary support and basic public services under the social security system.

The Government must take appropriate measures to increase revenue. That said, at a time when we are striving to boost economic development and attract enterprises and talent, we must take the actual circumstances and current development into account when we consider measures to raise government revenue. For example, we need to maintain Hong Kong's competitiveness in the international market and continue to attract enterprises and investments; we need to maintain and reinforce business confidence while avoiding impeding the momentum of local economic recovery; and we need to maintain the advantages of our simple and low tax regime and bear in mind the burden of our residents.

For example, some fees and charges for certain public services have not been adjusted for a long time; while income from certain services provided under the "user-pays" principle has been falling far short of cost recovery. It is, perhaps, time for review.

In the long run, the key to increasing government revenue lies in vibrant economic development. We must promote high-quality development in Hong Kong and facilitate the upgrading of traditional industries and explore new economic growth potentials, with the aim of growing Hong Kong's economic pie and building a more resilient growth momentum to bring benefits to different sectors of the community. It is only through these efforts that we can expand and diversify the sources of government revenue to better serve the needs of social development and public services.

For promoting high-quality development of Hong Kong's economy, it is essential that we actively integrate ourselves into national development and align with national development strategies. We must consolidate and enhance Hong Kong's development in the "eight centres", and seize the opportunities arising from the development of the Guangdong-Hong Kong-Macao Greater Bay Area and the Belt and Road Initiative. Here, two points are important:

(1) For the existing industries with clear advantages, such as finance, trade and high value-added services sector, we will continue to enhance our competitiveness, seek new breakthroughs, develop new growth potentials and tap into new markets in order to achieve higher and more robust growth with greater sustainability.

(2) We will step up the development of new industries where we enjoy clear advantages, in particular the innovation and technology, by attracting strategic enterprises and relevant talent, allocating resources to support research and development (R&D), as well as promoting the commercialisation of R&D outcomes and development of industries.

Meanwhile, we also have to invest in the expansion of Hong Kong's development capacity. Past experience has suggested that, for long-term development, we must maintain consistency in the formulation and implementation of policies. Obviously, we will take appropriate measures to respond to the short-term market conditions as the circumstances may require. Nevertheless, efforts on creating land reserve, building transport infrastructure and maintaining stable housing supply should not be slowed down, let alone stopped, due to short-term market conditions, so as to enable the Government to make flexible deployments to address market needs and public aspirations. This is pivotal to achieving not only our stable and sustainable development, but also the continuous improvement of people's livelihood.

It is true that long-term infrastructure projects require longer-term investments. By fomulating appropriate financing arrangements and leveraging market capital, such as investing with private investors and long-term investment funds in individual projects, we can mobilise different sources of funds to jointly support Hong Kong's development.

During the rest of the Budget consultation period, we will continue to humbly listen to opinions from all sectors of the community, pay close attention to latest changes in the social and economic landscapes, and assess the trends in the external political and economic environment. We will strive to ensure that our resource planning for the coming year will provide us with the necessary support to embrace challenges as opportunities and turn difficulties into strength, thereby enabling Hong Kong to grasp new opportunities and forge ahead steadily.

January 7, 2024

Looking back on 2023, Hong Kong has embarked on the road towards full normalcy. Our normal travel and exchanges with the Mainland and the rest of the world have gradually resumed. The economy has returned to growth with unemployment rate falling to a low level and inflation staying moderate. Meanwhile, we are also faced with numerous challenges such as heightening geopolitical tensions, adjustments to the global supply chains, interest rates that remained at a higher level, a weak external economic revival, as well as changes in consumption pattern of our residents and visitors. All these have put pressure on our merchandise exports, economic recovery and asset market performance.

To strengthen economic recovery, we launched another round of consumption vouchers in early 2023 and have been exploring ideas and various activities in order to stimulate spending. Early this year, we organised a series of "Happy Hong Kong" events, including Gourmet Marketplaces, Farmkets and the Harbour Chill Carnival, hoping to offer more places and activities for the public to go enjoy and inject more positive energy into the market after three years of living with the pandemic.

To spice up the city's nightlife, we then launched the "Night Vibes Hong Kong" event. Apart from the popular Waterfront Carnivals held earlier at various harbourfront sites, the recent Temple Street Night Market has also been well received by members of the public and tourists alike. I spent some time visiting Temple Street yesterday and was delighted to meet our fellow residents and a lot of tourists from the Mainland, nearby regions and all the way from America and Europe. Together we enjoyed world delicacies at the food stalls, talked about the history of Temple Street and the origin of various snacks, and extended New Year's greetings to each other in a relaxing and pleasant atmosphere. I was told by some tourists that they visited Temple Street as the place was famously unique, and they were pleasantly surprised to find the night market food stalls set up as part of the Temple Street Night Market.

In the coming year, we will have even more mega events and activities that highlight Hong Kong's diverse and inclusive east-meets-west culture, as well as the advantage of its convenient connectivity with the Mainland and the rest of the world. By organising more events with different themes, orientations and contents, and injecting more new elements and experience into them, friends from the Mainland and overseas will be more likely and willing to revisit Hong Kong, making this city an ideal destination for business, cultural experience, leisure travel and family vacations.

These large-scale activities include sports, arts and cultural, and trade and financial events. Regarding sports events, there will be the Hong Kong Marathon (January), Hong Kong Sevens (April), Hong Kong International Dragon Boat Races (June) and Hong Kong Cyclothon (October), amongst others. These events do more than attract numerous contestants from different parts of the world; they also draw to Hong Kong a large number of spectators who are sports enthusiasts.

For arts and culture, the Hong Kong Arts Festival held in February, the Hong Kong Entertainment Expo, Arts in Hong Kong and Art Basel in March, as well as the Hong Kong Book Fair in July, are some of the exciting events to which many of us look forward. Among them, Art Basel will be fully restored to its pre-pandemic scale, with the participation of over 240 art galleries from 40 countries and regions.

On trade, as Hong Kong is an international trade centre, we serve as the most important exhibition and sourcing platform each year for many industries and merchandises, such as jewellery, timepieces, wines and electronic products. The Hong Kong International Jewellery Show and the Hong Kong International Diamond, Gem & Pearl Show held early this year brought together over 2 500 exhibitors and attracted over 60 000 buyers from 130 countries and regions to Hong Kong. These exhibitions will be held again next February.

As far as finance is concerned, various large-scale international financial events which were successfully held in Hong Kong this year had attracted a host of leaders from top-notch financial institutions from across the globe, fully showcasing Hong Kong's status as an international financial centre. Looking ahead, a series of large-scale international financial events will be held one after another next year, including the Asian Financial Forum in January, East Asia Insurance Congress in September, and FinTech Week and Global Financial Leaders' Investment Summit in November.

In addition to "bringing in" visitors, we have also been "reaching out" to the rest of the world over the past year, making visits to places from the Mainland to Southeast Asia, Europe, the United States and North Africa. Through attending international conferences and conducting business visits, we have strengthened our efforts to explain to the business and financial sectors in those places Hong Kong's latest development and the new opportunities that come with it, while actively attracting enterprises, investments and talent to Hong Kong. These efforts have enabled us to consolidate our connection with the rest of the world in respect of finance, trade and business, and expand our "circle of friends". Next month, I will attend the World Economic Forum Annual Meeting again in Davos, Switzerland, where I will introduce our new strengths to top political and economic leaders worldwide.

Over the past year, we have also pressed ahead with the development of our finance-innovation and technology (I&T) dual engine. With regard to I&T, we have speeded up efforts in promoting I&T industrialisation, and achieved some progress in attracting strategic I&T enterprises, including a major international pharmaceutical firm and a leading new energy company, to settle in Hong Kong. These enterprises will bring substantial investments and jobs, and attract the upstream, midstream and downstream partners of their respective industry chains to the city, helping to enrich our I&T ecosystem and accelerate the development of our I&T sector. In respect of finance, we have strengthened co-operation with such new markets as the Middle East and ASEAN, and welcomed the listing of Asia's first Saudi Arabia ETF in Hong Kong at the end of the year. In addition, we have continued to deepen our connectivity with the financial markets in the Mainland. New initiatives such as Swap Connect and the HKD-RMB Dual Counter Model were launched during the year, further expanding the scope and capacity of the mutual access mechanism and enhancing our function as an offshore RMB business hub.

I believe that having sown the seeds through all the efforts mentioned above, we will reap a bumper harvest in the coming year and beyond.

At the end of each year, we always look back and try to learn from experience; but it is also the time to look ahead and prepare ourselves for new challenges. Challenges, though possibly revolving around the same themes each year, may still present new issues in light of new development trends and changing environments. This requires us to keep exploring new pathways and new solutions. We must therefore stay curious and humble with an open mind. Keep learning, be bold to innovate, and respond flexibly to the fast changing environment and open up new horizons. As we welcome the arrival of 2024, let us join hands, support one another and paint a brighter future with vibrant colours!

December 31, 2023

There is still one more week before we say goodbye to 2023. Many festive decorations and lightings are dotting all over our popular streets and shops. More people are seen visiting our busy districts and tourist attractions. We also see many visitors coming to Hong Kong to feel the festive atmosphere and taking pictures at various "checked-in" spots across the city.

I visited Tai Kwun at Hollywood Road, Central earlier and ran into many members of the public and tourists. In talking with them, I learnt that many overseas and Mainland visitors had found the festive atmosphere in Hong Kong to be strong and full of characteristics. They also said that this was exactly the appeal of Hong Kong as an international city, which attracted them to come to experience for themselves the unique vibes here.

Hong Kong is a cultural melting pot of East and West. Not only do we celebrate major western festivities, we also attach great importance to traditional Chinese ones. Over the recent Winter Solstice, fellow residents were busy meeting up with their families to celebrate the occasion, and many restaurants enjoyed decent patronage at dinner time. Relatives and friends would chitchat at get-togethers, recounting what had happened during the year and cherishing the precious moments being spent together. Apart from offering an opportunity for people to meet, these major festivities also provide a good stimulus for local consumption.

Just over the last couple of weeks, we are offering new places for our fellow residents and tourists to enjoy themselves and spend, including the night market at Temple Street and the 57th Hong Kong Brands and Products Expo (HKBPE), which is now being held in Victoria Park.

The night market at Temple Street has received positive feedback from the community since its launch, attracting crowds of visitors, making the area particularly busy on certain nights. By converting a historic place with unique street culture into a night market full of Hong Kong characteristics and offering delicacies of different places, we are showcasing the mix of "old" and "new", hoping to bring new attractiveness to the district.

I would like to thank the relevant government departments, the Hong Kong Tourism Board, various business associations and local communities for their full support in delivering the idea of creating a more lively Temple Street night market in just a few months. The night market has demonstrated that many of our districts have rich and quality tourism resources. By injecting new elements and new ideas, revitalising the traditional characteristics and blending in new features, we would be able to attract visitors and at the same time provide more interesting places for members of the public to visit.

A few days ago, I also invited several bloggers from the Mainland's social media platforms to join me in visiting the HKBPE. With a long history and a local flair, the HKBPE is a large-scale fair focusing on promoting local brands and products ranging from electrical appliances, housewares to gourmet food and drinks. The HKBPE has attracted quite many locals and Mainland visitors. They have commonly expressed their love for this "taste of Hong Kong".

Whether it comes to the HKBPE or other Hong Kong products and services, constantly reinventing ourselves and creating breakthroughs is crucial for new characteristics to emerge and allowing us to stay ahead of the competition. It is also the most important element in attracting local consumers and visitors to return. As long as we continue to innovate, grasp the market pulse, understand customer needs and focus on user experience, I am confident that the "Hong Kong brand" will become even more competitive, and we will win new business opportunities locally as well as in overseas markets.

December 24, 2023

I believe that we all have some basic ideas of the situation of the macroeconomic environment and public finance next year. The external environment is fraught with challenges. In the year, we lowered our full-year forecast for Hong Kong's economic growth. In view of the substantial increases in government expenditure over the past few years and the real pressure on public finance, we will need to consolidate our expenditure and exercise more prudent control. That said, it is imperative to cater for the needs of the community and the underprivileged groups as well as to invest for our future. Therefore, we must open up new horizons through accelerating economic growth. Simply put, we must grow the pie. That means pursuing development to foster growth, which will open up new room and let us have new resources to address various needs. We must make an all-out effort to drive economic growth, strive for development and bring tangible benefits to the people, thus making our economic pie bigger and better, with greater diversity and resilience. We will also need to achieve more inclusive development to allow members of the public to benefit.

Since the full resumption of normal travel with the Mainland and the rest of the world early this year, Hong Kong has embarked on the road to post-pandemic normalcy. The economy is registering positive growth, while the job market is improving and inflation is mild. However, such factors as high global interest rates, geopolitical tensions and adjustments to the supply chain have put pressure on the momentum of our economic growth. The asset market has remained weak. Government revenue has therefore been inevitably affected. In particular, stamp duties on stock transfers and property transactions as well as land premium fell substantially short of the estimates made at the beginning of the year. For 2023-24, after taking into account the proceeds from bond issuance, the consolidated fiscal deficit of the Government is expected to be slightly over $100 billion, higher than the $57 billion forecast when the Budget was announced early this year. Looking ahead, the geopolitical situation will remain complicated and volatile next year, which will place a drag on Hong Kong's economic growth, and make it difficult for our asset market-related revenue to come back strong quickly. Therefore, the possibility of registering deficit for another year cannot be ruled out.

In fact, excluding the money spent on anti-epidemic measures and counter-cyclical measures rolled out to stabilise the economy during the pandemic, government expenditure rose by about 40% from over $470 billion in 2017-18 to over $660 billion in 2022-23, far exceeding the increase in government revenue over the same period. During this period, the Government has logged deficits for three years, with our fiscal reserves dropping from $1,102.9 billion to $834.8 billion.

The significant rise in government expenditure over the past few years has indeed enhanced public services and benefited the community. However, government expenditure, after a period of rapid increase, must undergo a process of consolidation during which effective control and even a proper reduction of expenditure are unavoidable. This is essential to maintaining healthy public finances as well as ensuring sustainable and steady economic and social development.

The Government will continue to maintain zero growth in the civil service establishment this year. A Productivity Enhancement Programme has also been implemented, under which bureaux and departments are required to cut 1% of their recurrent expenditure in 2024-25 and a further 1% in 2025-26. The resources thus spared would be re-allocated internally for enhancing existing and introducing new public services.

In controlling the growth of expenditure, we will carefully consider and balance the needs for social and economic development, in particular the conditions of the most vulnerable and needy in the community.

The most effective and practical way to increase government revenue is by growing the economic pie and driving up revenue through economic development. We must continue to make ourselves more competitive, seek new breakthroughs and develop new areas of growth. It is the only way for Hong Kong to achieve a higher, faster and more sustainable growth.

In terms of promoting economic development and enhancing competitiveness, we have been actively nurturing and developing new industries, establishing new partnerships, attracting new capital and opening up new markets over the past year. For instance, we have achieved some progress in attracting strategic innovation and technology (I&T) enterprises to Hong Kong. These enterprises will bring in considerable investment and jobs, and attract the upstream, midstream and downstream partners of their respective industry chains to the city. All this would help enrich our I&T ecosystem and facilitate the accelerated development of our various industries. With these enterprises flourishing and making profits in Hong Kong, they will bring additional tax revenue to the Government. Moreover, we are committed to enhancing the competitiveness of our financial market on all fronts, by further deepening mutual access between Hong Kong's and the Mainland's financial markets, and strengthening co-operation with the Middle East and ASEAN regions. I am sure that we are heading in the right direction on the road to long-term economic development, but we must still work harder and go full steam ahead.

Although Hong Kong is now facing various challenges, past experience has told us one thing – the greater the challenge, the bigger the opportunity. I am convinced that as long as we plan ahead and work in concert, leverage our strengths and make the best use of resources, we will surely be able to open up new horizons for the city.

Note: Members of the public may share their views on the 2024-25 Budget through the following means -

Dedicated website: www.budget.gov.hk
Dedicated Facebook page: www.facebook.com/BudgetGovHK
Email: budget@fstb.gov.hk
Telephone: 2810 3768
Fax: 2147 5770
Post: Budget Consultation Support Team, 24/F, Central Government Offices, 2 Tim Mei Avenue, Tamar, Hong Kong

December 17, 2023

Over the past few weeks, the atmosphere of the DC election has been growing in intensity. Many fellow residents and colleagues told me that they would go and vote in the DC election. They see this as fulfilling their civic responsibility; but they also care much about their community and hope to elect the right people for building a better community together.

In today's DC election, there are a total of 44 geographical constituencies in the 18 districts across the territory, with a total of 171 eligible candidates running for 88 seats. There is competition in each constituency. In one district, there are 6 candidates. This election has truly restored the original mission of the DC to serve the community and focus on district matters. Candidates have different emphases in terms of their visions and manifestoes. Some focus on the promotion of green initiatives, while some care about fostering a more vibrant local economy. Please cast a vote on the candidate you prefer.

Nothing about people's livelihood is trivial. Community affairs involve matters of various scales, from road junction designs to greening or recreational facilities, and from environmental hygiene to better co-ordination of local stakeholders' needs in taking forward major infrastructure projects. For community work to be thoughtful and effective, there needs to be healthy interaction between public views and policy measures. Apart from communicating public views, DC Members should also put forward constructive advice on community affairs to the Government.

For example, our 18 districts are full of valuable resources with distinct character, such as local streets, restaurants, shops historical buildings, and even "checked-in" spots. These places, where properly explored and promoted together with interesting district stories, can attract more local and inbound tourists who will visit and spend there, thus boosting the local economy. DC Members understand their communities best. They can put forward constructive proposals to the Government for local residents, and contribute to stimulating the local economy.

Looking forward, in addition to working together to build a better community, we will also focus on promoting economic development and improving people's livelihoods. It is critical that we cope with the highly complex external situation as well as cyclical changes in interest rates and the broader economic environment, with calm and flexibility. In a bid to enhance the competitiveness, resilience and diversity of Hong Kong's economy, we need to develop new industries, seek new partnerships, attract new capital and explore new markets.

After more than a year of hard work, the new-term Government has made some good progress in promoting the development of new industries. Many innovative and technology (I&T) strategic enterprises are coming to Hong Kong. Following the landing of global pharmaceutical giant AstraZeneca which will establish a research and development (R&D) centre here, there was another exciting piece of news: last week, the Hong Kong Science and Technology Parks Corporation and Contemporary Amperex Technology Co. Limited (CATL) signed a Memorandum of Understanding. CATL has officially landed in Hong Kong. It indeed has cast its vote of confidence in our future I&T development.

As a global leader in electric vehicle batteries and energy storage batteries, CATL will establish its global headquarters and R&D centre in Hong Kong, investing a total of HK$1.2 billion and creating about 500 R&D positions. With more and more strategic enterprises setting up their businesses in Hong Kong, they will also bring together their upstream, midstream and downstream enterprises in their respective industries, thus promoting the development of a more vibrant I&T ecosystem in Hong Kong and creating strong impetus for the entire I&T cluster.

In terms of attracting new capital and opening up new markets, our relationships with different regions, such as the Middle East and Association of Southeast Asian Nations, are quickly getting closer. Last week, Saudi Arabia-based Future Investment Initiative (FII)'s inaugural PRIORITY Summit in Asia was successfully held in Hong Kong, attracting over 1,000 participants. About two-thirds of them were from the Middle East and other parts of the world, including political and business heavyweights from Africa and Latin America.

I still remember that after I attended the FII Summit in Riyadh last October, I started discussing with FII about organising an Asian edition of the Summit. After more than a year, this has become reality: we all witnessed its Summit in Asia held in Hong Kong, and felt the positive feedback that the Summit generated. This has shown that so long as we accurately grasp the global situation and work to build mutual trust with our partners, more good outcomes of collaboration will materialise.

The full implementation of the principle of "patriots administering Hong Kong" has better secured Hong Kong's social stability, allowing us to focus our efforts on pursuing economic growth, advancing development and improving people's livelihood. Together, let's look forward to a better community with more inclusive, diversified and robust economic development; and a society that is firmly moving forward, where everyone can enjoy life.

December 10, 2023

The listing of this ETF is a new milestone on strengthening the two-way capital flows between Hong Kong and the Middle East, highlighting Hong Kong's crucial function as a key link for financial connectivity under the Belt and Road Initiative.

As pointed out by the representative of the Saudi Arabia's Public Investment Fund (PIF), the launch of the product in Hong Kong offers Asian investors a unique opportunity to understand Saudi Arabia's development. They would be able to see more clearly Hong Kong's role as a "dual gateway" connecting Mainland China and global investors and financial markets. Hong Kong's deep pool of capital and talent, as well as its vibrant financial ecosystem, are on display. It can be anticipated that following the listing of the ETF, cooperation between Hong Kong and the Middle East will further expand, with deeper and broader two-way flows of capital, talent, and information.

Since the beginning of this year, the performance of Hong Kong's stock market has been depressed to a certain extent due to factors such as global interest rate hikes, geopolitical tensions, and uncertain recovery prospects. However, certain segments of the market have still achieved remarkable development. Taking the ETF market as an example, the inclusion of ETFs in Stock Connect in July last year has further expanded the investor base in the Hong Kong market. Together with the implementation of various facilitative trading measures, Hong Kong's ETF market has continued to grow this year, with a daily average turnover of HK$11.6 billion in the first ten months, representing a 25% year-on-year increase. Currently, Hong Kong's ETF products cover thematic investments, fixed income, and virtual assets, with trading counters available in Hong Kong Dollar, the Renminbi, and US Dollar. Hong Kong is also the first Asian market to offer Bitcoin futures and Ether futures ETFs. The listing of the Saudi Arabia ETF is expected to further enhance the global connectivity of Hong Kong's ETF market and consolidate our position as a leading ETF market in Asia.

While the global political and economic environment has brought different kinds of challenges to markets around the world, it has also brought new opportunities and possibly even more new partnerships.

According to the International Monetary Fund (IMF), the Asia-Pacific region as a whole is forecast to grow by 4.6% this year, higher than the global average and contributing to two-thirds of global growth. Next year, Asia's growth is expected to remain at about 4.2%. Meanwhile, the ten ASEAN member states, with a relatively young population and a growing middle class, have immense growth potential. According to the World Economic Forum's forecast, ASEAN will replace Germany as the world's fourth largest economy by 2030.

The Middle East is also a strong source of development momentum. For example, Saudi Arabia has put forward "Vision 2030", which proposes forward-looking directions and a concrete action plan to promote the structural transformation and diversification of the country's economy. At the 2023 United Nations Climate Change Conference (COP 28) which has just begun in Dubai in the United Arab Emirates, countries in the Middle East also showed enthusiasm in participating in promoting energy transformation. In recent years, in light of geopolitical risks, they have also recognised the need to diversify their investments and channel them into different categories. Hong Kong, as an important hub connecting the Mainland, Asia and global capital markets, would be an ideal choice for them to invest in. Timing and geography have created new opportunities for Hong Kong to deepen financial cooperation with the Middle East on various fronts.

It is, of course, important to connect with people. Over the past year, the Chief Executive, myself, other Government officials, and members of the Hong Kong Inc. paid a number of visits to the Middle East and the ASEAN countries. We proactively reached out to local political and business leaders and stepped up efforts to promote Hong Kong's new advantages. There has been a strong willingness on both sides to strengthen collaboration. Through persistent and diligent efforts, we have built wider and stronger foundations of mutual trust and created possibilities for deeper co-operation.

On Thursday and Friday this week, Saudi Arabia's Future Investment Initiative Institute will organise the inaugural FII PRIORITY Asia Summit in Hong Kong. This Summit, with the theme of "Megatrends Shaping Humanity", will gather representatives of the Saudi government and sovereign wealth fund. It will also bring together political, business, financial leaders and investors from all around the world to explore Asia's rapid urbanisation and digital transformation, and how Asia will drive the megatrends of tomorrow. The fact that the Summit is coming to Asia for the first time and has chosen Hong Kong as the destination is significant. It symbolises Hong Kong's important status in connecting the Middle East and Asia. I will attend one of the panel discussions and discuss with other speakers on how to strengthen cooperation among countries in the Global South, and promote more inclusive and sustainable development for the global economy.

While we strive to build relationships externally with our partners in Asia and the Middle East to attract new capital, we also keep reinforcing the exchanges and connections with Mainland provinces and cities to jointly promote collaborations in various fields, with a view to capitalising on the opportunities brought by the domestic circulation. Last week, the Fifth Plenary Session of the Hong Kong/Beijing Co-operation Conference was held in Hong Kong, during which the two cities signed a number of co-operation documents, including the Memorandum of Understanding (MOU) on Enhancing Hong Kong-Beijing Co-operation on the Development of the Financial Industry, which enables us to start a new chapter beyond our traditional ties of financial co-operation with Shanghai and Shenzhen. Earlier in June this year, the Hong Kong Exchanges and Clearing Limited signed an MOU with the Beijing Stock Exchange in support of cross listings of qualified listed companies in each other's market. The Exchanges of the two places will also work closer together in such areas as green finance, financial technology and exchange of talent.

The world is undergoing profound and accelerated changes unseen in a century in a complicated political and economic landscape. Hong Kong, being a small, fully-open and externally-oriented economy, would be greatly affected by changes in the external environment. We must strive to find new partners and develop new markets, so as to make our economy and financial market more resilient. We must see the situation clearly and respond sensibly. The road ahead will be full of challenges. But as we make good use of our advantages and seize the coming opportunities, we can certainly move forward firmly and steadily.

With efforts made to consolidate our status as an international financial centre and promote economic development, we will have greater room to improve people's livelihood. Community affairs, be they big or small, are closely related to our everyday life and require our attention and participation. The District Council Ordinary Election to be held on 10 December (next Sunday) presents us with a vital opportunity to take part together in community building. Please remember to come out to vote. Let's join hands to make our community and our home a better place!

December 3, 2023

Take the development of I&T and investment promotion for example. With the preparatory work done by the Office for Attracting Strategic Enterprises and other colleagues, during my earlier visit to Europe, I visited the leading pharmaceutical firm AstraZeneca in the United Kingdom to encourage them to conduct research and development (R&D) work in Hong Kong. It can be said that the sincerity and efforts of the SAR government, as well as the potential of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and the huge market of the entire Mainland and Asia, are the main factors for many I&T companies to actively consider settling in Hong Kong. Recently, I attended the Plaques Unveiling Ceremony for the establishment of AstraZeneca's R&D Centre and iCampus in Hong Kong. This is the first time that one of the world's top ten pharmaceutical companies set up an R&D centre in Hong Kong. It is expected that AstraZeneca will set up an R&D team of about 100 people in Hong Kong in a few years. As our OASES Partner, AstraZeneca also organised a group of about 80 Mainland pharmaceutical and biotechnology enterprises to visit Hong Kong to get a first-hand understanding of Hong Kong's I&T ecosystem and business environment. With strategic enterprises working together with their upstream, midstream and downstream enterprises, they will help us create a more robust I&T industry chain and a vibrant ecosystem.

When I was in San Francisco, the United States, attending the Asia-Pacific Economic Cooperation meetings, I also met with two companies in the Silicon Valley. One of them manufactures advanced medical equipment; and another is a start-up that combines artificial intelligence with biotech. Both of them are highly interested in landing in Hong Kong, and are actively considering setting up R&D centers and regional headquarters to speed up their expansion plans in Asia.

From leading international pharmaceutical firms to Silicon Valley start-ups, as well as many overseas companies in different industries, they are actively considering landing in Hong Kong, or have decided to do so. The institutional advantages of "One Country, Two Systems" are the key strength of Hong Kong that attracts them: Hong Kong continues to implement the common law system; has a comprehensive intellectual property protection system; the free flow of funds, goods, information and talents, which is conducive to the convergence of talents and funds, as well as the exchange and protection of innovative R&D outcomes. The Hong Kong SAR Government and Mainland regulatory authorities are jointly promoting the lawful and orderly cross-boundary flow of data within the Greater Bay Area. Hong Kong will bring together Mainland and international data at the same time, which will greatly facilitate Hong Kong's development in artificial intelligence, including R&D related to large model training or inferential applications. This also explains why we had stated in this year's Budget that we would press ahead with developing an Artificial Intelligence Supercomputing Centre.

In fact, we are making steady progress on our investment promotion work. Apart from attracting strategic enterprises, Invest Hong Kong also assisted over 330 Mainland or overseas enterprises to set up or expand their businesses in Hong Kong in the first ten months of this year, an increase of 30% over the same period last year, creating over 3 700 job opportunities for Hong Kong.

Hong Kong's unique institutional advantages and market advantages through the support from our Motherland have attracted many top-notch technology companies or startups to consider setting up operations in Hong Kong. At the same time, many venture capital or private equity funds are proactively exploring to expand their operations in Hong Kong, and one of the reasons for this is the desire to attract funding from more diverse sources, including new capital from the Middle East. In October last year, I attended the FII summit in Saudi Arabia, where I personally witnessed the vibrancy of the event and the rising business opportunities. I also encouraged them to come to Hong Kong to explore development opportunities. Next week, FII's first Asia Summit will be held in Hong Kong. Political, business, and investment leaders from the Middle East and Asia will gather here in Hong Kong. Events as such be conducive to financial and investment exchanges between Hong Kong and the Middle East.

Besides, Asia's first ever ETF investing in Saudi Arabia will be listed on the Hong Kong Stock Exchange this Wednesday. Investors will be able to trade the constituent stocks of the Saudi stock market index in Hong Kong through the ETF using HKD or RMB, and the relevant portfolio includes oil giant Saudi Aramco. The asset size of this ETF is the largest among similar products in the world, and it is a practical example of financial connectivity under the Belt and Road Initiative. I look forward to more two-way cooperation on financial products between the two places in the future, enabling broader financial connectivity and capital flows.

In fact, the Hong Kong Exchanges and Clearing Limited has successively included Saudi Exchange and Indonesia Stock Exchange into the list of Recognized Stock Exchanges, allowing companies with a primary listing on these exchanges to apply for a secondary listing in Hong Kong. Saudi Exchange brings together large-scale energy, industrial, and medical industries in the Middle East, while Indonesia Stock Exchange is the capital raising venue for many high-quality innovative companies in Southeast Asia. Encouraging companies from these two emerging markets to make use of Hong Kong for fund-raising will also provide them with greater incentives to set up operations and expand their businesses here.

While we need to keep injecting new power to fuel our economy, we should also gather forces to improve people's livelihood. Specifically, District Councils (DCs), our service platforms at the district level, will need to fulfill their roles to enhance district services, foster better community relations which promote care and mutual support, and convey public sentiment and opinions. I call on all of you to participate actively in the upcoming DC Elections on 10 December 2023. Cast your vote to express your expectations and aspirations for a better community that we can build together with team efforts.

November 26, 2023

This APEC meeting was the first one since all APEC members fully returned to normalcy after the COVID pandemic. Currently, the global political and economic situation is complex and fraught with uncertainty, and the global economy faces multiple risks. Representatives at the meetings generally considered that interest rates would remain higher for longer, and expected global economic growth to be slower in 2024 than this year, and tilted to the downside. The medium- to long-term outlook remains weak, and many countries may take two to three years to return to their pre-pandemic growth paths.

I have summarized the following observations of the APEC meetings having reflected on the meetings and events of the margins during the past few days.

(1) Global Economic Prospects and Fiscal Challenges

In the past few years, central banks in the United States and Europe have been rapidly tightening their monetary policies in response to high inflation. Many economies had no choice but to follow suit, making it more difficult to boost their economic development through loosening monetary policy in the short run. In addition, epidemic-related expenditures were substantial, leading to budget deficits for the majority of economies for consecutive years. With considerable levels of government debts, there is limited fiscal space. Under such circumstances, the strength of the economy and financial system have become more fragile. There is a need to rebuild buffers to withstand the shocks of unforeseen events.

At the same time, there is limited room to reduce necessary expenditures, such as those on social welfare and healthcare. An aging population will also increase expenditure and reduce tax revenues. Moreover, given the amount of investment needed to combat climate change and take forward infrastructure projects, the fiscal challenge in the future cannot be underestimated. Some APEC members are considering how to broaden revenue sources without compromising investments and their competitiveness.

(2) Combating Climate Change for Sustainable Development

In recent years, extreme weather events have been frequently occurring in various regions. The challenges of climate change are pressing. The investment required for green transformation is very sizable. It is estimated that Asia alone would need over US$66 trillion in the next 30 years. Governments alone would not be able to fund this.

Therefore, how to attract private market capital, and develop the related green technology industry to enhance the efficiency and effectiveness of relevant investments, is a topic being explored by many APEC members. During the conference, I shared Hong Kong's experience with other members. As the green finance centre of Asia, together with a flourishing green technology ecosystem, we can contribute to the green transformation of the entire region and even the world, especially in terms of raising funds.

(3) Promoting a more inclusive development

For the past few decades, some advanced economies had rapidly developed thanks to global economic integration. But at the same time, the widening gap between the rich and the poor had sowed the seeds of social instability. They gave rise to populism and protectionism which have disrupted international free trade and investment as well as heightened the risk of geopolitical conflicts.

During the meetings, many APEC member economies called for the need to reaffirm the world's commitment to the rules-based multilateral trading system, and to update the rules in response to the rapid development of the digital economy, e-commerce, etc. In addition, member economies recognised that in promoting economic development, whilst it is necessary to make the economic pie bigger, it is equally important to divide the pie more equitably so that all people can truly benefit from economic progress. Only by doing so can sustainable development and long-term stability and prosperity be achieved.

(4) Enhancing interconnectedness and multilateral cooperation, accelerating the development of digital economy

In recent years, geopolitical tensions have disrupted the stability of global industrial and supply chains, affecting profoundly the economies of many regions. Protectionism brings no benefit to any economy. On the contrary, more connectivity and cooperation would allow economies to play to their respective strengths and to cater to their needs. This is a more stable and sustainable mode of development.

The development of the digital economy and artificial intelligence is at different pace across APEC member economies. Whilst APEC member economies are keen to embrace the development on this front in a faster and better manner, we must at the same time manage the associated risks and allow the benefits of these developments to be widely distributed to the whole society. There is a need for more international communication and cooperation amid rapidly evolving landscapes in these areas.

(5) Sino - US Relations

The meeting between the leaders of China and the United States was under the global spotlight during the APEC meetings, whilst the economic development of our country and its impact on the global economy are also an issue of great interest to APEC member economies. Sino - US relations not only have an impact on the politics and economy of the two countries, but also the global economic outlook. Representatives of APEC member economies paid close attention to the meeting between the two leaders in the margins of the APEC meetings. Many of them were pleased and eager to see the meeting as well as more dialogues between the two leaders in the future. Moreover, representatives of APEC member economies actively approached representatives of our country at the meetings. This demonstrates the international influence and status of our country.

Hong Kong is a free, open and small economy. Our attendance at such high-level international events through participation in meetings, exchanging views and making observations, would enable us to grasp and deepen our understanding of the international political and economic situation and latest developments. This would allow us to better position ourselves and to make friends. Leveraging our international character and the unique advantages under the "One Country, Two Systems" principle, we can make greater contributions to our country and make our own development better.

November 19, 2023

Under the theme "Creating a Resilient and Sustainable Future for All", the relevant meetings will focus on building a resilient and interconnected region that advances broad-based economic prosperity; enabling an innovative environment for a sustainable future; and affirming an equitable and inclusive future for all. In the past few years, rising global geopolitical tensions, interest rate hikes and uncertainties in the pace of recovery of some major economies have caused concern for enterprises about the economic prospects. This has led them to reduce risk appetite and adopt a more prudent attitude to investing. In face of the complex and uncertain outlook, major economies should engage in more dialogues and exchanges to enhance mutual understanding, manage differences, promote cooperation, and seek solutions together to address challenges. This is essential to stabilising the situation and promoting economic development.

There are three key areas of work for my attendance at the APEC meetings and visit to the United States.

First, Hong Kong has the advantages of enjoying the strong support of the Motherland and being closely connected to the world. With the staunch support of the country, Hong Kong will diversify and accelerate its development in the future. At the APEC meetings, we hope to introduce Hong Kong's new opportunities in finance as well as innovation and technology to political and business leaders from various economies, while at the same time learn more about their state of development and strategies, as well as the changes to the global economy and its outlook.

Second, through bilateral meetings with different economies, we can expand our circle of friends and strengthen mutual understanding of each other's development directions and priorities, thus laying a better foundation for further cooperation in the future.

Third, I plan to visit local companies and meet with the business community in order to explain to them Hong Kong's favourable business environment, especially our strategies to promote the vibrant development of financial services, innovation and technology and other industries. I will also elaborate on the measures to attract enterprises and talents, as well as the business opportunities and potential in the Guangdong-Hong Kong-Macao Greater Bay Area and the Mainland as a whole. We will encourage companies and talents to come to Hong Kong to develop their businesses and explore new opportunities for collaboration.

Making new friends and engaging in more exchanges will certainly help the outside world better understand Hong Kong's new strengths and potentials as it emerges from stability to prosperity. Taking the Global Financial Leaders' Investment Summit held in Hong Kong last week as an example, global investors and financiers indicated that the market still has ample liquidity, and the challenge is how to identify regions and projects with better investment returns under the current complex and volatile political and economic circumstances. The Summit was well received by the participants, especially the video presentation by Vice Premier He Lifeng, and the in-person speeches and panel discussions by three senior officials from the financial regulators from the Central Government. They truly helped international investors better understand the Mainland's economic situation, clarified their doubts on issues of concern such as the real estate market and local government debts, and explained the Central Government's policy thinking and directions. Overall, participants generally agreed that although the Mainland economy is now undergoing some adjustments, and the process would lay a more solid foundation for its progress towards high-quality, more stable and sustainable development in the future. The Summit has certainly boosted their confidence in the economic prospects of the Mainland and Hong Kong.

The Summit was a success. In two weeks' time we will be welcoming the Bank for International Settlements (BIS) High-Level Conference. Subsequently, Saudi Arabia's Future Investment Initiative (FII) Institute will also host its inaugural PRIORITY Asia Summit in Hong Kong in early December. These events are testimony to Hong Kong's unique role under the "one country, two systems" system as a bridge and platform. Being international is a Hong Kong advantage, and it is deep in Hong Kong's DNA. We must fully leverage this advantage and continuously expand our international circle of friends, which will not only help promote our own development, but also contribute to the country's high-quality development process through the mutual reinforcement of the domestic-international dual circulation.

November 12, 2023

Hong Kong is proactively participating in the CIIE. Apart from setting up the Hong Kong Exhibition Area at the China Pavilion to showcase Hong Kong's achievements and advantages, more than 300 Hong Kong enterprises mainly engaging in food business, consumer goods, trade in services and professional services are also joining the event. Hong Kong business people are also taking part in the pavilions of medical devices and technical equipment.

This year, the Hongqiao International Economic Forum, the highlight of the CIIE, will hold for the first time a parallel session themed "Channelling Global Business through Hong Kong". At the parallel session, the Chief Executive, together with representatives of different sectors in Hong Kong, will promote the unique advantages of Hong Kong under "One Country Two Systems". I will also attend a parallel session on finance as speaker in the afternoon today, explaining how Hong Kong gives full play to its distinctive function and role as the international financial centre of the country with the advantage of enjoying strong support of the Motherland and being closely connected to the world, thereby better revitalising real economy with financial resources.

This year marks the sixth CIIE. It has highlighted the development philosophy of the country to continue opening up and achieving a win-win situation even in the face of a complex and volatile international landscape. Our country is committed to moving towards high-quality development together with the international community, and providing staunch support to the recovery of global trade and economy.

In fact, the global economy's recovery momentum has been weak this year. In light of rising unilateralism and protectionism as well as geopolitical tensions, the International Monetary Fund earlier estimated that growth would slow further to 2.9% next year.

Domestically, various factors such as the weak external environment, high interest rates, and financial market performance have, to some extent, limited the strength of the rebound in local consumption. The recently announced economic growth rate of 4.1% in the third quarter is more moderate than expected.

As for the fourth quarter, inbound tourism and private consumption are expected to remain the main growth drivers of the Hong Kong economy. Continued improvement in household income, together with the Government's various support initiatives, will provide a certain degree of support to local consumption. Nevertheless, generally speaking, taking into account the slightly weaker-than-expected recovery of the economy in the first three quarters, the full-year growth forecast to be announced this week will be lower than the projection made at the beginning of this year.

In future, we must continue to enhance the competitiveness of Hong Kong and inject energy into the economy through technological innovations and applications. Fintech is one example. Being one of the major annual events, Hong Kong FinTech Week 2023 was held last week and attracted a total of 30,000 participants from 90 economies around the world. The Hong Kong SAR Government has been actively promoting the development of Fintech in recent years, and we are now seeing fruitful results. This year, more new measures and results have been announced, such as promoting cross-boundary usage of e-CNY, implementing the connection between the faster payment systems of Hong Kong and Thailand, launching a new Integrated Fund Platform, etc. Empowerment through technology not only improves the efficiency of resources allocation in financial services, but also helps promote more product innovations, so that our residents can benefit from more convenient and inclusive financial services.

Following that, we will hold the second Global Financial Leaders' Investment Summit (the Summit) this week (6 - 8 November), with the theme "Living with Complexity". The Summit will bring together global financial leaders and representatives from Mainland financial regulators. The Summit will focus on examining the trends and changes that have far-reaching implications on the financial industry under the current highly complex global financial and investment environment. While we certainly need to be prudent in guarding against risks, it is equally important for us to keep abreast of the trends, to seize the opportunities lying ahead and to progress steadily, which are key to reinforcing and enhancing Hong Kong's competitiveness.

This year's Summit will be attended by up to 300 leaders from the world's top financial institutions, including 90 group chairmen or CEOs. By travelling to Hong Kong in person, our guests can see how Hong Kong has resumed full normalcy, and witness our new edges and opportunities. They can also take the opportunity to meet investors and clients in person to establish new business relationships, as well as their staff based here, so as to facilitate their institutions to leverage Hong Kong as a high-value-added platform for supporting their business development in the Mainland and Asia.

November 5, 2023

Take I&T for example. Over the past few years, the Government has made substantial investments and achieved notable progress in enhancing the domestic I&T ecosystem. The Policy Address outlines the direction for expediting the development of the I&T industry in Hong Kong through various measures. They include – (1) strengthening the policy drive and implementation structure. To this end, the Digital Policy Office and New Industrialisation Development Office will be established. These offices will be responsible for promoting the digitisation of public services and driving the development of new industrialisation in Hong Kong, respectively; (2) enhancing hardware facilities. This includes phased establishment of an Artificial Intelligence (AI) supercomputing centre from next year onwards, and the commissioning of the Microelectronics Centre next year. They will expedite the development of AI and microelectronics in Hong Kong; (3) creating a $10 billion New Industrialisation Acceleration Scheme. The Scheme will provide additional financial assistance to enterprises in such fields as life and health technologies, AI and data science, advanced manufacturing and new energy technologies. The funding will support the set-up of new production facilities. Moreover, the feasibility of allowing enterprises under the Scheme to employ non-local technical personnel more flexibly will be explored. These all aim to promote the downstream development of new industrialisation; and (4) strengthening cooperation with the Mainland. Efforts will be made to foster secure cross-boundary flow of Mainland data within the Greater Bay Area as soon as possible. The synergistic development of the Hong Kong Park and the Shenzhen Park of Hetao will also be promoted in collaboration with Shenzhen.

Life and health, as well as R&D in drugs and medical devices, are important areas of I&T, offering considerable economic value added. Hong Kong has a high-quality healthcare system, with our two medical schools ranked among the top 40 globally. In addition, several universities possess considerable strengths and edges in basic research and development. Meanwhile, since the reform of the listing regime in 2018, a large number of biotechnology companies have listed in Hong Kong to raise capital. This year, the Office for Attracting Strategic Enterprises has successfully attracted a number of life and health technology companies to settle in Hong Kong. Concrete proposals will soon be made too on facilitating cross-boundary data flow in the Greater Bay Area. It is evident that the industrialisation of R&D in drugs and medical devices, as well as life and health technology, is ready for take-off.

The catalyst for industrialisation in this area is the building of local clinical trial capacity and a robust local drug registration system. The Policy Address puts forward progression towards the "primary evaluation" approach for drug registration, and it is a crucial step in promoting Hong Kong's development as a health and medical innovation hub. In the short term, we will establish a new "1+" drug approval mechanism and facilitate clinical research and trials by the Hospital Authority. In the longer term, we will strive to establish the "Hong Kong Centre for Medical Products Regulation" as a standalone statutory body, thus realising the "primary evaluation" approach. Together, these initiatives will attract more local, Mainland and overseas pharmaceutical companies to conduct R&D and clinical trials in Hong Kong, and better integrate our strengths in healthcare and I&T so as to drive the relevant industries to become sectors with a competitive edge.

Apart from the industry-oriented development approach, we will step up efforts in attracting enterprises, talent and capital. That includes developing "headquarters economy" to attract enterprises from outside Hong Kong to set up headquarters or corporate divisions in Hong Kong; and the introduction of a mechanism to attract more overseas companies to re-domicile to Hong Kong. As regard talent attraction, we will expand the list of eligible universities under the Top Talent Pass Scheme; while the non-local student quota of publicly-funded post-secondary institutions will be doubled. We will also introduce pilot schemes to facilitate more non-local talent to work in the city, thus encouraging them to stay and pursue their careers in Hong Kong after graduation.

To support the industry-oriented approach and sustain economic growth, we need to provide adequate land and infrastructure. This will ensure that we have sufficient space and capacity for development. I will lead the newly established Committee on the Financing of Major Development Projects, which will study and examine viable investment and financing options for projects, including leveraging market forces and capital participation. Our goal is to ensure the Government's fiscal sustainability as development projects progress.

The Policy Address has injected more energy to Hong Kong's growth in the short, medium and long terms, while also reinforcing the resilience of development. We will press ahead at full team with implementing the various measures outlined in the Policy Address, so as to take the city's development in various areas to a new level, and provide our people with a better living environment and greater room for development.

October 29, 2023

I attended the opening ceremony, the CEO Conference and the High-level Forum on Green Development of the Forum. When participating in the Forum, I could feel the willingness for mutual collaboration to facilitate better development by participants from various countries and regions, with different languages and cultures, and at varying development stages. The shared values of respect, equality and courteous treatment have enabled the continuous growth of the network of friends of the Belt and Road (B&R), which fully reflect that the achievements and opportunities are shared across the world under the B&RI initiated by our country.

The B&R cooperation has seen the expansion from "hard connectivity" to "soft connectivity", as well as from high-level forums to specialised multilateral cooperation platforms over the past decade. Such precious experience will serve as important reference for the way forward. The eight major steps announced by President Xi Jinping to support high-quality B&R cooperation will open a new stage for the B&RI. These major steps provide clear directions and set a higher standard for achieving higher-quality and higher-level development of the B&RI in future, and will boost confidence in and inject impetus to global economic recovery and long-term development. Under the "one country, two systems", Hong Kong has the distinctive advantages of enjoying strong support of the Motherland and being closely connected to the world. We have been playing the roles of an active participant, contributor and beneficiary in the B&R cooperation. We are committed to making greater contributions to facilitating higher-quality development of the Initiative. Our efforts will pay off as we benefit from brighter development prospects in return.

1. Constructing a more multidimensional connectivity network

In future, the B&RI will not only continue to strengthen the connectivity of land transportation network, but also actively promote the Maritime Silk Road, expedite construction of the New Land-Sea Corridor and the Aviation Silk Road, etc. As an international shipping and trade centre as well as an international aviation hub, Hong Kong has an important role to play. For aviation, our edge is particularly strong, including being home to a highly efficient airport with a broad and dense international aviation network. Even during the pandemic, our cargo throughput remained first in the world. Currently, we are pressing ahead at full team with the resumption of flight capacity, which is expected to reach 80% of the pre-pandemic levels by the end of this year, and fully recover by next year. Upon the full commissioning of the Three-Runway System, the runway capacity will increase by 50%, with the target of handling 120 million passengers and 10 million tonnes of cargo annually from 2035 onwards. All these will help with the construction of the "Air Silk Road" network.

2. Pursuing practical cooperation and promoting higher-quality infrastructure development

As the cornerstone of the B&RI, infrastructure connectivity helps countries break through the bottlenecks that hinder development, and better integrate into the global supply and industrial chains, thereby achieving better development for all. In the next stage, the requirements on infrastructure in terms of quality, green development, sustainability, resilience, etc. will become higher, and the capital and technology so involved will require greater participation of market forces. A market-oriented and commercialised approach will help support relevant specific projects, enabling them to go deeper and farther, and become more practical.

In fact, Hong Kong, as our country's international financial centre, brings together domestic and foreign capital as well as top-notch financial institutions and talents, and offers diverse and abundant financing channels for different projects, ranging from big infrastructure projects to "small yet smart" projects for people's livelihood. We also launched our inaugural infrastructure financing securitisation product in the middle of this year, through securitisation of investment interests, accelerating fund flows and channelling funds to green and sustainable development projects.

Last week, the Hong Kong Monetary Authority (HKMA) signed a Cooperation Framework Agreement with the Silk Road Fund (SRF) in forming a B&R investment platform. Both parties intend to jointly contribute no more than RMB15 billion or equivalent in other currencies in phases. The HKMA and the SRF will leverage their respective advantages in capital, information, technology and management to explore onshore and offshore investment opportunities, and provide financial support to the B&RI. The BNR HK Flagship Impact Fund to be formed under the first phase, with total capital not exceeding US$1 billion or equivalent in RMB, will focus on investing in projects in areas such as energy transition and infrastructure, as well as environmental, social and governance (ESG).

In addition, Hong Kong's quality professional services, ranging from engineering, planning and construction, accounting, finance and risk management, to legal, mediation and arbitration services, are trusted by the world. Hong Kong's professional services can provide the B&R projects with initial analysis and assessment, financial and technology solutions, construction and project management, risk management, as well as operation and management upon project completion, thereby enhancing the cost- and operational-effectiveness of the projects.

3. Facilitating green development and promoting scientific and technological innovation

Green development is a trend embraced by countries around the world. It will not only meet the aspirations of developing countries for progressive development and better livelihoods for their people; with the aid of new energy, materials and advanced technology, it will also help reduce pollution in the course of economic development, protect the environment and achieve carbon neutrality. These will help achieve sustainable development marked with the co-existence of human beings and nature.

Being a leading green financial centre in Asia, Hong Kong is now making great strides to build itself as an international innovation and technology centre, in accordance with the National 14th Five-Year Plan. We are also pressing ahead with developing Hong Kong into an international green technology and green financial centre. These developments will help B&R countries to realise green development.

4. Promoting people-to-people exchanges and bonds

While "hard connectivity" in infrastructure and "soft connectivity" through harmonised rules and standards are central to promoting B&R cooperation, connecting people's hearts is equally important. Hong Kong will continue to play an important role in this respect. We have signed memoranda of understanding on cultural cooperation with more than 10 B&R countries, and have launched the B&R Scholarship, the Scheme for Subsidy on Exchange to B&R Regions for Post-secondary Students, etc.

Hong Kong is developing itself into an East-meets-West centre for international cultural exchange at full steam. Hong Kong is familiar with the Mainland and the world, has rich cultural resources, and is a city that brings together Eastern and Western cultures. Under the present complicated geopolitical situation, Hong Kong should better capitalise on its unique cultural characteristics to facilitate dialogues, exchanges and mutual learning with, among and beyond the B&R countries, or even among different civilisations.

5. Enhancing the international cooperation mechanisms under the B&R Initiative

With the enhancement of international cooperation mechanisms under the B&RI, multilateral cooperation platforms for different fields can be established, in which the participating countries can have greater participation and voice in discussing various issues, better safeguarding the deeper and further development of the B&RI.

With our efficient and convenient international air services and connections; a free, open, diverse and inclusive culture; and a safe city environment, Hong Kong is an ideal platform for hosting major international conferences and activities. In addition to the B&R Summit held last month in Hong Kong, which is the biggest one ever organised, a number of major international functions and events will also take place in Hong Kong in the coming months, including the Hong Kong Fintech Week, the Global Financial Leaders' Investment Summit, the first ever Asian PRIORITY Summit by the Saudi Arabia-based Future Investment Initiative to be held in Hong Kong, the Asian Financial Forum, etc. Political and business leaders from the Mainland and around the world will be invited to attend these international conferences, which will be conductive to enhancing exchanges and mutual understanding among various parties.

The eight major steps will support the B&RI to march towards a new stage of higher-quality and higher-level development, bringing tangible benefits to the people of participating countries, as well as greater contributions to the global community of a shared future. Being the key link and functional platform for the B&RI, Hong Kong will certainly make an all-out effort to actively participate in and contribute to the eight major steps. At the same time, we will leverage the new opportunities thus arising to achieve better and higher-quality development for Hong Kong.

October 22, 2023

As with the past, the Annual Meetings brought together finance ministers and heads of agencies responsible for development, governors of central banks, the management of the large corporations and financial institutions, as well as representatives from the academia from around the world.

The global economy is experiencing slower and imbalanced recovery than was expected; and many are anticipating that it will meet with multiple challenges ahead. This has become the focus of the Annual Meetings. The lack of growth momentum in many regions after the pandemic, the intensification of geopolitical conflicts, and the persistence of high inflation, etc., has continued to weigh on the global economic outlook. Many delegates at the Meetings are concerned that the high interest rate environment would remain higher for longer. A study also pointed out that reverse globalisation, supply chain reshoring, friend-shoring and even re-shoring as advocated by some countries would further slacken the weak global recovery.

Another issue attracting attention at the Meetings was climate change and green transformation. In recent years, low-income and developing countries have been increasingly impacted by climate change, which would also interfere with their development progress in public health and agriculture, as well as the sustainability of infrastructure. The global funding gap in green transformation remains significant, and it is crucial to encourage and leverage private market participation in this process more effectively. In addition, the Meetings also focused on global poverty and food crisis. A World Bank research indicates that the economic growth rate of developing countries in the past twenty years had declined from 6% to 5%; it is expected to further decrease to 4% over the next seven years. Research also shows that for every one percentage point decrease in global economic growth, an additional one hundred million people will fall into poverty, and another 50 million will enter extreme poverty. Given the current international scene, the World Bank is worried that imbalances in global development will intensify.

During the Meetings, I called on senior representatives from the International Monetary Fund and the World Bank, as well as central bank governors from other countries and senior executives from international financial institutions. We exchanged views on global and regional economic conditions, international geopolitics, green finance, digital economy, and fintech development. In these bilateral meetings, I introduced the successful implementation and long-term adherence to "One Country, Two Systems" in Hong Kong and the advantages they brought, as well as the new opportunities for Hong Kong in finance, innovation and technology, and green transformation, including, as proposed in my Budget this year, the goal of developing Hong Kong into an international centre for green tech and green finance. They recognised that as an international financial centre, Hong Kong is the regional leader in the development of green finance, and can make positive contributions in areas such as green financing, standard-setting, project certification, and talent training. I also invited them to attend the GreenTech Summit and Green Week to be held in Hong Kong early next year, where global elites in the green-related industries will gather. These events will promote constructive international dialogues, facilitate more matching between green funds and projects, and open up more possibilities for further cooperation in green development.

In recent years, Hong Kong has been actively promoting the development of financial technology and fostering financial innovation, so that members of the public can enjoy more diversified products and services. For instance, since the introduction of virtual banking licences four years ago, competition has prompted traditional banks to make greater strides in their digital transformation, with wider geographical coverage and more competitive fees, making financial services more inclusive. Some virtual banks have also seen good progress in opening up the Southeast Asian markets.

This year, the Annual Meetings were under the theme of "Global Action, Global Impact". It has been stressed that in view of the multiple challenges faced by the global economy, countries need to explore possibilities for achieving win-win co-operation in a divided world. As the Managing Director of IMF and the President of the World Bank Group stated in their opening remarks in the Annual Meetings, countries need to strengthen co-operation to achieve sustainable and inclusive growth, and work together to solve the problems faced by the world. This is the bridge that will lead to a better future.

As a key member of both the IMF and the World Bank, our country has been an active promoter of multilateral co-operation and joint efforts to address global economic, social and environmental challenges. A decade ago, President Xi Jinping initiated the Belt and Road Initiative (BRI), which adopts the principles of extensive consultation, joint contribution and shared benefits, and embraces the concepts of open, green, clean and win-win co-operation, with the aim of boosting connectivity among countries along the Belt and Road in such areas as policy, infrastructure, trade, finance and people-to-people ties. The BRI has yielded fruitful results, bringing tangible benefits to the people of participating countries.

At this important juncture of the 10th anniversary of the BRI, our country will host the third Belt and Road Forum for International Cooperation, an international event at the highest level, in Beijing this Wednesday (October 18). I will join the Hong Kong delegation led by the Chief Executive to attend this key event in Beijing. Hong Kong will continue to leverage our unique strengths and functions under "One Country, Two Systems" to facilitate more communication and exchanges towards complementary and synergistic development, thus making concrete contributions to a better future for the world.

October 15, 2023

The first batch of strategic enterprises include industry leaders, as well as enterprises that are smaller in scale but possess cutting-edge core technologies in their specific fields. Some of these enterprises have been newly established in Hong Kong, while others are expanding their operations here and bringing in the higher value-added portions of their production chains. In the next few years, they will together invest a total of more than $30 billion in Hong Kong and create about 10,000 jobs, most of which would be research and development (R&D)-related or management positions.

A number of the first batch of strategic enterprises come from the life and health technology sector. They commonly said that in arriving at the decision to establish international or regional headquarters, or production facilities in Hong Kong, the crucial factor behind is our unique advantages under the "one country, two systems" framework and the credibility of the "Made in Hong Kong" brand. Hong Kong is the city that will facilitate them to tap into the Mainland, Asian and international markets. The free flow of capital, a rich and diverse talent pool, an efficient market and free access to information, have always been the critical elements that make Hong Kong a highly international city. They are key to our success.

The first batch of strategic enterprises – whether they are industry leaders or startups – would help foster a more vibrant innovation and technology ecosystem in Hong Kong. Leading enterprises would be able to attract its upstream or downstream partner companies to Hong Kong. Smaller-scale startups with cutting-edge technologies, on the other hand, would inject energy to local R&D; and they are commonly sought by funds and investors keen on investing in high-quality projects. A complete industry chain with a thriving ecosystem would enhance the awareness, understanding and familiarity of investors and the market with relevant technological developments. This will facilitate more new innovative applications to emerge, and increase the level of end-users' acceptance of new technologies or products; and even be conducive to value of the enterprises as they list on the stock exchange.

The Launching Ceremony marks a new milestone for the Hong Kong SAR Government in its journey in developing innovation and technology. Through tailor-made "combination of punches", including services provided by dedicated teams as well as flexible and facilitative policies, coupled with the availability of funding, we are fast-tracking the clustering development of the technology industries.

A vibrant and proactive innovation atmosphere also contributes to the creation of more high-quality job opportunities. A number of the first batch of strategic enterprises are engaged in the sector of life and health technology. The application of technology and innovation in this area require experts and teams of talent in such fields as biology, pharmaceuticals, artificial intelligence, finance and management. Through collaborative efforts, they will be able to explore new areas and develop new products. The dedication of these professional teams would also attract more talents to join these industries.

In fact, this batch of strategic enterprises represent only a portion of the enterprises interested in settling in Hong Kong. Out of the around 200 enterprises which OASES has been in contact over the past several months, many are actively engaged in discussion with OASES. Discussions with some of these enterprises are reaching advanced stages. It is believed that more enterprises will soon firm up their plans to establish a presence or expand their businesses in Hong Kong.

In addition to attracting strategic enterprises, we have also been actively stepping up our investment promotion work. Invest Hong Kong has assisted a total of 300 companies in establishing their business in Hong Kong in the past nine months. Among them, 76 companies are from Europe, representing an increase of 7% compared to the same period last year. Invest Hong Kong will continue to enhance promotion in various overseas markets, including Europe, the Middle East and the Association of Southeast Asian Nations, to encourage companies to expand their businesses in Hong Kong.

"Science and technology are our primary productive force", and "Innovation is our primary driver of growth". Over the years, the HKSAR Government has invested around $200 billion in innovation and technology. That includes supporting R&D in higher education institutions as well as the developments in the Hong Kong Science Park and Cyberport. With the work of OASES proceeding at full steam, Hong Kong's innovation and technology ecosystem is gradually maturing, and we are now seeing the clustering development of enterprises. These demonstrate that Hong Kong is progressing towards high-quality development.

Our efforts to tell the good stories of Hong Kong also include external promotion. We are keen on inviting guests to come, and a series of large-scale international conferences and events will take place in Hong Kong in the next few months. They are expected to bring in tens of thousands of international business visitors to Hong Kong. Among which, the "Global Financial Leaders' Investment Summit", first announced in last year's Budget, will have its second edition in November this year. The event will bring together around 300 representatives of the world's top financial institutions, including over 90 chairpersons or CEOs.

At the Summit, with the theme "Living with Complexity", heavyweight international financial leaders will take part in in-depth discussions on financial issues of global significance. We will also seize the opportunity to introduce to these important guests the latest developments and advantages of Hong Kong, as well as showcase the unique charisma, hospitality and the East-meets-West characteristics of our city.

October 8, 2023

It is indeed a day of double happiness as we celebrate the Mid-Autumn Festival and the National Day. To celebrate this special occasion, I invited a group of children and their parents from grassroots families for a gathering yesterday where there were ample supply of tasty marshmallows and popcorns and interesting games to play. It was a delightful afternoon as we also sat together and had a little chat. While the children talked about their funny stories and their hopes for the future, I shared my childhood memories as well as the future development and opportunities for Hong Kong, in particular the brighter future of the city under the development of our country. Particularly, as our country has gone through an exceptional path of development and is now embarking on a new journey.

Since the founding of the People's Republic of China, our country under the strong leadership of the Communist Party of China, has eradicated absolute poverty and built a moderately prosperous society with the resilience and hard work of the whole nation. This is a thrilling and spectacular feat which has won recognition worldwide. Our country, remaining steadfast in the process of opening up, has been one of the key drivers of global economic growth over the past decade or so. While striving for a robust growth in its economy, our country also looks for every opportunity to cooperate with trading partners for mutual development and prosperity, making significant contributions to the stable development of the global economy.

Our country is pursuing Chinese-style modernisation through high-quality development, with the economy as a whole growing steadily. At a time when the world and the international environment are undergoing unprecedented and accelerated changes in a century, it is inevitable that our country will encounter risks and challenges along its journey of development. However, thanks to a large and a highly resilient and vibrant economy, the strong leadership of the Central Government that is responsive to changes, as well as its hardworking, diligent and innovative people, the fundamentals underlying China's long-term economic growth remain unchanged.

On this new journey of building a strong China and rejuvenating the Chinese nation, Hong Kong is embracing fresh and greater opportunities. The institutional advantages under "One Country, Two Systems" enable us to better perform our distinctive roles and functions, with the backing of our country while being closely connected to the world. We must integrate into the national development more actively, align ourselves better with the national development strategies and commit fully to the building of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and the pursuit of high-quality development of the Belt and Road Initiative, so as to continue serving our country's needs with our strengths. Under this complex and volatile international environment, Hong Kong can be a more proactive connector between the Mainland and the international community in such areas as finance, innovation and technology, trade and commerce, culture as well as community exchanges.

The nine-day visit to Europe earlier has allowed me to look further into our capacity of taking a more active role as a connector. I visited Paris, London, Berlin and Frankfurt during this trip, with a view to fostering and enhancing business exchanges and cooperation. The pandemic over the past few years not only put a stop to mutual visits, but also barred the opportunities of meeting in person. Coupled with heightened geopolitical tensions, there have been some biased reports on Hong Kong among the Western media in the past few years, with the European business sector and the community having some misconceptions about Hong Kong. Apart from providing a good opportunity for us to update by ourselves the latest situation of Hong Kong and introduce the development opportunities in Hong Kong and the GBA, especially in the innovation and technology and the creative and cultural industries, this trip also allowed us to expand our international network. In fact, face-to-face interactions, direct response to enquiries and giving explanations patiently with facts and data enable us to better understand each other's position and help build mutual trust.

Under a slackened global economic atmosphere, Western financial and business sectors are showing a greater interest in looking for opportunities in Asia and the Mainland, in particular the GBA. Many of my overseas friends I met during this trip shared the view that a fragmented world would only bring additional uncertainties and slow global economic recovery. No one would benefit.

Amid the increasingly polarised international landscape, the unique role and functions of Hong Kong as a super-connector under "One Country, Two System" can come into fuller play at this opportune time. Not only do we have a close bond with our motherland, we are also well-versed in the economic and market conditions in the Mainland. In addition, we enjoy smooth connectivity with the international market and free flow of different factors of production under "Two Systems", and our deep understanding of the western culture and mentality serves to facilitate communication and exchanges.

This two-way communication and exchanges needs to be maintained on a multi-dimensional and multi-level basis. During this trip to Europe, I specifically visited some local cultural institutions, including the Royal College of Art of the United Kingdom and Maison et Objet of France, with a view to further promoting cultural ties and exchanges between Hong Kong and these countries. By leveraging the convergence of the Chinese and Western cultures and a deep pool of diversified talents, Hong Kong should be playing a more active role as an East-meets-West centre for international cultural exchanges under the 14th Five-Year Plan. We will support our country in showcasing the soft power of the Chinese culture.

Seeing is believing. Apart from going out to promote Hong Kong, I also made good use of the trip to invite many friends from overseas to Hong Kong to see for themselves the latest developments of the city and meet with our business and industrial sectors and the like to explore development opportunities in the city and our country. In the coming six months, a series of major international conferences and mega events will be hosted in Hong Kong, including the Fintech Week, the Global Financial Leaders' Investment Summit, the inaugural Summit of the Future Investment Initiative Institute of Saudi Arabia in Asia, the Asian Financial Forum, as well as the Hong Kong Wine & Dine Festival and Art Basel. Together, they will bring a stream of business travellers and tourists to the city.

Today, as we celebrate the 74th anniversary of the founding of the People's Republic of China, let us join the whole nation in wishing the motherland a more prosperous and thriving future, and contribute to the building of a great China and the great rejuvenation of the Chinese nation.

October 1, 2023

During the exchanges with enterprises, I learnt that they were keen on developing business in Hong Kong. Some of them have been in touch with the Office for Attracting Strategic Enterprises on landing in Hong Kong, so as to use Hong Kong a base for expanding into markets in the GBA, the Mainland and even the rest of Asia. Eyeing the economies of scale and growth potential offered by the Mainland and Asian markets, they consider Hong Kong a familiar, trusted and preferred location for their business because of our edges, including the practice of common law, excellent reputation of the rule of law, business-friendly environment, simple and low tax regime, and regulation that aligns with the international standards and is suitably enforced.

It can be said that Hong Kong's role as a gateway and springboard is very clear. I encouraged the enterprises in both countries to expedite and expand their development in Hong Kong.

During this trip, I took the time to visit a number of green technology enterprises and encouraged them to settle in Hong Kong. By doing so, we will enrich our green technology industry composition and speed up our development into an international centre for green technology and green finance.

I also visited some collaboration projects between Hong Kong and local organisations, including the MTR Elizabeth line, which was commissioned in the UK last year. The line was operated and managed by the subsidiary of the MTR Corporation, and was named Passenger Operator of the Year 2023 in the UK's National Rail Awards in recognition of its timely, safe and efficient services. The services have won high satisfaction with local passengers.

Apart from such areas as finance, commerce, investment, trading and professional services, exchanges between Hong Kong and the two countries in arts and culture, as well as academic fields have continued to develop steadily.

For instance, the Hong Kong Polytechnic University has started collaborating with the Royal College of Art of the UK since 2021 to jointly establish a research facility to explore how artificial intelligence can empower fashion, product and interior designs. Maison et Objet (M&O), the largest design exhibitor in Europe which I visited in Paris, is also collaborating with Hong Kong's design industry on various fronts, which include setting up a Hong Kong Pavilion in M&O's 30th anniversary celebration event to be held in Paris next January. Moreover, the exhibitor is planning to stage some thematic design activities in Hong Kong at the end of next year. These collaborations are testimony to Hong Kong's top-notch professional services and soft power in culture. They represent our in-depth and diversified exchanges with the countries.

As in previous visits to overseas, I took the opportunity to meet with Hong Kong young people living, working and studying in the UK and France. This time, I met in London with a group of students from Hong Kong studying in the UK under the Hong Kong Scholarship for Excellence Scheme, as well as a number of Hong Kong young people engaging in the music and cultural industries in Paris, to learn about their lives there and brief them on the latest situation of Hong Kong. All these young people are energetic, full of ideas and passion about their future. They are indeed ambassadors for us to establish deeper cultural connections with the rest of the world, key to laying foundation for sustaining long-lasting friendships.

During this trip, I had plenty of opportunities to meet and exchange with representatives from the industrial, commercial and professional sectors. From small-scale closed-door roundtables to large-scale gatherings attended by hundreds of trade leaders, I took the opportunity to highlight Hong Kong's future development directions and positioning, in particular our new strengths and opportunities in the areas of financial services and innovation and technology. Financial and business leaders of the two countries generally recognised the enormous business opportunities that Hong Kong could offer. Their confidence in Hong Kong is underpinned by the institutional arrangement of "one country, two systems" principle , particularly our maintenance of the common law and the rule of law. At present, there are about 650 British and 360 French enterprises respectively in Hong Kong. The stock of inward direct investments from these two countries exceeded US$200 billion in 2021.

Looking ahead, the commercial and industrial sectors in the two countries believe that there is still ample room for them to strengthen collaboration with Hong Kong, explore opportunities together and join forces in tapping into the Mainland and Asian markets. In particular, in the fields of finance, innovation and technology, green technology, green finance (including standards and certification), as well as arts, culture and the creative industries.

This trip indeed provided the opportunities for us to have in-person exchanges and dialogues with local businesses, enterprises, arts and cultural organisations, and academic institutions. We were able to establish, or re-establish, in-depth connections and warm relationships with old and new friends. People-to-people contact and face-to-face exchanges are important. They allow direct, in-depth and more comprehensive communication through raising questions and concerns, and the presentation of objective facts and figures in response. In this process, we could know and understand each other better, establish mutual respect and create the conditions for deepening collaboration in the future. Today, I will continue my visit to Germany, and I look forward to meeting more friends from the business sector there, with a view to building more friendships and better presenting the new opportunities in Hong Kong.

September 24, 2023

It is along this line of thought that the "Night Vibes Hong Kong" Campaign comes into being. Apart from events featuring new themes, there will also be popular events held in physical mode again for the first time since the pandemic. Ticket discounts for night-time screenings at cinemas, night-time events at three harbourfront sites during weekends, the Mid-Autumn Lantern Carnivals and Fire Dragon Dance, and the National Day Fireworks Display, are all exciting events which we look forward to join. You may wish to invite your family and friends to go together, or even reserve a table at a restaurant to make the night you spend with them more delightful.

The series of events unveiled last week forms only the first phase of the "Night Vibes Hong Kong" Campaign. We will continue to gather views from the public and include more diversified and novel activities.

Activities organised for the community, in addition to creating happy collective memories for members of the public, can foster positive sentiment and outlook in the retail and catering sectors. It is true that the external environment is less than favourable, and that the local sectors face different challenges. We, therefore, have to adopt a "combination punches" approach to unleash potential demands in different areas and on different levels by making use of various festive characteristics and vibes, thereby bringing more boosters and impetus to the market.

According to the latest statistics, the daily average number of visitor arrivals to Hong Kong in August increased to nearly 132 000, representing over 80% of the pre-pandemic level, while the air capacity is expected to rebound to a level which is around 80% of the pre-pandemic capacity by the end of this year. As a number of mega events will be held in Hong Kong over the next few months, while expecting to see the number of visitor arrivals to Hong Kong picking up, we hope that the organisation of the various thematic events will provide more new venues and opportunities for local spending.

Domestically, we must step up our efforts to boost the market sentiment. Externally, we must strengthen our international ties and relations. All these are crucial to the pooling of talent and capital as well as promotion of business and investment, and hence instrumental in fostering our sustained economic development.

The two-day Belt and Road (B&R) Summit hosted in Hong Kong last week received the most overwhelming response ever. Of the thousands of participants, many were representatives from overseas countries and the Mainland. This highlights our role as a hub connecting the Mainland and overseas countries. The Summit reviewed the remarkable achievements of the B&R Initiative in the past 10 years and explored ways for greater development in future. Hong Kong has been playing an irreplaceable role in this respect. The Vice Premier of the State Council, Mr Ding Xuexiang, also mentioned in his speech at the Summit that Hong Kong should continue to actively participate in the promotion of the B&R Initiative by leveraging its unique advantages, and pursue better and greater development while integrating into the overall development of the country. He also expressed his hope that Hong Kong could strive to deepen regional co-operation, strengthen its financial services, focus on professional services, and deepen cultural exchanges.

While "bringing in" visitors, we have to actively "go out" to meet the political and business communities in different countries, and explain to them Hong Kong's latest developments and new opportunities in such areas as finance and technology. We would also like to take such opportunities to address some bias against and misconceptions about Hong Kong.

Last night, I set off for a 10-day trip to Europe, during which I will visit Paris, London, Berlin and Frankfurt. I will attend a mega promotion campaign organised by the Hong Kong Trade Development Council, as well as luncheons and dinners hosted by the financial and business communities. I will also visit local innovation and technology enterprises or creative arts and cultural institutions and exchange views with their representatives. It is my hope that this trip to Europe will open up more concrete opportunities for co-operation. In fact, there are various areas in which Hong Kong can strengthen collaboration with countries in Europe, including green technology and green finance, artificial intelligence, life and health, as well as Web 3.

Thanks to the staunch support of our country, the unique advantages under "One Country, Two Systems" and the hard work of our people, the city is seeing thriving development and new opportunities. Hong Kong's unique edge in maintaining smooth connectivity and close ties with global markets has not only allowed us to make greater contributions to the high-quality development of our country, but also provided better prospects for our own development.

September 17, 2023

Under the B&RI, a good number of infrastructure projects including railways, highways, ports, electricity facilities and industrial zones have been implemented in countries across Southeast Asia, Central Asia, the Middle East and Africa. They are promoting the growth and development of the local economy. With the recent commissioning of the Jakarta-Bandung High Speed Railway in Indonesia, which is the first high speed railway in Southeast Asia, travelling time between Jakarta and Bandung has been significantly reduced from three and a half hours to 40 minutes. This will enhance people flows substantially, and speed up the economic and societal development.

During the past decade, the average annual trade volume between China and the Belt and Road countries has doubled from US$1 trillion in 2013 to US$2 trillion last year, representing a growth of 8% per annum on average. China's outward direct investment in the Belt and Road countries last year amounted to nearly US$21 billion, representing a year-on-year increase of 3.3%.

The Belt and Road initiative is bringing enormous infrastructure investments and financing activities to the market, thereby expediting the implementation of projects. Under the "One Country, Two Systems" principle, Hong Kong is our country's international financial centre, bringing together domestic and foreign capital as well as top-class financial institutions and talents, and offering diverse and abundant financing channels. With rules and regulations widely trusted by international investors, Hong Kong can make unique contributions to this end.

In terms of financing infrastructure projects, in addition to traditional equity investments, syndicated loans, and bond issuance, investors may also choose to list mature projects in Hong Kong, or securitise investment interests so as to early recoup funds for deployment in other projects. In last year's Budget, I proposed a pilot scheme on infrastructure financing securitisation to be launched by the Hong Kong Mortgage Corporation Limited (HKMC). In May this year, HKMC successfully issued the first infrastructure financing securitisation product through a special-purpose company called Bauhinia 1. The total value of the Bauhinia 1 portfolio is in the order of about US$ 400 million, including infrastructure loans for 25 projects across 12 countries and involving 9 sectors. It also includes US$100 million in sustainable financing notes, invested in renewable energy projects that contribute to an annual reduction of over 260,000 metric tons of carbon emissions. The education and telecommunications-related projects covered by Bauhinia 1 also assist the respective countries in providing more opportunities for higher education to their underprivileged communities and improving communication infrastructure.

With the increasing use of Renminbi (RMB) by Belt and Road countries for cross-border trade settlements, the demand for RMB investment is rising. Hong Kong has the world's largest offshore pool of RMB funds, processes three-quarters of global offshore RMB payments and has the largest offshore RMB bond market. We are committed to expanding the range of offshore RMB investment products and channels, as well as risk management tools, to better meet the needs of investors in fund allocation and risk management.

Hong Kong also possesses huge advantages in providing the necessary professional services in engineering, construction, financial consultancy, accounting and legal services to infrastructure projects in the Belt and Road countries. Among which, our reliable dispute resolution services play a vital role in boosting confidence of parties concerned in taking forward cooperation.

Under the "One Country, Two Systems" principle, Hong Kong is the only common law jurisdiction in China. With the firm support of the National 14th Five Year Plan and the GBA Outline Development Plan, HKSARG is fully consolidating Hong Kong's position as a centre for international legal and dispute resolution services in the Asia-Pacific region. The AALCO (Asian‑African Legal Consultative Organization) Hong Kong Regional Arbitration Centre was established in Hong Kong in May last year. With the support of the Ministry of Foreign Affairs, the International Organization for Mediation Preparatory Office was officially opened in Hong Kong in February 2023.

Looking ahead, there will be a greater number of green infrastructure projects along the Belt and Road. According to market estimates, the Asia region alone will require US$66 trillion in climate investments in the next 30 years. Seeing the global trend in this area, I have set out clearly in this year's Budget our determination to develop Hong Kong into an international centre for green technology and green finance. Hong Kong's green finance market is leading in Asia, with green and sustainable bonds arranged in Hong Kong accounting for over one-third of the Asian market.

Green technology enterprises grown in Hong Kong have cutting edges in scientific research. For example, a local start-up has developed a cooling coating which, when applied to building surfaces, could lower indoor temperatures by 6 to 8 degrees, reducing 40% of electricity consumption. Moreover, a local start-up has developed the world's first artificial coral reef tile structure made by terracotta clay using 3D printing technology, which is being deployed in the sea to help corals grow. These enterprises have already established a presence in the Middle East market. Building on the cooperation among Hong Kong and our sister cities in the Greater Bay Area, we can provide the needed financial and technological solutions to help Belt and Road countries undergo green transformation.

A decade of co-operation has brought shared development and common prosperity. According to the World Bank's report, the B&RI had increased trade flows among participating economies by 4.1%, attracted 5% more of foreign investment, and levelled up the gross domestic product (GDP) of low-income countries by 3.4%. Benefiting from the B&RI, the GDP percentage share of emerging and developing economies in the world had increased by 3.6%. All these figures are testament to the pivotal role played by the B&RI in facilitating and deepening international co-operation, promoting global connectivity, and driving world economic growth. Hong Kong has consistently been an active participant in and contributor to this global co-operation platform. As we deepen collaboration with our trading partners, Hong Kong will fully leverage its distinctive advantages in the high-quality development along the Belt and Road. With more prosperous development and greater friendship, we can tap into more business opportunities and create brighter prospects together.

September 10, 2023

This explains why I see the need to set up a task force to leverage the collective wisdom of the industry, market and regulators to thoroughly examine the strengths and challenges of Hong Kong's stock market; and for the task force to propose short, medium and long-term proposals for the Government's consideration, with a view to enhancing market competitiveness and unleashing its future development potential.

The Task Force on Enhancing Market Liquidity was officially established last Tuesday. Specifically, it will comprehensively review key internal and external factors, including the listing regime, market structure and trading mechanism, as well as explore how to broaden the sources and flows of funds, attract more quality enterprises to list in Hong Kong, promote product innovation and diversity, enhance price discovery mechanism and trading efficiency, etc. The Task Force will convene its first meeting this week.

In fact, the key to improving stock market performance rests with investors having a positive outlook of the market, which will have a bearing on the amount of funds flowing into the market. This hinges on the economic performance, company earnings, whether there are continuous listings of companies with business potential, etc. These cannot be achieved solely by a cut in stamp duty on stock transfers.

Moreover, statistics reveal that reducing stamp duty on stock transfers cannot fundamentally enhance market turnover. Taking the experience from 1999 to 2001 as an example, despite the lowering of stamp duty for three times during that period, the average daily turnover dropped from $14.3 billion in 1997 to $6 billion in 2002. More recently, after the rate of stamp duty was slightly adjusted upward to 0.13% in 2021, the average daily turnover in the first few months (i.e. August to December) still recorded an increase of some 2% as compared with that of the same period in 2020. If we look into the overall share turnover ratio (also known as "turnover rate") measuring the rate of shares changing hands, it increased from 0.22% in 2020 to 0.27% in 2022, suggesting that trading activities had not been adversely affected by the upward adjustment of the rate of stamp duty.

Stock market fluctuations are also affected by geopolitical factors and market sentiment. Western political prejudice has created misunderstanding which interfered with investors' confidence in the stock markets of Hong Kong and the Mainland. Our country's Ambassador to the United States, Mr Xie Fung, in an article titled "The Chinese economy is doing better than you might think", has set out objective facts and figures to demonstrate the positive momentum of the country's economic development, especially in terms of technological innovation and green development. Many international enterprises have indeed voted with their feet to proactively expand their business in the Mainland. While the global economic recovery remains weak and regions face their own challenges in their respective development, the pessimistic views about the Mainland's economy from the West are clearly out of touch with reality, if not with ulterior motives.

During the three years of pandemic, many overseas investors and representatives of financial institutions were unable to visit Hong Kong. Biased reports from Western media had created misconceptions about the city. In this light, we will step up efforts to promote Hong Kong's advantages through both welcoming more guests and going out to tell our good stories. In the coming months, I will be visiting Europe and the United States to explain the unique advantages and new opportunities brought by the "one country, two systems" principle, as well as the latest developments of the city including innovation and technology, green tech and green finance, Web 3.0, etc.

We will also be hosting a series of major international financial conferences in the coming months, including the Hong Kong Fintech Week in late October, followed by the Global Financial Leaders' Investment Summit in November, the inaugural PRIORITY Asia Summit to be staged in Hong Kong by the Saudi Arabia-based Future Investment Initiative ("FII") Institute, as well as the Asian Financial Forum in January next year.

By actively presenting Hong Kong's new developments and opportunities, we aim to let international investors have a clearer and more comprehensive understanding of Hong Kong. By building an extensive network of relationships, we will tap into new collaboration opportunities and funding sources, thereby enhancing the competitiveness of Hong Kong's financial markets, and promoting their sustainable and robust development in the long run.

September 3, 2023

The application and evolution of innovation and technology ("I&T") applications are one of the major locomotives for the rapid expansion of the entertainment industry in recent years. Empowered by digital technology, the digital entertainment (or "digitainment") industry is bringing immense potential to the economy. Some studies estimate that the global market for online entertainment will expand from USD 184.2 billion in 2021 to USD 653.4 billion in 2027, with an annual compound growth rate of 21%.

In the past decade or so, the fast popularisation of and continuous improvements to mobile Internet and smartphone technologies have given rise to the exponential growth of music and video streaming, social media platforms and mobile gaming. Going forward, the next wave of breakthrough will likely be powered by Web3 and blockchain technologies. Many entertainment giants around the world are now investing resources in areas such as non-fungible tokens ("NFT"), GameFi, Play to Earn and immersive entertainment.

A couple of days ago, Cyberport organised the three-day Digital Entertainment Leadership Forum with the theme of "Power Up! When Entertainment goes Beyond ‘3oundaries'". Some 90 speakers from more than 30 countries and regions shared how digitainment could bring new experiences for art, education, sports and living in the Web3 era, as well as the relevant applications and opportunities of Web3 in daily lives. Over 3 500 people participated in the Forum physically and online, showing the vibrancy of digitainment business in Hong Kong.

The Forum is also one of the highlights of the "Happy Hong Kong" campaign. With elements such as Augmented Reality games, smart sports walls, motorsport stimulation and application workshops, as well as snack booths with local characteristics, it was a great place to go with relatives and families at weekend.

Quality entertainment experience can stimulate consumption and thus economic development. We are striving to tap into this new wave of opportunities arising from digitainment growth. Cyberport currently has more than 170 digitainment companies engaging in businesses such as metaverse, game development, game big data analysis, e-sports appliances and related research.

Among these companies, many are actively tapping into Web3 and other latest technologies with notable achievements. For example, a local digital health start-up has been collaborating with Marvel Entertainment to launch the world's first immersive interaction fitness adventure application, with which players can exercise together with comic characters. Meanwhile, a metaverse game developed by another start-up company has entered the Japanese market, having gathered more than 145 000 members in its social media channel within six months.

The application of fast-developing Web3 is not confined to digitainment or virtual assets. The blockchain technology underpinning Web3 is characterised by disintermediation, security, transparency, immutability and low cost. With innovations in technology and application, it has the potential to solve many difficulties and pain points encountered in finance, business, trade, supply chain management and even day-to-day life.

On the day of the Forum, I also opened Web3 Living Lab, which showcases how local companies deploy Web3 technologies and innovative ideas in different life and business scenarios, which would help boost efficiency and create new economic values. For example, in light of the difficulties of financing faced by farmers, a start-up has developed, using blockchain and Internet of Things technologies, a real-time system to monitor the location, health situation and growth of livestock. With blockchain's data immutability, the data is sufficiently credible for financial institutions to accept livestock as collateral for financing. On the other hand, one local bank is developing a programmable payment solution in Cyberport, introducing programmable tokens to smart contracts to facilitate more effective public, commercial and personal payments. Another local start-up, in collaboration with a globally renowned fashion designer, makes use of 3D scanning technology to allow participants to dress up in famous designer fashion in the virtual world. These case examples all demonstrate our local start-ups' spirit of innovation as well as capacity to make breakthroughs.

The HKSAR Government is also actively applying Web3 technologies. For example, the Hong Kong Monetary Authority issued tokenised green bonds in February this year, which were the first of its kind issued by a government globally. This has brought together bonds and other related financial instruments, participants and activities on a single digital platform, enhancing the efficiency of the entire process and significantly reducing the lead time normally required for traditional bond issuance from five business days (T+5) to one business day (T+1).

To accelerate Web3 development, I have allocated $50 million to Cyberport in this year's Budget to expedite the development of a vibrant Web3 ecosystem, including attracting enterprises and talent, and organising related educational and promotional activities. So far, Cyberport has amassed more than 180 companies with Web3-related technologies including a unicorn and a licensed virtual asset trading platform. More than 20% of these companies are from the Mainland and overseas.

The Task Force on Promoting Web3 Development, which I chair, had convened its first meeting. The Task Force brings together leaders and professionals in relevant sectors to assist the Government in promoting the vibrant and sustainable development of Web3 in Hong Kong in an orderly and prudent manner, covering the regulatory framework, ecosystem, infrastructure, talent and training, education and promotion, etc.

As an international financial centre and a metropolis placing much emphasis on I&T, we must be aware of the urgency of grasping the trend of I&T and advancing its development. With prudent and appropriate regulation, we will actively lead more innovative exploration and progress so that Hong Kong may prevail and rise in this highly competitive wave of technological innovation. By doing so, we hope to make greater contributions to our economy and bring real benefits to our residents.

August 27, 2023

According to Airport Authority Hong Kong's (AAHK) forecast, passenger volume at HKIA is expected to reach about 80% of the pre-pandemic level by the end of 2023, and see a full recovery in 2024. All in all, the current pace of recovery of our aviation industry is in line with our expectation.

There is an imminent need to address the current manpower shortage issue in the aviation industry in order to support its speedy and full recovery. While we continue to proactively provide training and facilitate local recruitment, we need to expedite the importation of labourers to address the pressing manpower demand. Under the first round of application of the Labour Importation Scheme for the Transport Sector - Aviation Industry, applications from 28 companies with a total quota of over 2 800 have been approved, covering 10 job types including Passenger Services Officer, Ramp Services Agent, Aircraft Maintenance Mechanic, etc. It is expected that these imported labourers will arrive in Hong Kong in October 2023 the soonest.

At the same time, we are pressing ahead with various development projects at HKIA and its surrounding areas. Projects including the Three-Runway System, large-scale integrated facilities, hotels, offices, logistics centres and transport infrastructure are being completed one after another. From "City Airport" to "Airport City", Hong Kong's development as an international aviation hub has entered a new era. We must ride the world's trends and seize new opportunities such as (1) the new mode of "bridgehead economy"; (2) new opportunities arising from the growth of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA); and (3) the paradigm shift in cargo logistics.

First, about the new mode of "bridgehead economy". In recent years, the world's leading airports have been transforming from passenger and cargo-carrying transportation facilities to hubs of economic activities, injecting impetus into the cities and regions in which they are located. With the support of the HKSAR Government, AAHK introduced in 2019 a strategic development blueprint to drive HKIA's transformation, from a City Airport to an Airport City. Our airport will not only be a facility for the arrival, departure and transit of passengers, but also a commercial landmark and even a leisure resort comprising aviation and other economic functions. These will boost economic activities in the vicinity of the airport.

We are taking active steps to realise the Airport City vision, an important effort of which is the SKYCITY development project, which takes up 25 hectares of land. 11SKIES, the centerpiece of SKYCITY with a gross floor area of 3.8 million square feet, will stand as Hong Kong's largest all-in-one commercial development, providing novel entertainment, retail and dining options as well as office buildings for accommodating medical, health care and financial services, etc. The adjacent AsiaWorld Expo will undergo Phase II expansion, the completion of which will provide an advanced arena with over 20 000 seats and more exhibition facilities. Apart from taking flights, passengers, when visiting HKIA in the future, may also experience brand-new indoor entertainment facilities, shopping spots, new dining concepts, and even undergo body checks and utilise storage facilities for precious artworks. SKYCITY will become an important tourist facility that will contribute to Hong Kong's overall tourism economy.

Second, new opportunities arising from the growth of GBA. With a population of around 87 million and a per capita GDP of over US$22,000, GBA is a huge source of tourists and travellers. Before the pandemic, around 14 million passengers from other GBA cities travelled to the rest of the world via HKIA every year. The completion of such major cross-border infrastructure projects as the Guangzhou–Shenzhen–Hong Kong Express Rail Link and the Hong Kong-Zhuhai-Macao Bridge (HZMB) in recent years, has allowed HKIA to establish an interlocking and multilateral sea, land and air transportation network. Going forward, we will further enhance the inter-modal transport connections and operation, and give full play to Hong Kong's role as an aviation hub in GBA. Hong Kong will serve as the prime gateway for Mainland and international passengers to travel to and from GBA.

The completion of the Three-Runway System by the end of next year will increase HKIA's annual passenger handling capacity by around 50% to around 120 million. The SkyPier Terminal, which will come into operation shortly, will enable transit passengers to travel via HZMB to HKIA's restricted area for direct boarding without the need to go through immigration clearance again in Hong Kong. We believe this facilitation measure will provide further incentives for passengers to choose HKIA while planning their trips.

At the same time, we will further expand HKIA's city terminal network in Mainland cities from the current 19 terminals to 30. We will also continue to step up cooperation with Zhuhai Airport: from providing passenger link service between Hong Kong and Zhuhai to establishing a high-end aviation industrial cluster in the region, the two airports will achieve synergy that adds economic value to both cities.

Third, the new mode of cargo logistics in recent years. Online shopping has become a key mode of consumption around the globe, and a characteristic of e-commerce is that orders are small but come on great numbers, with a vast variety of goods at relatively high value. This new mode of commerce places emphasis on product quality, and is most suited for high-value products like fresh produce and pharmaceuticals. This presents a huge opportunity for the air cargo industry. In fact, Hong Kong's air cargo throughput last year stood at 4.2 million tonnes, which only accounted for 2% of Hong Kong's overall cargo throughput, but 48% of Hong Kong's trade value. High-value and high-end aviation logistics is a market we must seize and for which we must continue to enhance our services.

On this, AAHK has in recent years partnered with different companies in constructing advanced logistics facilities and attaining international accreditations. These will enable Hong Kong to seize the growth opportunities stemming from modern high-end logistics services. For instance, AAHK cooperated with DHL on the expansion of the latter's Central Asia Hub, which was commissioned in March 2023, with the capacity of its automated cargo handling system having significantly increased by 50% to 1.06 million tonnes per annum. The premium logistics centre being constructed and to be managed by a joint venture led by Cainiao Network will also be commissioned within this year, and will allow Hong Kong to handle an additional 1.7 million tonnes of air cargo volume. The Transit Mail Centre, dedicated to handling transit mail from the Mainland, will be completed by 2025.

In order to enhance the services and efficiency of air cargo logistics in GBA, AAHK is developing the new "sea-air intermodal cargo transshipment" mode with Dongguan, which allows security screening, palletisation and cargo acceptance procedures for Mainland export cargo to be completed in Dongguan in advance. The cargo will then be transported by sea to HKIA directly and then transshipped to overseas destinations. Such arrangement enables more efficient division of labour, and would lower operating cost by around half, and the time for loading and unloading by one-third. This will benefit all parties concerned and enhance the overall competitiveness of cargo logistics of GBA.

With the staunch support of our country as well as the concerted efforts of the HKSAR Government, AAHK and the trade, Hong Kong's aviation industry will ride the world's trend of commercial development and make greater achievements. Together, we will turn a bright new chapter for Hong Kong's international aviation hub.

August 20, 2023

The Government recently released the report on the economy for the first half of this year and the outlook for the second half of the year. Private consumption and inbound tourism are expected to remain the major growth drivers in the second half of the year. Private consumption expenditure grew by 8.2% year-on-year in real terms in the second quarter after increasing by 13.0% in the first quarter. On a seasonally adjusted quarter-to-quarter basis, private consumption expenditure also increased by 3.9% compared to the first quarter. This shows that though affected by negative factors such as the uncertain external environment, rising interest rates, pressure on asset prices, etc., local private consumption is still growing steadily, supported by policy measures such as consumption vouchers and the launch of the "Happy Hong Kong" campaign, as well as a surge in tourist arrivals.

Among others, the performance of the retail and catering industries in Hong Kong also improved in the second quarter. The value of total retail sales and total restaurant receipts rose by 17.6% and 24.3% year-on-year respectively, recovering to more than 85% and 95% of the level of the same period in 2018 respectively. The above figures show that while Hong Kong residents increased their spending in places outside Hong Kong in the second quarter, their spending in Hong Kong also rose.

Entering the second half of the year, the recovery of Hong Kong's tourism industry is on an accelerating trend. The number of visitor arrivals in July was approximately 3.6 million, i.e. around 116 000 per day, representing an increase of over 30% from the previous month. In particular, the Mainland and Southeast Asian markets have been recovering faster. In July, the number of visitor arrivals from the Mainland reached about 70% of the pre-pandemic level, while the number from Southeast Asian countries like the Philippines even surpassed that before the pandemic. For visitor arrivals from Thailand, the figure reached over 90% of the pre-pandemic level in July. For the first ten days in August, the average daily visitor arrivals exceeded 130 000.

Although the number of visitor arrivals to Hong Kong is rapidly resurging, we must continue to enhance our competitiveness and attractiveness. Surveys conducted by the Hong Kong Tourism Board (HKTB) indicated that the spending habits of Mainland visitors have changed, as the proportion of those primarily visiting for shopping had decreased as compared to the pre-pandemic level. However, new patterns and changes bring new opportunities. Many visitors, especially those of the younger groups, are visiting Hong Kong to take part in arts and cultural activities, exhibitions, and major concerts. Taking the recent Hong Kong Ani-Com & Games Expo as an example, many Mainland and Southeast Asian visitors came to Hong Kong specifically for the event. Some exhibitors told me that visitors were very willing to buy creative products with special characteristics. What can be learnt from such change in travel and spending pattern is that we must understand and grasp what customers now value: uniqueness, creativity, quality, and user experience of products and services.

We must seize opportunities to promote a more diverse, high value-added and sustainable development of Hong Kong's tourism industry. In this regard, organisation of mega events, international conventions and exhibitions are crucial to drawing high value-added visitors. It is also a segment of the tourism industry in which destinations around the world are striving to establish a foothold. This year's Budget has earmarked $100 million for attracting more mega events with significant visitor appeal and tourism promotional effects to be staged in Hong Kong, so as to enhance the city's international image; provided over $250 million funding to HKTB to sustain its efforts in organising various major tourism events, including the Hong Kong Wine & Dine Festival, Hong Kong Cyclothon, Hong Kong WinterFest, etc., which will be staged in the second half of the year. We have also allocated resources to secure the staging of more international conferences and exhibitions of various types and industries in Hong Kong so as to consolidate Hong Kong's position as the premier MICE (meetings, incentive travels, conventions and exhibitions) destination in the region. For instance, a number of large-scale conferences on Web 3.0 and artificial intelligence have been held in Hong Kong for the first time, attracting tens of thousands of attendees; the Asia Fruit Logistica 2023 and Vinexpo Hong Kong will return to Hong Kong in September this year and in May next year respectively.

Overall, taking into account the actual outturn of the economy in the first half of the year and the situation in the second half, we have revised the economic growth forecast for the whole year to 4.0% to 5.0%, narrowed by 1 percentage point from 3.5% to 5.5% in the round of review in May.

In the short term, we will also need to work with the industry to revitalise Hong Kong's evening economy, to better consolidate the various recovering economic segments, and maintain the momentum of recovery. In the medium to long term, we will continue to create strong impetus for Hong Kong's development. The current-term Government is determined to promote the development of innovation and technology (I&T) as an important engine to promote the high-quality development of Hong Kong's economy.

In recent years, the United States has used various excuses and tactics to suppress our country's I&T development. Such unreasonable and hegemonic suppression will only strengthen our determination to go forward in I&T and open up more new race tracks for our own economy, while at the same time assisting our country in achieving greater self-reliance and strength in science and technology.

In recent years, economies across the globe all strive to develop their digital economies in order to boost economic growth. Artificial intelligence (AI) is one of the key drivers in the process. The AI industry over the past year has been developing rapidly in terms of its wide application. The advent of Generative AI has also triggered heated debates in different sectors. According to a research report by an investment bank, AI could help upgrade industries, with the potential to raise the global GDP by 7% in ten years and boost productivity by 1.5%. Our country's AI industry ecosystem is also developing vibrantly. Based on the estimates by the China Academy of Information and Communications Technology, the scale of China's AI core industry reached RMB 508 billion in 2022.

To drive the development of AI industry, data, computing power and algorithm are the three core elements. On data, under the "One Country, Two Systems" principle, Hong Kong allows free flow of information and possesses a sound legal system, which are conducive to the convergence of global information and data. Meanwhile, following the signing of the Memorandum of Understanding on Facilitating Cross-boundary Data Flow Within the Guangdong-Hong Kong-Macao Greater Bay Area with the Cyberspace Administration of China in end-June, Hong Kong seeks to facilitate the safe and orderly cross-boundary flow and use of Mainland data within the Greater Bay Area. Hong Kong is set to leverage the unique advantage of "dual convergence" of data from the Mainland and overseas, thus providing important raw ingredients for AI development.

As for computing power, we have commenced in May a consultancy study on establishing an AI Supercomputing Centre and its related operational model, with a view to completing it in 2023. In terms of enhancing algorithmic capabilities, the current-term Government, apart from continuing to nurture local start-ups, is also stepping up efforts to attract key I&T enterprises to set up or expand their business in Hong Kong. Many of them possess cutting-edge technologies in AI, large-scale modelling, supercomputing and chip research and development. Their landing in Hong Kong will accelerate the formation of an AI industry ecosystem here.

In terms of clustering more capital and talents to support I&T, as an international financial centre, Hong Kong has a diversified source of capital and a pool of international enterprises and talents. Experience suggests that for international investors, the choice of where to invest ultimately depends on the availability of quality investment opportunities and investment returns. We will continue to welcome more investors and capital, and make good use of the financial strengths of the HKSAR Government to leverage private sector capital through various forms of co-investment to help promote Hong Kong's I&T development.

During my visit to the Middle East last year, the political and business communities there generally expressed interest in expanding their investment scope and projects, with China and Asia topping their list of markets. Following my visit to Saudi Arabia, we were able to secure the hosting of a regional version of the Future Investment Initiative (FII), a large-scale summit held annually in Saudi Arabia, in Hong Kong this December. Moreover, as Hong Kong will organise the Global Financial Leaders' Investment Summit again in November as well as other international conferences, we will bring together a large number of world-leading investment institutes and leaders, enabling them to better understand and grasp the investment opportunities in Hong Kong and our country.

August 13, 2023

"Science and technology are the primary productive force, and innovation is the primary driver of growth." Globally, I&T is an important engine for faster and higher quality economic growth, and it has a direct impact on the competitiveness of a place and the progress of its economic development. In recent years, the Government has made every effort to promote I&T development in Hong Kong, and invested around $200 billion and made enormous efforts to attract talent. The I&T ecosystem in Hong Kong has grown more vibrant. In an increasingly competitive global environment, it is all the more necessary to accelerate Hong Kong's I&T development so as to create a greater impetus for our economic development as well as better employment opportunities for the community. This is also our aspiration when we first proposed attracting strategic enterprises to Hong Kong. The clustering of top-notch and high-potential enterprises will drive the development of associated industrial chains and help attract more enterprises and talents to come to Hong Kong. This will create a virtuous cycle for our I&T ecosystem.

The Government of this term has achieved good progress in attracting I&T enterprises. Our team, including the Innovation, Technology and Industry Bureau and the Office for Attracting Strategic Enterprises, has met with more than 200 companies so far, and over 25 companies have set up or expanded their operations in Hong Kong, or are planning to do so. Many of them are I&T companies with a market capitalisation or valuation of over $10 billion, or engaging in cutting-edge technologies. According to their current plans, they will initially invest a total of more than $17 billion in Hong Kong and create more than 4,000 jobs, most of which are research and development (R&D)-related or senior managerial positions.

Taking a few Mainland companies that I visited recently as examples. Biren Technology is a leader in the field of artificial intelligence computing power; Horizon Robotics focuses on smart driving technology and related chip research and development; Dmall is Asia's largest retail cloud solution provider; Yuan Hua Tech engages in R&D and manufacturing of high-end surgical robots and medical devices. They either have already set up in Hong Kong, or are actively implementing their setup plan in Hong Kong. Three of them would establish their international headquarters and R&D centres outside the Mainland in Hong Kong.

Other recent newcomers include New Horizon Health, a pioneering Mainland company specialising in home-based early detection of high-incidence cancers, which has already set up its global R&D headquarters in Hong Kong; and Time Medical, a high-end medical diagnostic equipment R&D and manufacturing company with original technology, which has set up a new smart production line in the Tai Po InnoPark for putting high-end R&D and manufacturing in Hong Kong for tapping into the global market.

Leading technology company Huawei as well as e-commerce giants Meituan and JD are also actively expanding their operations and developing new businesses in Hong Kong. We are undergoing in-depth discussions with many more strategic enterprises from the Mainland and abroad, and expect that more will set up their business here in the second half of the year.

Apart from artificial intelligence, big data, robotics, medicine as well as life and health, we are making good progress in financial technology. For instance, as set out in this year's Budget, Web 3.0 is one of the new fields underpinning the high-quality development of Hong Kong. As the Web 3.0 Hub of Hong Kong, Cyberport has gathered over 170 relevant enterprises, with their businesses covering non-fungible tokens (NFT), metaverse, digital asset trading platforms, and more. These enterprises include unicorns as well as leading trading platforms in the industry, with their founders coming from over 20 countries and regions.

Faced with challenges brought by the ever-changing external environment, we need to identify the major trends and leverage our own advantages with the support of national policies. By upholding fundamental principles and breaking new grounds, we will continue to strive for development, enhance our own competitiveness and open up more new arenas. We will steadfastly move forward and embrace new development opportunities amidst challenges, thereby making greater contributions to the high-quality development of our country.

August 6, 2023

Among others, the "Harbour Chill Carnival" organised by the Hong Kong Tourism Board has attracted many people to join the event in the past four weekends. Last night, my friends were thrilled to enjoy the shows on the water stage and watch the pyrotechnics within a close distance at the Wan Chai Promenade against the beautiful backdrop of Victoria Harbour. They said it was just like a pleasant and surprising reunion after going through years of the pandemic. The Carnival featured street performance, X Game demonstrations, etc., offering diverse programmes suitable for all ages. In the past two weekends, many people joined the Carnival after visiting the Book Fair or Ani-com & Games. I would highly recommend that you seize the chance of the last weekend of the Carnival (5 & 6 August) to enjoy the breathtaking view of the promenade and have an unforgettable joyful moment.

Statistics show that the economic situation is gradually improving. As Hong Kong has resumed normal and convenient travel with the Mainland and the rest of the world, local consumption and inbound tourism are the main drivers of economic recovery this year so far.

Among the three driving forces of Hong Kong's economic growth, private consumption remained the key pillar supporting growth in the second quarter. After a 24% year-on-year increase in the first quarter, the value of total retail sales continued to rise by 17% in April and May combined, recovering to more than 85% of the level in the same period in 2018. For restaurants, while total receipts for the second quarter will only be released on Thursday, they are expected to continue to grow visibly year-on-year and remain at above the average monthly level of $9 billion as in the first quarter.

However, merchandise exports, another driving force, continued to face severe pressure amid the persistently weak external environment. After an 18% year-on-year decline in the first quarter, the value of Hong Kong's merchandise exports continued to fall by 13% year-on-year in the second quarter. Exports to the Mainland, the United States and the European Union all shrank. Exports to most other major Asian markets continued to fall by varying degrees.

As for the last driving force, fixed investment, it has recently shown signs of slowing down, after reversing a decline in the first quarter. Affected by interest rate hikes and the weaker external economic outlook, fixed investment is expected to soften slightly in the second quarter.

As the market expects interest rates in advanced economies to remain high for some time, a host of factors such as tightened financial conditions, geopolitics, and the global and Mainland economic situations have put asset market performance under pressure. The average daily turnover of the Hong Kong stock market was $102.8 billion in the second quarter, about 20% lower than in the first quarter. Last Friday, the Hang Seng Index closed 2.4% lower than at the end of March. Similarly, the residential property market was quiet in recent months, with an average of 4 066 transactions per month in the second quarter, 13% lower than the number in the first quarter. Property prices have also slightly adjusted downwards recently, though the Residential Property Price Index and the Rent Index as at end June were still about 4.3% and 3.2% higher than at the end of last year.

Although the advance estimates of Gross Domestic Product for the second quarter to be released tomorrow may show the year-on-year growth rate to be slightly slower than in the first quarter, the economy as a whole is still on the track of improvement. As a matter of fact, the road to recovery is often bumpy; while there are ups and downs, it is important that the upward trend be maintained.

Looking ahead in the near term, some positive factors have emerged in the external environment. Last week, under the leadership of General Secretary Xi Jinping, the Political Bureau of the Central Committee of the Communist Party of China analysed the current economic situation in the Mainland, and made arrangements for the work on the economy in the second half of the year. Efforts will be made to expand domestic demand and boost market confidence, which include lifting consumption by increasing household income, giving full play to the Government's role in driving investment, and spurring private investment, while optimising the real estate market policy and stabilising foreign trade and foreign investment. These measures will lend strong support to the Mainland in attaining faster economic growth this year, and will be beneficial to different economic sectors in Hong Kong.

While remaining optimistic in general, we have to pay attention to some changes in the environment and respond proactively to new circumstances. For example, after three years of pandemic, the lifestyle of many people has changed with fewer people going out and spending at night. Meanwhile, nearby cities such as Shenzhen have developed attractive leisure spots in recent years. Coupled with the resumption of convenient travel between the two places, there has been a marked increase in the number of Hong Kong people going north for consumption. In addition, many sectors have indicated that in recent months, Mainland visitors coming to Hong Kong seem to be more interested in in-depth local cultural attractions, and their consumption patterns may have changed.

As the lifestyle and consumption pattern of our residents and visitors continue to evolve, we need to come up with more distinctive and creative marketing strategies and initiatives as well as better products and services; generate new momentum for consumption growth; enhance Hong Kong's attractiveness and competitiveness as a tourist destination, an events capital, a culinary paradise and a city renowned for its hospitality; and attract members of the public as well as visitors to spend and enjoy themselves in Hong Kong. We hope to join hands with the industries in exploring innovative ideas, with a view to boosting the market and our economy.

In the medium to long term, I have full confidence in the development of Hong Kong. Under the "One Country, Two Systems" principle, Hong Kong has unique and irreplaceable advantages. With the staunch support of our country, we will continue to fulfil our role as the "double gateway" connecting the Mainland and the world: on the one hand, assisting Mainland enterprises to tap into international markets, and promoting mutual access between the capital markets of the Mainland and the world; on the other, attracting capital, talent and enterprises from around the globe to Hong Kong.

Taking attracting enterprises and investments for example, since the establishment of the Office for Attracting Strategic Enterprises at the end of last year, it has met with more than 150 enterprises, many of which are leaders in their respective industries, or companies engaging in cutting-edge technologies. Some of them have already confirmed landing in Hong Kong. The first batch of strategic enterprises are mainly focused on life and health technologies, artificial intelligence and data science, as well as fintech.

All in all, as the external environment remains complicated and volatile, we must respond in a flexible and proactive manner so that we can continue to reinforce our recovery momentum and strengthen our impetus for growth. With the staunch support from our country, as well as the concerted efforts of the Government and different sectors of the community, Hong Kong's economy will definitely move forward and grow strong, along a more comprehensive and diversified direction.

July 30, 2023

The Government has already secured a land supply of around 7,300 hectares for the future, which has exceeded the anticipated demand of 6,200 hectares of land between 2019 and 2048 as estimated in the report of Hong Kong 2030+. The supply of "developable land" in the coming ten years would reach about 3,300 hectares, half of which would come from the strategic growth areas of Northern Metropolis and the Kau Yi Chau Artificial Islands.

Quantity aside, it is essential that we increase the speed of land supply. For some time, land supply was slackened due to various restrictions, such as statutory and administrative procedures that may be obsolete or excessive; and manpower shortage in the construction industry. We have recently seen breakthroughs in these two areas, which are expected to speed up the supply of land and housing substantially.

Land production involves different statutory procedures. Such procedures are intended to uphold the integrity and professionalism of the development process, and at the same time enable the views of affected parties or interested members of the public to be duly considered and adopted as appropriate. That being said, going through the procedures could take time, and it could be disproportionate to the scope of the development project. For example, plan-making under the Town Planning Ordinance, or the gazettal procedures of large-scale roadworks or railway development projects under the respective ordinances, could take 17 months or longer – factoring in the time in handling representations and comments under the statutory procedures – and they require a large amount of time and resources. To address rising expectations of the community for t land supply, while maintaining public participation, we need to streamline the statutory procedures, remove repetitive procedures of a similar nature, and rationalise obsolete arrangements, with a view to compressing the time required for land production.

Two weeks ago, the Legislative Council ("LegCo") passed the Development (Town Planning, Lands and Works) (Miscellaneous Amendments) Bill 2022. The Bill seeks to amend six major ordinances to streamline the statutory procedures for town planning, land resumption, reclamation, roadworks and railway development. It has also proposed an array of measures to expedite the development process, for example, streamlining the plan-making procedures under the Town Planning Ordinance.

The amended ordinances will come into effect on 1 September this year, and would benefit different development projects including the Northern Metropolis and the Kau Yi Chau Artificial Islands. Past projects of a similar scale often took more than a decade from project initiation to the production of the first batch of developable land. With the streamlined procedures, the time required could be compressed to seven years. As for turning primitive land to a spade-ready site for an average public housing project, the time required could be shortened from at least six years to around four years.

We thank LegCo Members for their careful examination of the Bill in the past six months, and for providing various constructive suggestions to refine the Bill. Together we strive to respond to the community's expectations for speedier land supply.

Besides streamlining statutory processes, we have also enhanced the relevant administrative procedures and internal coordination. The Development Bureau ("DEVB") has set up a Steering Group to holistically review the procedures involved in various aspects, as well as align and rationalise the standards and definitions in development approval processes adopted by relevant departments. So far, streamlining measures relating to 11 aspects have been rolled out, including those on building height restrictions, landscape requirements, design and disposition clauses under lease, site coverage restrictions, and gross floor area/plot ratio restrictions. While reducing repetitive handling of matters, the measures have also enhanced the transparency and certainty of the approval process.

On top of streamlining procedures and coordination, we also need to enhance the productivity of Hong Kong's construction industry. This includes stepping up the application of advanced construction techniques and innovative technologies, and at the same time increasing the overall manpower supply, so as to ensure that the land we identified could be created as early as possible for the benefit of the community.

On the application of advanced technologies, the Government has injected a total of $2.2 billion into the Construction Innovation and Technology Fund. DEVB has also set up a cross-departmental steering committee to co-ordinate the development of high productivity construction methods such as Modular Integrated Construction ("MiC"), to promote the use of innovative technologies and raise productivity. I have also earmarked $60 million in the Budget this year to conduct respective studies on establishing the Building Testing and Research Institute as well as the construction of the first advanced construction industry building. Apart from supporting the construction industry in enhancing research and development as well as application of new construction technologies, the initiatives, as they materialise, would also provide the space for operators to set up steel reinforcement bar prefabrication yards and processing sites for MiC to enhance speed and safety in construction.

On manpower supply, we are joining hands with the industry in launching a promotion campaign to publicise the professional image and development opportunities of the sector so as to attract new blood. We also allocated $1 billion to the Construction Industry Council ("CIC") last year for funding more manpower training and enhancing workers' skills.

It is difficult to meet the manpower demand of the sector in a short period of time by merely strengthening local training, particularly in view of the many different trades in construction. According to the manpower forecast report published by CIC earlier this year, the manpower shortfall will rise to over 40 000 in 2027. We have thus launched the Labour Importation Scheme for the Construction Sector as a supplementary measure. Opened for applications from last Monday (July 17), the Scheme has a quota ceiling of 12 000 – the number has duly taken into account the need to safeguard employment opportunities and wages of local workers on the one hand, and on the other prevent Hong Kong's development from being severely constrained due to insufficient manpower.

Our efforts to identify and increase land supply, streamline statutory procedures, enhance coordination of administrative processes, apply advanced technologies and increase manpower supply, all point to the same goal – our commitment to adopt a comprehensive and multi-pronged approach to expedite land and housing production. We are determined to create the necessary capacity and build the momentum for the development of Hong Kong in the long run.

July 23, 2023

Some 6.5 million people are eligible to receive the second instalment of consumption vouchers. Among them, around 136 000 have chosen to switch to another stored value facility (SVF) for receiving the vouchers, while around 220 000 are newly eligible registrants. They will start receiving their vouchers today.

It is worth noting that about one million people who use Octopus cards would not be able to collect the second instalment of voucher today, since they, after receiving the first instalment in April, have not yet reached the cumulative amount of "eligible spending" by 30 June. The Secretariat had sent reminders to these users earlier. Among them, about two-thirds have their cumulative "eligible spending" falling short of the required amount by less than $500, and as for most of the rest, the amount that falls short is less than $1,000. Those who fulfil the spending requirement by the end of this month will receive the second instalment on 16 August, and so forth, but the requirement has to be met by end-October at the latest. If one wishes to check the records relating to the cumulative amount of eligible spending in their Octopus cards, they may do so through the Octopus mobile app, the Octopus website, the Octopus hotline and the dedicated Octopus Service Points at MTR stations. People who receive consumption vouchers using other SVFs are not subject to the above requirement. All they need to do is to use their vouchers before the relevant expiry date.

The disbursement of the second instalment of consumption vouchers will inject around $13 billion of additional purchasing power into the retail and catering industries. While the Consumption Voucher Scheme has operated for three years, electronic payment in Hong Kong has become more prevalent with expanded coverage. A total of more than 13 million individual SVF accounts and over 220,000 corporate SVF accounts were opened during this period. According to statistics from the Hong Kong Monetary Authority, the total value of SVF transactions in the first quarter of 2023 was $138.5 billion, representing an increase of around 25% year-on-year. The number of transactions was over 1.8 billion, with an average transaction value at $77. Among them, physical point-of-sale transactions rose by more than 36%. All these show that electronic payment has already become more widely accepted as a mode of payment in our daily lives.

With the rapid advancement in electronic payment, it is now the golden opportunity to help businesses reduce cost, improve efficiency and increase revenue through accelerating digitalisation of business operations. This is also a good timing for start-ups to roll out innovative products or services. Last week, the Legislative Council approved a funding of more than $700 million to kick-start two measures announced in this year's Budget. The first is the $500 million Digital Transformation Support Pilot Programme, which will provide subsidies to small and medium enterprises in the two pilot sectors (food and beverage industry and retail industry) in applying ready-to-use basic digital solutions. The second is the $265 million Incubation Programme for Smart Living Start-ups which encourages and assists start-ups to develop more innovative solutions and services related to smart living, thereby enhancing the quality of life of our residents.

Innovation and Technology (I&T) is an important engine for driving Hong Kong's economy forward, as well as an accelerator and catalyst for upgrading and restructuring traditional industries and enterprises. During my trip to Beijing last week, I visited a number of I&T enterprises. From the cutting-edge civil aerospace technology to intelligent autonomous driving, and to cloud-based solutions for large retail networks, new technologies and products can enable traditional corporate clients to enhance their business models; increase the range of their services or products and improve their quality so as to generate more revenue; and provide better service experience to customers. Hong Kong enterprises can learn much from their inspiring stories. These Mainland enterprises commonly said that Hong Kong's world-class professional services and financing platform, together with the convergence and free flow of international capital and talents as well as the presence of international companies and organisations, have made Hong Kong the best choice for them to develop and manage their international business.

The focus of the Beijing trip was to call on relevant Central Authorities and financial regulators to report to them the latest economic and financial developments in Hong Kong, and to gain a better understanding of the Mainland's regulatory approach and developments in relevant areas. We also took the opportunity to discuss ways to promote Hong Kong's further integration into the country's overall development and alignment with national development strategies; and to reinforce and enhance Hong Kong's status as an international financial centre and as the international hub for other areas. Through the recent visits to Shanghai and Beijing in the past two weeks, we can feel more deeply our country's love and care as well as staunch support for Hong Kong; and understand the uniqueness of Hong Kong's advantages under the "one country, two systems" principle. Our country's economy has entered a new era and a new stage, and is marching towards high-quality development under a new development pattern. Hong Kong needs to play a more proactive role, and strive harder to make unique and irreplaceable contributions to the great rejuvenation of the Chinese nation.

July 16, 2023

This is the Harbour Chill Carnival, one of the highlights of the "Happy Hong Kong" campaign. For five weekends in a row starting this weekend, the Carnival will bring a whole new experience of cultural performances by featuring shows on a water stage as well as ashore at the Wan Chai waterfront. My gratitude goes to various government bureaux/departments as well as the Hong Kong Tourism Board for their dedicated efforts in organising the event. I invite everyone to come to join the fun-filled Carnival at the Wan Chai waterfront, especially next Sunday (16 July), which is the disbursement date of the second instalment of consumption vouchers. I hope that you will come with your relatives and friends after dining together on that day, and have a great time together at the Carnival.

Since the announcement of the Budget early this year, we have been pressing ahead with efforts to implement various initiatives, from the Consumption Voucher Scheme to the "Happy Hong Kong" campaign. Our aim is to boost local consumption while bringing more pleasant experiences to residents and reinforcing the positive market expectations for the future. Indeed, we can create more room for improving people's quality of life and alleviating social and livelihood issues only if our economy continues to improve with a stronger momentum. Striving for economic growth and better livelihood is the common aspiration of our society, as well as the core mission of the HKSAR Government.

Yesterday, I just finished my three-day visit to Shanghai, which was my first visit to the city in three years since the society has resumed normalcy after the epidemic. During the trip, in addition to attending the World Artificial Intelligence Conference (WAIC) 2023 and the Asian Logistics, Maritime and Aviation Conference Satellite Conference – a New Chapter of Hong Kong-Shanghai Collaboration, I met with the representatives of various organisations, innovation and technology (I&T) enterprises and the business sector to discuss in depth how to make fuller and better use of the strengths of Hong Kong as an international financial centre and the services provided here to spur their growth. We also explored how to strengthen collaboration in order to seize together the new development opportunities that are coming.

This visit proves that Hong Kong is on the right track in actively promoting I&T development. However, as technology is rapidly developing and constantly evolving, competition intensifies day by day. We must grasp the opportunities of the times, always stay ahead of changes and expedite our work.

In respect of attracting enterprises and investment, we received quite a lot of positive feedbacks during the visit. Through visiting enterprises or their research centres, and attending luncheons and other special exchange sessions, we met and liaised with many emerging start-ups and leading technology enterprises. All of them acknowledged Hong Kong's advantages under "One Country, Two Systems" and its international status. They also showed great interest in making use of Hong Kong as a base to tap into the international market. I believe that there will be some good news shortly on attracting strategic enterprises to Hong Kong.

Over the past few days, I also visited various organisations, including the New Development Bank, the China Foreign Exchange Trade System and the Shanghai Data Exchange, and actively discussed with them how to facilitate their development by better leveraging our strengths as an international financial centre, as well as promoting co-operation in the areas of finance and data.

It is also worth mentioning that this year marks the 20th anniversary of the Hong Kong/Shanghai Co-operation Conference. The two cities, each playing a crucial role in the Guangdong-Hong Kong-Macao Greater Bay Area and the Yangtze River Delta Group of Cities, can enhance co-operation in numerous areas such as finance, trade and commerce, logistics and shipping, green transformation, digital economy, and culture and tourism, with a view to jointly making greater contributions to our country's high-quality development.

In this trip, I also met with Hong Kong people living in Shanghai in a dinner to understand their lives and work; and paid a visit to Fudan University to exchange views with the teachers, students and alumni. During the speech and the exchange session at Fudan University, I introduced Hong Kong's latest development and its future opportunities brought by the synergy of the finance-I&T dual engine. From the lively interactions and discussions, it was obvious that the participants had keen interest in the opportunities and future of Hong Kong. While Hong Kong and Shanghai share many things in common, each has its own distinct strengths, characteristics and development achievements. Collaboration between the two cities will definitely be mutually beneficial and bring greater strength.

July 9, 2023

Having taken into account a range of factors, including the current property market situation, the local economy, the external conditions, etc., we consider that there is room to adjust the countercyclical macro-prudential measures for certain property mortgage loans. The aim is to reduce the down payment burden for members of the public in purchasing their first property for self-use, or switching to another property, without increasing the risks posed to the banking system. It is worth emphasising that this adjustment aims to reduce the down payment and mortgage insurance costs for members of the public, and the measures are clear and focused.

As for the demand-side management measures for residential properties to suppress speculative and investment activities, commonly known as the "harsh measures", they remain unchanged. Indeed, we must put the home ownership needs of local residents first. It should be stressed that this adjustment is not any change to relaxing the "harsh measures", or any prelude to such change. The Government has no plan to relax them.

Following the Hong Kong Monetary Authority's ("HKMA") adjustments to the macroprudential measures, the latest regulatory requirements for bank mortgages are as follows:

From the user perspective, fine-tuning the property mortgage loan arrangement can relieve some actual down payment burden for members of the public in purchasing their first property for self-use or switching to another property. As the portion requiring insurance coverage for certain mortgage loans is slightly reduced, the relevant mortgage insurance premium will also be lowered. In addition, the Hong Kong Mortgage Corporation ("HKMC") will offer a special premium concession to first-time home buyers by waiving premium on insurance coverage for the mortgage loan portion not more than 5% above the maximum loan-to-value ("LTV") ratio for banks for properties valued up to HK$15 million.

Measures for property mortgage loans has all along been aimed at ensuring that the banking sector has sufficient resilience to manage financial risks and to avoid over-leveraging in the mortgage market when the property market is exuberant. We have been closely monitoring changes in the property market, interest rates, capital flows, as well as the external and domestic economic and financial environment, and make appropriate adjustments to the measures as necessary.

Over the past three years, we made adjustments to the measures for property mortgage loans mainly by relaxing the LTV ratio under the Mortgage Insurance Programme ("MIP"). Under the MIP, for example, for first-time home buyers to apply for mortgage loans of up to 90% of the property value, we raised the property value cap in phases from $4 million to $10 million; for mortgage loans of up to 80% of the property price, we raised the property value cap to $12 million. The market reacted positively to these adjustments, and the residential property market did not undergo much volatility. These measures were intended to make the down payment less burdensome and to provide more choices for first-time home buyers.

Excessive volatility in the property market will adversely impact on the economy and the well-being of the society. As elaborated above, the macro-prudential measures relating to the LTV ratios for property mortgage loans are neither invariable nor flip-flopping. The fundamental principle is to maintain stability of the banking sector while at the same time cater for the needs of the public in buying their own homes.

July 7, 2023

It has been more than a quarter of a century since Hong Kong returned to the Motherland. Over the past 9 000 days or so, we have undergone many ups and downs and overcome major challenges one after another. The Asian financial turmoil in 1998 and the global financial tsunami in 2008 have let us fully understand the significance of financial risk management, which concerns the stability of our society as well as the well-being of our people. Our fight against SARS in 2003, and the battle against the COVID-19 pandemic which just came to an end, have taught us that the whole society has to work together in anti-epidemic initiatives. Having learnt from the illegal Occupy Central movement in 2014 and the "black-clad violence" in 2019, we are fully aware of the importance of safeguarding national security, as security is the prerequisite to prosperity.

Challenges have never been easy, but with flexibility, diligence, perseverance and hard work, we have risen to the occasion and learnt from experience.

As our economy continues to grow and expand, our gross domestic product (GDP) has more than doubled since 1997 to exceed HK$2.8 trillion, representing an average annual growth of about 2.8%, higher than the average growth of 1.9% in other advanced economies over the same period. Our GDP per capita has now reached a high level of US$49,000.

Our expenditure on healthcare, social welfare and education continues to increase. The average life expectancies for males and females increased from 77.2 years and 83.2 years in 1997 to 81.3 years and 87.2 years in 2022 respectively, reflecting to a certain extent that our living standard continues to improve. Among our working population, those with post-secondary education account for about 47%, an increase of about 25 percentage point from the level of 1997. According to the Human Development Index compiled by the United Nations Development Programme which is based on indicators such as life expectancies, educational levels and national income per capita, Hong Kong ranked fourth among 191 countries and regions last year, just behind Switzerland, Norway and Iceland, demonstrating that Hong Kong has a leading edge in terms of overall development level and living quality.

When we are looking back, we want to get a better picture of the past and gain a foothold for planning the future, so that the road ahead is sound and steady with the development thereafter better and brighter.

There have been many changes in the situations and challenges that surround us in the past 26 years, but what remains unchanged is our country's unwavering support for Hong Kong, ranging from the stable supply of fresh water, grocery items and fresh food to policies facilitating our economic development. What also remain unchanged are the flexibility and hard work of the Hong Kong people and the HKSAR Government's commitment to further boosting the economy, improving people's livelihood and serving the community. All these are the dynamics that enable Hong Kong to turn challenges into opportunities at different stages and capitalise on such new opportunities to scale new heights.

Our country is pursuing high-quality development in all areas and advancing the great rejuvenation of the Chinese nation with Chinese-style modernisation on all fronts, with Hong Kong starting a new chapter for future success. With a vast market, stable and steady development, further reforms and opening-up as well as continued innovation in different areas, our country has provided the most conducive environment and boundless opportunities for development of Hong Kong. From our institutional advantages under "One Country, Two Systems" to our common law system and the seamless interface with international best standards and rules, we are able to gather capital, top-notch enterprises and talents from across the globe. All these are our unique advantages that support the development of Hong Kong as an international financial centre and an international innovation and technology hub.

We have to keep on seizing this historical development opportunity. In particular, we need to let our young people have a deeper understanding of the progress, philosophy, path and objectives of our country's development, so that they can all tap on this golden era of opportunities and fully develop their potentials to contribute to the country.

The past 26 years have showcased Hong Kong's remarkable story and our love for the Motherland. It was through concerted efforts, dedication to excellence as well as perseverance that our successful story was written. Looking forward, we will continue to work hand in hand and strive together for the betterment of Hong Kong and the prosperous development of our country, with a view to making brand-new and greater contributions to the historic feat of the great rejuvenation of the Chinese nation.

July 2, 2023

Looking back at the past four quarters, the economy shrank by over 4% in the third and fourth quarters of last year due to the worsening external environment and tightening financial conditions, though a series of Government's counter-cyclical measures had a stabilising effect on the economy. Under the leadership of the Chief Executive, we precisely adjusted our anti-epidemic measures, effectively controlled the epidemic, and achieved full resumption of normal travel in early February this year. This supported a significant improvement in the economy in the first quarter of this year, in which a year-on-year growth of 2.7% was registered. Other measures, including the distribution of consumption vouchers, tax and fee waivers and reductions for enterprises, and the extension of the 100% loan guarantee scheme for small and medium-sized enterprises, have also effectively boosted the momentum of economic revival. The unemployment rate in Hong Kong has also declined from 4.7% in the second quarter of last year to the current 3.0%. Inflation has remained generally moderate. The prices and trading activities of the residential property market have both rebounded moderately in the first five months of the year. It can be said that the end of the epidemic and full resumption of normal travel have enabled various economic and business activities to quickly recover. The year-on-year growth of retail sales value accelerated from only about 1% in the second half of last year to nearly 22% in the first four months of this year. Fixed investment in the first quarter of this year also increased substantially by nearly 6% in real terms over a year earlier. However, Hong Kong's merchandise exports are still under pressure, recording a double-digit year-on-year decline in value terms in the first four months of this year, mainly due to the further deterioration of the global economy, geopolitical tensions and intense competition among economies. These challenges are expected to continue for the rest of this year.

While we cannot control the external environment, we are pressing ahead at full steam with local development.

The epidemic has brought many challenges in the past few years, and we have decisively adopted an expansionary fiscal policy and launched large-scale counter-cyclical measures to overcome various short- and medium-term challenges and risks. We have also promoted medium- and long-term development comprehensively with a perspective that goes beyond economic cycles. We must seize the historic opportunities brought by the development of our country, and take a holistic view and plan for the long term by taking into account international perspectives and Hong Kong's position. Through better integration of a "capable government" and "efficient market" alongside innovations in policies and mechanisms, we can enhance economic development momentum, explore and cultivate new economic growth areas, and strive to boost the productivity and competitiveness of traditional industries.

As regards expanding capacity, the new-term Government strives to increase land supply by enhancing speed, quantity and efficiency. It has identified 3,280 hectares (ha) of land, which is sufficient to meet development needs in the next 10 years. 3,280 ha is roughly a double of the size of Tseung Kwan O. Of these supplies, around half come from the Northern Metropolis and the Kau Yi Chau Artificial Islands.

For housing, we have identified sufficient land for the provision of about 360 000 public housing units, which will be able to meet the demand for public housing in the next ten years. While expediting housing construction, we have introduced Light Public Housing and Transitional Housing with a view to providing more options for grassroot residents who are inadequately housed and yet to be allocated public rental housing. We also endeavour to increase the supply of subsidised sale flats through various means.

On transportation, the Tseung Kwan O - Lam Tin Tunnel and Cross Bay Link, Tseung Kwan O were commissioned at the end of last year, providing a more convenient commuting option for the district. The Tung Chung Line Extension of MTRCL commenced construction at the end of last month, which is the first railway project to be built under the current-term Government. We are also taking forward various planned projects in full swing, amongst which the construction of Oyster Bay Station, Tuen Mun South Extension, and Kwu Tung Station of the Northern Link will commence this year.

A Bigger and Stronger International Financial Centre

Hong Kong is where international and Mainland capital, talent and projects converge. We are a platform for efficient financing and capital flow, and a testing ground for financial innovation. In the past year, Hong Kong, as an international financial centre, has seen its business areas becoming wider, the product suite enriched, the sources of capital more diverse, and the cooperation with the Mainland, especially the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) closer.

1. On the stock market, exchange-traded funds (ETFs) were included under Stock Connect, while stocks of international enterprises that are listed in Hong Kong and fulfil specified conditions were included under Southbound trading. Together with the launch of "HKD-RMB Dual Counter Model" and the introduction of listing channel for pre-profit specialist technology companies, they have enriched the choices of Hong Kong stocks for investors, and are also conducive to enhancing attractiveness to capital and vibrancy of Hong Kong stocks.
2. On bond issuances, in the first half of this year, we made two triple-currency green bond offerings covering US dollars, Euro and Renminbi tranches. Both offerings marked the largest ESG bond issuance in Asia. In addition, we made the world's largest retail green bond issuance last year, as well as the world's first government tokenised green bond issuance in February this year, demonstrating our commitment to promoting financial inclusion and innovation.
3. Hong Kong's banking system remains resilient, with total deposits (including HKD and foreign currency reserves) having increased by 2% compared to mid-last year, to more than HK$15.5 trillion as at end-April. The capital adequacy ratio also stood at 20.8%, well above the 8% international regulatory standard.
4. On widening the sources of capital, since the issuance of the Policy Statement on Developing Family Office Businesses in Hong Kong and the organisation of the Wealth for Good in Hong Kong Summit, Invest Hong Kong has received close to 100 enquiries from family offices worldwide, with one-third having indicated interest in setting up in Hong Kong.
5. On cooperation with the GBA, we jointly promulgated 18 measures for Supporting the Linked Development of Shenzhen and Hong Kong Venture Capital Investments in Qianhai with the Shenzhen Qianhai Authority to provide facilitation and preferential policies for the Hong Kong private equity industry. We also signed the "Agreement on Enhancing Hong Kong-Guangdong Financial Cooperation" with the People's Government of Guangdong Province to further promote deepened financial cooperation between Guangdong and Hong Kong.
6. On financial infrastructure and innovation, the Hong Kong Monetary Authority is exploring the application of e-HKD. The Multiple Central Bank Digital Currency Bridge ("mBridge") Project has moved beyond experimentation and entered into the pilot phase. In addition, the cooperation with the People's Bank of China on e-CNY cross-boundary retail payments has entered into the second phase of technical testing, with the aim of enabling the use of Faster Payment System to top up e-CNY wallets in the future. In October 2022, the Commercial Data Interchange was formally launched. So far, it has facilitated more than 3,100 small and medium enterprise loan applications and reviews, with an estimated total credit approval amount exceeding HK$2.8 billion.

We must open up new tracks in order to achieve a leap in growth. The new-term Government proposes to develop Hong Kong into an international centre for green technology and green finance, hoping to seize a leading position in this huge international new market by leveraging Hong Kong's advantages in these two areas. This seeks to capitalise on Hong Kong's strengths to serve the country's needs and respond to the increasing international demand. Statistics show that in the next 30 years, the Asian region will require US$66 trillion in climate investment, and there is a massive need for upgrading corporate equipment for different industrial chains. This demonstrates the immense demand for green technology and green finance.

International Innovation and Technology Center makes strong progress

Over the past year, we have made tremendous efforts to promote research as well as transformation and application of research outcomes in innovation and technology ((I&T)) at full steam, through new policies, new initiatives and new modes, the details of which were outlined in my blog article last week.

The new initiatives announced in Chief Executive's Policy Address last year in attracting businesses and talents are being implemented. These are strong policy measures to attract leading (I&T) companies with cutting edge technologies to set up in Hong Kong; and encourage more talents to work and live here. By doing so, we are creating vibrant ecosystems and industry clusters. As regards the Hong Kong Investment Corporation, it has received investment proposals from various enterprises and is already engaging with them.

It can be said that the development of (I&T) in Hong Kong has gain wider recognition and support in the community. It is moving towards a phase of accelerated progress.

At the meeting celebrating Hong Kong's return to the motherland last year, President Xi Jinping set out in his important speech four proposals, which have become the guiding principles of our work in the past year and beyond. The HKSAR Government spares no effort to pursue economic growth and improve people's livelihood through various policies and measures. Indeed, we are facing numerous challenges and difficulties in the course of development, and it takes time to resolve the various problems accumulated over the years. Nevertheless, as the Chief Executive has put it, the whole HKSAR Government team, the executive authorities and legislature, and different sectors of the community have become all the more united, and our economy is moving in a positive direction. As long as we continue to strive for progress and expedite development, Hong Kong's future will certainly be better and brighter.

June 25, 2023

Promoting the development of innovation and technology (I&T) has been a priority for the Government. The National 14th Five-Year Plan makes clear the position and mission of Hong Kong to develop as an international I&T centre. Promoting the upgrading, transformation and diversification of industries through I&T is the road which must be taken for Hong Kong to move towards quality development. This will also help our country to accelerate the realisation of high-level self-reliance and greater strength in science and technology and Chinese-style modernisation. The development of I&T is a core issue for Hong Kong's future development.

Since the establishment of the then Innovation and Technology Bureau (now the Innovation, Technology and Industry Bureau) in 2015, we have invested nearly $200 billion to support the development of I&T. In his Policy Address delivered in October last year, the Chief Executive proposed measures to actively compete for enterprises and talent. The Hong Kong Innovation and Technology Development Blueprint promulgated at the end of last year establishes a clear development direction and roadmap for Hong Kong's I&T development. I have announced in this year's Budget that Hong Kong should implement three main directions of taking forward high-quality development. We must actively align with national development strategies, and leverage our strengths and the unique advantages under "one country, two systems" to open up new arenas for our economic development.

The new-term Government has assumed office for nearly a year. We have accelerated our efforts in the area of I&T and made good progress. The overall I&T ecosystem in Hong Kong has become more vibrant, with various achievements in nurturing start-ups, attracting enterprises and talent, and realising the transformation of research and development (R&D) outcomes.

Take the Hong Kong Science Park, one of our flagship I&T bases, as an example. In the past year, a total of 320 companies landed, up 30% compared to last year, of which 20% came from the Mainland or overseas, including one "unicorn" company which focuses on developing next-generation data processing units (DPUs). In addition, over 430 start-ups graduated from the Hong Kong Science and Technology Park's Incubation programme. In the past year, technology companies in the Science Park raised about $780 million.

The I&T ecosystem of Cyberport, another flagship I&T base, is also growing rapidly. At present, there are over 1,900 enterprises in the Cyberport community of which the start-ups therein have accumulatively raised over $35.7 billion, and own over 480 intellectual property items. Among the six "unicorns", a smart logistics start-up was successfully listed on the Hong Kong Stock Exchange last year; while a travel platform is on the way to listing. Last year, one Cyberport community company became the second virtual assets trading platforms licensed by the Securities and Futures Commission. On the other hand, I have allocated $50 million in the Budget for Cyberport to accelerate the development of the third-generation Internet (Web 3.0), which uses blockchain as the underlying technology. Over the past year, more than 150 relevant enterprises landed in Cyberport, which will certainly bring in more R&D and applications in this respect.

In promoting applied R&D and new industrialisation, the Government's five research and development centres have also been collaborating well with the industry. In the financial year 2021-22, over 210 R&D projects were undertaken, representing an annual increase of over 10%; 135 patent applications were granted, up 16% compared to the previous year. One example is a fabric handling technology developed by the Hong Kong Research Institute of Textiles and Apparel (HKRITA), which won a Gold Medal with Congratulations of the Jury at the International Exhibition of Inventions in April this year. On the other hand, the Hong Kong Productivity Council has assisted more than 150 enterprises to apply intelligent manufacturing technology for production. For example, it has recently assisted a traditional life and health-related enterprise to improve its production and management efficiency by using smart robots and data systems.

All these examples have demonstrated the spirit and ingenuity of the local industry. With the right policies and technical support, Hong Kong is definitely capable of realising Industry 4.0.

We will continue to strengthen our support for I&T and new industrialisation. The $10 billion "Research, Academic and Industry Sectors One-plus Scheme" announced in the Policy Address has recently been approved by the Legislative Council. We will inject funds into the Innovation and Technology Fund in phases to implement the programme, with a view to accelerating the "from 1 to N" transformation and commercialisation of R&D outcomes.

We also need to step up the pace for digital transformation for the service sector, which accounts for a larger share of our economy. The Digital Economy Development Committee, chaired by myself, was established last year and is conducting in-depth studies on cross-boundary data flows, digital infrastructure, digital transformation and talent development. In particular, $500 million has been set aside in this year's Budget for Cyberport to launch the Digital Transformation Support Pilot Programme, a one-to-one matching scheme to assist SMEs in applying ready-to-use basic digital solutions, which will be launched shortly.

To further enrich the local I&T ecosystem, we are sparing no efforts to attract enterprises with frontier R&D capabilities to Hong Kong. The landing of top-notch enterprises in the industry can lead to a clustering effect in the upstream and downstream of the industry chain, and attract top talents to Hong Kong.

The Office for Attracting Strategic Enterprises (OASES) is working to attract high-potential and representative strategic enterprises from around the globe, particularly in strategic industries including life and health technology, artificial intelligence and data science, financial technology, advanced manufacturing, new energy and new materials. In about six months since its establishment, OASES has met with more than 150 enterprises, many of which are leaders in their respective industries, as well as companies engaging in cutting-edge technologies. Some enterprises have submitted their development proposals.

For these enterprises, there are many different factors to consider whether to land in Hong Kong, including government policies and funding support, flexibility in land premium and infrastructure provisions arrangements, the availability of talent in Hong Kong, the ease of cross-boundary data flow, taxation and other issues regarding imports into the Mainland, etc. We will consider the overall benefits that these enterprises can bring to Hong Kong and discuss with them the most suitable conditions and proposals. We have set up a $30 billion Co-Investment Fund and will take into account various factors, including the potential of individual projects of the enterprises to drive the development of local industries, the contribution to the development of the local economy and I&T, as well as the number of job opportunities that can be created, in deciding whether to co-invest in the enterprises concerned. In terms of land, the existing Science Park and Cyberport, as well as the Hong Kong-Shenzhen Innovation and Technology Park in the Loop and the San Tin Technopole, which are being taken forward at an accelerated pace, are also options for enterprises to explore. In recent months, OASES, through the Immigration Department, has handled a number of cases related to talent admission.

Apart from the devotement of public resources, there has also been a growing interest in investing in I&T in recent years. Hong Kong has vibrant securities, private equity and venture capital markets, and is an ideal platform for I&T companies to raise capital. In 2018, we reformed our listing regime to facilitate the listing of pre-revenue/pre-profit biotechnology companies in Hong Kong. In March this year, we also launched a widely-welcomed listing regime for specialist technology companies, which provides an additional channel of financing for specialist technology enterprises in industries such as cloud services, artificial intelligence, semiconductors, electric vehicles, advanced materials and new energy. It is also expected to contribute to the breakthroughs to R&D for core technologies in our country.

With the concerted and focused efforts paid over the years, the foundation of Hong Kong's I&T development has been further strengthened. In the future, we will continue to work in accordance with the four major directions set out in the Hong Kong Innovation and Technology Development Blueprint, with a view to enhancing Hong Kong's I&T ecosystem, enlarging the I&T talent pool, promoting the development of digital economy and a smarter city, so as to join hands with our sister cities in the Greater Bay Area to build a world-class I&T hub and move towards high-quality development together with our country.

June 18, 2023

In fact, as at the first quarter of this year, the proportion of RMB in cross-border payments and receipts in the Mainland has risen to 48%, surpassing the US dollar for the first time. RMB has become the most commonly used currency in the Mainland's cross-border transactions. While more Mainland enterprises are using RMB as the settlement currency for cross-border trade, the use of RMB by other countries as the currency in bilateral cross-border trade settlement and for investment has also increased. The internationalisation of RMB is accelerating, bringing new and historic opportunities for the development of Hong Kong's offshore RMB business. We must seize these opportunities.

Hong Kong is a global hub for offshore RMB business. As at end April this year, the size of offshore RMB deposits in Hong Kong, including certificates of deposit, was close to RMB1 trillion, making it the world's largest offshore pool of RMB funds. We are actively enriching Hong Kong's offshore RMB asset pool, seeking to fulfil the functions of RMB as a currency for international payment, investment and reserve. This will make the entire offshore RMB ecosystem more vibrant.

In fact, since the launch of Shanghai-Hong Kong Stock Connect in 2014, the scope and capacity of the mutual market access programme has been gradually expanding to cover Shenzhen-Hong Kong Stock Connect, Bond Connect, Cross-boundary Wealth Management Connect in the Greater Bay Area, ETF Connect and Swap Connect, etc., further increasing the channels for the two-way fund flows while containing the risk of capital outflows under closed-loop management. The upcoming "HKD-RMB Dual Counter Model" for securities trading will facilitate more efficient flow of offshore RMB in the international market.

HKEX will launch the Dual Counter Model for trading on 19 June. The first batch will cover 24 stocks which can be traded in HKD or RMB respectively. The two counters will have the same share holder register, with same physical shares in which holders' rights and entitlements would be the same. These stocks cover industries in technology, finance, properties and consumer products, accounting for some 40% of the average daily turnover of Hong Kong's stock market. This will offer more diversified investment options for local and global offshore RMB holders. Looking ahead, we can expect a gradual increase in the number of stocks adopting the Dual Counter Model. To minimise the price difference between the two counters effectively while promoting the liquidity of the RMB counter, the new arrangement also includes setting up the "Dual Counter Market Maker" regime. At present, nine exchange participants have been designated as such market makers to provide liquidity for relevant trading. Going forward, we will promote the inclusion of RMB-denominated securities under Southbound Trading of Stock Connect, so that Mainland investors can trade Hong Kong shares with onshore RMB funds, reducing the potential exchange rate risk when their funds go south.

Hong Kong must continue to enhance the richness and convenience of the offshore RMB business market. This will not only help the internationalisation of RMB but also meet the needs arising from changes in the international political and economic landscape in recent years. In particular, geopolitical tensions have become increasingly complex; the US banking industry has been in turmoil in recent months; and the US government has long been plagued by debt problems, while at the same time "monetising" huge deficits and arbitrarily freezing or even confiscating assets of other countries. These actions have undermined international confidence in the US dollar and prompted many countries to diversify their foreign exchange reserves. On the other hand, although our country's economy continues to grow steadily and is also the world's largest trading nation, which accounts for about 13.5% of global trade, the proportions of RMB in global cross-border SWIFT payment settlement and as a reserve are both currently less than 3%. There is significant room for growth in the future.

In the foreseeable future, the global demand for using RMB will only grow further. With a richer and deeper product mix, coupled with the enhancement of mutual market access, Hong Kong can play a unique and strategic role in RMB internationalisation and contribute to national development. Apart from the upcoming launch of the Dual Counter Model, we have been actively working to develop and expand mutual market access, and made good progress over the past year. For example, the inclusion of exchange-traded funds under Stock Connect was officially launched in July last year, offering more diverse asset allocation choices to Mainland investors. The initiative has been widely accepted by investors since its commencement. The Northbound average daily trading volume was around RMB240 million in April 2023, representing an increase of over 11 times since the first month of its launch; the Southbound average daily trading volume was around HK$1.96 billion, representing an eight-fold increase since the first month of its launch. In a similar vein, given the escalating demands for more diverse RMB investment products in the market, the turnover and capacity of the Dual Counter Model will gradually increase and expand in the future.

In addition, we also saw the inclusion of more eligible stocks under Stock Connect in March 2023, covering the securities of overseas enterprises that have been primary listed in Hong Kong and fulfil certain conditions for Southbound Trading; and more stocks of the Shanghai Stock Exchange A Share Index and the Shenzhen Stock Exchange Composite Index under Northbound trading. This not only facilitates Mainland and international investors to diversify their global asset allocations, but is also conducive to attracting more quality foreign companies to get listed in Hong Kong.

Meanwhile, the launch of Northbound trading of Swap Connect (i.e. mutual access between the interest rate swap markets) in mid-May has facilitated offshore investors holding onshore bonds to trade interest rate swap products in the Mainland so that they could better manage exchange rate fluctuations. Swap Connect will create synergy with Bond Connect, which will help enhance the depth and breadth of the opening up of the Mainland's financial markets. On the first day of launch, 27 offshore institutions traded onshore RMB interest rate swaps with a notional value exceeding RMB 8.2 billion.

Earlier this month, we also successfully issued green bonds worth around US$6 billion, which was well received by the market. In particular, the RMB tranches accounted for RMB15 billion, which represented a 50% increase compared to the amount issued in January this year. A new 10-year RMB tranche was also issued. These would help extend the offshore RMB yield curve and enrich offshore RMB product offerings.

Looking ahead, we will continue to explore with the industry and relevant Mainland institutions on expanding the channels for two-way cross-boundary RMB fund flows; provide more investment and risk management products; and build a more vibrant offshore RMB ecosystem. The Securities and Futures Commission, HKEX and the Hong Kong Monetary Authority are in discussion with Mainland institutions regarding the launch of Mainland government bond futures in Hong Kong as well as further improving the offshore RMB financial infrastructure so as to enhance its capacity. These will support the long-term development of Hong Kong's offshore RMB market.

June 11, 2023

More activities of "Happy Hong Kong" will be rolled out. Ocean Park's "Chill All Night" event, also being launched yesterday, will take place on four consecutive Saturday nights. Hong Kong Bar Culture Festival will be held from 9 to 11 June in East Tsim Sha Tsui. A range of different agricultural and fisheries festivals are scheduled to be organised in the coming few months. During the summer holidays, Harbour Chill Carnival, a large-scale sea-land carnival, with Victoria Harbour as the grand stage, will be held for five weekends from 8 July.

Recently, many people told me that they were more willing to buy and spend with consumption vouchers. As one may have noticed, the second-instalment vouchers will be disbursed in mid-July (i.e. 16 July). Eligible persons who wish to use their existing stored value facility (SVF) to receive the voucher do not need to register or make any application. For those who wish to switch their SVF or are newly eligible, they can register online or in person at the temporary service centres from 5 June (i.e. tomorrow) to 27 June. For more information, please visit the Consumption Voucher Scheme website .

The Consumption Voucher Scheme and "Happy Hong Kong" campaign are part of the "combination punches" in this year's Budget for consolidating Hong Kong's economic recovery momentum, and they complement with and reinforce each other. The disbursement of consumption vouchers injects around $33 billion of purchasing power into the market, while the "Happy Hong Kong" campaign creates more occasions for spending through themed activities, and boosts people flow in order to foster a vibrant atmosphere that would encourage people to spend more to overcome the traditional low retail season in these two months.

In fact, supporting local consumption is one of our key strategies to stabilise the local economy in the short to medium term, especially in the first half of the year. After a strong rebound in local consumption in the first quarter of the year, the value of total retail sales, while its growth slowed slightly in April, increased further to nearly $35 billion, easing the pressure on our economy from the continued weakness in exports since last year. When compared with pre-pandemic levels, both retail sales value and restaurant receipts have already recovered to about 90% of the levels during the same period in 2018 and 2019. While visitor arrivals and airport capacity have, for the time being, only recovered to about 50% of their pre-pandemic levels, our transportation and handling capacity is expected to recover further as the aviation industry actively expands its workforce; and visitor arrivals are expected to gradually pick up.

In addition, improvements in employment and income levels have also helped to support local demand and stimulate economic growth. The latest unemployment rate (February to April) dropped to 3.0%, the lowest level since the third quarter of 2019. Residents' income also increased in real terms after adjustment for inflation. The median monthly household income, which reflects the overall household income, rose by 2.1% in real terms in the first quarter of this year. With stable employment and income, the footing for the economy to go forward has become stronger.

As for the asset market, the performance has been more complicated. In the residential property market, both the number of transactions and flat prices rebounded along with the recovery of the local economy. The number of residential property transactions rose to a monthly average of around 4,600 in the first four months of the year, representing a significant increase of over 60% compared to the same period last year (i.e. at the peak of the fifth wave of the epidemic). The overall flat price and rental indices also increased by 5.8% and 1.5% respectively in the first four months of the year compared to end-December last year. We will continue to speed up and increase housing land supply on all fronts to respond to the public's pressing need for a better living environment.

For the stock market, a series of factors have heightened market concerns on the Mainland and global economy as well as financial markets: the recent collapses or takeover of banks, one after another, in Europe and the United States (US); inflation and interest rates remaining high; the US Congress' recent grapple with the debt ceiling issue; and persistent geopolitical interferences, with the US and western countries trying to push other economies to decouple from China through so-called "de-risking". Hong Kong's stock market has been weak in recent months, with the Hang Seng Index closing last Friday about 4% lower than that at the end of last year. The average daily trading volume in the first four months of the year was also 4% lower than that of last year.

Looking ahead to the second half of the year, while the local economy is recovering steadily, we still need to stay vigilant about the uncertainties and challenges in the external environment. The International Monetary Fund has projected that global economic growth would slow further to 2.8% this year. Weak external demand, coupled with ongoing political disruptions to the global supply chain, will continue to weigh on Hong Kong's export performance. That the US has undermined the multilateral system and trade rules with the World Trade Organization at its core, together with its pursuit of unilateralism and protectionism, will further heighten geopolitical tensions. This will not be conducive to the steady recovery of the global economy.

We must continue to pay attention to external risks and uncertainties, adopt bottom-line and worst-case-scenario thinking, and take precautions against risks. We must properly coordinate development and security, and ensure that Hong Hong Kong's economic development would be of high quality and sustainable.

June 4, 2023

At present, developed areas account for only about a quarter of the area of Hong Kong, which is at about 1 100 square kilometres. As we open up more land for housing and expand development capacity, we must plan the transport network and system well in advance to foster faster and more efficient development and meet the needs of the relevant areas in a timely manner.

As at last year, Hong Kong had a population of around 7.3 million, of which over 3.9 million resided in the New Territories, accounting for approximately 54% of our total population and up by 3.4 percentage points as compared to the figure 20 years ago. The share of the population residing in Kowloon stayed more or less at 30%, while that living on the Hong Kong Island went down by more than three percentage points to around 15%.

To enable Hong Kong to develop better and more efficiently, we need to change our mindset and adopt a forward-looking planning approach, with a view to better rationalising the spatial layout and infrastructure facilities, so that new development areas can better meet the housing and living needs of our residents. A transport network connecting various parts of Hong Kong would not only facilitate daily trips, but also help accelerate industrial and commercial developments and unleash the development potential of land along the network.

Currently, there are about 270 kilometers of railways in Hong Kong, covering areas inhabited by around 70% of the population. Railway is the backbone of Hong Kong's transport network. As the construction of new railways takes time, we need to plan ahead to implement the railway projects in a timely manner. This can facilitate activities of the general public as well as the industrial and commercial sectors in the new development areas; and at the same time, enhance the connectivity of the entire transport system of Hong Kong, making it more accessible and convenient, and offering more options and flexibility to the general public and businesses.

The ground breaking ceremony for Tung Chung Line Extension was held last week. This is the first railway project with construction commencing under the current-term Government. It also marks a new stage of the Tung Chung New Town Extension (TCNTE) Project. Construction of two railway stations, including Tung Chung East and Tung Chung West, is expected to be completed by the end of 2029. Upon their commissioning, the journey time between Tung Chung East and Central will be shortened by 21 minutes. In addition to making travel more convenient, this will also bring huge economic benefits.

TCNTE development will provide 62 000 new flats to accommodate an additional population of 180 000. By then, the whole Tung Chung area will have a population of about 300 000. Various supporting recreation, education and community facilities, including post-secondary education institution, will be provided in the development. The development will also provide considerable commercial floor areas for office and hotel uses, creating 40 000 job opportunities for residents in the district. The implementation of TCL Extension is therefore pivotal to the full-fletched development of TCNTE.

Apart from this project, the current-term Government will also make every effort to enhance the transport network in the New Territories in the coming few years, with a view to facilitating the overall development of Hong Kong, including the Northern Metropolis. There will be three projects in the New Territories West, namely Oyster Bay Station, Tuen Mun South Extension and Hung Shui Kiu Station; and for the New Territories East, there will be Kwu Tung Station under the first phase of the Northern Link. Construction for these projects will commence within this year and next year accordingly. They are expected to unleash the development potential of the land along the railway lines and create greater capacity.

For example, although Kwu Tung Station and Hung Shui Kiu Station are just addition of new stations along existing railway lines, they are both important transport nodes in the Northern Metropolis.

Currently, the Kwu Tung North/Fanling North and Hung Shui Kiu areas are mainly occupied by low-density domestic dwellings, as well as brownfield operations such as recycling yards, container storage, etc. Local transportation in these areas mainly relies on road connections with limited capacity, which would not be sufficient to accommodate the future additional population of 226 000 and 176 000 in these two New Development Areas respectively. Therefore, the two railway stations will play an important role in triggering the development of these two areas.

Indeed, town planning for the Kwu Tung North New Development Area is centred around Kwu Tung Station, which will become the main public transport hub in the area. High density residential developments will be built around the railway station so that the majority of residents can access the station within a relatively short walking distance. Upon commissioning of the station, compared with existing road-based transport, the journey time from Kwu Tung North to Sheung Shui Station can be greatly shortened from 15 minutes to about 3 minutes.

The Hung Shui Kiu Station, which is to be built between Tin Shui Wai Station and Siu Hong Station on the Tuen Ma Line, has similar functions and goals. A public transport interchange and an environmentally friendly transport services system will be taken forward near Hung Shui Kiu Station to facilitate interchanges to other transport modes. Upon commissioning of the Hung Shui Kiu Station, travelling from the station to Exhibition Centre Station and Admiralty Station, via the Tuen Ma Line and the East Rail Line cross-harbour extension, would take around 41 minutes and 43 minutes respectively. More importantly, since Hung Shui Kiu is geographically close to Qianhai, Shenzhen, space for expansion of Hung Shui Kiu Station has been reserved to allow for connection to the Hong Kong-Shenzhen Western Rail Link (Hung Shui Kiu - Qianhai). The entire railway map will greatly enhance the connectivity between Hong Kong and Shenzhen, and promote the efficient flow of goods and people between the two cities. Together with the planning of other road networks, it will provide a crucial transport and logistics route for cross-boundary cargo to connect to the airport and container terminals. From dots to lines, the efficiency of people and cargo flows in the entire region will be greatly enhanced.

The Oyster Bay Station and the Tuen Mun South Extension will help increase land and housing supply. The development project at the depot site of Oyster Bay will provide about 20 000 housing units, of which around half will be public housing units. It will become a new community well fitted with community facilities. Phase 1 of the project with a total of around 6 000 public and private housing units is expected to be completed with population intake from 2030 onwards. Upon commissioning of Oyster Bay Station, travelling from the station to Hong Kong Station and Tung Chung Station will take around 28 minutes and 4 minutes respectively. Regarding the 2.4-kilometre long Tuen Mun South Extension Line, it will extend southward from the existing Tuen Mun Station to the Tuen Mun Ferry Terminal area, and an intermediate station will be constructed at Tuen Mun Area 16. This railway alignment will help improve the railway services for the community to the south of Tuen Mun town centre. Better transportation connections will not only benefit residents, but also help unleash the housing supply potential of the land in the area.

Whether it is district-based or territory-wide planning and development, our primary consideration is to better facilitate daily commuting, employment, commercial and industrial activities as well as economic development. The infrastructure-led approach will allow Hong Kong to develop faster and in a more efficient and sustainable manner, which will in turn bring greater benefits to our people.

May 28, 2023

The development of a food culture is closely related to natural resources, climate, geography, economic activities and level of economic development, etc. of a place. We, the Chinese, see that food is a gift of Mother Earth; for food, we look to where we live, be it the mountains or seas. Food culture, indeed, is manifestation of the social, economic and cultural characteristics of a place. In a modern economy, the catering sector is an important part of the services industry, which interacts closely with the trading, retailing and tourism sectors. Its entire industrial chain comprises agriculture, food procurement, transportation and logistics, food and beverage services, as well as sales and promotion. Rich and distinctive gastronomic experiences not only boost local consumption and activities, but also stimulate exports and inbound tourism. Hong Kong has long been acclaimed as a culinary capital, and the development of a gourmet economy definitely presents a golden opportunity for us. In particular, it provides our young people with more development opportunities that can meet their aspirations and interests.

I visited the Chinese Culinary Institute (CCI) and International Culinary Institute (ICI) under the Vocational Training Council (VTC) recently, which touched off some even deeper feelings within me. I could sense the strong interest and passion of the students in culinary arts as well as joining the catering industry when they were introducing the production of gourmet chocolates, the art of handcrafted candy and the pairing of different floral teas and dishes. With humility and enthusiasm in learning, industriousness and strive for excellence in their study and work attitude, no wonder these students repeatedly achieved outstanding results in international competitions at young ages. Many students had also received job offers well before their graduation. The two Institutes has maintained close connections and collaborations with the catering industry. Many master chefs and famous chefs from Michelin restaurants (including internationally renowned chefs visiting Hong Kong) have been invited to conduct demonstrations and exchange with teachers and students. Some of them even served as consultants for the Institutes. The Institutes have also arranged for their students to take part in internships on the Mainland and overseas. Apart from enriching the learning experiences of students, these opportunities can also stimulate more exchanges between Chinese and foreign culinary arts, and facilitate their integration; and nurture more cross-cultural talent that will reinforce Hong Kong's position as a culinary capital and help diversify our food culture.

The VTC is one of the staunch supporting organisations of the series of "Happy Hong Kong" events. Whether it comes to demonstrating noodle pulling at the launching ceremony, setting up food-tasting booths at the "Gourmet Marketplaces", or the "Skills Fiesta" to be organised in October, students have been actively participating in the events or making preparations to share their creations and joy with members of the public through culinary demonstrations, fashion shows, sports activities on smart technology, cultural activities, etc.

The VTC is the largest vocational and professional education and training (VPET) provider in Hong Kong, offering training to some 200 000 students each year through a full range of pre-employment and in-service programmes with internationally recognised qualifications. Apart from culinary institutes, there are also institutes with diversified themes in hotel and tourism, design, maritime training, etc. In a number of my Budgets, I allocated resources to enhance and strengthen VPET development in Hong Kong, covering areas such as catering, construction, nursing, cultural and creative industries, fashion design, etc. Meanwhile, the Pilot Training and Support Scheme has also been regularised, allowing trainees to receive apprenticeship training under the "Earn and Learn" model with a salary under the Scheme. Upon completion of training, trainees will also receive certificate, diploma, or higher diploma qualifications. As of February last year, more than 7 600 trainees and 550 employers had benefited from the Scheme, covering industries including engineering and related technologies, automobile, design, jewelry and creative industries, testing and certification, medical centre operation, etc.

The nurturing of talent and multiple progression pathways are the key pillars that support the high-quality development of Hong Kong's economy. Not only do they help youngsters actualise themselves and unleash their potentials; they also bring together everyone's creativity and hard work to provide impetus for growth in different economic sectors. A sufficient supply of talent is key to sustainable socio-economic development. Strengthening the cultivation of talent and enhancing the skill level of the workforce are fundamental to maintaining productivity and creativity. While the emergence of technological innovations such as artificial intelligence, big data, and robotics, etc. may challenge traditional workflows and positions, they will also bring new opportunities. We need to strengthen local manpower training, especially pre-employment and in-service programmes that enhance interdisciplinary skills, in order to provide more opportunities and assistance for aspiring youngsters to explore new directions and embark on new runways. Meanwhile, we also envisage the provision of more progression choices for people who aim to enhance their competitiveness and income through learning new skillsets. VPET and diversified training could enhance the standard and learning capabilities of the workforce and productivity as a whole. The vocational training platform could allow students, employers, potential customers, and the market to better connect and co-operate. As Hong Kong pushes forward economic transformation towards high-quality development, there is definitely more room for the development of VPET.

May 21, 2023

In the past decade, this figure, which reflects the potential supply of first-hand residential properties in the short- to medium- term, has gradually increased from over 60 000 units to over 100 000 units at present. Yet, residential property prices continued to rise during the same period, reaching a historic peak in late 2021 before entering a phase of adjustment. If more units can be put in the market to meet the demand in the upward cycle of property market, people do not need to rush into the market for fear of supply shortage and the property market may develop in a more stable and orderly manner. Supply is a powerful and critical tool for adjusting prices.

Having gone through rounds of discussion over the years, the community already has a clear consensus: the shortage of land supply has led to high property prices and constrained Hong Kong's development. The Government of this term is working at full steam to enhance the speed, quantity and efficiency in land production to increase land supply on all fronts.

From a long-term, macro perspective, we have secured 7 300 hectares (ha) of land supply from different sources, well exceeding the land demand of 6 200 ha from 2019 to 2048 as indicated in the Hong Kong 2030+ Study Report.

That said, equally important to securing a good quantum of land supply is to ensure that the pace of delivery will be able to respond to changes in market demands. To allow the market to grow in a steady and orderly manner, the Government needs to have abundant land reserve (especially "spade-ready sites") to maintain a consistently large land and housing supply throughout the years and to meet the ever-changing market situations. Considering that formation of land and development of infrastructure and ancillary facilities take time, and that there may be delays arising from unforeseeable circumstances, our land reserve needs to comprise land from diversified and multiple sources. Only with that could we be confident with ensuring a steady supply.

This is why we have been emphasising that the development of the Northern Metropolis (NM) and the reclamation proposals of the Kau Yi Chau Artificial Islands (KYCAI) must proceed at full speed. Of the 7 300 ha of overall land supply mentioned above, over half would come from these two strategic growth areas, with over 3 000 ha from the NM and 1 000 ha from the KYCAI.

These two strategic growth areas, while both contributing significantly to Hong Kong's land supply in the next 25 years, have different foci and strategic goals.

The NM supports Hong Kong in establishing a new industry pattern of "South-North dual engine (finance-innovation and technology)" and accelerates the development of Hong Kong into an international innovation and technology (I&T) centre, thereby promoting the development of new industrialisation and facilitating cooperation and synergy with our sister cities in the Greater Bay Area. As announced in the Budget Speech last year, a dedicated fund of $100 billion has been set aside to expedite the implementation of land, housing and transport infrastructure works within the NM. The Development Bureau is pressing ahead with the establishment of the Northern Metropolis Co-ordination Office, and will formulate an action agenda and implementation plan of the NM within this year. The Office for Attracting Strategic Enterprises is also proactively reaching out to attract strategic enterprises to tie in with the industrial pattern in the NM. The Government will shortly commence consultation on the development proposals and land use planning of San Tan Technopole, a flagship project in the region, with a view to commencing site formation works for the first batch of I&T sites in 2024. In addition, it is expected that the NM will provide more than 500 000 new flats and more quality living space for members of the public. All in all, the NM development will play a very important strategic role in the overall economic and social development of Hong Kong.

There are three key positions for the KYCAI reclamation project: first, it will become a major source of residential land supply, providing about 200 000 residential flats to accommodate a population of 500 000 to 550 000; second, it will be developed into a third Core Business District in Hong Kong, providing a total of about 5 million square metres of commercial floor area; third, it will connect Hong Kong Island, Lantau Island, the Hong Kong International Airport, the Hong Kong-Zhuhai-Macao Bridge Port and the New Territories West, and further link to the future railway to Qianhai, Shenzhen. The railway would provide members of the public with a more convenient and accessible transport network, which facilitates their commuting as well as economic activities. Upon full development of the KYCAI, the associated economic activities are anticipated to bring around HK$200 billion of value added to Hong Kong annually, amounting to about 7% of our gross domestic product.

The development of artificial islands of 1 000 hectares is not only related to the economy and people's livelihood; it also seeks to build a more convenient transport infrastructure network, thus shortening the commuting time between home and school/office, and greatly facilitating work, study and life. On a ballpark basis, land sales revenue from the private residential and commercial sites created from reclamation under the project would amount to about $750 billion. The land sales revenue alone has surpassed the construction cost; this has not yet taken into account the economic benefits mentioned in the previous paragraph and from the development enabled by more convenient transport along the transport infrastructure and in other areas. In addition, in light of aging buildings in the urban areas, we need more decanting space so that urban renewal can be expedited.

Indeed, the community has different opinions on this project. Nearly 8 000 pieces of public submissions had been received in the recently completed public engagement activities, among which about 60% expressed support to the project. The major concerns of those holding a different view were largely about the progress of the project, impact on the environment, etc. The Government will take into consideration the views received and strive to make good overall planning for the project. For concerns about the impact of the entire project on public finance, I would like to point out that there are good conditions for this project to raise funds from the market, and a relatively large portion of the funds required would be raised through the market. As a matter of fact, many enterprises and institutions have also acknowledged the development potential of the project, and have expressed interest in taking part in it. The proposals include structured financing or public-private partnership models to allow greater flexibility and wider choices for financing the project. In addition, we could also issue bonds with a retail component. By doing so, we can allow members of the public to share stable and sound investment returns while financing the project.

Reclamation is an effective means to provide sizeable land to Hong Kong. As a matter of fact, with our hilly terrain, reclamation has always been a major source of land creation in Hong Kong, with over 70% of our city's population living in new towns created from reclamation. The pace of reclamation has however significantly slowed down since 1997. At present, the amount of reclaimed land only accounts for 7% of Hong Kong's total land area, far lower than the 20% in Singapore. The continued shortage of land carries profound impact. The median per capita floor of accommodation in Hong Kong is only 170 square feet, one-third lower than Shanghai and Singapore, and 40% lower than Shenzhen. There is an imminent need for Hong Kong to boost land supply through reclamation and other land development initiatives.

All in all, it is necessary for us to take forward both the NM and KYCAI projects. This will not only help diversify our land supply sources; both developments will complement each other and help address any time gaps in land delivery that may arise from different projects in progress. We must continue to create land through a multi-pronged approach, so as to make available a more spacious and better living environment for the people of Hong Kong.

If we want more vibrant and stronger economic growth, we must overcome bottlenecks on various fronts such as talent, workforce and land. Only by better developing Hong Kong's economy and infrastructure, and enabling our people to have higher incomes and a better living environment, could their aspirations for a better life come true. As Hong Kong progresses from good governance to prosperity in a new era, this will be our key deliverable.

May 14, 2023

The Gourmet Marketplace, one of the highlights of the "Happy Hong Kong" campaign, took place at the Sha Tin Town Hall Plaza and Sha Tin Park this weekend. Benefiting from the high patronage and business turnover of the first marketplace held in Wan Chai the previous week, the Sha Tin marketplace has gathered more active participation from exhibitors and enthusiastic public response. After officiating at the opening ceremony yesterday, I showed my support by visiting various booths, and tried both local snacks and delicacies from different places. Apart from Chinese cuisines such as Kansu mutton, Chiu Chow kung fu tea and hand-made beef balls, as well as Fukien-style wonton soup, there were also local flavours like siu mai, egg tarts and Hong Kong-style milk tea. Visitors watched children's spectacular performances of unicorn dance and cheerleading while enjoying delicious food. The nostalgic tea café decorations also made a fantastic photo spot. The marketplaces held on the Hong Kong Island and in the New Territories definitely had its own charm.

The cheerful and optimistic atmosphere, together with the return of tourists to Hong Kong, has benefitted the consumption market. Total restaurant receipts surged by 82% year-on-year to $27.56 billion in the first quarter of the year. While part of the increase was due to the low base effect, the amount was still the highest in more than three years. The value of retail sales also rose by 24% year-on-year over the same period, and has exceeded $30 billion for four consecutive months from December 2022 to March this year. Private consumption expenditure grew sharply by 12.5% year-on-year in real terms in the first quarter of the year, and exports of services rose notably by 16.9%, thanks to the recovery in inbound tourism. Fixed investment also reversed its downtrend and rebounded by 5.8% amid the positive economic outlook. However, overall exports of goods still recorded a 18.7% decline amid the weak external environment and further uncertainties. As a result, while our GDP ended four consecutive quarters of declines, it only grew moderately by 2.7% year-on-year in the first quarter this year.

These figures show that Hong Kong's economic recovery is still in its initial stage and needs to be strengthened. In particular, the US Federal Reserve raised interest rates by a quarter of a percentage point last week. Even though the market expects that the current rate hike cycle may soon come to an end, interest rates will remain high for some time. This, alongside the failure of one bank after another in the US, has heightened market concerns and brought more uncertainties to the external economy.

In summary, we need to do our utmost to strengthen the momentum of the local recovery. If the external market conditions do not suddenly deteriorate, then with the series of measures we have introduced to support domestic demand and the continued improvement in imports and exports of goods from the Mainland, the Hong Kong economy is expected to improve further during the year. I believe that our economy will get better quarter by quarter, and this year will be better than last year.

Many of the "Happy Hong Kong" activities reach out to local communities whereby members of the public may invite their neighbours, families and friends to participate in the activities that take place in the district they live or work and share the joyful experiences together. The Gourmet Marketplace is taken forward under the leadership of the Home and Youth Affairs Bureau, with coordination by the Home Affairs Department and collaboration by District Offices. We also received tremendous support from the catering industry, chambers of commerce, clansmen associations and charitable groups. District work concerns the daily livelihood of the public and is at the forefront in serving the public, involving various government departments, organisations and stakeholders. The Government and our district partners must put people in the centre, be practical and pragmatic, and properly gauge the pulse of the local community; and by proactive planning and steer, deliver concrete outcomes in the work on people's livelihood and community management.

From district governance to community management, there is a need for clear direction as well as pragmatic and practical targets. They also need to meet the needs of community members and deliver practical outcomes. Improving the district governance structure will put an end to the chaos in the District Councils (DCs) in the past; through the introduction of an appropriate system, clear responsibilities and division of labour, district work will truly focus on improving community services and people's livelihoods. The proposals on improving governance at the district level announced by the HKSAR Government last week seek to achieve this goal. The proposals will effectively restore the DCs back to their positioning of district advisory and service organisations which are not organs of political power under Article 97 of the Basic Law. The proposals are in line with three guiding principles, namely according top priority to national security; fully implementing "patriots administering Hong Kong"; and practising "executive-led" governance. The improved district governance structure will strengthen the management and coordination of district work, enhance the efficacy of governance at the district level, and steer relevant work to a more focused and constructive direction, so that it can better serve the people and respond to their needs.

In striving for economic development in a new era and a new stage, we are in dire need of a stable political and social environment, which will allow Hong Kong to focus on high‑quality development and enhance people's quality of life, thereby forging ahead steadily at this crucial stage of advancing from good governance to prosperity.

May 7, 2023

Happiness can indeed be as simple as sharing with friends and families new and joyful experiences as well as delicious food. Savouring local delicacies when travelling abroad always brings us fond memories. The "Happy Hong Kong" Gourmet Marketplaces, featuring delicacies from different places, offer members of the public the opportunity to enjoy the same happiness while staying in the city. The next marketplace following this one will take place at the Sha Tin Town Hall and Sha Tin Park in the coming weekend (6-7 May), while another one in Kowloon will be held at the Kwun Tong Promenade on the first weekend of June. In addition to the large-scale Gourmet Marketplaces on the Hong Kong Island, in Kowloon and the New Territories, we will also organise thematic food fairs in Wong Tai Sin, Tsim Sha Tsui, Yuen Long and Mong Kok in the coming months.

Just as the slogan of the "Happy Hong Kong" Campaign - "Taste the Joy Share the Fun", a wealth of events will come one after another apart from the first Gourmet Marketplace and the Cinema Day which rolled out yesterday. The Ocean Park Corporation; Cyberport; Hong Kong Science and Technology Parks Corporation; Agriculture, Fisheries and Conservation Department, the Vocational Training Council; MTR Corporation Limited, etc. will also host a range of events. The Harbour Chill Carnival to be hosted by the Hong Kong Tourism Board on the Wan Chai Promenade during the summer holidays will definitely be one of the highlights. Members of the public can visit the thematic website of the "Happy Hong Kong" Campaign for the latest event updates. Do join these events with family and friends to create happy memories.

In just two months after the announcement of the Budget in late February, we disbursed a new round of consumption vouchers in mid-April, and the "Happy Hong Kong" events also commenced yesterday. I would like to express my deep gratitude to colleagues of various government departments for their efficient work; appreciation is also given to the contribution by various participating organisations. The original thought of organising the "Happy Hong Kong" Campaign events was to weave more happy moments for the public at the time of economic recovery. I am grateful for the support and active participation by members of the public.

Be happy and stay positive; together, we become stronger.

The positive and optimistic atmosphere is in fact beneficial for consumption and the economy. Hong Kong's retail sales value has risen for three consecutive months (December 2022 to February 2023), and the sales value has returned to a level above $30 billion. Since the full resumption of convenient travel between Hong Kong and other places in early February, visitor arrivals have gradually increased, and local consumption sentiment has improved further. These factors have led to a significant improvement in overall private consumption performance, offsetting the impact of continued weak exports and becoming a main driving force behind the improvement of the economy in the first quarter. These positive factors will be reflected in the first quarter economic figures and retail sales data to be released this week.

As for the consumption vouchers issued in mid-April and the recently launched series of activities under the "Happy Hong Kong" campaign, we hope they would not only make our residents happy, but also help consolidate economic recovery in the second quarter as well as positive market expectations. As Hong Kong is a small, fully-open economy, its export performance is largely affected by the external environment. Local consumption is an area that we can take steps to stabilise. As in the past few years when the economy faced tough challenges, a series of counter-cyclical measures also played the same role: to utilise fiscal policies to support the domestic economy and reinforce confidence.

2023 is a year when we have overcome the epidemic and will achieve economic recovery. We have adopted a slightly expansionary fiscal policy to maintain fiscal stability and sustainability. However, at the initial stage of economic recovery, we dare not lower our guard, and will be proactive in boosting the market's confidence and the public's expectation of economic recovery to the best of our ability, through different types of measures and activities. Tomorrow is the Labour Day holiday. I wish you all a relaxing and happy long weekend.

April 30, 2023

The packed schedule of the past few days has left me with a deep impression: although the epidemic has hindered exchanges between the two places, various Mainland authorities have a solid grasp of the situation in Hong Kong and care deeply about our developments. They would like to give us more support and step up co-operation with us, and hope that by enhancing existing co-operation mechanisms and exploring new initiatives under their purview, they may help Hong Kong give fuller play to its unique advantages and roles, move forward and contribute further to the national development.

Through days of meetings during the visit, we learnt more about the economic and financial situation as well as the latest developments and thinking behind relevant policies in the Mainland. The meetings have provided important information and points of reference for us and the financial regulators in taking forward our work in the future and in enhancing co-operation between the two places.

At my meetings with various ministries and authorities, I briefed them on the latest economic and financial developments of Hong Kong, as well as our achievements and future priorities in the development of innovation and technology (I&T). The priorities include pursuing continuous innovative and in-depth development of Hong Kong as an international financial centre on all fronts; striving to drive the development of new industrialisation through I&T; and setting the goals of doubling the gross domestic expenditure on R&D as a percentage of the gross domestic product (GDP) and increasing the contribution percentage of manufacturing sector to GDP to 5% within ten years. We also discussed the current condition and future outlook of the development of Guangdong-Hong Kong-Macao Greater Bay Area, as well as the three major directions of Hong Kong in pressing ahead for high-quality development in the new era and in a new stage, including the digital economy, Web3.0 and international green technology and green finance centre. I also talked about the work of Hong Kong in supporting and developing its economy by implementing policies such as "competing for talent" and "competing for enterprises"' under the new governance concept of a "proactive and capable government" serving an "efficient market".

The epidemic over the past three years has indeed affected the direct communication and exchange among people and has prevented us, to a certain extent, from obtaining first-hand information and experience concerning different markets. That is why we have, after the resumption of normal travel, actively gone global and invited visitors to visit Hong Kong so as to promote the new advantages and opportunities in Hong Kong in the new development stage.

Since the resumption of normal travel, different Mainland provinces and cities have been sending delegations to Hong Kong to promote exchanges and attract investments. Meanwhile, we have actively visited the Mainland and the overseas markets, with the aim of riding on the momentum and opportunities arising from post-epidemic economic recovery to attract investments, facilitate enterprises to set up operations in Hong Kong and draw in talent, so as to strengthen and speed up economic recovery to the benefit of the public and enterprises.

Blessed with the advantages of time, location and the support of the Motherland, Hong Kong is now seeing a golden opportunity for development. As different aspects of economic activities are witnessing a quicker pick-up in the post-epidemic era, the overall atmosphere is positive. Our edge as a regional hub has also appeared again thanks to the gradual recovery of the global transport capacity, with quite a number of business, convention and exhibition, and promotional activities having been attracted to Hong Kong. Since the implementation of the National Security Law and the principle of "patriots administering Hong Kong", Hong Kong has restored social security and stability; policy implementation has become more efficient. Taking into account the above factors plus the steady development of our country and the staunch support of the Central Government, many local and overseas friends are holding an optimistic and positive view about the future of Hong Kong.

In several recent visits, I took the opportunity to go to local universities and exchange with the students. I briefed them about the various advantages and attractions of Hong Kong, seeking to give them a better understanding of living and working in Hong Kong. I also encouraged them to seek career development here. The universities that I visited, be they the National University of Singapore and Universiti Malaya in the previous trip, or Peking University in this trip, are all globally renowned. Graduates from these universities will meet the requirements of the Top Talent Pass Scheme, and may come to work in Hong Kong.

The speaking event at the Peking University met with heartening response from students. I spoke to a full-house audience of over 400 students. Those who could not find a seat simply stood throughout the event. We exchanged views in a relaxing yet enthusiastic atmosphere. The students were interested in the opportunities available, and wanted to know more about the details of working in Hong Kong. I talked about work and life in Hong Kong, covering the vibrant cosmopolitan lifestyle in Hong Kong, such as the beauty of our countryside, the rich and diverse art and cultural activities, the more than 200 restaurants recommended by Michelin, countless authentic local delicacies, and the safe and secure environment, etc. From the interactions during the Q&A session, I deeply felt the love of these students for Hong Kong and their strong interest and desire to pursue their careers here.

To promote vibrant economic development and create a strong growth impetus for Hong Kong, we are stepping up efforts in the work on the promotion of Hong Kong through various channels. For tourists, we have the "Hello Hong Kong" campaign and various promotional initiatives. For the locals, we will soon launch the "Happy Hong Kong" campaign; and just disbursed consumption vouchers last week in the hope of strengthening the momentum of economic recovery and creating a more positive and optimistic atmosphere for our community.

As the economy of Hong Kong is picking up, let us seize the opportunity to press ahead with high-quality economic development, so as to create a new paradigm for our society and work together to make it more prosperous, beautiful, and inclusive.

April 23, 2023

The Hong Kong Special Administrative Region (HKSAR) Government held thematic seminars at the Hong Kong Convention and Exhibition Centre yesterday morning, where a number of heavyweight keynote speakers made in-depth analyses of the situation in Hong Kong and shared their views from different perspectives. Their speeches were highly informative and comprehensive. The HKSAR Government also organised a series of public educational and promotional activities. I attended a school workshop as well as educational activities on national security hosted by the disciplined services for the public in the afternoon. Be they seminars of a more serious nature or lively interactive learning activities, events that enhance public awareness of national security on all fronts among various strata of society, industries/sectors and age groups are undoubtedly conducive to building a more thorough understanding of the relationship between development and security in the community; and converging positive forces in safeguarding national security together. They all have a significant bearing on maintaining Hong Kong's prosperity and stability in future.

"National security is the bedrock of national rejuvenation, and social stability is a prerequisite for building a strong and prosperous China." Learning and thoroughly understanding President Xi Jinping's economic thoughts are important in studying the holistic view of national security in depth. An important part of which is building a "new development paradigm" with "new development concepts", while safeguarding our new development path with a "new security landscape". Without national security, there is no stability. Without stability, no one can speak of development.

Mr Xia Baolong, Director of the Hong Kong and Macao Affairs Office of the State Council, highlighted in his keynote speech yesterday that Hong Kong's stability today, which did not come easy, should be cherished, and that Hong Kong's prosperity and stability would benefit all. Mr Zheng Yanxiong, Director of the Liaison Office of the Central People's Government in the HKSAR, also pointed out that Hong Kong was at a new and critical stage of advancing from stability to prosperity. We had to be aware that the foundation for our stability still needs to be consolidated; and guard against any resurgence of anti-China and anti-Hong Kong forces. We should lose no time in promoting prosperity and stimulating our growth, especially when Chinese-style modernisation and development are advancing full steam ahead, where Hong Kong is set to capitalise on its unique advantages and functions of enjoying strong support of the Motherland while being closely connected to the world.

During a discussion session at the thematic seminars, I stressed that the purpose of safeguarding national security was to safeguard Hong Kong's security an development. The financial sector and the cyber world are critical battlefields without gun smoke. Both of them are areas of national security which we must rigorously defend. As an international financial centre, Hong Kong has free flow of capital and information. We must stay vigilant at all times and ensure that work in various areas and levels is pursued in full reciprocation of the "holistic view of national security", in particular safeguarding financial and cyber security. While reinforcing security, we should also strive for fast-paced development. Only with the right coordination of security and development can we secure both stability and prosperity; and advance from stability to prosperity.

Hong Kong is pressing ahead with high-quality economic development, including the promotion of digital economy, development and application of the third generation Internet (Web3), as well as development of an international green technology and green financial centre. All of them are new areas that can help strengthen the impetus for our economic growth. Last week, a number of major exhibitions on innovation and Web3 festivals were held. Attracting a large number of local industry players as well as an even higher proportion of participants from overseas, these events have fostered effective, intensive and in-depth cross-professional interactions and exchanges. Quite many industry players indicated that through these events, they were able to find new investors and secure funding for their projects. They also expressed great appreciation of our lifestyle: our food as well as the hills and the seas. Apart from fully showcasing the ideal and highly efficient business environment in Hong Kong, these events helped stimulate our innovation and technology ecosystem. They are testimony to the fact that a stable and secure environment is certainly conducive to promoting investment and development.

The staunch support of the Central Government and the implementation of the Hong Kong National Security Law have restored public security and social stability in Hong Kong. With our country's sustained and steady economic development, continuous breakthroughs in technological innovation, as well as our relentless efforts in the pursuit of excellence, foreign investors are becoming more confident and optimistic in making investments in Hong Kong. Many local enterprises are also actively considering the expansion of their operation, hoping to seize new opportunities brought by steady economic recovery, and by our city under the new development paradigm.

It is true that more needs to be done to consolidate Hong Kong's economic recovery momentum. Today, we issue a new round of electronic consumption vouchers, which have instantly injected about $20 billion of purchasing power into the market, equivalent to around 60% of Hong Kong's monthly retail sales. This will stimulate real demand in retail and catering sectors, and instil optimism. Besides, the "Happy Hong Kong" Campaign which I announced in the Budget will be launched soon, which will cover a series of fairs and carnivals featuring specialty cuisines and fun activities. I hope we will all see more happy faces and feel the positive energy in the community through organising these events, which will be favourable to the buoyancy of the economy.

April 16, 2023

As our society returns to normalcy and our connection with the rest of the world fully resumes, we should seize this opportunity and go full steam ahead to open up new arenas and foster new strengths for the development of our economy with concerted efforts.

I have announced in this year's Budget the three main directions of taking forward Hong Kong's high-quality development. The digital economy and the application of the third generation Internet (Web3) indeed present great development potential, and we have received positive feedback from the society. In this week alone, at least four forums or festivals will be hosted in Hong Kong on Web3, digital economy and Fintech. Some of these events are anticipated to attract as many as over 10 000 physical participants.

On this Thursday and Friday, the HKSAR Government and Cyberport will co-organise the "Digital Economy Summit 2023", with the theme of "Emerging with Resilience: Fostering a Smarter Future". Participants include cross-sectoral business representatives from the I&T sector, Web3, financial sector, professional services providers, environmental protection industry, business and commerce, manufacturing industries and academia, etc. Six thematic forums will be held at the Summit on the future development trends of smart cities, data innovation, Fintech, artificial intelligence and big data, Web3, smart mobility and new industrialisation, coupling with the global and regional future I&T development analysis.

Another festival with the theme on Web3 will be hosted by industry players. This is the first time that the festival would be held in Hong Kong, reflecting that Hong Kong's vision and development strategy for Web3 has aroused great interest from industry players. The event will focus on topics such as the development of Web3 and blockchain technology, the most popular Web3 applications and the related regulations in place worldwide, with a view to building up a collaborative platform for exchanges and the pursuit of progress in the frontier development of Web3 around the world.

This is going to be a busy week. A number of founders and senior managers of leading Web3 enterprises and startups will be gathering at the forums and festivals in Hong Kong. The participants include representatives who work in the fields of Web3 infrastructure facilities, trading platforms, virtual assets, e-wallet and payment tools, cyber security audit and the innovation and technology venture funds. Some industry players describe the series of events are comparable to a "tournament" hosted for IT masters to meet.

In fact, the global competition on Web3 development is deepening, with the focus on creating the greatest opportunity for application and innovation while ensuring the risks remain manageable. Whether the innovation is about making changes over existing approaches or making "disruptive innovations", the ultimate goal is to address pain points in real life and the real economy, to enhance efficiency and promote more inclusive development. For example, how to leverage tokenisation technology to solve the long-standing pain point of transaction transparency for the bond market and to facilitate the next stage of innovations in green finance; as well as to explore the use of blockchain technology to simplify the supply chain and the transaction processes of trading and to reduce costs, etc. When it comes to real-life application, there is much for us to do in deepening our explorations and leading new innovations.

Of course, the significant volatility in the virtual assets market over the past period and the recent collapses of virtual assets exchanges have caused some in the community to doubt the future of Web3. However, we think this is in fact the best time to promote the development of Web3.

Thinking back to the early 2000s, the world experienced a dot-com euphoria which ended in the bursting of a bubble. After this cycle, market participants became calmer. Besides, after the speculations ebbed, capable participants who remained would be more focused on competing on technological innovation, practical application and value creation, which contributed to improving the quality of the real economy. This is how the Internet technology industry has evolved.

I believe Web3 is going through the same process. In the coming stage, market participants need to develop blockchain technology in greater depths, enabling its features and advantages such as transparency, high efficiency, security, decentralization, de-platforming and low cost, to be applied in wider scenarios and tackle more pain points of existing business models and even break monopolies. This would enable users to share more widely the economic value brought by data, and bring leapfrog progress to the real economy.

To allow Web3 to continue its innovative path with prudence, we will adopt principles that place equal emphasis on both "appropriate regulation" and "promoting development". Under appropriate regulation, apart from ensuring financial security and preventing systemic risks, we will continue to work on investor education and protection, and anti-money laundering/ counter-terrorist financing. Under the "same activity, same risks, same regulation" principle, we will first introduce a licensing regime for virtual asset service providers in June 2023 and then study the regulation of "stablecoins" to ensure the sustainable and responsible development of the virtual assets sector.

Separately, I have proposed to allocate $50 million to Cyberport in my latest Budget to expedite the development of the local Web3 ecosystem by, among other things, organising major international seminars, to enable the industry and enterprises to better grasp frontier development and to promote cross-sectoral business co-operation, as well as arranging a wide array of workshops for young people.

There is no easy road to innovation and technological reform. Even if we have identified the direction for development, we still have to chart our way forward, advancing steadily step by step. Only with the resolve to keep trying can we find new solutions and new ways out. It is my hope that the large-scale forums to be held next week will allow participants to have more in-depth exchanges and brainstorming of new ideas for the development of digital economy and Web3, thus enabling us to explore the practical approach to be adopted in future in a more forward-looking and specific manner and helping us forge ahead prudently in new arenas and new areas through innovation and steadiness.

April 9, 2023

In order to have closer and more in-depth interactions with local youths, I visited two renowned universities, Universiti Malaya and the National University of Singapore, where I delivered speeches and exchanged views with students. Not only were they keen to know how to strengthen co-operation between Hong Kong and their countries to achieve better regional development, they also expressed interest in the development opportunities in Hong Kong and the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) as well as our new policies and measures to attract enterprises and talent, particularly the Top Talent Pass Scheme launched a few months ago. Given that these two universities are among the top 100 in the world, their graduates would fulfil the requirements of the scheme. In other words, they may just come to Hong Kong and look for jobs, enjoying greater flexibility in pursuing careers in Hong Kong. Students attending the events come from different academic departments, and some of them have plans to start their own businesses. From the close interactions I had with the students, I can feel that our new policies have been attractive so that they would consider coming over to Hong Kong for developing their careers.

Many of the people I met, including young students, business executives and practitioners in the service sector, are ethnic Chinese who can speak Cantonese, Putonghua and English. Some of them even said that they grew up watching Hong Kong movies and listening to Hong Kong pop music. I felt like I was at home when talking to them. Some non-ethnic Chinese young people there also know Hong Kong quite well and are enthusiastic about coming to Hong Kong for development. In fact, with the geographical proximity and profound cultural, economic, trade and social ties between Hong Kong and the Southeast Asian economies, many enterprises in those countries have set up business in Hong Kong. Some people who visited Hong Kong after the resumption of normal travel said that Hong Kong's economic and social atmosphere had obviously improved, and the city had regained vitality. Although the pandemic has hindered our exchanges in the past few years, they have remained optimistic about the Mainland's economy and the huge potential of the GBA. Some enterprises expressed that they would like to use Hong Kong as a fund-raising platform and point of access to the Mainland market.

In Singapore, I attended a conference organised by the South China Morning Post and delivered a keynote speech in which I stressed that technological innovation, grooming of talent and cross-territorial collaboration could help strengthen the impetus for economic growth in the Asia-Pacific region. The Mainland and countries in ASEAN are currently rising as important economic powerhouses and the development potential of the whole of Asia is boundless. All countries in the region are hoping to promote more diversified and higher value-added economic development. On the premise of maintaining social and political stability, strengthening the internal growth momentum and seeking regional co-operation to accelerate development have become the main focus of the entire region. In fact, Hong Kong, with its unique advantages, is certainly the best platform which could assist countries in Asia to accelerate development.

The institutional arrangement of "one country, two systems" not only enables Hong Kong to benefit from the enormous Mainland market, but also allows us to maintain the common law system with market rules and regulatory regimes that align with international standards. Besides, Hong Kong maintains a stable exchange rate and enjoys free flow of capital, talent, goods and information. Our market is highly efficient and transparent. The staunch support from our country has helped strengthen the development of our capital market. Since mid last month, international companies listed on the Hong Kong Exchanges and Clearing Limited that meet certain requirements have been included in the Southbound Connect. This means that such companies, in addition to attracting international funds, may benefit from the huge amount of Mainland funds. Such a measure represents a milestone in further promoting the diversification and internationalisation of Hong Kong's stock market.

The establishment of the Office for Attracting Strategic Enterprises and the Co-Investment Fund at the end of last year, together with such directions for development as I proposed in the Budget last month, including the acceleration of the development of digital economy, and the promotion of Web3 as well as GreenTech and GreenFi, have become Hong Kong's new highlights in attracting enterprises to establish presence in the city. During this trip, I met with representatives of enterprises engaging in innovation and technology (I&T), Internet platforms, biomedicine and artificial intelligence. These enterprises are interested in Hong Kong's policies and supporting measures to promote I&T development, especially those on using Hong Kong as a base for tapping into the GBA market. Some of them said that the meetings had enabled them to have a more comprehensive understanding of Hong Kong's latest developments and situation. Some even said that the meetings had speeded up their decision to establish a presence or expand their business in Hong Kong.

During this trip, I also arranged a breakfast meeting with representatives of leading enterprises engaged in Web2 andWeb3, the businesses of which cover digital infrastructure, investment funds, virtual assets (VA) and trading platforms. We exchanged views on the future development of Web3. Many of them said that they did not have many opportunities to attend such cross-sectoral meetings in the past; they were quite interested in our policy ideas and directions for fostering the development of Web3 in Hong Kong. In fact, ever since we issued our policy statement on the development of VA in Hong Kong last year, they have been paying close attention to Hong Kong's development in this area. They reckon that our endeavours to establish a clear framework for the development of the VA market with a proactive and balanced regulatory approach; these will help promote the steady and prudent development of the industry and allow Hong Kong to stand out in the face of keen global competition. They are highly optimistic about the development prospects of Hong Kong.

In short, the impression I have got from this trip is that both Malaysia and Singapore have their own development potential. Malaysia is rich in natural resources, and its merchandise trade creates ample business opportunities for enterprises. Besides, the Malaysian Government is actively promoting the upgrading, transformation and diversification of industries. Singapore, well versed in the operation of the Southeast Asian market, offers comprehensive and high-quality professional and other services. Singapore's competitive business environment is highly attractive to enterprises wishing to tap into the regional market. How Hong Kong could foster closer co-operation with both countries in opening up the major markets of the Mainland and the ASEAN, is something which we should continue to explore and work on.

This trip has also given me the chance to meet many old friends who have all along supported Hong Kong. I have also made new friends who know about Hong Kong and are looking forward to visiting the city again. They all appreciate the work culture of Hong Kong featuring diligence and flexibility; our vibrant and efficient business environment; precise, transparent and stable policies; and glamorous cosmopolitan lifestyle. These are the strengths that make Hong Kong a front-runner in Asia.

It can be expected that with the shift in global economic gravity from West to East, the continuous development of China and the developing Asian economies, advancement in technology application and technological innovation, and the expansion of the middle class, economic growth in the Asia-Pacific region will gain further momentum while trade in goods and services and the flow of people will increase significantly. There may be concerns that intensified competition among the economies may bring about adverse consequences; but economic development will enable us to make a bigger pie. Stimulated by the pressure of competition, economies will keep enhancing their competitiveness, which will make possible the application of higher-level technology, product innovation, service improvements, etc. After decades of development, various economies have charted a distinctive path of their own. It is my conviction that, by brushing aside the zero-sum mindset and contemplating how to achieve win-win, healthy competition will bring out the best of our strengths and potential, thus enabling us to make greater contributions to the development of the global economy, as well as the well-being of our own people and community.

April 2, 2023

There were lively exchanges among participants on Wealth for Art, Wealth for Tech, Wealth for Green and Wealth for Philanthropy at the Summit, discussing how the investment management of family offices can keep up with the times, support technological innovations and foster green, low-carbon and sustainable development, and how family offices can make greater contributions to the community by better promoting philanthropic work in respect of wealth succession.

As I have pointed out in my keynote speech at the Summit, Hong Kong is an international financial centre with our robust financial markets developing in a stable, secure and orderly way. Coupled with our world-class financial infrastructures plus a diversified and efficient capital market, we can fully meet the business and investment needs of family offices. Moreover, our unique advantages under "One Country, Two Systems" not only allow us to easily benefit from the opportunities available in the enormous Mainland market, but also enable us to adopt a common law regime and market rules that align perfectly with global standards. Together with a wide range of professional services, Hong Kong has become a converging point for capital, talent, investment products and art and cultural items from the Mainland and around the world. Besides, as there are over 50 international schools in Hong Kong which offer curricula of different countries including the United Kingdom, the United States, European countries, Japan, South Korea and Singapore, family members can therefore choose the education courses that suit their cultural background. Hong Kong also boasts over 200 Michelin-recommended restaurants, offering diversified dining experience with different cultural and culinary characteristics to all. The inclusive culture and varied choices in Hong Kong have made the city an ideal place for family offices to establish their business.

In fact, quite a number of participants told me during the Summit that this event was successful in attracting decision makers and managers of family offices, and that it indeed provided a chance for them to get together for the first time over the past few years. Many decision makers also indicated that they were very impressed by the pace of our economic recovery as well as our vibrancy and charm, and that they were preparing or even had decided to establish family offices in Hong Kong.

Family offices form an integral part of asset management business. They have a relatively high concentration of wealth with investments not only confined to financial products but also covering art and cultural items. Apart from having a strong demand for the trading, collection and management of artworks, family offices are also very interested in promoting medical research, green development and philanthropy. They are also engaged in arranging education and daily life matters for members.

During the Summit, the HKSAR Government issued the Policy Statement on Developing Family Office Businesses in Hong Kong, setting out clearly the relevant policy direction and summing up its recent efforts in this regard, which include introducing a new Capital Investment Entrant Scheme in the Budget this year, offering tax concessions for family office investments, funding the establishment of a new Hong Kong Academy for Wealth Legacy, providing art storage facilities at Hong Kong International Airport and developing Hong Kong into a philanthropic centre. In fact, the total transaction value of artworks, collectors' pieces and antiques auctioned in Hong Kong in 2021 exceeded HK$66 billion, ranking one of the highest in the world. We believe that by attracting more family offices to establish their presence in Hong Kong, we can foster Hong Kong's development into a global art auction and trading hub.

Hong Kong is a dynamic city where East meets West with a mix of the old and the new. With the express support of the National 14th Five-Year Plan, we are pressing ahead with the development of Hong Kong into an East-meets-West centre for international cultural exchange. While the M+ Museum showcases world contemporary art, the Hong Kong Palace Museum exhibits our country's cultural essence. Art Central and Art Basel, which are being held over these two weeks, have attracted a wide audience from around the world, the Mainland and the local community. On performing arts, our music talents are recognised internationally, and performing arts groups of different fields, be they large or small, have achieved a very high standard and helped creating a blossoming art scene in the city.

Since the full resumption of normal travel with the Mainland and the rest of the world, Hong Kong has held major events and large-scale international conferences one after another. Apart from the Wealth for Good in Hong Kong Summit, the international conference jointly organised by the Hong Kong Monetary Authority and the Bank for International Settlements was also held successfully last week, during which in-depth discussions and exchanges on ways to ensure future-proof supervision for an innovative banking world were conducted. More large-scale events will follow in the coming months, including the Hong Kong Sevens to be held this week. In addition to inviting visitors to come to experience for themselves the vibrancy and charm of the city, we will reach out and establish deeper and broader ties and friendships with the rest of the world. Today, I am going to visit Malaysia and Singapore to showcase our new advantages and business opportunities in such areas as economy, finance, innovation and technology and art and culture. Besides meeting government officials, visiting enterprises and interacting with the local business community, I will also speak at local universities. So long as we seize every opportunity to promote our city, I believe that we will surely be able to attract and pool together more enterprises, talent and capital from around the world, thereby increasing our appeal and boosting the influence of Hong Kong as an international metropolis.

March 26, 2023

At the skateboard ground of the Kwun Tong Promenade that morning, I was faced with a daunting challenge of learning skateboarding but I believe that through perseverance and hard work, my efforts will come to fruition. The cheers from members of the public passing by that day also gave me crucial support and motivation. The crowd applauded and cheered when Chun and my "seniors" showed us their extraordinary skills. Despite their young age, the "seniors" excelled in skateboarding and one of them has even won a medal at an international competition. They shared with me that despite the fall and injury sustained during training, they never gave up and had continued to practice hard and learn new skills, thereby making breakthroughs.

These emerging sports, be they in form of indoor or outdoor practice and performances, create a new dimension of physical exercise, self-challenge and individuality. They also allow members of the public and people in the neighbourhood to foster closer ties and alleviate the sense of "alienation" between busy people in a metropolis by providing them more opportunities for interaction, fun, competitionand amusement. Some urban sports such as 3-on-3 basketball, futsal, BMX freestyle, skateboarding, sport climbing and breaking have also been incorporated as official events at the Olympic Games or the Youth Olympic Games.

In my Budget Speech delivered in mid-February, I announced that resources would be earmarked to examine the conversion of some underutilised floors of the Kwun Chung Municipal Services Building into an indoor venue suitable for urban sports such as skateboarding and sport climbing. At the same time, we will explore ways to upgrade the basketball court in the nearby King George V Memorial Park, Kowloon. Together they would be turned into an urban sports centre encompassing both indoor and outdoor facilities. The technical feasibility study for the conversion is expected to be completed within this year and consultation will be conducted in accordance with the relevant procedures.

Providing well-equipped sports facilities is an integral part of sports development. At present, the Leisure and Cultural Services Department has a number of urban sports-related venues, including 14 indoor and outdoor sport climbing facilities, eight skateboard grounds, five skateparks and over 120 5-a-side soccer pitches. In addition, we plan to enhance some existing facilities and provide bouldering walls and skateboarding facilities for promoting relevant urban sports.

Sports not only can help strengthen our physical fitness, it also improves our mental health and quality and fosters the connection between people in the society. The dauntless spirit and perseverance of athletes also helps boost morale and enhance social cohesion. Some international sports events also draw wide attention and attract a large number of fans abroad to come to Hong Kong every year, thereby bringing economic benefits to local tourism, retail, and catering industries.

We have been dedicated to the promotion and implementation of three policy objectives on sports development, namely, to support elite sports, promote sports in the community and maintain Hong Kong as a centre for major international sports events, through various measures including the allocation of resources for nurturing our elite athletes, supporting the expansion project of the Hong Kong Sports Institute, and providing enhanced support to retired athletes for their post-athletic development. Meanwhile, we are also committed to promoting sports in the community and encouraging more people to participate in sports.

With the return to normalcy, it is the opportune time to promote economic recovery, we look forward to the return of many spectacular sports events to Hong Kong, including the Hong Kong International Dragon Boat Races, Hong Kong Cyclothon, and the Hong Kong Sevens to be held later this month, etc. The Hong Kong Tourism Board has earmarked over $250 million this year to continue organising and assisting in the promotion of various large-scale tourism events including sports events. What is certain is that more joyful and exciting scenes will reappear in Hong Kong this year. Let us continue to liven up with sports in Hong Kong, magnificent events in Hong Kong and a Happy Hong Kong!

March 19, 2023

我們作為國家的一份子，分享著美好未來的發展機遇，也要有強烈的責任擔當，一起為推動更好的發展肩負重大責任。首先，我們要深入學習、更通透地領悟習主席的講話精神，掌握箇中的核心思想，更好動員社會資源和力量，加快推進香港的發展和經濟建設，更好發揮香港的獨特優勢，更積極融入國家發展大局。經濟搞上去，民生改善了，老百姓滿意了，我們的工作才算合格。這也是國家對香港特區管治團隊的高度期望和明確要求。

習近平主席表示，「推動強國建設，離不開香港、澳門的長期繁榮穩定」。要全面準確、堅定不移貫徹落實「一國兩制」、「港人治港」，高度自治的方針。中央支持香港發展經濟、改善民生，更好融入國家發展大局。習主席的講話，是我們推進香港各項工作的重要指南，也是我們的信心所繫，接下來我們要做的，就是鼓足幹勁，將不同的藍圖變成現實，向國家、向市民交上合格成績表。

總理李強也指出，中央政府始終高度重視發揮香港的優勢和特點。回歸以來，在國家支持下，香港國際金融、航運、貿易三大中心地位得到了鞏固和提高。這是總理對香港工作的肯定，也是要求和鞭策，我們需要繼續鞏固發展，打造新優勢，開拓創新，闖出新天地。

今年兩會強調「牢牢把握高質量發展這個首要任務」，並為推動高質量發展指明了路徑，提出加快實現高水平科技自立自強、推動民營經濟健康發展等具體意見。民營經濟的發展環境及空間將會越來越大，還有很多新領域可以開拓，還有很多新賽道可以參與。

「一國兩制」讓香港有著制度優勢，可發揮資本主義制度的市場靈活性、普通法及市場規則與已發展國家的順勢銜接等獨特優點，為民營經濟的新發展提供更多新的探索和加速推進的空間。

中央是香港繁榮穩定發展的堅實支持和後盾。雖然近年發展受到不同因素影響，曾經遇到困難，但每次都在中央支持下都得以成功跨越，繼續穩步向前。如何繼續主動作為、積極作為，這是我們需要時刻放在心上的基本態度。

習主席指出，「強國建設、民族復興的宏偉目標令人鼓舞，催人奮進」。習主席一直親切關心香港的發展和市民的生活，並對香港的發展提出重大期望。我們正肩負著重大責任，要全面準確、堅定不移貫徹落實「一國兩制」方針，要全力以赴維護香港的繁榮穩定，要更好地融入國家發展大局，這是香港美好未來的必由之路。讓我們一起合力同心，在強國建設與民族復興的偉大事業中，貢獻重大和不可替代的力量!

March 13, 2023

The past decade has been an exceptional and extraordinary one. In the face of various risks and challenges, our country, under the strong leadership of the Party's Central Committee with Xi Jinping at its core, has successfully united and led the whole nation to rise to challenges of various kinds brought by political, economic and epidemic-related issues and overcome obstacles one after another, with the implementation of a new development philosophy and a new development paradigm.

The 2023 Two Sessions are especially meaningful as this year marks the beginning of our country's realisation of Chinese-style modernisation. In a new era of socialism with Chinese characteristics, the road towards the great rejuvenation of the Chinese nation would be met with risks and obstacles along the way. Despite these difficulties and challenges, the Central Government has made full preparations, which include keeping the economy operating within an appropriate range, expanding domestic demand, remaining committed to opening up wider to the world and deepening international economic and trade co-operation for mutual benefits.

During the Two Sessions, various goals of economic development for the year were set, and more importantly, the point of "being committed to the primary task of pursuing high-quality development" was highlighted. Apart from identifying a path for us to promote high-quality development, the Central Government has also given us some specific advice on accelerating the realisation of high-level technological self‑reliance and promoting healthy development of private economy.

Hong Kong is now at a critical stage in its development. Now that the principle of "patriots administering Hong Kong" has taken deeper root in the city, we should focus on developing our economy by devoting our efforts and resources to the pursuit of high-quality development on all fronts. Through technological innovation as well as development of new models and systems, we should pursue more diversified and in-depth development of our economy, and enable the results produced to continuously translate into an enhancement of people's quality of life, thereby giving our people a genuine sense of achievement and satisfaction.

Amid the profound changes in the world unseen in a century, we need to maintain the momentum of innovation in our financial markets and sustain their vibrant development so as to consolidate and enhance our strength as an international financial centre, while attaching great importance to co-ordinating development and security.

Meanwhile, the Government will spare no effort in accelerating technological innovation and application with a view to achieving high value-added development. Given the keen international competition, we will open up new areas and new arenas for development to foster new growth drivers and new strengths. Whether it is about the development of artificial intelligence, biotechnology, digital economy, the third generation Internet (Web3), or the establishment of an international green technology and financial centre, we should, in addition to pursuing progress while ensuring stability, seize the opportunity to promote fast and steady development, with a view to embracing the philosophy of pursuing high-quality development through "innovation, co-ordination, green, openness and sharing".

The economy of our country is moving towards high-quality development, with a view to accelerating the realisation of high-level technological self‑reliance. To better integrate into the overall development of our country, Hong Kong must actively align with national development strategies, thereby creating more room for our future development.

In practising the great principle of "patriots administering Hong Kong", we should flexibly integrate a "capable government" with an "efficient market", and promote diversified economic development through the adoption of new development models. We should also better align our common law system and market rules with the legal systems and market mechanisms of developed countries, so as to give full play to our unique advantages of enjoying the strong support of the Motherland while being closely connected to the world in the global economy. It is our firm belief that, with staunch support from our country and our relentless efforts, we will be able to create new impetus and achieve another leap forward in our integration into national development.

March 12, 2023

The election result has fully reflected the common will of the people of the whole nation. That President Xi has been unanimously elected is testimony to the shared aspiration of the people and whole-process democracy. Not only does it demonstrate the popular support for President Xi from various classes, sectors and communities of the country, it also manifests the people's high acclaim for and full recognition of the great achievements made by the country under the leadership of President Xi.

In the past five years, President Xi has got himself personally involved in the formulation and implementation of various plans for Hong Kong. Under his care, Hong Kong has confidently embarked on a new journey from stability to prosperity following the transition from chaos to order, with the implementation of "One Country, Two Systems" back on track and progressing steadfastly and successfully. President Xi's great care, full support and guidance provide the strongest safeguard for Hong Kong's development and underpin our confidence in the success of the city.

Following the 20th National Congress of the Communist Party of China, China has embarked on a new journey of building itself into a modern socialist country in all respects. In joy and delight, let us join hands with the whole nation and work hard to achieve the second centenary goal of China under the leadership of President Xi.

As our country embarks on a new journey, Hong Kong is also entering a new stage.
Hong Kong is set to grasp new opportunities and achieve new development.
Hong Kong must play an irreplaceable role in shouldering this historic mission.
Hong Kong must achieve better development as it goes full steam ahead with its integration into national development.
Confident in our future, we are determined to make more irreplaceable contributions to the great rejuvenation of the Chinese nation.

March 10, 2023

As mentioned in the Report, China's economy grew by 3% last year, with its Gross Domestic Product reaching Renminbi 121 trillion. Its average annual growth rate was 5.2% for the past five years as a whole. Our country's economic structure has been further improved and infrastructure further upgraded. Remarkable achievements have been made in technological innovation. Reform and opening-up have been deepened. Its eco-environment has improved notably, while its living standards have kept rising.

It can be said that innovative macroeconomic regulation has kept our country's economy operating within an appropriate range. Deepening reform in key areas and at critical links has further energised the market and stimulated social creativity. Efforts to promote in-depth integration of online and offline consumption have raised the share of online sales in the total retail sales of consumer goods from 15.8% to 27.2%. The work to foster ecological and environmental protection as well as green and low-carbon transition development has also yielded promising results.

The Report also reviewed the progress of the work in relation to Hong Kong and Macao over the past five years, including the effective implementation of the overall jurisdiction over the two special administrative regions in accordance with the Constitution and the respective Basic Law, the enactment of the Hong Kong National Security Law, the implementation of the principle of "patriots administering Hong Kong", the steering of Hong Kong to a new stage of advancing from stability to prosperity following the transition from chaos to order, further promotion of the development of the Guangdong-Hong Kong-Macao Greater Bay Area, as well as supporting Hong Kong in pursuing economic development, improving people's livelihood, preventing and controlling the epidemic and maintaining stability. Looking forward, Premier Li remarked that we should fully, faithfully and resolutely implement the principle of "One Country, Two Systems", "Hong Kong people administering Hong Kong" and a high degree of autonomy in Hong Kong, administer Hong Kong according to the rule of law, safeguard the constitutional order as stipulated in the Constitution and the Basic Law, and implement the principle of "patriots administering Hong Kong". The Central Government will continue to support Hong Kong in pursuing economic development, improving people's livelihood, and maintaining long-term prosperity and stability.

This year is not only the first year of our country's full implementation of the spirit of the 20th National Congress, but also a critical juncture for Hong Kong to achieve another leap forward. The Report highlighted our country's priorities for development this year, which are also the areas we should focus on when serving our country's needs and seeking to achieve better development for ourselves:

1. striving to expand domestic demand and promote complementary development between regions;
2. accelerating the modernisation of the industrial system, including digitalisation of traditional industries and small and medium enterprises to make them higher-end, smarter and more eco-friendly; and forging ahead with the development of digital economy, stepping up regular oversight and supporting the development of platform economy;
3. effectively preventing and mitigating defusing major economic and financial risks; and
4. promoting the development of green transformation, improving policies for green development and developing a circular economy.

Our country is steadily heading towards high-quality development, with its economy advancing full steam ahead. With the staunch support from the Central Government, Hong Kong is also forging ahead along the new path from stability to prosperity. We have to make every endeavour to achieve greater economic development and step up our efforts to improve people's livelihood. While the Policy Address delivered by the Chief Executive at the end of last year sets out the policy directions and priorities of the whole Government, the Budget announced recently lately seeks to vigorously press ahead with the development of our economy and improvement in people's livelihood at full speed. The Budget has proposed to deepen the development of the "eight centres" and set out three major directions for driving further our economy towards high value-added development, namely accelerating the development of digital economy, seizing the opportunities brought by the third generation Internet (Web3), and developing Hong Kong into an international green technology and green financial centre.

Our country is building itself into a great modern socialist country in all respects. In the great rejuvenation of the Chinese nation, Hong Kong must give full play to its irreplaceable role by contributing more proactively to the cause. Let us join the whole nation in striving for the realisation of the Chinese Dream.

March 5, 2023

Yesterday, I visited the Hong Kong Design Institute of the Vocational Training Council in Tiu Keng Leng to gain an understanding of the students' learning situation. These students major in areas such as fashion design, art tech, make-up, and modelling, and equip themselves with theoretical knowledge and practical skills in just two years. In addition to traditional classroom learning, incorporating more experiential learning in practical workshops can inspire creative thinking and learning at different levels, making the learning process more interactive, well-rounded, and interesting.

Let's take students who major in fashion design as an example. During their studies, they are responsible for all kinds of work, from pattern drafting to tailoring and sewing. This nurtures their fashion sense and enables them to grasp the essential elements in tailoring. Under their guidance and assistance, I had the opportunity to participate in part of the tailoring process. Of course, they are much more professional than I am. But through their detailed explanations and witnessing their passion and earnestness for their profession, I am confident that they will make good achievements in their study. With hard work and persistence, they will definitely thrive in their careers.

Over the past few years, the Government has continued to allocate more resources towards VPET. In fact, in the latest Budget, I announced that a two-year pilot project would be launched from the 2023/24 academic year. This pilot project will offer secondary school students an opportunity to pursue VPET-related programmes that are embedded in the Hong Kong Diploma of Secondary Education (HKDSE) curriculum under the HKDSE framework. Upon graduation, students will be awarded a VPET Diploma at Qualifications Framework Level 3, alongside their HKDSE qualification. This is an excellent opportunity for students to explore their future development pathways and follow their aspirations.

The economy of Hong Kong is progressing towards diversification and high value-added development. The cultural and creative industries, in particular, offer tremendous opportunities and room for development to our people, especially to many local young people who possess dreams, passion, and perseverance.

The Government has been striving to promote the development of the cultural and creative industries. Since the launch of the CreateSmart Initiative (CSI) in 2009 and till the end of September 2022, nearly $2.3 billion had been allocated under the CSI, providing funding support to the creative sectors to organise about 650 projects in Hong Kong, the Mainland, and overseas. The CSI benefitted around 13,000 small and medium-sized enterprises, creating close to 30,000 jobs and over 80,000 opportunities for nurturing talents.

After more than a decade of development, the CSI has successfully nurtured new talent for the local creative industry, and some of them have gained international recognition. For instance, the "Animation Support Programme" has provided funding and mentoring support to over 200 promising local start-ups, allowing their original creative animations to be showcased to international buyers at FILMART (Hong Kong International Film & TV Market), the largest film and TV exhibition in Asia. Some of these productions have even won awards in competitions like the DigiCon6 ASIA Awards in Japan. As a result of the programme, numerous companies were also hired by international brands to produce animated advertisements, while some animators were invited to produce exhibitions for M+ and museums in the US.

In the latest Budget, the Government has injected $500 million into the CSI to encourage more cross‑sectoral and cross‑genre collaboration on creative and cultural programmes, and promote the co‑production of television variety programmes by local television stations with Mainland or Asian production teams, to enhance the influence of Hong Kong's pop culture. The CSI will also provide funding support for the Hong Kong Design Centre and the Hong Kong Trade Development Council to implement flagship events and incubation programmes.

Furthermore, I allocated funding to support the exchange activities of arts and cultural groups in the Greater Bay Area and other places outside Hong Kong in the past few Budgets. As we have fully resumed our connectivity with the Mainland and the international community, such cross-sectoral and territorial collaboration and exchanges will present numerous opportunities for the sector.

To expedite our economic development, we attach great importance to nurturing local talent while making our best efforts to attract outside talent. In addition to the cultural and creative sector, I have also earmarked resources through the Budget to provide more internship and training opportunities for young people and professionals pursuing careers in industries such as finance, maritime, aviation and logistics, innovation and technology, and construction. For instance, we will inject $200 million into the Maritime and Aviation Training Fund to step up manpower training in the logistics industry and drive the industry towards high-quality development. In the Budget, I also announced the launch of a financial technology internship scheme for post-secondary students, to help them develop an early interest in financial technology. These schemes not only provide the youth with more opportunities for continuous enhancement but also help them better grasp the opportunities arising from Hong Kong's high-quality development. They also enrich the local talent pool for the development of the "eight centres" in Hong Kong and provide the required manpower for the city's development.

March 5, 2023

Innovation and technology (I&T) are the drivers for economic growth. They open up opportunities for accelerating high-quality development. By addressing problems with new solutions and breaking limitations with new thinking, we can keep resolving difficulties that beset our market. By doing so, we can create value continuously and take lead in pursuing more vibrant development of our economy with ample opportunities.

We are pressing ahead with the development of digital economy in four major directions, namely digital infrastructure, cross-boundary data transfer, digital transformation and human resources support. The Budget has announced studying the development of a supercomputing centre. It has also put forward measures to help expedite the digital transformation of small and medium sized enterprises, having taken into account the recommendations of the Digital Economy Development Committee. As for Web3, it has opened up a new trend in Internet services with the use of blockchain as its core technology to push forward a disintermediated, safe, transparent, low-cost, efficient and sharing-based business model, nurturing a new wave of innovation in commercial and other applications with huge development potential.

Green technology and green finance are major international trends. Statistics indicate that the global market size of green technology will reach US$417.4 billion in 2030, with an annualised compound increase of 31.5% as compared with that in 2021, at US$35.5 billion. It will prove to be a huge market. However, throughout the world, there has not yet emerged a world-leading industrial cluster of green technology and green finance. While our country is marching the "dual carbon" goals, we have also mapped out the way forward for decarbonisation. With a number of quality local green technology enterprises and our strengths as an international financial centre, Hong Kong is definitely capable of better integrating green technology with green finance, with a view to leveraging the forces of these "dual engines" to accelerate the development of the industry. The building of an international green technology and green finance centre will open up new horizons for Hong Kong.

In fact, Hong Kong has already nurtured and pooled together a group of high-quality, forward-looking, innovative and passionate green technology companies. Yesterday, Mr Michael Wong, the Deputy Financial Secretary, and I visited two I&T flagships in Hong Kong respectively, namely Cyberport and the Science Park, and met with a number of green technology start-ups to understand their I&T and development needs. I strongly feel that the dual green strategy proposed in the Budget is indeed opportune, and is a necessary path to promote green development in Hong Kong.

There are more than 100 green technology enterprises in the Science Park. One of them applies 3D printing technology in an underwater coral and ecosystem restoration project by designing fabricated terracotta reef tiles as a "foundation" structure for corals to grow on. Such efforts help restore the beautiful marine habitats and contribute to the marine carbon sequestration. This local start-up grew in the Science Park, has gained rapid expansion upon recognition by and investments from investors from the Middle East, thus facilitating a green dream venture to go beyond Asia.

Another start-up produces disposable tableware by developing new green materials. Compared with other existing paper-based tableware which still contains plastic in general, the tableware developed by this I&T start-up is entirely de-plasticised, which is more effective in protecting the environment. The tableware can be directly heated, and the relevant technology may be subsequently used to develop more new products. Another company makes use of aquatic microalgae to help reduce carbon dioxide indoors. The carbon reduction effect of a seemingly ordinary "plant wall" is indeed several times greater than that produced by trees of the same weight.

Meanwhile, Michael visited three green technology start-ups in Cyberport. One of them focuses on green living and urban farming technology. Its team has developed a hydroponic machine to grow fresh vegetables through automatic adjustment of temperature, spectrum, relative humidity, pH content, etc. Another start-up concentrates on smart technology for building management, making use of artificial intelligence, big data and Internet of Things to facilitate energy saving and decarbonisation in buildings in order to achieve sustainable development. Specialising in wind force, solar energy and green hydrogen energy, the third start-up develops and promotes green technology, renewable energy and zero carbon energy technology.

Each of these start-ups has its own specialties and characteristics, and at the same time they have one thing in common: the passion and dreams for protecting the environment and promoting green development. Their stories also bring up a key issue: green technology development requires solid foundation of scientific research and technological development; but investment, financing and business management support as well as market research and promotion are equally important. Collaboration across sectors will help us lock onto the problems, explore and develop solutions and provide support for applications, thereby better facilitating the promotion of an active cycle for the green technology industry as a whole from innovation and R&D, commercialisation of R&D outcomes to mass production and a complete and vibrant industry chain. Building such a highly co-ordinated and interactive ecosystem will certainly boost and accelerate our green technology development, which will attract investment, enterprises and talent from all over the world to Hong Kong, making Hong Kong a global green leader.

February 26, 2023

The challenge this year is that after three years of epidemic, coupled with a weak external economy, the Government has accumulated a rather high deficit over the past few years. That notwithstanding, we need to press ahead with social and economic recovery, as well as intensify support for future investments. Indeed, through adopting an expansionary fiscal policy and implementing counter-cyclical measures, we effectively relieved pressures on local residents and enterprises caused by the economic downturn, and stabilised the society and people's livelihood during the epidemic. Fiscal reserves inevitably declined. Hong Kong is on the road to normalcy, and our economy is regaining momentum. Although we are running into more constraints under tight resources, we affirm our determination to make great efforts to pursue economic development, improve people's livelihood, and map out the long-term plan for Hong Kong's future development. Our country is making steady progress on high-quality development, and technological innovation provides an opportunity to accelerate forward. Looking ahead, Hong Kong is embracing golden opportunities.

I have full confidence and expectations on Hong Kong's future – this is what I felt when I chose the colour for the Budget Speech's cover. While the current momentum of economic recovery still needs to be further strengthened, Hong Kong is on the cusp of a new development stage. As long as we aim right and prepare well, we will surely be able to ride on the wind and usher in bright sunshine!

February 19, 2023

This event is the first territory-wide large-scale sports event in 2023. This year, many mega events, sports competitions, large-scale exhibitions and international fora and summits of different themes will be held in Hong Kong, one after another. For March alone, there are the Hong Kong Sevens, Hong Kong Disneyland 10K Weekend 2023 running event, Clockenflap Music & Arts Festival, Art Central, etc., to which we all look forward.

The coming back of mega events is important to Hong Kong at multiple levels. On the one hand, it showcases to the world that Hong Kong has fully returned to normalcy, and the society and the economy have walked out of the woods of the pandemic. Moreover, our mega events have many loyal fans and staunch supporters around the word, and such events will help attract more visitors from the Mainland and overseas to Hong Kong, benefitting various industries including tourism, hotel, retail, catering, etc. On the other hand, where the normal lives of our residents had been disrupted over the past three years of the pandemic, organising mega events again would allow them to take part in and enjoy such events. Looking forward, Hong Kong is going to stage and attract more mega events, to the enjoyment of both local residents and visitors.

Some people say that in the past three years, Hong Kong has run a "marathon" or gone through a "stress test". We have endured an economic downturn which posed challenges to people's livelihoods, and firmly maintained the stability of the financial system and the society at large. As of now, the economy has been steadily recovering, and the unemployment rate has fallen gradually to a relatively low level. The latest unemployment rate will be released next week, and continuous improvement is anticipated. Yet, many sectors are still facing recruitment difficulties, which need to be dealt with proactively and promptly.

Equally important is that the economy, society, businesses and individuals all need to rest and catch a breath after the previous period of downturn, just as runners need to relax and stretch after a long-distance run to allow their bodies to adjust and recover. We are convinced that after going through stress, exercise and proper rest, the society and the economy will achieve "supercompensation" just like the human body would, and become more resilient and powerful, thus bringing overall performance to new heights.

In fact, our economy, various sectors, businesses and individuals have already made many adjustments after undergoing stress for over three years. Every recovery has a process; development has its stages. We are now gradually moving forward with brighter prospects and better momentum.

The number of visitors to Hong Kong has been increasing steadily since the full resumption of convenient travel with the Mainland and the world earlier this month. But it is still quite far behind from what it was before the pandemic. It is expected that the tourism, retail, catering, transport and logistics, and other sectors will gradually pick up growth as the society returns to normalcy.

Figures from the Census and Statistics Department indicates that the retail sector saw some improvements towards the end of last year, and the catering sector was also doing better as reflected by the latest figures. Total restaurant receipts in December last year, released earlier this month, rose to nearly $9 billion, representing a 1.5% year-on-year increase. It is the third consecutive month of growth and a reversal of the previous eight months' decline. In dollar terms, this was the highest amount of total restaurant receipts in the month of December in three years. As we return to normalcy, with local consumption recovering and visitor arrivals rising, restaurant receipts will surely improve further. Individual months are likely to see total receipts going back to the $10 billion level. For example, in 2018 when the market was buoyant, restaurant receipts exceeded $10 billion in five months of that year.

It is worth exploring how to help our catering sector to achieve breakthrough while it recovers and gains more business.

Hong Kong is a culinary capital, bringing together fresh food and master chefs from all over the world. We offer fine wine pairing and quality dining experiences; delicious Eastern and Western cuisines as well as local street food; and much more. In such a tiny place as Hong Kong, there are more than 200 restaurants recommended by Michelin. What can be expected in the time to come are the increasing local consumption demand and the return of tourists; more and better food supply thanks to the full resumption of transport and logistics; more frequent exchanges on cooking, etc. With all these and our passion for gourmet, infinite creativity and willingness to try new things, the culinary capital of Hong Kong will be enriched in substance and eye further developments.

As many other sectors are gradually recovering from the downturn, we hope that different industries will embrace the acceleration of quality development in the future. How to bring products and services closer to the needs of consumers, or even lead and create new consumer demand; and how to make the best use of digitalisation to enhance operating efficiency and identify consumer preferences more aptly, etc., are all important issues to be considered in enhancing the competitiveness of enterprises.

The Budget for 2023-24 will be announced in less than two weeks' time. My colleagues and I are now working hard to finalise the content of the Budget. Preparing for the Budget has always been a challenging task, though the nature of and circumstances giving rise to challenges each year are not quite the same. This year, in the face of a volatile economy with its recovery momentum still in need of consolidation, our challenge is seeking to safeguard people's livelihood, stabilise the economy, create impetus for growth and make plans for the future on the one hand, while maintaining fiscal discipline and sustainability of public finances on the other. To achieve that, we need to be innovative and strike the right balance. I hope that the upcoming Budget will lay solid groundwork and provide steer for the recovery of Hong Kong. It is also our hope that, by investing in the future, Hong Kong will have greater room for development and be in a better position to leverage on the national development strategy as well as the great and promising prospects of our country.

February 12, 2023

It is anticipated that official events as well as business, tourism and other economic activities will recover fast, and cross-boundary people and goods movements increase steadily. This is expected to boost Hong Kong's exports, transportation and logistics, tourism, retail and catering sectors, and contribute to a more optimistic sentiment and outlook for Hong Kong's economy as a whole.

Nonetheless, recent economic data have reminded us that we should remain vigilant. The value of Hong Kong's merchandise exports plunged by 28.9% year-on-year in December last year, the steepest single-month decline in 68 years and the eighth consecutive month of decline. For 2022 as a whole, the value of merchandise exports dropped by 8.6%. While the value of retail sales reverted to an increase of 1.1% in December last year, it still fell by 0.9% for the year as a whole. It is worth noting that although the overall figures were not satisfactory, the value of retail sales in respect of online sales alone reached $34.6 billion last year, an increase of 21% over the preceding year, with its share in total sales rising to 10%, a further increase of around 2 percentage points over that in the preceding year. So long as we work hard and carefully look for new opportunities amid changes, we can still capitalise on the present and open up the future. The Government's disbursement of consumption vouchers in the past two years not only stabilised consumer and business confidence under the epidemic, but also stabilised the local economy and employment; while at the same time promoting the development of e-payment and e-commerce, and opening up new growth opportunities for businesses for enterprises in the face of adversity.

Looking ahead to 2023, while Hong Kong's economy will certainly be better than that of last year, the external environment will still be full of challenges and uncertainties. Economic recovery will take a process, whether it be the resumption of flights, return of tourists, or increase in investments – it may take some time for the economy to gather momentum. After enduring the downward pressure in the past few years, the financial status of enterprises as well as our residents and workers will also take time to recover. As such, we need to work hard to strengthen the hard-earned positive momentum, be vigilant about risks, and go forward steadily. Only by creating a stable and favourable environment for economic development, and by adopting business-friendly policies and measures, can Hong Kong's economy best recover.

In the short term, different sectors are striving to enhance their business handling capacities, including speeding up restocking, stepping up recruitment, strengthening training, etc., with a view to catering for the rise in business and transactions upon the start of recovery and revival of the market. In the meantime, the Task Force on Promoting and Branding Hong Kong led by myself has commenced work; and the Government also launched a large-scale global promotional campaign "Hello Hong Kong" last week. With all these efforts to enhance the promotion of Hong Kong to the world at a time when the city returns to normalcy, we hope that our Mainland and overseas friends would appreciate the city's new bright economic prospects, new cultural vision, and have new experience of our tourism and mega events when they visit Hong Kong again.

The series of promotional activities under the "Hello Hong Kong" campaign includes the give-away of over 700,000 free air tickets and "Hong Kong Goodies" welcoming offers from some 16,000 retail and dining outlets and attractions. Together, they aim to enrich visitors' travel experience and highlight Hong Kong's friendliness and hospitality as visitors enjoy our delicacies and beautiful scenery. This year, there will be more than 300 large-scale events, trade shows and international events in Hong Kong, such as the upcoming Standard Chartered Hong Kong Marathon, Hong Kong Sevens, Clockenflap Music Festival and Art Basel; as well as the Hong Kong Wine & Dine Festival and the Global Financial Leaders' Investment Summit to be held near the end of this year. By joining these events, friends from all over the world will be able to appreciate the unique advantages, opportunities and charm of Hong Kong.

While we are striving to consolidate and promote Hong Kong's economic recovery, and as we reopen and rejoice the recovery alongside various mega events, let us not forget our fellow residents who are living in hardship, and the need to help them improve their living conditions and quality of life. The current-term Government adopts a governance model that better integrates a proactive and capable government and an efficient market so as to promote Hong Kong's faster and better development through measures in the short, medium and long term. We are trying our best to address people's concerns and difficulties in their daily lives.

On land and housing, the Government is making every effort to increase the supply of land and housing by enhancing speed, quantity, efficiency and quality. Nevertheless, land creation and housing construction take time. The building of Light Public Housing (LPH) proposed by the current-term Government is intended to provide those residing in poor living environments the hope of options which can improve their living conditions in a relatively short period of time. This is particularly the case when the forecast production of public housing in the next ten years will be back-loaded, which means that there would be an obvious gap in housing production in the first five years despite the fact that the estimated production target would exceed the demand. LPH serves to fill part of this gap and is not a long-term measure. Viewed from this perspective, it is important to implement the scheme as soon as possible. The society has expressed different concerns about the scheme and we are responding proactively. Communication is a continuous process. I hope that all sectors of the society, while raising their views and concerns, will also adopt the spirit of neighbourliness and mutual care; and allow the scheme to commence early, thereby improving the living environment of those who are inadequately housed as early as possible. I believe that with the advice and monitoring of various parties, different considerations and concerns will be properly addressed in the future operation of the scheme.

Note: Persons who have stayed in overseas places or Taiwan during the seven days before the day of entering the Mainland will still be required to conduct a nucleic acid test.

February 5, 2023

Our economy has been plagued by the epidemic over the past few years. As such, government revenue from taxes as well as fees and charges has fallen. At the same time, the anti-epidemic efforts and relief measures implemented in the past three years have incurred an expenditure of more than $600 billion in total. Taking into account these two factors, the fiscal deficit was brought to a record high of over $200 billion in 2020-21. It is also anticipated that the deficit will reach some $100 billion in 2022-23. In the face of the epidemic and economic downturn, we decisively adopted an expansionary fiscal policy to step up support for the people and small and medium-sized enterprises (SMEs) through the introduction of counter-cyclical measures, thereby maintaining public and market confidence. The measures have delivered the expected results and won recognition from the market and rating agencies.

As our community has entered the post-epidemic stage, with anti-epidemic measures having been gradually removed, and normal travel between the Mainland and Hong Kong resumed in an orderly manner, our economy will surely perform better this year than the last. We therefore have to adjust our fiscal strategy accordingly. After adopting an expansionary fiscal policy for the past few years, our fiscal reserves have drastically dropped to the level of $800 billion, which is equivalent to around 12 months of government expenditure, and far lower than the level three years ago which was equivalent to more than 20 months of government expenditure.

As our economy and market came under pressure, we took exceptional measures during exceptional times to safeguard people's livelihood. However, as our economy stabilises, we have to make adjustments to our fiscal measures accordingly. This is a responsible act, and in line with the principle set out in Article 107 of the Basic Law. The sustainability of our public finances is one of the fundamental elements of Hong Kong's stable and prosperous social and economic development. As a small and fully externally-oriented economy, Hong Kong needs to maintain strong financial strength in order to withstand the risks posed by the external changing environment. As proven in cases of other countries, unsustainable public finances would undermine the stability of the local economy and the financial system, which would in turn affect people's livelihood.

The tightening of the expansionary fiscal policy adopted in recent years is both inevitable and necessary. The key issue is how far such policy should be tightened to be commensurate with the current economic situation, as well as how such adjustments could be made more acceptable to members of the public, SMEs and the society at large. All these require our careful consideration.

On the other hand, although the economy this year will do better as compared to the last, we must closely monitor the speed and extent of post-epidemic economic recovery, especially during the initial stage when market confidence is still relatively weak. Sharp reductions in expenditure at this stage would not be conducive to consolidating the recovery momentum. In addition, as the business environment of different sectors and the income of wage earners from different strata may improve at a slower pace, the "sensory temperature" of the public towards economic recovery may vary. Taking these factors into consideration, even though the Government is under tremendous pressure to reduce public expenditure, it may not be appropriate to abolish relief measures across the board.

Hence, as regards our fiscal policy for the coming financial year, we will switch from a "considerably loose" expansionary approach to a "moderately loose" one. On the one hand, we have to focus on providing support for the underprivileged, creating stronger impetus for economic growth and further strengthening public confidence in our efforts to improve the economy. On the other hand, we have to strive to control public expenditure to maintain market confidence in our healthy public finances.

However, simply cutting expenditure will not help us increase revenue in future. We have to make an all-out effort to pursue the two objectives together at full steam, with a view to achieving vibrant economic development and bringing sustained impetus for growth while maintaining financial sustainability. Development is of overriding importance. Only with robust economic development could we have the financial resources to address the various needs of the people.

Our strategy is to promote better integration of a "proactive and capable government" and an "efficient market". From the measures to invest heavily in innovation and technology (I&T) in the past few years as well as the current measures to attract enterprises and talent, our aim has been to create strong impetus for economic growth by using I&T to facilitate the upgrading and transformation of traditional industries and foster the growth of emerging industries. As Hong Kong enters a new development stage, whether we can maintain the competitive edges and vitality of our economy and ensure the long-term prosperous and stable development of Hong Kong hinges on the success of such measures.

Another major line of thinking for the upcoming Budget is pursuing economic diversification and enriching industrial development, which are conducive to a balanced economic structure and hence the creation of more quality employment opportunities. This is not just about economic development, but also about people's livelihood.

The greatest challenge in the preparation of this Budget is a huge fiscal deficit. While it is essential to reduce expenditure, it is even more crucial for us to increase revenue. Under such circumstances, some of the relief measures which have been implemented for years may need to be adjusted. When considering various measures, we will try to minimise the impact on the underprivileged. That said, we do ask for understanding and support in circumstances where certain expenditures have to be cut, and where additional tax burden may have to be shared by the community.

Looking forward, we hope that our financial position will take a turn for the better as our economy heads towards full recovery and regain impetus. We need to foster greater and stronger economic growth, that is to say, "to make a bigger cake and share it among all". We should sustain the recovery momentum of each sector at this stage, as well as create stronger impetus for economic growth in future. Entering a new development stage, Hong Kong is set to embrace new opportunities, new potentials and new strengths. We will adopt a proactive approach, stepping up our efforts to make known Hong Kong's new positioning and developments to the rest of the world. As put forward in the Policy Address, we should tell the good stories of Hong Kong. The Task Force on Promoting and Branding Hong Kong, led by myself, was officially set up last week. The team comprises relevant government officials, prominent individuals with diverse backgrounds and a number of Hong Kong Inc. partner organisations. Through devising promotion strategies with concerted efforts, as well as direct communication and public relations promotion, the team aims to allow people in Hong Kong, the Mainland and overseas countries and regions to have a more comprehensive understanding, better knowledge and fuller recognition of Hong Kong's advantages and opportunities, thereby enabling Hong Kong to soar high, reach new milestones and scale new heights in its future development.

January 29, 2023

I just returned from Switzerland yesterday after making a four-day trip to attend the World Economic Forum (WEF) Annual Meeting in Davos. During the various discussion sessions, I exchanged views with political and business leaders from around the world in such areas as the global macro-economic environment, climate and sustainable development as well as developments in finance and technologies, updated them on the latest situation of Hong Kong and promoted actively the enormous opportunities offered by the city.

It was my third overseas visit since Hong Kong started stepping towards to normalcy. In addition to meeting representatives of countries of the Association of Southeast Asian Nations and in the Middle East, I spent more time meeting people from Europe and North America this time. All these visits have brought me deep thoughts. First, although the epidemic has disrupted our connection with the rest of the world over the past three years, many foreign enterprises still have much care and positivism about Hong Kong's development, and are highly interested in doing business here. Second, we do have many good and old friends who are willing to support the city by offering us advice even when we were in hard times facing various challenges. Third, however advanced technology is and however convenient virtual meetings are, they can neither replace face-to-face meetings and sincere reaching out, nor explanation and interactions in person.

By actively participating in more international conferences and having more exchanges in person, we can better understand the views and concerns of the international political and business community. We can effectively explain and clarify certain stereotypes or misconceptions. We can also provide updated information and different points of view towards doubts and worries. What is more, we can make timely, appropriate and more comprehensive responses to address their areas of concern. Not only do these face-to-face exchanges allow the outside world to get a fuller picture of the enormous opportunities lying ahead of Hong Kong, but they also enable us to look at our own inadequacies from different perspectives and seek improvements.

By actively participating in more international conferences and having more exchanges in person, we can better understand the views and concerns of the international political and business community. We can effectively explain and clarify certain stereotypes or misconceptions. We can also provide updated information and different points of view towards doubts and worries. What is more, we can make timely, appropriate and more comprehensive responses to address their areas of concern. Not only do these face-to-face exchanges allow the outside world to get a fuller picture of the enormous opportunities lying ahead of Hong Kong, but they also enable us to look at our own inadequacies from different perspectives and seek improvements.

As stressed in my speeches and interventions at the Annual Meeting and during my exchanges with many of the participants, Hong Kong's development, whether arising from giving fuller and more active play to the various important roles our Country has entrusted us under the 14th Five-Year Plan, or by economically integrating into and facilitating the strategic development in the Greater Bay Area, would create more opportunities for our partners. In fact, with rifted global political and economic relations, we always truly believe that only when all sides seek to cooperate sincerely with each other could we achieve win-win and create favourable conditions for sustainable global development. Through innovations in science and technology or business models, the world could solve difficulties faced by societies, combat climate change, improve the well-being of humankind and create more business opportunities. And by this, we can bring the global economy out of crisis, and open up new horizons of development. This fully echoes the theme of this year's WEF Annual Meeting.

During the Annual Meeting, some participants did expressconcerns to me about certain political matters. Direct explanation and communication did help enhance mutual understanding, even though opinions might remain divided. But more importantly, we were able to bring the voices and views of Hong Kong into international meetings, so that our overseas counterparts could listen to stories about Hong Kong from an all-round perspective.

Amid a hectic schedule, I still managed to take some time to introduce Hong Kong – including our culture, scenery and cuisines to the participants of the Annual Meeting and the locals. I invited them visit Hong Kong and experience the city's vibrancy and opportunities in person. Indeed, in a foreign place, one may be rewarded with friendly responses or even surprises by just initiating a chat with someone you have never met!

All in all, as we attended international meetings in person and took part in interactions and discussions with other participants, we were able to grasp a fuller picture of the views, stances and concerns of international political and business leaders. As we went into the local community to promote Hong Kong's appeal in tourism, we have learnt about perception and impression of Hong Kong by members of the general public. All-round interactions help us understand the world's views about Hong Kong more comprehensive; in response, we can devise more focused and useful narratives to promote the strengths and development potentials of Hong Kong. It is necessary to step up work on promoting Hong Kong to all levels of people from elites to members the general public.

All in all, as we attended international meetings in person and took part in interactions and discussions with other participants, we were able to grasp a fuller picture of the views, stances and concerns of international political and business leaders. As we went into the local community to promote Hong Kong's appeal in tourism, we have learnt about perception and impression of Hong Kong by members of the general public. All-round interactions help us understand the world's views about Hong Kong more comprehensive; in response, we can devise more focused and useful narratives to promote the strengths and development potentials of Hong Kong. It is necessary to step up work on promoting Hong Kong to all levels of people from elites to members the general public.

January 22, 2023

The AFF has always been an annual signature event in the financial and business sectors. This year's forum attracted a total of more than 7 000 participants amid the accelerated pace of returning to normality in Hong Kong. Both numbers of the participants and exhibitors exceeded the pre-pandemic levels. Among them, more than 100 global business leaders, policymakers, financial and wealth management professionals, entrepreneurs, technology innovators and economists spoke at the forum, sharing their observations and insights on the latest economic and financial developments. So to speak, Hong Kong has always been a prime location for being closely connected to the world, examining trends and changes, gathering cutting-edge viewpoints and converging massive business opportunities. As an international financial centre, Hong Kong has outstanding strengths and core competitive advantages.

I met with a number of representatives of international organisations who visited Hong Kong from overseas to participate in the forum both within and outside the venue. They were all very excited about Hong Kong's resumption of normal travel and exchanges with the Mainland as well as other parts of the world, and some of them already made arrangements to visit Hong Kong again within this year. They unanimously affirmed Hong Kong's role as the unique bridge between the Mainland and the world as well as our convenient hub function as a base to cover the Asian market. Their visit to Hong Kong to participate in the forum strengthened their confidence in Hong Kong, and also allowed them to actively consider and plan to increase investment and expand the scale of operations in Hong Kong.

Under the theme of "Accelerating Transformation: Impact ∙ Inclusion ∙ Innovation" in the AFF this year, participants focused on thinking about how to jointly build resilient economic development through innovation and inclusion. In my speech at the forum, I also elaborated the importance of "sustainable development". In addition to jointly addressing the challenges of climate change, all parts of the world should cooperate to promote more tolerant, inclusive and resilient global development. By putting forward the "Global Development Initiative", our country has been promoting a mutually beneficial and win-win cooperation model indeed, which has received broad and substantial support from the international community. The HKSAR government has been adopting a multi-pronged approach to promote sustainable development as well.

Another issue of concern at the forum was the increasing downside risks of the global economy. The situation in Europe, troubled by the energy crisis, was even more alarming. Many participants were relatively optimistic about the Asian economy, and even adjusted their investment strategies and deployment for this year accordingly.

Looking ahead to 2023, the global economic environment remains complex and volatile. According to the World Bank's "Global Economic Prospects" report released last week, the global economy is forecast to grow by just 1.7% this year amid heightened geopolitical tensions, elevated inflation, rising interest rates and reduced investment; among which growth in advanced economies is forecast to slow even more significantly to just 0.5%. The slowdown in major economies, pressures on government revenues and rising debt, together with weak investment sentiment, will severely limit the ability of governments around the world in allocating public spending on providing social services and responding to climate change, etc. Amid geopolitical tensions, it will indeed be a challenge to remain committed to promoting better cooperation among countries, so that the global economy can develop in a sustainable and even more resilient and inclusive manner.

This year's World Economic Forum will be held in Davos, Switzerland from the 16th to 20th this month, and the theme is "Cooperation in a Fragmented World". I left for Switzerland last night to attend the forum. During the forum, I will exchange views with political, business and financial leaders from different regions, and actively promote the latest developments in Hong Kong's recovery and the tremendous opportunities in this new phase of development.

No matter what challenges we face, we must do our best to develop our economy, expand our development capacity, and enhance our development momentum, so as to open up wider markets for our industries and create more quality employment opportunities for our citizens. This will allow us to have more room in resolving issues and conflicts regarding people's livelihood. Internally, we need to bring forces in the local community and in the market together, leverage the advantages from the Mainland's resources and economies of scale, in order to inject energy to Hong Kong's economic development. Internationally, we need to promote Hong Kong's advantages and tell the good stories of Hong Kong to paint a clear picture of Hong Kong's new opportunities and development, and spare no effort in attracting investments and talents. It could be said that attracting investments and talents are equally important, and they complement one another. At this stage of returning to normalcy, the Government's political team is actively involved in the work on telling the good stories of Hong Kong. This includes the resumption of visits to different countries and markets and the active promotion of Hong Kong's latest developments and tremendous opportunities to governments, businesses, enterprises and community representatives through various channels and occasions, with a view to fostering better exchanges and cooperation, working together to explore new markets and open up new opportunities, and jointly promoting mutually beneficial development, so that different segments and sectors of the community can benefit and the fruits of development can be better shared.

January 15, 2023

In fact, after 3 years of pandemic, our community is returning to normalcy. We have already planned a series of events in the Mainland and overseas to enhance promotion of Hong Kong's new economic highlights, new cultural horizons, and new tourism experiences. This year, Hong Kong will become a dynamic city, providing visitors with unique cultural and gourmet experiences. We are ready to launch different promotion campaigns to showcase Hong Kong's advantages in all aspects.

"Go Global" to promote Hong Kong's advantages

This year, our political team will proactively visit different countries, regions and markets to promote Hong Kong's advantages as well as various flagship events and occasions to overseas and Mainland audiences. At a time when the entire world is striving for more comprehensive recovery, these interactive activities will help us strengthen mutual understanding, connection and cooperation between Hong Kong and other regions, thereby facilitating faster and more effective recovery for everyone.

I will be setting off this Saturday to Switzerland to attend the World Economic Forum at Davos, where I will meet with global political and business leaders to explain to them in detail the current position, opportunities and potentials of Hong Kong. I will promote our latest developments in the areas of finance, innovation and technology, attracting enterprises and talents, and in culture and tourism. In addition to attending a series of annual meetings of various international organisations, I will also visit important markets for Hong Kong, including the ASEAN countries and Europe, in the second half of the year. The Hong Kong Monetary Authority (HKMA) will lead delegations of finance officials to the Middle East, ASEAN, and other regions this year.

The Hong Kong Trade Development Council has also planned outbound visits and business missions, including a mission to Indonesia for the infrastructure and real estate-related services sector in February to explore business opportunities, and delegations to various ASEAN markets including Thailand. In the Mainland, two of the flagship events will be held in mid-2023: SmartHK in Guangzhou, which promotes business-matching and cross-boundary wealth management through different interactive activities; and Chic HK in Shenzhen which promotes Hong Kong brands and unique designed products to consumers in the Greater Bay Area.

These are but some of the items under the initiative to "go global" in promoting Hong Kong's advantages. In fact, the HKSAR Government's 14 overseas Economic and Trade Offices and 5 Mainland offices will also step up all their promotional activities.

Inviting visitors to boost the hosting of mega events in Hong Kong

The core message of promoting Hong Kong across the globe is twofold. On the one hand, we should let others know that Hong Kong offers unlimited business and other opportunities; on the other hand, we should vigorously promote the fascinating and mega events to be held in the city that are not to be missed. These events cover not only exchanges and business matching activities in respect of economic, innovation and technology and financial development, but also sports and major events featuring local and foreign cultures, arts and cuisine.

Economic and financial activities

The Asian Financial Forum (AFF) to be held on this Wednesday and Thursday leads the charge. The AFF, jointly hosted by the HKSAR Government and the Hong Kong Trade Development Council, is an annual signature event in the region. It returns to physical format for the first time in three years and is held in a hybrid mode that is accessible both physically and virtually. The two-day forum is expected to assemble thousands of government, finance and business leaders to exchange insights and explore business and investment opportunities. This large-scale forum will once again demonstrate Hong Kong's advantages as an international financial and business hub.

The finale of the year will be the Global Financial Investment Leaders' Summit organized by the HKMA, which will be even larger in scale than last year. The Hong Kong Fintech Week, which has become a global flagship Fintech event , will continue to be held at the end of this year, bringing together global Fintech-related leading companies, start-ups, academics, and industry leaders to exchange experiences and views. The HKMA is also in discussion with the Bank for International Settlements and the Basel Committee on Banking Supervision to organize their meetings in Hong Kong this year, enabling the heads of central banks and financial regulators from around the world to gather in Hong Kong. The Asian Insurance Forum, the annual flagship event of the insurance sector organized by the Insurance Authority, will also be held in end 2023.

Furthermore, with the support from the Financial Services and the Treasury Bureau, the dedicated FamilyOfficeHK team set up by Invest Hong Kong plans to promote Hong Kong's competitiveness and status as a family office hub through around 60 events in Hong Kong, the Mainland and overseas during the year, covering summits, roundtables and seminars, etc. Supporting the development of family office business is our key objective which can deepen Hong Kong's pool of liquidity and create more business opportunities for the financial sector and other professional sectors.

I am aware that many financial and commercial corporations in Hong Kong are also actively organising large-scale conferences, board meetings and other activities, so their managements and clients may come to Hong Kong to understand the latest developments and to discover new business opportunities in person. We welcome all to hold more conferences of all sorts to take advantage of the multiplier effect and gain greater momentum.

And surrounding the themes of Hong Kong's industries with advantages and the "eight centres" will be a number of regional flagship events of various industries. For instance the Hong Kong Legal Week, an annual flagship event of the Department of Justice, will bring together prominent experts, practitioners, government officials, academics and elites from diverse sectors from around the world to share their insights on a wide spectrum of legal issues. The Hong Kong Maritime Week, a major annual event of the maritime and port industries, will also be held at the end of the year.

Innovation and Technology (I&T)

In the coming year, Hong Kong's I&T will enter an accelerated development period. We will strengthen the cooperation with our sister cities in the Greater Bay Area to better integrate into the national development. Hong Kong should be more proactive in developing into an international I&T centre. The Innovation, Technology and Industry Bureau will organise the "2023 Digital Economy Summit" in April this year with the theme "Emerging with Resilience: Fostering a Smarter Future", focusing on how smart city technologies will drive the development of digital economy.

Attracting Tourists

The Hong Kong Tourism Board (HKTB) will enhance its support for Meetings, Incentive Travels, Conventions and Exhibitions (MICE) tourism so as to attract different MICE events to be staged in or return to Hong Kong, bring more high value-added overnight visitors to Hong Kong, and re-establish Hong Kong as the premier destination for MICE tourism in the region. HKTB is also making intensive preparations to launch global large-scale promotion activities, and has resumed large-scale travel trade visits to Hong Kong three weeks ago, receiving trade representatives from Korea, Malaysia, Singapore, Indonesia and the Philippines. Hong Kong will also soon become a destination of international cruises again, with the first international cruise ship since the pandemic berthing in Hong Kong in the middle of this month.

Major sports events have always been of great interest to tourists. This year, we expect more than ten major international sports events to be held in Hong Kong, including the "25th Hong Kong Marathon" in February and the "Hong Kong Sevens 2023" at the end of March, with the participation of over 350,000 athletes and spectators in total. We will further enhance the "M" Mark System, including increasing the funding ceiling for each event to $15 million.

On the cultural side, the West Kowloon Cultural District is a must-go attraction for tourists visiting Hong Kong. Various thematic exhibitions will continue to be presented by the Hong Kong Palace Museum and M+ to showcase the unique charisma of Hong Kong as a metropolitan where the East meets West.

The Leisure and Cultural Services Department (LCSD) will present the Museum Summit 2023 in late March, inviting about 30 experts from renowned museums around the world to Hong Kong to exchange experiences on topics such as the latest development of museums, reinvention of cultural facilities, etc. Gallerie degli Uffizi has been enlisted as the international partner of the Summit. Starting in April, LCSD will organise the inaugural "Hong Kong Pop Culture Festival" to promote Hong Kong pop culture, including paying tribute to some of the deceased superstars and telling their extraordinary stories about Hong Kong's development through a series of activities, reflecting the spirit and cultural charisma of different eras.

Photography fans should spare time to attend the Hong Kong Flower Show to be held in Victoria Park in mid March. Taking "Bliss in Bloom" as the theme, the Flower Show features Hydrangeas as its theme flower and other flowers from various regions of the world, showcasing the floral art and landscaping exhibits prepared by gardening organisations in Hong Kong, in the Mainland and across the world.

One of the most signature and iconic events for food and wine lovers in town would definitely be the Hong Kong Wine & Dine Festival held by HKTB in October. Food and wine lovers had very much enjoyed the event while appreciating the spectacular harbour view.

Life in Hong Kong is a good blend of diverse elements. Though living in a fast-paced city with buoyant financial and commercial activities, we can take a break to enjoy good food and fine wines with friends or refresh our mind with the beautiful scenery of rolling hills and restful waters. What makes the city even more attractive is its East-meets-West culture characterised by a fascinating mix of old and new. As Hong Kong has started to make steady strides along the path to normalcy, I will lead a dedicated team to rebuild the image and branding of Hong Kong by telling our stories well and highlighting our strengths and development opportunities.

January 8, 2023

As we embark on a new journey, we have seen many enlightening developments. Where the epidemic has lasted for three years, the world is now returning to normalcy; the anti-epidemic work of the HKSAR Government has also entered a new stage with adjustments continuously made. For example, most of the testing arrangements for inbound persons have been removed recently. As I visited shopping malls recently, I ran into tourists from time to time, and could feel that the retail market sentiment was improving. As for the Mainland, measures such as testing for inbound persons and centralised quarantine would also be cancelled starting 8 January. The relaxation of quarantine measures in the Mainland and Hong Kong would support cross-boundary flows of people and goods. It is expected that the number of tourists visiting Hong Kong would rebound significantly this year. Cross-boundary land transport volume and air cargo handled by the Hong Kong International Airport would also improve significantly. This will provide greater impetus for recovery in Hong Kong's exports, tourism, retail and catering sectors.

The steady economic progress of the country provides the greatest support to Hong Kong's development. The Central Economic Work Conference held in mid-December 2022 emphasised the need to stabilise growth, employment and prices. It also gave priority to restoring and expanding domestic demand, and set clear goals for the country's economic policies in the coming year. This installs much confidence in the parties concerned as they could clearly understand the direction of the country's economic development and plan their business.

The Mainland has earlier adopted a series of monetary policy tools and introduced fiscal measures to stimulate the economy, including lowering the reserve requirement ratios twice, lowering the one-year and five-year loan prime rates by 15 and 35 basis points respectively; new tax and fee reductions to a scale reaching RMB 4 trillion; and adding RMB 500 billion in special local government bonds issuance on top of the newly increased RMB 3.65 trillion set at the beginning of last year. These measures are gradually bearing fruit. It can be expected that the Mainland's economy will resume rapid growth later this year and provide an important driving force for global economic growth.

Nonetheless, given global macroeconomic trends, there are still many uncertainties and factors that may restrict development. One key variable is the monetary policy of the US Federal Reserve. Although inflation rate in the US has fallen from a high of 9% to around 7% recently, the continued stringency in the labour market may pull up wages, which may cloud the outlook of inflation.

Looking back at 2022, the US Federal Reserve has raised interest rates seven times in a row in order to curb inflation there, and the federal funds rate target has been raised significantly from 0-0.25% to 4.25-4.5%. The market expects that interest rates will increase further to around 5.1% this year, and the peak level may eventually be higher. Where the impact of sharply interest rate rises on the economy unfolds gradually, it is still not clear whether the US economy can have a "soft landing" this year.

The challenges facing the European economy are even more severe. Energy supply shortages stemming from the Russia-Ukraine conflict have not only affected people's daily lives, hindered industrial production and disrupted supply chains, but also have caused the inflation rate in the euro area and the UK to soar to over 10%. The European Central Bank and the Bank of England take lowering inflation rates back to target levels as their primary goal, and have clearly indicated that they will continue to raise interest rates to achieve the goal. The tightening of monetary policy will further weaken the European economy. Europe may face "stagflation" this year, with low growth and high inflation.

Under such circumstances, I am still cautiously optimistic about the economic situation in Hong Kong this year and hold a relatively positive attitude. I earnestly hope that the strong momentum of development will create stronger impetus to the economy's recovery.

The three major driving forces of the Hong Kong economy all present elements that warrant optimism. The gradual return to normalcy around the world and the relaxation of quarantine requirements in the Mainland are expected to support Hong Kong's merchandise exports. Business travellers and tourists from all over the world are expected to resume more frequent travels, and together with the resumption of a series of international events this year, Hong Kong's visitor arrivals are expected to rebound strongly this year. As for local consumption, in addition to benefiting from the increase in the number of tourists, the catering and retail industries will also gain from the bold adjustment of local anti-epidemic measures and the improved atmosphere arising from the society's returning to normalcy, which together will help stimulate people's willingness to spend. Thanks to the low base effect in the first quarter of last year, it is expected that domestic consumption will rebound significantly in the first quarter this year, on a year-on-year basis.

Fixed investment will benefit from the aforementioned favourable factors, coupled with a more optimistic overall economic outlook and improved social atmosphere. However, against the backdrop of rising global interest rates and overall borrowing costs, it is necessary to watch if the investment atmosphere would be swayed by the mood of the market.

On asset prices, having been affected by the macro situation, Hong Kong's stock market fell by 15% last year, which was the largest drop in percentage since 2011. The market is generally optimistic that Hong Kong's stock market will recover on the grounds that the economy will improve this year. We will continue to reinforce and speed up the development of the financial markets in Hong Kong. Along the directions of continuously deepening the mutual access regime and actively promoting the internationalisation of the RMB, we hope to make the financial sector, including Hong Kong's stock market, more vibrant and with a wider variety of products. This will allow the market to develop more widely, deeply and comprehensively.

On the property market, the negative effects of continuing rate hikes around the world and the weak economy on the property market last year were evident. The US raised interest rates by a total of 4.25 percentage points last year, and the one-month Hong Kong Interbank Offered Rate (HIBOR) rose from 0.3% to close to 5% in the same period. The actual interest rate of mortgage loans which are pegged to HIBOR rose to the cap; and the effective interest rate of new mortgage loans also rose from 1.6% at the beginning of last year to 3.125-3.625%. In the first eleven months of last year, the transaction volume of Hong Kong's residential property market fell by 38%. Index of the Rating and Valuation Department indicated that property prices dropped by 13.8% during the same period. Looking to this year, the US' cycle of interest rate hike has not yet ended, and mortgage rates in Hong Kong may continue to rise along with market rates, thus affecting the property market. However, other than interest rates, changes in the epidemic situation, economic conditions, housing supply and market sentiment will also impact on the property market. In fact, the market generally expects that the resumption of cross-boundary people movement with the Mainland will help boost property market sentiment. Above all, orderly adjustments to the property market in Hong Kong have not created any major impact on or systemic risk to Hong Kong's financial system or economic fundamentals. We will continue to closely monitor market changes.

2023 is a year that would allow us to be cautiously optimistic and enthusiastic in new developments. It is also time when Hong Kong must actively seek to accelerate development. During this critical period of change, we need to hold a historical perspective that goes beyond economic cycles. We also need a clear understanding of national and global development trends, and work hard to promote better integration of a "capable government" and an "efficient market". We are working at full steam to facilitate the work of "competing for talents and enterprises", as well as vigorously creating land and enhancing infrastructure to inject energy into Hong Kong's development and expand development capacity, so that Hong Kong can seize the opportunities from the momentum of the recovery to the greatest extent, speed up development, and reach a higher new level.

January 1, 2023

Speaking of our wishes for the future, I met with nearly 100 secondary students last week. Apart from listening to their views about the upcoming Budget as well as their suggestions on allocation of public resources, I hoped to learn more about our young people's thoughts and expectations for Hong Kong's future.

"How should we paint this picture?" This is the question I have raised in the Announcement of Public Interest on the public consultation for the upcoming Budget. During the meeting, the students were asked to express through painting their own expectations for the future of Hong Kong. I was truly touched by the pictures they painted: some showing concerns over the wealth gap in the community and hoping that the underprivileged would receive better care and support; some longing to see greater diversity, inclusiveness and love in our society; and some hoping that greater efforts be made by Hong Kong in environmental protection and decarbonisation to contribute to the mitigation of the impact of global climate change. Each painting, so to speak, carries a wish; when all of these paintings are put together, they portray our common vision and goals which we should work together to realise and achieve.

Having gone through the ups and downs in 2022, we will definitely cherish the hard-earned momentum of steady recovery. With social sentiment turning positive and optimistic, we have great expectations for the coming year. As a matter of fact, viewing Hong Kong from various perspectives, I am highly confident about its future.

First of all, with the concerted efforts of the Government and different sectors in society, Hong Kong has gathered pace on its road to normalcy in this quarter. The successful hosting of various mega events, including the Global Financial Leaders' Investment Summit and the Hong Kong Sevens, has displayed Hong Kong's vibrancy and huge potential, making it the centre of attention again in the international arena. In fact, the top management of a number of international financial institutions has expressed full confidence in the future of Hong Kong after the Global Financial Leaders' Investment Summit, citing that Hong Kong's unique role enabled us to leverage support from its motherland while enjoying close connection with the world as well as opportunities offered by the Guangdong-Hong Kong-Macao Greater Bay Area. Some of them are actually planning to expand their operations in Hong Kong by sending more top management personnel to the city and recruiting more local staff here.

Embracing a new mindset in governance, which is characterised by active planning and a proactive attitude, the current-term Government has broken new ground for Hong Kong through better integration of a capable government and an efficient market to foster and expedite the development of a diversified economy. For instance, on "competing for enterprises" and "competing for talents", we have introduced quite a number of out-of-the-box and ambitious measures, such as establishing the Office for Attracting Strategic Enterprises and the Co-Investment Fund, setting up the Talents Service Unit and forming the Dedicated Teams for Attracting Businesses and Talents in the Mainland and overseas offices. These measures have received overwhelming response since their announcement in the Policy Address in October. Numerous enquiries and requests for meeting were received in this regard. Some of them were from top-notch enterprises in major industries, while some came from smaller-sized enterprises engaging in cutting-edge technologies. These enterprises are actively considering establishing operations in Hong Kong.

Earlier on, we issued a policy statement on the development of virtual assets in Hong Kong and a development roadmap for the insurance sector in Hong Kong. Enthusiastic response was also received from the industries, and quite a number of companies are planning to set up business in Hong Kong. They have casted their votes of confidence in the future of Hong Kong by making actual investment here.

In order to attract enterprises, investment and talents in a more efficient and effective manner, we are stepping up our external promotion work by publicising the unique advantages of Hong Kong and the opportunities offered in the city. In the past two months, I visited the Middle East and Indonesia to introduce to the local political and business communities Hong Kong's latest development and potential while establishing more connections and friendships with local counterparts. Coincidentally, the governments and enterprises of these countries are very interested in developing their infrastructure and economies by leveraging the advantages of Hong Kong as an international financial centre and are eager to explore further with us room for co-operation. We will continue to strengthen external promotion of Hong Kong in the coming year.

There is one thing I can be certain about: Hong Kong has a bright and promising future. That said, we should remain cautious about the inevitable fluctuations in the course of economic recovery, and be ready to provide adequate care and support for those, particularly the underprivileged, who may still be living under greater pressure. Nevertheless, given the need to maintain sustainability of public finance in the light of limited public resources, we should strike a balance among the needs of different sectors. We, therefore, welcome any views and suggestions for the upcoming Budget.

In less than a week, we will bid farewell to the turbulent year of 2022. As pointed out by President Xi Jinping, Hong Kong will see abundant opportunities and broad prospects in the new era while embarking on a new journey. Heading towards 2023, I wish that Hong Kong will take on a new look and achieve new progress. May I wish you every success and happiness in the days to come!

December 25, 2022

To better understand the views and needs of members of the public and different stakeholders, we have started the public consultation for next year's Budget and launched relevant publicity. Members of the public are welcome to express their views through our dedicated website or Facebook page for the Budget, or by email, phone (2810 3768), fax (2147 5770) or post (Budget Consultation Support Team, 24/F, Central Government Offices, 2 Tim Mei Avenue, Tamar, Hong Kong). The views and suggestions received will serve as valuable reference for our preparation for the Budget.

Having prepared for each year's Budget over the past few years, I have come to reckon deep in my heart the importance of gathering views widely. Even if we share similar visions and common objectives, there may be drastically different views on how to realise them, setting of priorities and phasing in implementation. Through a series of activities for consultation, we hope to communicate more directly with members of the public and stakeholders from different sectors, so as to better understand their needs and expectations on the Budget, the "pain points" faced by the community, and enhancements needed in the implementation of measures.

Communication and exchanges will enable us to become more holistic in contemplating policies and improve our narrative; and better plan our work and chart the details. Apart from facilitating members of the public to understand and support our policy initiatives, such interactions would be key to uniting the forces of the community.

During the consultation sessions held with different sectors, quite a number of participants expressed concerns about Hong Kong's fiscal position, and took the view that the Government should scale down "sweeteners" so as to reduce expenditure and lower the level of fiscal deficit, thus avoiding a further drop in fiscal reserves. While there are points in these views, some others saw that the economy is still sluggish, and small to medium enterprises as well as the livelihood of our residents, especially that of the grassroots, are still under pressure. They considered that the Government should give appropriate support to these parties. As the provider of public services and manager of public finances, we need to see the whole picture and at the same time take care of various sections; and balance different considerations and formulate proposals that can cater for the needs of the parties concerned.

In fact, the environment under which we prepare for the 2023-24 Budget would be more challenging than that of the previous year. With geopolitical tensions, supply chain disruptions, elevated inflation, aggressive tightening of monetary policies by major central banks across the globe, soaring interest rates and sustained impact brought by the epidemic, we envisage a negative economic growth of 3.2% for 2022 and a fiscal deficit amounting to over $100 billion for this financial year. Heading towards 2023, further relaxation of anti-epidemic measures in Hong Kong and the Mainland would facilitate activities of members of the public and the economy to a greater extent. Cross-boundary travel and economic activities would also gradually resume. Despite the complicated and volatile external environment, the business sector in general has become more optimistic about economic recovery next year. That said, we should remain cautious about the uncertainties arising from possible abrupt shifts in market expectation and investment sentiment.

As our community is gradually resuming normal with our economy beginning to stabilise, members of the public are still expecting relief measures as part of the counter-cyclical measures taken by the Government. On the road to economic recovery, there is also a pressing need to ride on the recovery momentum and allocate additional resources to promote economic development, thus allowing Hong Kong to enjoy speedy, robust and steady social and economic development in future.

Each of us may have different aspirations about the future of Hong Kong. To build a better future for our home, we need to work together to turn our thoughts into specific and feasible proposals, and for our vision to materialise. We must face the challenges in front of us, and at the same time pay due attention to the need for longer-term development. It is important that we set our sights far enough so that we can see the trend of future development opportunities and challenges. Only by doing so could we have ample space to create wealth for the community and allocate resources to address their needs. By making good use of resources, we will paint a brighter future for Hong Kong.

December 18, 2022

Quality urban development requires strategic planning and continuous building at multiple dimensions and levels. We must continue to increase land supply to meet the public's housing and livelihood needs, and to promote social and economic development. We also need a well-connected road network and consistently enhanced transport infrastructure that make journeys shorter and more comfortable, and bring places closer with each other. At the same time, this will help expand the development capacity of different districts and promote a more balanced overall development layout for Hong Kong.

In fact, it takes much time to develop land or transport infrastructure projects. It is necessary to plan well ahead to create the needed space for social and economic development. In addition, we need to be bold in breaking past limitations and plan in a forward-looking manner so as to provide the society with more room for progress and innovation, and for the economy to grow rapidly.

Looking back at the development of Hong Kong in the past few decades, there were large-scale infrastructure projects in each of them, such as the construction of the Mass Transit Railway in the 1970s and 1980s, the construction of a new airport in the 1990s, the West Rail during the millennium, as well as the cross-boundary Guangzhou-Shenzhen-Hong Kong Express Rail Link, Hong Kong-Zhuhai-Macao Bridge and expansion of the third runway of the airport. In retrospect, even though these projects had once faced doubts and resistance, they all carried landmark significance, by creating opportunities for Hong Kong's economic and social development, and establishing more convenient connections between Hong Kong and our country as well as the rest of the world. They laid an important foundation for improving the quality of life of the people.

Take the Hong Kong International Airport (HKIA) for example. Prior to the pandemic in 2019, HKIA's annual passenger and cargo throughput were about 71.5 million and 4.8 million tonnes respectively, representing increases of 1.5 times and 2 times compared to the figures in 1998 when it was first commissioned. During the same period, the number of airlines operating at HKIA and the number of destinations served also doubled. HKIA has for years ranked first in the world in terms of cargo throughput, and it remained so last year amid the pandemic. HKIA has won accolade from many domestic and international visitors for its world-class management and service standards. When the Three-Runway System project is fully completed in 2024, the capacity of HKIA will further increase. It is estimated that by 2035, HKIA will be able to handle about 120 million passengers and about 10 million tonnes of cargo per year, thereby creating numerous job opportunities and socio-economic benefits for Hong Kong.

Capacity is what it takes to support development. It is also the key to new town developments, be they from reclamation or re-planning of land uses. Since the 1970s, the Government had developed nine new towns, including Tsuen Wan, Shatin/Ma On Shan, Tuen Mun, Tai Po, Fanling/Sheung Shui, Yuen Long, Tin Shui Wai, Tseung Kwan O and Tung Chung. Together, they have provided a total of 17,000 hectares (ha) of land through comprehensive planning and development. These new towns are now home to over half of our population, and are serviced by various strategic roads and public transport networks. The planning and relevant works of over 340 ha of reclaimed land in West Kowloon in the 1990s had met the housing needs of a population of over 100,000. The project also helped improve the local transport and drainage systems, elevated the neighborhoods, as well as facilitated the creation of a world-class arts and cultural district.

Based on current planning, land supply for Hong Kong in the next decade will come from two main sources, namely the Northern Metropolis and the Kau Yi Chau artificial islands. Around 1,300 ha of land will become spade-ready sites in the next decade from the Northern Metropolis; whereas around one-third of the 1,000-ha reclaimed land (i.e. 300 ha) from the Kau Yi Chau artificial islands will be delivered in the next decade. In other words, these two projects will altogether provide 1,600 ha of land, amounting to half of the total supply of the Government-led land creation efforts in the coming decade. Equally important to the land created are the opportunities brought about by these large-scale projects, as well as the more accessible and efficient transport and infrastructure networks made available thereby. Kau Yi Chau artificial islands is a case in point. It will connect HKIA and the Hong Kong-Zhuhai-Macao Bridge. Joined by the new railway line and road link, including the fourth harbour crossing, they will connect Hong Kong Island West, Lantau and the Northwest New Territories. A key transport link network will be formed the west side of the city, thus improving the overall territory-wide transport network.

The Policy Address has set out a clear aim to pursue land development along the directions of "enhancing quantity, speed, efficiency and quality". We are now pressing ahead through a multi-pronged approach to create land and compress land development procedures. This will meet the demands of the community and our residents in the short to medium term, as well as to build up a land reserve in the long term to respond to ever-changing social needs. We will also continue to take forward transport infrastructure projects in a forward-looking manner by adopting an "infrastructure‑led" and "capacity-creating" planning approach. With this in place, transport and freight demands arising from long-term development could be addressed, territory-wide transport network improved, and development potential of land in the vicinity unleashed. All these seek to improve the living environment and enhance the quality of life of our residents, as well as create a strong impetus of growth for Hong Kong and an enabling environment for emerging industries or young entrepreneurs.

December 11, 2022

The Constitution is the fundamental law of the state. With the highest legal status and legal effect in the whole country, including the HKSAR, it is an important symbol and sign of the nation. The existing Constitution was adopted at the Fifth Session of the Fifth National People's Congress exactly 40 years ago, i.e. on 4 December 1982. It was also then that the Constitution provided in express terms the legal basis for establishing special administrative regions. Article 31 of the Constitution stipulates that the "state may establish special administrative regions when necessary. The systems instituted in special administrative regions shall, in light of specific circumstances, be prescribed by laws enacted by the National People's Congress." Article 62 of the Constitution also stipulates that the National People's Congress has the power to decide on the establishment of special administrative regions and the systems to be instituted there.

The Basic Law of Hong Kong, enacted by the National People's Congress in accordance with the Constitution in April 1990, prescribes the systems of the HKSAR and has a constitutional status under the legal system in the HKSAR. The report of the 20th National Congress makes it clear again that we should safeguard the constitutional order of the HKSAR established by the Constitution and the Basic Law, as well as uphold and improve the governance system under "One Country, Two Systems". These requirements fully demonstrate that the Constitution and the Basic Law together form the constitutional basis of the HKSAR.

In learning that the Constitution is the fundamental law of Hong Kong, we must appreciate that the Constitution has established the ruling status of the Communist Party of China (CPC) and hence the fact that the state's political system, legal basis and practice of governance are inseparable from the leadership of the CPC. Likewise, the fundamental requirements for Chinese-style modernisation are to "uphold the CPC's leadership, adhere to socialism with Chinese characteristics, achieve high‑quality development and create a new form of human civilisation." These are my realisations and insights pertaining to participating in the seminar on promotion of the spirit of the 20th National Congress yesterday and the events relating to the Constitution Day to be held today.

As stipulated in Article 5 of the Basic Law, the "socialist system and policies shall not be practised in the Hong Kong Special Administrative Region, and the previous capitalist system and way of life shall remain unchanged for 50 years." With the enactment of the Basic Law in accordance with the Constitution, our country, which practises socialism, allows and provides a legal safeguard for Hong Kong to implement a capitalist system and maintain its way of life. Hong Kong, by leveraging the advantages under "One Country, Two Systems", has achieved stable and prosperous development in the past 25 years.

In an important speech delivered on 1 July this year, President Xi Jinping made it clear that the fundamental purpose of "One Country, Two Systems" was to safeguard national sovereignty, security and development interests, and to maintain the long-term prosperity and stability of Hong Kong and Macao. Tested repeatedly in practice, "One Country, Two Systems" serves the fundamental interests of not only Hong Kong and Macao, but also those of our country and nation. It is also widely accepted by the international community. "There is no reason for us to change such a good policy, and we must adhere to it in the long run".

Looking back at the development of the Constitution and the Basic Law and their relationship enhances our understanding of the implementation of "One Country, Two Systems". Studying in depth the spirit and essence of the report of the 20th National Congress gives us a better understanding of the CPC's steer in concluding the development of our country in the past 10 years as well as its great vision, direction for development and action plan for the future.

The HKSAR Government held seminars to promote the spirit of the 20th National Congress of the CPC yesterday. We are very grateful to the two keynote speakers of the publicity delegation, including the Chairman of the Legislative Affairs Commission of the Standing Committee of the National People's Congress, Mr Shen Chunyao, and the Vice-Chairman of the Committee on Economic Affairs of the National Committee of the Chinese People's Political Consultative Conference, Mr Xie Fuzhan. Their comprehensive and in-depth explanation of the theme and essence of the report of the 20th National Congress has enabled us to learn and understand more deeply and thoroughly the goals, directions and requirements set out in the report. Moreover, the sending of the publicity delegation to Hong Kong by the Central Government to provide an in-depth explanation of the report is a testament to the great importance it attaches to the cause of "One Country, Two Systems" as well as its care for Hong Kong. What we learned yesterday will help us embrace more fully the spirit of the report of the 20th National Congress in our daily work and make it an important guiding principle for our actions and practices. Regarding the seminar I attended yesterday, I have particularly deep feelings about two points.

I. Development of socialist modernisation with Chinese characteristics

Having secured great achievements in alleviating poverty and building a moderately prosperous society in all aspects, our country is advancing towards its second centenary goal. The overall strategy is the adoption of a two-step approach, under which our country will basically achieve socialist modernisation between 2020 and 2035, and subsequently build itself into "a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious and beautiful" between 2035 and the middle of this century. The next five years will be crucial as our country embarks on its journey towards Chinese-style modernisation, and the Central Government is firmly committed to achieving this goal with clear directions and steps. As Hong Kong integrates into the overall development of our country, we must bear in mind our unshirkable historic responsibility. We should also capitalise on our unique characteristics and work tirelessly with the Mainland towards the realisation of our long-term goals.

II. Making contribution to national development by giving fuller play to our strengths in innovation-driven development

Promotion of high-quality economic development plays a key role in the modernisation of our country. Hong Kong is capable of making contributions proactively in this area with its unique advantages. These include expanding and strengthening its financial services to provide stronger support for real economic development of Hong Kong and our country; giving full play to the institutional strengths under "One Country, Two Systems", the advantages arising from economies of scale offered by the vast Mainland market and the regional advantages of the Guangdong-Hong Kong-Macao Greater Bay Area to foster more effectively the development of finance and other industries through innovation and technology; and pooling the efforts of the government, industry, academic and research sectors to commercialise research and development results and promote industrial development through innovative application.

As pointed out by Mr. Shen and Mr. Xie yesterday, Chinese-style modernisation is the modernisation of harmony between humanity and nature, and it is a development process that facilitates the building of a community with a shared future for mankind. The great rejuvenation of the Chinese nation is now on an irreversible course. The country's second centenary goal is also our common goal which we will work together to achieve. Hong Kong's bright future lies in the prosperous development of our country.

December 4, 2022

As the signature event of the Maritime Week this year, the theme of the Asian Logistics, Maritime and Aviation Conference (ALMAC) is "The Future of the Sustainable Supply Chain: Connectivity ∙ Collaboration ∙ Innovation". For many representatives of maritime organisations and agencies attending in person, this was their first visit to Hong Kong since the pandemic which has lasted for nearly three years. Together with online viewers, more than 14,000 practitioners from the logistics, maritime and aviation industries participated in ALMAC. At the meeting, I highlighted Hong Kong's core competitive advantages, future development directions, and the huge opportunities brought by the Guangdong-Hong Kong-Macao Greater Bay Area (GBA).

While Hong Kong has maintained its position as one of the top ten ports in the world, its throughput volume has gradually declined over the past ten years. The public would want to know, what are the prospects of the shipping industry in Hong Kong's economic and industrial development?

In fact, 80% to 90% of the world's merchandise goods traded is transported by sea, and this relates to the overall employment in the businesses of commercial goods supply and logistics. The industry spans a wide array of sectors, from shipbuilding and maintenance; financing and insurance of ship sales and purchases; ship agency and ship management; to arbitration that is related to shipping services, etc. Within this large cluster, Hong Kong's shipping industry should eye on high value-added business.

High value-added maritime services

Apart from actively improving port efficiency to strengthen its competitiveness in cargo transportation, Hong Kong has already been developing towards high-end maritime services. At present, there are nearly 900 shipping-related companies operating in Hong Kong, providing a great variety of quality maritime services. The merchant fleet owned and managed by Hong Kong shipowners and ship management companies account for about 10% of the deadweight tonnage of the world's merchant fleet. The Hong Kong Shipping Register ranked fourth in the world. The Hong Kong Port provides frequent and comprehensive liner shipping services connecting to nearly 600 destinations worldwide, with about 270 international container vessel sailings per week.

Hong Kong is an international financial centre efficiently connected to the world, which facilitates shipping companies to meet the needs of financing and ship insurance. Hong Kong has a flourishing marine insurance market. 12 out of the 13 members of the International Group of Protection and Indemnity (P&I) Clubs have presence in Hong Kong, the largest cluster of representatives outside London. Together with the Hong Kong branch of the China Shipowners Mutual Insurance Association, Hong Kong has become the second largest maritime P&I insurance centre in the world outside London.

Hong Kong is also an internationally recognised arbitration centre. The Baltic and International Maritime Council (BIMCO) has named Hong Kong as one of the world's four arbitration venues over two years ago.

Over the past few years, the HKSAR Government has implemented a number of tax concessionary measures to foster the development of high-end maritime services. These include the tax concessions in 2020 supporting ship leasing business and marine insurance businesses; the half-tax concession (i.e. a tax rate of 8.25%) provided to ship agents, ship managers and ship brokers, which were enacted in July this year. These measures have enhanced Hong Kong's competitiveness in attracting clusters in the maritime industry.

With continuous economic development, our country is the world's largest exporter of merchandise goods. With the huge demand for trade and logistics, the demand for services provided by the shipping industry has continued to rise. In the country's dual circulation development strategy, Hong Kong's high value-added maritime services can play a role in connecting the Mainland with the world, and also help Hong Kong serve the global community while integrating into the overall development of the country.

Hong Kong's growth as an international financial centre and international arbitration centre are supporting the transformation of its shipping industry to a high value-added maritime cluster. The application of innovation and technology, and the development of green and sustainable finance, create further potential for the maritime sectors.

High value-added logistics/air cargo

Apart from the development of high value-added maritime clusters, Hong Kong also has a leading edge in air cargo logistics in the world. By strengthening collaboration with various cities of the GBA, Hong Kong's advantages in sea-land-air inter-modal transport will become even more evident. For example, as I mentioned in the Budget earlier this year, we are developing "sea-air cargo transhipment" between the Hong Kong International Airport (HKIA) and the rest of the GBA, with the Airport Authority Hong Kong (AAHK) setting up an upstream HKIA Logistics Park in Dongguan and an airside intermodal cargo handling facility at the HKIA. This will allow export cargo from the Mainland to complete security screening in advance and then be transported seamlessly to Hong Kong. It will then be directly transshipped to all overseas destinations through Hong Kong's international aviation network without the need to undergo further security screening. Similarly, international cargo can also be imported into the Mainland through the reverse process. The AAHK has launched a sea air intermodal pilot scheme for the purpose of testing and establishing the full operational procedures.

We will also further facilitate the flow of logistics information in the GBA and improvements to the inter-modal operation, develop high-end and high value-added logistics services (including the handling of cold chain goods and pharmaceuticals), as well as encourage the logistics industry to make wider use of technology to enhance productivity.

In addition, the 2^nd Greater Bay Area Maritime Forum will be held simultaneously in Hong Kong and Guangzhou. The government departments and shipping organisations involved in transport and logistics in Guangdong and Hong Kong have been in close communication and are actively seeking further cooperation to produce the greatest synergy and development of shipping in the entire GBA.

In his important speech on 1 July 2022, President Xi Jinping expressed support for Hong Kong to strengthen its position as an international shipping centre. This is also an important part of our economic development towards higher value-added development. The HKSAR Government will adopt a multi-pronged strategy to consolidate and enhance Hong Kong's status as an international shipping centre and international aviation hub by combining the strengths of a proactive government and an efficient market, with the objective of continuously enhancing the momentum of Hong Kong's development.

November 27, 2022

The theme of this year's G20 Summit is "Recover Together, Recover Stronger". President Xi Jinping pointed out at the meeting that the lingering COVID-19 pandemic, acute weaknesses of the world economy, rising geopolitical tensions, deficient global governance as well as food and energy crises are compounded with one another. Faced with these substantial and pressing challenges, it is imperative that countries embrace the vision of a human community with a shared future. Whether it comes to stabilising the economy or dealing with climate change, countries around the world need to be united and work together. A peaceful and stable international environment is a prerequisite for global development; prosperity and stability cannot materialise in a world where the rich get richer and the poor poorer. At a time when the world is undergoing rapid changes unseen in a century, the world needs more inclusive and resilient development from which people can benefit.

In his speech at the G20 Summit, President Xi reiterated the "Global Development Initiative", which won recognition by many attending leaders. President Xi first put forward the Initiative in his important speech to the United Nations General Assembly last year; it was also included in the report of the 20th National Congress of the Communist Party of China last month. The Initiative emphasises that development is the key to people's well-being, and we should work together to steer global development towards a new stage of balanced, coordinated and inclusive growth. The core concept includes staying committed to development as a priority to foster global development partnerships that are more equitable and balanced; staying committed to a people-centered approach to safeguard and improve people's livelihoods through development; staying committed to benefits for all with emphasis on addressing unbalanced and inadequate development among and within countries; staying committed to innovation-driven development to seize the historic opportunities created by the latest round of technological revolution and industrial transformation, foster an open, fair, equitable and non-discriminatory environment for the development of science and technology, and foster new growth drivers in the post-COVID era and jointly achieve leapfrog development; staying committed to harmony between human and nature, accelerating the transition to a green and low-carbon economy and achieving green recovery and development. Since the Initiative was proposed a year ago, it has received support from more than 100 countries and international organisations, and more than 60 countries have participated in the "Group of Friends of the Global Development Initiative".

In the past three years, the global economy has been hit hard by the pandemic, which has taken a toll on the international community's progress in poverty reduction over the past years. The serious supply chain disruptions have also exacerbated food shortage, and the weak global economy is in dire need of support in order to recover. In fact, the Global Development Initiative put forward by our country rightly addresses the practical needs and long-term goals of world development. It also compliments the United Nations 2030 Agenda for Sustainable Development. Our country has also proposed specific and feasible projects whereby developed countries, developing countries and countries of smaller economic scale can fully share the benefits. This is beneficial to individual countries, while at the same time promotes equitable development on the whole and allows people around the world to share the fruits of economic development. Starting from the standpoint of well-being of humankind, the Initiative has established a platform for international cooperation and dialogue on relevant issues, thereby demonstrating the willingness to shoulder international obligations by a great country. Where strong unilateralism and protectionism now prevail in the international community, this is not easy. Our country has demonstrated the courage and responsibility to move forward firmly, and is striving to promote international cooperation and more balanced partnerships for more sustainable and inclusive development.

When I participated in the G20 Summit in Indonesia last week as a member of the Chinese delegation, I felt that many representatives of the participating countries truly supported the Initiative, which ultimately seeks to promote global development and shared achievements. More inclusive development has strong political and moral appeal in the international community, and it is bound to gradually gather more support to facilitate implementation of the Initiative.

During the Summit, I also took the opportunity to exchange views with government delegates from different regions as well as business leaders and representatives of enterprises. We discussed the strengthening of economic and trade co-operation, and I also encouraged foreign enterprises to make better use of Hong Kong's platform as an international financial and business centre to raise funds and expand businesses. For instance, Indonesia has actively been promoting infrastructure development in recent years, and the country is in need of a large amount of capital to support its projects. Hong Kong is an international financial centre and an economic and trade hub in Asia; we are familiar with the Asian markets, economies and culture, and possess an extensive network and the unique advantage of serving both international and Mainland investors. With a deep and wide pool of capital as well as a broad investor base, Hong Kong is an ideal platform for the Indonesian government and enterprises to raise funds. At the same time, Indonesia can take advantage of Hong Kong's world-class professional services to advance its development.

The political and business community in Indonesia is also keen on advancing green and sustainable development in tandem with economic development and improving people's living standards. Hong Kong saw vibrant development in green and sustainable finance in recent years; for governments and enterprises which are pursuing green transformation, we provide a financing platform for them to connect with global investors. In addition to financing greenfield projects, we are also actively rolling out initiatives to channel capital to high-quality brownfield projects. This provides a good point of cooperation for Hong Kong and Indonesia. The total amount of international green and sustainable debt arranged or issued in Hong Kong last year was over US$56 billion, quadrupled from a year ago. The Indonesian business community is indeed very interested in the relevant developments and services in Hong Kong. The Indonesian Chamber of Commerce and Industry (KADIN), the largest industry and business organisation in Indonesia, is actively preparing for a high-level delegation to visit Hong Kong next year to explore opportunities for further co-operation and development. Meanwhile, I have also invited some Indonesian friends whom I met to attend the Asian Financial Forum to be held in Hong Kong in January next year.

Some has said that the 21st century is the Asian Century. In particular, the Asia-Pacific region accounts for one-third of the world's population, over 60% of the world's economy and nearly half of the world's trade volume, and it is the region with the greatest economic growth momentum. At a time when global development is undergoing turmoil, and geopolitical tensions are intertwined with changes in economic structures, the Asia-Pacific region needs to work even closer to build a stable and smooth supply chain, as well as to strengthen economic and trade cooperation in the region. Given this broader perspective, Hong Kong is well-placed to play its role as a "super-connector", a platform for pooling capital and talent, and a provider of high value-added services, sharing the future prosperity and development with the Association of Southeast Asian Nations (ASEAN) and other Asian countries. Indeed, ASEAN is already our second largest trading partner. We will step up our efforts to promote economic and trade cooperation in the future, including our bid to join the Regional Comprehensive Economic Partnership Agreement (RCEP) as soon as possible, so as to further integrate into the regional industrial value chain and consolidate Hong Kong's position as an international trade centre.

As Hong Kong gradually regains its international connections, we will be taking the opportunity to visit more places around the world to tell the good stories of Hong Kong and proactively seek opportunities for cooperation, investment and development. We will bear in mind the spirit of mutual cooperation for development and extend our efforts under the "One Country, Two Systems" principle, so as to make valuable contributions to more sustainable and inclusive word development, and to building a human community with a shared future.

November 20, 2022

This policy statement demonstrates our determination and commitment to explore financial innovation with the industry and clearly states our position: in actively embracing innovation, there must be corresponding and up-to-date regulation to manage the risks properly and create the prerequisites for an orderly and prosperous market. The policy statement has received recognition and support from the industry in general. We have also received a lot of positive responses, and many enterprises in the sector are considering to expand their operations in Hong Kong or relocate their business back to Hong Kong.

Since the middle of this year, we have seen a number of crypto breakdown and bankruptcy of the relevant companies. A major cryptocurrency trading platform also filed for bankruptcy protection last week. The market has described the period as a "Crypto Winter". This has helped reinforce the industry's belief that a VA service provider must operate in a transparent manner and be subject to proper regulatory and compliance requirements, particularly in the areas of corporate governance, financial and operational disclosure, and investor and user protection. All these are conducive to the long-term development of the VA industry; this is also the international consensus. The policy statement we issued has laid a foundation for cultivating such environment, and has kindled the industry's good hopes for the development of the VA market in Hong Kong.

Whenever VAs are mentioned, cryptocurrencies and speculation always come to mind. In fact, virtual or digital assets involve a wide range of innovative technologies, including:

1. "Fungible tokens", such as Bitcoin and Ethereum, are a type of virtual asset which is characterised in the sense that each token has the same value and function, and may be divided into smaller units for trading. This characteristic allows the trading of such token to be free from restrictions arising from geography, system, registration or time. The total market capitalisation of the cryptocurrencies market, which had once been exuberant over the past few years, was estimated to have once reached nearly US$3 trillion.

2. "Non-fungible tokens" (NFT) are neither divisible nor replaceable (i.e. having a unique digital identity) and allow digital objects to be transferred by placing specific information, such as digital images, videos or clips, onto a blockchain in an encrypted form. Many native assets originating from the chain are exchanged in the form of NFTs. This function of tokenisation can be linked as 'tokens' of traditional financial instruments for more convenient and efficient transaction, and may even be used as smart contracts in commercial transactions.

Whether fungible or not, that the 'token' is able to exist in a unique and digital form that cannot be copied, is based on the Distributed Ledger Technology (DLT), which records information over time in blocks and stores copies over the Internet, making it difficult for records, such as digital tags and transaction history, to be tampered with or deleted.

Despite having a unique digital tag and an open and transparent record of transactions, the transaction details are encrypted, providing sufficient information security. In other words, the encryption under blockchain technology provides information security; distributed ledger avoids tampering with transaction records and provides efficient, secure, transparent and cost-effective transaction conditions without the need for central registration formalities. As such, many financial institutions are exploring ways to have their financial assets tokenised to address the difficulties in clearing, settlement and payment that have persisted for the years.

Analyses have pointed out that the application of blockchain has created a decentralised web world, or the so-called web 3.0, which is the underlying technology driving the Metaverse, allowing institutions and individuals to use the token function of NFT to conduct direct peer-to-peer transactions. How this feature can be applied to different financial services, business transactions and even corporate services is still under exploration, but there is a consensus among the industry that huge potential does exist for application development.

In our policy statement on VA development, we have proposed several pilot projects, including the tokenised offering of a new tranche of green bonds for institutional investors, which is expected to be launched within the year and will be the first tokenised government green bonds in the world. The Hong Kong Monetary Authority (HKMA) is also studying e-HKD, which may serve as the "backbone", linking flat currencies with VA, and facilitate more innovations in the space. In addition, the HKMA has earlier conducted a consultation to explore the regulation of payment-related stablecoins and will announce the next steps in due course.

The Securities and Futures Commission (SFC) has also embraced innovation while upholding the principle investor protection, and has been closely monitoring the technological innovations, changes in applications and the regulation required in relation to VA. Under the regulatory principle of "same business, same risks, same rules", the SFC has licensed two VA trading platforms with regulatory requirements similar to those of traditional stock exchanges, including the requirement to keep client assets in segregated accounts, to comply with financial resources requirements and to maintain at least 12 months of actual operating expenses, and to avoid conflict of interest (no participation in proprietary market-making activities). The SFC has also licensed eight VA fund managers and approved two brokers to provide VA dealing services for their clients under an omnibus account arrangement. We have recently been working to introduce a licensing regime for VA service providers so that such operators will be subject to regulatory requirements similar to those of traditional financial institutions, including compliance with the anti-money laundering and counter-terrorist financing and investor protection requirements. The policy statement also sets out that the SFC will be conducting a public consultation on how retail investors may be given a limited degree of access to virtual assets under the new licensing regime. The Government welcomes the possibility of introducing virtual asset futures exchange traded funds (ETFs) in Hong Kong.

Past waves of technological innovation have led to leaps and bounds in economic and industry development. Although the process may inevitably have its ups and downs, the long term benefits and inspiration brought to our future generations are worth acknowledging. The tech bubble burst in 2000 has caused many people to be wary of technological development. However, in the environment of mobile terminals and network, technology has evolved on its own path and developed into platform and network economies. While the bubble and volatility in the VA market over the last few years have disturbed the investment market, financial innovation has not ceased to develop and the industry continues to evolve in technology and applications.

The policy statement therefore aims to establish a comprehensive regulatory framework for the VA industry; it actively promotes technological innovation and application while ensuring that risks are appropriately managed. We need to make full use of the potential of innovative technologies, but at the same time guard against the volatility and potential risks they may cause, and the transmission of these risks and impacts to the real economy. The repeated collapse of cryptocurrencies or the filing for bankruptcy protection of the relevant trading platforms once again is a reflection of the need for transparent operations and appropriate regulation. With these in place, we can ensure the long-term stable and sustainable development of this industry.

On the premise of safeguarding safety and appropriate risk management, embracing innovation will certainly bring new strengths to economic and industry development. The realisation of its potential and the innovation of its application require the development of relevant technologies and the entire ecosystem, including cryptocurrencies, VA exchanges, the development of the Metaverse, and innovative application of "tokenization", such as in securities issuance and trade finance. In considering the overall direction of development, a core direction is that if the purpose of the financial world is to serve the real economy, technological innovation should also play the same role in serving the real economy. I hope that our friends in the innovation and technology ecosystem can join hands to promote more efficient, convenient and innovative applications where risks are controllable, bringing more new opportunities to traditional industries and enterprises, so that the innovation and technology industry can make good progress with its own development, and at the same time assist in bringing the whole economy into a new phase of growth.

November 13, 2022

October 30, 2022

Whether it be creating strong impetus for economic growth, competing for enterprises and talents, or increasing land and housing supply, under the leadership of the Chief Executive, we have made every effort to advance with active planning and a proactive attitude. The whole development concept has clearly moved from "positive non-interventionism" and "big market, small government" in the past towards a direction that would better integrate a "capable government" and a "highly efficient market". This is a clear and obvious choice for Hong Kong.

In the face of increasing uncertainties and risks related to global development, enterprises tend to reduce their investments. As such, in the current situation, our industries may fall into a state of underinvestment if led solely by market forces. This would be contrary to the broad direction of strengthening the growth momentum, accelerating development and finding new economic growth points. This is when the Government's support and intervention are required so as to provide guidance, form consensus, inject power for promoting accelerated development.

However, this does not mean that the Government can solve every problem. The crux is on the need to identify the main trends and grasp the key points. For areas where we face the fiercest global competition and the parts that need government guidance, we dare to lead, take full responsibility, and accelerate development. Meanwhile, for areas where market forces are needed to foster development, we let the market unleash its potential by creating a favourable environment and conditions. Only then can we harness the power of a capable and proactive Government, while at the same time enjoying the market's high efficiency in allocating resources, thereby facilitating the rapid development of the Hong Kong economy in the future.

For the Hong Kong economy to keep up with the development of neighbouring areas, we must build our financial services even better and stronger, and put innovation and technology (I&T) in a more prominent position, including developing I&T as an industry and widely adopting I&T in traditional industries to promote the comprehensive upgrading and restructuring of the economy. At this critical juncture of developmental transformation, we must work together to allow Hong Kong's economic development to enter a new chapter and embark on a new path.

There are a range of new policies and measures in the Policy Address about developing I&T, and attracting strategic enterprises and talents. We will set up dedicated offices or teams to provide one-stop services in handling and following up on these cases, so as to ensure that the indicators set out in the Policy Address could be achieved in a concrete and solid manner. Many enterprises, as well as friends from the business or I&T sectors, are very interested in the relevant measures. Quite a number of foreign chambers are also enquiring on the relevant details.

On attracting enterprises, we will soon establish the Office for Attracting Strategic Enterprises (OASES), for attracting high-potential and representative strategic enterprises from around the globe, particularly those from life and health technology, artificial intelligence and data science, financial technology, and advanced manufacturing and new energy technology. We will also set up an advisory committee, comprising representatives from relevant business sectors and leaders, to advise on the overall strategy of attracting strategic enterprises. The Chief Secretary for Administration will oversee the work of talent attraction, which will be implemented by the Labour and Welfare Bureau.

To support the OASES and better align with the work of the Talents Service Unit, we will expand the functions of the SAR Government's overseas Economic and Trade Offices and Mainland Offices, and set up Dedicated Teams for Attracting Businesses and Talents in the offices. In casting a wider net to attract enterprises and talents, we will proactively reach out to target enterprises and talents, encouraging them to establish a foothold and develop in Hong Kong. As such, enterprises and talents will succeed while fostering better developments for Hong Kong and creating employment opportunities of higher quality for the residents.

The enterprises that we wish to attract to the territory are all leading and representative enterprises from industries with strategic importance to Hong Kong. We will set aside $30 billion from the Future Fund to establish the Co-Investment Fund for attracting enterprises to set up operations in Hong Kong, while at the same time consider co-investing in the enterprises or their individual projects, taking into account their potential to drive industry development and job creation in Hong Kong, thereby benefitting Hong Kong further as a whole.

The Hong Kong Investment Corporation Limited (HKIC), as announced in the Policy Address, has been set up to manage the Co-Investment Fund ($30 billion). The HKIC will also manage the Hong Kong Growth Portfolio ($22 billion), the GBA Investment Fund ($5 billion) and the Strategic Tech Fund ($5 billion) launched under the Budgets over the past few years.

The purposes of the HKIC are to identify investment opportunities and strategically promote development of target industries, so as to enhance the long-term competitiveness and economic vitality of Hong Kong while generating investment return. Its board of directors will comprise industry leaders, experts and government officials. We are in the process of formulating the institutional arrangements and governance structure of HKIC and will announce the details in due course.

Hong Kong is in a new phase of development, and is moving towards a new chapter of governance and prosperity. The blueprint and measures outlined in the Policy Address will vigorously promote Hong Kong's even better development and integration into the national development.

October 23, 2022

The important speech delivered by the General Secretary is encouraging and inspirational, boosting our confidence in the future of our country. It has not only strengthened our resolve to fully implement the "One Country, Two Systems" principle for building a better Hong Kong, but has also reinforced our drive to further integrate into the overall development of our country. Under the scientific guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the cause of "One Country, Two Systems" has been advancing steadily in the right direction, enabling Hong Kong to write its success story and compose even more magnificent chapters in the days to come.

Hong Kong is a part of China and we are members of the Chinese nation. It is, therefore, our undeniable responsibility and mission to fully devote ourselves and contribute to the rejuvenation of the Chinese nation, while our country is striving towards its second centennial goal.

Today, with patriots administering Hong Kong, it is important that we fully, accurately and faithfully implement the "One Country, Two Systems" principle. We must provide stronger impetus for economic growth on all fronts, creating favourable conditions for resolving deep-seated conflicts through economic development. We must earnestly address issues relating to people's livelihood and keenly embrace challenges. Moreover, we have to better leverage Hong Kong's position and advantages as an international financial centre as well as international innovation and technology hub, and proactively realise the potentials of the world-class cluster of cities in the Guangdong-Hong Kong-Macao Greater Bay Area, so as to seize new and historic opportunities brought by the 20th National Congress of the CPC and promptly make breakthroughs in our economy and people's livelihood. By capitalising on our strengths, we can serve our country's needs and contribute to the social and economic development in Hong Kong and our country.

Our country is committed to deepening reform in a sustained manner, promoting higher quality economic development, accelerating the construction of a new development pattern and upholding the principle of having "technology as the prime production force, talent as the prime resource and innovation as the prime driving force". Hong Kong's economy is also moving towards higher quality and more diversified development. The Policy Address which has just been delivered by the Chief Executive has made our overall strategy clear. Under our governing philosophy of better alignment of "a capable government and a highly efficient market", we will highlight the role of innovation and technology in fostering economic development, proactively and holistically co-ordinate and implement policies, and resolve the deep-seated conflicts and issues arising in the course of social and economic development, thereby enabling Hong Kong to integrate into the overall development of our country in a more comprehensive and in-depth manner.

The world is changing with the times. Our country's sustained development is providing new opportunities for the world. Our country's dedication to openness and mutually beneficial development has fostered an international environment conducive to development. Our country is also working with the international community to generate new impetus for global development. As our country's international financial centre, Hong Kong has to shoulder greater responsibility and carry out the honourable mission to contribute more proactively to our country's development. Hong Kong shares the Chinese Dream of the great rejuvenation of the Chinese nation.

October 22, 2022

In the past five years, our country has faced various challenges on the development front. In addition to the sudden onset of the COVID-19 pandemic and the rapid changes in the international landscape, the deepening of reform has entered a deep-water zone. Nevertheless, the CPC has, during the years, united people of all ethnic groups within the nation in an effort to tackle the complex situation and enormous challenges, steadily promote reform and foster high-quality development, thereby resolving various long-standing problems and hence steering the nation towards continuous development of socialism with Chinese characteristics in a new era.

Hong Kong has been witnessing our country's development by participating in and benefiting from it. History has proved that under the leadership of the CPC and with the staunch support of our country, Hong Kong has managed to ride out storms and rise to challenges. The "One Country, Two Systems" principle is not only an institutional strength of our country, but also the cornerstone of Hong Kong's success. Its full, accurate and faithful implementation is the key to Hong Kong's thriving development, enabling the city to swiftly move from chaos to order and progress further to prosperity.

At the opening of the 20th National Congress of the CPC this morning, General Secretary Xi delivered a report on behalf of the 19th CPC Central Committee. The report, which is both heartening and encouraging, gives us a clearer direction for achieving our goals and strengthen our resolve and confidence. We must, therefore, study in depth and understand in full the report, making it a guide for our work in Hong Kong. It is imperative that we fully and resolutely implement the "One Country, Two Systems" principle, while striving towards the second centennial goal of building China into a great modern socialist country in all respects.

With a heart filled with joy and happiness, we are embarking on a new journey in a new era. Our country will basically realise socialist modernisation between 2020 and 2035, and build itself into a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious and beautiful between 2035 and the middle of this century. The next five years will be crucial as our country sets out to build itself into a modern socialist country in all respects. We must take part in the process and contribute to advancing the great rejuvenation of the Chinese nation with Chinese-style modernisation on all fronts.

Our country is committed to promoting higher quality economic development, accelerating the construction of a new development pattern, deepening reform in a sustained manner and upholding the principle of having "technology as the prime production force, talent as the prime resource and innovation as the prime driving force". Hong Kong needs to give fuller play to its strengths and speed up development in the same direction, particularly in the face of the prevailing complex and volatile international environment. Hong Kong has to strengthen co-operation with the Mainland and overseas countries, highlight the role of innovation and technology in fostering economic development, and co-ordinate and implement policies in a holistic manner so as to better leverage Hong Kong's position and advantages as our country's international financial centre as well as international innovation and technology hub.

General Secretary Xi has clearly expressed his support for Hong Kong to develop its economy and improve people's livelihood. He has urged us to resolve the deep-seated conflicts and issues arising in the course of social and economic development, promote long-term stability and prosperity, better integrate into the overall development of our country and play a bigger role in realising the great rejuvenation of the Chinese nation. These kind words and expectations have enlightened us on what direction to take and goals to achieve. While knowing that we are charged with a great responsibility, we are also honoured to be entrusted with the mission. We must strive hard to start a new chapter for Hong Kong together.

October 16, 2022

If there is a golden formula for successful I&T stories, one indispensable factor would be the possession of a child's curiosity, a young person's pursuit of his or her dreams, an adult's sophistication and resilience, and the wisdom of an elderly. Through exploration and interaction; looking for the truth with experimentation; and providing solutions and tackling problems for the development of the society, we should aim at making imperishable contributions to the well-being and continuous advancement of humankind. An I&T story as such would be heartening and moving. It would become a powerful impetus of growth that sustains economic development.

Innovation and Technology Empower Our Dreams

In recent years, our schools and tertiary institutes have attached great importance to STEM (science, technology, engineering and mathematics) education and inspired a passionate I&T atmosphere. To enable our young people to explore and participate in the development of I&T at various stages, we have increased I&T subsidies for primary and secondary schools. We have also provided research funds and resources for universities to upgrade their laboratory equipment, as well as scholarships and internships for university students to engage in the I&T industry. Meanwhile, schemes including the Technology Talent Admission Scheme, the Global STEM Professorship Scheme, etc. have also helped to attract a pool of I&T talents from both the Mainland and overseas.

Steered by the HKSAR Government and with the collaboration of stakeholders, post-secondary education institutes are running various STEM programmes to nurture the talents needed for the future development of I&T. The number of graduates from STEM-related programmes have been on the rise in recent years. From the 2022/23 academic year onwards, the eight universities have introduced new programmes on aspects such as "intelligent manufacturing engineering" and "data analytics in science"; they have also introduced inter-disciplinary programmes combining STEM and different disciplines such as "humanities and digital technologies", "arts and technology" and "biotechnology, entrepreneurship and healthcare management" so as to broaden students' scope and at the same time strengthen Hong Kong's talent pool in various aspects.

To showcase and promote Hong Kong's I&T achievements to members of the public, the Innovation and Technology Commission (ITC) has been organising the InnoCarnival since 2008. Organisations and stakeholders from various sectors will showcase their local I&T inventions and research achievements. This has become a popular annual event for the whole community, including families and kids.

InnoCarnival 2022 will be held from the coming Saturday (October 22) at the Hong Kong Science Park for nine consecutive days up to October 30 with the theme of "Innovation & Technology Empower our Dreams". This year's carnival is supported by 54 partners, including universities, research and development centres, government departments and organisations, which will each showcase the fruits of scientific research, innovative applications, or transformation of R&D outcomes. In addition to about 40 webinars hosted by experts and scholars, there will be more than 100 online I&T workshops with different topics, such as Metaverse workshop, glider model making workshops, Artificial Intelligence game design workshops, etc. for the participation of families. As this year marks the 30th anniversary of the National Manned Space Programme and the country has launched the recruitment of the fourth batch of astronauts, including the recruitment of Payload Specialists in Hong Kong for the first time, there will be a designated space exhibition zone in the carnival to enhance the public's knowledge of Hong Kong's contribution to national space development.

It is worth noting that the "City I&T Grand Challenge: The Showcase" will also be staged during the carnival. The Grand Challenge aims to encourage the public to develop I&T solutions to help solve problems encountered in their daily life and drive the future development of Hong Kong together. Winners in the university/tertiary institute and open groups last year have received funding support from the ITC. After receiving training and refinement of I&T solutions for over half a year, teams have successfully transformed ideas from the competition into prototypes. At the Showcase, prototypes will be revealed to the public for the first time through real-life scenarios, including an elderly home and restaurant. This kind of competition helps different sectors of the community to have wider participation in I&T endeavours and enable the public to experience the material changes in their daily life brought about by I&T, thus facilitating the building of the I&T atmosphere in the society. Another flagship event which immediately follows the carnival will be the Hong Kong FinTech Week commencing at the end of October.

Pushing Boundaries, Reaping Benefits

The National 14th Five-Year Plan positions Hong Kong as an international financial centre, and supports our development as an international innovation and technology hub. Fintech is fast developing in Hong Kong and has grown into a vibrant ecosystem. Today we are home to more than 600 Fintech companies, one-third of them from overseas. These firms offer different kinds of financial services, such as mobile payment, cross-boundary transfer, intelligent financial consultancy, wealth management, regtech, virtual assets trading, etc. Fintech enables innovative business modes which provide more personalised financial services that are safe and convenient, enhancing the competitiveness of the financial industry and offering better customer experience.

The annual Hong Kong FinTech Week (HKFW) will take place from October 31 to November 4. Themed "Pushing Boundaries, Reaping Benefits", the event has attracted many guests and exhibitors, including more than 500 local, Mainland and overseas institutions, and over 200 speakers from the Mainland as well as Europe and Asian countries who will participate either in person or virtually. Exciting new elements will also be featured at this year's conference reflecting the rise of Web3 and metaverse technologies. Attendees will receive a limited-edition proof of attendance protocol (POAP) token issued as an non-fungible token (NFT), on a first-come, first-served basis, giving holders exclusive access or early registrations to upcoming industry events and special discounts for next year's HKFW tickets. The POAP token will also allow holders to create their own augmented reality avatar with 3D scanning devices at the event, providing a new experience for the guests.

In this year's HKFW, the HKSAR Government will issue a policy statement on the development of virtual assets in HK. It will cover a number of key topics including our vision and approach, regulatory regimes, thoughts on investors' exposures to virtual assets, and our pilot projects to embrace the technological benefits and financial innovations brought by virtual assets. The policy statement will make our policy stance on virtual assets clear to the global markets. It will also demonstrate our commitment and determination to explore financial innovations together with the global virtual assets community.

I&T Stories Fly with Accelerated Speed

Hong Kong has a solid foundation in basic scientific research at university level. We have five world top-100 universities, two world top-40 medicine schools and a great number of world renowned experts and quality research talents with international collaboration experiences in different fields. 16 key state laboratories, six Hong Kong Branches of Chinese National Engineering Research Centres and 22 Joint Laboratories with the Chinese Academy of Sciences have been established in Hong Kong so far, demonstrating national and international recognition of our scientific research capabilities.

With the strong support of our country, Hong Kong has gathered strengths by investing more than $150 billion over the past five years in promoting scientific research, fostering talents and developing infrastructure to support I&T development, including an injection of $10 billion to establish the InnoHK Clusters to promote global research collaboration. InnoHK has so far attracted more than 30 top universities and research institutions from the Mainland and overseas to work with their local counterparts. Meanwhile, over more than 20 years since its establishment, the Innovation and Technology Fund (ITF) has fostered an impressive number of research talents, start-ups and the commercialisation of R&D outcomes, which have attracted a considerable amount of private investment. The annual expenditure of the ITF has increased from over $700 million in 2013-14 to about $4,000 million in 2021-22. A number of schemes are available under the fund to sponsor universities and private companies to conduct application research, in order to promote scientific research and the commercialisation of R&D outcomes. For the past five years, a total subsidy amounting to $5.8 billion has been provided to research institutions and companies to support local research and development. Also, we have provided subsidies to six universities to help with commercialisation of their R&D outcomes through the Technology Start-up Support Scheme for Universities. These are examples showing how we have been working to accelerate the promotion of I&T development in Hong Kong through the active collaboration among the government, industry, and academic and research sectors.

Overall, Hong Kong has made good achievements in basic research, fostering of talents, development of I&T industry and I&T application. The general I&T environment and atmosphere are transforming in a very positive manner and our work is bearing fruit. Nevertheless, there are areas in our I&T development that should be strengthened and reinforced from a forward-looking perspective. We have to put I&T development in a more prominent position to bring its supporting and leading roles into full play. The HKSAR Government is now formulating the Hong Kong Innovation and Technology Development Blueprint for the next five to ten years, which aims at laying out a clear direction of development and objective so as to better coordinate the relevant supporting policies.

Just as technology development may come with a challenging process, stories of success may also have bumpy paths. Hong Kong's I&T story has begun its phase of acceleration, and we are turning over the page to strive for flying development. We are highly motivated and passionate about this new chapter, and are fully prepared for it. Indeed, I&T will further strengthen the impetus of growth of Hong Kong, and allow us to explore new economic growth points and make greater contributions to great rejuvenation of the Chinese nation.

October 16, 2022

Looking closely at the report's contents, Hong Kong's overall rating actually increased by ten points, which were more than those of New York and London, the top two centres in the ranking. However, the pandemic situation has restricted Hong Kong's external connectivity, which might have affected the overall impression of many financial practitioners on Hong Kong and thus dragged down the relevant ratings and the overall ranking. Nevertheless, the report showed that Hong Kong still owns considerable advantages in banking, insurance, professional services and trade.

In fact, in this latest ranking, there were very keen competition and narrow gaps between cities ranked from the third to the tenth, as reflected by the fact there was only a marginal difference of one point in ratings between every two consecutive ranks. At the same time, the top two centres, New York and London, which in the past had been leading other competitors by significant margins, saw their leads narrowing in recent years as other financial centres were catching up amid intense international competition. Moreover, as the index is released twice a year, the fluctuation in ratings and rankings may be influenced by short-term factors. Therefore, it is important that we keep a clear understanding of our own strengths and weaknesses, so that we can do what is needed systems-wise, policy-wise and publicity-wise through strategic deployment and efficient implementation, so as to consolidate our strengths, shore up our shortcomings, and continuously enhance the competitiveness of Hong Kong.

If we take a comprehensive look at the objective environment and factors, we would understand that Hong Kong is indeed full of opportunities with a bright future. Compared with other international financial centres, Hong Kong's biggest and core advantage is that we are the leading international financial centre of our country, which is the world's second largest economy; and our super-connector role under the "One Country, Two Systems" that is difficult to replicate or replace. This is also the foundation and starting point for us to plan for the long-term development of Hong Kong. At the same time, many aspects of Hong Kong's financial market are still outstanding and excellent, and possess obvious comparative advantages. With the more vigorous and proactive development mode adopted by the new-term Government, new development advantages and space will be created for us.

The Current Situation of Hong Kong's Financial Markets

Many friends are concerned about how Hong Kong's financial services industry fares as compared to Singapore, but discussions often rely on vague impressions. Statistics elaborating on Hong Kong's financial markets' status and development as objectively set out below should help calibrate our understanding on the current situation.

Hong Kong's financial services markets have a significant advantage in size. In 2020, they contributed USD 76 billion to the economy or 23% of the gross domestic product (GDP), and was around 1.5 times of that of Singapore (around USD 49 billion).

According to the figures as at end of 2021, the market capitalisation of Hong Kong's stock market was over $42 trillion, with a total of some 2 500 companies listed in Hong Kong, representing 7 times and 2.7 times more than those of Singapore respectively. The aggregate stock turnover of Hong Kong in 2021 reached a record high of HKD$41 trillion, which was over 20 times more compared to just HKD$1.9 trillion in Singapore. The convergence of capital and enterprises from both the Mainland and the globe, coupled with the advantages brought about by the mutual access with the Mainland's financial markets, have allowed Hong Kong to develop into a capital market with greater depth and breadth and more active trading activities that has outperformed other securities market in the region.

In terms of foreign exchange, Singapore possesses relatively more inherent advantages as it serves the multi-currency Association of Southeast Asian Nations (ASEAN) region. However, being one of the major US-dollar exchange centres in the world and the largest offshore Renminbi (RMB) business centre, Hong Kong also has a strong foundation. At the end of last year, RMB deposits in Hong Kong exceeded RMB900 billion, which was about 60% of global offshore RMB deposits. About 75% of global offshore RMB payments are processed in Hong Kong.

Hong Kong is a leading bond hub in Asia, ranked third in bond issuance volume in Asia (excluding Japan) after the Mainland and Korea. With a competitive ecosystem of financial institutions and professional services, Hong Kong is also the largest centre in Asia for arranging international and Mainland offshore bond issuance, accounting for 34% of the issuance in the region, which is six times greater than that of Singapore.

In recent years, green finance has been growing by leaps and bounds in Hong Kong, both in market size and diversity. Last year, Hong Kong recorded US$31.3 billion of green and sustainable international bond issuances, accounting for one-third of the Asia market and topped the list in Asia in terms of the volume of bonds arranged; while the total amount of green and sustainable bonds and loans issued was four times of that in 2020, reaching US$56.6 billion and ranked first in Asia. The HKSAR Government has issued a cumulative total of close to US$10 billion worth of green bonds, which are denominated in Hong Kong dollar, RMB, US dollar and euro. Among them, some US dollar- and euro-denominated green bonds have a tenor of as long as 20 to 30 years, which were the longest-tenor government green bonds of the same type in Asia at the time of issuance. Among others, the Shenzhen Municipal People's Government also issued green bonds in Hong Kong, which was the first time a Mainland municipal government issued green bonds here. The issuance has showcased the growing importance of Hong Kong's role in channelling international capital to support the green transition of the Mainland.

Hong Kong has a leading role in the asset and wealth management industry in the region.  As at the end of last year, assets under management in Hong Kong amounted to over US$4.5 trillion, with two-thirds of the funding sourced from non-Hong Kong investors.  Hong Kong is also Asia's largest hedge fund centre and the second largest private equity market in Asia (only after the Mainland).  The capital under management by private equity industry has recorded US$180 billion, four times higher than that of Singapore.  Furthermore, the total assets of Hong Kong's banking industry amounted to over HK$26 trillion last year, setting a record high in many years.

These figures allow us not only to discuss how we could shore up our shortcomings, but also to identify our strengths objectively. Hong Kong has always grown and developed in the midst of competition. There is no need to underestimate ourselves or hide from our weaknesses. What we need to do is to face the reality, and make targeted, effective policies to further enhance the competitiveness of Hong Kong's financial market.

Hong Kong is not just an international financial centre; we are our country's international financial centre. We, with our first mover advantages, have "quantitative and qualitative" edges of a developed market; enormous opportunities are seen down the road. However, at the same time, profound changes in the world unseen in a century are rapidly unfolding and will bring challenges.

Challenges

1. Increased risk of global recession. Major central banks of overseas economies have raised interest rates rapidly to curb inflation, and this has led to rising costs of business operation and borrowing, thus dampening investment and consumer sentiment. Alongside with growing geopolitical tensions, the adding up of negative factors could push the global economy into recession again. The International Monetary Fund has already warned that it would lower the global growth forecast for 2023 again from the previous projection of 2.9% in its new report to be released next week. The World Bank has also indicated earlier that the global growth could be as low as 0.5% next year, reflecting the deteriorating economic outlook. On the other hand, the declining risk appetite and interest rate differentials could lead to sharp turns in capital flow directions at any moment, and they could possibly trigger a new round of volatility in the global financial markets.
2. Increasingly fierce market competition. As the global economy is facing headwinds, competition among companies and markets will inevitably become more intense and acute. Different economies may scramble harder for businesses and talents in order to maintain the momentum of their economic and sectoral development.
3. Uncertainties brought about by de-globalisation. In the past, globalisation drove the integration of markets around the world; but the rise of populism, protectionism and geopolitical tensions are reversing it. Two camps of system are gradually emerging. Hong Kong, as our country's international financial centre, is also faced with new ideological challenges. We must get fully prepared for them.

Opportunities

1. Firm support from our country. The medium-to-long term trend of rising economic prospects of our country has remain unchanged. Since its reform and opening up, our country's economy has been growing at an average annual rate of over 9%, and is now the world's second largest economy, accounting for over 18% of the global economy. The stable and prosperous development of our country provides the strongest backing of Hong Kong's future development.
2. Developing Asia. With the global economic gravity shifting from the West to the East, Asia's share of the world economy has already exceeded 40%. It is expected that the region's economy will continue to grow at a faster pace and its share in the world economy rise further in the future. The share of 30 emerging and developing Asian countries of the world economy has also jumped from 17% in 2012 to 26% this year. For the 10 countries of ASEAN, their economies have grown rapidly over the past years. Together they are now the world's fifth largest economy; and anticipated to be the fourth largest by 2030. One can imagine that in the future, Asia will play an even more prominent role in the global economy. Hong Kong, with its close ties to countries in the region, is standing on the favourable side of history.
3. Institutional advantages of "One Country, Two Systems". "One Country, Two Systems" is an institutional strength of our country's governance system, and gives Hong Kong a distinctive status and a host of advantages. Within "One Country", Hong Kong enjoys the firm support from our country and benefits from participating directly and fully in the development of the vast Mainland market. The advantages of "Two Systems" allow Hong Kong to continue to practise the capitalist system, retain its common law system and judicial independence, maintain a high degree of freedom and openness as well as an internationally-aligned business environment, making Hong Kong a unique bridge for our country to connect with the world. The Basic Law protects the free flow of capital into and out of Hong Kong, as well as the legal status of the Hong Kong dollar. The transparent, stable and efficient Linked Exchange Rate System is the backbone of Hong Kong's monetary and financial stability. These advantages have continued to deliver enormous benefits for Hong Kong's economic development. Take innovation and technology for example: "One Country, Two Systems" has enabled us to work more closely with our sister cities in the Guangdong-Hong Kong-Macao Greater Bay Area, allowing cities to complement each other's strengths. Hong Kong's scientific research and development (R&D) is set to go faster and further as we join with the Mainland's strong R&D capabilities, advanced manufacturing industries and market forces.

While Hong Kong will face both opportunities and challenges in the future, opportunities outnumber challenges. I announced the organisation of the Global Financial Leaders' Investment Summit in the Budget in February this year when Hong Kong was experiencing the peak of the fifth wave of the COVID pandemic. And yet responses from overseas were overwhelmingly positive. In the process of organising the Summit, different international financial institutions approached us and sought to attend the event even though they had not yet received invitation. Indeed, the Summit will be the first high-profile financial conference to be held physically in Hong Kong since the outbreak of the pandemic three years ago. With over 100 leading institutions from around the world, this is surely one of the most anticipated financial events in Asia this year.

With the Summit to be held in less than a month, preparations are in full swing. Many participants have indicated that a one-day event is too short, and many who are not able to attend would like to have the opportunity to join. In response, the Hong Kong Monetary Authority, together with the Hong Kong Academy of Finance, will organise a seminar titled "Global Investment Dialogue" with "Investing through Uncertain Times" as its theme on the day following the Summit (3 November 2022). The seminar will feature, among others, distinguished speakers from a range of global asset managers including traditional long-only funds, established private equity funds, infrastructure finance experts and large hedge funds. They will share how to rise to the challenges and grasp opportunities under the currently uncertain macro environment. Their experience and unique perspectives will provide participants with a comprehensive and multi-faceted overview of the current investment landscape. In addition to inviting Academy members and guests to attend the seminar, the event will also be broadcast live so that more members from the financial industry and the public can participate.

Since assuming office, the new-term Government has adopted a science- and evidence-based, targeted ant-epidemic approach, with the aim of maximising the resumption of economic activities and external connections at a minimum cost. We strive to lead Hong Kong steadily out of the adversities of the pandemic. With the easing of the COVID situation, anti-epidemic measures have been adjusted accordingly; the relaxation of quarantine arrangements for arrivals to "0+3" is an important step to this end, which has greatly reduced the inconvenience of cross-boundary travel while keeping risks under control. It is conducive to restoring the confidence of the international community in Hong Kong as an international financial centre that is open with an efficient flow of capital and people. We are also gradually resuming visits to overseas, and eagerly seek to tell the good stories of Hong Kong by promoting our development opportunities and potential. Hong Kong is an international financial, shipping and trading centre. For many entrepreneurs and business executives, Hong Kong is a market full of opportunities, a city filled with vibrancy, and a food paradise with cuisines from all over the world. Together with Hong Kong's cultural hub status – signified by the Hong Kong Palace Museum, the M+ Museum, the Xiqu Centre and more – and the beauty of our natural environment and scenic country parks, etc., they make city life here so dynamic, entertaining and culturally rich. As we gradually return to normality, Hong Kong's boundless opportunities, vibrancy and colourful lifestyle will continue to attract the world's top talents from the financial and other fields, as well as enterprises from around the world, to embrace the many opportunities we have to offer.

October 9, 2022

A new batch of consumption vouchers were distributed yesterday. About 6.36 million eligible persons got the second voucher. A spending power of about $15 billion had been injected instantly into the retail and catering market. The festive atmosphere during the long weekend of the National Day and Chung Yeung Festival would also boost the consumer sentiment.

The effect of consumption vouchers on stimulating consumption and boosting the economy is remarkable. Taking the first vouchers distributed in August for example – they amounted to some $13 billion – about 70% of the total value of vouchers was used within the first month of disbursement. Out of such value, about 60% was spent on retail transactions, 30% on catering and the other 10% on services. As regards the number of users, over one-third of voucher holders spent their whole voucher value within the first month of distribution.

Although consumption vouchers can bring a stimulus effect to the economy in the short term and help retain confidence, the retail market performance would still be affected by the general economic environment. Since the beginning of this year, the global situation has remained volatile, geopolitical tensions persisted, and supply chain not yet reinstated fully. Heightened inflation levels have propelled major foreign central banks to raise interest rates repeatedly and aggressively. The market is worried that the global economy may enter a recession. This has intensified the risk aversion sentiment, as evident in the pressure endured by the local stock and property markets recently. Lingering external factors and the local epidemic situation have hindered the resumption of local economic activities and consumption; coupled with the high base effect, retail sales value recently announced in August fell slightly by 0.1% year-on-year. On a seasonally adjusted month-to-month comparison, however, the figure had continued to rise. Indeed, consumption vouchers have propped up the weak retail market to a certain extent.

Another policy objective of the Consumption Voucher Scheme is to promote and broaden the use of electronic payment. Since the launch of the Scheme last year, the six stored value platforms have acquired some additional 8 million consumer accounts and 150,000 merchant accounts in total. With more consumers and merchants accepting electronic payment, online retail sales transactions have increased rapidly. In the first eight months of this year, the cumulative online retail sales value reached $20.45 billion, representing an increase of 22% when compared to the same period last year, or an increase of 77% when compared to the same period in 2020. The percentage of online sales among all retail transactions had also increased gradually, from only 5.4% in the same period in 2020 to 9.0% in 2022.

Technological innovations and their wider application are helping various industries to improve their operational efficacy and explore new business models, as well as open up more sale channels and new markets. They also bring in new opportunities for development and create impetus for growth. Faced with a deteriorating external environment and keen market competition, we need to strengthen our support to technological innovations and deepen their application so as to create more room for our economy and enterprises to grow. This is a direction with which we are pressing ahead. We need to facilitate better integration of a capable government and an efficient market, thus fostering diversification of our industries and strengthening the momentum for economic growth.

The upcoming 20th National Congress of the Communist Party of China will provide us with important directions for the planning of our future development. The world is undergoing profound changes unseen in a century, and changes of the world, of our times and of history are exhibiting their characteristics more evidently. The challenges and conflicts that we need to confront and resolve have become more complex than ever. The 20th National Congress of the Communist Party of China will be a very important meeting, which will set out the mission and targets, major policy directions and action plans for the development of the Communist Party of China and our country in the next five years or even longer. As President Xi pointed out, "The next five years are crucial as we set out to build China into a modern socialist country in all respects, and doing a good job during this period is of vital importance to achieving the Second Centenary Goal. We must focus our efforts on addressing unbalanced and inadequate development…and work out new approaches and measures for solving our problems." Firm support of our country is very important for Hong Kong's continued success in the future. That is why we need to better understand the Party's and country's planning for the future. By holding on to the essential elements of success and finding the right direction; and by more quickly and comprehensively integrating into the national development, thus serving the needs of the country more earnestly, we will certainly create a brighter future for ourselves.

October 2, 2022

Among the many central banks that raised interest rates, the one that caught the most attention was the 0.75% rate hike by the US Federal Reserve (Fed) last week, raising the target range for the federal funds rate to 3 - 3.25%. It was the fifth interest rate hike by the Fed this year, bringing the total rate hike to 3%, which was at the fastest pace in over 30 years. At the same time, the UK raised interest rate by 0.5% last week, marking its seventh consecutive rate hike. In Sweden, the interest rate was significantly lifted by 1%, exceeding market expectations.

Following widening interest rate differentials between the US dollar and other currencies, the US dollar had strengthened further with the US Dollar Index hitting a 20 year-high to above 113. In contrast, the pound fell significantly to a 37-year low while the Euro and the Japanese Yen also plunged to hit their 20-year and 24-year lows respectively. The Japanese Yen plummeted below 145 per US dollar, propelling Japan's central bank to intervene in the currency market last week for the first time since 1998.

Apart from interest rate differentials, foreign currency exchange rates are also affected by policy risks. The UK government's latest tax cuts and energy subsides are seen by the market as being inconsistent with its policy objective of curbing inflation, and that it may further worsen the government's fiscal position. This triggered a massive sell-off of the Pound.

As inflation has stayed high in the US, Europe and the UK at 8-10%, the market expects interest rates to continue to rise, putting more pressure on global stock markets. The US S&P 500 Index and Hang Seng Index have both fallen by 23% cumulatively since the start of this year.

The World Bank pointed out earlier that central banks around the world have sharply and simultaneously raised interest rates this year to an extent not seen over the past five decades. It believed that the risk of a global economic recession has increased. If central banks around the world all put reducing inflation to target levels as their first priority, interest rate hikes are bound to continue and financial markets will remain under pressure. It is estimated that global economic growth next year may only be 0.5%.

As an open economy on all fronts, Hong Kong will surely be affected in many ways in the face of this austere external economic environment:

1. Hong Kong's exports will be under further pressure. Hong Kong's merchandise exports have contracted year-on-year for three months in a row, and the figures to be released for August will show that the decline has continued to widen. Monetary policy tightening around the world will further weaken global economic growth momentum, and it is expected that Hong Kong's exports will continue to be under challenge.

2. Rising borrowing costs. After the US had increased rates by 3% cumulatively, a number of major banks in Hong Kong raised their prime rate (P) by 0.125% and increased the deposit rates simultaneously last week. Since most small to medium enterprises (SMEs) are using the prime rate as the basis for calculating interest rates on their bank loans, the rise in prime rate means that their financing cost would increase. In fact, borrowings by large corporations and mortgage servicing payments that are calculated on the basis of the Hong Kong Dollar Interbank Offered Rate plus a certain spread, have already increased considerably over the past few months. In response to the changes in the interest rate environment, the Hong Kong Monetary Authority (HKMA) lowered the interest rate stress testing requirement for property mortgage lending from 300 basis points to 200 basis points last week. The new level is regarded as sufficiently prudent from the perspective of effective risk management of banks' property lending.

3. Financial markets, especially foreign exchange and securities markets, will remain volatile alongside swings in external markets. Fast-moving capital flows, together with emotional responses from the market, may introduce even more unexpected volatility.

4. Asset prices are under pressure. In addition to the repeated pressure on Hong Kong's stock market this year, overall residential property prices also fell by 6.3% this year up through August. Apart from changes in interest rates, macroeconomic conditions, market supply and demand, investment sentiment and so on all have an impact on asset prices.

As far as Hong Kong is concerned, there has been some good news over the past week. As the number of newly confirmed cases gradually stabilised, after balancing the risks, the arrival quarantine requirement will be relaxed starting tomorrow. This includes lifting the hotel quarantine requirement for inbound persons and adopting a "0+3" arrangement; and allowing passengers to perform rapid antigen tests in lieu of nucleic acid testing before boarding a flight to Hong Kong. Residents and the business community generally welcome the measures. Just as pointed out by the Chief Executive, it is hoped that effective control of the epidemic will let society and the economy have the maximum room for recovery, and Hong Kong will be able to connect with the world and maintain its competitiveness, while inconvenience for those arriving in Hong Kong would be minimised.

The epidemic has been troubling the world for nearly three years, and people flows in other places have been recovering rapidly in recent months. Some people say that they have already seen the light at the end of the tunnel for the global epidemic. However, as WHO Director-General Tedros Adhanom Ghebreyesus said, a marathon runner does not stop when the finish line comes into view, but she runs harder, with all the energy she has left. At this critical moment, we must all sprint for the finish line and actively cooperate to meet the anti-epidemic requirements. At the same time, everyone should speed up preparations for returning to normal, so that as we move towards the "post-pandemic" stage, we can grasp the opportunities brought about by economic recovery.

There is about a week to go before the National Day, on which it just so happens that the second consumption voucher would be disbursed. This will also help boost the consumption demand and benefit retail and catering businesses. I hope that during the holidays, everyone will gather with their families and spend happily to celebrate the 73rd anniversary of the founding of the People's Republic of China!

September 25, 2022

This said, the economy as a whole has been plagued by the epidemic and a weak external market. Merchandise exports had registered negative growth, and the stock and property markets softened. Many enterprises, particularly small to medium-sized enterprises (SMEs), are still enduring pressure on their business operations. The rental enforcement moratorium implemented earlier this year was an exceptional measure under exceptional circumstances, and it played a key role in preventing massive closures of SMEs during the height of the local epidemic.

As the epidemic gradually came under control and domestic economic activities improved, the Government would need to adjust the approach of supporting the economy. Following the end of the rental enforcement moratorium period at the end of July, we have enhanced support for the Special 100% Loan Guarantee under the SME Financing Guarantee Scheme (SFGS) and the Pre-approved Principal Payment Holiday Scheme (PPPHS). This includes, among other things, work by the Hong Kong Monetary Authority (HKMA) and the Hong Kong Mortgage Corporation to strengthen the communication between banks and SMEs as well as industry associations to expedite the processing of corporate loan applications.

To alleviate the cash flow pressure on SMEs during the epidemic, I announced in the Budget earlier this year to enhance the Special 100% Loan Guarantee by increasing the maximum loan amount per enterprise, equivalent to the total sum of wages and rentals for 27 months; raising the ceiling to HK$9 million, relaxing the repayment period to a maximum of 10 years; and extending the application period for the scheme till the end of June 2023. At a time when the epidemic is gradually coming under control but the economy has yet recovered, these enhancements would allow enterprises to receive liquidity support. Since the launch of the Special 100% Loan Guarantee from April 2020 and till the end of August this year, around 55 000 applications involving loans of around $103 billion have been approved, benefiting approximately 33 000 enterprises which employed about 350 000 employees.

Both the Special 100% Loan Guarantee and PPPHS are designed specifically to assist enterprises hard hit by the epidemic in coping with cash flow pressure. Together with other relief measures, such as concessions or reductions in profits tax, rates, water and sewage charges, rentals or fees applicable to government properties, as well as the Consumption Voucher Scheme, we endeavour to support enterprises on multiple fronts so that they could survive in a market of fierce competition.

Last Friday, HKMA announced the extension of PPPHS for three months, from November to the end of January next year. The principal payment holiday period under SFGS (including the Special 100% Loan Guarantee), would be extended accordingly to a maximum of 36 months in total. On the same day, the Government announced further extension of rental or fee concessions applicable to government properties and short-term tenancies, etc. for three months, effective from October to December. In the meantime, the Government would holistically review the measures concerned and examine suitable subsequent arrangements. We will make announcements at the appropriate juncture.

Indeed, just as SMEs and wage earners alike are facing varying degrees of economic pressure, the Government's revenue position is also under stress. It is reasonable to assume that in a sluggish economy, government revenue would fall short of expectations, while expenditure would rise. Under such circumstances, the fiscal position for the 2022-23 financial year would be worse than originally anticipated. We are expecting a deficit of over $100 billion, far above the estimated amount of $56.3 billion in the Budget this year. If this becomes true, it would be the second-highest fiscal deficit ever recorded, only behind the deficit of $232.5 billion in 2020-21. This would also mean that the Government's fiscal reserves might fall to just around $800 billion. The deficit would be more severe if the issuance of Green Bonds this year, amounting to $35 billion, has not been taken into account.

Since the beginning of this year, while the epidemic hit the economy, substantial tightening of monetary policies by central banks around the world has also seriously weakened the external economic momentum and impacted on the local economic situation. In light of weaker economic performance, we revised our forecast for Hong Kong's economic growth downward twice this year. With poorer performance in exports, private consumption and fixed investments, the business environment would be challenging, and revenues from profits tax and salaries tax in this financial year would likely be lower than the estimation earlier this year.

For stamp duties, the average daily turnover of the Hong Kong stock market between April and August this year was $117 billion, representing a year-on-year drop of 26%. Residential property transactions for the first four months of this year fell by 37%. Given the slackening stock and property markets, revenue from stamp duties might be one-third less than originally estimated.

Amid a sluggish property market, revenue from land premium for the first five months of this financial year amounts to $17.2 billion, which is far below the annual estimated revenue of $120 billion. Judging from past experience, land premium would be prone to larger adjustments as property prices went down. In April, tendering was unsuccessful for a residential site. In a slackening economy, the market demand for commercial sites would also weaken, and developers would be less interested in initiating land premium negotiations. All these have affected our land revenue.

At the same time when government revenue is falling, expenditure is increasing significantly. Faced with the epidemic and the downward pressure on the economy, we have been implementing various counter-cyclical measures to cope with economic contraction and uphold market confidence. Taking into account the counter-cyclical measures totaling more than $170 billion in the Budget at the onset of the year alone, it was estimated that a deficit of over $56 billion would be recorded for this financial year. Nevertheless, the figure has yet reflected the "Employment Support Scheme 2022" which was subsequently rolled out, costing $43 billion, and measures under the sixth round of the Anti-epidemic Fund.

In short, with falling revenue and rising expenditure; a complex and volatile external political and economic environment; and a bumpy road to global economic recovery, the economic prospect of Hong Kong is filled with challenges. Making good use of public monies to support the grassroots and people's livelihood, and to maintain the stability of the society, is a priority for us in the short to medium term. In capitalist markets, it is not easy to strike a proper balance between maintaining competition and letting the market exert its force on the one hand, while on the other helping businesses to survive. In introducing support measures, we must also take into account fiscal robustness and appropriate use of public monies. As financial resources are scarce, while reserving sufficient resources for what needs to be done, we must maintain fiscal robustness and sustainability to ensure economic security and financial stability.

The outlook for our economy in the next few quarters remains highly challenging. The second round of consumption vouchers to be disbursed on 1 October will inject more than $15 billion of purchasing power into the market, stimulating the economy with a multiplier effect. However, the key to improving our economy is better control of the epidemic, and convenient cross-boundary travel is at the heart of reigniting the economic momentum. The Government has continued to call on everyone to get vaccinated so that we can build a solid barrier against the epidemic together. This is the most effective way to protect ourselves and the health of our relatives and friends. It will help us strive for the resumption of normal economic activities and external connections, which is essential to securing our livelihoods and promoting strong economic growth in Hong Kong.

September 18, 2022

Last Friday, we announced the subscription and allocation results of the latest batch (the seventh batch) of Silver Bond. This time, we received a record-high number of valid applications close to 290 000, representing a 13% increase when compared with that of last year, while the total subscription amount reached nearly HK$62.5 billion. Among the applicants, about 65% were aged 60 to 69, and 35% over 70. The most senior applicant was 104 years old. In view of the overwhelming response, we decided to raise the final issuance amount to HK$45 billion, which was 50% higher than the issuance size last year, in order to meet the demand of our senior citizens as far as possible. We always bear in mind that our residents should share the fruits of the development of Hong Kong's financial markets. Eligible applicants who applied for 20 or fewer units were allocated the full amount for which they applied, amounting to around 68% of all eligible applicants.

Since the first issuance of Silver Bond in 2016, the issuance size has gradually increased from HK$3 billion to HK$45 billion, while the number of subscribers has climbed from some 70 000 to nearly 290 000. It reflects that our senior citizens have gradually accepted Silver Bond to be a safe and reliable investment option with steady returns. This sits well with our direction of promoting financial inclusion. The interest rate floor of Silver Bond has been raised from 2% at the inaugural issuance to 4%. In determining the interest rate of Silver Bond, we would follow closely the rising trends of interest rates and inflation so that the elderly can truly benefit.

It is worth noting that even if the interest rate floor of Silver Bond rises, the stability and sustainability of the Bond Fund would not be affected. Since the Bond Fund does not form part of the fiscal reserves and is managed separately from other Government accounts, the proceeds received from the issuances and the interest costs are independent from the Government's finances. This mechanism has been in place for years, and is applicable to iBond as well. As for the proceeds raised from green bond issuances, we have clearly confined the use of them to funding green infrastructure projects. Hong Kong is a small, fully open economy where funds can flow in and out freely. It is of paramount importance that the exchange rate be kept stable. We must uphold fiscal discipline: bond issuances would not fund the Government's recurrent expenses.

Maintaining strict fiscal discipline and avoiding a long-term and structural deficit are fundamental to maintaining the security and stability of public finance, as well as ensuring that the Government has the capability to cope with potential economic and financial volatility. Nonetheless, looking around the world, governments of many major foreign economies have already accumulated huge amounts of debt, and continued rise in global interest rates will add to their burden in debt repayment. Moreover, in light of elevated energy prices and rising inflation, some governments have chosen to provide subsidies to citizens, or control prices through other means, so as to ease the hardship faced by the local community. Yet, at the same time, a weak economy will lead to lower tax revenues, and thus the public finances of these economies will be under pressure from both ends. In fact, the risks associated with the external economic environment and the financial markets have risen further. With inflation in the Eurozone reaching a record high of 9.1%, the European Central Bank has recently raised interest rates by 0.75%, the highest single rate hike ever. In the United States, having regard to comments made by Federal Reserve officials, the market is expecting another interest rate hike of 0.75% to be announced at the Federal Open Market Committee (FOMC) meeting in a fortnight's time, thereby bringing the total increase in the federal funds rate to 3% this year.

The impact of rising interest rates elsewhere on Hong Kong's has been emerging. For instance, the one-month Hong Kong Interbank Offered Rate (HIBOR), which is commonly linked to mortgage rates, has risen from around 0.13% at the beginning of the year to over 2% now. Faced with increasing costs of funding, many banks have raised the interest rate cap on newly approved HIBOR-based mortgage loans, and this has unavoidably increased the mortgage servicing burden of mortgagors. Following the cumulative increase in interest rates in the United States, banks in Hong Kong may also have to adjust their deposit and lending rates, including the prime rate, which is the basis for interest rates for bank loans to many small to medium enterprises (SMEs). Rise in interest rates will add to the operational pressure shouldered by SMEs.

Dampened by a range of factors such as the fluctuating local epidemic situation, tighter financial conditions and a worsening external environment, the property market has gone though some adjustments lately. Up to July this year, residential property prices have come down by over 5% from the high in September 2021. Transactions during the first eight months this year fell by nearly 40% compared with the same period last year. Together with the relatively weak Hong Kong stock market performance, these will adversely affect the willingness to spend and the economic atmosphere. Even though our unemployment rate has gradually been coming down, many businesses and enterprises are still facing considerable pressure on their operations, and dare not hold high hopes for their business during the Mid-Autumn Festival. Under the current circumstances, we hope that consumption vouchers can boost the economy. The next round of consumption vouchers will be disbursed on 1 October, injecting more than $15 billion of spending power into the market. We are hopeful that this will support the retail and catering sectors.

In the past few years, Hong Kong's economy has been hit by the epidemic and weathered ups and downs. We all understand that effective control of the epidemic is most fundamental to stabilising the economy. The current anti-epidemic approach is based on science and evidence, and comes with precision. It aims to achieve the greatest efficacy at minimum social and economic costs. It is true that striking a balance between keeping the epidemic under control on the one hand, and facilitating travel and maintaining the economy on the other, is extremely challenging. But the current-term Government has been steadily moving towards this direction. Only by working together and further enhancing vaccination coverage would we have the greatest flexibility to restore exchanges with other places, stabilise the economy, and regain the momentum of economic development.

September 11, 2022

Looking back at the development process, it essentially comes down a few points: finding the right direction, firmly pressing ahead, steadily moving forward and continuously deepening development. Taking mutual access between Hong Kong's and Mainland's capital markets as an example, banks in Hong Kong commenced personal Renminbi (RMB) business in 2004, which has since then been constantly developed and expanded to cater the needs for exchange and cross-boundary trade settlement by enterprises. In 2014, the Shanghai-Hong Kong Stock Connect was launched, which offered for the first time a channel for investors and enterprises to directly participate in the stock markets of the two places. Subsequently, mutual access has continued to deepen gradually – from Shanghai-Hong Kong Stock Connect to Shenzhen-Hong Kong Stock Connect, from stocks to bonds, from spot market to derivatives market – providing international and Mainland investors with more diversified investment choices and risk management tools. Following the successful implementation of various mutual access schemes between the markets of both places, an onshore trading model under prudent risk management has been created, beneficial to both onshore and offshore investors. It has also generated unprecedented cross-boundary market liquidity and vibrancy while supporting the opening up of our country's financial markets in an orderly manner. Such development will be accelerated by further expansion of mutual market access arrangements, announced last Friday by the China Securities Regulatory Commission (CSRC) – certainly a piece of good news in respect of deepening the development of Hong Kong's capital markets. For this, the HKSAR Government is truly grateful.

Vice Chairman of CSRC, Dr Fang Xinghai, said last week that CSRC would (a) move forward to include securities of overseas enterprises that have primary listing in Hong Kong and fulfil certain conditions in the eligible scope of Southbound Trading of Stock Connect; (b) study the setting up of an RMB securities trading counter under Southbound Trading of Stock Connect; and (c) support the issuance of Mainland government bond futures in Hong Kong.

So how significant are these three measures to the development of Hong Kong's capital markets?

First, moving forward to include securities of overseas enterprises that are primary listed in Hong Kong and fulfil certain conditions in the eligible scope of Southbound Trading of Stock Connect. This measure would allow Mainland investors to invest in the stocks of relevant overseas companies through Southbound Trading of Stock Connect while ensuring proper risk management. It would improve the liquidity and valuation of relevant securities, and is thus conducive to attracting more quality and high-profile overseas enterprises with close business connections with the Mainland to list in Hong Kong. It would also enhance Hong Kong's competitiveness and distinctiveness as our country's international financial centre, while facilitating further high-quality opening up of the Mainland's financial markets.

Second, setting up an RMB securities trading counter under Southbound Trading of Stock Connect. The measure would "kill two birds with one stone" – lowering the exchange rate risk and cost of Mainland investors on the one hand, while on the other enriching RMB investment choices in Hong Kong. It would help increase the liquidity and depth of the offshore RMB market. The two-currency option for buying shares would also provide investors with greater trading flexibility and incentives. The working group set up to this end – announced in the Budget earlier this year – has already been making preparations to overcome possible technical challenges, including setting up a "dual-counter market maker" regime as well as waiving the stamp duty on stock transfers by market makers in their transactions, so as to increase the liquidity of RMB-denominated stocks. It is our plan to introduce the relevant legislative amendments to the Legislative Council this year.

Third, supporting the issuance of Mainland government bond futures in Hong Kong. It offers another effective risk management tool for investing in Mainland government bonds through the Bond Connect and other channels. Together with mutual access arrangements for Swap Connect as promulgated earlier, overseas investors could hedge against changes in interest rates on RMB assets. By facilitating Hong Kong and overseas institutions to better manage relevant investment risks, the measure would improve the liquidity and reduce the bid-ask spreads in the Mainland government bond market, thereby further enhancing international participation in and acceptance of the market. It would also be beneficial to the internationalisation of RMB and help Hong Kong develop itself into a more comprehensive offshore RMB hub and risk management centre.

Mutual access between the financial markets of the Mainland and Hong Kong has been deepening and expanding, and the three measures have signified a new stage of development. The Mainland is pressing ahead with two-way opening up and high-quality development of its capital markets. As our country's international financial centre, offshore market outside the Mainland, and only financial centre maintaining the common law system and fully connected to international markets, Hong Kong, and our capital markets, are at a new starting point. We need to be innovative and willing to embrace change, and to proactively align ourselves with the development strategy and needs of our country. We will also need to broaden the development of our financial markets and services so as to better serve the real economy and national development. We are all the more determined to make important and irreplaceable contributions to Hong Kong and our country.

September 4, 2022

A few days ago, US Federal Reserve Chairman Jerome Powell reiterated the importance of price stability at the Jackson Hole meeting, stating that restrictive monetary policy would be maintained for some time, and warning against prematurely loosening policy. His speech reinforced market expectations that the Fed would continue to raise interest rates aggressively at an accelerated pace, including a further 0.75% hike at the September meeting, and triggered a sharp fall in US stocks.

It is not difficult to understand the market's concerns. If the Fed raises interest rate by another 0.75% in September, it will be the third consecutive rate hike of such level in the current cycle, bringing the total rate hike to 3% in just seven months, and raising the target range for the federal funds to 3 - 3.25%.

Any further substantial interest rate hike in the US would mean that carry trades and HKD selling interests are likely to re-emerge, while the upward pressure on HKD interest rate will also increase. However, just as we have stressed repeatedly in the past, despite the differentials between Hong Kong and US interest rates, and that carry trades had led to an increase in HKD selling interests in the past few months, total deposits in Hong Kong's authorised institutions'⁽¹⁾ continued to increase by 0.4% in the first half of this year, indicating that the selling of HKD is not equal to capital outflows. An increase in HKD selling interests would not affect Hong Kong's financial and monetary stability since interest rates differentials and carry trades are completely consistent with the expectations under the Linked Exchange Rate System.

With elevated inflation elsewhere, a weak global economy and rising interest rates, Hong Kong's economic momentum would be adversely affected. At the same time, the worsening local epidemic situation has also raised concerns about the economic outlook. How to effectively stabilise the economy and make adjustment in response to market expectations is a major challenge at the moment.

In response to the latest epidemic situation, the Health Bureau has announced four new anti-epidemic measures under the scientific evidence- and precision-based anti-epidemic strategy to enhance our fight against the epidemic. We hope that everyone will give their full support, and encourage relatives and friends who have not yet been vaccinated to get a jab as soon as possible. The whole community needs to work together to reinforce the protective barrier against the virus, so that we could contain the epidemic effectively, and at the same time allow normal social and economic activities to continue as far as possible. This would also safeguard the operation of small, medium and large enterprises, as well as protect jobs and income.

In fact, the impact of the epidemic on Hong Kong's competitiveness and our ties with the international market has long been a matter of concern. Our targeted anti-epidemic approach was adopted with the aim of minimising the social and economic impact while effectively putting the epidemic under control. Recently, on various occasions, including consultation sessions for the Policy Address, I have heard the views of representatives from chambers of commerce, the financial sector, small to medium enterprises etc. of different industries and backgrounds. They generally agreed that Hong Kong has unique advantages and remains an important gateway for foreign businesses to enter the Mainland market, an ideal platform for expanding their regional business, as well as a base for Mainland enterprises to enter overseas markets. Hong Kong is still very appealing to them. In his important speech on 1 July, President Xi Jinping said that the "One Country, Two Systems" principle must be adhered to in the long run and that Hong Kong's distinctive status and advantages must be maintained. This has also reinforced their confidence in Hong Kong's future development.

Many representatives from the financial, trade, shipping, aviation and convention and exhibition sectors indicated that Hong Kong needs to expedite the resumption of quarantine-free travel with the Mainland, and to make it more convenient to travel to and from overseas as soon as possible, as it is crucial to attract and retain talents, as well as to ensure that foreign enterprises would continue to operate and invest in Hong Kong.

At the meetings, some trade representatives also expressed the hope that the Government provide incentive measures to attract large-scale international and Mainland enterprises with strategic importance to invest in Hong Kong, with a view to driving the upgrade and restructuring of the economy and industries in Hong Kong and creating quality employment opportunities.

At the same time, quite a number of participants pointed out that in recent years, the outside world has been misled by generalisations as well as biased reports and commentaries from Western media. Misunderstandings about Hong Kong's situation also come from the fact that many people have not visited Hong Kong for a long time because of the pandemic. As such, the Government has to step up the efforts in external promotion and tell the good stories of Hong Kong actively.

Apart from publicity and promotion work, in face of the changes in the current international political situation, it is necessary for us to further strengthen economic and trade cooperation with emerging economies, as well as to attract talents and enterprises from different regions to come to Hong Kong for development and use our quality high-end services. To date, over 100 Southeast Asian companies are listed on the Stock Exchange of Hong Kong, and the most recent one listed is a Malaysian food and beverage company. Indeed, the Association of Southeast Asian Nations (ASEAN) is the second largest trading partner of Hong Kong, accounting for 12% of Hong Kong's merchandise trade. Under the Regional Comprehensive Economic Partnership and the Belt and Road Initiative, enterprises and capital from countries in the ASEAN as well as the Middle East will certainly be our focus as we work to enhance cooperation. As an international corporate financing centre, Hong Kong has to work to attract companies from different places and of diversified backgrounds to raise funds and expand businesses in Hong Kong.

The next five years will be a critical period for Hong Kong as we move to a new stage of development. For the moment, we must do our best to fight the epidemic, expand vaccine coverage, and do more testing. Looking ahead, we must grasp this golden period of opportunity and work hard together as a community for the high-quality development of Hong Kong, and for the society as a whole to better share the fruits of our development.

(1): Authorised institutions refer to institutions that are authorised to operate a business of taking deposits in Hong Kong under the Banking Ordinance, including licensed banks, restricted license banks, and deposit-taking companies.

August 28, 2022

The global economic outlook is worsening. Inflation in the UK reached 10.1% in July, the highest in four decades; inflation rates in the US and the Eurozone also stood at levels over 8%. As a result, many advanced economies are under huge pressure to raise interest rates to curb inflation. For example, the US Federal Reserve has already raised interest rates four times this year, altogether by a total of 2.25%. It is the expectation of the market that the Federal Reserve would pursue another significant rate hike at its meeting next month.

The external environment has affected Hong Kong's market in various ways. With the US having repeatedly raised interest rates, the Hong Kong Interbank Offered Rates (HIBORs) have also increased. The overnight HIBOR rose from 0.06% in mid-March to over 1% recently, while the one-month HIBOR, which is commonly used as a benchmark for residential mortgage loans, rose from 0.28% to 1.85%. However, with abundant liquidity in the local market, the rise in HKD interest rates has been less significant than that of USD rates, resulting in both HKD overnight and one-month HIBOR being lower than USD rates by around 0.5% and 1.2% respectively. But if the US raises interest rates again next month and HIBOR rises further, it is likely that Hong Kong's deposit and lending rates, including the prime rate, may also increase accordingly.

Interest rate hikes and geopolitical tensions have put pressure on financial markets as well as weakened the momentum and demand of the global economy. Meanwhile, cross-boundary cargo flows between Hong Kong and the Mainland have been disrupted by the epidemic. In this light, figures of Hong Kong's merchandise exports in July, which will be published soon, are expected to register a year-on-year decline in three consecutive months.

In view of external pressure and the on-going epidemic, the Hong Kong economy is moving forward under pressure. We must protect ourselves from the potential risks emanating from the external environment, and at the same time make every effort to stabilise the domestic economy and strive to go forward. In recent months, the local employment situation has improved slightly, with the unemployment rate in May to July being 4.3%, down by 1.1 percentage points from the preceding three-month period (i.e. February to April). During the same period, the underemployment rate dropped by 1.6 percentage points to 2.2%, a half-year low. For the economy as a whole, we have earlier lowered our economic growth forecast this year to -0.5% to 0.5%. Yet, considering that the economy has already contracted by 2.6% in the first half of the year, this means that, should epidemic situation remain largely under control, economic activities in the second half of the year will hopefully see some improvements. Our economy is still resilient.

On inflation, even though major external markets see a high inflation threat, the situation in Hong Kong is largely stable. The Composite Consumer Price Index (CPI) rose by 1.5% in the first half of the year. Although the index registered enlarged increases in May and June, and is expected to rise in July, the inflation forecast for the full year remains broadly moderate, at 2.1%. Some may ask the following question: why does inflation in Hong Kong still remain at a comparatively low level? In short, the main reason is that the compositions of consumer spending and the relevant indices differ from place to place. Elevated international energy prices have intensified inflation in Europe and the United States, but energy items only account for about 3% of Hong Kong's CPI. Changes to the price of the relevant items have relatively little impact on the overall CPI. Housing expenditures, which account for 40% of our CPI, have continued to decrease recently. As for food prices, which account for 27%, the supply and distribution of fresh food and vegetables from the Mainland have remained stable, thanks to the steadfast support and care by the Central Government. Thus related price increases have come down a bit from the peak in March.

Faced with headwinds caused by internal and external factors, Hong Kong's economy is moving forward under pressure. The HKSAR Government is making every effort to keep the epidemic under control and stabilise the economy at the same time. The epidemic has lasted for more than two and a half years. With more widespread vaccination as well as enhancements to medical treatment and isolation facilities on the one hand, and the implementation of precise disease prevention and control measures based on science and evidence on the other, the conditions to stabilise the economy have become more favourable. History has told us that in the middle of difficulty lies opportunity; and we must seize opportunities when they arise. With different challenges and obstacles ahead of us, we must always get well prepared to respond swiftly to short-term problems and challenges, and make good planning for the medium to long term. Many industries and members of the public have called for further strengthening the planning and support for the innovation and technology (I&T) industry and the relevant manpower; and enhancing local talent development while attracting more enterprises and talents from abroad to come to Hong Kong. With new thinking and innovative policies, we will put more efforts to promote economic development so that young people as well as talents and enterprises from different sectors can benefit from participating more widely in the I&T and other industries.

August 21, 2022

Following the full implementation of evidence- and precision-based anti-epidemic strategies, the Government put in place the "Red and Amber Codes" and adjusted the quarantine requirements to the "3+4" model last week. While effectively controlling the epidemic risk, we hope to offer facilitation to returning Hong Kong residents and tourists so that our external economic activities can regain momentum. The distribution of consumption vouchers at this juncture is expected to boost our economy to a certain extent. Yet, it is true that we are also faced with a weakening global economy and rising interest rates which will bring pressure on Hong Kong's economy.

The economic data freshly released also reflect the latest situation. Although the economy recorded a quarter-to-quarter growth of 1% in the second quarter this year, the situation is still worrying when compared to the same period last year. The economy contracted by 1.3% year-on-year in real terms in the second quarter following a year-on-year contraction of 3.9% in the first quarter, representing negative growth in two consecutive quarters. Geopolitical tensions, together with intensifying inflation and weak economic performance around the world, have dragged Hong Kong's export performance substantially. While consumption vouchers under Phase I were disbursed in April and had injected over $30 billion of purchasing power into the local consumption market, with private consumption having become a major supporting force of the economy, it is not sufficient to offset the adverse effect brought by weak export performance.

Last Friday, taking into account the worse-than-expected economic performance in the first half of the year and the sharp deterioration of global economic prospects, we lowered our economic growth forecast for this year as a whole to -0.5% to 0.5%, as opposed to 1%-2% as previously announced in the round of review in May. This figure is hardly ideal, but considering that the economy had already contracted by 2.6% year-on-year in the first half of the year, this means that the economy should improve slightly in the rest of the year. Of course, the actual situation would depend on changes in the external environment and the local epidemic situation.

In fact, maintaining business confidence is also a crucial element that underpins our economy. Amid the suddenly worsening epidemic situation earlier this year, rental enforcement moratorium, which was promulgated in the Budget, sought to halt any loss of confidence caused by massive closures of small and medium enterprises (SMEs) and waves of layoffs thus triggered. The measure gave some breathing space for tenants in the retail and catering sectors which had been hard hit by the epidemic, and eased the pressure on them as the economy contracted further in the second quarter.

Enacted by the Legislative Council, the rental enforcement moratorium law became effective in early May, and the three-month "protection period" just ended at the end of July. Quite a number of trade organisations from the retail, catering and service sectors have expressed that the measure had helped many members of their trades to withstand pressure for immediate closure and secure jobs for their staff. It provided prompt assistance at a time when they urgently needed help.

There were once concerns that rental enforcement moratorium would impact on a large number of individual landlords and they would be unable to repay their mortgages on time. However, such a phenomenon did not materialise. For the interest-free Personal Loan Guarantee Scheme specifically available to individual landlords with financial needs, only three applications had been received.

In the past few months, rental enforcement moratorium successfully motivated some tenants and landlords to agree on restructuring their rental agreements or adjusting the rent, so that merchants could continue to operate their business and seize the demand brought by consumption vouchers. Still, in the past week, some merchants already received demand letters from their landlords seeking to recover the outstanding rent.

At times of economic hardship, we must balance various factors in light of the circumstances and seek to deploy public resources efficiently and roll out measures to stabilise the economy. Rental enforcement moratorium was an exceptional measure at an exceptional time when our economy was in a critical condition. Our economy has emerged from the most difficult period – albeit it is still under downward pressure – and it is necessary to adjust our support measures. Now that the protection period of rental enforcement moratorium has ended, and enterprises may still have liquidity problems as their business may have yet recovered fully. I have thus asked the Hong Kong Monetary Authority and the Hong Kong Mortgage Corporation Limited to strengthen their communication with banks, SMEs and trade organisations and provide assistance as far as possible to enterprises with short-term liquidity problems. For instance, by expediting the processing of applications for the Special 100% Loan Guarantee Scheme, or helping businesses to restructure their debts. We also hope that landlords could show compassion and be willing to negotiate with tenants so as to help them overcome the current challenges.

Last week, the Government introduced adjustments to the quarantine arrangements for persons coming to Hong Kong. Inbound persons from overseas places or Taiwan are subject to quarantine under the "3+4" model, i.e. quarantine in designated quarantine hotels for three days, followed by medical surveillance at home for four days. They are also subject to Amber Code restrictions under the Vaccine Pass during the surveillance period. I have noticed that both local and overseas stakeholders welcome this arrangement as it would reduce inconvenience for returning residents and travellers, and be beneficial to our economy. Let's continue to work together to fight the epidemic. The Government will continue to closely monitor the development of the epidemic on the one hand, and take care of the needs of our economy on the other, so as to secure the room for different trades and industries to survive and thrive.

August 14, 2022

At a time when the external economic outlook is unclear and the local economy is under pressure, the Government begins disbursing the second phase of consumption vouchers in batches to about 6.36 million eligible persons today, with a total amount of over $30 billion. This, together with discounts offered by stored value facility (SVF) operators, merchants and shopping malls, as well as the additional spending by consumers, will enhance the multiplier effect of the consumption vouchers, and bring about a certain degree of stimulus to the local economy that urgently needs support. I plan to use my voucher to enjoy tea and buy a few small gifts. To share the joy, I also bought cotton candies and popcorns which are children's favourites. Sharing them with the residents of a neighbourhood, we had a good chat and an enjoyable Sunday morning.

About 6.21 million eligible persons received their first $2,000 voucher today. They include (1) pre-existing registrants who received vouchers under Phase I in April this year and meet the relevant eligibility criteria for Phase II, and (2) new eligible registrants who have come to live in Hong Kong through different admission schemes for talents, professionals and entrepreneurs, or to study in Hong Kong. They will be given consumption vouchers at a total value of $5,000 by instalments. Another about 150,000 new registrants who are Hong Kong permanent residents or new arrivals meeting the relevant eligibility criteria will be given consumption vouchers at a total value of $10,000 by instalments. Today they received their first $3000 voucher. This means that a consumption power of nearly $13 billion has been injected into the local market of retail, catering, etc.

For consumption vouchers under Phase II, the number of participating SVFs has increased from four to six. For people who have chosen to collect their vouchers via AlipayHK, BoC Pay, PayMe from HSBC, Tap & Go or WeChat Pay HK, the first voucher has been directly deposited into their specified SVF account.

For those who have chosen to collect their vouchers via Octopus, they may collect them by tapping the card through the Octopus app or in person at the Subsidy Collection Points of the Public Transport Fare Subsidy Scheme (commonly known as the "blue machines") at MTR stations, Light Rail Customer Service Centres, designated piers and public transport interchanges; as well as designated convenience stores, supermarkets or Octopus Service Points.

Relevant eligible registrants would receive SMS notifications or mobile app push notifications today which remind them that the first voucher has been disbursed. They should remember to check them. They may also make enquiries through the interactive voice response system of the hotline 18 5000.

On the other hand, among registrants who have been notified that they did not meet the eligibility criteria, the Consumption Voucher Scheme Secretariat has received over 150,000 applications for review (excluding duplicated applications). These applications are mainly from people who have made statutory declarations on the grounds of "permanent departure from Hong Kong" for early withdrawal of their Mandatory Provident Fund (MPF) or benefits under occupational retirement schemes. Among them, review was successful for about 104,000 applications. The registrants concerned were handed vouchers today and have been notified by SMS.

The Secretariat is processing the remaining review cases in full swing, including considering the information provided by the applicants and requesting some applicants to submit further information. Where their reviews are successful, they will receive the first voucher as soon as on 16 August.

Since we rolled out the Consumption Voucher Scheme last year, consumers and merchants have become more willing to embrace electronic payment, and its scope of application has also been gradually expanding. By the end of June this year, the major SVF platforms have acquired about 7.1 million more consumer user accounts, and about 130,000 more merchant accounts in total. Even though the value of retail sales fell by 2.6% in the first half of this year, the value of online sales rose by 24%. It is fair to say that consumption vouchers have expedited the application of electronic payment and raised its popularity, and reinforced consumer-driven digital retail transactions. This will provide more opportunities for merchants and businesses, as they may explore new business models and markets.

The "four proposals" set out by President Xi in his important speech at the 1st July celebrations included "continuing to create strong impetus for growth". For the economy to move towards high-quality development, digitalisation is an inevitable direction to follow, and is a source of new energy and momentum for development. Innovation and technology (I&T) are certainly the economy's engine to drive the development of new key industries; equally important is introducing technology and digitalisation to traditional industries and business operations, thereby helping industries to upgrade and transform themselves and find new areas for growth.

For businesses, digitalisation can help drive transformation, improve the quality and quantity of output, and stimulate innovation. The "Digital Economy Development Committee" which I chair is pressing ahead with work in this area in full speed, bringing together the knowledge of the best minds of the industry and academia, and making every effort to chart a blueprint for the development of the digital economy for Hong Kong. An exhibition and sharing session on digital applications and technology co-organised by various government bureaux and departments will be held this week, which will encourage them to follow the policy direction of promoting I&T development and make good use of I&T to optimise public services.

With the Government working together with highly efficient markets and all parties, Hong Kong's digital economic development will surely leap forward. Consumption vouchers, while delivering much joy and encouraging spending, are further promoting and deepening the development of electronic payment. Harnessing the power of the market, they help integrate the digital economy into our daily life, and would make transactions more convenient and efficient as well as bring a more diverse range of products for our choice.

August 7, 2022

On consumption, amid the sharp increase in interest rates in the US, Hong Kong's interest rates are under upward pressure, which will affect asset prices such as those for Hong Kong stocks and properties, and dampen our residents' willingness to spend. The second phase of consumption vouchers will be disbursed in batches soon. It is expected to boost local consumption. From last year's experience, it can be seen that if the epidemic was stable and under control, and with the effect of the consumption vouchers, the retail and dining businesses could see significant improvements. Meanwhile, I also saw for myself the considerable number of visitors and amount of spending in large-scale exhibitions and conventions like the Hong Kong Book Fair and the Ani-Com & Games Expo.

On fixed investment, the overall weakened economic outlook, coupled with prospective rising interest rates, would increase borrowing costs and put pressure on business operations, bringing about a negative impact on overall investments.

As we face the short- to medium-term economic pressure, we will closely monitor the situation, make prudent judgments and adjust our policies to cope with changes in a timely manner. Taking anti-epidemic work as an example, the government of this term has adopted disease prevention and control measures under the principles of being science-based, evidence-based and precise, and reviewed the effectiveness of the existing measures and operational experience with a view to making appropriate adjustments to achieve the greatest effect with the lowest cost, thereby minimising the impact on normal social activities and visitors.

We are currently pushing ahead with the preparatory work for the Global Financial Leaders' Investment Summit, which is scheduled to be held in November, and the financial industry is brimming with excitement for the event. Along with the Hong Kong Sevens to be held in the same month, these physical events will symbolise our reconnection with the world ever since Hong Kong was struck by the pandemic more than two years ago. These events will revitalise Hong Kong' connection with the international community and highlight our status as an international financial centre.

Changes in the macro investment environment will not stop us from taking things forward. For instance, the issuance size of the forthcoming seventh batch of Silver Bonds will substantially increase to a maximum of $45 billion, much higher than the minimum size of $35 billion as announced in the Budget earlier this year. The minimum interest rate will also increase to 4%, which is higher than that of the sixth batch at 3.5% last year. Relevant details will be announced by the Hong Kong Monetary Authority shortly. In short, though our economy is facing uncertainties, I have full confidence in Hong Kong's future. Looking ahead, there are more opportunities than challenges. As President Xi mentioned in his important speech during the ceremony on the 1st of July, "One Country, Two Systems" will be adhered to in the long run, and we must maintain Hong Kong's distinctive status and edges. The Central Government fully supports Hong Kong to improve our presence as an international financial centre. All these have laid the foundation of our confidence in Hong Kong's future.

The role of Hong Kong as an international centre of our country will definitely become more important in the future. The development pattern and directions of our country and the world will also guide ours. Our country is progressing towards higher quality development and entering a new era of broader and deeper opening up. As long as we actively dovetail ourselves with national development strategies, Hong Kong's social and economic development will break new ground and achieve another leap forward.

July 31, 2022

When the overall economic performance is weak, and various trades and industries are generally under greater pressure, large-scale thematic exhibitions like the Book Fair could stimulate the consumption demand and bring about short-term employment opportunities. The upcoming disbursement of Phase II consumption vouchers will also likely play a role in stimulating the market and the economy.

The labour market in Hong Kong has improved somewhat lately. The unemployment rate in April to June was 4.7%, 0.7 percentage point lower than the high this year in February to April. Inflation remained largely moderate in overall terms, with underlying composite consumer price inflation at 1.8% in June. Nonetheless, as the global economy including the Mainland economy has been sluggish, we are not optimistic about the latest export figures for Hong Kong to be announced this week. For the economy as a whole, the economy contracted by 4% year-on-year in the first quarter due to the impact of the epidemic at the start of the year. Even though there might be some improvements to the advance estimates on gross domestic product for the second quarter, which is scheduled to be released early next month, the economic situation would hardly be ideal.

For the second half of the year, the pace and strength of economic recovery will still undergo considerable challenges. One of the main negative factors is that the US Federal Reserve and many major central banks are anticipated to raise interest rates substantially, raising concerns about the effect on the global economy and capital flows. Taking the US as an example, inflation has continued to intensify this year, and the consumer price index rose by 9.1% year-on-year in June, a 41-year high. In order to curb inflation, the Federal Reserve has raised interest rates three times this year by a cumulative 1.5 percentage points. Currently, the market widely expects that interest rates would further rise by a further 0.75 percentage point at this week's meeting of the US Federal Reserve. If this materialises, the cumulative rise in interest rates for this year would reach 2.25 percentage points, which will lead to more fluctuations in capital flows and asset prices, and may also bring about volatility in the financial markets. Raising interest rates time and again would not be conducive to economic recovery. How the US could contain inflation on the one hand, and avoid getting caught in economic recession on the other, warrant close attention.

With the further interest rate hike in the US, capital flows and asset prices in the Hong Kong market would inevitably be affected. Most notably, under the Linked Exchange Rate System (LERS), there have been more carry trades in the market in view of higher interest rates in the US and relatively low interest rates in Hong Kong. Coupled with the subdued local demand for Hong Kong dollars (HKD) in recent months, the weak-side Convertibility Undertaking (CU) has been triggered multiple times since May. The Hong Kong Monetary Authority (HKMA) bought HKD and sold US dollars (USD) according to the established mechanism. With the triggering of weak-side CU, funds flow out from the Hong Kong dollar system, and hence we could hear the so-called "capital outflow" from the news. On the face of it, "capital outflow" may sound like lack of confidence in the market. But indeed it is a sign of confidence in LERS: in order to gain from interest rate arbitrages, carry trades are normally conducted only in markets where the currency is stable.

Since the global financial crisis in 2008, the US had implemented massive quantitative easing (QE), and it led to flooding of capital around the world. Since Hong Kong's interest rates were consistently higher than the US interest rates at the time, and with the exchange rate guaranteed under LERS, a large amount of funds flew into Hong Kong, resulting in an exceptionally abundant level of liquidity in Hong Kong's banking system. Some of the money was absorbed by HKMA through the issuance of Exchange Fund Bills and Notes. During the US's last rate-hike cycle between 2015 to 2018, funds also flew out from the HKD system, and HKD interbank rates rose slightly upward following the US interest rates. However, funds flew back into the HKD system amid rate cuts and the relaunch of QE in the US in 2020. To date, a large amount of funds still remain in Hong Kong. At as the end of June 2022, the outstanding amount of Exchange Fund Bills and Notes was about $1.2 trillion, which was about 7.5 times of that in December 2008. Therefore, increases and decreases in the Aggregate Balance as a result of funds flowing in and out of the HKD system is part of the adjustment process under the design of LERS.

As the US has raised interest rates a number of times this year, capital holders selling HKD and buying USD to earn higher interest returns on their USD holdings have made a comeback. As of 22 July 2022, HKMA has bought over HK$170 billion and sold the equivalent amount of USD, and the Aggregate Balance declined to about HK$165 billion accordingly. According to the operation of LERS, where the weak-side CU is triggered, funds would flow out from the HKD system and the interest rate automatic adjustment mechanism would kick in. The HKD interbank rates will gradually rise, offsetting the incentives for carry trades, slowing down fund outflows from the HKD market, and ultimately stabilising HKD within the 7.75-7.85 band. The so-called "capital outflow" situation will ease.

Interest rate is the most powerful market adjustment force under the Currency Board system; and high transparency, stability and consistent enforcement of the system design are the strongest safeguards of HKD and LERS. Hong Kong's public finances are sound, and the financial risk monitoring mechanism is robust. Our financial and banking systems have also over the years built up strong defence and resilience. We have a large foreign currency reserve (reaching US$440 billion), which is equivalent to about 1.7 times of the HKD monetary base. Our financial and banking systems have adequate liquidity; our banks are stable and have high asset quality. All these have reinforced our confidence about safeguarding LERS.

As for the property market, even though there has been a slight adjustment to local property prices in the past few months, it has remained largely stable. While more than half of private residential properties in Hong Kong are free of mortgage loans, as Hong Kong follows the US into a cycle of rising interest rates, the repayment burden of mortgage borrowers will increase. Members of the public should take a prudent strategy when buying property or making other investment decisions.

July 24, 2022

Taking into account that some residents may indeed have, for various reasons, returned to Hong Kong to work or live, the CVS Secretariat has issued SMS to registrants who have made the above declaration to inform them of the situation and invite them to submit a written application for review within 14 days upon receiving the SMS. If they are currently residing in Hong Kong, providing simple proof will help ascertain their eligibility.

We take a lenient and facilitating approach in processing the proof. Such records as bank statements, tax demand notes, salary statements, rent receipts, telephone bills, public utility bills, medical attendance records, hospital appointment slips, etc. may be used. If registrants are unable to provide such records due to special circumstances, they may state the reasons in the review application form. The CVS Secretariat will look into these cases and exercise discretion where appropriate.

We encourage registrants who intend to apply for review to submit their applications electronically or by post. The application form may be downloaded from the CVS Scheme's website. Upon completion, return it together with the proof of residency in Hong Kong by email (enquiry@consumptionvoucher.gov.hk), post ("Consumption Voucher Scheme Secretariat" at P.O. Box 185000, General Post Office, Hong Kong) or fax (3106'0701). Applicants may also submit their forms in person, or through their relatives and friends, to the eight temporary service centres of the CVS Scheme. They are located in Sheung Wan, North Point, Cheung Sha Wan, Mong Kok, Kwun Tong, Sha Tin (Shek Mun), Tsuen Wan and Tuen Mun respectively (detailed addresses). Registrants who have received the SMS will need to submit an application for review within 14 days. For those who face hardships, we will exercise discretion where necessary.

For registrants of the CVS Scheme who have made statutory declarations to leave Hong Kong permanently and withdrawn MPF contributions early, we believe a considerable number of them have left Hong Kong for good. Public money amounting to hundreds of millions of dollars would be used should these registrants be handed consumption vouchers. Indeed, according to information verified between the CVS Scheme Secretariat and the Mandatory Provident Fund Authority, around 240'000 registrants have made the relevant statutory declarations. As at last Saturday evening, the Secretariat had received a total of about 30'000 review applications through various channels (including email, fax, post and at service centres).

There are views suggesting that the authorities should have further checked by different means whether registrants who withdrew their MPF contributions early are in fact no longer residing in Hong Kong. While we understand these views, there are various requirements and restrictions in the existing legislation seeking to protect personal data and prevent undue access to them. For instance, the Inland Revenue Ordinance has stringent restrictions on the use of data for purposes other than that for tax. We will continue to pay attention to views from the community, and learn from the experience of disbursing consumption vouchers for this time.

It is worth noting that high external inflation and rising pressure on interest rates are plaguing the global economy, thus creating pressure to drag Hong Kong's economy too. The value of merchandise exports fell by 1.4% year-on-year in May, and will continue to be under pressure in the short term. Where the value of retail sales rebounded by 11.7% in April this year when Phase I consumption vouchers were disbursed, it fell slightly by 1.7% in May. Many retailers and restaurants also indicated that their business had declined recently, and the situation ahead would really depend on the impact of the epidemic's development as well as the tightening of the financial environment on the public's confidence and ability to spend. It is fair to say that amid an uncertain economic outlook, the disbursement of Phase II consumption vouchers in installments will help extend its effect of boosting the economy.

After the end of registration period for 2022 (Phase II) CVS on 23 July, relevant preparation work will proceed to the next stage. The six SVF operators are gearing up to start disbursing Phase II consumption vouchers on 7 August. The operators have rolled out quite many new offers this time for the benefit of both consumers and merchants. Phase II consumption vouchers will inject a purchasing power of more than $30 billion into the market, hopefully with a multiplier effect too. We hope this will bring optimism and actual business to the retail market.

July 17, 2022

At the meeting celebrating the 25th anniversary of Hong Kong's return to the motherland and the inaugural ceremony of the sixth-term Government of the HKSAR, President Xi Jinping's important speech expressed fully his sincere care for Hong Kong and our residents. President Xi set out "four proposals" for us, including further improving Hong Kong's governance, continuing to create strong impetus for growth, earnestly addressing people's concerns and difficulties in daily life, and working together to safeguard harmony and stability. They have provided clear directions for our work. The SAR Government has been holding sessions on "Spirit of the President's Important Speech" to allow our colleagues to have a deeper understanding of, and share what they have learned from, the important speech; and enable us to integrate the spirit and substance of the speech into our work. I believe the Government team and the community as a whole have high expectations on the Government in the coming few years, particularly as policies and measures need to be based on such development concepts as being "people-centered", continuing to enhance people's sense of achievement, satisfaction and security, etc.

To consistently strengthen Hong Kong's impetus for growth and address people's concerns and difficulties, land and housing are a pressing issue of paramount importance that needs to be addressed. As instructed by the Chief Executive, we have set up two groups dedicated to expediting land and housing supply on all fronts in a bid to streamline the procedures and processes, and enhance the co-ordination of inter-departmental work. We endeavour to expedite land creation and housing developments through improved efficiency and increased quantity, so as to foster more diversified development. The Steering Committee on Land and Housing Supply (the "Steering Committee") chaired by me will comprehensively oversee the various segments involved in land development, strengthen co-ordination of the relevant approval processes, and strive to unlock the development potential of private lands. Its areas of work cover the supply of land for residential, commercial, social welfare and community facility uses, etc., as well as the delivery of land for public and private housing. The Steering Committee will also ensure timely, high-level intervention to tackle problems arising in the relevant processes, and clear obstacles to development.

Specifically, the Steering Committee will comprehensively oversee the supply of land through coordinating the work of all relevant policy bureaux and departments in land development and housing supply, covering areas in planning, land administration, environment, transportation, infrastructure, and configuration of social welfare, leisure and cultural facilities. Moreover, it will consistently review the progress of land creation projects in their different stages from studies to site formation, so as to ensure that the supply of land for various uses would practically materialise. Meanwhile, the Steering Committee will also formulate and release periodically a ten-year supply forecast for developable land (i.e. "spade-ready sites") to increase transparency and facilitate public monitoring of the Government's work.

The Steering Committee will also ensure that a proper mechanism is in place for continuously implementing the "infrastructure-led" and "capacity-creating" approaches of development, so as to unlock the development potential of sites that are situated along land transportation routes and even in remote areas, through improved transport infrastructure. These approaches will not only help avoid impeding the progress of land supply due to obstacles in an area or two on the way, but also enable increases in plot ratios brought about by the timely provision of transport infrastructure, thus increasing land supply.

In addition, the Steering Committee will also steer the legislative amendment work relating to the streamlining of development-related procedures, such as those for the Town Planning Ordinance, the Foreshore and Sea-bed (Reclamations) Ordinance, the Roads (Works, Use and Compensation) Ordinance and the Lands Resumption Ordinance, so as to streamline and expedite statutory processes; avoid executing procedures of a similar nature by different departments repetitively; rationalise obsolete or ambiguous arrangements; provide mandate for government departments to proceed with certain procedures in parallel, etc. These will shorten the time involved in processes from planning to provision of developable "spade-ready sites". Moreover, the Steering Committee will formulate proposals on unlocking the development potential of private land and with a view to expediting land and housing supply in a holistic manner.

The Task Force on Public Housing Projects (the "Task Force"), headed by the Deputy Financial Secretary, is responsible for overseeing the construction of public housing with the objective of enhancing speed, quantity and efficiency. The scope of work includes monitoring the timely handover of sites earmarked for public housing projects; exploring various measures to expedite construction and intake; producing and updating forecasts of new public housing supply; deliberating and resolving cross-bureau or inter-departmental issues that affect the timely completion of public housing projects; as well as exploring and formulating measures to increase public housing supply.

The Task Force will, as expressly requested by the Chief Executive, submit a preliminary proposal for expediting the construction of public housing within the first 100 days of the new-term Government. It will include proposals for implementing the "Public Rental Housing Advance Allocation Scheme", devising plans for the division of work and coordination among various departments, re-introducing and enhancing the Private Sector Participation Scheme, compressing the building design process, as well as streamlining relevant works and inspection procedures. The objective is to expedite the completion of flats to increase the overall public housing production over the next five years.

These two high-level, inter-departmental groups are working in full speed and will hold their first meetings this week respectively. Under the strong leadership of the Chief Executive and the concerted efforts of the Government team, I believe the Government of this term will live up to President Xi's expectations, and actively respond to people's aspirations by pragmatically seeking to improve their livelihood and proactively addressing problems they face.

July 10, 2022

Over the past decade, Hong Kong experienced many challenges and difficulties, leading to doubts from inside and outside Hong Kong about our role and contributions, and even about whether Hong Kong could continue to prosper. President Xi's remarks clearly and firmly recognised Hong Kong's past success and our distinctive role and contributions to our Country's development, and pointed out the driving force and path for Hong Kong's future success.

Given the continuous development of our Country, Hong Kong will definitely enter a crucial phase with a golden opportunity of rapid development. The crux is that we need to have a sense of urgency to grasp the opportunities to fully unleash the huge potential of development.

Our Country has always been the strongest support for Hong Kong. Amid our difficult times in fighting the epidemic, our Country offered Hong Kong a series of supporting measures. Despite the fluctuating local epidemic situation, President Xi visited Hong Kong in person to host the inaugural ceremony and meet with different sectors to have a deeper understanding on Hong Kong's latest development. For instance, President Xi visited the Hong Kong Science and Technology Park and had exchanges with our local I&T researchers and young representatives of I&T enterprises. All these have clearly shown President Xi's care for Hong Kong.

More crucially, President Xi's important remarks highly recognised the remarkable success of the implementation of the "One Country, Two Systems" arrangement in Hong Kong. President Xi solemnly declared that "One Country, Two Systems" is a good system, which should be adhered to over the long run, and the Central Authorities' commitment to "One Country, Two Systems" will not be altered. This clearly shows that the development of Hong Kong has the full support of the Country, further boosting the confidence of different sectors and investors in Hong Kong's future. President Xi's remarks have also emphasised the "four musts". First, we must implement the "One Country, Two Systems" principle in a full and precise manner. The more firmly the "One Country" principle is upheld, the greater strength the "Two Systems" will be unleashed. Second, we must uphold the Central Authorities' overall jurisdiction while securing the SAR's high degree of autonomy. Third, we must implement the "patriots administering Hong Kong" principle, and fourth, we must maintain Hong Kong's distinctive position and advantages. These are the experiences summarised over the past 25 years of the implementation of "One Country, Two Systems" in Hong Kong, which we should correctly understand in order to ensure the successful and steadfast implementation of the system.

"One Country, Two Systems" has provided Hong Kong with unique competitive advantages and a favourable business environment. President Xi's speech has explicitly, clearly and firmly expressed the Central Government's full support for maintaining Hong Kong's unique position and advantages over the long term, consolidating our status as an international financial centre and a transportation and trade hub, maintaining a free, open and rules-based business environment, upholding the common law system, and expanding our seamless, fast and convenient international links.

In the past, many investors, multinational enterprises and professionals have all along been using Hong Kong as a base to enter the Mainland and Asian regional markets because of the operation of Hong Kong's capitalist system and our common law system, free and open business environment, and regulatory regime that aligns with international standards. President Xi's remarks clearly affirmed the institutional strengths of "One Country, Two Systems", that there is no reason to change the system and that it must be adhered to over the long run. Many businessmen and professionals consider that this has boosted their confidence in Hong Kong's future development and in injecting additional investments, as well as provided the best guarantee.

Our proactive response is : we have to become familiar with the history of the recent development of our country and Hong Kong, as well as the profound changes and trends in the international arena; in our thinking, we need to have the firm will and confidence to develop collaboratively with the Mainland; on strategy, we have to proactively integrate into the nation's overall development and to be in sync with national development strategies, while maintaining seamless international links and fostering our unique role as a gateway and a bridge; in operation, we have to continue to maintain a high degree of freedom and openness together with the advantage of following international standards; and by playing to our own advantages and strengths, we may continue to serve an irreplaceable function and role in our Country's new era of more extensive, deeper and broader opening. This is the unique formula for Hong Kong's future success.

Confidence is our cornerstone, the market is our strength.

Take being an international financial centre as an example, it is at the intersection of investors, businesses, capital and talent. The development of a financial centre is underpinned by confidence, markets and alignment with international standards all working together. The Central Authorities have reinforced the confidence in Hong Kong from all walks of life, our Country has a large market and continuous steady growth, and the "Two Systems" arrangement has ensured Hong Kong's advantage in being well connected internationally. It can be definitely said that Hong Kong's role as an international financial centre as well as our Country's international financial centre will only grow in importance. Our world-class position as a financing platform, our distinctive mutual access mechanism and our unique capabilities as firewall and a testing ground will enrich and deepen the future development of different segments of the financial sector in Hong Kong. Whether it is the internationalisation of the Renminbi, the return of China Concept Stock companies from overseas markets, green and sustainable finance, the bond market, or the asset management industry, all will benefit as a result. Of course, we must also have a bottom-line mentality and continue to strengthen financial security, as only by striking a proper balance between development and security can we steadily move forward.

Hope leads the way.

Hong Kong has experienced several ups and downs since our return to the Motherland. Today, Hong Kong is at a new stage of restoring order from chaos and striving towards greater prosperity.

President Xi once again reminded us that "people's aspiration for a better life is what we are striving for". Our objectives of making an all-out effort to promote even better economic development and continuously enhancing the momentum of development are to create a better setting and more room to improve people's livelihoods and satisfy their hopes for a better life. Under the leadership of the Chief Executive, Mr John Lee, the entire team will do our best to enhance the effectiveness of governance and address people's livelihood concerns. Economic development is good only if it could create diverse and quality employment opportunities, increase the public's general income level and bring improvements to the living environment, only then can the public truly benefit and feel they are sharing in the fruits of economic development. By being pragmatic and committed to the people, we will make the aspirations of the public the most important pursuit of our policy formulation, and use bold and effective measures to actively and steadily push forward reforms, overcome difficulties and break down fences of interests, so as to blaze a new trail for Hong Kong. At the same time, we will create diversified and quality learning and career development opportunities for young people, so that they can realise their dreams and fulfil their aspirations according to their own interests.

These are what our people need, what the Central Authorities expect from us, and what we set for our goals. Standing on this new starting point of the implementation of "One Country, Two Systems", with your support, we are embarking on a new journey towards governance and prosperity.

Unity will give us will and determination to strive for our goals;
By working together, we will have greater power to overcome challenges;
Development will bring us the opportunities to improve our quality of living;
At the end, let us share the fruits of development in a better and fairer manner.

July 3, 2022

今早在就職典禮上，習主席充份肯定了香港回歸廿五年來的發展和成就，亦充分肯定了回歸後香港經濟的蓬勃發展，一流的營商環境，國際金融、航運、貿易中心地位的穩固，保持了資本主義制度和普通法制度，拓展暢通便捷的國際聯繫。我們珍惜的發展，中央同樣很珍視，習主席對香港的關愛令人感動，他的講話洋溢着對香港和廣大市民的關愛之心、關切之情，處處為我們加油鼓勁，讓我們在應對未來挑戰時倍增力量。

習主席在講話中提到，香港地位特殊且條件優良，發展空間十分廣闊。的確，我們必須全力抓緊國家發展帶來的歷史機遇，維護和充份用好來之不易的營商環境，主動對接十四五規劃、粵港澳大灣區建設和一帶一路高質量發展等國家戰略，全面融入國家發展大局，更全面推動產業多元發展，進一步增強香港的發展動能，為香港創造新一個發展黃金期。

國家利益和香港利益是一致的，只要我們胸懷國家，從大局着想和長遠需要出發，將能夠讓有為政府和高效市場更好接合，積極謀劃、積極穩妥推動改革，破除思想束縛和利益固化，這樣將充分釋放香港所蘊藏的巨大創造力和無限機遇。我們迎來的將會是充滿活力、機遇處處和聚焦發展的動感之都。

習主席的殷切期望丶市民的熱切盼望，讓我們更有決心和力量，努力作為，滿足市民對美好生活的嚮往，切實排解民生憂難，開啟良政善治的新局面。「民有所呼，我有所應」，在踏入由治及興的時刻，在發揮新制度的優勢與力量之時，我們要力求做到「力之所致，效果漸現」。經濟發展是為了人民，讓未來的發展成果更多更公平惠及全體市民，為民所想，為民辦實事。

「一國兩制」是行得通、辦得到、得人心的好制度，是維護國家主權、安全和發展利益的好制度，我們必須珍惜得來不易的穩定局面和眼前的黃金發展機遇。香港回歸廿五年，在「一國兩制」實踐中累積了寶貴經驗，我們必須全面貫徹準確落實「一國兩制」的方針，維護中央全面管治權，負起主體責任將香港治理效能提升，落實「愛國者治港」的原則。「一國」原則越堅固，「兩制」優越性將更彰顯，香港的前景將會更璀璨輝煌。

2022年7月1日

正如習主席剛剛講話時所指出，「一國兩制」是一個好制度，具有強大生命力，能確保香港長期繁榮穩定、維護香港同胞福祉。

儘管香港過去幾年面對了嚴峻挑戰，但在習主席引領下，在大家同心合力下，這些都一一克服了，讓「一國兩制」的實踐回到正軌上。習主席心繫香港、關愛香港，我們應該更加努力，對未來更加充滿信心，堅守「一國兩制」不動搖，不辜負習主席的期望。團結奮進，香港必定可有更大的發展，並為中華民族偉大復興貢獻力量！

June 30, 2022

I have joined the HKSAR Government for a decade. During my term as the Financial Secretary in the last five years, I have been working hard to promote the diversification of economic development, particularly in the aspects of financial services and innovation & technology. I have also stood firm in the defense of national security and financial security and struck a right balance between promoting development and safeguarding security. At the same time, I have made good use of the fiscal resources to enhance public services and provide relieves to the people. I am grateful and glad for joining the governance team of the coming Government, continuing to join hands with you all to strive for a better future for Hong Kong.

In the coming few years, amid the profoundly changing international political and economic situation, Hong Kong will continue to face a complex, severe and multifaceted external environment. Therefore, safeguarding the country's sovereignty, security and development interests, ensuring the steadfast and successful implementation of the "One Country, Two Systems" arrangement, maintaining Hong Kong's financial security, and at the same time consolidating and enhancing Hong Kong's role as the country's international financial centre are extremely important. Strengthening national identity, deepening understanding, learning about and upholding the constitutional order of Hong Kong, and safeguarding the Central Government's authority and overall jurisdiction in Hong Kong are core, fundamental tasks that have to be continuously promoted. A safe and stable social environment is the major premise for citizens to live and work in peace and happiness and for the society's all-round development.

Looking back at the past quarter century, Hong Kong's economy has flourished, serving Mainland and international enterprises and investors while bringing together Mainland and international capital and talents. Our per capita GDP is nearly US$50,000, which ranks among the top in the world. But at the same time, some problems have arisen in the course of the development. Taking economic structure as an example, while the financial services industry accounted for over 23% of the Hong Kong economy in 2020, it only took up 7.5% of the total employment; the trading and logistics industry accounted for 19.8% of the Hong Kong economy, but it took up almost 17% of our total employment, much higher than that of the financial services industry. These few figures have already illustrated the importance of diversity in economic structure. While some industries are more favourable for economic growth, others offer relatively more jobs. In the future, we have to promote industrial diversification even more comprehensively, develop in multiple directions, and pursue the continuous upgrading of industries in order to support economic development with equal emphasis on both "quality" and "quantity". Not only can this reduce the volatility of the economic cycle and boost economic growth, but also it will create more quality jobs and opportunities for entrepreneurship, as well as more room for upward mobility and better incomes. In addition, we must keep up with the times, grasp the trend of economic development and evolution, and continue to add momentum to economic growth. In recent years, we have been investing heavily in innovation and technology, and at the same time promoted the development of cultural, performing arts, sports and other industries in the hope of enhancing the core competitiveness of Hong Kong, and also allow citizens, especially young people, to have a diversified platform to pursue their interests and realise their dreams.

Every city has its own story as well as its own development trajectory. In the past quarter century Hong Kong has seen ups and downs in its development path. By staying close to our motherland, and with the care and strong support from the Central Government, even through the wind and the rain, every time Hong Kong has recovered swiftly and continued to grow vigorously, and Hong Kong people have all along been pragmatic, flexible and hard working. Today, Hong Kong is at a new starting point for putting the "One Country, Two Systems" arrangement into practice and at the beginning of an era of golden opportunities. We can better leverage the clear positioning provided by the 14th Five-Year Plan and make great efforts in the development of the eight traditional and emerging sectors. By using the Guangdong-Hong Kong-Macao Greater Bay Area as an entry point, Hong Kong can proactively integrate into national development, give full play to our unique role in the dual circulation development strategy of our country, and work hard to continuously improve our own competitiveness. In this way, we can use our strengths to serve the needs of the country and achieve sustainable and prosperous development.

At the same time, regarding the various livelihood issues that citizens are most concerned about, we must do more and deliver actual results. Among these, the problem of land and housing is a pain point that has been troubling Hong Kong society for a long time. In the coming five years, with an innovative mindset, firm determination, and a fighting spirit, we will make every effort to work with all sectors to speed up the resolution of this problem.

President Xi Jinping will attend a meeting celebrating the 25th anniversary of Hong Kong's return to motherland and the inaugural ceremony of the sixth-term government of the HKSAR. This shows the great importance that President Xi attaches to Hong Kong's development and his heartwarming care to Hong Kong people. It also reflects the Central Government's firm recognition to the results achieved by the "One Country, Two Systems" arrangement and their full support to Hong Kong's progress towards governance and prosperity. All these could strengthen our confidence and forge people's consensus on stability and development. It is encouraging that President Xi's attendance will add more meanings to the celebrating activities this year.

Over the past two years, the Central Government decisively enacted the Hong Kong National Security Law and improved Hong Kong's electoral system to implement the "patriots administering Hong Kong" principle, providing the most steady direction for Hong Kong's good governance. Hong Kong has entered a new chapter of governance and prosperity. Let us join hands to make Hong Kong a better home for everyone's wellbeing.

June 26, 2022

June 25, 2022

On the other hand, the international environment we are facing has become more complicated. Inflation in the US rose to 8.6% in May, while inflation in major European economies ranged from 5% to 9% (5.2% in France in May, 7.9% in Germany in May and 9% in the UK in April). Global inflation continues to intensify, increasing the pressure for central banks to raise interest rates. The US Federal Reserve has raised interest rates by 0.75 percentage point last week, which is the largest increase since 1994 and the third time this year. These three rate hikes this year added up to 1.5 percentage points, with the federal funds rate rising to 1.5-1.75%. Many major markets have also raised interest rates recently. For example, the UK raised interest rates by a quarter of a percentage point last week, the fifth time this year; and Australia raised interest rates by half a percentage point, the second time this year.

Rampant inflation coupled with central banks' monetary policy tightening at increased intensity and speed will further dampen global economic growth, which might further undermine Hong Kong's export growth momentum. Rising interest rates in different economies may also trigger rapid changes in capital flows, and financial markets and asset prices will thus be more volatile. There will be a larger impact on selected economies with weaker fundamentals. Although market liquidity in Hong Kong remains abundant, Hong Kong interest rates will eventually rise under the Linked Exchange Rate System, following the US Federal Reserve's actions of raising interest rates by larger amounts and at a faster pace and shrinking its balance sheet.

In the past 25 years, Hong Kong has experienced many ups and downs, from the Asian financial crisis in 1998, the bursting of the IT bubble in 2000, the "SARS" epidemic in 2003, to the global financial tsunami in 2008, the black-clad violence in 2019 to the COVID-19 pandemic since 2020. Nevertheless, Hong Kong has achieved tremendous development in the past 25 years: GDP has doubled to more than HK$2.8 trillion; the total value of merchandise trade has more than tripled to an all-time-high of more than HK$10 trillion, ranking sixth highest in the world; total employment expanded by 15% to about 3.65 million; and the number of regional headquarters and regional offices located in Hong Kong has increased by 57% to nearly 4 000.

As one of the pillar industries, the financial industry has been serving the needs of Hong Kong and our country. Over the past 25 years, the Hong Kong stock market has expanded with its market capitalisation grown substantially from $3 trillion or so to over $40 trillion, representing a 12-fold increase; the number of listed companies has tripled from about 600 to 2 500; the average daily turnover has increased by nearly 10 times to $160 billion.

On banking sector, the total assets have increased by more than two times to HK$27 trillion; the total deposits (including Hong Kong dollars and foreign currencies) have increased nearly fivefold to HK$15 trillion; and the total bank loans (in Hong Kong dollars and foreign currencies) increased nearly by 1.6 times to HK$10.9 trillion.

The total amount of bond issuance rose 19 times to about US$400 billion last year. The average daily net turnover of the foreign exchange market increased sevenfold between 1998 and 2019. Its share of global transaction increased from 3.8% to 7.6% and its global ranking rose from 7th to 4th. The scale of our asset and wealth management business jumped ninefold to about HK$35 trillion in 2020, with about two-thirds of that sourced from non-Hong Kong investors.

The development of Hong Kong's financial industry and the overall economy benefited from the solid support from the central government and the stable development of our country. Hong Kong's development also benefited from our role as a bridge, a firewall and a testing field connecting the Mainland and the international markets, as well as the profit brought about by institutional innovations. More importantly, the hard work and flexibility of Hong Kong people, which maintained the vitality and resilience of our economy, would always lead us to new paths of development despite challenges ahead.

All these figures speak for the remarkable results achieved by generations of Hong Kong people through hard working and perseverance. As we celebrate the 25th anniversary of Hong Kong's return to the motherland, we are now at a landmark occasion that enables us to continue to stay humble and determined, and join hands with citizens to build a brighter future for Hong Kong.

June 19, 2022

Although the retail market was weak in the first quarter amid the fifth wave of epidemic, which led to an approximately 3% decline in total retail sales value in the first four months of the year as a whole, online sales continued to perform well. The value of online sales rose by 36% in the same period to over $11 billion and accounted for around 10% of total retail sales, higher than about 7% recorded in the same period last year.

Taking a closer look at the online sales figures, the value of online sales from retailers with brick-and-mortar stores totalled over $6.7 billion in the first four months of this year, an increase of 48%; while virtual shops' total sales were $4.3 billion in the same period, an increase of 20%. This shows that even though the overall retail market was plagued by the epidemic, online sales were still able to sustain growth, and their share of the total has been rising. In particular, retailers with brick-and-mortar stores have benefitted the most, indicating that the proportion of online sales and digital transactions is steadily increasing among these traditional retailers.

In fact, if we look at the statistics for the past two years, it is evident that the acceptance and adoption of electronic payments and electronic transactions by both the public and merchants have increased after the launch of electronic consumption vouchers. Since the introduction of the Consumption Voucher Scheme last year, major stored value facility (SVF) platforms have added about 6.6 million consumer accounts and about 130 000 merchant users. As digitalisation has already taken place right from the initiation of transactions, this has provided a very essential and favourable environment for retail and logistics companies' digital operations and management, even enabling them to upgrade and transform. By seizing the opportunities brought by digital applications, it is possible to break new ground and find new impetus for business growth even in the face of headwinds in the operating environment.

I announced in the Budget early this year the Consumption Voucher Scheme to disburse a total value of $10,000 to each eligible people, and $5,000 consumption voucher under Phase I was disbursed in April. However, owing to the epidemic situation at that time, many retailers were unable to launch their promotional programmes. The $5,000 consumption voucher under Phase II will be disbursed during the summer vacation and it is hoped that this can further boost consumption in this traditional golden period.

We will announce this week the disbursement details of the Phase II of the Consumption Voucher Scheme. We have announced earlier two new SVF operators, including BoC Pay and PayMe from HSBC. Together with the existing four operators, including AlipayHK, Octopus, Tap & Go and WeChat Pay HK, the total number of operators that are available for selection has been increased to six. It is believed that the operators will launch a new round of publicity and promotions to attract customers. I also hope that through the market force of "changing the SVF" will permit consumers to enjoy the maximum discounts, and let the consumption vouchers bring a greater leverage effect, and broaden the development of electronic payment.

At the same time, if people choose not to change the SVF and stay with the SVF used for receiving the consumption vouchers last time, there is no need to go through any registration procedures. We will automatically check the information that has been registered before and let the eligible persons receive the consumption vouchers smoothly at the designated schedule.

With the use of consumption vouchers, e-payment has become more popular among consumers and merchants, providing favourable conditions for us to speed up the digitalisation of our economy. While we all agree with the pressing need in developing digital economy, questions remain on how we could work on the most critical parts, and how we should build the most important infrastructure system or platform. These are all urgent and crucial issues for the digitalisation to succeed. That is the reason why I proposed to set up a "Digital Economy Development Committee" in this year's Budget, with a view to gathering collective wisdoms from industry elites, experts and scholars to outline the blueprint for this important subject, so as to expedite and guide the future development with focus. The major duties of this Committee will include identifying key development trends and major driving factors, defining key factors for success, and on this basis establishing direction, strategy and key performance indicators. Also, the Committee should make suggestions on how to enhance the cooperation with major stakeholders and promote the development of data service industry, and make strategic recommendations on the digitalisation of different sectors. The preparatory work of the Committee is almost completed. I look forward to the close cooperation with the representatives of the industry and scholars. Together we will lay the foundation for Hong Kong's continuous economic upgrade and transformation in future.

June 12, 2022

This ILS is a catastrophe bond issued by a Mainland reinsurer, and is also the second ILS issuance in Hong Kong since the announcement of the "Pilot Insurance-linked Securities Grant Scheme" in the 2021-22 Budget. The objective of the Scheme is to strengthen Hong Kong's function as an international risk management centre, and each eligible application can obtain a subsidy up to HK$12 million under the Scheme. At the same time, we have established via legislative means a dedicated regulatory regime for ILS (including catastrophe bonds), with a view to building a vibrant ILS ecosystem, enhancing underwriting capacities, strengthening financial resilience and bridging protection gaps.

For many years, the vibrant IPO capital raising activities in Hong Kong's financial markets have been the talk of the town. Yet, we are determined to develop Hong Kong into a more comprehensive international financial centre of greater depth. Apart from the stock market, we have dedicated efforts to promote various products including bonds, funds, insurances and derivatives. On bond market, for example, our efforts have started bearing fruit in recent years.

In fact, bonds are also an important investment tool for investors, allowing them to match their capital with the right projects according to their investment horizon and risk tolerance level. Bond market development can help build a yield curve for longer tenors, which is an important reference for the long-term cost of capital, facilitating investors to manage risk and channelling long-term capital into the development of the real economy. In short, the asset and risk management functions of bonds help pool together long-term capital.

To expedite the further development of the local bond market, the Steering Committee on Bond Market Development in Hong Kong, which I chaired, conducted a comprehensive review of the local bond market ecosystem last year. We are committed to enhancing the transparency and efficiency of bond trading in Hong Kong, so as to further stimulate the development of our bond market. In fact, in recent years, we have been actively promoting the issuance of diversified types of bonds in multiple currencies and making use of tax measures to attract more entities in the region to raise funds through issuing bonds in Hong Kong's market. For instance, the Shenzhen Municipal People's Government issued RMB 5 billion of bonds in Hong Kong in October last year, which was the first time a Mainland municipal government issued bonds outside the Mainland. The HKSAR Government also issued euro- and renminbi (RMB)-denominated green bonds for the first time last year. Our bond market development has seen good progress in terms of the speed of development, market size, product types and risk management.

In fact, green bonds as well as other green and sustainable finance will be an important direction in promoting Hong Kong's debt market development in the future. Our Country has been very supportive of the development of green and sustainable finance in Hong Kong, and set out in the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and the Opinion on Providing Financial Support for the Development of the GBA, promulgated in 2019 and 2020 respectively, to support the development of Hong Kong into a green finance centre in the GBA. As a green and sustainable finance hub in the region, Hong Kong can play a vital role in channelling international capital to support the green transformation of the Country's economy, and contribute proactively in helping our Country to achieve its "3060 Dual Carbon Targets" in relation to carbon emission peak and carbon neutrality.

In the past few years, the HKSAR Government has been working in concerted effort with financial regulators and the industry to promote the development of green and sustainable finance in Hong Kong through a multi-pronged strategy. Since 2019, the HKSAR Government has successfully issued about US$10 billion of green bonds in total, which have been well received by investors, providing an important new benchmark for potential issuers in Hong Kong and the region, and enriching the green and sustainable financial ecosystem.

These issuances also achieved a number of breakthroughs. For instance, the US$2.5 billion of green bond we issued in February 2021 was the world's largest US dollar government green bond deal at that time, in which the 30-year tranche was even the US dollar government green bond with the longest tenor in Asia. We later issued around US$4 billion worth of green bonds in November and included the euro tranches and RMB tranches for the first time, in which the 20-year euro tranche was the euro government green bond with the longest tenor in Asia at that time. We also issued the inaugural retail green bond of HK$20 billion earlier, which was the largest retail green bond issuance across the globe thus far. The issuance has not only broadened the variety of green and sustainable financial products, but also further enriched the retail bond market in Hong Kong.

Apart from issuing Government bonds, we also hope to provide a green finance platform for governments and corporates around the globe and encourage more businesses and external reviewers to make use of Hong Kong as their green finance base. Last year, we launched a three-year Green and Sustainable Finance Grant Scheme to provide subsidy for eligible bond issuers and loan borrowers to cover their expenses on bond issuance and external review services. Over the year since its launch, close to 100 applications have been approved, involving a grant amount of about $100 million. Earlier, we have lowered the minimum loan size threshold from $200 million to $100 million in respect of applications for subsidies for covering external review costs under the scheme, so as to benefit more enterprises.

In addition to the bond market as well as green and sustainable finance, the offshore RMB business is also a key area that Hong Kong must continue to develop and promote in the future.

Hong Kong is the world's largest offshore RMB business hub, processing 75% of global offshore RMB payments. Last year, the total amount of RMB trade settlement handled by banks in Hong Kong was over RMB7 trillion. The offshore RMB liquidity pool in Hong Kong is over RMB800 billion, accounting for about 60% of the world's offshore RMB deposits. Moreover, the Ministry of Finance has issued RMB sovereign bonds in Hong Kong for 13 years consecutively, totalling RMB238 billion so far. The People's Bank of China (PBoC) also established a regular mechanism of central bank bill issuance in Hong Kong and has been issuing RMB bills in Hong Kong since 2018, totalling RMB500 billion so far. From the perspective of international trend, following the continuous expansion of the Country's economy, the demand for RMB in international trade, investment and reserves will continue to grow. Hong Kong, as an offshore RMB business hub, will play a more critical role.

Looking ahead, we will further promote the development of Hong Kong's offshore RMB ecosystem in multiple directions, providing more RMB-denominated investment tools and channels, as well as stable and highly efficient treasury services such as foreign exchange, exchange rate risk and interest rate risk management tools, etc. We will also enhance the relevant market infrastructure to enable a better circulation of RMB in the offshore market, so as to give full play to Hong Kong's function as an offshore RMB centre in the Country and facilitate the internationalisation of RMB.

We will continue to push forward the diversified development of Hong Kong's financial market. As long as we correctly identify our advantages and positioning, consolidate our strengths, make up for our shortcomings, precisely assess the international trend and serve the needs of our country well, Hong Kong's financial industry will undoubtedly achieve further development in terms of quality and quantity.

June 5, 2022

The “One Country, Two Systems” arrangement is an epoch-making design that endows the Hong Kong SAR with unique institutional advantages. Not only can Hong Kong implement the capitalist system within “One Country” and connect with the world, but also we can benefit from the opportunities brought about by the rapid development of the Mainland, which implements socialism with Chinese characteristics. The flexible arrangement of “One Country, Two Systems” is Hong Kong's core competitive edge, enabling Hong Kong to prosper and develop into an international financial, transportation and trade centre, as well as a centre for international legal and dispute resolution services in the Asia-Pacific region. Today, Hong Kong still plays an irreplaceable and unique role in our country's development.

The Basic Law stipulates the arrangements for Hong Kong to adopt a free trade policy, and to continue to be a free port and a separate customs territory; to maintain the status of the Hong Kong dollar and Hong Kong's status as an international financial centre; to have independent public finance and tax system; to safeguard the free flow of people, capital, goods and information; to safeguard the property of individuals and investors; to continue to implement the common law system, with courts that continue to exercise independent judicial power including the power of final adjudication. The Basic Law is not only an important foundation for the HKSAR Government to implement policies in accordance with the law, but also the basis for businessmen's and international investors' confidence in Hong Kong's economic development.

After years of political turmoil in Hong Kong caused by foreign and external forces and black-clad violence in 2019, the Hong Kong National Security Law safeguards the security of the country and Hong Kong through legislation, creating a safe and stable environment for the Hong Kong society, providing room for economic development, providing more effective guarantee for the personal safety and freedom of citizens, and further consolidating Hong Kong's status as an international financial centre.

The figures speak for themselves. Since the implementation of the Hong Kong National Security Law, the amount of funds raised through initial public offerings in Hong Kong exceeded HK$650 billion, an increase of over 30% compared with the same period before the implementation. The average daily turnover of Hong Kong stocks since the implementation surpassed HK$150 billion, which is about 60% higher than the 12 months preceding the implementation. Assets under management by our asset and wealth management industry amounted to around HK$34.9 trillion as at end-2020, registering a growth of 20% over the amount before the law was implemented. The total deposits in the Hong Kong banking system reached HK$15.3 trillion recently, an increase of about 10% compared with that prior to the implementation of the law.

The recent Russia-Ukraine conflict has made it clear how the United States weaponises the US Dollar and the international financial systems, blatantly distorting and interfering with the operation of the global financial markets. Security is not only a main focus of our country, but also a risk that enterprises should carefully assess. We recently further streamlined the requirements for Greater China enterprises to seek secondary listing in Hong Kong, with a view to supporting the return of “China Concept Stocks” that need to manage political risks.

In fact, we have been endeavouring to revamp our securities market regime so as to enhance its competitiveness, including the implementation of a series of reforms to the listing regime. For example, the Hong Kong Exchanges and Clearing Limited launched a new listing regime in April 2018 to allow emerging and innovative enterprises that have weighted voting rights structures and pre-revenue / pre-profit biotechnology companies to list in Hong Kong, and establish a concessionary route for relevant qualifying issuers to seek secondary listing in Hong Kong. As at the end of April 2022, a total of 74 companies had been listed through the new regime with more than $580 billion raised, representing over 44% of the total fund raised through initial public offerings in the same period. Hong Kong has also become Asia's largest and the world's second-largest fundraising hub for biotechnology. Since 2019, 21 “China Concept Stocks” issuers have returned to Hong Kong through secondary listing or dual primary listing, the total market capitalisation of which accounted for over 70% of all “China Concept Stocks” listed in the United States.

With the support from our country and leveraging our institutional advantages under the “One Country, Two Systems” arrangement, Hong Kong is able to pave the way for its future success through continuous efforts amid the ever-changing global context. The mutual market access scheme is one of the special strengths uniquely created in Hong Kong with the support by our country, which could hardly be copied by other markets. From Stock Connect, Bond Connect, mutual recognition of funds, to the market's much anticipated mutual access of exchange-traded funds just announced last Friday, they have continuously brought new opportunities in an incremental manner, and gradually developed Hong Kong as a secure channel connecting the Mainland with foreign capital and markets. We will strive to further expand the breadth and depth of mutual market access.

The world is experiencing profound changes unseen in a centruy and geopolitical tension has been intensifying. As a fully open international financial centre, Hong Kong has to be well prepared and equipped with contingency plans for different risks. We need to understand that national security is the prerequisite for economic development, while economic development could provide protection for national security. For this, we have to strengthen two points of understanding. First, we have to look at the development of Hong Kong from the holistic view of national security, and work on contingency planning with the “bottom-line mentality”. Second, we have to establish the mind set for comprehensive development, which promotes economic development in a diversified and balanced approach, with a view to enhancing the flexibility and resilience of our economy in tackling the complicated external environment, while ensuring most people of the society could better share the fruit of economic development, thus paving a more solid foundation for long-term social stability.

This year is the 25th anniversary of Hong Kong's return to Motherland, which also marks a new historic starting point for Hong Kong's development. We have to keep deepening our understanding and thinking on the accurate implementation of the “One Country, Two Systems” arrangement, so that we could better utilise the advantages and flexibility of this arrangement. At the same time, we have to safeguard the bottom-line by faithfully implementing the Basic Law and the Hong Kong National Security Law, so as to create the necessary and conducive conditions for the robust development of Hong Kong. I firmly believe that if the whole society could stay united to well safeguard the bottom-line of national security, with the staunch support of our country, we can build a bright future for Hong Kong!

May 29, 2022

The unemployment rate for February - April released last week rose further by 0.4 percentage point to 5.4%, the highest since April - June last year. The total number of unemployed persons increased to over 0.2 million. Nonetheless, these figures are lagging indicators to some extent and cannot reflect the current improving situation. As I pointed out last week, we do not need to be too pessimistic about the outlook, or else we may miss the improving trend of the economy or new emerging opportunities. Taking the unemployment rate as an example, although the figures have not yet shown improvement, the employment market indeed has been gradually turning better, as felt from the sentiment in Hong Kong-style tea restaurants.

On inflation, Hong Kong's underlying Composite Consumer Price Index rose by 1.6% year-on-year in the first quarter of this year and remained moderate overall, mainly because housing rentals which have a relatively high weighting in the index continued to fall. However, taking a closer look at the breakdown, the price increases in the three major categories, namely clothing and apparel, food items and transportation, are higher than the overall figure, and these are the areas that people face most directly in their daily lives. For example, food prices rose by 4.6% in March, out of which the rise in basic food prices even reached 7.6%. It is probably because the epidemic has caused disruptions to transportation and logistics, which in turn affected the supply of fresh vegetables and other foods. However, judging from the current trend, the rising trend of food prices is expected to moderate.

As long as the epidemic stays under control and daily life gradually returns to normal, the Hong Kong economy is expected to recover progressively in the rest of the year. The international rating agency Standard & Poor's recently pointed out that although the fifth wave of the epidemic has seriously affected Hong Kong's economic performance in the first quarter, it believed that Hong Kong can handle the situation well and the Government's financial situation will not deteriorate significantly. As such, Hong Kong's credit rating is maintained with a stable outlook.

Nonetheless, while the economy has been stabilising lately, we need to stay alert and continue to work together to control the epidemic on every front. As for vaccination, the latest arrangement is that uninfected individuals aged 18 to 59 with personal needs, or who are exposed to higher risk of infection due to working at premises such as healthcare settings, residential care homes for the elderly or residential care homes for persons with disabilities, may choose to receive a fourth dose of vaccine. May I appeal all of you to get jab in order to protect yourselves and your families.

Over the past two and a half years, the epidemic has dealt a severe blow to the economy and the society. Nonetheless, the epidemic will come to an end eventually. While making full effort in controlling the epidemic, we should also work hard to plan and promote the future development for Hong Kong. While we should not just focus on economy and neglect the importance of fighting against the virus, we should also not overlook the need of planning for the future amid the epidemic. I am looking forward to the financial summit to be held this November, which not only could strengthen our connections with the top financial leaders and institutions from overseas and the Mainland, but also make a showcase of how Hong Kong has been able to remain as a vibrant international financial and commercial centre with many opportunities despite the challenges over the past two years and more.

Looking back the past 25 years, Hong Kong has achieved a remarkable development since our return to the Motherland. Despite all the challenges we faced during the development process, from financial crises to economic fluctuations, our direction towards a stable and solid development remained unchanged. In celebrating the 25th anniversary of our returning to the Motherland, we are entering a new era and I have every confidence in Hong Kong's future. Let us join hands together to march forward and we will definitely gain a greater achievement for Hong Kong.

May 22, 2022

The unemployment rate to be released this week is expected to deteriorate further as it covers the period of February to April, which still reflects the peak of the epidemic. Nonetheless, the epidemic has been gradually brought under control in the past month or so and social distancing measures have been relaxed in phases. Looking forward, if the epidemic situation remains stable, the unemployment rate will likely peak and gradually improve.

Looking back at the changes in the unemployment rate figures in the past few years, it can crudely be said that the figure jumped three times in 2020, starting from 3.4% and rising with an upward trend of "3, 4, 5, 6" within a year to 6.6% at the end of the year. After hitting a high of 7.2% at the start of 2021, the figure showed a three-step descent of "7, 6, 5, 4", moderating back to 4% at year-end. Entering 2022, the unemployment rate jumped to over 5% in a few months due to the aforementioned factors.

This trend may be able to give us some insights: in order to understand the cause and structure of an issue, we should not only consider the figures on hand, but also observe the trend and factors affecting its change. Only in this way could we anticipate the future and respond appropriately.

Generally speaking, how should we assess the economic performance for the rest of this year when the GDP growth forecast for the year was revised down, with the unemployment rate still rising and capital gradually flowing out? In fact, we do not need to be over pessimistic. As long as the epidemic is brought under control and confidence is maintained, Hong Kong's economy is expected to stabilise and grow slightly. While it is hard for us to control external changes, as long as we manage the risks and do our job well, pressures and challenges will only make our economy even more flexible and resilient.

For example, while the epidemic has indeed taken a toll on the economy, the current situation has largely stabilised. With the disbursement of the new round of consumption vouchers in April, we should see a notable recovery in retail sales and restaurant receipts in April. It is estimated that the stimulus effect of the two phases of consumption vouchers will boost the economy by 1.2 percentage points. Meanwhile, the various support measures for enterprises, including the new round of the Employment Support Scheme, has helped support the gradual improvement of business confidence, with Hong Kong's PMI and the diffusion indices on business receipts amongst SMEs rebounding in April.

The rate hikes is another example. The US has raised interest rates by 0.75% this year, and is about to shrink its balance sheet. Under the Linked Exchange Rate System (LERS), the widening HKD-USD interest rate spread, the resulting increase in arbitrage activities and the recent sluggish stock market performance have contributed to a fall in the HKD exchange rate to the "weak-side Convertibility Undertaking" level of HKD 7.85 to one USD. The HKMA has also bought HKD 11.7 billion in the market according to the mechanism, releasing an equivalent amount of USD to maintain HKD within the Convertibility Zone. While the recent US interest rate hike has caused some fund outflows, but that has to be considered against the context of the inflows of about one trillion HKD into Hong Kong between 2008 and 2015, of which only about 12% has left during the fund outflows triggered by the subsequent period of US interest rates normalisation and interest rate hikes (2015-2018). Furthermore, the ample aggregate balance of Hong Kong's banking system (over HKD 320 billion) and foreign exchange reserves (reaching HKD 465.7 billion) enable us to effectively maintain the LERS. We have been closely monitoring the HKD market and related derivatives markets and have not seen any unusual activity. In fact, the HKD Convertibility Zone from HKD 7.75 to HKD 7.85 against one USD amounts to only around 1.3% fluctuation in the HKD exchange rate against the USD. Fund outflow, if any, will not lead to additional business risks considering the limited fluctuation in the exchange rate.

However, interest rate hikes will inevitably affect global fund flows, asset prices and even economic activities, and will also increase companies' and individuals' burden of loan interests. The faster pace and greater extent of the interest rate hike this time in the US may result in more far-reaching implications. Yet, the market is constantly adjusting its expectations and gradually digesting the information pertaining to the risk of a faster rate hike. As long as we adhere to prudent risk management principles, have our contingency plans ready, stay vigilant, maintain profitability and flexibility, Hong Kong's economy will continue to move forward stably even amid a complex and volatile environment.

May 15, 2022

As the epidemic gradually subsides, the social distancing measures have been relaxed by phases. Coupled with the boosting effect of the consumption vouchers, we could see improvement in market sentiment over the recent two long weekends, benefitting the businesses of restaurants and retail merchants.

Yet, the COVID-19 epidemic continues to pose pressure on people's livelihood, societies and economies around the world. The Hong Kong economy contracted by 4% in the first quarter this year from a year earlier, ending an improving trend for four consecutive quarters. Meanwhile, private consumption expenditure fell by over 5%, fixed investment fell by over 8% and total exports of goods fell by 4.5%, indicating that the situation does not look good.

Taking a closer look at the domestic market, the value of retail sales fell by 13.8% in March and decreased by 7.6% for the first quarter as a whole. Food and beverage businesses were under particular pressure, with total restaurant receipts in March at only $3.93 billion, the lowest monthly figure on record; and those for the first quarter at $15.2 billion, the lowest in the past 16 years.

These figures reflect the immense impact on the economy at the peak of the fifth wave of the epidemic. Although we expect that economic data will show some improvement as the epidemic is gradually brought under control and economic activities resume slightly, the fact that it will take time for the domestic economy to recover and the continued uncertainties in the external environment coupled with heightened risks do not bode well for Hong Kong's economic situation this year. We are reviewing the GDP growth forecast and will announce our latest forecast next week. At this juncture, it appears that a downward revision is inevitable.

Effectively putting the epidemic situation under control is the most crucial support for the economic performance this year. Maintaining the stability of the domestic market is particularly important against the highly volatile external environment.

Last week the US Fed raised the interest rate by 0.5%, which is the first time in 22 years that the increase has reached 0.5%. Although remarks from US Fed officials have played down the possibility of a greater extent of rate hikes in future, the trend of rate hikes in the rest of the year remains certain with a cumulative increase reaching 2.5% or more. The US Fed has also determined the scale and pace to reduce the size of its balance sheet. These two factors together will bring a fundamental impact on the global capital supply. At the same time, the central banks of the UK and Australia have raised their interest rate by 0.25%. The global market is worrying about the intensifying geopolitical situation, the mounting inflationary pressure, the possibility of recession and the fluctuation of exchange rate. These factors have created further uncertainties to the flow of capital and asset prices. The stock markets in US and Hong Kong had been highly volatile last week.

The global market, including Hong Kong, had been enjoying a low interest rate environment for more than a decade. Low capital cost had been benefiting business operations in borrowing and lower the burden on those who need to repay mortgage. However, with the interest rate hiking cycle begun, all these conditions will be reversed. In particular, as the economy has not yet fully recovered from the epidemic, we have to pay attention to the impact of interest rate hike to people and SMEs.

As for the property market, the rise in HKD interbank rates will increase mortgage repayment expenses of property owners. Although over half of the residential properties in Hong Kong do not have mortgage loans, the recent average mortgage debt service ratio of new residential mortgage loans is at 37%, and all of them have passed the stress test of raising interest rates by 3%, reflecting that systemic risks have been managed in various aspects. Nonetheless, as the economy has yet to be fully recovered, the increase in interest rate may pressurise the mortgage repayment and daily lives burden of some property owners. Apart from interest rate, the development of the property market will also be affected by other factors such as demand and supply, the amount of capital supply and economic outlook. To SMEs, the impact of the epidemic on market's demand and global supply chain continues, making businesses still difficult. Ongoing interest rate hikes means the pressure on their loan repayment is also gradually raising.

Thanks for the support of Members, the Appropriation Bill was approved by the Legislative Council (LegCo) last week, enabling the implementation of the countercyclical measures proposed in the 2022-23 Budget, and paving the way for post-epidemic economic recovery and long-term development. I will work with the relevant bureaux to expedite the rolling out of various initiatives under different areas in my Budget, including deepening the development of innovation and technology, accelerating the development of digital economy, and continuing to enhance the development of our traditional industries such as financial services, maritime, trade and aviation.

This Budget is the last one of this current term Government. Looking back, the preparation of the Budget every year had faced different new challenges, and we needed to address various social demands and people's aspirations in the process. It has always been a big challenge to sort out priorities and make the best use of our finite public resources to cater for most of the different aspects, to address the needs of the majority of people while taking care of the wishes of the minority. In a deeper thought, we not only have to promote economic development to "make the cake bigger", but also divide the cake well. Apart from looking at macro-figures such as the GDP growth, GDP per capita, inflation rate and unemployment rate, we have to pay more attention to questions such as whether people's wellbeing are getting better in the development, whether there are improvements in jobs quality, people's income and quality of lives. Also, we need to concern whether our industry structure could allow our young people to achieve self-actualisation and gain satisfaction in jobs which could also support their daily lives. In short, our economic development has to better benefit our people, putting people's interests at the centre of the development. With this principle in mind, I have been actively promoting the development of our innovation and technology, sports, cultural and creative sectors, with a view to diversifying the development of our industries. At the same time, I have been promoting the development of our financial services towards inclusiveness, which includes the issuances of iBond, Silver Bond and Green Bond.

Hong Kong is stepping out from the impact of the fifth wave of epidemic and our economy is recovering gradually. Over the past few decades, even faced with different hiccups and challenges, with the staunch support of our Country and the hard work and flexibility of Hong Kong people, we have overcome the difficulties and achieved a higher standing today. Entering into a new development phase and a new chapter, by sharing the same goal and the will to progress, together we can definitely build a more fair and just and caring society with better development.

May 8, 2022

Since the launch of the Consumption Voucher Scheme last year, we have seen the wider application of e-payment in different aspects of our daily lives. We may need to bring cash most of the time in the past, but now we can buy groceries even without cash. This is a very substantive change, as more and more convenient e-payment options are now available for our use in daily lives.

Many people and merchants are keen to know when the consumption vouchers under Phase II will be disbursed. We are actively making preparations, aiming to start disbursing the $5000 consumption vouchers under Phase II during summer by batches. To expand the choices, the number of participating Stored Value Facility (SVF) operators under Phase II will be increased to six. The newly selected operators are BoC Pay from Bank of China (Hong Kong) and PayMe from HSBC. Together with the existing four operators, i.e. AlipayHK, Octopus, Tap & Go and WeChat Pay HK, people would be given more options. We are now discussing with relevant operators on the detailed arrangements. Our target is to commence registration in the middle of this year. By then people could decide whether to swtich to another SVF in collecting the Phase II consumption vouchers.

Through this arrangement, we hope to provide different options to suit the different needs of people. By increasing the number of participating operators, we could leverage the power of the market to broaden the aspect and scope of the application of e-payment, and bring more new concessions to people and merchants with a view to promoting a broader, faster and deeper development of e-payment.

The development of e-payment has come a long way to achieve the accomplishment today. Similarly, the economy will take time to recover. Economic data to be released this week, including the extent of negative economic growth in the first quarter, retail sales and restaurant receipts, will reflect the rather weak economic situation amidst the peak of the fifth wave of the epidemic.

In addition, the rising trend of inflation also warrants attention. Hong Kong's underlying Composite Consumer Price Index increased by 1.7% year-on-year in March, a high in the past two years and staying at 1% or above for nine consecutive months. Although housing rentals which has a relatively high weighting in the index softened somewhat, basic food prices rose by more than 7% and those of takeaway food and meals out also increased, leading to a 4.6% rise in overall food prices which was one of the main forces driving up inflation. Prices of "clothing and footwear" and "electricity, gas and water" also rose by 4 to 7%. For grassroots, rising prices of basic items like clothing, food, housing and transportation will directly add pressures on their living. The latest inflation data will only be released at the end of this month. Nonetheless, when I went to wet market yesterday, many people there mentioned that prices had generally gone up and eroded their purchasing power. We must continue to monitor the evolving local and external economic situation closely, particularly the imported inflationary pressure on Hong Kong due to rising global inflation.

May 1, 2022

However, many enterprises and breadwinners are still facing the economic pressure and impact brought by the epidemic. Even the overall economy has been stabilised, their pressure can only be gradually relieved given a continuously stable environment and adequate time.

The performance of some economic indicators also takes times to show improvement. For instance, the latest unemployment rate (January to March 2022) announced last week surged 0.5 percentage point to 5%. The number of unemployed persons increased by around 27 000 to 188 000. The underemployment rate also rose to over 3%. The employment situation of most sectors has deteriorated. The unemployment rate of the food and beverage service activities sector increased by 2.6 percentage points to 11.0%, and that of the retail sector increased by 1.4 percentage points to 7.7%. Although the economy has been warming up, the unemployment rate to be announced next month, which covers the period of February to April, will still reflect the difficult situation under the fifth wave of epidemic. It will therefore take some time for the unemployment rate to recede.

The improving epidemic situation has provided us with some more breathing space. This could only be achieved by the support of the Central Authority, the core responsibility shouldered by the SAR Government and the concerted efforts made by the community. We have to make the best effort to sustain this hardly won trend.

In fact, our efforts in stabilising the epidemic and supporting the economy also affect our fiscal position. Over the past few years, the SAR Government has spent several hundred billions of public money to fight against the epidemic. The year-end financial result of the 2021/22 fiscal year is going to be announced this week. The revenue brought by the profit taxes is higher than our estimate due to the much lower-than-expected number of applications received for tax holdover. Also, the actual Government expenditure is slightly lower than our forecast. As a result, the year-end financial result will see a surplus of some HK$ 29 billion, slightly higher than the estimate of HK$ 18.9 billion mentioned in our Budget announced earlier. However, as the Accounts of the Government use cash basis accounting, they have covered the HK$ 29 billion raised from Government's bond issuance, the HK$ 23 billion brought back from the Housing Reserve, and the HK$ 25 billion investment return of the Future Fund brought back for the first time. If we deduct these three factors, fiscal deficit can still be seen for the last fiscal year.

Although our economy has been stabilising and the local inflation rate is still staying at a mild level (1.7% at March), we have to stay vigilant to the turbulent external environment, particularly the geopolitical situation and the interest rate trend. The US is facing a high inflation rate of 8% and the Federal Reserve increased the interest rate by 0.25% mid last month, which was the first time in the past some three years. Taking into account the recent views expressed by the Federal Reserve officials, the market generally expects that the US will increase the interest rate to a much further extent within this year in order to tackle the high inflation. The investment market is paying close attention to the adjustment of interest rates of different economies, the changes of interest rate differentials between currencies, and their subsequent impact on the global economy, capital flow, changes in asset value and the fluctuation of the financial market.

As for Hong Kong, our concerns focus on the local interest rate and the trend of Hong Kong dollar exchange rate. We also need to monitor whether there will be a capital outflow, and the impact brought by interest rate hike on property owners and the quality of mortgage loan.

Under the Linked Exchange Rate System, HKD interest rate will inevitably increase following the US interest rate hike. Yet, the actual speed of HKD interest rate adjustment will be affected by the liquidity in Hong Kong. During the period between the global financial crisis in 2008 and 2015, a total of HKD 1 trillion fund inflow into Hong Kong was recorded, and most of which has remained in Hong Kong. In the last interest rate hike cycle in the US (ie the period between 2015 and 2018) where the Federal Reserve cumulatively raised the interest rates by 2.25%, the prime rate in Hong Kong increased only once in September 2018 by 0.125% (some bank interest rates rose by 0.25%) due to the abundant liquidity in Hong Kong. The one-month Hong Kong Interbank Offered Rate was also risen to about 2%, excluding seasonal factors.

As the returns on holding foreign currencies becoming more attractive with the rising interest rates in external markets, some capital outflows will be inevitable. Under the Linked Exchange Rate System, HKD must be exchanged for USD when funds flow out. If the HKD exchange rate falls to the weak-side Convertibility Undertaking of HKD 7.85 per USD, the HKMA will undertake these HKD sell orders to ensure that the HKD will not exceed the Convertibility Zone of HKD 7.75 to HKD 7.85 per USD. This mechanism aims to maintain the flexibility and free flow of capital, and at the same time avoid excessive exchange rate fluctuations that may adversely affect economic and commercial operations. For example, between 2018 and 2019, the HKD weakened along with the outflow of capital and hit the weak-side Convertibility Undertaking. However, the total amount of funds that effectively flowed out was only about HK$120 billion, which accounted for some 10% of the cumulative capital inflow since the financial tsunami in 2008.

The US rate hike cycle will not affect Hong Kong's financial and monetary stability. The Linked Exchange Rate System has gone through various economic and interest rate cycles in the past four decades, and has proven to be effective. With the interest rate hike in the US, the market expects that the interest rate spread between the HKD and USD will widen, and there will be gradual outflows of funds from the HKD to USD. In addition to the interest rate spread, the exchange rate of the HKD against USD is also affected by other market factors. For example, the sluggish Hong Kong stock market in recent months has led to a weakened demand for HKD, and the HKD exchange rate has been fluctuating rapidly recently. Therefore, it is difficult for us to accurately predict the specific timing of the changes in the HKD exchange rate and the flows of funds. However, it can be expected that with the US interest rate hike triggering a widened HKD-USD interest rate spread and hence related arbitrage activities, the HKD exchange rate will reach the weak-side Convertibility Undertaking of HK$ 7.85. Funds will flow out of the HKD market, and the HKD interest rate may also be adjusted according to market conditions. This follows the design of the Linked Exchange Rate System and is normal. And we also have a huge monetary base (HKD2.2 trillion) to serve as a buffer for capital outflows.

The increase in HKD interbank rates will affect residential mortgage interest rates and add the burden on property owners. However, the borrowing ratio of the property market in Hong Kong has been stable. According to HKMA's data, more than half of the residential property owners in Hong Kong do not have mortgage loans, and the average payment-to-income ratio of bank mortgage lenders is at a low level of 36% with the eight rounds of macroprudential measures in place. Mortgage lenders are also stress-tested and have the ability to withstand pressure arising from rising interest rates.

In addition to changes in interest rates, other factors such as supply and demand, market expectations for the macroeconomic outlook and investment sentiment will also affect the asset prices in the stock and property markets. At a time of rising inflation and interest rates, investors have to exercise prudence in manage potential risks.

April 24, 2022

Over the past two years, the epidemic has dealt a severe blow to the economy and the society, showing that security is the prerequisite for development and development is the cornerstone of security. By effectively controlling the epidemic and achieving "dynamic zero" infection, we can provide the greatest safeguard and protection for the economy, which is also the greatest support to people's livelihoods and daily lives.

It was the National Security Education Day two days ago and our country had taken the opportunity to promote this important topic from different angles to enhance people's understanding. When talking about national security, people may first think of national defense and the military. However, this is only one of the many aspects of national security. Just like home security, apart from locking doors and windows properly, we would also take precautionary steps to prevent potential threats. There are different aspects of national security. The holistic view of national security consists of five essential elements, namely (1) taking the people's security as the ultimate goal; (2) achieving political security as the fundamental task; (3) regarding economic security as the foundation; (4) with military, cultural and public security as means of guarantee; and (5) promoting international security so as to establish a national security system with Chinese characteristics.

Only by implementing the national security work could we create a stable political environment and defend our development interests, so that our people could strive for better livelihoods. It involves multi-dimensional and multi-disciplinary work. The implementation of the National Security Law in Hong Kong has strengthened our institution and enhanced our capacity in relevant aspects. The National Security Education Day helps us develop a more thorough understanding of this crucial topic, thus strengthening the foundation of the relevant work.

National security encompasses 16 areas, including economic security, technological security, cyber security, ecological and resource security. As for the economic aspect, national security includes security of the economic system, economic order, economic sovereignty and economic development. Ensuring the security of these aspects is key to safeguarding the overall social security and development environment.

Hong Kong is a small and fully open economy. The work to strengthen Hong Kong's economic security is important not only to our own development and social stability, but also to our duty to safeguard national security.

As the world is undergoing changes not seen in a century, we are facing a complicated, volatile and challenging external environment. Politically, apart from the rise of protectionism and unilateralism and the intensifying geopolitical tensions, the US and other western countries have been trying to suppress the development of our country from various fronts. Economically, in recent years, the governments of the US and some European countries have raised debts of massive scale and the central banks of many countries have implemented extremely accommodative monetary policies, greatly increasing macroeconomic and financial market vulnerabilities. At the same time, the COVID-19 pandemic has caused structural changes to the development and distribution of the global supply chains, as well as to logistics and transport.

Although the external environment is challenging, we have been strengthening our security work on various fronts.

In the face of unilateralism, we have to expedite our work in implementing multilateral economic and trade agreements to ensure the continuous, safe development of Hong Kong's key industries. By maintaining economic and trade relations with other places on a fair and mutually beneficial basis, we could fight for greater space of investment and development for our enterprises.

At the same time, we must continue to develop innovation and technology to enhance Hong Kong's core competitiveness and optimise and diversify our economic structure. We should plan for the long-term sustainable development of our economy, make efforts to enhance our economic resilience and enrich the development of our industries, thus making our economic growth more inclusive with higher quality. All these are not only for strengthening our economic security, but also for creating more high-quality and diversified jobs so that people could better share the fruits of development.

To strike a balance between security and development, we should enhance our economic core competiveness and flexibility internally, while strengthening and diversifying our networks externally. We are pursuing a similar direction in maintaining financial security. The core advantages of our financial market include our steadfast Linked Exchange Rate System (LERS), robust financial system, and the highly transparent and well risk-managed operation of different parts of the market. Hong Kong's foreign currency reserve amounted to over US$480 billion, representing 1.8 times of our monetary base. This has provided a solid support to Hong Kong's monetary stability and supported the market's confidence in the LERS.Even in the face of external fluctuations and heightened risk-averse sentiment in the stock market in recent months, there has been no notable capital outflow so far. The Hong Kong dollar exchange rate has been fluctuating between the convertibility undertakings of 7.75 to 7.85 per US dollar according to the market's demand and supply. The net balance of the banking system amounted to over HK$330 billion, showing sufficient liquidity in our market.

Hong Kong's financial market has built up strong and solid buffer and resilience, which help us withstand shocks to the market caused by external factors. The capital adequacy ratio of our banking system stood at 20%, far exceeding the international minimum standard of 8%. The average liquidity coverage ratio of our banks reached 150%, far exceeding the minimum legal requirement of 100%. According to both regular and ad-hoc stress tests conducted by the Hong Kong Monetary Authority, our banking system can withstand potential shocks under extreme market environment. Moreover, transactions or short selling deals have been conducted orderly in stock, futures and derivatives markets. The margin deposit requirement will be adjusted according to risk changes and so far there have been no signs of abnormal concentrated position or cross-market manipulation. We will stay vigilant and work with financial regulators to continually monitor signs of systematic risk through our round-the-clock, cross-market and coordinated monitoring mechanism and respond decisively if necessary.

National security is the key foundation for any country and the prerequisite for the protection of people's wellbeing. The holistic view of national security consists of not only national defence and the military, but also economic, social and resource security, as well as the interests of sustainable development. Only by strengthening our holistic view of national security could we achieve the great rejuvenation of the Chinese nation amid challenges.

April 17, 2022

In fact, the flexibility of the Consumption Voucher Scheme allows people to spend according to their needs and preferences, while ensuring that the money would circulate within the local economy to the largest extent. The Scheme can also strengthen and deepen the use and application of e-payment in Hong Kong, promoting digitalisation and bringing more opportunities to SMEs. I noticed that more and more small merchants are experimenting ways of online sales to explore new opportunities, such as adopting the model of "online promotion+ e-payment+ delivery logistics". There are also more restaurants allowing customers to place orders through mobile phone, and some are even testing the use of mobile payments for customers to check the bill.

Changes in business operation models can always enhance effectiveness and flexibility, thus creating space for service innovation and reform. The consumption vouchers have played the facilitating and accelerating function for the digitalisation of Hong Kong's economy. Apart from directly benefitting people, the Scheme also leverages on people's consuming power to speed up the digitalisation of the economy. Taking the receipt of vouchers through Octopus as an example. On last Thursday, i.e. the first day of the disbursement of the consumption vouchers, about one million people collected their vouchers through the Octopus mobile app, which shows a 37% increase from last year, reflecting that people have become more acquainted with the use of convenient electronic means for accessing services.

Inclusiveness should also be taken into account in promoting economic development and developing industries. On one hand, it allows people to participate and be benefitted from the development, while on the other hand, it promotes the understanding and recognition by the community of the related industries. In other words, people can better share the fruit of development, and at the same time collective power and wisdom can be gauged to accelerate the development. Over the past few years, I have been promoting the development and the deepening of the bond market along this direction. All along organisational investors have been the major participants of the bond market. Yet the iBond and Silver Bond have opened up the opportunities for the mass public to participate. They also provide a safe investment option with stable return for people to hedge against inflation risk.

The development of Green Bond is another recent example. In my 2018-19 Budget, I established the framework for Green Bond. Since then, the SAR Government have been issuing Green Bonds for organisational investors to subscribe and the market reception has been very positive as seen from the bonds' tenors and interest rates. In my Budget released early last year, apart from raising the borrowing ceiling of the Government Green Bond Programme to $200 billion, I also announced the inaugural issuance of retail Green Bonds for the participation of the public. The inaugural retail Green Bond offering was originally scheduled for early March this year, but has been postponed due to the then severe epidemic situation. Given the epidemic situation is gradually subsided, and many commercial activities can indeed be conducted online or through other electronic means amidst the anti-epidemic requirements, we will relaunch the issuance shortly.

The issue size of this batch of retail Green Bond will be $15 billion, which could be raised to the maximum of $20 billion taking into account market response. This has combined the postponed issue size of $6 billion of the last fiscal year and the issue size planned for the current fiscal year. This arrangement could save issuance cost and administrative work and allow greater timing flexibility for the later issuance of iBond and Silver Bond. Taking into account the hiking interest rate environment, we will raise the minimum annual interest rate of this batch of retail Green Bond from 2% to 2.5%. The tenor will maintain as three years and bond holders will be paid interest once every six months at a rate linked to local inflation. The subscription period is scheduled to open by end this Month. Proceeds raised under the Green Bond would be used for financing Government's green infrastructures or related projects. In other words, by pooling in people's capital to actively promote green development in Hong Kong, not only we could help people achieve their investment goals, but also bring more people to join hands in building a greener Hong Kong together.

April 10, 2022

By using the registration record of the successful registrants last year, nearly 6.2 million citizens will receive the new round of consumption vouchers automatically and do not need to register again. For the very small amount of people who need to update their record due to various reasons, the relevant updating procedures have been completed and all the preparations are ready. The consumption vouchers under Phase I will be disbursed on April 7, i.e. the coming Thursday. The vouchers are valid for seven months with the expiry date of October 31 to allow more flexibility in spending, i.e. the vouchers can be used up before the expiry date with a daily spending of only around $20.

The distribution arrangements will be the same as last year. People using accounts of AlipayHK, Tap & Go or WeChat Pay HK will receive the $5,000 voucher on April 7 through their respective accounts. For people collecting voucher via Octopus, the $5,000 consumption voucher will be disbursed by two batches. People could start collecting the first batch of $4,000 by tapping the card on April 7. In view of the current stored value limit of Octopus card, people are not able to collect more than $3,000 voucher value when tapping their cards for the first time and the remaining value can be collected by tapping the card again after the stored value of the Octopus card is lowered. In other words, the $4,000 voucher can be fully collected by tapping the card several times. As for the remaining $1,000 voucher under Phase I, it will be disbursed on the 16th day of the following month when the cumulative total "eligible spending" has reached $4,000, and the earliest date of disbursement will be June 16. Put it simply, if "eligible spending" has reached $4,000 on or before end May, people could get the remaining $1,000 voucher on June 16. The "eligible spending" needs to reach $4,000 by end October the latest, i.e. before the expiry of the Phase I consumption voucher, in order to collect the remaining voucher on November 16.

Disbursing the Phase I consumption voucher in early April aims to provide support to people who are under great pressure due to the epidemic. The relatively long validity period for this phase of voucher can provide greater flexibility and hence there is no need for people to rush out for spending. We hope that this can also help extend the positive effect brought by this $30 billion initiative to the market and bring more businesses to merchants.

As we can learn from the anti-epidemic work over the past two years, the most effective way in supporting the economy and people's livelihood is to control the epidemic quickly and effectively. We should fully implement the strategy of "dynamic zero infection" to strive for the resumption of cross-boundary travel with the Mainland as soon as possible, and actively seek for resumption of travel with the international community under the prerequisite of proper risk management. This is what best suits the overall interests of Hong Kong citizens and the society. We need to establish a mechanism under the "dynamic zero infection" strategy, continue to make suitable adjustments taking into account the development of the epidemic, and cut off all potential chains of infection through testing decisively and precisely, so as to achieve "early identification, early quarantine, early treatment". We also have to mobilise the whole community to fight against the epidemic together, in order that the epidemic could be brought under control to the largest extent within the shortest time possible.

The epidemic has posed a huge challenge to Hong Kong. While making our all-out effort in fighting against the epidemic to protect the lives and health of our people, we should also do our best in stabilising the economy and supporting people's livelihood. The early disbursement of the consumption voucher could help serve this stabilisation function to a certain extent. The almost seven-month validity period is also long enough to provide flexibility in spending so that people can use the vouchers without stress while complying with the anti-epidemic measures. Let us join hands to fight against the virus for an early victory, so that we could resume our normal daily lives and achieve economic recovery soonest possible.

April 3, 2022

In fact, figures of different economic activities have shown how huge the current pressure is. For instance, our total retail sales value will see a decrease again in February, ending the 12-consecutive-month increasing trend. The growing pace of our export will also slow down. As a result, our economy will inevitably record a recession in Q1, reversing the previous four-consecutive-quarter recovery.

One of the questions I have been frequently asked in recent local or overseas online seminars or media interviews is that whether I am still confident in Hong Kong's economic prospect. My answer is clear and definite. I am having absolute and resolute confidence in Hong Kong's economic prospect. By having a precise assessment on the overall development trend, and acting decisively to capitalise the development and support of our Country, we will overcome any short term challenges and move forward.

Learning from Hong Kong's development path over decades, even in face of challenges or difficulties, we should not lose our confidence despite short-term hiccups. Our Country has been developing steadily, and has been firmly supporting Hong Kong's stability, prosperity and development under the full and faithful implementation of the "One Country, Two Systems" arrangement. Against this backdrop, Hong Kong has been working hard and developed into an international finance, trade and maritime centre, and contributed to our Country's development at the same time. Today, these objective conditions and demands are further consolidated, providing the most solid direction for Hong Kong's future development.

Even our short term development may have been disrupted by the epidemic, it will eventually come to an end one day. With the improvement of the electoral system and the implementation of the "patriots administering Hong Kong" principle, Hong Kong will surely achieve a more prosperous and all-round development, gradually bringing more tangible and substantive changes in people's livelihood as well as social and economic developments. By having a good understanding of the overall situation and social sentiment, making the right decisions and executing with determination, we will be able to get rid of unnecessary disturbance and enhance governance efficiency, deliver concrete measures for social and economic improvement and earn people's recognition and support.

Upholding the principle of "precisely grasping the overall situation and making progress steadily" could strengthen our confidence and determination in handling short-term challenges, and help us in rightly position ourselves to ride on the development trend proactively. This is what we have summarised from Hong Kong's past success.

In face of the current severe local epidemic situation, we should adopt the same holistic approach and formulating our work carefully. On one hand, some people may consider that the anti-virus work could be slightly relaxed as more than one million citizens have already been infected by the Omicron variant and many of them have even recovered, and it seems that the peak of the epidemic is over. Yet on the other hand, other millions of citizens are still doing very hard to protect themselves from infection. More importantly, more than 200 000 elderlies in the community aged over 70 have not yet received the first jab of vaccination. This poses a big challenge in our anti-epidemic work.

Of course, we should not overlook the fact that recently some other places have gradually relaxed their anti-epidemic measures as well as the immigration and quarantine requirements on arrival travelers. As an international city, we have to tackle this very concrete and crucial question on how we should resume connections with other places gradually and orderly, while at the same time upholding the principle of "prioritizing people's lives and health" and "dynamic zero infection" to pursue resumption of normal travel with the Mainland. In addition, the intensifying geopolitical situation, mounting global inflation pressure as well as the hiking interest rate have troubled the investment sentiment of the global market, exacerbating the external challenges and pressure that we are facing.

We should aim for a holistic victory in curbing the epidemic, that is to suppress the epidemic and support the economy at the same time, as well as to stabilise the internal situation having taking into account external developments. In short, while we have to achieve the goal of "prioritising people's lives and health" and adopt the strategy of "dynamic zero infection" to protect our people and support the economy, we should also maintain connections with other places through practical means. It is important for us to be patient and vigilant and apply the "bottom-line mind set" in fighting against the epidemic. With a practical, sustainable and dynamic plan, as well as comprehensive and adequate preparation, we will surely win this battle against the epidemic and progress towards full economic recovery!

March 27, 2022

Affected by the severe epidemic situation and strict social distancing measures, the unemployment rate of the retail, accommodation and food services sectors combined rose sharply to 6.9%, 1.4 percentage points higher than the previous period. In particular, the unemployment rate for food and beverage service activities even surged by 1.9 percentage points to 8.1%.

Judging from the current situation, the economy will inevitably slip into contraction in the first quarter and the unemployment rate will worsen further rapidly. Entering the second quarter, the economic outlook will continue to hinge on the progress and effectiveness of epidemic control and prevention. The Government's current anti-epidemic work is progressing at full steam around the principle of "three reductions, three focuses and one priority". This means that reduction in the number of infections, severe cases and deaths are the important goals of the current phase. Meanwhile, more precise, stronger and more targeted measures should be applied to the "three focuses" (focused crowds, focused premises and focused areas), and support for the elderly must be accorded priority. The HKSAR Government will continue to strengthen coordination and cooperation among various departments, and make more effective use of the manpower and resources support provided by the Central Government and the Mainland to advance our epidemic control and prevention work. During the anti-epidemic period, the healthcare system has played a key role in safeguarding citizens' health and life. I would like to express my heartfelt appreciation to the staff in the public healthcare system for their hard work. I would also like to express my sincere gratitude to the medical staff from the Mainland who came from afar to help Hong Kong. Let us work together to make Hong Kong stronger in our fight against the epidemic.

The anti-epidemic work is a battle to curb the spread of the virus. It is also a battle of endurance. As General Secretary Xi Jinping emphasised, "perseverance is victory". We must remain unswayed in execution, and at the same time organise and manage both the anti-epidemic work as well as the social and economic situation, and take more effective measures, in order to minimise the impact of the epidemic on the society and economy to the largest extent.

Indeed, the full control and containment of the epidemic relates to the life and health of citizens, while stabilising the economy with an all-out effort relates to enterprises' business operations and citizens' livelihoods. Both of them are the top concerns of our citizens. On stabilising the economy, we have guided the economy holistically since the onset of the fifth wave of the epidemic, aiming to support enterprises, particularly SMEs, with greater strength. SMEs account for 98% of the total number of enterprises in Hong Kong and employ 45% of the private market labour force. Supporting SMEs is the key to stabilising the vitality and resilience of the economy, and more importantly employment.

We have taken a multi-pronged approach to support SMEs, namely alleviating their operation cost, supporting cashflow and preserving employees. The measures include:

• Providing taxes and fees reduction to alleviate their operation cost;
• Enhancing the Special 100% Loan Guarantee product under the SME Financing Guarantee Scheme to increase the maximum loan amount per enterprise and extend the maximum repayment period, and introducing rental enforcement moratorium through legislation to provide SMEs with breathing space in cashflow;
• Assisting SMEs in preserving their employees and jobs through the new round of Employment Support Scheme (ESS).

After several adjustments and enhancements, we are now pressing ahead with the legislative work for the rental enforcement moratorium. Last Friday we published in the Gazette the Temporary Protection Measures for Business Tenants (COVID-19 Pandemic) Bill, which will be introduced into the Legislative Council (LegCo) for the First Reading and the Second Reading this Wednesday. We will work closely with the LegCo to support their scrutinising work, with a view to completing the legislative process as soon as possible.

The Chief Executive has recently announced a new round of ESS of some HK$20 to 30 billion to provide eligible employers of specified sectors subsidies of 3-month salary expenses, which is estimated to benefit more than 1 million employees. The Policy Innovation and Co-ordination Office is now working on the details of the Scheme, with an aim to open for application within April.

With these multi-pronged measures, we hope to tide more SMEs over this extremely testing time by enhancing their capabilities and confidence so that they would preserve their employees, which is in turn conducive to the preservation of economic vitality and an earlier economic recovery. As for the Consumption Voucher Scheme, it will be disbursed by two phases, while the first phase of $5000 voucher will be disbursed in next month, with a total amount of $30 billion. We hope that it would help alleviate people's pressures under the epidemic, which could be beneficial to the businesses of SMEs at the same time.

To stabilise the local economy, external risks could not be overlooked. Under the influence of various factors such as downturn of prices of technology stocks, geopolitical tensions in Ukraine, interest rate hike and concerns over the coronavirus epidemic, Hong Kong stocks once plunged in tandem with external stock markets last week. Following the subsequent thematic meeting of the Financial Stability and Development Committee of the State Council hosted by the Vice-Premier Liu He, market confidence restored and local stock prices also rebounded. During the period of heightened volatility in the market last week, we had been monitoring market changes closely, so as to ensure orderly operation of different market segments, smooth settlement and clearing, and that there was no unusual behaviour that might significantly impact financial stability nor systemic risk. Overall speaking, there was no notable upsurge or increase in trading spread. While there was a rise in short selling, the aggregated short positions as a percentage of market capitalisation remained at 1.3%, which was comparable to the long-term average. There was also no concentration or building up of positions in the derivatives market. Despite the drop in market prices, no capital outflow was observed and the financial positon of brokerage firms could also cope with the market risks.

We are dedicating effort to strengthen people's and enterprises' confidence through multi-dimensional means. While different measures could help support the economy and secure employment in different ways, the most crucial factor is still the effectiveness and speed of our anti-epidemic work. The current local epidemic situation is still complicated and severe. The number of tested and reported positive cases has accumulated to over 1 million. Even though some patients may have already recovered, still we could not let down our guard. In face of this tough battle against the virus, as Xiao Baolong, the director of the Hong Kong and Macao Affairs Office of the State Council pointed out, with the relentless fighting spirit of the society, we will surely win this anti-epidemic war!

March 20, 2022

The situation in Ukraine has become the focus of the world, which may affect the evolving global geopolitical situation and the development path of the global economy. For Hong Kong, the risks at this stage are manageable. On trade, Ukraine and Russia accounted for only 0.05% and 0.78% of Hong Kong's exports of goods in 2021 respectively. As for inflation, Hong Kong economy is highly service-oriented and not particularly dependent on energy, and the expenditure weight of energy in Hong Kong's consumer price index is only about 3%. Even though international energy prices surge, the impact on Hong Kong's inflation will be relatively mild. However, we will stay highly vigilant and take necessary precautions to any possible impacts on the global financial market and Hong Kong's financial system, as well as the potential impact on financial security.

Since the geopolitical situation has become tense, external market conditions have turned unclear, with the global and Hong Kong stock markets under pressure. However, the Hong Kong stock market and the Hong Kong dollar market continue to operate in an orderly manner, the exchange rate of Hong Kong dollar has been stable, and capital flows have shown no abnormal signs. The banking system has also remained stable, with the capital adequacy ratio as a buffer indicator staying high at 20%, far exceeding the international minimum standard of 8%. The non-performing loan ratio was at a very low level of 0.88% at the end of last year.  All these reflect that banks are well-positioned to cope with challenges. Overall, Hong Kong's adequate foreign exchange reserves (about US$500 billion) and resilient current account (current account surplus in the last four quarters averaged 10% of GDP) have rendered a strong and firm buffer and resistance to shock for Hong Kong's financial market.

The stable growth of the national economy and the positive long-term fundamentals are also the solid support for Hong Kong's economy to keep its momentum and be confident about the future. The Mainland continues to pursue the direction of "prioritizing stability and seeking progress while maintaining stability" and sets the economic growth target for this year at about 5.5%, higher than the average growth rate of 5.1% in the past two years. The nation's GDP has exceeded RMB 110 trillion. In spite of its gigantic size, the economy of the Mainland still maintains a stable and solid growth pace, providing a stabilising anchor for global trade and investment. This is why I am still full of confidence in Hong Kong's economic prospects: Being hard hit by the epidemic, the economy of Hong Kong will very likely see a year-on-year contraction in the first quarter and the unemployment rate is expected to rebound sharply.  That said, as long as the epidemic can be put under control as soon as possible, Hong Kong will get out of the slump soon and regain growth momentum.

Since the latest wave of epidemic broke out in early January, it has brought serious disruption to people's daily lives, as well as the social and economic activities. The SAR Government is currently pushing forward the anti-epidemic work with an all-out effort and directing our resources towards the objective of "reducing infections, reducing severe cases and reducing death". In this fight against the virus, we are particularly grateful of the guidance and support of the Central Government, as well as the staunch assistance and coordination of different Mainland authorities and local governments. From the swift arrival of the Mainland experts team, the deployment of nucleic acid testing staffs from different places, the setting up of Fire Eye Laboratory and mobile testing vehicles, the provision of rapid testing kits, to the establishment of a mobile cabin hospital within seven days, and the maintenance of normal fresh food supply through water and land means, all these supports have shown the caring of our Country to Hong Kong.  

The severe epidemic situation has brought a tremendous pressure on the Hong Kong economy. To support the economy, we first have to contain the epidemic. Fighting against the epidemic is the overriding mission at present. While the SAR Government is curbing the epidemic with an all-out effort, we should also endeavour to support the economy. As Premier Li Keqiang recently pointed out, it is important to help SMEs stay afloat during economic hardship as they are providing large amount of jobs, and their operation are crucial to people's consumption power, the operation of large-scale enterprises, as well as the overall society and economy. In face of the current suffocating business environment, supporting those sectors in special difficulty could avoid large-scale closure of businesses, which can in turn preserve our economic vitality and support the market sentiment.

SMEs account for 98% of the number of enterprises in Hong Kong, hiring 45% of our labour force in the private sector, and providing a large amount of grassroots jobs. To support our SMEs, I proposed a series of measures in the Budget, including taxes and fees reduction, further relaxation of the eligibility and loan amount of the Special 100% Loan Guarantee product under the SME Financing Guarantee Scheme, as well as the rental enforcement moratorium. By introducing the proposed rental enforcement moratorium, we could provide our SMEs with a temporary breathing space and facilitate the negotiations between landlords and tenants for an adjusted rental arrangement in this exceptional period. Coupled with the relaxed Special 100% Loan Guarantee product, as well as our enhanced capacity in handling the epidemic with the support of the Central Government, I believe we can bring more confidence and hopes to struggling SMEs to tide over this hard time. We are working in full steam on the related legislation work for the rental enforcement moratorium. After widely gauging the views from different sectors, we have proposed various enhancements with a view to striking an appropriate balance between different concerns under the prerequisite of public interests.

I noted that some people have reservation on the proposed rental enforcement moratorium and wish the Government could subsidise the merchants in paying their rents with public money. However, while our society and economy are hardly hit by the epidemic and many grassroots citizens are facing intense pressure in earning a living and paying their rents, would it be acceptable to the overall society to use public money for subsidising the rental income of commercial landlords?

In addition, in face of the external fluctuation and uncertainties, as well as the challenges brought by the local epidemic situation, we must be more prudent in the use of public money and reserve our fiscal strength to handle sudden changes and support market's confidence. When formulating supporting measures, the Government should in principle consider those which can directly benefit the wide public and SMEs, with a view to supporting people's livelihoods, the employment, the economy and people's confidence. This is the key to overall social stability. In fact, it is with this goal in mind that I have decided to re-launch the Consumption Voucher Scheme and relax the arrangement of the Special 100% Loan Guarantee product again.

From anti-epidemic work to economic development, our Country has always been our most solid support. As Xiao Baolong, the director of the Hong Kong and Macao Affairs Office of the State Council pointed out, we have to maintain confidence and with the support of the Central Government and the effort of all of us, any difficulty could be overcome. There is always a rainbow after the rain. Hong Kong will definitely have a bright future.

March 13, 2022

It is always important to ensure stable food supply and smooth operation of key public services in Hong Kong, no matter during the course in curbing the epidemic or at the stage of post-epidemic recovery. Thanks to the guidance and support of the Central Government, and the staunch support and coordination of different Mainland authorities and local governments, the supply of fresh food and vegetables to Hong Kong has remained stable and sufficient. I would also like to express my gratitude to colleagues from different Government bureaux and departments for their effort in sustaining the provision of various essential public services. In the front of financial market, we have already formulated contingency plans for different scenarios and conducted a review and update lately, with a view to ensuring the normal, smooth and effective operation of services such as transactions, operations, clearings and settlements of our major financial market infrastructure, despite any possible changes brought by the epidemic or anti-epidemic works.

Indeed in as early as 2019 when Hong Kong was experiencing riots, I coordinated relevant bureaux and departments, financial regulators, major financial services operators and their senior management in formulating a "business continuity plan", with a view to ensuring that cross-market and cross-agency real-time contingency plans and communication channels are in place even if the financial market is under sudden interference. The plan has been updated taking into account the development of internal and external environments so as to cope with volatile situations and challenges.

Some of the scenarios covered in the plan include that when travel is blocked or restricted in the city, the whole financial system (including financial infrastructure, major systems and platforms, and major financial institutions) could readily switch to the backup hybrid mode to ensure continuous normal operation of the system, with only about 10 to 20% of the workforce working in the office. As such, even if travel is blocked or restricted for whatever reasons in Hong Kong, our financial market will continue to open, while markets of stocks, derivatives, bonds, currencies and foreign exchanges could operate and carry out transactions as usual. As an international financial centre, many transactions and settlements in Hong Kong are conducted through electronic means. Our banking system handles an average of more than HK$ 3 trillion of clearings every day. Moreover, as a hub for international capital flows, Hong Kong is also supporting a massive amount of transactions of financial and non-financial products across markets. These businesses and clearing services are highly interconnected and interdependent. Therefore, the "business continuity plan" enables different participants, stakeholders, financial institutions and regulators across the market to fully understand how normal services, smooth communication and coordination, and normal transactions and settlements could be maintained when the backup plan is activated. In addition, many international financial institutions have based their headquarters of the Asia-Pacific region in Hong Kong to manage businesses in the whole region. By preparing the "business continuity plan" well and drawing up contingency plan for extreme scenarios, it could help maintain the confidence of the management staff of international institutions as well as investors. In fact, many institutions have already put in place contingency plans in response to the anti-epidemic measures. As such, even if social distancing measures are tightened or travel is restricted, our financial market will operate as usual.

As for retail banking services, some branches of banks have to close temporarily due to the epidemic situation and their services are affected. Nonetheless, generally speaking the banks can still meet the needs of people. Moreover, the Consumption Voucher Scheme launched last year has promoted the wider use of e-payment by citizens and merchants, reducing the use of cash and helping prevent the spread of virus. Many financial institutions are actively encouraging their employees to get vaccinated and booster shots. Different parts of the financial market are actively supporting the anti-epidemic work and contributing their part for Hong Kong at this critical time.

We are still fighting a tough battle against the virus. Nonetheless, with the guidance and support of the central authorities, our anti-epidemic capacity, facilities, resources and manpower have been greatly enhanced and we are much more confident. The SAR Government has strengthened the measures in curbing the epidemic and people have also raised their anti-epidemic awareness. I am confident that Hong Kong will surely win this battle against the epidemic.

March 6, 2022

In the face of the severity of the current wave of the epidemic, economic sentiments have weakened and some sectors are under intense pressure. The economic performance in this quarter is not optimistic. Supporting our people and SMEs is key to protecting our society. Social stability hinges on the safeguarding of the health, lives, livelihood and income of the 7 million plus people in Hong Kong. With over 300 000 SMEs in Hong Kong employing 45% of the workforce in the private sector, supporting SMEs is core to the economic stability of Hong Kong.

Against such background, the Budget adopted a multi-pronged approach to preserve and support our SMEs, including easing their costs, supporting their cash flow and boosting the market. The Budget proposed a series of taxes and fees reduction, including reduction in profits tax and rates, as well as waivers and concessions of government fees and charges, which could help lowering the operating costs of SMEs. In order to support the cash flow of SMEs, we have proposed the rental enforcement moratorium and enhanced the Special 100% Loan Guarantee product under the SME Financing Guarantee Scheme. By disbursing the second batch of consumption vouchers by phases in summer time, it could help continuously boosting market consumption power and consumption demand. Consumption vouchers and a variety of tax reduction and relief measures proposed in the Budget, including the newly proposed tax deduction for domestic rental expenses, will also provide support to individuals.

While taking prompt action to stabilise the epidemic situation is the overriding mission at present, it is also important for us to stabilise the economy and confidence. The outbreak of the epidemic and the tightened social distancing measures have hit many SMEs hard and dampened their confidence in the economic outlook. For sectors that are severely impacted, such as the catering sector, some businesses have temporarily suspended their operation while some have even closed down. When revenue amounts to only 20% to 30% of the usual level or has dropped to zero, the burden of the already high rental payment is even heavier. We have appealed to big property developers and landlords to consider lowering rent or adjusting the rental structure as far as possible, with a view to helping SMEs ride out of the storm. The response however has been far less than satisfactory. With the onset of the latest wave of the epidemic, more SMEs are in dire situation.

Operation costs for businesses, particularly rental expenses, have been high in Hong Kong. In the past, it has been left for market's self-adjustment. However, the Hong Kong economy has plunged into a frozen state due to the latest epidemic situation and the SMEs are on the brink of mass closing of businesses. This will deal a severe blow to the employment situation, undermine people's confidence and bring social instability.

Against this consideration, I announced in the Budget that we will expeditiously introduce new legislation to prohibit landlords from terminating the tenancy of or not providing services to tenants of specified sectors for failing to settle rents on schedule, or taking relevant legal actions against them. The relief will be valid for three months. In addition to the 17 categories of premises listed under the Anti-epidemic Fund such as child care centres, tutorial schools and laundry shops or workshops, the specified sectors will include sectors that are hard hit by the epidemic such as retail stores and interest classes. We believe that when the epidemic has stabilised and the business environment has improved, the business and cashflow of enterprises will gradually return to normal and they will by then have the ability to gradually re-pay the due rental expenses. The arrangement is necessary at difficult times like now. Through setting up a moratorium period, we hope that we could buy time for SMEs to resolve their difficulties and provide them with breathing space, with a view to avoiding a domino effect of business closure.

This measure does not prohibit landlords from collecting rents, but only slightly delays the collection. It does not encourage tenants not to pay their rents, but only aims to provide relief to the enterprises, particularly SMEs which cannot afford the severe pressure within a short time. If everyone could make a step to support our SMEs, we could also support the livelihood of the employees and their families.

Some small merchants have reflected that since the announcement of this measure, some of those who had been extremely pessimistic turned to feel a bit relieved and started planning for how to stay afloat in the coming few months. Some merchants reflected that more landlords has shown willingness to discuss on rental reduction. I also noticed that since the announcement of this measure, a developer has responded to our appeal to provide rent waiver to its tenants which are required for closures under Government's restrictive measures until 20th April.

I hope that more able developers and big landlords can shoulder their social responsibilities in supporting our SMEs by sorting out a mutually-acceptable plan for both sides. This is not a zero-sum game. We are all on the same boat and this is the time we need to show our support to each other.

Curbing the epidemic is the overriding mission at present, and it requires the whole community to join hands and work together. Many organisations have recently responded to the appeal by making donations to show their care for the society. Their care indeed could also be shown through provision of rent waiver or reduction to tide our SMEs over the current testing time. This could help our society in stabilising the economy and preserving jobs, and give the most solid commitment to the work of curbing the epidemic.

To ensure the smooth implementation of the rental enforcement moratorium arrangement, we plan to put forward the following measures: (1) deferred payment of rates can be arranged for properties affected by this measure; (2) the legislation will stipulate that if owners fail to repay their mortgage on schedule as a result of their rental income being impacted by the measure, repayment moratorium by banks will apply; (3) for elderly owners relying on the rental income from a single property to earn a living, the Government will provide them with lending at an amount up to three months of the rental, subject to a ceiling of HK$100,000.

Some may be concerned that this measure will affect the commercial operation or the contractual spirit of our market. Nonetheless, some overseas markets such as the UK, Australia and Singapore had put in place similar measures when their economies were hard hit by the epidemic. It showed the necessity for governments to put protecting the economy and social stability as the top priority at critical times. The rental enforcement moratorium will last only for three months, which is an exceptional action in exceptional times.

To enhance the operation of this proposal, we will continue to gauge the views of different stakeholders. At the same time, we wish everyone could put the welfare of the whole society first, helping to support our economy and preserving our SMEs and people's livelihood. Living under the same roof, I hope all of us could contribute our part and support each other with mutual understanding in this testing time.

The drafting of the legislation for the rental enforcement moratorium is being conducted in full speed, with a view to providing short-term support to the operation of specified sectors at this critical time. After the completion of the drafting work, the legislation will come into effect only after the respective approval of the Chief Executive in Council and the Legislative Council.

February 27, 2022

The fifth wave of the epidemic is developing rapidly in Hong Kong. Our economy, which was originally on the track of recovery since last year, has come under great pressure and many people are frustrated or even being trapped in difficult situation. The situation has changed radically from that at the initial Budget consultation period. We should cope with the challenges proactively and deploy sufficient resources to fight the epidemic. At the same time, we have to make our best effort to relieve the burden of citizens and small and medium enterprises to boost confidence, while making mid- to long-term planning for economic development and safeguarding Hong Kong's economic and financial security.

We have to address both internal and external challenges with the concerted and all-out efforts of the whole society. Internally, we have to curb the latest wave of epidemic as soon as possible, which is crucial to the health of citizens, the maintenance of public services, people's livelihoods, as well as the overall normal operation of social and economic activities. Externally, as a small and fully open economy, Hong Kong could be easily affected by the complicated and volatile international political and economic environment. The associated market fluctuation and risks necessitate our precautionary actions.

Looking back, Hong Kong has overcome many difficulties. With the staunch support of the Central Authorities, we will have more resolved determination and confidence and will take actions more decisively. There is no problem that could not be solved and we will find feasible solutions. While we have already got favourable conditions, we must create suitable environment and find the right way to achieve the goal.

The cover colour of the upcoming Budget reflects our thought in the course of preparation. Soil may not have a colourful appearance, but it could provide rich nutrients to nurture the growth of trees. Every tree needs to be deeply rooted in the earth to thrive. With the arrangement of "One Country, Two Systems" and our dedicated efforts, I believe we can build a brighter future for Hong Kong, our home.

February 20, 2022

At this critical moment, President Xi Jinping has expressed his care for Hong Kong and given an important instruction. We will fight the epidemic with unwavering determination, confidence and the concerted efforts of the whole society. As emphasised by President Xi, we have to stabilise the epidemic situation early as the overriding mission at present, mobilise all available manpower and resources and adopt all necessary measures to safeguard the lives and health of Hong Kong people and the stability of society. This important instruction not only gives us a clear direction for our fight against the epidemic, but also reflects the expectation on our work.

The SAR Government should assume the main responsibility in fighting the epidemic. In the face of serious limitation in anti-epidemic resources, facilities and manpower during this difficult time, I would like to express my heartfelt gratitude to President Xi's care and guidance on Hong Kong, the staunch support of the Central Authorities and local governments, the efforts of our colleagues from different bureaux and departments and the support of different sectors of the community. Despite the rapid spreading of the epidemic, with President Xi's care and instruction as well as the staunch support from the ministries and commissions of the Central Authorities and the Guangdong Provincial Government, the SAR Government will mobilise the whole society and strive to contain the virus as soon as possible with all-out effort, determination and confidence. This would be the best way to meet the expectations of President Xi and Hong Kong people.

Curbing the epidemic is the overriding mission at present. The care, guidance and support of the Central Authorities have boosted our confidence and made us more united. By working with different sectors of the community together with determination, we can surely win this battle against the epidemic!

February 16, 2022

In face of the rapid spreading of virus in the community, bottlenecks on various fronts have been seen and additional supports are urgently needed. With the caring support and assistance of the Central Government, we will be better equipped to tackle and solve our imminent difficulties faster and curb the epidemic as soon as possible, which is the key to maintain people's confidence and support the economy.

At this testing time amid the rapidly changing external environment, maintaining economic and financial stability are equally important. We have to be alert of any sudden reversal of capital flow or market sentiment. In particular, US inflation has continued to heat up from 1.4% at the beginning of last year to a significant rise of 7.5% last month, exceeding market expectations and reaching the highest level in 40 years. This also explains why the US Federal Reserve is going to tighten monetary policy at a faster pace than that in the last interest rate hike cycle. This expectation has led to fluctuations in global stock markets last week. Going forward, we must pay attention to the impact brought by changes in interest rates and global capital flows on the asset and foreign exchange markets in the Asia-Pacific region.

As a small and fully open economy, Hong Kong must stay vigilant against such potential risks. We have been closely monitoring the changes in the external environment. Our assessment is that the risks brought by this round of US interest rate hike to Hong Kong's financial and monetary stability are manageable, and the buffers we have built up over the years for the financial market and the related measures put in place have been working effectively.

In terms of capital inflow into Hong Kong dollars, under the Linked Exchange Rate System, the Hong Kong Dollar (HKD) interbank rates usually track their US dollar (USD) counterparts, but they may also be influenced by the level of liquidity in the market. Take the previous US interest rate hike cycle as an example, the US rate had increased by 2.25% cumulatively from 2015 to 2018, while the prime rate in Hong Kong was raised only once ranging between 0.125% to 0.25% in the same period. Currently our banks remained well-capitalised with robust liquidity positions and the aggregate balance has reached HKD350 billion. As such, even if the US raises its interest rate, it is expected that changes in capital inflow will not lead to an increase of Hong Kong interbank rates. Furthermore, Hong Kong's current account remains strong. Our average current account surplus amounted to 10% of our GDP over the last four quarters, and our foreign exchange reserves has reached the level of USD500 billion, which provide us with strong resilience against the changes in fund flows.

As for the property market, the multiple rounds of macro-prudential measures introduced in the past have resulted in a relatively stable mortgage-to-loan ratio, with the average repayment-to-income ratio of mortgage lenders at a low level of 36%. The stress test conducted by banks in approving loans also takes into account the financial resilience of lenders in the event of interest rate hikes. Hence, we do not see the property market posing systemic risks to the financial system.

The banking system in Hong Kong has always maintained a high degree of resilience to shocks. For example, (1) banks have a strong capital buffer, with an average capital adequacy ratio of 20%, substantially higher than the international minimum standard of 8%; (2) the average liquidity coverage ratio is 150%, which is also much higher than the statutory minimum requirement of 100%; and (3) the bank's asset portfolio remains healthy, with the overall bad debt ratio at 0.81% at the end of September 2021, which is very low when compared to international standards and historical data. Regular stress tests on banks conducted by the Hong Kong Monetary Authority (HKMA) have shown that the banking system can withstand a potential surge in interest rates and its knock-on effects.

However, the potential upward trend in interest rates and the impact of the epidemic on the economy in recent months may affect the cash flow and even repayment ability of some individuals and SMEs. We and the HKMA have been paying close attention to the situation, and further encouraged our banks to provide support and flexibility to enterprises as far as possible in such a hard time. By working together to overcome difficulties, let us strive for a strong post-pandemic recovery for our economy!

February 13, 2022

Amid the threat of the fifth wave of outbreak, the festive atmosphere of the Chinese New Year holiday has been disrupted. The latest outbreak has been lasting for more than a month, with the number of confirmed cases surging from few cases to several hundred cases a day. People are bothered with many questions, such as when the pandemic will be contained? How the virus will impact their health? How should they get prepared for compulsory testing or "restriction-testing declaration" operation?

In face of the uncertainties and worries, it is imminent for us now to identify and quarantine infected persons quickly and effectively, with a view to cutting off the chain of infection in the community and contain the spread of the virus. Hong Kong is now under the threat of two virus variants, i.e. Omicron and Delta at the same time. The current epidemic situation is very severe as there are many chains of infection hidden in the community and the daily number of confirmed cases has been surging. To protect the public health, safeguard the effective operation of our healthcare system to ensure timely treatment for those in need, and support the living of breadwinners and the businesses of SMEs, we have to keep the virus at bay as soon as possible. Only by winning this battle against the virus, could we provide the most stable and solid support to the economy.

As such, we have to fight against the virus with the greatest determination and the fastest speed and mobilise every support and resources that needed. The whole society has to conduct virus testing to the largest extent in an orderly manner, with a view to identifying those infected and providing them with suitable treatment. By doing so, we could restore our social activities under a risk-managed, stable and safe environment. We could draw confidence from the experience of some Mainland cities which have been fighting against the virus effectively. With the concerted efforts of the Government, enterprises and the citizens striving for the same goal, we can surely win this battle against the virus! Only by giving our full effort in the battle and conducting testing in full scale, could we cut off the chain of infection as soon as possible and restore a safe social environment.

Under the leadership of the Chief Executive, the SAR Government is making its best effort and has strengthened various measures, including enhancing the testing capacity by re-setting up the Fire Eye Laboratory with the assistance of the Guangdong Government, providing more quarantine facilities and procuring more rapid test kits. May I also appeal all of you to be patient, stay at home and avoid going out, and encourage your families and friends to get vaccinated to protect the health of their own and the weaker ones.

The latest epidemic has again dealt a serious blow to our economy. Last month, the SAR Government has announced the launch of the fifth round of measures under the Anti-epidemic Fund (AEF) soon after the tightening up of the anti-epidemic measures, so as to provide support to premises and individuals directly affected. The related supporting schemes have been open for application, while some of which have already started the disbursement of subsidies. As for the sixth round of measures under the AEF with a preliminary scale no less than $20 billion, funding support from the Legislative Council will be sought after the details of the measures are ready.

The AEF aims to provide timely support to those affected by the epidemic and the related restrictive measures so as to help tide them over this difficult time. As for the upcoming Budget to be announced in less than three weeks, not only it should address the pressing needs in short- to mid-term, but also the planning needs for mid- to long-term development. While the recent development of the epidemic has poised a huge challenge to our economy, we should not overlook the risks from the external environment.

Since this year, the international political and economic environment is still complicated and changeable. The continuing bottleneck in global supply chain, coupled with the inflationary pressures on energy and commodity prices, not only affect the global economic outlook but also induce a high level of inflation in many major economies. This will bring further uncertainties to the pace of different major central banks in tightening up their monetary policies, amplifying the risk of fluctuation in global financial market and capital flow. We should also continue to pay attention to the development of the China-US relations and the international geopolitical situation. Given all these uncertainties, we should reserve our fiscal strength to a certain extent in order to safeguard the security and stability of Hong Kong's financial institution.

No matter the challenging anti-epidemic work, or the mission of safeguarding a stable financial institution and our development security and interests, they all require us to have in-depth considerations and accurate assessments on the fundamental problems before making any decisions, and to have comprehensive planning and contingency plans to cater for extreme scenarios. Making the best preparation for the worst scenario is the important guiding principle for us in safeguarding the overall stable development of our society.

February 6, 2022

There are many traditions to celebrate Chines New Year, one of them being gathering with family members and friends. However, given the threat of the latest outbreak, we should avoid gatherings among families and going to crowded places in order to minimise the risk of infection. The latest COVID variants have been spreading quickly in the community and pose threat to public health, people's daily lives and economic activities. We have to join hands and work together in order to win this battle against the virus.

Looking back at Hong Kong's past development path, though we had faced different challenges at different stages, still we succeeded in overcoming them and turned crises into opportunities. The success we have achieved today is not only the result of Hong Kong people's strong determination, aspiration and relentless effort, but also the support of our Country, which allows Hong Kong to perform its strength to serve the Country's needs and prompted Hong Kong to achieve an even greater success. In face of great challenges or even crises, we have to make careful assessment of the imminent problems and foreseeable situations, so that we could plan and prepare for the worst scenario and tackle it in a prudent manner. Only by doing so could we best serve all the Hong Kong citizens and provide a stronger support for Hong Kong's steady progress. With comprehensive and sufficient forecast and preparation, we could stay calm in any challenges and sail through them with courage.

As such, we need your full cooperation in fighting against the virus, including complying with the testing and quarantine requirements. Only by identifying the sources of infection in a comprehensive manner could we cut off the chains of infection to the largest extent quicky and contain the pandemic. I would like to appeal all of you again to encourage your families and friends to get vaccinated, which is not only the most effective mean to protect yourselves and your families, but also the ultimate way to help the society restore normal operation.

As for public finance management, we are sharing the same philosophy. The Hong Kong economy is under great pressure due to the latest outbreak, and many people have seen their jobs and income affected and are worried about the economic prospect. Facing this uncertain environment, we still could stay positive and make our biggest effort to deliver the best outcome for the people. For example, in my Budget last year I enhanced the Special 100% Loan Guarantee Scheme to enable SMEs to have easier access to loans in the market with a view to alleviating their cash flow pressure. We also provided 100% personal loan guarantee to unemployed individuals to tide them over. Moreover, we launched the Electronic Consumption Voucher Scheme which, with the concerted effort of different parties, has succeeded in boosting local consumption and people's confidence, and promoting the wider use of e-payment. As the economic recovery in 2021 was better than expected with improving trend shown in various economic sectors, Government revenue in this soon ending fiscal year will be much higher than expected.

In fact, as shown in the Government's monthly financial results, the actual consolidated deficit of this fiscal year had gradually receded from the peak of HK$115.7 billion for the six months ended September 30 2021 to HK$65.8 billion for the eight months ended November 30 2021, taking also into account the receipt of net proceeds of around HK$29 billion from the issuance of Government green bonds.

Then how about the financial results for the nine months ended end December last year, which will be announced in this week? As December to January is the peak period of receipt of profits tax and salaries tax, and the investment return of our fiscal reserve placed with the Exchange Fund is credited to the fiscal account in December, it is not unforeseeable that the Government's financial results as at end last December will be further improved substantially. Nonetheless, we cannot deduce the Government's full-year financial results on that simple basis. It is because the Government still has to make large expenditure to maintain its daily operations in the remaining three months of the current fiscal year. Past experiences indeed showed that Government's expenditure usually exceeds its revenue in February and March.

On the other hand, the global market is facing the threat of the pandemic over the economy, the society and people's livelihoods; possible risk brought by inflation and interest rate hike including impact to capital flow and asset price; as well as geopolitical tensions. All these factors coupled together have led to a more complicated and changeful outlook for the global economy. When preparing the upcoming Budget, my team and I will make careful study and dynamic assessment on these uncertainties. Our major principle is to provide support to the economy and people's livelihoods under the pandemic, and take account of the mid to long term development needs and financial stability of Hong Kong. In this course, we have to strike a careful and right balance between the long term and the pressing needs, so that Hong Kong could strive for progress.

January 30, 2022

今天參加了中聯辦的在線新春活動，一起迎接虎年的到來。駱惠寧主任的致辭除了向廣大市民送上新年祝賀和關懷，更點出了對香港在新階段裡的期盼。

回歸祖國二十五年，香港走過了非凡歷程。過去幾年發展雖遇波折，在中央的堅實支持下，香港「一國兩制」的實踐重回正軌，回到了可以聚焦發展、為幸福生活奮鬥的新征程。站在歷史的新起點上，我們對「一國兩制」更充滿自信，對香港的未來更滿懷希望。

就如駱主任指出：「世界的機遇在中國，香港的機遇在內地」。在國家邁向第二個百年目標的新征程上，中央更重視香港的特殊優勢和獨特作用，在國家一系列發展戰略規劃中香港都有角色，香港融入國家發展大局的「接口」在不斷增多，讓我們對未來有十足的底氣和信心。

香港正處於發展路上的新關鍵時期，只要更積極全面融入國家發展大局，在國家穩步持續發展的進程中抓準定位、認清角色，發揮自身所長、服務國家所需，新一頁的香港故事將會更精彩。在對接國家所需這篇章裡，我們要講好國家發展的故事、講好香港故事。在百年未有之大變局中，我們必須有更大擔當、更好作為；在建設現代化強國的新征程上，為國家發揮更積極的貢獻；在中華民族偉大復興的中國夢裡，和唱著香港夢！

未來，讓我們一起同心合力、乘勢而上，全力抓緊機遇，以「逢山開路、遇水架橋」的拼勁和堅毅，全力推動和實現香港良政善治的新篇章。再大的困難，都只會更激發我們奮勇向前、破解難題的激情和堅定意志。讓我們一起同心抗疫、攻堅解難，為市民的幸福生活、為香港的美好未來全力奮鬥！

2022年1月26日

We have always been dedicating effort to explore and create more development opportunities and spaces while taking full precautionary actions at the same time. As progress and stability are equally important, we have to aim for an all-front development and safeguard the stability of our economy and the financial market. Only by doing so, we could keep moving forward steadily under an ever changing environment.

Hong Kong's robust development has been relying on the concerted and dedicated effort of the whole community to promote economic development and comply with our supervisory requirements. With the long established and effective supervisory framework, we have been able to sail along the direction of "pursuing progress under stability and promoting stability with development" for years, which has gained the recognition of international organisations.

In face of the complicated and ever changing global political and economic environment, as well as the impact brought by the fluctuating pandemic, while our economic environment may keep a generally positive tone this year, still we have to stay vigilant and pay extra attention. In particular, as the virus has kept evolving new variants, we could not underestimate its possible impact. As such, the whole community has to come together and join hands in fighting against the virus with a view to achieving the target of dynamic clearing of case. Only by doing so, we could actively safeguard people's normal living and travel, as well as the stable operating environment for businesses to the largest extent, which is also crucial for safeguarding the overall social and economic stability.

To promote economic recovery, the key is to curb the virus with our best effort. Social distancing measures have been retightened up recently, which will inevitably affect people's daily lives and the operation of businesses. Nonetheless, only by bringing the virus under control could we minimise its social and economic impacts. I would like to appeal everyone to join us in our anti-virus work, including complying with the compulsory testing requirements and encouraging your friends and families to get the jab.

As the anti-virus measures will bring greater pressure on some sectors, the Government has recently launched the fifth round of supporting measures through the Anti-epidemic Fund (AEF). Apart from the five rounds of AEF measures, I also rolled out series of countercyclical measures with a scale of over $100 billion in my Budget over the last two years, including Government fee waivers, tax and rate rebates, the electronic consumption voucher scheme, the 100% loan guarantee for SME and individuals. These measures had deployed resources in a way to achieve leveraging effects in order to alleviate the impacts and pressures induced on people and enterprises due to the economic downturn.

In fact, to cope with economic downturn, the large-scale countercyclical measures covered in the Budgets over the last two years has led to a relatively high level of deficits and a sharp decrease in our fiscal reserve. Although some may have concern over this situation, the Hong Kong economy has always been enjoying a high degree of resilience and flexibility. Taking last year's situation as an example. As long as the pandemic was kept under control and the Mainland and external economic environment stayed positive, with the concerted hard work of the whole community, the Hong Kong economy had seen a robust economic rebound, which provided support to Government revenue which in turn greatly improved the fiscal situation of this soon ending financial year.

In face of this once-in-a-century pandemic, there is a need for us to roll out countercyclical measures to stabilise the economy and people's confidence. This is echoed by the IMF, which recognised the effectiveness of SAR Government's swift and decisive fiscal policies and measures in providing buffers to the economy under pressure and supporting its gradual recovery.

We have received many different views in the few dozens of consultation sessions conducted for the Budget. Many agreed that the upcoming Budget has to strike a careful balance. While supporting those affected by the pandemic, we should also make efforts in promoting economic development and improving people's livelihoods. While safeguarding financial stability and promoting development, at the same time we should also promote an inclusive and sustainable economic development, and be vigilant to the complicated and ever changing situation in both internal and external environment. With the electoral system successfully improved to implement the "patriots administering Hong Kong" principle, Hong Kong has entered into a new era and new phase which we can enjoy a more favourable environment to promote economic development in full steam and expedite our work in handling the problems accumulated over the years.

January 23, 2022

Let me summarise here a few points elaborated at the meeting. On the economy, benefitted from strong export, the largely controlled local epidemic situation, continuing recovery in domestic demand, a robust growth in private consumption further boosted by the Electronic Consumption Voucher Scheme, as well as the notable growth in private investment, the economic growth of last year is expected to reach 6.4%. This has reversed the recession recorded in the previous two consecutive years. The unemployment rate has also subsided to 4.1% gradually.

In the fiscal front, for the soon ending 2021-22 financial year, the fiscal deficit was originally projected to reach $101.6 billion. If we exclude the issuing of bonds, the bringing back of the Housing Reserve and the Future Fund's investment return, the deficit could even reach the high level of $180 billion. However, given the stable economic recovery, and the rather positive outlook for the property market, our land sale income and the premium paid by developers were much higher than expected. Coupled with the higher income from stamp duty driven by the high transaction volumes in property and stock markets, the fiscal deficit pressure of this financial year has been greatly relieved.

Nonetheless, the uncertainties brought by the fluctuating epidemic situation has caused frustrating pressure on the overall economy, the society and people's livelihood. Apart from making dedicated effort in the anti-epidemic work, we also have to make good use of the public resources to provide relief and support to citizens and enterprises under the epidemic. At the same time, with the complicated and changing international political and economic landscape, we must be prudent in fiscal management and allocate resources where they are required. In addition, we have to maintain our financial strength to ensure financial stability and prepare for known and unknown situations and needs. As Hong Kong is an open and small economy, we need to keep vigilant on the potential risk and impact brought by the mounting inflationary pressure in external market, including the risk of rate hike, reverse in capital flow and fluctuation in asset prices.

To create a stable environment for development, we have to stabilise our internal situation and take precautionary actions for external challenges to strike a right balance between different fronts. In face of the complicated internal and external environments, it has put many limitations and challenges in front of us in preparing the Budget. Representatives and stakeholders of different sectors have shared with us their observations and suggestions during the consultation meetings held over the last two months. To have such suggestions materialised, policy support and breakthrough in implementation constraints are needed. We have therefore relayed the suggestions gauged to the relevant policy bureaux for review and consideration. When the suggestions are considered feasible in policy perspective, we could then follow up in the financial aspect.

As learned from the experience over the past few years, even given the same problem, different people could have very different ideas on how to solve it, making it quite hard to reach consensus. What we can do is to make better explanation to the public to gain the majority's support, and at the same time hope for the understanding of those with different views. Once a decision is made, we will do our best to deliver the most favourable outcome in order to earn people's recognition.

Taking the Electronic Consumption Voucher Scheme proposed in the last Budget as an example. When the Scheme was first announced, there were some concerns and criticisms in the society. However, with the team's effort, the support of Stored Value Facility (SVF) operators, the concessions offered by merchants, as well as the participation of the public, the Scheme has achieved a good outcome in terms of boosting the economy and promoting the wider use of electronic payment. According to preliminary figures, since the launch of the Scheme, the four SVF operators have seen an increase of around 4.7 million personal accounts and around 96 000 commercial accounts, with a surge in the number of e-payment transactions.

In recent consultation sessions, quite some participants suggested that we should disburse electronic consumption vouchers again in the upcoming Budget. However, some opposed this suggestion as they think the Scheme costs a large amount of expense and public resources should be deployed in a more targeted approach. Furthermore, some were of the view that as people had avoided going out and reduced consumption under the epidemic, that might limit the effect of the consumption vouchers.

Besides, some stakeholders expressed their hope that one-off relief measures. i.e. the so-called "sweeteners" can be carried on in the Budget. Yet some were concerned that measures such as tax and rate rebates could only benefit those with higher income and assets, resulting in another kind of inequality.

On the other hand, if any relief measure strives for precision and focus on certain targeted groups, it could cause backlash as some may regard it as differentiated treatment. On the contrary, if the measure could benefit the mass, it could also be criticised as giving insufficient care to the underprivileged. What we can do is to strive for a better result that is deemed acceptable to most people. We also have to strike a better balance and make better explanation to win people's understanding.

While the economic outlook this year is on a good tone, the biggest uncertainty and barrier is the development of the pandemic which has been troubling us for two years. We need to work together to fight against the virus, with a view to achieving the goal of dynamic clearing of cases, and create a favorable environment for the resumption of cross-border travel with the Mainland. Only by doing so, we could achieve economic recovery to the largest extent under a safe environment, and protect people's living and travel from the disturbance brought by the pandemic.

January 16, 2022

Given the high contagiousness of this coronavirus variant, forceful restrictive measures and speedy tracing work are the key to bring the epidemic under control. First of all, we have to take strict measures to prevent imported cases, that include fully implementing the related restrictive and surveillance measures. Secondly, we have to contain the spread of infection in the community. When local cases arise, we need to identify the infected persons as soon as possible to minimise the risk of outbreak and cut off the chain of infection in the community.  There are many possible occasions that we may expose ourselves to premises of high risk, such as social gathering, working or even just staying at a place with someone you do not know. These premises can be restaurants, or any poorly ventilated places with people gathered. To keep a better record of your own itinerary, we should use the "Leave Home Safe" App when entering and leaving different premises, so as to facilitate the focused and quick tracing of those exposed to high-risk premises and minimise the areas affected.

As we can see from recent cases in the community, the wide usage of "Leave Home Safe" App can help protect ourselves and other citizens to the largest extent. There may still be concerns that since the App will keep a record of the itinerary, people will be forced to undergo comlulsory testing when needed. However the fact is, if you have been exposed to high risk premises, taking a test as soon as possible is the best way to protect yourself and reduce the risk of infection of your family members and friends. We could not tell whether we are infected or not merely by our own feeling.  By using the "Leave Home Safe" App and complying with the compulsory testing requirements, we can identify the affected cases in a scientific approach with a view to curbing the spreading of the virus as quick as possible. This is indeed what all of us could contribute in the work against the pandemic.

The wider usage of the "Leave Home Safe" App could help to enhance the speed and accuracy of the tracing work. At the same time, if more people get vaccinated, we could build a large "protective shield" in our community to slow down the spreading of virus and moderate the symptoms of infection for infected persons. Although it is still possible for a vaccinated person to get infected, the vaccine could help suppressing the contagiousness of the virus and effectively lower the risk of severe symptoms and hospitalisation. This could protect ourselves and the health of your families and friends, alleviate the pressure on our healthcare system and avoid the need of imposing more restrictive social distancing measures.

It is the common goal of the society to prevent imported cases, contain local infections, cut off the chain of infection in the community as soon as possible, so that we could resume normal daily lives and travel, as well as to stabilise our business environment. It takes every one of us to do our own part, i.e. wearing mask and keeping good personal hygiene, complying with testing requirements, appealing your friends and families to get vaccinated and use the "Leave Home Safe" App. Let us fight the virus together to help get back to our normal lives and achieve economic recovery. Currently, there are still more than 20 per cent of our population who have not yet received the first dose of vaccine. To cater for the demand for vaccination, the Government already announced that more Community Vaccination Centres and more vaccination booths in Hospital COVID-19 Vaccination Stations will be provided, and related manpower will be strengthened.  Please encourage your friends and families to get the jab.

Apart from the local pandemic situation, we have to face other external uncertainties this year, including the development of the pandemic around the world, the bottleneck in global supply chains, the rise of energy and commodity prices, as well as the adjustment of monetary policy by the US and EU's Central Banks under continuing inflationary pressure. The adjustments arising may lead to drastic changes in capital flow and impact on asset prices or even the real economy in different places. When preparing this years' economic forecast in the upcoming Budget, I need to give careful considerations to these uncertainties and challenges and make appropriate response. Although we have seen improvement in market sentiment and economic performance over the past seven months or so, it is unfortunate that the fifth wave of outbreak has sparked just before the Chinese New Year, hitting hard on breadwinners and merchants of various sectors.  As this will inevitably affect the overall economy, we need to make dynamic assessment on how to deploy and allocate resources to provide suitable support to those affected.

January 9, 2022

While the Hong Kong economy has been maintaining its positive momentum with the labour market improving notably, the recovery is not yet comprehensive. This is mainly because inbound tourism remains frozen, causing the pace of recovery in the tourism and related sectors to lag behind the overall economy. Enterprises and employees in these sectors still face greater pressures, and their actual "sensory temperature" have yet to get warm.

Only through successful prevention and control of the epidemic can we provide stable and sustainable conditions for economic recovery. We hope that everyone can join us in fighting against the virus. Apart from getting vaccinated ourselves, let's also invite our relatives and friends to get a jab as well. To better protect Hong Kong together, we should do our best in risk management and go for testing if required.

Year 2022 will be the year for economic and social development. The implementation of the Hong Kong National Security Law has rapidly restored order to the society. The improvement of the electoral system and the smooth completion of two important elections have reinforced the implementation of "patriots administering Hong Kong" and the executive-led system, which would ensure that the "One Country, Two Systems" arrangement is back on the right track on an institutional level and allow us to move forward steadily. Hong Kong is now entering a new stage of good governance, and we look forward to a future of accelerated progression, including the resolution of long-standing deep-rooted social issues, and a more rapid economic development.

Externally, market generally expects to see a further recovery in major economies this year, thus rendering support to Hong Kong's exports. Even though the Mainland economy faced some downward pressure in recent months, its sound fundamentals and still ample policy room for manoeuvre can support the economy to achieve "stability while pursuing progress". By integrating proactively into the national development, Hong Kong economy will surely gain more growth momentum and development space.

However, the external environment is very complicated and the global economy still faces enormous challenges. The pandemic development remains the greatest uncertainty. The Omicron variant becomes an imminent threat and is spreading rapidly in many parts of the world recently. Many governments have tightened their anti-epidemic measures and travel restrictions, which may pose a drag on global economic growth. On the other hand, the supply bottlenecks in various regions may linger for a longer period of time. This, together with the upward pressures on energy and commodity prices, may hinder global production activities and push up global inflation. Major central banks have begun to tighten their monetary policies due to rising inflation, and the possible repercussions on global financial market and capital flows warrant attention. Developments in China-US relations and geopolitical tensions need to be monitored closely, and its impact on Hong Kong must not be taken lightly.

Overall speaking, if there is no abrupt deterioration of external environment and the local epidemic situation remains stable, Hong Kong economy should stay on a growth track in 2022. Yet, the breadth, depth and pace of recovery are still highly certain at this stage. I will announce the economic forecast for this year in late February when the Budget is released.

While the external environment is beyond our control, we have to keep a grip on the local situation. We can hardly control the evolving external environment, but we can make every effort to enhance our system and make Hong Kong one of the most competitive markets. Industries with clear advantages, as our "forwards", have to play a more leading role. Emerging industries have to speed up their developments, advance forward and "make a breakthrough". Core industries, as "holding midfielders", have to undergo upgrading and transformation. All these ensure the entire "economic train" to accelerate forward, creating new markets and more job opportunities. Only by achieving a more broad-based and in-depth integrated economic development, can the goals of "full employment" and "quality jobs" be met, allowing people to better share the fruits of economic development.

In promoting market development, it has been our guiding principle to be proactive. We strive to promote the robust development of different industry sectors with a view to providing greater growth momentum to the economy. Take the financial services sector as an example. Building a diversified, vibrant and sustainable fundraising platform has always been our direction in elevating the platform's competitiveness. Two institutional reforms, including the listing regime for special purpose acquisition companies ("SPACs") and the enhancement of the secondary listing regime, have come into effect in Hong Kong since yesterday to further consolidate Hong Kong's leading position in the financial services industry.

Last year, I requested the Hong Kong Exchanges and Clearing Limited and the Securities and Futures Commission to study about introducing a listing regime for SPAC in Hong Kong. Upon the intensive work and market consultation in around half year's time, the current proposal strikes a balance between the needs for market development, prudential supervision and investor protection. The Hong Kong version of SPAC listing regime allows investors to fix the scope of investment of the funds at a more early stage and identify suitable investment projects within designated timeframe. At the same time, requirements such as restricting subscription and trading to professional investors, prescribing minimum fundraising threshold (to $1 billion) as well as requirements during de-SPAC transaction (such as requiring companies to fulfil all requirements for a new listing), etc., strikes a right balance between protecting investor, market quality and market attractiveness. The new SPAC listing regime will broaden the fundraising channel for enterprises to list in Hong Kong and strengthen the competitiveness of Hong Kong as a premier listing platform around the globe.

Meanwhile, the enhancement of the secondary listing regime will help attract more "China Concept Stocks" to return from the overseas market, with a focus on facilitating overseas-listed Greater China Companies from the traditional sectors and without weighted voting rights ("WVR") structures to secondary-list in Hong Kong. The enhancement also provides greater flexibility to dual-primary listed issuers.

Continuous innovation and enhancement of our regime are conducive to maintaining the strong vibrancy and adaptability of the market. In 2018, I pursued the reforms of the listing regime to allow the listing of innovative companies with WVR structures in Hong Kong with appropriate investor protection safeguards. Together with SenseTime, the artificial intelligence company that listed last week, over 60 companies have listed under the relevant regime over the past three years, with over HK$570 billion of funds raised through IPOs in aggregate. These companies account for around one-fourth of Hong Kong's stock market capitalisation and boosted the daily turnover of our stock market from less than $90 billion in 2019 to over $160 billion in last year. This shows that institutional reform and innovation are the only way to continuously enhance the overall competitiveness of Hong Kong's fundraising platform.

This year marks the 25th anniversary of the establishment of the Hong Kong Special Administrative Region (HKSAR). Hong Kong has entered into a new phase of good governance and full steam development. The HKSAR Government will work together with different sectors of the community, including the new Legislative Council, to focus on economic development and the improvement of people's livelihoods, with a view to delivering concrete actions in addressing people's needs and difficulties and promoting our social development in full speed!

January 2, 2022

I met with some dozens of secondary school students a few days ago to learn more about their thoughts on the allocation of public resources and Hong Kong's future development. This dedicated consultation session has been held five years in a row. Young people always have their unique views and ideas on Hong Kong's development. They care about the overall needs of the society as well as their own paths of development. In additional to a robust economic development, they also wish to see a right balance between development and ecological and heritage conservation, and proper handling of crucial social issues such as land and housing and ageing population. Through interactions and discussions, we were able to understand each other's point of views and explore feasible solutions. Even though our perspectives and priorities may be different, it is always true that the communication has strengthened our mutual understanding and friendship.

The core subject of the Budget is about the proper allocation of public resources. Apart from promoting social and economic development, citizens also wish to see improvement in livelihoods and be benefitted from it. In fact, different governments are facing this similar situation, i.e. competing public demands under finite resources. The key is to sort out the priority of different demands and allocate the resources in an effective and balanced manner. While serving the needs of the majority, we should also take care of the demands of the minority. Given the ever changing situation and needs of the society, it is crucial for us to have your active participation in formulating policies and allocating resources, in order to build a future that meets the expectations of all.

The message we wish to deliver through the Budget promotional video this year is that, we are equipped with strengths and resources, but are also facing difficulties and challenges. As to how we should allocate the resources, we need to have mutual communications with the public and to press ahead with full steam to leverage our strengths and tackle the difficulties and challenges together.

We are now having the great opportunity of development to seize. In social aspect, the local epidemic has been brought under control effectively and we are seeing a gradual economic recovery.

As for law and order, the implementation of Hong Kong National Security Law has restored and strengthened social stability, enabling a good development trend for the society.

In political front, with the enhancement of the electoral system to implement the "patriots administering Hong Kong" principle, two important elections, i.e. the Election Committee Election and the LegCo Election, had been held successfully, supporting Hong Kong's democracy to progress along a direction that suits our actual situation. With the executive-led system strengthened, we are moving towards good governance, laying a solid foundation for a sustainable social and economic development for Hong Kong.

The current social stability is a hardly gained result, which was achieved through many works done by the SAR Government under the leadership of the Central Government. People's right is now being protected in accordance with the law and a new paradigm of widespread and balanced political participation has been established. In short, Hong Kong's current situation has proved that the new electoral system accords with the principle of "One Country, Two Systems" and suits the actual situation of Hong Kong, providing the institutional support for Hong Kong's prosperity and stability in the long run.

As President Xi Jinping has stated in his meeting with the Chief Executive during her duty visit in Beijing, "We firmly believe with the deeper implementation and continuing improvement of the institution, the advantages of the ‘One Country, Two Systems' will further stand out."

The Christmas holiday has brought a festive atmosphere to the city, giving a boost to the businesses of the retail and catering sector. With year 2022 approaching, we are looking forward to a new look, a new phase and a brighter future for Hong Kong.

December 26, 2021

This election is of significant importance as it is the first LegCo election held after the implementation of Hong Kong National Security Law and the enhancement of the electoral system. It marks the successful implementation of the improved electoral system and the "patriots administering Hong Kong" principle. People from different strata, sectors or professional backgrounds competed fairly and justly in the election. It paved the way for Hong Kong's good governance and laid a solid foundation for the faithful and steady implementation of the "One Country, Two Systems" arrangement.

Looking back in history, there was basically no democracy in Hong Kong under the British colonial ruling. The British side only pushed forward the so-called "political reform" shortly before our Country's resumption of sovereignty over Hong Kong, with a view to sustaining its influence here. It is indeed only after our return to the Motherland that Hong Kong has truly entered into a new phase towards democracy.

From establishing the principle of "One Country, Two Systems", "Hong Kong people administering Hong Kong and high degree of autonomy", to the building of Hong Kong's democracy in accordance to the Constitution and Basic Law, the Central Government has always been supporting the democratic development of Hong Kong. Three important attempts have been made in the past with the last one held in 2014, which aimed to set out the road map towards universal suffrage of the Chief Executive. This proposal to further democratise Hong Kong's constitutional system was unfortunately vetoed by the so called democratic legislators.

The centennial changes of the global situation is accelerating, and foreign interferences with an attempt to disturb and hinder the development of China are building up. As both the domestic and foreign environment becoming ever more complicated, the struggle revolving Hong Kong's democratic development had intensified. As a consequence, some people had used the anti-extradition law incident as an excuse to spark the riot in 2019, which fundamentally went against the bottom-line of the "One Country, Two Systems" principle, endangering the national and Hong Kong's security.

In face of foreign political intervention and disturbance, the Central Government had decisively enacted and implemented the Hong Kong National Security Law to lift Hong Kong out from chaos and restored stability and governance in our society, providing the necessary conditions for democratic development. The LegCo election on Sunday was a lively example to this point, from which we could see all the election related activities were conducted smoothly in a safe environment.

The implementation of Hong Kong National Security Law, the improvement of the electoral system and the oath-taking requirement for public servants all aimed at consolidating the principle of "patriots administering Hong Kong" at the institutional level, ensuring the governing authority is firmly held in the hands of patriots. Through this, the governing system can then be focused on serving public interests and prevent foreign agents from entering the system and using it as a platform to harm the national and Hong Kong's interests for the benefits of other countries.

The improved electoral system has expanded political participation in a balanced and orderly manner, enhanced the representativeness of the Election Committee and the LegCo, and safeguarded the fundamental overall interests of Hong Kong. It can also promote the virtuous interaction between the executive and the legislative branches, resolving the long term political standstill of the LegCo. With the implementation of the executive-led system and good governance, the SAR Government and different sectors of the society could focus on economic development and improving people's livelihoods.

Perhaps some people who are enchanted with the Western-style democracy may still doubt Hong Kong's steady democratic development. Some foreign politicians even took the LegCo election as an opportunity to criticise and downgrade Hong Kong's democratic development, using it as a handle to hinder our Country's development.

In fact, our Country's democratic system and institutional strength have contributed to the continuous improvement of people's livelihoods and satisfaction, reflecting the failure of the western system which is unable to resolve the actual difficulties faced by the people in daily lives. Under the mounting pressure from local politics, politicians would only try to shed their responsibility by diverting people's attention.

As we can see from foreign examples, there were cases from time to time that the winning political party failed to honour the promises they had made during election. People's actual needs and social development interests were compromised or even sacrificed amid political struggle. The Western-style democracy is not able to address social dilemmas and deep-seated problems. Even worse, it exacerbated the problems and social inequality, and stirred up populism.

In fact, democratic development should not only emphasises on its "quantity" but also the "quality". The ultimate parameter for assessment should be the outcome, i.e. whether the system can address people's aspiration for a better livelihood. In other words, voting and other related procedures only reflect part of the democracy. What we should focus on is the outcome that can be achieved from the democratic process. Any democratic development and system could only gain wide and solid support from the people if they can lead to continuous improvement of people's livelihoods.

Our Country is walking on the development path of socialism with Chinese characteristics and implementing the "whole-process democracy". The system emphasises on expanding people's political participation in an orderly manner, enhancing the democratic process, and complementing elections with negotiations. It ensures people's right of democratic election, negotiation, decision, management and monitor in accordance to the law. With the implementation of the "whole-process democracy", outside elections, the Government's policy-making and governance are also put under democratic management and monitor, which allows negotiation and expression of views on important issues while helping the society to stay united.

Our Country's national institution and management model has enabled its sustainable and stable development, and supported our Country to grow stronger towards prosperity, with people's livelihoods remarkably improved. The Country is heading towards the great rejuvenation of the Chinese nation. Safeguarding the national security is the prerequisite of stability and development.

Our Country's national institution and management, together with the framework built under the Constitution and the Basic Law, set out the principle and path for Hong Kong's democratic development, allowing Hong Kong's smooth return to the Motherland, promoting Hong Kong's prosperous economic development and providing the basic guidance for Hong Kong to achieve stable democratic development. We must be determined in walking on the path of democratic development which best suits Hong Kong's actual situation. Only by fully safeguarding the national  interests of "One Country" could we enjoy the flexibility of "Two Systems". Only by ensuring a stable social and economic environment could we be equipped with the space and resources to pursue a democratic system with our own characteristics that can best suit Hong Kong's actual situation.

With the resolute, full and faithful implementation of the "One Country, Two Systems" and "patriots administering Hong Kong" principles, we could see a bright future for Hong Kong's democratic development. The ending chapter of the white paper on "Hong Kong: Democratic Progress under the Framework of One Country, Two Systems" issued by the State Council Information Office lately, as quoted below, provides us with the confidence in Hong Kong's future development:

 "The implementation of 'One Country, Two Systems' in Hong Kong has achieved a great success, showing a strong adaptability and institutional resilience. The Communist Party of China and the Chinese Government have the confidence, wisdom and capability not only to well manage and promote development in the Mainland with socialism, but also well manage and promote development in Hong Kong with capitalism, also promote Hong Kong's democratic development in accordance to the actual situation."

Let us join hands to work hard together for a brighter future of Hong Kong!

December 22, 2021

This election is competitive, fair, open, just and clean. The right of vote of the electorate and the right to be elected of the candidate are safeguarded under the law. More than 1.35 million and 70 000 voters casted their votes in the geographical and functional constituencies respectively. For the Election Committee constituency, the voting rate even reached 98%. These reflected citizens' wish and expectations for the work of the new LegCo. I believe that every newly elected LegCo member will work hard and to deliver their best for the benefit of our people and to address their needs.

Under the new paradigm, this LegCo election had been able to get back on its ultimate aim to focus on meritocracy and serving the people. In some foreign cases, when an election has led to vicious partisanship and long term political standstill, the genuine demand of the people could hardly be addressed effectively, which would in turn undermine the credibility and legitimacy of the system in the long run.

This first LegCo election under the improved electoral system shows that our election culture has got back on the right track, laying a sustainable foundation for high quality and solid democracy. After all, the key purpose of the improved electoral system is to enable patriots with passion to serve Hong Kong, contributing to Hong Kong's development and addressing people's needs. I look forward to working hand in hand with members of the new LegCo in delivering better and concrete outcomes for our people.

To achieve a steady democratic development for Hong Kong, we need to have a better understanding on our past development path in determining our future development direction. Today the State Council Information Office timely promulgated the white paper on "Hong Kong: Democratic Progress Under the Framework of One Country, Two Systems", which provided a detailed and systematic historical account of Hong Kong's democratic development.

As pointed out in the white paper, there were basically no democratic development when Hong Kong was ruled by the Britain. Even when the British government ratified the International Covenant on Civil and Political Rights in 1976, a reservation was particularly made to exclude Hong Kong from the application of the article of establishing periodic elections. Only until Britain realised the determination of our Country to resume sovereignty over Hong Kong, it started the so-called "political reform" with a view to sustaining its influence in Hong Kong.

On the other hand, since Hong Kong's return to Motherland, the Central Government has been supporting and safeguarding Hong Kong's constitutional and democratic development in accordance to the Constitution and HKSAR Basic Law. The Central Government is the designer, establisher, defender and the promoter of HKSAR's democracy and has the ultimate authority over Hong Kong's electoral system. Any "constitutional reform" with an attempt to reject the Central Government to exercise overall jurisdiction over the HKSAR is not only unconstitutional and against the requirement of the Basic Law, but will also put Hong Kong in a wrong direction in democratic development, undermining the long term stability and development of Hong Kong. Since the implementation of Hong Kong National Security Law and the improvement of the electoral system, Hong Kong's constitutional development has been able to get back on the constitutional, legal and right path, which best suits Hong Kong's actual situation. With the new LegCo to be established, Hong Kong is going to start a new chapter in which we will be able to improve the quality of democracy, consolidate the constitutional order, implement the executive-led system and establish good governance for the wellbeing of the people.

Hong Kong has reached a new milestone with the establishment of the new LegCo. In this journey of new era, let us join hands together to take Hong Kong forward and proactively contribute to our Country's development towards prosperity.

December 20, 2021

The latest stable environment has provided us with the golden opportunity to focus on development. We need new visions, new blueprint and a greater driving force to expedite Hong Kong's development. Your participation will give us the needed momentum to build a better future for Hong Kong and address people's aspiration for a better quality of living.

I casted my vote this morning and the process was very smooth. The candidates are of higher quality in general, which supported the improved governance of Hong Kong in the new development phase.

During the course of Hong Kong's development, we have to address the different needs of the society, strike a right balance between the interests of different strata and sectors, and take into account the business environment for enterprises and Hong Kong's overall competitiveness. The administrators of Hong Kong should take all-round consideration and make decisions based on the overall interest of the society. At the same time, we should also understand and tackle the dilemma that may arise in the development process. As such, as citizens' representatives in monitoring and pushing forward the work of the executive branch, the LegCo should consist of representatives of different strata and sectors, so as to ensure that the Government's work can strike a suitable balance between different interests of the society and facilitate the stable progress of the society.

There are 153 candidates running in today's election, representing different strata, interests and parts of the political spectrum in Hong Kong. Apart from those from political parties whom we are more familiar with, there are also professionals from different industries, leaders from business sector, labour sector or associations, former government officials and people from grassroot. Through the competition of programmes and ideas, they have brought out diversified proposals and options for Hong Kong's better development and priority in resources deployment.

The improved electoral system has shown a wide representativeness, political inclusiveness, fair competition and balanced participation. Your vote could bring the right candidates with passions, visions and capability to the LegCo, ensuring the Government to have a multi-angle consideration in making decisions. Hong Kong is moving towards governance and prosperity. Under the latest stable environment, we should not only aim to progress steadily, but also speed up our pace of development to unleash Hong Kong's full potential - what we aim should be a stable and fast development for Hong Kong.

Different countries or cities pursue their own development paths which best suit their actual situation. The arrangement of "One Country, Two Systems" has given Hong Kong its stable and unique strength. Today's election allows Hong Kong to run democracy under a stable and free environment in accordance to our constitutional framework, which also best suits our actual situation. For any new institutional arrangement, it takes time for the people to get familiar with. By participating actively, we could promote a virtuous cycle within the system and facilitate a gradual recovery for Hong Kong's development. This institutional strength will help us achieve a more fruitful outcome for our development.

Casting our votes is a chance for us to express our wishes and expectations on Hong Kong's development. Your participation will help build a brighter future for Hong Kong.

Let us build the future and share the fruit of development together.

Cast your vote for Hong Kong!

December 19, 2021

To expedite Hong Kong's development and continue to improve people's livelihoods, we need a stable environment and an effective governance system. We have to utilise our institutional strengths under the "One Country, Two Systems" arrangement and the executive-led system, with a view to enhancing the governance and problem-solving capability of the Government and sharing the fruits of social and economic development with the people.

Under the leadership of the Communist Party of China, the new China has successfully overcome different challenges and achieved continuous economic and social development. In recent years, our country has reached the goal of building a modestly well-off society and eliminating absolute poverty. People have seen a substantial improvement to livelihoods and are looking forward to a better future. The Chinese nation is progressing on the journey of great rejuvenation.

As for Hong Kong, we are also working towards the same direction. The Hong Kong SAR Government has been working to improve people's quality of life and making long-term planning for the future of the city.

Under the "One Country, Two Systems" arrangement, we can continue to capitalise on the strengths and flexibility of capitalism and market economy to allocate resources and production factors effectively, enabling better economic development, or so called "making the cake bigger". At the same time, we should "allocate the cake well", as the fundamental objective of development is to promote the interests of the people. Only by allowing everyone to share the benefits of development without neglecting the needs of the minority could a society sustain harmonious and stable development.

For years, the pan-liberalised political system adopted by some western democracies has led to the excessive growth of political power in the capitalist system and a deeply imbalanced wealth distribution, which would undermine the interests of the people and the stability of the society in long run. Some statistics showed that in the US the wealth owned by the richest 1% exceeds that owned by all middle-class families combined. If economic development could only benefit and concentrate wealth in a small number of people and enterprises, and if the amount of wealth determines the political say, it would be difficult to achieve balanced and stable social development and safeguard people's wellbeing.

Under the development model of the Mainland, the interests of the people are put at the centre of development. From the elimination of absolute poverty, building of a modestly well-off society, to the great rejuvenation of the Chinese nation, development is all about substantially benefitting the people. In fact, the living standard of people in the Mainland is continuously improving and they are having greater life satisfaction.

Different countries pursue their own development paths, leading to different development models which suit their own needs. Only through mutual respect could we ensure a stable development environment for all. The institution of new China has shown strong adaptability in the course of development, while some countries' development is stuck in bottlenecks or even faced with social polarisation. Without proper solutions to their own problems, some of these countries are passing the blame to the Mainland to distract people from their own failure.

Against this background, we could understand why the US and other western countries have been trying to hinder the development of the Mainland and Mainland enterprises. The US and other western countries have unfairly treated some technology companies with a civil background, or even restricted their institutions and nationals from investing in those companies.

We should learn from history and grasp the current international geopolitical situation. By fully capitaalising on our institutional strengths under the "One Country, Two Systems" arrangement, we could promote better development for Hong Kong, improve people's livelihoods and build a stable and prosperous future.

This LegCo election has shown wide representativeness, political inclusiveness and balanced participation. With the enhancement in its composition, the new LegCo will consist of Members from different strata and sectors who could represent the overall interests of the society. Over the years, many social problems have accumulated along with Hong Kong's development under the capitalist system. The improvement to the electoral system could enable continuous development in Hong Kong while striking a better balance between the interests of different sectors and districts, reflecting the people's will in a more comprehensive manner and in accordance with Hong Kong's actual situation and overall interests.

We have to be confident in the "One Country, Two Systems" arrangement and determined in walking on our own path. The international environment is evolving and there is a rising trend of de-globalisation, unilateralism and protectionism around the world. Moreover, with many major economies facing the risk of high inflation which might affect their economic recovery, coupled with the continued disruption brought by the pandemic, our world is facing increasing instability and uncertainty. As a small and open economy, Hong Kong is also faced with many challenges and risks. The Central Economic Working Conference concluded last week announced that stability would be the top priority of the economic work next year and progress has to be made under stability. This also reflects the challenges to be faced by the global economy next year.

Given the more complicated international situation, we have to clearly recognise the actual situation, stay focused and be versatile. We also need to grasp the development opportunities, while staying alert and managing the risks well. With the support of our country, our institutional strengths and the governance capability brought by the improved electoral system, Hong Kong can further prosper in the new development phase. We look forward to working with the new LegCo Members to foster better development. For the bright future of Hong Kong, let's vote on 19 December!

December 12, 2021

Indeed, in order to promote a prosperous and stable development for Hong Kong, a harmonious society with mutual respect, and a sense of achievement and satisfaction for our people, we need not only the administration to deliver with full effort, but also our citizens to participate in public affairs proactively.

Your participation and support are crucial for Hong Kong's success.

Yesterday, I went out with my colleagues during lunch hour to promote the upcoming LegCo election and encourage people to vote. With the LegCo playing the function of monitoring and facilitating, I am sure we can built a better future for Hong Kong together. Many citizens shared with me their support towards the election and their eagerness to vote on the election day.

The candidates for the election have a very diversified background, representing different strata, interests and parts of the political spectrum. Apart from those from political parties whom we are more familiar with, there are also professionals from different industries, leaders from business sector, labour sector or associations, former government officials and people from grassroot.

In short, the improved electoral system has shown a wide representativeness, inclusiveness, balanced participation and fair competition. I believe the future composition of the LegCo will better represent the overall interests of Hong Kong and help us better address the deep-seated problems accumulated over our past development process.

Over the years, we have missed the opportune time and moment for solving problems in the society due to the non-functioning of the LegCo, leading to a stagnation in Hong Kong's development. With this historic opportunity for us to step out of the past difficult situation, the whole society can come together to help Hong Kong move forward. Let's vote together on 19 December!

December 10, 2021

The Constitution is the fundamental law of the state, serving as the overall guiding principle for governance and has the highest legal status and legal effect. The Constitution sets out the constitutional order of our Country and gives the legislative backing and source of power for the Basic Law. The Constitution and the Basic Law together form the constitutional basis of the Hong Kong SAR. The "One Country, Two Systems" principle, the Basic Law and the establishment of the Hong Kong SAR are based on the authorisation by the Constitution.

Article 1 of the Constitution sets out our national system, stating that "The socialist system is the fundamental system of the People's Republic of China. Leadership by the Communist Party of China is the defining feature of socialism with Chinese characteristics. It is prohibited for any organization or individual to damage the socialist system."

As stipulated in Article 31, "the state may establish special administrative regions when necessary. The systems instituted in special administrative regions shall, in light of specific circumstances, be prescribed by laws enacted by the National People's Congress."

Article 62 specifies the functions and powers of the National People's Congress, under which item 14 covers "deciding on the establishment of special administrative regions and the systems to be instituted there". This provides the constitutional basis for the establishment of the "One Country, Two Systems" institution.

In other words, without the authorisation by the Constitution, the "One Country, Two Systems" principle, the Basic Law and the Hong Kong SAR would not have been established, and the smooth return of Hong Kong to the Motherland in 1997 would not have happened. The Constitution and the Basic Law are the cornerstone of Hong Kong's rule of Law. By correctly understand the Constitution, we would have a more comprehensive and precise understanding on Hong Kong's constitutional order and the principle of "One Country, Two Systems".

From the perspective of the Constitution, to support the constitutional order of the SAR, we shall respect the socialist system of the Country and support the leadership of the Communist Party of China. In fact, the enactment of the National Security Law in Hong Kong and the improvement of the electoral system are all implemented in accordance with the Constitution, which enabled Hong Kong to step out from chaos, restore governance in critical moments and embark on a journey towards prosperity.

The Constitution and the Basic Law enable Hong Kong to capitalise the advantages brought by the "One Country, Two Systems" principle for development in times of stability. They also help Hong Kong to restore social stability and safeguard the overall interest of the society and citizens in times of turmoil. The Constitution and the Basic law enable the successful and steadfast implementation of the "One Country, Two Systems" principle and ensure the long term prosperity and stability of Hong Kong.

"One Country, Two Systems" is a prominent institutional strength of our Country's governance system, supporting Hong Kong to firmly and steadily develop since our return to the Motherland. Next year marks the 25th anniversary of the establishment of the Hong Kong SAR. Although throughout the years, there may have been some hiccups during the implementation of the "One Country, Two Systems", Hong Kong has inarguably achieved remarkable development and is progressing towards a more stable and prosperous future.

Amid the changing situation of a century, our Country has been developing steadily and robustly. Hong Kong will continue to play our unique role and proactively contribute our strengths on the path of the great rejuvenation of the Chinese nation. With the guidance and safeguard provided by the Constitution and the Basic Law, and the resolute, full and faithful implementation of the "One Country, Two Systems", we will be able to integrate into the national development more proactively and pursue a complementary and coordinated development with the Mainland. This will build a better future for Hong Kong and Hong Kong can go hand in hand with our Country to realise our aspirations.

Only by deeply rooted with our County can Hong Kong achieve a continuous development. Only by firmly securing the "One Country" principle can the smooth operation of the "Two Systems" be ensured. The implementation of the "patriots administering Hong Kong" principle provides the basis for Hong Kong's prosperous development, while the executive-led system will enhance the effectiveness of governance. Your participation is vital for the good governance of Hong Kong. The Legislative Council Election will be held two weeks later, your vote matters and let's join hand to build a better future for Hong Kong.

December 5, 2021

A few days ago, I invited my colleagues to watch an election forum arranged for the 51 candidates running for the 40 seats of the Election Committee constituency. During the debate, the candidates' focus fell on a wide range of topics, from Hong Kong's integration into national development, our economic and industry development, to people's livelihood and better allocation of resources to address wealth disparity. Although you may not be familiar with all of the candidates, each of them has been actively participating in social and community services, with a deep understanding on Hong Kong's social and economic development.

With the improvement to the electoral system, Hong Kong is entering a new phase of governance and prosperity and the LegCo is moving towards a new paradigm. Under the new political landscape, the next term of LegCo could work in full swing to improve people's livelihood, promote economic development and build a better future for Hong Kong.

Regardless of your background, your keen attention to and participation in the LegCo election is very important. The election provides an opportunity for us to deepen our understanding and express our views on Hong Kong's development and other social issues, enabling us to work together to build a better future for Hong Kong and share the fruits of development.

The implementation of the National Security Law and the improvement to the electoral system in Hong Kong have restored stability and put Hong Kong back on the right track of social and political development. An improved electoral system will not only strengthen and put into practice the principle of "patriots administering Hong Kong", but also implement the executive-led governance and enable the administration to put the interests of people at the centre of development. By doing so, we can concentrate on promoting development for people's well-being, addressing deep-seated problems in Hong Kong and seizing the enormous opportunities brought by national development.

With the full support of the Central Government and restoration of executive-led governance, the Government could work at full steam to promote development and improve people's livelihood. At the same time, the LegCo could actively perform its function of facilitation and monitoring and the society could focus on economic and social development. With our society working together for a better Hong Kong, we could resolve our deep-seated problems.

How could we effectively overcome the constraints on our development and address the needs of different strata and sectors of our community? Apparently, it is important to engage more people with different expertise and experience from different social strata, bringing in multiple perspectives yet working towards the same objective to build the future of Hong Kong. From this angle, we could better understand the meaning and function of the improvement to the electoral system.

In fact, the 153 candidates of the LegCo election have various background. Apart from familiar faces from political parties, there are also professionals, leaders from business sector, labour sector or societies, former officials and people with religious or grassroots background. They represent different parts of the political spectrum, reflecting a balanced participation in the election.

The candidates' election platforms cover a wide range of issues, such as land and housing, labour and social welfare, healthcare as well as economic and political development. The candidates indeed hold different views on policy issues, reflecting the complexity and considerations behind public policies. Faced with different needs and values in the society, some of which may even be conflicting ones, the Government has to strike a right balance.

The candidates of the LegCo election represent the views and interests of different groups or backgrounds, just like a miniature of our community. If elected, they could assist the Government with policy formulation, addressing pressing problems while having a vision for long-term development. The Government and the LegCo could work together to enhance public policies and capitalise on the prevailing situation to achieve better development.

What is our vision for the future of Hong Kong? I believe many people aspire to economic prosperity, job security, better quality of life and decent living space. Let's actively participate in this LegCo election and play a part in achieving balanced and inclusive participation, facilitating LegCo to focus on the development of Hong Kong and support our society to progress in unity.

As for the local bond market, although its speed of development appears to be slightly behind that of the stock market, it still stands at a leading position in Asia. In recent years, the Government is determined to develop the local bond market. Through the government bond programmes, we have promoted bond issuances in multiple types and currencies. With tax measures, we have attracted an increasing number of entities in the region to raise funds in our market through issuing bonds. Significant progress has been seen in various aspects of our market including the speed of development, the size and the variety in product types and risk management tools.

Let's take green bonds as an example. In the 2018-19 Budget, I proposed the establishment of a green bond framework, which clearly set out the direction for the Government to promote green bond issuances, thereby channeling funds to propelling the development of a green and low-carbon economy. The Government Green Bond Programme has been working well, meeting with overwhelming market response. I therefore announced in my Budget earlier this year to double the borrowing ceiling of the programme to HK$200 billion.

Last week, we successfully offered a new batch of green bonds with a total issuance size of US$3 billion. About one-third of them were US dollar-denominated bonds and the rest were euro-denominated. This was the HKSAR Government's inaugural offering of euro-denominated bonds and also the first time that an Asian government issued a euro-denominated green bond of as long as 20 years. At the beginning of this year, we issued a 30-year US dollar-denominated green bond, which was also the first issuance among Asian governments.

Europe has been running at the forefront of green finance. This time, more than 70% of our EUR tranches were allocated to European investors, which demonstrated that European investors had great confidence in the financial strength of the HKSAR Government as well as our commitment in promoting green finance. The successful issuance of euro-denominated green bonds has further broadened our investor base and diversified our green bond programme. During the green bond roadshow, we were delighted to see that on the whole, international investors had a high regard for our green bond framework and our prudence and transparency in project selection.

This batch of green bonds was well received, achieving very low levels of funding cost and providing an important new benchmark for potential issuers in Hong Kong and the region. Taking the 10-year USD tranche as an example, the yield was 1.855%, which was only 23 basis points over the 10-year US Treasuries. The yield of the 5-year EUR tranche was close to zero, while that of the 20-year EUR tranche was 1.059%. This accomplishment has not been easy as it has come at a time when the global bond market is increasingly volatile.

Green bond issuance is just part of the Government's efforts to develop Hong Kong as a green finance centre in the Asia-Pacific region. We have been promoting the development of green finance in three main directions. First, on the regulatory front, the Hong Kong Monetary Authority, the Securities and Futures Commission and various regulators have introduced a series of regulatory measures on areas like climate risk management and disclosure. Hong Kong is the first place in Asia which has explicitly required the financial industry to implement the G20 climate-related financial disclosures by 2025. At the same time, we will also adopt the Common Ground Taxonomy developed by China and the European Union, which will, to a large extent address the pain point of the lack of a unified standard among the financial sector. These measures will help financial institutions better manage the risks associated with climate change and the transition towards decarbonisation, while bringing additional benefit of channeling funds towards addressing climate change and promoting carbon neutrality through market forces.

Second, on green finance infrastructure, talent and data are the major bottlenecks in the development of green finance around the globe. The Government and various regulators have jointly launched the Centre for Green and Sustainable Finance to support the industry in areas such as capacity building, data collection and analysis, etc. We also launched the Green and Sustainable Finance Grant Scheme in May this year to provide subsidy to corporate green bond issuers and loan borrowers on expenses on bond issuance and external review services, incentivising their green transition.

Third, on enhancing the industry and public awareness and attention on green finance, apart from the engagement of Exchange Fund in responsible investment and expansion of the green portfolio, we have also created more green finance business opportunities for the financial sector through stepping up our promotional efforts and issuing government green bonds. As a next step, we are actively preparing for the issuance of retail green bonds, which will provide an avenue for the public to invest in and promote our green economy. Through sharing the returns with the general public, our financial services can benefit more people while we enjoy a greener environment.

The Government, by promoting green finance development, is attracting resources for Hong Kong's own sustainable development. As the country's international financial centre, Hong Kong also has the responsibility to support the country's "30·60" targets for carbon emission reduction. The successful issuance of RMB-denominated green bonds by the Shenzhen Municipal Government in Hong Kong last month has set an important example for governments and enterprises in the Mainland, especially those in the Greater Bay Area, to make use of the Hong Kong market for green financing. To encourage more Mainland issuers to do so, the Government will soon issue RMB-denominated green bonds, following the successful issuance of the USD and EUR tranches last week, consolidating further Hong Kong's role as an offshore RMB hub and green finance centre.

Climate change is an imminent issue for all of us. The Government and financial regulators are working with the industry to enhance the financial sector's resilience to climate risks and to seize the relevant opportunities, so as to support Hong Kong meeting its pledge to achieve carbon neutrality before 2050. At the same time, we also leverage our role as the financial centre for the country and Asia to move towards green and sustainable development.

November 21, 2021

In the report of the sixth plenary session of 19th Central Committee of the Communist Party of China (CPC), it has comprehensively summarized the important achievements and experiences learned from history since the establishment of CPC a hundred years ago. It has provided answers on CPC's success in the past, and also how it can continue to succeed in the future. Looking back into the different development phases in the past, we can see some common success traits, including a strong core leadership, vigorous sense of mission, adhering to the principle of putting the people first, being persistent in its visions and beliefs to walk on its own path, with the readiness to adjust and self-improve.

The key to the stability, development and success of our Country is having a strong core leadership and the guidance of scientific theories. The Xi Jinping new era socialist thought with Chinese characteristics has incorporated the basic theory of Marxism with the actual situation of China and Chinese culture, and continues to promote the innovation and implementation of the theory, so as to provide a strong guidance for the development of the Country.

For any country and any political party, a core leadership is of utmost importance. Mr Deng Xiaoping once said, "Any leading group needs to have a core. Any leadership without a core is unreliable." By having a core, the leadership can keep its steadiness and overcome any kind of hardship. The plenary session has confirmed President Xi as the major establisher of the new era socialist thought with Chinese characteristics. Under the core leadership of President Xi, the Central Committee of the CPC has achieved historic success in promoting the development of the Party and the Country, which has showcased its deep care to the people, remarkable political wisdom and vigorous sense of mission, leading the Chinese nation rising to prominence. The leadership with President Xi as the core is the key driving force for the whole development, leading the Country to march into the new era of socialism with Chinese characteristics.

The resolution passed by the sixth plenary session is not only of utmost importance to the future development of the Country, but also to the future of Hong Kong. As such, we need to have a deeper understanding on it. For instance, the plenary session has highlighted the principle of "putting the people first" as one of its ten valuable experiences gained over the past a hundred years since the establishment of the CPC. By putting the interests of the people as the centre of development, we could rightly adjust our focus for our economic and social development. The purpose of economic development is to enhance the wellbeing of the people. This also brings out the importance and meaning of the goal "common prosperity" - not only shall we make the cake bigger, but also divide the cake well.

However, there is no shortcut to common prosperity, which could neither be achieved solely by secondary distribution. We need to create the wealth for the society together, and to share the fruit of it together. We need to enhance the balance, coordination and inclusiveness of our development, so that it could maintain efficiency and promote fairness at the same time. Leading with innovation and technology, we could promote a more vigorous and diversified economic development and maintain the momentum of growth, so as to provide the material basis for realising common prosperity.

As reaffirmed in the plenary session, the Central Government has adopted a series of effective measures, including the firm implementation of the "patriots administering Hong Kong" principle, which helped Hong Kong to achieve a major transition from chaos to governance and provide a solid basis for the steadfast and successful implementation of "One Country, Two Systems". For that we all have a deep understanding. The nomination period for the Legislative Council election, which is to be held next month, has just ended last week. A number of people with more diversified background and broader breath of representation have submitted their nomination forms, ensuring a vigorous competition for the election. We can foresee that the future Legislative Council could provide more diversified views and suggestions to the executive branch, facilitating Hong Kong to move towards the new phase of good governance.

The arrangement of "One Country, Two Systems" allows Hong Kong to maintain our unique institutional strength and take up a special and irreplaceable role in the development of our Country. We must also remember that the principle of "One Country" is the root and basis of the arrangement. As such, we have to make the best effort in safeguarding national security and supporting the stable development of our Country, including firmly supporting the strong leadership of the Central Government on Hong Kong, comprehensively and rightly implementing the "One Country, Two Systems" arrangement, and realising the principle of "patriots administering Hong Kong". Also, we need to promote Hong Kong's integration into the national development by rightly positioning our role, so as to perform our strength and contribute to the development of our Country.

The development of our Country needs the power of unity, so does Hong Kong's future. We need to be determined on our goals and undeterred by any risk and interruption. Hong Kong share the same dream with our Country. Let us to be united with all our people to fight for the great rejuvenation of the Chinese nation!

November 14, 2021

In the blink of an eye November is upon us, and it is time for me to start preparing for the consultation of the Budget next year. That exchange session with children might be seen as an unofficial kick-off of the consultation exercise. In my daily work and activities, I like to listen to our people and put myself in their shoes. As regards the Budget, apart from providing resources for the Policy Address, the Budget also serves to allocate public resources effectively, with a view to better facilitating Government's work and public services. As resources are limited, we need to allocate them appropriately in a reasonable and effective manner. Given the diversified needs of different sectors in the society and the wide range of issues that need to be addressed, we have to assess the urgency of the problems, set priority and allocate resources in a pragmatic manner, so as to gradually tackle people's different needs.

As Hong Kong is a small and open economy, Government revenue has always been affected by economic cycle and market sentiment to a large extent. How about the situation this year? With the good performance in export and our effective measures in controlling the epidemic, our economy has seen a gradual improvement. The Consumption Voucher Scheme has also boosted businesses of the catering, retail and service sectors. These all point to an improvement in Government revenue.

In addition, some land sites in the prime urban area were sold for a high price. And driven by the positive outlook on the property market, property developers have become more active in paying land premium in order to develop their land, driving the relevant income to reach a new historical peak of over HK$40 billion as at end October. Revenue from stamp duties on property and stock were also higher than expected due to the flourishing market performance in the first half of the year. As such, the fiscal deficit of this financial year is expected to be far less than our estimate in early this year.

When we look into the Government revenue, operating revenue, such as salary tax and profit tax, are always guided by the economic cycle. Capital revenue such as land income is even further affected by market sentiment and atmosphere. In short, as we can see from the Government revenue recorded over the past two decades, land income of a single year is not a reliable and effective basis in estimating the land income of the following year. Moreover, the availability of land sites in premium urban areas varies greatly from year to year and the supply of land is limited.

As such, Government accounts have adopted the following categorization: pairing the operating revenue such as salary tax and profit tax with operating expenditure such as those for education, healthcare and social services; and paring the capital revenue such as land sales income with capital expenditure such as those for implementing capital works projects. By doing so, a clearer picture on the nature and sustainability of the Government revenue and expenditure can be presented.

As for the operating expenditure, our spending in healthcare, social services and education have increased by 53%, 62% and 25% respectively over the past five years. However, the increase of operating revenue over the same period is far from catching up with the same pace. There were even huge deficit in the operating account in the past two years as a result of the economic downturn and the outbreak of pandemic.

With the considerate amount of non-recurrent revenue brought by land related items this year, the problem of surging expenditure can be partly addressed. However, just like maintaining personal finance, we may use the profits earned from property or stock market to make other investment and consumption, but we should not expect the same profit would continue in the future. Similarly, if we make commitment in increasing recurrent expenditure based on that kind of expectation, it would be just like over-drafting from the future and could bring incalculable potential risks. In fact, some of the recent Government's commitments involve large amount of recurrent expenditure, including the extension of the $2 Fare Concession Scheme to cover elderly aged between 60 to 64, the relaxation of eligibility for receiving the Old Age Living Allowance, and the paying of MPF for low-income class. The financial implications of all these measures will only be shown in the future financial years.

Due to the outbreak of pandemic and economic downturn in the past two years, we have deployed strong countercyclical measures to alleviate the pressures on people and enterprises, including some "one-off measures", or the so called "sweeteners" such as tax reduction and rate concession. Yet due to our narrow tax base, tax reduction could only benefit a relatively limited amount of people against the total population. And even though some people are living in self-owned property, there are many others living in rented flats, who could hardly be benefitted from rate concession. In short, when formulating any one-off measures, not only should we consider administrative feasibility and efficiency, but also their coverage and fairness.

Looking ahead, Hong Kong is moving towards a new phase of governance and prosperity. The executive-led system under the principle of "patriots administering Hong Kong" has brought us a new style of governance and the enhancement of the electoral system has revamped our political landscape. Under this new phase, what parameters should we take into account in considering the raising and allocation of resources? In my view, the following elements are necessary:

• - Tangible items that make people have a sense of achievement;
• - The grassroots should be further benefitted, and to share our fruit of economic development in a fairer manner and work hard along the goal of "common prosperity";
• - To promote a stronger, more comprehensive and solid economic growth for Hong Kong, with a view to providing more high-quality jobs to increase the income of people;
• - To address deep seated dilemmas such as housing and wealth disparity.

These tasks could not be accomplished overnight and need the support of the whole society. To push this forward in our next year Budget, we need your active participation and discussions. We will make our best effort in forging consensus and win the understanding, recognition and support of the people.

After the implementation of Hong Kong National Security Law and the enhancement of the electoral system, we are now holding our first Legislative Council election, which has reflected a more balanced participation. During the first week of nomination, we can see candidates coming from different sectors, backgrounds and professions, some of them are young professionals. Their goals are also more pragmatic, focusing on how to promote the better development of Hong Kong. The new electoral system is able to attract more candidates with different backgrounds, which could broaden the representativeness of the Legislative Council, showing that the new system could achieve a more diversified balance of views. It could be expected that the competition will be intense in this election and the society will have a growing expectation for its development. Let us participate in the exercise actively, and join hands together to build a better future for Hong Kong.

November 7, 2021

Alongside the roll-out of mass vaccination programme around the world, the global anti-epidemic work has entered into a new phase. The successive reopening of some major economies together with the solid recovery of the Mainland economy have led to a sharp rebound in global demand. Against this backdrop, production and trading activities in Asia were robust. The value of Hong Kong's total exports of goods surged by 30% in the first half of the year. While the growth momentum moderated afterwards, total exports of goods still posted a 22.7% increase in Q3.

The local epidemic was largely under control in recent months, and the public went out more to spend. The value of total retail sales in Hong Kong rose by 8.4% in the first half of the year, while total restaurant receipts also turned to a 0.5% increase. The disbursement of electronic consumption vouchers in the past few months further boosted sentiment in the retail and restaurant sectors. Retail sales rose by 11.9% in August, and the upcoming figures on retail sales and restaurant receipts should reflect the continued vibrant atmosphere in the market.

The economy grew notably by 7.8% year-on-year in the first half of the year, driven by strong export performance and the gradual revival of domestic demand. Advance estimates on GDP for Q3 will be released tomorrow (1 November). As the recovery of Hong Kong's economy has become more entrenched in recent months as evidenced by trade and consumption-related indicators, I believe that the growth figure for Q3 would still be visible. However given the much stronger-than-expected rebound in the first half of the year and the higher base of comparison in the second half of last year, the year-on-year growth rate in Q3 should be lower than that in the first half.

The trend of sustained solid recovery in the economy is also witnessed in the latest labour market data. The seasonally adjusted unemployment rate declined sharply from a 17-year high of 7.2% at the beginning of this year to 5.5% in Q2, and further to 4.5% in Q3, which is the lowest level since Q1 of last year. Wage and payroll growth also accelerated slightly in Q2. Total employment in the retail, accommodation and food and beverage services sectors combined, which were hard hit by the epidemic, also bottomed out and rose by 3.5% year-on-year in Q3. In addition, business sentiment generally improved and augured well for the recovery of business investment activities.

Looking ahead to Q4 of this year, the growth rate of Hong Kong's exports of goods will likely slow down as global economic growth has already shown signs of peaking out. Domestically, the performance of consumption-related sectors will continue to be supported by the improved employment and income conditions, as well as the effects of the Consumption Voucher Scheme. In mid-August, the Government projected the economic growth for 2021 as a whole to be 5.5% to 6.5%. Judging from the developments so far, I expect that the actual growth figure for the year as a whole should be close to the upper end of this forecast range.

While the economy has stayed on a path of steady recovery, the business environment and outlook will need to improve continuously so as to benefit industries that employ a large number of grassroots workers. According to the Census and Statistics Department, the year-on-year increase in the average wage rate accelerated slightly to 1.1% in June this year. However, after discounting the changes in consumer prices as measured by the headline Consumer Price Index (A), the overall average wage rate still fell by 0.3% in real terms. To a certain extent, this figure reflected that even though the economy has continued to revive so far this year, the actual "sensory temperature" for the grassroots workers may still yet to warm up.

In addition, while the recovery trajectory of the Hong Kong economy has remained solid so far, we cannot overlook the risks lurking in the external environment. The more infectious Delta variant continues to plague many parts of the world. This, together with supply bottlenecks in many economies, have posed downside risks to the global economic outlook. Moreover, the elevated energy and commodity prices, rising shipping costs and heightened external inflationary pressures could also hinder global economic growth and also exert inflation pressures in Hong Kong. Changes in the monetary policies of central banks in the US and Europe, as well as China-US relations and geopolitical tensions also require attention.

Earlier, the International Monetary Fund (IMF) forecasted that global economic growth would decline from 5.9% this year to 4.9% next year. The IMF also pointed out that the momentum of the global economic recovery has weakened recently and the balance of risks is tilted to the downside. Therefore, we must stay alert. I will make a forecast for Hong Kong's economic growth next year when I prepare the coming Budget.

Hong Kong's socio-economic development has always been inseparable with our Country. Over the years, cross-boundary movement of people between the two places for business, trade, tourism, education or visiting relatives, has become an important part of our economic activities and daily lives. The HKSAR Government is further adjusting its anti-epidemic measures and arrangements with a view to resuming the normal flow of people with the Mainland as soon as possible, thereby providing a major impetus for our economic recovery. At the same time, Hong Kong is a business hub connecting the Mainland with the rest of the world. Many foreign companies in Hong Kong, including many foreign financial institutions, have operations in the Mainland. Resuming quarantine-free travel with the Mainland could facilitate their staff to visit and conduct business in the Mainland, which is very crucial for Hong Kong to uphold our hub status.

October 31, 2021

Despite our continuous economic development, Hong Kong's pattern of industries and employment have led to our unbalanced economic structure. Over past two decades, the financial service sector has taken up a much more important proportion in our GDP, which has surged from 12.8% to 21%. However, its contribution to the share of our employment only grew from 5.3% to 7.1%, accounting for about 270 000 employed persons. For the trade and logistics sector, the portion it took up of the GDP has dropped from 23.6% to less than 20% over the same period, and its share of the job market declined from 23.8% to 17.5%, but still employing over 670 000 people. For the tourism sector, although it only accounted for 4.5% of our GDP just before the outbreak of the pandemic, it employed 6.6% of our workforce, i.e. about 260 000 people. Under this employment structure, even the financial services sector has enjoyed a robust development, which may also stimulate the demand on our retail, catering, tourism and transport sectors, employees of different sectors are still having an unbalanced share of the fruit of economic development.

On the other hand, the value of assets of different places around the world has kept surging in recent years due to the excessive free capital brought by the quantitative easing policy implemented by many western countries. In Hong Kong's case, coupled with our long-time shortage of land supply, the price of flats has already far exceeded the affordability of most of our citizens, leading to a high living cost which takes away a big slice of the wages hardly earned by the breadwinners and undermines their actual purchasing power.

To a certain extent, our economic structure has led to a seriously uneven distribution of the fruit of the economic development, and worsen the income and wealth disparity. The growth of people's income can hardly catch up with the surge in living costs. This becomes the major dilemma of our society, which greatly undermines people's sense of achievement and satisfaction, and even their sense of belonging to the society.

What are our aspirations for the life living in Hong Kong? Different generations may have different wishes, from more playing spaces, a more diversified platform for career development, to more comfortable living environment and a caring society for the elderly. How should we plan the development of Hong Kong in order to fulfil the different needs of our citizens?

If we see the development of Hong Kong as a robustly growing Banyan tree, what it needs is the participation of all of us to make it grow stronger.

A stable environment is the foundation for development and prosperity, just like the roots of the tree. The "One Country, Two Systems" principle has to be fully implemented and Hong Kong needs to firmly grasp the opportunities brought by the development of our Country. The "One Country, Two Systems" principle is one of the fourteen basic governance principles of the Chinese Communist Party, which is not only a special arrangement for the unification of the Country, but also an institutional strength of our Country. With the governance of Hong Kong being part of the national governance system, we have to fully and comprehensively understand the relations between the Constitution and the Basic Law, the national strategy and plan of economic development and rightly position ourselves. By doing so, we could better take up our roles in the development of our Country, the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), and have a better cooperation with other brother cities in the GBA. We have to perform our strengths to serve the needs of the Country, which is also what Hong Kong needs indeed for its further development.

Our traditional pillar industries, such as financial services, are just like the main trunk of the tree, which we need to make it further stronger. Similar to those freshly grown prop roots which need to anchor to the ground for better development, our emerging industries, such as innovation and technology, also need to connect with the production factors and the market of the Mainland for a robust and speedy growth.

By leveraging the demands and opportunities of the Mainland and the GBA in particular, with our own strengths and the effort of the Government, other sectors of Hong Kong, such as professional services, real estate, catering, retail, art, cultural and performance activities would enjoy a broader space for development. This will create more jobs and opportunities of better career prospect for our citizens, especially our young people. After the implementation of the Hong Kong National Security Law and the enhancement of the electoral system, the executive-led system is back on track and the development of Hong Kong under the new phase will be expedited to show a new landscape.

No matter how the economic development flourishes, the most important thing is that the mass public could share the benefits and the fruit of the economic development to a greater extent. The interests of the people should always be put at the centre of any economic and social development. There are two crucial factors in achieving this goal. First, we have to create an environment conducive to robust economic development and promote the diversified development of our industry, so as to provide more high quality jobs and increase people's income. Second, we have to substantially increase the supply of land and housing, with a view to realising the ownership-led policy objective so that people can have a decent living environment with a more affordable living cost. By fighting hard along these two directions, we could gradually improve people's living and make Hong Kong a better living place for all.

October 24, 2021

During the latest session of the Canton Fair, the national-level Pearl River International Trade Forum was held for the first time with the theme of "The new development of China providing new opportunities to the world". The Forum serves to provide a high-end discussion platform for important topics on international trade. In one of its sub-forums, I delivered a remark on Hong Kong's advantages and opportunities in the cooperation of international trade in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA).

Although in recent years international political and economic situation has undergone significant changes with occasional tensions sprung out in geopolitics, it did not deter our Country's determination in further opening up and promoting free trade. Taking the Canton Fair as an example, its annual transaction volume has increased almost 680-fold since its establishment 65 years ago, from about US$87 million to US$59 billion at the time just before the pandemic. China is not only a major exporter, but also a significant importer in international trade. In recent years, the growing rate of import of China has exceeded that of export and China's import last year amounted to 11.5% of the world's total import. The gigantic size of its market and the overall positive trend in economic growth will continue to support the development in international trade of our Country. And indeed China has already become an indispensable part in international production and supply chains.

As the Premier Li Keqiang pointed out in his keynote speech in the opening ceremony of the Canton Fair, although faced with many internal and external challenges, our Country has been seeing a steady economic recovery since this year and various major indicators of the macro-economy are still staying within a reasonable range. In the first nine months of this year, there were more than 78 000 daily new registers of market entity and over 10 million of new employment in urban area. The profit of industrial enterprises, fiscal revenue and residents' income have shown a faster pace in growth. Although the economic figures receded in Q3, with the resilience and strong vibrancy of the economy, our Country is confident that the whole year economic growth target would be achieved. In the new phase of development, our Country will continue to deepen cooperation in external trade, create a market-oriented, rule of law-based and internationalised environment for businesses, and promote liberalisation in trade and investment.

Looking back in history, Hong Kong's path of development has been deeply connected with our Country's development. Following our Country's economic transformation, Hong Kong's trade sector started from exporting products in the Pearl River Delta to overseas market, and then transformed to providing broader services to the growing domestic demand in the Mainland. Mainland is the largest market for Hong Kong's export in goods. Our export to the Mainland has increased from 35% of our total goods export in 2000 to 59% last year. Looking ahead, with the continuing growth of people's income level, the mid-level income population in our Country is expected to increase from currently 400 million to 800 million in future, bringing a much bigger consumption power. In addition, with the development strategy of internal circulation as the mainstay as proposed in the Outline of the 14th Five-year Plan, demand for high-quality products and services will continue to grow in the Mainland. As such, Hong Kong's export of goods to the Mainland will certainly continue to grow with a notable speed.

With the institutional strength of our "One Country, Two Systems" arrangement and the geographical advantage of being the south gate of the Country, Hong Kong has been serving as an important gateway of our Country to trade with the world. The success of this role also comes from our long time effort in building a global network of trade and commerce, our commercial rules that up to international standard, the highly efficient financial, transport and logistic services, the zero tariff and free trade port policy, highly efficient custom clearance services, and our world-class infrastructure such as airport and container terminals.

The Outline of the 14th Five-year Plan supports Hong Kong's status as an international financial, shipping, trade centre and an international aviation hub, and supports Hong Kong's service sector to develop towards the high-end and high value-added direction. Being an international trade and shipping centre, Hong Kong has always been promoting the development of modern logistic industry, enhancing our competitiveness as a regional logistic hub, particularly in providing high value-added services and handling goods of high value.

With further growth in external trade in the GBA, particularly the booming of e-commerce, the personalisation of consumer demand and fast-changing taste of fashion, orders received by manufacturers are becoming small in amount with a narrow delivery window. There has been an increasingly keen demand for air cargo services in the region, so as a higher level of demand on the service capability and capacity of the airport. Hong Kong has to dedicate investment in this area that we have competitive edges to further develop our strength.

As such, the Airport Authority Hong Kong (AA) is going to build a premium logistics centre at the airport cargo area. The centre is expected to start operation in 2023 to promote the high value-added third party logistic services. At the same time, redevelopment of the Air Mail Centre at the Hong Kong International Airport (HKIA) is being planned to introduce more advance equipment to enhance its efficiency and capacity. Strategic partner may also be engaged with a view to enhancing the Centre's competitiveness. Together with the commissioning of the Three Runway System in 2024, HKIA's annual cargo handling capacity is expected to exceed 9 million tonnes, which can fulfil the needs in the coming ten plus years.

In addition, to promote development of regional logistics, Hong Kong has to co-develop with other brother cities in the GBA in order to achieve a greater synergy. AA is planning to set up a HKIA Logistics Park in Dongguan and an airside intermodal cargo handling facility at the newly reclaimed area of the third runway, with a view to creating a brand new mode of whole industrial chain cooperation. With this new facilities, customs clearance, security screening and other services for Mainland exports could be completed in the Dongguan Logistics Park before shipping the goods to the cargo handling facility in the restricted area of HKIA by sea, and transferred to other places around the world directly. The same channel can be applied to the air cargo imported to the Mainland, i.e. goods can be shipped directly from the restricted area of HKIA to Dongguan and then deliver to other places in the Mainland.

At the same time, we will continue to expand Hong Kong's trading network and sign Free Trade Agreements (FTAs) with more trading partners, so as to consolidate our role as a regional and international trading hub. So far we have already signed FTAs with 20 economies. Moreover, with the support of the Ministry of Commerce of our Country, we are seeking to join the RCEP as soon as possible to assist Hong Kong enterprises and investors in exploring a bigger market.

The future of Hong Kong's economic development is deeply connected with the Country's development. We have to help Hong Kong young people to better grasp the opportunities brought by the GBA and the fast development of our Country, so that they could enjoy a broader space of career prospect. With this in mind, I met and exchanged views with young Hong Kong entrepreneurs working in Guangzhou during my trip to learn more about their start-up experience and work and life in the Mainland, as well as the challenges they faced and the support they needed in starting businesses in the Mainland. In fact, the Mainland government authorities have rolled out a number of facilitating policies and initiatives to support Hong Kong young people to start business and work there. HKSAR Government will also continue to support and assist them.

Hong Kong has experienced many challenges in the past two years. With the implementation of the Hong Kong National Security Law and the enhancement of the electoral system, Hong Kong has stepped out from chaos and is now moving towards governance and prosperity. Under the national development strategy of domestic and external dual-circulation, Hong Kong will integrate into the national development plan more proactively. By working closely with fellow cities in the GBA, we could further upgrade our trade, shipping and logistics sectors, and build a world-class bay area and cluster of cities. By doing so, we could serve the needs of the Country and at the same time realise a sustainable economic development for Hong Kong.

2021年10月17日

We have to think from a broad perspective in answering this question that have a considerable bearing on Hong Kong's future. It also matters to whether we could utilise our land resources, address people's needs in housing, living and jobs, promote Hong Kong's economic and industries development and provide support for enterprises to do business and form clusters here. For financial services, our most competitive sector, it will continue to develop at its current stronghold, i.e. the Harbour Metropolis. Our new engine for economic development, i.e. innovation and technology (I&T), will be placed at the Northern Metropolis. This dual-core planning will enhance the allocation of our precious land and talent resources, guide the development of related infrastructure, facilities and supporting services to build a more convenient and liveable environment for both living and working. This plan has also taken into account public views collected during the study of the “Hong Kong 2030+: Towards a Planning Vision and Strategy Transcending 2030” conducted by the previous term of the Government.

This South-North dual-engine planning and development could serve several purposes:

　　(A) To better integrate into the national development plan. With the Guangdong-Hong Kong-Macao Greater Bay Area becoming the driving force of regional development, and the cooperation between Shenzhen and Hong Kong further deepens, agglomerating the I&T industry at the Northern areas which is near to Shenzhen will facilitate a closer connection and cooperation between the two places. It helps to create a more robust ecology and a more completed industry chain for the sector, which is conducive to the nurture and a faster development of this new economic engine, expediting the building of the international technology and innovation centre in the Greater Bay Area. Furthermore, the cooperation and co-development of the financial, professional and other high value-added services sectors between the two places would also be deepened.

　　(B) To achieve a more even and reasonable industry development. Apart from the financial sector, I&T will become another important engine for our economic development, which could offer abundant high-quality jobs and opportunities for starting businesses. As such, we have to reserve sufficient space to attract more I&T enterprises and research institutes to domicile and develop in Hong Kong, which can in turn promote the upgrading of our traditional industries and improve the over-centralised problem of our industry and economy in the past.

　　(C) To address the shortage in land and housing supply. Shortage in land supply has been suppressing the development of commerce and many social services. Small living spaces and high property prices have become the most acute dilemma of our society, and the release of more useable land for development and residential use is one of the crucial factors in resolving the problem. The development of the Northern Metropolis and the corresponding opportunities in rationalising the use of land in other areas will offer an important source of land supply to meet the demand in the coming twenty years.

　　(D) To achieve a reasonable planning for living and travel. The plan could help to alleviate the current situation that many people residing in the New Territories have to travel to the urban area for work. In fact, traffic congestion not only hampers urban and economic development, but also increases citizens' cost of time for travelling. The dual-core development planning will help to diverge the flow of people in the peak commuting hours and alleviate the pressure on our transport system, so that people can plan their travel easier and have a more enjoyable life in the city.

For the Harbour Metropolis at the South, it will continue to provide development space for the financial and commercial services. For the Northern Metropolis at the North, given its scenic ecological environment, we will develop this area with the concept of “Urban-Rural Integration and Co-existence of Development and Conservation” in order to provide a place that combines working, learning and living environment of high quality, as well as convenient recreational space that people can enjoy the nature.

Under this development plan, the two poles of Hong Kong will carry our two major economic engines, just like the shape of a dumbbell. Between the two poles, there are two main corridors at the East and the West of Hong Kong. While the “Western Economic Corridor” at the West will link up North-West New Territories and Lantau, the “Eastern Knowledge and Technology Corridor” will connect Kowloon East and New Territories East with the Northern Metropolis, covering three universities, the Science Park, Tai Po Industrial Estate and the Hong Kong-Shenzhen Innovation and Technology Park. With a more reasonable overall spatial planning, together with the transport infrastructure-led development concept, it will help to release more developable land with higher plot ratio, so that people's needs in housing and quality living could be addressed.

Furthermore, we can see an even larger planning of space from a broader viewpoint, i.e. the “Twin Cities, Three Circles”. Between the twin cities of Hong Kong and Shenzhen, there are “three circles”, which are:

• The Shenzhen Bay Quality Development Circle at the West. Qianhai, Shekou and Houhai of Shenzhen will connect with Tin Shui Wai, Yuen Long and Hung Shui Kiu of Hong Kong, turning the current fringe area of Hong Kong to a central gateway to Shenzhen West.
• The Hong Kong-Shenzhen Close Interaction Circle in the middle. It will include several ports, e.g. Luohu, Lok Ma Chau, Huanggang and Man Kam To, connecting the vibrant areas of Shenzhen such as Luohu and Futian with San Tin, Kwu Tung North, Fanling, Sheung Shui and the New Territories North new town in Hong Kong.
• The “Mirs Bay/Yan Chau Tong Eco-recreation/tourism Circle” at the East. Apart from Mirs Bay and Yan Chau Tong, it also covers various scenic spots such as Lin Ma Hang, Hong Kong Geopark, Tung Ping Chau and Dapeng Peninsula.

Since Hong Kong's return to motherland over twenty years ago, our development has been experiencing ups and downs. We have gone through several economic cycles; and experienced chaos and standstill politically, and even intervention by external forces. On the economic front, we have learned from past experience and enhanced the risk management mechanism to ensure our financial stability and vibrancy, which at the same time help promote economic development. On the political front, the Central Government has decisively implemented the Hong Kong Security Law and enhanced Hong Kong's electoral system, helping Hong Kong to step out from chaos, restore governance and move towards prosperity.

With the hardly-earned stable environment, we have to grasp this golden opportunity to improve governance and embark a new journey with new mind set. As Hong Kong has entered into a new political phase, we should also aim our performance of governance at a higher standard. Land and housing is the most acute dilemma of our society and we are now handling its toughest part. The SAR Government should make the best effort to resolve the problem in full speed, aiming to achieve a notable result within three to five years in order to gain the confidence of the people. We need to have a can-do spirit and immovable will, as well as the power to unite the whole society. We also have to adjust our thought and perspective. After all, the interests of the people should always be placed at the centre of any development. Let us join hands together to focus on development to substantially improve people's quality of living, paving way to a brighter future for Hong Kong.

October 10, 2021

One can easily noticed that more people were visiting shopping malls and shopping on the street, which triggered surge in sales in stores and restaurants and boosted consumer sentiment. With the epidemic being kept at bay in recent months and the economy starting to recover, I hope the optimistic feeling that the consumption voucher brought to the market could support a positive outlook for the economy, which is important in driving a continuous economic recovery.

Apart from boosting the economy and supporting the related sectors, the Scheme has also brought other intangible benefits, such as the happiness and satisfaction the people had when using the voucher. For me, I bought dim sum and ice cream to share with citizens after receiving the vouchers, which is indeed a great experience as you can share the joy with others. The disbursement of this new round of voucher also gave the National Day some extra festive mood.

The road for our Country to develop and attain today's prosperity is not easy. Looking back in history, what we learned is even facing difficulties and challenges, it is important to be confident on our direction and road of development, and determined during the implementation process, so that even the most difficult problems could still be resolved at the end. As seen in our Country's development in the past, with all the hard work and struggles of the people, the Chinese Communist Party has led the Country in achieving a development of leaping pace. It also reminds us not to forget the original mission, i.e. putting the interests of people at the centre of any development.

In different stages of its development, our Country had faced different challenges and dilemmas of its time and overcome them one by one with effort to achieve success. With this extraordinary determination and high spirit, our Country has gained the achievement as we see today, i.e. from fighting against poverty to becoming an overall well-off society, and from being exploited to reaching a level playing field with others in the world.

The formula for our Country's development is to walk on a path that best suits the actual situation of our own, which is the road of socialism with Chinese characteristics. With the steady leadership of the Chinese Communist Party, the society has been staying united and created a stable environment with unified power, allowing a governance with pioneering spirit and high efficiency. Through relentless development, our Country has come up with a flexible and vibrant model for economic development, cementing a solid foundation for the great rejuvenation of the Chinese nation. Our Country's development path in the past has led to today's success and a bright prospect for the future. Our Country is entering a new phase in a new era with new idea of development.

This is where our confidence came from for Hong Kong's future.

The great design of "One Country, Two Systems" has allowed flexibility in the system, made use of capitalism to develop Hong Kong's economy and achieved success. "One Country, Two Systems" is an organic system with many advantages that we can learn from its implementation in the past. Given the changing circumstances and different stages of development, its implementation in the new era will need to face new challenges and shoulder new responsibilities. In the new phase of development, it is key to duly implement the "One Country, Two Systems" principle to ensure the stability and prosperity of Hong Kong.

"One Country" is the prerequisite for the flexibility of the "Two Systems". Under the principle of "One Country", as a community with common interests, we have to fully safeguard the national safety and development interests. Even if there are differences between the two systems, it is a common goal for us to govern for the wellbeing of the people and keep improving people's quality of living. It is the basic principle that the SAR Government should always uphold when formulating any social and economic policies. Whether it is about land development, ecological preservation or any other sorts or planning, the interests of the people should always be put at the centre for development. Bearing this in mind, it helps us to sort out priorities in addressing the problems, dilemmas and challenges.

Land and housing are the most acute dilemmas in our social development, which have induced a great burden on people's living. It must be addressed with the greatest effort. With the support of the Central Government and the hard work of the SAR Government, as well as a strong will and determination to face challenges, no dilemma can't be resolved. We need to have new mindset to address the tension brought by uneven social development, in order to respond to the support and expectation of the Central Government and the people's aspiration for better quality of living. To gather power for taking forward reforms, it is key to share a vision with the society on development in the coming five years, and ensure the people can actually feel their livings are gradually improving.

Economic development is the foundation for social progress and provides the necessary resources and power to resolve social dilemmas. As seen from the chaos erupted in Hong Kong in recent years, to promote economic development, we must safeguard the national security and development interests as our first priority. Facing the game-changing time of a century and the tension brought by international geopolitics, we have to clearly recognise the situation, duly prepare for risk management and contingency plan, and also well explain the story of Hong Kong. With this consideration, I announced the "Report on Hong Kong's Business Environment" early last week.

The report aims at illustrate the bright prospect of Hong Kong. Particularly, the Central Government has decisively implemented Hong Kong National Security Law and enhanced the electoral system for Hong Kong over the past two years, which helped Hong Kong society stepping out from chaos and moving to the new phase of governance and prosperity. Nonetheless, some people may still have misunderstanding and bias on Hong Kong's development and business environment, or even being misled by the propaganda and misinformation spread by the US and some other countries. As such, we have to publish this report to debunk those allegations and proactively promote the advantages of Hong Kong.

From the success of Hong Kong in the past, to the development at present and opportunities for the future, we have been relying on the continuous development and solid support of our Country, and using our own strengths to serve the needs of the Country. Telling the story of Hong Kong well is to safeguard an objective favourable environment and the development opportunities for Hong Kong, which is also a way to respond to our Country's care and support. With the strong and solid support of our Country, and the advantages of the "One Country, Two Systems" arrangement, Hong Kong's future will definitely be more prosperous and stable.

October 3, 2021

As we live in Hong Kong, we have witnessed the situation when Hong Kong fell into the turmoil of violent acts in 2019. Those who opposed to the violent acts often got attacked, seriously threatening and harming the freedom of speech and personal safety, and undermining Hong Kong's public safety. Yet the US, who had always been bragging about human right and freedom, was in support of these anti-freedom, anti-human right acts, and even shielded those who are opposed to China and attempt to destabilise Hong Kong, and offered platforms for them to advocate "Hong Kong independence" and spread political disinformation. These hypocritical, double standard, hegemonic and bullying acts had deeply hurt Hong Kong society.

In the light of the interference and damage brought by external forces, the Central Government has decisively and timely enacted and implemented the Hong Kong National Security Law, which has restored Hong Kong's safety and stability, safeguarded Hong Kong citizens' legitimate rights, and plugged the national security loopholes in Hong Kong. The enhancement of the electoral system implemented the "patriots administering Hong Kong" principle on the institutional level and helped Hong Kong develop into the new phase of governance and prosperity.

However, while the Country enacted the Hong Kong National Security Law to safeguard the sovereignty, national security and development interests, the US reacted with smearing and vilifying campaign and adopted unreasonable responses. These included announcing the revocation of the special status and preferential economic treatment on trade for Hong Kong, unilaterally suspending or terminating bilateral agreements with Hong Kong, forbidding imported goods produced in Hong Kong marked "Hong Kong" as their origin. This July, the US Department of State, Department of Commerce, Department of Homeland Security and Department of Treasury jointly issued a so-called "Hong Kong Business Advisory" with an attempt to cast doubt over Hong Kong's business environment and development prospect, and imposed unreasonable and so-called sanctions on the officials of the Central Government and HKSAR Government.

The reality is since the implementation of the Hong Kong National Security Law, Hong Kong has stepped out from chaos and restored governance. With social safety and stability restored, people's daily lives and travel are no longer under threat of violence, enterprises and shops also no need to be afraid of violent attacks. The Law has also helped to restore the confidence of foreign and local enterprises, which had once been worrying about Hong Kong's prospect due to the widespread of violent acts. The enhancement of electoral system has been leading Hong Kong towards governance and prosperity and rebuilding hopes for Hong Kong's future.

If we look at the situation objectively, we can see that Hong Kong's business environment is still excellent and vibrant, with unlimited opportunities ahead. Taking the financial market as an example. The gradual expansion of the connect schemes between the two markets has excited the financial services sector and other related sectors. From Shanghai-Hong Kong Stock Connect to Shenzhen-Hong Kong Stock Connect, the annual trade value has increased from less than RMB 200 billion in 2014 to over RMB 15,000 billion last year. Similarly, after the open up of the Northbound Trading under Bond Connect 4 years ago to allow foreign enterprises directly participate in the interbank bond market in the Mainland, the Southbound Trading under Bond Connect was launched last week, enabling a two-way flow of capital under this channel. The Cross-boundary Wealth Management Connect in the Guangdong-Hong Kong-Macao Greater Bay Area was also launched recently, which is an initiative that had been long awaited by the asset management industry. Over the past decade or so, the widening, deepening and continuing development of the connection mechanism manifested our Country's determination in continuous reform and opening-up and innovation under the prerequisite of well management of risk.

Apart from the financial services sector, the co-operation in industry development between the two places has also been strengthening. Taking innovation and technology for instance. To give greater policy support to Hong Kong's development, the Central Government has clearly stated to support Hong Kong to develop as an international innovation and technology hub in the Outline of the 14th Five-year Plan. It also listed the Shenzhen-Hong Kong Innovation and Technology Co-operation Zone in the Loop area as one of the four major cooperation platform in the Greater Bay Area, which is the only major cooperation platform with the theme of technology and innovation. By facilitating convenient cross-boundary travel between the two places, this platform will be very attractive to both foreign and domestic research organisations, tech enterprises and talents.

The Plan for Comprehensive Deepening Reform and Opening Up of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone was also launched recently. One of the Plan's major objectives is to speed up the institutional reform and innovation for technology development, and promote the cooperation between Hong Kong and Shenzhen in technology R&D, particularly in areas that Hong Kong has advantages, such as AI, healthcare and Fintech. The Central and municipal governments had earlier opened up their technology funding scheme for Hong Kong, so that universities and R&D institutions in Hong Kong could directly apply for Mainland's research funding and participate in the related projects. Moreover, more than 20 national level research platforms have been set up in Hong Kong. In short, as for innovation and technology, the Central Government has adopted institutional and policy innovation to promote a more convenient cross-boundary flow of related production factors, such as talent, goods, capital and information, with a view to supporting the development of innovation and technology in Hong Kong.

From the success in the past, to the development at present and future opportunities, we have been relying on our Country's support. Being an inalienable part of the Country, Hong Kong has the obligation and duty to safeguard national security, territorial integrity and development interests. We also require a stable and orderly social environment for carrying out measures for social and economic development and improvement to livelihoods. In this massive change of a century, any development and tension in the international geopolitical arena will inevitably complicate the development of Hong Kong. Nonetheless, the US and other countries should duly respect China's sovereignty, abide by the basic principle of international relations and not to meddle with Hong Kong's affairs. At the same time, Hong Kong will continue to be a free, fair and open market which welcomes enterprises and investors from around the world to come and explore development opportunities and share the development interests. Taking the financial sector as an example, the profits gained by US enterprises and investors from their operations in Hong Kong are indeed much more than that by those from the Mainland and other places in the world.

Our Country has been determined on the path of reform and opening up and committed to the institutional strengths of "One Country, Two Systems". China not only participates, but also contributes to the global economic development. In this course, our Country has been emphasising on promoting the co-development of the world as a whole, upholding the principle of communication, sharing and cooperation to achieve a win-win situation. Indeed, only by viewing the world as a community for human development could we maximise the utility for all and join hands to tackle the common challenges faced by humankind.

September 26, 2021

Keeping this view in mind, it helps us to build a clearer perspective and gain more confidence to look beyond the present and see the wide range of possibilities for the future.

Being the Country's international financial centre, Hong Kong makes unique and active contribution to the country's strategic development of the financial market. Each of the steps involved are taken under a risk-controlled manner. The development trail of the mutual financial market access enlightens us that prudent start and progression can ensure more sustainable development. The Shanghai-Hong Kong Stock Connect launched in 2014 had less than RMB 200 billion of trade value in the first year, but the trading volume subsequently increased and with the scheme being expanded to Shenzhen-Hong Kong Stock Connect, the annual trade value of last year had reached over RMB 15,000 billion.

Similar development has been observed in Bond Connect. The average daily turnover of Northbound Trading under Bond Connect which was launched in 2017 was about RMB 1.5 billion initially and gradually increased to RMB 26 billion today, representing an increase of about 17 times in a few years' time. 60% of the foreign holdings of Mainland onshore bonds are acquired through Northbound Trading under Bond Connect and the amount has increased to around RMB 3,800 billion recently. This shows that the programme is widely supported by international investors.

Four years have passed and the details of the long-awaited Southbound Trading under Bond Connect were announced last week. The scheme will be formally launched this week, taking the development of Hong Kong's bond market to a new level. Institutional investors in the Mainland can make diversified asset allocation in Hong Kong's bond market through Southbound Trading, and more international institutions will consider issuing bonds in Hong Kong. The capital and debt issuers can be matched more effectively. The Shenzhen Municipal Government will also issue RMB-denominated bonds in Hong Kong, which is the first time for a Mainland municipal government to issue bonds in Hong Kong. The SAR Government also plans to include RMB-denominated green bonds in the Government Green Bond Programme. These initiatives will enrich and add impetus to Hong Kong's bond market, further stimulating the development of the market.

With a view to providing more comprehensive and sophisticated financial services in Hong Kong, it is necessary to create a conducive environment for deepening the development of the bond market. The Steering Committee on Bond Market Development in Hong Kong chaired by me has commenced work to review the "ecosystem" of Hong Kong's bond market holistically, including bond issuance, trading, clearing, listing, custody, taxation, credit rating services, etc., so as to improve the transparency and efficiency of local bond trading.

In fact, the Southbound Trading under Bond Connect or the Cross-boundary Wealth Management Connect in the Guangdong-Hong Kong-Macao Greater Bay Area, both introduced recently, provide major favourable conditions to promote cross-boundary use of RMB. The schemes also open up the Mainland's capital account on an appropriate scale, enrich the spectrum of RMB financial products available for investment, providing a more diversified and energetic environment for the use of RMB outside the Mainland and satisfying the asset allocation needs of individuals and enterprises. As more offshore RMB is attracted for accumulation and investment in Hong Kong, our RMB liquidity pool could be further expanded, consolidating Hong Kong's status as the world's largest offshore RMB business centre, thereby promoting RMB internationalisation of the Country in a steady and prudent manner

Apart from policies and measures, we also have to pursue the development of infrastructure and co-ordination in the region, with a view to achieving maximum synergy. To facilitate the development of Qianhai, which will be another important hinterland for Hong Kong's financial and professional sectors to prosper and for our young people to live and start their own businesses, as well as the cooperation between Hong Kong and Shenzhen in technology development in the Loop and its proximate area, we need to provide better infrastructure and other supporting measures for people to live and work. We have to speed up the review of the development planning for the New Territories North and the frontier area, so that Hong Kong could seize the opportunities brought by our Country's development, providing our people better career prospect and more decent living space.

In fact, from the gradual expansion and deepening of the connection between the two financial markets, to the implementation of the Qianhai Plan, the various contents, measures and directives share a common feature, i.e. to adopt policy and institutional innovation to transform barriers to advantages, well manage potential risks, and be positive and determined in overcoming difficulties to achieve new impetus for new development.

To better grasp the opportunities brought by the Country' development, apart from policies and infrastructure, it is also important to ensure a safe, stable and pragmatic social environment in Hong Kong. On institution, we have enacted legislation to safeguard national security and enhance Hong Kong's electoral system. The first important election after the enhancement of the electoral system, i.e. the 2021 Election Committee Election, will be held today. Next will be the Legislative Council Election and the Chief Executive Election. To fully implement the basic principle of "patriots administering Hong Kong" through these three elections also demonstrates the well management of risks. By this, we can prevent the intervention of external forces and to bring Hong Kong back on track. It will also create a conducive environment for effective governance, allow the society to tackle the deep-seated problems which have hindered Hong Kong's development, with a view to enhancing the living quality of our people, and move towards development and prosperity.

September 19, 2021

Let me first begin with Cross-boundary WMC.

Under "one country", we enjoy the benefits of "two systems". Hong Kong's financial market development enjoys the unique advantage of facilitating international and Mainland capital in conducting cross-boundary investments through closed-loop channels, such that investment opportunities can be explored in a risk-controlled manner. From Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, Northbound trading under Bond Connect, mutual recognition of funds, to the launch of Cross-boundary WMC last week – it demonstrates how we expand the mutual market access mechanism from covering stocks, bonds, funds and now to eligible wealth management products distributed by banks.

Under Cross-boundary WMC, there will be an aggregate quota of RMB 150 billion in each direction for the Southbound Scheme and Northbound Scheme, and an individual investor quota of RMB 1 million. Initially, the scheme will only cover investment products with low to medium risk. The Southbound Scheme is applicable for residents of the Mainland cities in the Greater Bay Area while the Northbound Scheme is applicable for residents of Hong Kong and Macao. Eligible individual investors of the two places can make cross-boundary investments in relevant authorised products through this channel.

For financial institutions, the addressable market for wealth management products is significantly expanded at once as the Greater Bay Area is the most prosperous region in the Mainland in terms of economic development with the largest wealth accumulation. It was found that Chinese families' investment in financial products only accounts for 17% of their total assets, which is much lower than that of the United Kingdom (27%), Japan (38%) and the United States (58%). As the number of households with higher net worth continues to increase, there is a pressing demand in the market for diversified investment and international allocation.

On the other hand, Hong Kong is the largest private wealth management centre in Asia with a global ranking second only to Switzerland. As at the end of last year, assets under management by Hong Kong's asset and wealth management industry amounted to nearly HK$ 35 trillion with a year-on-year growth of 21%. Hong Kong offers a wide variety and diversified mix of financial products which can serve various investment and risk management needs of Mainland residents – this is where the potential of the Southbound Scheme lies. The Northbound Scheme also opens a channel for Hong Kong and Macao residents to invest directly in the wealth management products of the Mainland, providing more options for investors.

One can say that Cross-boundary WMC has brought about historic development breakthrough and enormous new opportunities for the wealth management markets of the two places.

At a more macro level, Cross-boundary WMC serves two major functions.

Firstly, by making use of the unique advantage of "one country, two systems" and three monetary systems, Cross-boundary WMC further deepens the collaboration and integration and promotes the interactive development of the onshore and offshore market. It enhances the scope and level of the mutual market access mechanism despite the differences in the financial and legal systems within the Greater Bay Area. This scheme allows financial factors to flow more conveniently within the area, such that the financial sector can better support the development of the real economy as the regional economy grows, turning the Greater Bay Area into an open community for coordinated innovation in the Country. Developing along this direction, the Greater Bay Area can gradually become an important bridge connecting the economic and financial systems of the domestic circulation and those of the international circulation for the Country. This is how Hong Kong can play our role as a unique financial centre in a better way to serve the needs of our Country.

Secondly, Cross-boundary WMC can provide room conducive to promoting internationalisation of Renminbi in a steady and prudent manner. The Scheme provides a risk-controlled testing space for facilitating individual investment and capital account convertibility within the Greater Bay Area.

While the Cross-boundary WMC can bring new opportunities to Hong Kong's financial sector, the Qianhai Plan has formulated a new blueprint for the overall long-term development of Hong Kong.

The QianHai Plan is a national development strategy, and it provides unlimited opportunities for Hong Kong's future development and prosperity. Some may make comparison between the Qianhai Plan and the Hengqin Plan. Some may worry the development of Qianhai will surpass Hong Kong, even leading to the loss of talents, capital and opportunities in Hong Kong. However, only by cooperation and co-development can we seize the new opportunities brought by the national development. Only by expanding the capacity of usable land in the region can we create space for more industries to develop. Only through cooperation can we promote the robust development of industries where Hong Kong enjoys clear advantages. Only by setting our perspective right can we see the new landscape.

As regards strategic positioning, the Hengqin Plan puts emphasis on the integration of Guangdong and Macao development, and promotes the diversified development of Macao's industry to an appropriate extent through in-depth cooperation. The Qianhai Plan focuses on the co-development of Guangdong, Hong Kong and Macao. By putting institutional innovation as its core, the Plan aims to promote the bridging of rules and mechanism across the border, and enrich the models of co-development.

As for the development of industry, the Hengqin Cooperation Zone will concentrate in the development of four new major industries. For Qianhai, it aims at opening up more service sectors, speeding up the institutional reform and innovation for technology development, and creating a world-class environment for doing business.

After all, what opportunities will the whole development bring to Hong Kong?

First, Hong Kong will enjoy a greater space for development. The area of the Qianhai Cooperation Zone will expand from 14.92 sq km to 120.56 sq km. By strengthening planning and development, bridging the rules and mechanism, and cooperation among the industries, it can help Hong Kong to alleviate the constraints on development of industries due to shortage in land supply.

Second, Hong Kong will gain a stronger impetus in the upgrading of industries. Hong Kong's pillar industries and other industries with advantages will be benefitted. The Qianhai Plan will open up more service sectors for Hong Kong and Macao, and promote the connections in areas such as finance and technology and innovation. With more enterprises enjoying the support of technology development and financial services, Hong Kong could gradually realise the upgrade of our industry structure.

Third, Hong Kong young people could have a broader platform for development. The Qianhai Plan has proposed to facilitate young people from Hong Kong and Macao to study, work, reside, live and start their own businesses in the Qianhai Cooperation Zone. As at June this year, the Qianhai Shenzhen-Hong Kong Youth Innovation and Entrepreneur Hub has already incubated more than 200 Hong Kong start-up teams. It is not hard to see that the Cooperation Zone will provide Hong Kong people with more choices of high-end post, thus creating a greater space of development for Hong Kong young people.

Now it is crucial that Hong Kong's enterprises and people could adjust the perspective and see the opportunities for future development. By having a deeper understanding in the framework and direction of the overall development, Hong Kong enterprises and people could seize the new development opportunities, allowing Hong Kong's economy to progress towards the high value-added end and better integrate into the national development plan.

September 12, 2021

For the remaining some 300 000 registrations, the information provided is either incomplete or incorrect. For example, some were submitted without the Hong Kong identity card (HKID card) copy and hence the identity of the registrants cannot be authenticated, some did not indicate their compliance with the residing in Hong Kong requirement, and some provided incorrect information on HKID card or stored value facility account number. Among them, applicants of over 280 000 registrations had actually supplemented or corrected their registration within the registration period of the Scheme. As a result, the number of registrations which could not be processed as at 14 August, i.e. when the registration period ended, was about 19 000.

Taking into account that some citizens might not be able to supplement or correct their registration before the registration deadline, we announced on 15 August the provision of a two-week (until August 31) resubmission period. In particular, we arranged staff to receive and process the paper registration forms submitted during the period, with a view to ensuring that the details provided are correct and complete. More than 5 000 resubmissions were received in this period.

Some citizens only realised that their registrations were unsuccessful when the second batch of consumption vouchers were disbursed on 1 September. In order that these citizens could have a chance to correct and complete their registrations, we have further provided two more weeks for resubmission, so that they may resubmit their registrations on or before 15 September in person or through a trusted person.

In the middle of last week, the waiting time at the Secretariat in Pioneer Centre in Mong Kok had been long owing to the sudden influx of visitors, and we saw some elderly travelling a long way to Mong Kok to make the resubmissions. This is a situation we deeply regret. This reflects that there was deficiency on our implementation and preparation work and improvement should be made. We have taken immediate remediation, including to increase manpower substantially and make available additional service hours on Saturday in the resubmission period. Over the past three days, the number of daily cases handled by the Secretariat has dropped from more than 2 000 in the first two days to about 1 000 yesterday. By and large, no more queuing is required for resubmission of registration forms at the Secretariat in the Pioneer Centre.

Currently, our estimation is that there are still about 10 000 registrations that cannot be further processed due to inaccurate or incomplete information. In order to facilitate this group of people to resubmit their registrations, starting from tomorrow (6 September) we will operate three additional service centres in the General Post Office in Central, Wan Tau Tong Neighbourhood Community Centre in Tai Po and Leung King Community Centre in Tuen Mun to accept resubmission of registrations. These centres will operate on Monday to Saturday, from 9 am to 6 pm, until 15 September. Together with the existing Secretariat at Pioneer Centre in Mong Kok, there will be a total of four service centres to accept resubmissions. I would like to express my gratitude to colleagues in various departments for their assistance in such a short notice, so that we can operate these centres to better serve the public.

Through these service centres on the Hong Kong Island, Kowloon and the New Territories, we hope that it may facilitate people living in different districts to resubmit the registrations. Since the registration forms are not required to submit in person, elderly may consider asking a trusted relative or friend to resubmit on their behalf.

The Consumption Voucher Scheme has a clear policy objective and purpose, i.e. to benefit the citizens directly, boost the recovery of Hong Kong's economy, and promote the wider use of electronic payments by citizens and small merchants. 6.3 million of people have already received the first voucher. It has effectively stimulated the market and significantly boosted the business of merchants, which fully reflects the effectiveness of the Scheme. When the first batch of registrants receive the second voucher on 1 October, we expect it will give another round of boost to the consumption sentiment.

Nonetheless, as this is the first time to implement such a scheme, different challenges and problems may arise, including how to help the elderly to connect with the different digital channels, so that they could be more adapted to the use of electronic means. This is a topic that we must address. When facing with challenges, we should not escape or else the society will not improve. Only by addressing the problems with effort, could we help our society to progress and provide better service to our citizens. The implementation of the Consumption Voucher Scheme also needs to be reviewed and adjusted from time to time, so as to better achieve its original goal, and benefit the citizens and the society as a whole.

September 5, 2021

As an international financial centre and the world's largest offshore RMB business hub, Hong Kong's development is dependent on our geographical proximity to Mainland and its huge market potential. So, during the period covered by the 14th Five-Year Plan, what does the Mainland need? How should Hong Kong derive its strategic plan to seize the pivotal opportunities?

Our Country is already the world's second largest economy, with a middle-class population of about 400 million. Along with our Country's continuous reform and opening-up, as well as steady economic growth, the "size" and "quality" of the Mainland economy will grow and improve further, and the financing and risk management needs of enterprises will increase. The growing middle-class will also mean a much bigger demand for asset management services. More importantly, as the size of the economy and external trade and investment continue to expand, the demand for RMB for overseas transactions and investment is bound to increase. All these bring new opportunities and new room for development for Hong Kong.

Hong Kong is one of the world's top fund-raising platforms for IPOs. In terms of bond issuance, Hong Kong ranked third in Asia (except Japan) after the Mainland and South Korea. Although we have made certain achievements in the bond market development, we still need greater efforts in various aspects so as to seize the new opportunities ahead and embark on a new phase of development.

First, we should promote a deeper and wider bond market. Although Hong Kong has achieved a robust development in stock market, we should provide more diversified financing channels for corporates, with bonds being one of these important tools. From the investors' perspective, bonds are an important option that allows funds to, based on the desirable investment time horizon, effectively match investments with similar maturities and risk levels. Developing the bond market will also help establish a yield curve with long tenors, which is an important benchmark for the cost of long-term capital. It helps investors manage risks and channel the long-term capital for the growth of the real economy. In short, the asset and risk management functions of bonds help gather long-term capital. With the huge demand driven by the continued economic growth of the Mainland and the upcoming launch of the Southbound Bond Connect, Hong Kong's bond market will enjoy more room for development.

Yet, we still need to make breakthroughs in some aspects in order to drive our bond market development to a new level. For instance, many bonds are currently traded over-the-counter with insufficient price transparency, which increases costs and weakens efficiency in transactions. In fact, the entire "ecosystem" of the bond market should be reviewed, including bond issuance, trading, clearing, listing, custody, taxation and credit rating services, etc. In order to accelerate the development of Hong Kong's bond market, the Steering Committee on Bond Market Development in Hong Kong led by me has started its work last week.

Secondly, we strive to deepen and diversify our asset management market. The asset management business of Hong Kong has recorded a continuous growth in recent years. The growth in asset under management last year reported over 20% increase to HK$35,000 billion, among which over 60% of the funding were sourced from overseas. The cross-boundary wealth management connect pilot scheme in the Guangdong-Hong Kong-Macao Greater Bay Area is ready to be launched soon, which will drive more demand for funds and products.

Thirdly, the development of green and sustainable finance will be another new impetus for the growth of our financial market. Our Country's carbon neutrality goals and the active efforts of other countries around the globe in combating climate change have focused the market's attention on the significance of green and sustainable development. It follows that green bonds, green finance and funds raised from sustainable development investments will bring new momentum to the financial market development.

In fact, in addition to the diversified development of our market and products, the National 14th Five-Year Plan also sets out a very important and attractive development theme for Hong Kong: consolidating the development of the offshore RMB market and contributing to the internationalisation of RMB.

Our Country's economy will continue to expand and develop under the Belt and Road Initiative and the new development pattern of "dual circulation", which emphasises the domestic and external markets boosting each other. As such, the demand of offshore using, holding and investing of RMB by Mainland or foreign enterprises, financial or other institutions will substantially increase. As the world's largest offshore RMB business hub, Hong Kong is not only a "reservoir" for providing offshore RMB funds, but should also develop an "offshore ecosystem" for RMB. Hong Kong is equipped to develop more offshore RMB-denominated investment tools, and to provide return-generating channels, financial instruments and projects, in addition to effective and efficient treasury management services such as currency exchange and exchange rate risk management, which will enable the circulation of RMB funds in the offshore market. As an offshore RMB market in the Country, Hong Kong can fully perform the role as set out in the Outline, i.e. to prudently advance the internationalisation of RMB through market-driven policies and enterprises' independent choices, and promote a new mutually beneficial and cooperative relationship with the free use of RMB.

To link up with the National 14th Five-Year Plan, Hong Kong must also have corresponding strategies and plans. From the financial sector to other areas, we must set new directions for development from the perspective of reaching a new level, so that we can firmly grasp the development opportunities. We need to prepare ourselves to better connect with the Mainland's policies, industries and markets; and more importantly, to align with our Country's vision and mindset for development. Only in this way can we mobilize the power and resources of the whole society to the greatest extent in the complex and interactive market, and promote the better development of Hong Kong in our Country's blueprint for the future. The Country's new development pattern and strategy have created a new stage and new spaces for Hong Kong. We must expedite our work - "only by doing well today, can we win tomorrow."

August 29, 2021

The employment situation also saw improvement across various sectors. The unemployment rate of the consumption- and tourism-related sectors combined (viz. retail, accommodation and food services sectors) fell from the peak of 11% early this year to the current 7.6%. Among these sectors, the unemployment rate of food and beverage service activities fell by 1.4 percentage points to 8.6%, far below the high of 14.7% early this year. Meanwhile, the unemployment rates of the construction sector and the arts, entertainment and recreation sector also recorded notable declines.

It is worthy to note that, even though the employment situation across sectors has gradually improved, it has yet to revert to the pre-pandemic level of early last year. Taking the retail, accommodation and food services sector as an example, its current unemployment rate was still over 2 percentage points higher than the pre-pandemic level of 5.2%. We expect that, as the effect of the Consumption Voucher Scheme begins to be seen in August, the boost to private consumption will lead to further improvement in the employment situation in relevant sectors.

Nonetheless, whether the current improving trend in the economy and the labour market can be sustained hinges on the development of the pandemic and the effectiveness of anti-epidemic efforts. Getting vaccinated not only gives better protection to yourself, your family and friends, but also helps provide a more solid foundation for Hong Kong's economic recovery.

The sustained high-quality development of our country's economy provides the most powerful backing for Hong Kong to prosper and develop. The enormous size of our country's economy, the persistent efforts on innovation and technological development, coupled with continuous reform and opening up, have provided new markets for enterprises and new demands for products, created more opportunities for business development and brand-building, and hence facilitating Hong Kong to diversify and enrich its direction of economic development. However, this does not mean we will slow down the development of the financial industry. The financial services sector is the strongest segment of the Hong Kong economy. We have to remain at the forefront, constantly make breakthroughs, go beyond ourselves and consolidate Hong Kong's status as an international financial centre. In this way, we are developing according to the strategy of "overarching planning, steady progression".

Hong Kong's advantages as an international financial centre lie in its huge market demand, coupled with the comprehensive and complete package offered by our financial services industry. From capital, projects, products to talents, the whole industry chain is highly efficient and professional, which drives a virtuous cycle in further attracting capital, talents and enterprises to converge in Hong Kong.

When talking about the strengths and efficiency of Hong Kong, figures speak for themselves. In the first half of this year, total deposits in the Hong Kong banking system exceeded HK$15 trillion, representing an increase of around 5% over the end of last year. The rate of increase would even be close to 8% if we only consider deposits in Hong Kong dollar alone. The size of assets under management in Hong Kong has also increased. As at the end of last year, the Hong Kong asset and wealth management industry managed nearly HK$35 trillion of assets, representing a year-on-year increase of 21%. Hong Kong is the largest hedge fund base in Asia and the second largest private equity fund base, following the Mainland. As to the Hong Kong stock market, notwithstanding some fluctuations alongside changes in the external environment, IPO activities have remained buoyant.

Overarching planning, steady progression

The financial sector has its own pattern for development, but being the core of a modern economy, it is of utmost importance to ensure that financial development could serve the real economy. We should not only focus on equities and asset management, but also review the overall development blueprint of the whole chain and the whole industry, so as to undertake overarching planning and adopt a step-by-step approach to achieve steady progression.

For financial institutions to deploy and allocate funds, the most crucial aspect is accurate investment and risk management, with a view to seeking the most efficient use of capital and leveraged returns while controlling costs. One of the major directions in the development of our financial industry is to expand Hong Kong's offshore Renminbi (RMB) pool and related investment products, so that enterprises and institutions holding offshore RMB funds can deposit, manage, deploy and invest their RMB funds in Hong Kong in a "one-stop shop" manner.

The A-share index futures contract recently announced by HKEX is the first offshore A-share index futures product formally approved by the Mainland authorities. It could serve as a useful risk management tool for offshore investors participating in the A-share market, while broadening the offering of financial products in Hong Kong. The "Guangdong-Hong Kong-Macao Greater Bay Area Cross-Boundary Wealth Management Connect" and the "Bond Connect" Southbound Link, which are highly anticipated by the market, are also ready to be rolled out. They would help further widen and deepen the mutual interconnection of the financial markets in the two places.

Hong Kong's social and economic developments have always been closely connected with the Mainland's development and needs. The 14th Five-Year Plan clearly supports the strengthening of Hong Kong's development as a global offshore Renminbi (RMB) business hub, an international asset management centre and a risk management centre, which provides us with a blueprint for overall development planning and a market with unlimited potential and opportunities. The Outline of the 14th Five-Year Plan sets out the direction for national development in the next five years, outlining a clear path for Hong Kong's future development in innovation and technology, finance, and legal and other professional services. A deeper understanding of the state and strategy of national development will help Hong Kong more accurately position itself, better grasp opportunities from the Mainland's development, and improve the quality of its own development. The Central Government has arranged for a delegation to visit Hong Kong to introduce the Outline of the 14th Five-Year Plan to different sectors through various meetings this week. In the future, the HKSAR Government will continue to enhance external publicity and explain to our society the importance of the Outline to the development of Hong Kong, so that the whole society will join hands to build a better future for Hong Kong.

August 22, 2021

Hong Kong's total exports of goods grew for four consecutive quarters and rose by 20.2% in Q2, benefiting from strong exports to the Mainland. Meanwhile, the local epidemic situation has been stabilised in recent months, which provided favourable conditions for further economic revival. For example, fixed investment grew by 23.8% in the previous quarter. Private consumption expenditure, after having experienced contraction for a year and a half, started to improve since early this year and rose further by 6.8% in Q2 after growing by 2.1% in Q1. Private consumption should continue to gather steam as the effect of the consumption vouchers begins to kick off in August.

As shown in past data, when private consumption continues to improve, the labour market will fare better in tandem. This is because about one-third of Hong Kong's wage earners are engaged in the retail, restaurants, tourism, and logistics and transportation sectors, which are closely related to domestic consumption. It is expected that the latest unemployment rate, to be released this week, will fall further from its current level of 5.5% alongside the continuous improvement in private consumption expenditure.

Impacted successively by the violent acts in 2019 and the epidemic, the unemployment rate rose from 3.4% at the start of 2020 to the peak of 7.2% at the beginning of this year. Although notable improvement has been seen in the employment situation in recent months, it will be difficult for the unemployment rate to fall back to the low level prior to the pandemic in the near term, unless the epidemic becomes fully contained and travelling between Hong Kong and the Mainland as well as the rest of the world resumes. To support people's livelihood and protect the jobs, it is imperative to keep the epidemic under control. This fight against the epidemic has been going on for a year and a half, and time has shown that this is not only a fight for epidemic prevention and control, but also a battle to protect the economy. Protecting citizens' health and livelihood is equally important.

In order for Hong Kong to achieve steady economic recovery, we must create favourable conditions for our society and economy. While we must sustain our efforts in implementing effective anti-epidemic measures, it is equally important that we strive to maintain the safety and stability of our society and withstand external political interference. Only then can Hong Kong's economy continue to grow. Our country has been sparing no efforts in maintaining the safety and stability of Hong Kong and ensuring its prosperity and development. Following the violent acts in 2019, the Central Government has enacted for Hong Kong the National Security Law and improved the electoral system for the sake of Hong Kong's long-term stability. In the face of the disruptions to business operation caused by the arbitrary unilateral sanctions imposed by the US, an Anti-Foreign Sanctions Law was passed by the Standing Committee of the National People's Congress (NPCSC) in June. How the Law will be implemented in Hong Kong has yet to be decided by the NPCSC, but it is evident from the developments over the past two years that every move of our country is a robust response to emerging challenges and is for the good of Hong Kong's steady development in the long run.

Our country's rapid development has been met with repeated unreasonable suppression by the US. The US has even made use of Hong Kong as a pawn to interfere with our country's development, such as revoking Hong Kong's special tariff status, implementing export control on technology products, spreading malicious rumours about Hong Kong's business environment, and even imposing arbitrary sanctions against officials of both the Central Government and the HKSAR Government. All these are attempts to cause serious disturbance to our business environment and such bullying acts are intensifying. The Anti-Foreign Sanctions Law recently passed by the NPCSC aims to make available more tools in the "policy tool box", so that counter-measures of comparable strength may be taken in response to any sanctions imposed. Increasing the options in the "tool box" may be regarded as a "passive" and defensive move to ensure that we are strong enough to fight back. By doing so, we can force the barbaric opponents to face the reality and return to rational negotiation. This is a strategy of fighting a war to end wars.

The Anti-Foreign Sanctions Law performs its functions in two ways. First, it stops any attempt by an organisation or individual to enforce the so-called sanctions imposed by foreign countries. Second, it brings our country's counter-measures into implementation. Whether the law is to cut off the "long arms" extended by foreign countries through imposing the so-called sanctions or to bring our own counter-measures into implementation, its ultimate purpose is to restore market order and safeguard the development interests of corporations engaging in normal business activities. In fact, similar policies for implementing counter-measures are also in place in the European Union and the UK to protect their own interests. Before 1997, Hong Kong also countered the imposition of additional trade restrictions by other countries to mitigate their impacts on Hong Kong enterprises through legislation (Protection of Trading Interests Ordinance (Cap. 471)). Based on the same rationale, our country has enacted the Anti-Foreign Sanctions Law to safeguard our national dignity, safety and development interests.

Anti-foreign sanctions is a matter of foreign affairs within the purview of the Central Authorities, and Hong Kong has a constitutional obligation to get the Anti-Foreign Sanctions Law implemented. The law drafting approach in the Mainland is different from that in Hong Kong. Many laws in the Mainland just establish the fundamental principles, leaving the implementation details to be worked out in future or letting the relevant government departments to enforce them in the form of administrative measures. The Anti-Foreign Sanctions Law is a national law that establishes the fundamental principles. On the operational front, the law will be implemented in Hong Kong having due regard to our actual circumstances and the status of Hong Kong as an international financial, trading and maritime centre. Nevertheless, it is foreseeable that some people may make use of this issue to create publicity stunts to undermine Hong Kong's status as an international financial centre, smear our business environment, or even benefit themselves by causing market fluctuations. We must stay alert and prepared, paying greater attention to risk management under such circumstances.

August 15, 2021

During my recent visits to different malls and shops, their staff told me that the disbursement of the voucher has driven up the number of customers and the amount of their spending. People were more eager to spend, while some even spent their own money on top of the voucher, giving a boost to the merchants' businesses. Overall speaking, we have seen a positive result in the second goal of the Scheme, i.e. boosting the economy and supporting the employment.

The third goal of the Scheme is to promote the wider application and development of e-payment, so as to pave the way for the digital transformation of Hong Kong's economy. With the Consumption Voucher Scheme, Government's Subsidy Scheme for Promotion of Contactless Payment, as well as the concessions offered by stored value facilities (SVFs) operators, the number of consumer accounts of the four SVFs and the number of merchants accepting e-payment have increased by over 2.2 million and more than 48 000 respectively by end of July, i.e. just before the voucher disbursement. Most of the electronic payment transactions have been conducted smoothly since the disbursement of the voucher. We can see that both the consumers and merchants are happy with the e-payment process.

The Scheme allows people to choose the SVFs that best suited their needs, which has promoted the competition among different payment platforms and provided a broad market base for e-payment to grow. It is our hope that the SVF operators will continue to lower their fees and improve their service quality in order to attract more customers, enabling a robust and continuous development of e-payment in Hong Kong. Online shopping and e-payment are the future trend of retail development and a must-have element for the merchants to attract consumers. For the merchants who have yet adopted e-payment, it would be good for them to grasp this opportunity to install e-payment devices in order to ride on the consuming spree induced by the Scheme in the coming few months.

Nonetheless, for any new measure or service, it is usual to see hiccups at the beginning. Over the past one week, a small number of transactions have faced problems in payment or handling, which has already drawn the attention of the Consumer Council. In fact, no matter using the voucher or not, we should always spend smartly, pay attention to the terms and conditions of the concessions offered by merchants, and make choice according to our own personal needs. As a smart consumer, it is also important to compare the products and prices, and check the receipts when you buy.

The consumption voucher covers a wide range of uses, and e-payment has become more common nowadays. These not only facilitate the consumers to enjoy easier and more convenient shopping and payment experience, but also enhance the transaction efficiency and speed, cut down the transaction cost and enable greater flexibility. Most of you may have already noticed that there is no minimum spending requirement when using the consumption voucher for buying products or services. No extra charge is also allowed. No matter you are using the voucher or e-payment method to foot the bill, you should remember the following three steps: check the price, check your payment, and check the receipt.

Hong Kong people are smart consumers. Given the market competition and the forces driven by consumers' choice, consumers and merchants both will continue to be benefitted from the Scheme.

The registration for the Scheme will close by this Saturday (14 August). Please act quick to register if you have not yet done so. Let us spend together to boost the economy and spend smart to enjoy the concessions.

August 8, 2021

• Encourage people to spend, support the enterprises by stimulating the market;
• Boost the economy together and create more jobs;
• Deepen the use of e-payment to facilitate the development of digital economy.

For those who receive the first voucher today, the voucher could be used immediately and they will collect the second voucher on 1 October.

The following citizens will collect their voucher in the second batch, i.e.:

• Those who have completed the electronic registration between 18 July and 14 August; or
• have submitted paper form registrations.

Registrants in the second batch will receive their first voucher of $2,000 on 1 September, and similarly, get their second voucher two months later (i.e. on 1 November).

Although there is a time difference in receiving the voucher for registrants in different batches, the time interval between the first two disbursements is indeed the same. This could allow a greater flexibility in the use of the voucher, while ensuring that the Scheme will not deviate from its overall goals. All the arrangements aim to maximise the benefit of the Scheme to people and strike a balance between the use of resources. Many coordination works have been involved in the progress.

Looking back at the past two years or so, the local economy had fallen into the longest and deepest recession in record, given the successive hit dealt by the violent acts and the pandemic. The once fluctuating epidemic situation also made us pessimistic to the economic prospect. The SAR Government has been fighting hard against the epidemic under the leadership of the Chief Executive, and I have been providing full support to the relevant financial needs. When drafting the Budget early this year, after taking into account the macro-economic situation, we decided to launch the Consumption Voucher Scheme, with a view to benefitting the most citizens and merchants, and ensuring all the resources could stay in the local economy. At the same time, the Scheme can promote the deepening use of e-payment in Hong Kong, giving a strong push for Hong Kong's next phase of economic development.

Given the incentives offered by the Scheme, over the past few months, the total number of consumer accounts of the four stored value facilities (SVFs) has increased by over 1.2 million and the total number of merchants accepting e-payment has increased by more than 28 000. Although some critics say that the Scheme's boosting effect on e-payment would not last long, the fact is that the competition between the SVF operators has already led to reduction in transaction fees paid by small merchants. I believe this trend will continue which can in turn facilitate the deepening development of the e-payment platform in Hong Kong.

The Scheme is achieving what it was designed for at the beginning. All along we have been thinking from the perspectives of the people. Even the Scheme involves many stakeholders, angles and situations, and requires people's understanding and support, it can bring to our people benefits that can be felt. I also believe that people will gradually understand the advantages of e-payment.

In deriving fiscal initiatives and planning for the development of our financial services sector, it is always one of my goals to ensure that people could share and feel the benefits. From the Consumption Voucher Scheme that serves to benefit all citizens, to the 100% Personal Loan Guarantee Scheme that provides temporary support to those unemployed, they together with iBond, Silver Bond and annuity products, are all serving this same goal.

The development trend of the market has also raised people's interests in such products. Taking the Silver Bond which just closed subscription last Friday for instance. It has been oversubscribed almost 2 times, attracting around $68 billion (an 60% increase from last year) from about 260 000 applications (an 90% increase from last year). Due to the overwhelming response, I have decided to raise the size of issuance to $30 billion. The allocation result will be announced this Friday.

The iBond we launched earlier this year was also well received with a large oversubscription. For the future issuance of Green Bond, even it is an infrastructure- and work projects-based product that mainly targets for institutional investors, we are also exploring to issue it in the retail market for the participation of the public. All these products and projects are all serving the same goal, i.e. to benefit the public and let them have a sense of having a stake during the implementation of policies.

Undeniably, there are dilemmas and imbalance in Hong Kong's development, which we have to face them squarely. The key is that we need to deepen our understanding to identify the crux of the problems, and set out a solution blueprint and milestones in order to press ahead the works in full swing. By doing so, even those deep-seated problems could be resolved gradually. As Xiao Baolong, the director of the Hong Kong and Macao Affairs Office of the State Council recently pointed out, we have to work really hard and in a pragmatic manner to address what the most people urgently concern, hence the people could have a sense of having a stake in the society. With the prosperous development of our Country, Hong Kong's future will surely be better. Let us work together to make Hong Kong more prosperous, more balanced in development, and our society more harmonious.

August 1, 2021

The problem of land and housing has been troubling our society for a long time. Given the continuous shortage in land supply, the waiting time for public housing is getting much longer and the living condition of the grassroots is deteriorating. At the same time, property ownership has become more difficult even for the middle-class. The shortage in supply of commercial space for a time has also led to expensive rent and constrained the development of different sectors.

For some time, Hong Kong's political disputes and malfunctioning of the Legislative Council have hindered the implementation of many policies and reforms. Now, the Central Government has helped us get out of this predicament through the legislation of the Hong Kong National Security Law and the enhancement of the electoral system. Given this favourable new environment, what we should do next is to work in full speed with determination to break through the biggest bottleneck of Hong Kong's development.

Xia Baolong, the director of the Hong Kong and Macao Affairs Office of the State Council recently talked about the wish that when our Country realises the second centennial goal, the implementation of the "One Country, Two Systems" principle in Hong Kong will be more successful and the society will be more harmonious. By then the heart-wrenching problem of housing will be greatly improved, Hong Kong's subdivided flats and caged homes will be eliminated, allowing a better and sufficient development for our society. Shouldering up these goals, the land and housing problem, the culprit for Hong Kong's under-development, has to be resolved. Other land-related problems will also be addressed and tackled subsequently. In the coming twenty or so years and no later than 2049, i.e. when our Country realises the second centennial goal, Hong Kong has to get rid of the problem of subdivided flats.

Apart from the clear target of resolving the problem of subdivided flats, we also have to make the best efforts to address other aspects of our housing problem, including expensive in cost, small in space and hard to afford. In fact, there are two big dilemmas behind this phenomenon, i.e. the disparity in income level and the disparity in asset.

Housing is the key reason behind these two big dilemmas. If we could provide suitable, affordable and reasonable living space to lower people's housing costs or make home ownership easier, on one hand, this could resolve the problem of those expensive and small subdivided flats, while on the other hand, it could enhance people's living quality and allow people to accumulate asset by greatly lower the expenditure in rent.

It is never easy to break through deep-seated problems. If our mind set is trapped by the past experience or path, we will only end in feeling helpless when trying to tackle Hong Kong's problem of land and housing. Yet as Hong Kong has restored governance from chaos over the past few years and is now heading towards development, we must be more determined to re-evaluate Hong Kong's land and housing problem from a broader perspective. We must not give up any options easily and keep fighting with will and determination for our goal.

The problem of living space and cost has deeply affected the development and stability of our society. The high cost of living space not only make it difficult for young people to save money and accumulate asset, but also deter them from being innovative and adventurous. The high renting cost faced by enterprises also hinders the diversification of Hong Kong's economic development. Tackling the land and housing problem is not just an economic or financial matter. It is also about the long term social stability, the diversity of our job market and the vibrancy of the economic development. It is an economic issue, a livelihood issue, and also a significant political issue.

We must have the strong will and determination to fight hard and address what the people really care and concern. Under the "One Country, Two Systems" arrangement, Hong Kong could develop with the system of capitalism and market economy. However, implementing the "Two Systems" principle does not imply the serious wealth disparity in Hong Kong is reasonable. As the President Xi Jinping said, we have to make efforts to tackle the problem of uneven and inadequate development and address people's most imminent concerns, and also have to achieve more noticeable and substantive progress in promoting the common prosperity of all the people. Looking back at Hong Kong, the problem of land and housing has to be resolved with substantive progress. We have to increase the land supply in short, medium and long term, streamline those overcomplicated procedures in our system, and substantially increase the long term land supply and establish a land reserve by reclamation and other means. We must always serve the overall interests of the society and fight hard for wellbeing of our people.

July 25, 2021

To grasp the business opportunities brought by the Scheme, some restaurants have rolled out 30% off promotion since mid-July to attract customers. I invited Tommy Cheung, the Legislative Council representative of the catering sector, to yum-cha yesterday. Many people in the restaurant told me joyfully that they had already registered for the Scheme and shared with me their upcoming plans in spending the vouchers. I am grateful for the recognition and support we have received from citizens for the scheme. Electronic consumption not only brings more convenience to our daily lives, but also encourages merchants to launch more concessions, bringing benefit to both businesses and customers, and in turn our society, economy and the job market.

During a taxi ride yesterday, the taxi driver also told me that business had slightly improved and the economy had been recovering. He has installed e-payment device on the taxi, and observed that passengers using e-payment have been increasing recently. He hoped his business could get even better when consumption vouchers are released later.

Hong Kong's economy has indeed shown a noticeable improvement since entering this year. The economy ended the recession of six consecutive quarters in Q1 this year and recorded a 7.9% growth. This growing trend keeps going. The unemployment rate has receded from the peak level of 7.2% early this year to the level of around 6% in May. The latest unemployment rate figure of April to June will soon be announced this week, which is expected to be getting better and returns to the level of about one year or so ago. Nonetheless, even if the overall economy is turning better, many sectors are still facing difficulties and many people's lives are still under great pressure. For the full recovery of our economy, we have to continue with our anti-virus efforts. I also appeal to you all to get vaccinated so as to create a more favourable environment to facilitate the recovery of our economy.

Looking back at the preparation and implementation process of the Scheme, there are some thoughts I would like to share. While the Scheme has good policy intention, it is a new initiative with challenges in implementation. Many people might have doubts and uncertainties towards the Scheme when it was first announced. Through communications, we then understand people's thinking and made appropriate responses. By leveraging the power of the stored value facility operators and the market, we have maximised the value of the consumption voucher and encouraged more merchants to adopt e-payment method. When the Scheme was launched, besides doing the promotion and explanatory works through the media, we worked with different parties and local groups in a concerted approach to carry out promotion at the community level, such as explained directly to the citizens and helped them in registrations. We also timely addressed the hiccups popped out at the beginning of the launch. We went through every step cautiously and carefully. With all the assistance and support from both inside and outside the Government, hopefully the Scheme would continue to run smoothly. After experiencing the violent acts and the blow dealt by the persisting epidemic, all of us should join hands in building a better Hong Kong. The Government, political parties, business sector and the community should work together and show care and acceptance to each other.

I attended a thematic seminar on the one-year anniversary of the implementation of the Hong Kong National Security Law last Friday. Undoubtedly, a safe and stable environment is the prerequisite for economic and social development and the implementation of any policies. After one year of implementation, the Hong Kong National Security Law has helped restore stability and safety in Hong Kong. Security and development are the two sides of the same coin. After stepping out from chaos and restoring governance, Hong Kong is now at the critical moment for future development and prosperity. We have to fully utilise our unique advantage under the "One Country, Two Systems" arrangement and actively integrate into the national development plan of our Country, with a view to creating a promising vision for Hong Kong and setting out clear working targets. As Xiao Baolong, the director of the Hong Kong and Macao Affairs Office of the State Council said, we could only get our wellbeing by fighting hard for it. There will always be resistances and difficulties when we work out the solutions for the deep-seated problems in Hong Kong, such as land and housing and wealth disparity. Only by having a strong will and determination, taking the overall interests of the people and the society as the guiding principle and uniting all the power in our community, we could make concrete steps to address people's hardship, and become a responsible and capable patriotic administrator of Hong Kong.

July 18, 2021

I continued to visit different districts these few days to chat with citizens and help them register for the Scheme. The registration process was very smooth. People were excited in talking about the Scheme – from registration procedures, offers by stored value facility (SVF) operators and merchants, to how they can maximise the value of the $5000 voucher. People also have different spending plans that suit their best needs. With this positive atmosphere, many merchants are expecting that the vouchers could give a boost to the consumption market and hence the overall economy.

During the visits, I answered some questions frequently raised by citizens -

a) I have received a reference number after completing the registration, but why I still haven't received the SMS notification on the registration result?

After you submit the registration, you will first receive a SMS notification to confirm that the system has received your registration for further processing.

For electronic registration, people will receive the SMS notification on the registration result around one week after completing the registration.

For those submitting paper registration forms, they will receive the notification in around two weeks.

Due to the large number of applications, it takes time for the system to process. Please do not make duplicate registrations to avoid delaying the handling process.

b) I registered electronically and chose to authenticate my identity through uploading my ID card copy. Why can't I upload the copy at the same time when I submit the electronic registration form? And I have already received a reference number for my registration, but why the system shows that there is no record of my registration when I try to upload the ID card copy?

If registrants choose to upload ID card copy for identity authentication, they can only do so, as instructed on the screen display, on the Scheme website 24 hours after submitting the electronic registration. The Government will send SMS notification on this to the mobile phone number provided by the registrants. This arrangement is to diverge the network traffic flow effectively so as to ensure the system could have enough capacity to handle the uploads.

Please note that your registration is not yet completed before the ID card copy is uploaded. If you try to make an earlier upload, the system will indicate that related registration record is not available. In fact, if you choose to upload your ID card copy for identity authentication, you only have to upload it after receiving the relevant SMS notification and the registration process can then be completely quickly.

c) The "residing in Hong Kong" requirement of the Scheme

Under the Scheme, to fulfil the "residing in Hong Kong" requirement, the registrant cannot be away from Hong Kong continuously during the 24–month period immediately before 18 June 2021. In other words, a registrant is eligible if he/she has been in Hong Kong for only one day during the said period.

For a registrant who has been absent from Hog Kong continuously during that period, he/she would still be considered eligible if it is due to specified reasons including studying abroad, performing overseas duties for a company, or recipients of assistance under the Fujian Scheme or GuangDong Scheme, etc.

The Government will conduct random checks on the "residing in Hong Kong" requirement. Some citizens may have received SMS sent from the designated telephone number 852 5567 3873 which asks them to provide documents to prove that they satisfy the said requirement. Such selected registrants can contact Deloitte Touche Tohmatsu via the number provided in the SMS, and provide the required documents through email, in person or by other appointed persons.

Apart from the above frequently asked questions, we also came across some special cases. For instance, some citizens failed to complete the registration after filling in the ID card information, since the card issue date entered was not the updated one shown in their newly replaced ID card. And there is another case that a citizen who had not yet registered was puzzled as she received SMS notification on receipt of registration, and was concerned if there is a leakage of her personal data. It turned out to be a false alarm after she learnt from her sister that her mobile phone number had been provided for communication purpose in their mother's registration and hence the "unknown" SMS notification.

The Consumption Voucher Scheme is a new initiative involving over 7 million citizens and more than ten thousand of merchants. The registration system has to be convenient and secure at the same time, and the Scheme has to cater for large amount buying and encourage small amount consumption. It takes time for the people to understand the setting and the requirement of the system and the Scheme. My thanks go to the many community volunteers who assist fellow citizens in registration, together building a caring and helpful community.

The Scheme is entering its second week of registration. For electronic registrations completed on or before this Saturday, i.e. 17 July, verified registrants will received the first consumption voucher on 1 August.

For other electronic registrations submitted after the first two weeks and all paper form registrations, as long as they are completed on or before 14 August, verified registrants will receive the first consumption voucher on 1 September.

No matter how you register for the Scheme and when you will receive the electronic consumption vouchers, let us spend together to boost the economy, and use e-payment more frequently to promote digital economy.

July 11, 2021

For those who would like to submit electronic registrations later or to submit paper registration forms, as long as the registration can be completed before the deadline, i.e. 14 August, they can receive the first voucher on 1 September. The following demonstration video explains the registration procedures and the information required in the process.

There are four steps in the electronic registration process. It can be easily completed if you have got the required information ready.

1. Enter your ID card number and date of issue for identification;
2. Authenticate your identity by answering two security questions if you have successfully registered and received $10,000 under the Cash Payout Scheme (CPS) launched last year. The two questions are (i) the last four digits of the telephone number registered under CPS, and (ii) the last five digits of the bank account number specified for receipt of payment, or the post office chosen for collection of cheque. Other authentication methods include using the iAM Smart mobile app or uploading their ID Card copy according to notification.
3. Designate a stored value facility (SVF) account for receiving the consumption vouchers: Select one SVF from the four options, and fill in the related account number or card number.
4. Declare your compliance with the "residing in Hong Kong" requirement, i.e. has not been absent from Hong Kong continuously for the 24 months immediately before 18 June 2021. Exemptions include performing overseas duties for a company on a temporary basis, studying abroad, hospitalised outside Hong Kong, or recipients of assistance under the Fujian Scheme or GuangDong Scheme, etc.

The above four steps are all that required for completing an electrocnic registration.

The Scheme has recently become a hot topic in the community. People around are excited in exchanging views on the scheme registration, plans in using the vouchers, and concessions offered by SVF operators, etc. If you have any questions on the Scheme, you may visit the Scheme's official website for more details.

This is the first time for a consumption voucher scheme to operate in Hong Kong. More explanatory works are needed as it is a new trial involving over 7 million citizens and more than 100 000 merchants. We are happy to note that many merchants and stores have grasped this opportunities to adopt e-payment. The various concessions offered by the four SVF operators, shopping malls, merchants and restaurants have also aroused people's interest in using the electronic consumption vouchers. All these help to achieve the objectives of the Scheme - to boost the economy through spending together, and to promote e-payment to bring more convenience and concessions.

Today, it is hard to imagine our daily lives without mobile phone and internet. Similarly, e-payment is the prerequisite infrastructure for the future digital economy. Still, there is room for improvement in the usage pattern and utilisation of e-payment in Hong Kong. Only by taking forward the development of e-payment infrastructure could we create a favourable environment to lower the transaction cost, enhance efficiency and provide more diversified choices for consumers and merchants. This could also open up new business opportunities for merchants and enterprises to launch more cross-sectoral promotions, bringing more diversified job opportunities and creating new landscape for the economy.

We need your support to make the Scheme successful. Let us spend together - every dollar you spend will help boosting the economy, and every transaction you make will promote the development of the e-payment infrastructure. You may also find the joys of trying new things and enjoy more concessions in the new way of spending. Let us join hands together to support and participate in the Scheme!

July 4, 2021

User experience depends on the actual operation of the Scheme. To help people better understand the Scheme, we are reaching out to different groups and sectors to explain its details and have summarised the frequently asked questions as follows:

1. The consumption vouchers will be disbursed in instalments. Should I register for each instalment?
   No. Eligible persons need to register only once and the vouchers will be disbursed in instalments according to the timetable.
2. For consumption vouchers received through AlipayHK, WeChat Pay HK or Tap & Go, do I need to use the first voucher in order to collect the second one?
   No. Even if you have not used the first voucher, the second voucher will still be disbursed according to the timetable. You can use the two vouchers together. In other words, if you have not used the first voucher ($2000), you can use it with the second one ($3000) i.e. using two vouchers worth $5,000 in total.
3. For consumption vouchers received through Octopus, can the vouchers be used for paying transport expenses?
   Transport expenses are covered by the consumption vouchers, whether the vouchers are received through Octopus or other e-wallets.
4. E-payment is not that popular in Hong Kong. Are we ready for the Scheme?
   E-payment and online shopping are the major retail industry trends, providing people with more personalised products and services while allowing merchants and enterprises to expand their businesses and launch creative marketing campaigns. The Scheme will offer more incentives for people to use e-wallets and help create an e-payment platform in Hong Kong.

In fact, the use of e-wallets is not as remote as some have suggested. Even in wet markets in some older districts, quite a number of stalls have already installed e-payment devices. Many people prefer using them to avoid small changes in cash in day-to-day shopping. Yesterday, I visited some wet markets, stalls and restaurants in different districts and talked to many people. I used e-payment and enjoyed the cashless spending experience!

With the launch of the Scheme and the promotional offers provided by SVF operators, consumers will be more willing to take the first step to use e-wallets more frequently. Competition among the operators will also help gradually lower the service charges of e-payment for consumers and merchants. More importantly, with the wider adoption of e-payment and e-commerce by consumers and merchants, the transaction efficiency at retail level could be enhanced and the transaction cost lowered. At the same time, more effective use of data and matching of services across sectors could be achieved. With research and innovation, new opportunities could always be found and new services created. The flexibility, efficiency and popularity of e-payment could help merchants and start-ups launch new services and products to tackle customers' pain-points.

To press ahead with the digital transformation of Hong Kong's economy, we have been working to encourage more enterprises to enhance operational efficiency and expand businesses with the adoption of technology with a view to applying such technology in other areas. Apart from promoting e-payment at retail level, we are also taking forward research work on deepening the use of Central Bank Digital Currency (CBDC). In the coming year, we will continue with the trial use of CBDC in cross-border trade payment and step up our preparation in using CBDC at the wholesale and retail level in Hong Kong, including conducting study on the retail use of e-HKD. We will also continue to collaborate with the People's Bank of China to conduct technical testing of e-CNY in Hong Kong, with a view to providing convenient cross-border payment services to residents in the Mainland and Hong Kong.

From retail payment platforms to CBDC, technological advancements have brought about challenges and opportunities to our economy and stimulated the development of new applications and services. Developing innovation and technology as a new industry, riding on the strategic development of the Guangdong-Hong Kong-Macao Greater Bay Area, and developing green finance to grasp the enormous opportunities brought by green and sustainable development have all created growth impetus and development space for Hong Kong. These will also facilitate our young people to have greater room of development and more options when pursuing their dreams. I met with some young people yesterday and we shared our thoughts on the future. While feeling frustrated at times, the young people are hopeful about their career. I am deeply impressed by their passion for their work and willingness to try and innovate.

With the solid support of our Country and the implementation of the principle of "patriots administering Hong Kong" in our system, I believe Hong Kong will continue to thrive and prosper and our young people will have more career development opportunities. The celebration of the 24th anniversary of the establishment of HKSAR coincides with the centennial of the founding of the Communist Party of China. In modern Chinese history, our Country has overcome difficulties and successfully charted our own path of development and institutional building. In the new era under Socialism with Chinese Characteristics, the "One Country, Two Systems" arrangement is unprecedented and its objectives are clear, namely, upholding pragmatism and fighting for the well-being of the people and the rejuvenation of the Chinese nation.

June 27, 2021

Details of the Consumption Voucher Scheme were announced last week. This is a measure launched in Hong Kong for the first time, covering 7.2 million citizens, over 100 000 merchants and different application scenarios. The whole operation system has to be built from scratch. Knowing that citizens are very concerned about the details of the Scheme, we have been carrying out briefings for different groups of people to explain the related arrangements. Relevant information has also been uploaded to the dedicated website of the Scheme for public access.

Over the past few days, I have come across some frequently asked questions on registration and the using of vouchers in the press conference, TV and radio programmes and different briefings. I shall take this opportunity to make some elaborations on those areas.

1. What is the specific requirement of "residing in Hong Kong"?
   "Residing in Hong Kong" refers to a person who has a presence in Hong Kong within the two years immediately before 18 June 2021. This arrangement has taken account the fact that some citizens may have their returning plans to Hong Kong affected by the pandemic. The following are exempted from the above requirement and hence are deemed to fulfil the eligibility criteria - Students studying abroad and participants of the Working Holiday Scheme administered by the Labour Department, or recipients of assistance under the Portable Comprehensive Social Security Assistance Scheme, allowance under the Guangdong Scheme, or allowance under the Fujian Scheme.
2. If I choose Octopus to receive the electronic consumption vouchers, do I need to use a personalised Octopus card?
   No. Both personalised Octopus cards and non-personalised standard Octopus cards are accepted for registering consumption vouchers.
3. After submitting electronic registration, will there be any SMS notification?
   Yes. SMS notification will be sent to the local mobile phone number that you provided. It will include a reference number for use in further enquiries.
4. For AlipayHK, Tap & Go and WeChat Pay HK, after receiving the first voucher of $2,000, can I use it together with the second voucher of $3,000 for a bigger spending?
   Yes.

Many elderly people are also concerned about the details of registration and the using of the consumption vouchers. During my chat with some senior citizens yesterday, they expressed interests in learning new things and were excited to share their plan in using the vouchers. While some of them tended to use Octopus cards for receiving the consumption vouchers, some were keen to learn to receive and use the vouchers through e-wallet in smart phone. Indeed some of them are veteran users that are very familiar with the application of stored value facilities (SVFs) in smart phone.

Electronic consumption voucher has recently become a hot topic in internet search. While some people are focusing on the registration and using of the vouchers, many others are already making plans on how to spend them, like buying gifts for family members and eat out with friends. Concessions and promotions to be offered by SVFs operators and other merchants also draw people's attention. It is expected that the using of the vouchers will boost the businesses of local retail, catering and other services sectors. More importantly, the Scheme could help promote the wider use of SVFs and expedite the establishment of e-payment platform and the development of digital economy in Hong Kong.

With the participation of over 7 million citizens, let us spend together to promote the use of e-payment in Hong Kong and speed up economic recovery. This mass participation will create demands and incentives for more small and medium sized merchants to adopt e-payment and thus enjoy the related opportunities of growth. With the concerted efforts of the Government, business sector and the community, the development and wider use of e-payment system in Hong Kong will gain its full speed. As e-payment and online sales will become the major impetus of growth for the future global economy, let us spend together to help Hong Kong progress on the right direction to success.

June 20, 2021

Following the issuance of iBond, we will soon announce the details of the issuance of the next batch of Silver Bond by end this month. I have already announced in the Budget this year that the maximum issuance size of this batch of Silver Bond will be no less than HK$ 24 billion and the eligible age will be lowered from 65 to 60, so as to provide the elderly with a stable and reliable investment option with fair return under the current low interest rate environment. At the same time, it can help promote the development of the high potential "silver hair" market.

When we prepared the Budget earlier this year, the inflation rate and interest rate were still very low around the globe, and the stock market was heating up. Under this circumstance, iBond and Silver Bond might not look attractive enough for investors. Nonetheless, our judgement at the time was that, the stock market will inevitably be volatile, and the easing monetary policy continued by many overseas major economies will lead to abundance of capital and mounting pressure of inflation, which will in turn trigger the demand for inflation-linked products with guaranteed minimum interest rate. We therefore have decided to issue another batch of iBond with an option to further increase the issue size, so that citizens could share the fruit of the development of our financial market, and further development of the local bond market can be promoted. When iBond was open for subscription over the past few weeks, coincidentally there was a mounting pressure of inflation in the US, and hence adding attraction to inflation-linked products and heating up the sentiment of iBond subscription. Promoting the development of Hong Kong bond market through issuing Government bonds could bring present and future benefits. This reflects that by taking a forward-looking mentality and making early preparations, we can achieve the effect of killing two birds with one stone.

We hope that the electronic consumption voucher scheme proposed in my Budget can also achieve a double benefit effect, i.e. boosting consumption and the economy, and at the same time promoting the widespread using of e-payment. The COVID-19 pandemic has popularised the acceptance and usage of e-payment and online sales. According to many surveys, the model of electronic transaction would be the major trend of growth for the future global market. If we lag behind our fast-paced neighbouring cities, the room of businesses for our local enterprise and small merchants will be undermined, the choices of products and convenience that could be enjoyed by consumers will be diminished. This could hinder the overall development of digital economy in Hong Kong.

As an international financial centre, although Hong Kong's financial services are having a robust development, there is a big room of improvement for e-payment and online sales on the consumption front. For instance, over HK$ 8.1 billion value of online sales was recorded in the first four months this year, reflecting a 53% increase compared with the same period last year, which is much higher than the 8.3% growth in the overall retail sales value. However, this fast growing online sales sector still only accounted for 7% of the total retail sales values in Hong Kong, much lower than that ratio in Mainland, which stood at over 20%. This tells that there is a huge room of growth for online sales in Hong Kong.

Moreover, merchants with physical stores gained a growth of 81% in online sales in the first four month this year, much higher than 28% increase in sales gained by those only operating online stores. This reflects that traditional merchants are also actively exploring online sales to seek driving force for business growth.

While one may be attracted by the concessions offered by e-wallets and other cross-sectoral promotions, or the convenience of online shopping in using e-payments, its widespread use among consumers and merchants will in any case be a pivotal foundation for future growth of Hong Kong's retail market.

The electronic consumption voucher scheme not only provides extra money for our citizens to spend in consumption, but also helps to bring the community together to promote the wider application of electronic consumption and facilitate small merchants to further tap in electronic platforms to explore more business opportunities. If local merchants are given opportunities to carry out more cross-sectoral promotions, our economy and market could be further energised with new ideas.

In fact, with our efforts against the virus showing effects gradually and more and more people getting vaccinated, Hong Kong's economy has been picking up its impetus after suffering from the epidemic for more than one and a half year. Not only the GDP is seeing a rebound, but improvement is also shown in the labour market. For instance, the unemployment rate has been receding from 7.2%, a 17-year peak, at earlier this year. Given the pace of improvement in recent months, the unemployment rate to be announced will soon come down to nearly the level of that one year ago. Nonetheless, it is still far from the situation of almost full employment before the outbreak of the epidemic.

To facilitate an economic recovery to its largest extent, it still requires effective measures against the epidemic and resumption of cross boundary travel with the Mainland and other places. Getting vaccinated not only helps protect yourselves and your families, but also facilitate the society and people's daily lives to resume normal.

The rolling out of the electronic consumption voucher at this point of time helps to build up a positive atmosphere for people to consume, create more business opportunities for the merchants, and promote the use of e-payment in Hong Kong. Every dollar we are going to spend today will bring present and future benefits. The preparation of the electronic consumption voucher scheme is at its final stage. We will soon announce the scheme details, including the arrangement for registration and disbursement. Registration is expected to start next month.

June 13, 2021

Infrastructure development plays a role in improving the living quality of people. The Government has been making substantial investment in different infrastructure projects such as housing, hospitals and road networks, boosting our public works expenditure to an annual average of over HK$100 billion in the coming few years. Together with private development projects, the total construction volume will stand at an annual average of about HK$ 300 billion, creating more than 300 000 jobs. This reflects the continuing strong demand on construction services in Hong Kong.

Nonetheless, Hong Kong construction sector is facing various challenges, particularly the ageing of manpower and backwardness in technology. We have been adopting a multi-pronged strategy to address the problems, including applying new technologies, providing professional training and rejuvenating the workforce.

Innovative technology

Introducing new technology to the industry could increase productivity, enhance the quality of works and the safety in worksites. In my 2018 Budget, I set up a HK$1 billion Construction Innovation and Technology Fund to encourage and support the industry to adopt technology and innovative construction methods, such as Building Information Modelling (BIM) and Modular Integrated Construction (MiC), and also help to boost the practitioners' capabilities in applying technology. Furthermore, Digital Works Supervision System has been adopted in all public works projects since last year so that the latest technology can be applied in different aspects including planning, construction and works supervision, which could also help enhance the safety, efficiency and quality of works.

Apart from adopting innovative technology in works, the Hong Kong Institute of Construction (HKIC) has included innovative technology in its training programme since its establishment in 2018. For instance, the HKIC - Kwai Chung Campus provides the first Safety Experience Training Centre, which incorporates virtual reality (VR) and other sensory experience into its safety training courses so as to raise awareness of the industry and trainees in construction site safety and prevent accidents in workplace. Also, HKIC has introduced the using of emulators in welding and crane operation courses so that students can learn the needed skills in a safe environment.

Professionalisation and rejuvenation

Skills training is particular important in the construction industry. The Government has allocated a total of HK$620 million over the past decade to the Construction Industry Council (CIC) to train skilled workers required in the sector. Amongst the above total sum, HK$200 million funding was used to support HKIC to increase the allowance for attracting more young people to receive training and join the industry, provide training to upgrade in-service general workers to be semi-skilled workers, and also semi-skilled workers to be skilled workers. By this, practitioners in the industry are provided with a career path through continuing learning.

Besides enhancing skills training for practitioners, HKIC also dedicates effort to acquire accreditation for its programmes under the Qualification Framework (QF). At present, full-time certification courses and diploma courses for construction have already obtained recognition under the Framework. HKIC also strives to attain the operator status of "Programme Area Accreditation" at QF level 3, with a view to providing a comprehensive articulation mechanism for continuing learning and a clear career path for full-time graduates. In other words, through the basic training courses and continuing study under HKIC, young people of the construction industry could have three directions of development, i.e. artisans with excellent skills, knowledge-based worksites managing staff, or frontline project supervisory staff.

With the concerted efforts of the Government, CIC and the industry, CIC has provided training to more than 40 000 industry practitioners over the last decade, injecting new workforce to the industry. Through promoting the application of innovative technology, providing professional training and enhancing the career path, the overall image of the industry can be enhanced and more development opportunities can be provided to the practitioners, which in return help attract young people to join the industry.

I attended the ceremony for the completion of development project of HKIC campuses last week to celebrate the completion of the renovation and facilities upgrading works of HKIC's Kowloon Bay, Kwai Chung and Sheng Shui campuses. Training facilities of the campuses have been consolidated and upgraded to facilitate modern and interactive teaching model and meet the future development needs of the industry. During the ceremony, some students and graduates shared with us their directions of continuing learning and aspirations of the future. Apart from further equipping themselves on skills, innovative technology application and works supervision, some students have planned to pursue higher diploma and aimed at becoming knowledge-based and skilled professionals of the industry. We are pleased to see that the industry has built up a multi-layer model in the passing of knowledge, covering theory, practice and application.

It is also surprising to us that the HKIC students not only possess artisan skills, but also talents in playing trendy music. During the ceremony, a student band performed the school anthem with lyrics jointly composed by teachers and students of HKIC. Their fantastic performance did showcase their professional artisan spirit. I would like to encourage young people that, no matter which sector you work in, as long as you work hard for your aspirations and your goal, you will one day realise your dream and make your own success story.

June 6, 2021

The aforementioned measures ensure the successful and steadfast implementation of the institutional arrangement of "One Country, Two Systems" and facilitate a more robust development for Hong Kong with our institutional uniqueness and strengths consolidated and enhanced. Under the principle of "One Country, Two Systems", the Basic Law protects the implementation of capitalism and common law system, independent judiciary, free flow of capital, free convertibility of currency, and independent taxation system in Hong Kong. With our historical development and these institutional strengths, Hong Kong has become a hub, as well as a highly effective "two-way" platform, drawing talents and capital from overseas and the Mainland.

As learned from Hong Kong's development path, while we have to stay open to the global community, our fundamental interest is closely tied with our Country. Hong Kong's future prosperity and opportunities will depend on how well we could integrate into our Country's development plan. With the implementation of the 14th Five-year Plan and the Guangdong-Hong Kong-Macao Greater Bay Area strategy in full steam, Hong Kong could grasp the enormous opportunities in innovation and technology and financial services development, and also developing as an international aviation hub, a hub for arts and cultural exchanges between China and the rest of the world, an international legal, dispute resolution services and regional intellectual property trading centre.

Our neighbouring cities have been going through high-speed development in recent years and offer abundant opportunities. Yet Hong Kong over the past decade left us an impression of stalemate in development. In particular, the endless political disputes and the non-functioning of the LegCo had hampered our governance effectiveness. In the latter half of 2019, serious violent and illegal acts, as well as the advocation of separatism and Hong Kong independence dealt a serious blow to Hong Kong's law and order, rule of law and the investment environment. The implementation of the National Security Law in Hong Kong and the improvement to the electoral system could help stop and correct the past social chaos, and establish a new order of "patriots administering Hong Kong" on the system level, restoring a socially safe, politically stable and lawful environment for Hong Kong.

Under the new electoral system, with the "executive-led" political system strengthened and the Government's governance capability enhanced, our society will be able to focus on tackling social, economic and livelihood issues, including complicated long problems such as land and housing. The reality is that, with the restoration of political order, different sectors of the society are having a high expectation on the dealing of those deep-seated issues which have hindered the development of Hong Kong for long time. The SAR Government has to unite different sectors of the society to work together to solve the problems.

Since the implementation of the National Security Law in 2020, Hong Kong has quickly restored its governance from the state of chaos. Right now, while fighting against the epidemic remains our primary task, it is also crucial for us to well organise the coming three important elections. At the same time, we have to make use of the new political environment and dedicate efforts with innovative ideas to tackle the deep-seated problems. Learning from the experience of reforms in this two years, even if facing with complicated and intractable systematic issues, with the right assessment of the nature of the problems, innovative ways to formulate solution based on the Country's and Hong Kong's interests, detailed planning as well as implementation with determination, problems could be fixed eventually. 2021 will be marked as a new milestone for Hong Kong's transformation from chaos to governance, and gradually towards development and prosperity.

May 30, 2021

In terms of hardware, we have been pressing ahead with the two "10-year Hospital Development Plan" (HDP) to provide more beds and upgrade the hospital facilities. For the first 10-year HDP, HK$200 billion has been earmarked and various projects are under way. The whole plan is expected to provide a total of over 6 000 additional beds and more than 90 operating theatres. I announced the second 10-year HDP in my 2018-19 Budget, which included the redevelopment of Princess Margaret Hospital and Tuen Mun Hospital, and the expansion of Queen Elizabeth Hospital and North Lantau Hospital. The entire plan is expected to provide over 9 000 additional beds and other new hospital facilities, meeting the projected service demand up to 2036. Apart from the two HDPs, we have earmarked HK$ 5 billion for the acquisition of medical equipment, including advanced medical devices for treating cancer and other diseases requiring specialty services.

Apart from hardware, our shortage in medical manpower is equally severe. Currently, Hong Kong has a ratio of two doctors per 1 000 population, which lags far behind other advanced economies such as Singapore, the UK and the US. According to the "Healthcare Manpower Projection 2020", the shortage of doctors will get further worsen in the medium to long term. The current shortage of manpower in our public healthcare system is even more imminent. We have to take decisive actions to tackle the problem so as to alleviate the pressure on the public healthcare system and shorten the waiting time of patients. One of the solutions is to increase the number of locally trained doctors. We have substantially increased the number of medical training places from an annual average of 250 during the period of 2005-06 to 2008-09 to 530 in 2021-22, representing an increase of more than one-fold. We also plan to further increase the number of medical training places. At the same time, we pledged in the 2018-19 Budget to provide adequate resources to the Hospital Authority (HA) for employing all local medical graduates, so that our young medical students could focus on their studies without needs to worry about finding jobs in future.

To enhance the capacity of the whole public healthcare services, apart from increasing the training places for doctors, it is also necessary to train more pharmacists, physical therapists and nurses, and enhance the teaching facilities. I visited a few tertiary institutions providing training to local medical professions in the past few years to learn more about their needs in teaching facilities. In the past two financial years, around $1.9 billion has been allocated to the University of Hong Kong, the Chinese University of Hong Kong and the Hong Kong Polytechnic University for carrying out short term renovation and enhancement works, as well as feasibility studies and medium to long term works projects to expend their teaching facilities. This helps to ensure that the training of local medical professions will not be constrained by teaching supporting facilities.

And in view of the increasing workload on the frontline staff of our public healthcare system, I have allocated resources for the HA in my recent Budgets to implement a series of targeted measures to retain talent. These include raising the various allowances for the frontline staff, enhancing the scheme of rehiring retired staff, and creating more promotion and training opportunities. The additional expenditure involved is expected to increase by more than 6 times from around HK$ 160 million in 2021-22 to around HK$ 1.2 billion in 2025-26.

Though we have increased the number of training places and enhanced the teaching facilities, it still takes more than ten years to train a specialist doctor. Such medium to long term measures for increasing doctors could not instantly relieve the manpower shortage problem in the public healthcare system and address people's imminent healthcare needs. We therefore need to adopt a multi-pronged approach with effective short term measures in tackling the problem.

Last week, the SAR Government proposed to amend the Medical Registration Ordinance to create a new pathway of "special registration" other than the existing registration mechanism, with a view to allowing non-locally trained doctors to apply for full registration after fulfilling a set of criteria. The required criteria for the applicants include: (1) being a Hong Kong Permanent Resident (HKPR); (2) holding a medical qualification recognised by the SAR Government; (3) full-time employed in any of the public healthcare institutions in Hong Kong for five to eleven years, and being considered by the employing institutions to have served satisfactorily. As for the actual serving period in the public institutions, it depends on whether the applicant have obtained specialist qualification before joining the institution. If the applicant is a fresh graduate from a medical degree, he/she will have to go through specialist training in Hong Kong public institutions for at least six years, and serve in the institutions for at least another five years after obtaining the specialist qualification in order to be fully registered.

This arrangement provides an option for non-locally trained HKPR doctors, who are familiar with the Hong Kong environment, to relocate to Hong Kong and serve in our public healthcare institutions, so as to help relieve the manpower pressure on our public healthcare system. The continuous performance assessment during the employment period in public healthcare institutions could also help ensure the quality of these doctors.

Looking at overseas experience, Singapore has been facing similar shortage in manpower in recent years. Since 2003, they set up a similar arrangement for the admission of overseas doctors and gradually recognised the qualifications of medical graduates from over a hundred of international medical schools. By offering a limited registration, the overseas doctors are allowed to work in the hospitals and could obtain full registration after being assessed by senior doctors. The merits of the arrangement is that the admission of overseas doctors can be expedited to alleviate the pressure of manpower shortage with quality safeguards.

The admission of non-locally trained doctors indeed is not something new to Hong Kong. Back in the 1990s, non-locally trained doctors accounted for about 45% of newly registered doctors in Hong Kong at that time. However, over the past decade (2011 to 2020), that ratio dropped significantly to about 10%, deteriorating the manpower shortage problem in our healthcare system.

Facing the persistent problem of shortage of doctors in our public healthcare system, we have already allocated extra resources in both software and hardware enhancement, with a view to solving the problem in the medium to long term. To tackle the manpower shortage in the short run, the current proposal would be the most appropriate option by drawing non-locally trained HKPR doctors to serve in our public healthcare system. I appeal you all to support the legislative amendment proposal for the overall benefit of our society.

May 23, 2021

In the Leaders Summit on Climate last Month, President Xi Jinping reiterated our Country's commitment to reducing coal consumption between 2026 to 2030, striving to peak carbon emissions before 2030 and achieving carbon neutrality before 2060. To support that transition, some analyses estimated that more than RMB 100 trillion is required on green investment. In fact, the global capital demand for decarbonisation keeps mounting, and global green bond issuance hit a record high of US$ 290 billion last year.

Hong Kong is also striving to reduce carbon emission in order to realise our commitment of achieving carbon neutrality before 2050. As an international financial centre, Hong Kong could play a vital role in directing market capital to support public and private organisations to invest in green and low carbon emission activities, contributing to the progress towards global carbon neutrality. In my past Budgets, I have dedicated efforts to promote the development of green and sustainable finance in Hong Kong, with a view to building Hong Kong as a regional green finance hub in the Greater Bay Area. Through supporting the financing and certification of China's and Greater Bay Area's green projects, on one hand we could facilitate our Country in achieving its strategic aim of transformation towards green economy, while on the other, help promote diversified development of Hong Kong's financial industry to keep abreast with the international trend.

According to a report issued last week by Climate Bonds Initiative, an international NGO, the total value of green bonds issued in Hong Kong between 2015 to end 2020 amounted to over US$ 38 billion, while in 2020 alone the value of green bonds and loans arranged and issued in Hong Kong totaled about US$ 12 billion. The issuers of these green bonds came from different countries and regions, with Mainland issuers being the key driver, making up 60% of the overall issuance volume last year. The range of products has also diversified. Apart from mainstream products like green bonds and loans, other instruments like sustainability-linked bonds and loans as well as transition bonds are also becoming more popular.

The new Green and Sustainable Finance Grant Scheme proposed in my Budget this year was formally launched last week, and has been well received by the industry. The Scheme covers a comprehensive range of relevant products, including green and sustainable bonds and loans, and provides subsidy for expenses on bond issuance and external review services. We believe that the Scheme will help attract more bond issuers and borrowers to use Hong Kong's fundraising platform and professional services, boosting more green finance activities in Hong Kong. At the same time, it also encourages more financial and professional service providers and external reviewers to use Hong Kong as a regional hub.

In the Budget this year, we also expanded the scale of the Government Green Bond Programme by doubling the borrowing ceiling to HK$200 billion to allow for further issuance of green bonds totalling HK$175.5 billion within the next five years, having regard to the market situation. This will also allow more room for piloting the issuance of green bonds that involve more types of currencies, project types and issuance channels, thereby further enriching the green finance ecosystem in Hong Kong. As green finance is garnering attention in society, we also plan to issue retail green bonds so that the general public can participate in green finance directly.

Green bond proceeds raised under the Programme will be credited to the Capital Works Reserve Fund as stable funding resources for public works projects that provide environmental benefits and support Hong Kong's sustainable development. It could also ensure the implementation of such works projects will not be delayed by other fiscal considerations, facilitating Hong Kong to achieve the target of carbon neutrality as planned.

To deepen and accelerate the development of Hong Kong's green finance market, it is necessary to strengthen the cross-sectoral coordination and cooperation in the financial industry and formulate effective strategy, with a view to establishing an ecosystem that is conducive to the development of green and sustainable finance. The "Green and Sustainable Finance Cross-Agency Steering Group" was therefore set up by several regulatory bodies and Government departments last year, which have formulated six key focus areas and five near-term action points covering the following key aspects:

• Risk management: Continue to promote the development of international regulatory requirements and standards to ensure financial institutions manage climate risks properly and embed climate considerations into their decision making and business operations; and assess the climate risk resilience of financial institutions under different climate scenarios, such as through the pilot exercise on climate risk stress testing.

• Disclosure: Implement mandatory climate-related disclosures in line with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) across relevant sectors no later than 2025, making Hong Kong the first Asian jurisdiction to make this commitment.

• Green standards: Aim to adopt the Common Ground Taxonomy being developed by a working group co-led by China and the European Union, to ensure that Hong Kong's standards are largely aligned with those on the Mainland and internationally, enabling freer flow of green capital.

• Capacity building: The Steering Group is taking steps to set up a joint public-private sector platform to act as a focal point for financial regulators, Government agencies, industry stakeholders and the academia. Through consolidating resources and information, and facilitating cross-sector interaction, the platform aims to enhance talent development, capacity building, and support climate risk analysis and academic research.

With the Government's active coordination, planning and policy support, implementation of the related strategic plan and initiatives, and collaboration with the industry to mobilise market's resources and power, I believe we can succeed in realising the decarbonisation of Hong Kong's economy and enhancing Hong Kong's status and competitiveness as the green finance hub in the Greater Bay Area.

Promoting a green future can facilitate Hong Kong's continuous economic growth and create more job opportunities. Last week, the Government Economist slightly revised upward the economic growth of Q1 to 7.9%, not only ending the contraction of six consecutive quarters, but also showing a robust rebounding force. The unemployment rate also receded from the record high of 7.2% to 6.8%. With the gradual improvement in the economy and the recent epidemic situation, it is expected that the to-be-announced unemployment rate and underemployment rate will show a further notable decrease. Nonetheless, whether the labour market could continue its improvement and lead to a rebound in overall wages, which is the most direct benefits that wage-earners can get from economic and employment improvement, still largely depends on how effective the epidemic situation is controlled. To facilitate the continuous improvement in the economy and the job market, I urge you all to support the vaccination programme and encourage your families and friends to get vaccinated. This is the most effective way to protect yourself and your families, and also a crucial step to support a gradual improvement for our economy and the job market.

May 16, 2021

Overall speaking, Hong Kong's economy has indeed shown signs of recovery and recorded a 7.8% of year-on-year growth in Q1 this year, ending the contraction after six consecutive quarters and marking three consecutive quarters of positive growth. In Q1, the private consumption expenditure grew by 1.6%, a rebound after six consecutive quarters of contraction. Nonetheless, the growth in Q1 is mainly export-driven. Other sectors, such as retail and catering, are still showing a weak performance.

Taking the restaurants sector for instance. The value of total receipts of the sector in Q1 this year was HK$ 19.7 billion, decreased by about 9% annually or 37% when comparing to Q1 2019. As a sector engaging over 230 000 employees, its unemployment rate still remains high at 13.3%, which is much higher than the overall unemployment rate of 6.8%.

Apart from the restaurants sector, the pandemic has also dealt a severe blow to other sectors such as tourism, retail, transport and logistics. These sectors altogether employ about 1 million people, i.e. around one-third of Hong Kong's labour force. For enterprises and employees of these sectors, their "sensory temperature" in real life will be much lower.

Local enterprises of different scale from different sectors, as well as foreign enterprises in Hong Kong, are all looking forward to Hong Kong's success in winning the battle against the epidemic. Storekeepers in the wet market told me that, although their business has slightly improved, it is not yet fully recovered back to the level before the COVID-19 outbreak. In addition, some representatives of foreign enterprises reflected that due to the stringent anti-epidemic measures, some of their employees in Hong Kong could not return to their home country to visit their families for more than a year, at the same time it is also not easy for their families to visit Hong Kong. They are concerned that, if the situation persists, some of their non-local senior management staff will return to their home country or relocate to other places to work. Similar difficulties are also faced by those stationed employees from the Mainland, as reflected by many Chinese enterprises. This situation is detrimental to Hong Kong's attractiveness in drawing talents and the business operations of these enterprises in Hong Kong.

The SAR Government has been making our best effort to bring the epidemic under control. It is equally important to have our citizens' support to the vaccination programme. Only by getting vaccinated, our body could build up the immune system against the COVID-19 virus and reduce the risk of serious illness if getting infected. This is the most effective and pragmatic way to protect our own and our families' health, and also the most crucial part to facilitate the society to return to normal. After all, even if we can reduce gatherings in order to curb the spread of the virus, it is unlikely to totally prevent people from all sorts of social contacts in daily lives. In order to resume normal lives and economic activities as soon as possible, many places around the world, particularly those advanced economies, are pressing hard for mass vaccination as a key strategy in their game plan to win the battle against the epidemic.

We also need a road map for economic recovery. Through bringing the epidemic under control and resuming cross boundary travel between the Mainland and other foreign places, it could help stabilizing the economy and improving people's income, which in turn continually boosting private consumption. As seen from past figures, continuous improvement in private consumption can support the job market, thereby lowering the unemployment rate and increasing the overall wage level.

The objective of the electronic consumption voucher scheme being pursued is to give a boost to the economic recovery, particularly to those sectors such as retail, catering and personal services, which could provide large amount of jobs for the grassroots.

Another objective of the electronic consumption voucher scheme is to promote the usage of e-payment among merchants, particularly small to medium size merchants. Of the total retail sales value in Q1 this year, HK$ 6.29 billion came from online sales, reflecting a 63% increase compared with the same period in 2020, much higher than the 7.5% increase in the overall retail sales value. This demonstrates the strong growing impetus in the online sales sector. However, online sales still only accounted for 7.7% of the total retail sales values in Hong Kong, while that ratio in Mainland stood at over 20%. This tells that there is a huge room of growth for online retail sales in Hong Kong.

Moreover, figures in Hong Kong show that merchants with physical stores gained a much higher growth in online sales than those without, reflecting the business opportunities that traditional merchants could explore through online sales channels.

There have been calls for the Government to help local merchants enhance competitiveness and create a greater space for their development. This is exactly one of the functions that the electronic consumption voucher scheme aims to serve. By providing market incentives, we hope to encourage more small merchants to adopt e-payment, which could facilitate them to connect with other online sales platform in the long run, so as to grasp the benefits from this fast growing sector and the opportunities for upgrading their business. When I toured around the wet market yesterday, I saw that many merchants had been using different types of e-payment devices. I have tried them too, which was a pretty good experience. I believe the launch of the electronic consumption voucher scheme could further deepen the application and development of e-payment in Hong Kong.

The preparation of the electronic consumption voucher scheme is at its full swing. We expect that the scheme will be open for registration and vouchers will be started to hand out gradually in this summer. It is envisaged that the scheme would create more sales and promotion opportunities for the retail market from the latter half of this year till early next year.

Hong Kong's economy has shown signs of recovery in Q1. To sustain the trend of recovery, the whole community has to stay united in fighting against the epidemic. Our current low and slow vaccination rate will hamper Hong Kong's economic recovery, with the wage earners from different sectors bearing the direct and indirect costs. To protect your own and your families' health and to help a speedy economic recovery for Hong Kong, please support and join in our vaccination programme.

May 9, 2021

Hong Kong has undergone economic contraction for six consecutive quarters, which is the longest recession on record. During this period, Government consumption expenditure has increased by 6% to 10%, partially offsetting the contraction in private consumption expenditure thus providing a countercyclical support to the economy. With gradual improvement seen in export and investment, Hong Kong's economic performance will record a notable growth in Q1 this year. Nonetheless, business operation in some sectors are still facing huge pressure due to the epidemic and social distancing measures, which leads to an uneven recovery across different sectors.

After the passage of the Budget by the LegCo, the various supporting measures will be taken forward at full speed to benefit the public and the enterprises as soon as possible, so as to alleviate some of the pressure amid the uneven economic recovery.

For instance, although the unemployment rate has slightly receded from the record high, the rate in some sectors still remains at a high level and the unemployed have been facing financial pressure. To provide them with a supplementary option, the 100% Personal Loan Guarantee Scheme (PLGS) was proposed in the Budget. The PLGS is opened for application since mid of last week and about 7000 loan applications were received in the first three days. The participating banks have received many enquiries and are proactively processing the applications, with preliminary approval cases from applicants in the logistics and transport, retail and catering sectors.

Other Budget measures will be gradually rolled out as well. For instance, to enhance students' interests in information technology, the "Knowing More About IT" programme will provide funding up to HK$400,000 to each school with technical support by the OGCIO, with a view to enriching primary school students with more IT experience through extra-curricular activities.

We are also taking forward in full steam the much-attended electronic consumption voucher scheme. The four selected Stored Value Facility (SVF) operators are now assisting more merchants to install payment devices. The second round of the subsidy scheme for promotion of contactless payment in public markets under the Anti-epidemic Fund has also been launched. The scheme will extend its eligibility to cover not only stall tenants of the markets under the Food and Environmental Hygiene Department and the Housing Authority, but also licensed hawkers. Successful applicant will receive a one-off subsidy of HK$5,000. Application will be open until June 30. This Scheme will help to promote the use of e-payment among the small and medium merchants, which can in turn offers more convenient payment options for the public. I believe when the electronic consumption voucher scheme launch in the summer holiday and coupled with the merchants' concession and promotion initiatives, it could energise the market and provide a positive sentiment.

Furthermore, we have been providing multidimensional support to our SMEs. For example, the Budget injected HK$1.5 billion to the BUD Fund to assist enterprises in exploring markets in 37 economies (including the Mainland) which have entered into Free Trade Agreements or Investment Promotion and Protection Agreements with Hong Kong. Taking into account the difficulties faced by SMEs in promoting overseas under the pandemic, the Trade and Industry Department has expanded the funding scope of SME Export Marketing Fund to cover exhibitions targeting the local market as well as online exhibitions. Together with the support of the Convention and Exhibition Industry Subsidy Scheme, enterprises could take part more actively in different local exhibitions to promote their business. The "Lifestyle Shopping Fest" running at the HKCEC is one of the activities that could be benefited from these schemes. This event is indeed the first physical exhibition organised by the Hong Kong Trade Development Council since the epidemic outbreak early last year. I toured the exhibition last week to show my support to the merchants selling various products, such as snacks, drinks, healthy food, household products and jewelleries. There are also booths by young people's start-ups, showing well designed cultural products and potted plants. The event organiser also set up a dedicated platform for the suppliers or their sponsored KOL to promote their products online.

Supporting people's livelihood and stabilising the economy are the short term goals set in my Budget. As for supporting enterprises, apart from reducing profits tax, providing rates concession for non‑domestic properties, and waiving business registration fees, the Budget also proposed to enhance the Special 100% Guarantee Product under the SME Financing Guarantee Scheme. The enhancements have already been fully implemented to address the financing needs of enterprises.

As for supporting individuals, apart from the PLGS, the Budget also proposed to reduce salaries tax and tax under personal assessment, provide rates concession, grant each residential electricity account a subsidy of $1,000, and provide an extra one-half-of-a-month allowance to eligible social security recipients. The electronic consumption voucher scheme could benefit both individuals and the enterprises. As for the well-received i-Bond, it will be launched later this month.

To promote a full economic recovery, the key is to contain the epidemic as soon as possible. Only by winning the battle against the virus, we can resume people's daily activities to the largest extent, including the safe and free travel with the Mainland and other international cities, so that economic recovery could be achieved. Although the local epidemic is largely under control at this moment, the recent virus variant cases reported in the community have raised concerns about the risk of resurgence of epidemic in Hong Kong. The epidemic development in some overseas countries is also worrying, and therefore our efforts in preventing imported cases has become ever more important. I appeal you all to get vaccinated, which is the only way to help yourself to build up your immune system against the COVID-19 virus and to safeguard your own and your families' health. This is also crucial for the society to return to normal.

May 2, 2021

The Mainland economic growth accelerated to 18.3% in the first quarter of this year, marking four consecutive quarters of positive growth. Even if we compare the first quarter's performance with that of 2019 so as to eliminate the low base effect seen in the same period last year, there was still a 10.3% growth, showcasing a steady recovery of the Mainland economy. As for the US, the market generally expects that figures for the first quarter of this year to be released this week will show continued improvement of the economy, after resuming growth in the preceding two quarters. It can be said that the outlook for the world's two largest economies is optimistic. Coupled with other economies' proactive policy support in general, the International Monetary Fund earlier this month raised its global economic growth forecast for this year to 6%.

How about Hong Kong's situation? Led by the improved external environment, Hong Kong's exports had resumed growth for four consecutive months, with the growth in merchandise exports reaching 37.5% in the first two months of 2021 combined. As export performance of the Mainland and other Asian economies continued to be impressive, it is expected that figures on Hong Kong's exports for March to be released on 27 April would indicate sustained improvement.

Meanwhile, retail sales were largely affected by the epidemic and social distancing measures. When the epidemic was contained, marked improvement to the sentiment for both the retail and catering sectors could be seen. Business sentiment has also recovered of late as the epidemic eased. Judging from the current situation, Hong Kong's GDP will likely show a more notable improvement in the first quarter against a low base of comparison after recording negative growth for six consecutive quarters.

Yet, the "sensory temperature" in real life could be another situation. Taking the latest unemployment figures as an example, the unemployment rate in the first quarter (January to March) was 6.8%, down by 0.4 percentage point from a 17-year high announced last month. However, there were still around 260 000 unemployed persons. Although the underemployment rate edged down to 3.8%, 148 000 persons were still underemployed. For these 400 000 wage earners, their pain was still intense.

Moreover, the unemployment rate of the consumption- and tourism-related sectors (viz. retail, accommodation and food services sectors) combined remained high at 10.7%, much higher than the overall figures. For the food and beverage service activities sector in particular, even though the unemployment rate fell back by 0.8 percentage point, it remained elevated at 13.3%, reflecting that the epidemic and social distancing measures took a heavy toll on business operations and the labour market. Hence, we need to bring the local epidemic under full control as soon as possible so as to enable business and tourist travels with the Mainland and the rest of the world to resume. Otherwise, it would be difficult for the labour market to improve in a broad-based manner. Furthermore, as fresh graduates are going to enter the job market soon, the room for the labour market to improve further in the near term will be limited.

How can we on one hand ensure and safeguard public health, while on the other hand try to resume people's normal daily lives, including work, study and travel? Many places around the world have been pushing hard to encourage their people to receive vaccinations, so as to curb the spread of the virus and reduce the risk of serious illness for those who get infected. In the US and the UK, over 40% of their populations have received at least one dose of the vaccine; and the ratio is even over 60% in Israel. However in Hong Kong, the ratio is just over 10%.

Looking back the past 10 months or so, the evolution of the epidemic has led to adjustments in social distancing measures from time to time, which has greatly disrupted many business operations and the lives of the general public. Many studies have pointed out that vaccination has become a crucial part of the anti-epidemic battle. Only when a large proportion of the public are vaccinated can the impact of the virus be better contained and social distancing restrictions be further relaxed. When people's lives could return to normal and smooth and convenient cross-boundary travel is enabled again, the economy would be able to undergo a swift recovery in the shortest possible time. Furthermore, as vaccination in Europe and the US is progressing well, resumption of international travel is being actively deployed. If Hong Kong lags behind in vaccination, we would be relatively constrained and economic recovery would also be hindered when travel largely resumes in overseas markets.

In terms of vaccine supply, Hong Kong is more fortunate than many other places in the world. Apart from sufficient quantity, we are also able to offer two different types of vaccines for the public to choose. Many vaccination centres have been set up in different locations for the convenience of the public. Now with the vaccination programme extended to cover all persons aged 16 or above, there is indeed room for us to expedite the vaccination in Hong Kong. To protect ourselves and our families, to win the war against the epidemic, to restore our lives back to normal, to achieve a full and steady economic recovery, and to facilitate leisure and business travels to the Mainland and overseas, we hope that everyone could support the vaccination programme, and encourage your family members and friends to participate.

April 25, 2021

Economic security is an integral part of the national security. As we see from history, a robust economy is always the foundation of a strong country. On the contrary, a declining economy often leads to people's suffering, social unrest and political instability, or even foreign invasion. Over the past few decades, it is not uncommon to see attempts to overthrow other countries' regimes by destroying their economies and disrupting their financial systems, leading to social unrest and political turmoil. Those so-called sanctions, economic blockades, or even the weaponisation of the currency clearing system, are the economic and financial means usually used in threatening other countries or even destroying their regimes.

Safeguarding the safety of the economic sector is a war without gun smoke, so to speak.

Only by having a robust economic growth, we could have the resources and power to improve people's livelihood and protect our own safety. Without a safe and stable political and social environment, it is hard for any economic growth. National security is the prerequisite for economic development, while economic development could provide protection for national security. They are actually two sides of the same coin that we have to handle with a holistic approach.

In the economic area, not only we need to have the mindset to grasp development opportunity, but also the awareness of risks to take precautionary actions. With a "bottom-line mindset", we should make efforts in establishing the institution and mechanism for security development and building capacity to guard against both foreign and domestic threats.

As for risk management, we should focus on safeguarding all sorts of significant risks and challenges. Not only we need to be highly vigilant to "black swan" events, i.e. incidents beyond expectation with severe consequences, but also prevent "grey rhinos" threats from potential hidden conflicts. We also have to tackle the shortcomings and bottleneck constraints in the process of development.

Looking back in history, although the trigger points of the 1997 Asian Financial Crisis and the 2008 Global Financial Crisis are different, both are common in the sense that loopholes in risk management and alert system did exist in the economic and financial system. This is why apart from plugging the loopholes identified, we also paid extra attention in the need of establishing a risk alert mechanism, including assessing different types of risks, building a risk warning and monitoring system, and enhancing the capability of continuous dynamic monitoring and real-time warning. We need to enhance the collection of information and enable a comprehensive use of different data, information and intelligence for monitoring, analysis, forecast and warning, so as to identify the signs and source of the risks early and nip them in the bud.

Besides establishing a risk alert system, we should also develop a contingency mechanism, with a view to ensuring a smooth coordination between crises warning, command in contingency, on-site handling, recovery and rebuilding, as well as post-event evaluation. At the same time, we need to have a proactive management on information dissemination to lead public opinion and manage expectation, so as to prevent any secondary risks.

In addition to enhancement of mechanisms, we also have to ensure the security of our key sectors.

First, we should ensure the development security of our key industries, promote continuous economic development, create jobs and increase tax revenue. Taking the financial sector for instance, we need to keep enhancing its competitiveness, exploring space for development, overcoming the weaknesses while consolidating the strengths, with a view to strengthening and enhancing our advantages as an international financial centre. Another example is the innovation and technology sector. Technology will determine the global economic development in the coming future, and the capability to develop and apply technology is key to any economy's competitiveness. Under the 14th Five-Year Plan, our Country is endeavoring in innovation development to achieve self-reliance on technology. On the one hand, Hong Kong needs to strengthen our own R&D capability and forge a vibrant ecology for innovation and technology; while on the other hand, we need to have more cooperation with other places to attract foreign and domestic talents, technology enterprises and key technologies to come to Hong Kong, so as to help our Country to overcome the hurdles in these aspects.

Finance is the lifeline of the economy and financial security is the cornerstone of economic security. Our paramount priority is to prevent any systematic financial risk from happening, of which the most important task is to ensure the stability of our monetary system. We are determined to defend our Linked Exchange Rate System, which is key to secure the confidence of the society and the market. We need to establish an effective regulatory system to ensure order developments for different financial trades, such as banking, securities, insurance and asset management. At the same time, it requires an effective supervision over cross-sectoral risks in order to plug the possible loopholes due to trade-divided regulations on the market. In addition, to assist the Country in the process of opening up its financial sector, Hong Kong should play our roles as "testing field" and "firewall" to mitigate or even prevent foreign market risks from transmitting to the Mainland market. Meanwhile, not only we have to crack down on money laundering and financing of terrorism, but also any financing activities that could violate the National Security Law, ensuring our financial system will not be used to carry out activities that could threaten the national security.

Moreover, we need to safeguard the security of key infrastructure, and to ensure the sufficient supply and security of food, water and energy, with a view to ensuring the safety and convenience of people's living and travel, as well as the smooth operation of economic activities.

Political stability and social safety are the bedrocks for economic security. Last year, the Country has legislated the National Security Law for Hong Kong SAR in order to plug the legal loopholes in national security for Hong Kong and enhance the protection system on national security. This year, the Country is set to improve the electoral system of Hong Kong to fully implement the "patriots administering Hong Kong" principle. Also, with the SAR Government's enhancement of the oath-taking arrangement for public officers according to Article 104 of the Basic Law, the system and implementation mechanism of safeguarding national security in Hong Kong will be further improved.

The SAR Government will make its best endeavour to take forward the above initiatives and ensure their effective implementation. At the same time, we shall learn from experience and continue to improve our work so as to keep abreast of times, ensure our capability in coping with the new risks that come along with new situations, and the new challenges brought by technological advancements. Through the above works and by defending the bottom-line, we can make contributions in safeguarding the national security.

April 18, 2021

We have been making progress in the preparatory work of the electronic consumption voucher scheme (the Scheme) as well. With the assistance of the Hong Kong Monetary Authority (HKMA), four Stored Value Facility (SVF) operators have been selected to assist in implementing the Scheme, with a view to commencing registration in this summer. The selected SVF operators are AlipayHK, Octopus, Tap & Go and WeChat Pay HK. The respective SVFs currently cover a network of some 30 000 to 100 000 merchants in the local retail, food and beverage, and service industries.

The major selection criteria include the operator's relevant experience, their popularity, their business nature and the aspect of merchants that the SVFs covered. We believe the four selected operators have offered the SVFs mostly used by the general public in daily consumption.

We are also aware of the need to ensure good user experience. In preparing, designing and implementing the Scheme, we will do our best to cater for the needs of different users, and strike a balance between various aspects such as user convenience, operation reliability, and service coverage.

We will set up a central registration system for the public to register online. For those who have previously registered for the Cash Handout Scheme, some of their basic personal data will be automatically filled in for verification, so that registrants can save time in entering information.

People can choose any one of the four SVFs that best suit their consumption pattern for receiving and using the consumption vouchers. Taking the Octopus for instance. People could register with their Octopus card in hand without the need to register a new one or to use a personalised Octopus card. For the other three SVFs, as they are operated as e-wallets on smart-phone platforms, the use of consumption vouchers through them will be even more convenient.

To prevent impersonation or fraudulent use of personal data in registration, the central registration system will not accept duplicated application. In addition, each Octopus card or personal e-wallet will only be allowed for one single registration.

As for other implementation details of the Scheme, such as number of instalments, the amount of each instalment and the validity period, we are now considering the different suggestions from the public, with a view to confirming the details soon. The general principle is to allow flexible use of the electronic consumption vouchers within a certain period of time in local retail, food and beverage and service merchants, so as to stimulate the economy.

To enhance the convenience in using the voucher and cover more merchants in their networks, the operators have agreed to waive, as far as practicable, relevant fees for the installation and usage of payment devices by local merchants (in particular SMEs), as well as general administrative fees. For instance, if the merchants apply directly to the operators for payment-receiving code or simple devices, i.e. not applying through a third party supplier, no installation fee will be charged. In addition, the SVF operators, taking into account their respective operational model and commercial arrangements, will rebate the additional income generated from the Scheme to merchants or consumers by different means.

The issue of electronic consumption vouchers of $5,000 to each eligible Hong Kong permanent resident and new arrival aged 18 or above, which involves financial commitment of about $36 billion, is expected to boost the economy by 0.7 percentage point. Apart from stimulating the consumption market and hence the local economy, the Scheme also encourages small merchants to adopt e-payment methods, so as to better grasp the related business opportunities in the future.

In order to maximise the economic benefit of the Scheme, besides curbing the local epidemic as soon as possible, we hope that the participating SVF operators, as well as the retail, food and beverage and service sectors will organise large scale promotional events and even offer cross-sectoral concessions. This will help create a greater multiplying effect of the Scheme and give a boost to our economy and the labour market.

April 11, 2021

There are a few key areas in the amendments. First, the amendments improve the composition of the Election Committee and entrust it with new functions. The Election Committee will be expanded with 1 500 Members and the number of sectors will be increased from four to five. The newly created sector is the "HKSAR deputies to the NPC, HKSAR members of the National Committee of the Chinese People's Political Consultative Conference and representatives of Hong Kong members of relevant national organisations". Members from this sector can better attend to the overall interests of the Country and Hong Kong, while Members from other sectors tend to accord higher priority to the interests of specific groups or districts they represent. In addition, the number of subsectors will be increased from 38 to 40, with the composition of some subsectors enhanced and some other subsectors combined. The two new functions entrusted to the Election Committee are: (1) electing 40 legislators who will represent the Election Committee; and (2) nominating all the candidates standing in LegCo elections.

As for the LegCo, the number of seats will be increased to 90 according to the amendments. Currently, LegCo Members returned by functional constituencies mainly represent the interests of their respective trades or sectors, while those returned by geographical constituencies mainly stand for the interests of their districts. The newly added legislators to be returned by the Election Committee will represent the overall interests of the Hong Kong society. A larger portion of legislators returned by the Election Committee helps resolve the fragmented and partial representation of interests during the deliberation of the LegCo. Moreover, the same electorate will elect these legislators and the Chief Executive. This will help generate support for the Chief Executive in the LegCo, which is conducive to the communication between the executive authorities and the legislature and the implementation of the executive-led governance structure. The requirement for LegCo election candidates to obtain nominations from each of the sectors of the Election Committee aims to ensure their representativeness, so that they would go beyond the vested interests of specific sectors and represent the overall interest of Hong Kong.

Over the past few days, the political team of the HKSAR Government engaged representatives of different sectors to explain the amendments, listen to their views and enhance communication and exchanges. During my meetings with representatives of the business and professional sectors, attendees expressed some thoughts and expectations. Let me sum them up and share with you here.

First, the social incidents and violent acts in the latter half of 2019 endangered Hong Kong's stability and law and order and dealt a serious blow to the business and investment environment. Many local and foreign enterprises at some point hesitated to make further investments in Hong Kong. Also, as many have noticed, the endless political disputes and the intensifying non-functioning of the LegCo over the past decade have seriously hindered the efficiency in governance and the social and economic development of Hong Kong. It is worrying that Hong Kong is facing worsening social and political instability and uncertain economic prospect given the rise of separatism in recent years, with some legislators and political figures pleading foreign countries for sanctions on Hong Kong and the Country in order to advance their political agenda. Therefore, following the enactment of the National Security Law in the HKSAR last year, there is the necessity and urgency to improve the electoral system now to restore political stability, public safety and law and order in Hong Kong.

Attendees generally expect that following the improvement of the electoral system, the executive-led governance structure could be strengthened and the Government's governance capability could be enhanced. Various deep-seated problems, such as land and housing, could then be tackled more effectively in a timely manner. Long-term vision and early planning are also needed to enable Hong Kong to better integrate into the overall development of our Country and better develop our economy.

With the enactment of the National Security Law and the improvement of the electoral system, security and social stability can be restored and our political development can be put back on the right track. It is expected that extreme political disputes and attacks could be reduced, non-functioning situations in the LegCo could be avoided and attention could be focused on dealing with substantive matters and fostering development. With this new atmosphere, it is hoped that more capable people would be willing to take part in public services to help build a better Hong Kong.

The local community needs to understand more about the improvement of the electoral system, whereas in the international arena there are misunderstanding and even deliberate attacks. The HKSAR Government will not only take forward the legislative exercise to implement the new electoral system as soon as possible, but also ensure effective promotional work. Looking ahead, the political team of the HKSAR Government will continue to intensively engage different sectors. We fully support the NPC Standing Committee's work to improve the electoral system of HKSAR to help restore stability, prosperity, pragmatism and efficiency in Hong Kong while allowing the sharing of the fruits of economic development in a more balanced and extensive manner.

April 4, 2021

Economic recovery is only possible if we can contain the epidemic. The anti-epidemic experience in the Mainland since Q2 last year was a successful showcase. With the policy measures from the Central Government and the support of the public, the epidemic has been curbed swiftly and the economy has seen a strong rebound. Mainland's target economic growth rate this year has been set at 6% or above. As the second largest global economy with an annual GDP of more than 1 trillion RMB, the robust growth of our Country's economy could provide a major driving force for the recovery of the weakened global economy.

I believe economic recovery is the global trend this year. The threat of the epidemic could be gradually eased by mass vaccination programmes launched around the globe. With the easing monetary policies and the large-scale fiscal stimulus adopted by different governments, it is expected to give a stronger push for global economic recovery in the latter half of this year. In the first two months of 2021, Hong Kong recorded an increase of 37.6% in value of total exports of goods, a big leap from the drop of 12% recorded in the same period of last year. We expect the full-year performance on goods exports will be pretty good. As regards exports of services, its recovery largely hinges on the pace of cross-boundary travel resumption.

Although there is a glimpse of hope ahead, many are still facing real difficulties at this moment. This explains why even against the backdrop of huge fiscal deficit for two consecutive years, I still pressed ahead for countercyclical measures of a scale of more than HK$120 billion in my Budget announced last month, with a view to providing further support to enterprises and individuals in need.

For enterprises, liquidity support is crucial. We therefore launched the Special 100% Guarantee Product in April last year to assist enterprises hard hit by the epidemic and having suffered decline in sales turnover in coping with cash flow problems by providing them with loans with 100% Government's Guarantee through the Hong Kong Mortgage Corporation Insurance Limited (HKMCI). In less than a year, 28 000 applications with a total loan amount of HK$45.3 billion have been approved, involving over 260 000 employees. Moreover, the enhancement measures announced in my Budget last month will come into effect tomorrow. After the enhancement, the scheme will extend to cover enterprises newly set up at the beginning of the COVID-19 outbreak, i.e. Q1 2020. The maximum loan amount per enterprise will be increased from the total amount of employee wages and rents for 12 months to that for 18 months, and the loan ceiling will be raised from HK$5 million to HK$6 million. Also, the maximum repayment period will be extended from five years to eight years, and the maximum duration of principal moratorium will be extended from 12 months to 18 months. Enterprises which have borrowed loans under the original scheme can also apply for an increase in loan amount, extension in repayment period and duration of principal moratorium through their banks. Together with the 80% and 90% Guarantee Products enhanced in 2019, the SME Financing Guarantee Scheme has already benefitted more than 35 000 enterprises which employs over 560 000 employees together as at end February this year.

The labour market in Hong Kong has been deteriorating since the fourth wave of outbreak. In order to provide a supplementary financing option for the unemployed with financial difficulties, I announced in my latest Budget the setting up of a time-limited 100% Personal Loan Guarantee Scheme (PLGS). The Government will provide a total guarantee commitment of HK$15 billion to provide eligible borrowers with loans at a concessionary interest rate. Thanks to the approval of the LegCo Finance Committee, the funding proposal of the Scheme was endorsed last Friday. We will continue to work with HKMCI and the banking sector on the detailed arrangements, with the aim of launching the Scheme in next month.

Under the PLGS, Hong Kong permanent residents aged 18 or above are eligible to apply, provided that they have been unemployed for at least two months at the time of loan application and can demonstrate cessation of main recurrent incomes from employment in Hong Kong. Self-employed individuals, free-lancers, gig or casual workers are also eligible upon the production of a declaration of unemployment and demonstration of a loss of main recurrent incomes. Applicant may receive a maximum loan of up to six times the average monthly income for any three months within the designated period, subject to a ceiling of HK$80,000. The maximum repayment period is six years, with an option of principal moratorium for the first 12 months. The effective interest rate will be fixed at 1% per annum, while the borrower will receive a full rebate of the interest after the loan is fully repaid by the end of the repayment period.

Given that the Scheme aims to provide relief in this testing time, we will keep the application criteria simple and clear. Banks participating in the Scheme will consider the loan applications with due diligence according to their professional judgement. As the banks need not bear the risk of defaulted loans, we believe they could handle the applications more effectively.

Apart from providing a supplementary financing option for the unemployed through the PLGS, we will also make our best efforts to create more jobs through other measures. For instance, the latest Budget proposed to further allocate HK$6.6 billion to create around 30 000 time-limited jobs. In addition, in the light that many grassroots have been suffering from underemployment amid the epidemic, the Government has proposed to relax the working hour requirements under the Working Family Allowance Scheme. This includes lowering the current basic working hour requirement of not fewer than 144 hours per month for non-single parent households substantially by half for one year. The proposal has just been approved by the Finance Committee and will be implemented in June.

The SAR Government will endeavour to push ahead with our anti-epidemic work including the mass vaccination programme. We need support from your all in order to achieve herd immunity. Only by doing so, a stable environment could be created for the speedy recovery and sustainable development of our economy. I have been feeling good after receiving the first dose of the vaccine some weeks ago, and am going to get the second jab this week. Let us join hands in fighting the epidemic, riding out of the storm and taking us to the road to economic recovery and normal life.

March 28, 2021

“The Outline of the 14th Five-Year Plan for National Economic and Social Development and the Long-Range Objectives Through the Year 2035” (the Outline) was endorsed earlier at the annual session of the National People's Congress. The Outline pins down the basic realisation of socialist modernization as the long-range objectives in 2035, by then the country's economic and technological strength as well as composite national strength will have risen significantly. The Outline also sets out the country's development targets, philosophy and key missions in the 14th Five-Year Plan period. This important document reflects the country's assessments of the current and future international situation and domestic development, and its preparation and responses.

The Outline puts forward new development concepts for building a new development pattern in a new development stage. The Mainland's GDP exceeded RMB 1 trillion last year. More than 55 million rural population were lifted out of poverty during the 13th Five-Year Plan period. The country advanced the attainment of the first centenary goal of building a moderately prosperous society in all respects, and is now heading for the 2035 long-range objectives of building a great modern socialist country. This goal has started a new stage of national economic and social development, which calls for the new development concepts, that is, Innovation, Coordination, Green, Openness and Sharing. In fact, these five development concepts were introduced to address corresponding problems. Innovation is to provide development momentum. Coordination is to deal with the problem of unbalanced development. Green development is to handle the issues of harmonious coexistence of human and the nature. Openness is to address the requirement of a higher level of internal and external synergies for better development. Sharing is to tackle the issues of social fairness and distribution in the society. This is a grand development blueprint to meet the people's ever-increasing expectations for a better life. What are the implications for Hong Kong?

The country's new stage of development in fact also marks a new development landscape for Hong Kong. To explore the new opportunities and break new grounds amid crises and changes, we need to stay ahead of others, either by taking the first-mover advantage or "overtaking at the bend". The Outline puts forward that it is of paramount importance to make innovation and technology a core driving force, equipping industries and enterprises with capability to upgrade and transform and to produce revolutionary products. In addition, we need to seize new business opportunities, explore new markets and identify new consumer segments to which we did not pay attention in the past. Hong Kong must grasp the opportunities firmly and participate fully.

Therefore, we should pay attention to the logics, concepts and content of the Outline, as well as the areas where it supports Hong Kong. The Outline supports Hong Kong to consolidate and enhance the competitive advantages, not only in the traditional areas of international finance, shipping, and trade centre, but also as an international innovation and technology centre and an international aviation hub that were newly mentioned. In addition, the Outline includes the Innovation and Technology Co-operation Zone in Shenzhen-Hong Kong Loop as a major platform of co-operation in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) for the first time, alongside Qianhai, Hengqin and Nansha. These are all relevant to whether Hong Kong can gain a new impetus for economic growth, as well as our ability to sustain economic diversification and provide more high-quality employment opportunities.

The Outline puts forward a new development pattern of “dual circulation”, which takes the domestic circulation as the mainstay while letting the domestic and external markets boosting each other. The establishment of the “dual circulation” is for attaining development that is of higher quality, higher efficiency, greater sustainability and greater safety. From the perspective of economic development and business operation, Hong Kong should utilise the GBA as the entry point to grasp the opportunities arising from the ever-expanding and increasingly rigorous demand for better quality of goods and services in the Mainland market; and technological innovation is the “fast lane” for participating in the country's domestic circulation. At the same time, Hong Kong should also strengthen its roles and functions as a springboard, an intermediary, a high value-added service platform, an international talent and fund pool, a testing ground and a firewall, in order to enhance and enrich the interaction and connection between the Mainland and international markets, as well as the connection between the country's and international standards.

The country is heading for the goal of building a modern socialist country in an all-round way, characterised by sustained and relatively fast economic development, ever-growing size of middle-class consumers, and continued transformation and upgrading of industries. This means Hong Kong will have vast opportunities to participate in new industries, new forms of business and new ventures. Enterprises should study more comprehensively and in depth the logics and content of the Outline, so as to fully understand the new development trends, and seize the business opportunities with their own edges.

Safeguarding national security is the prerequisite to the steady development of the country and Hong Kong in the long term. It is imperative for Hong Kong to fully and faithfully implement the “One Country, Two Systems” principle, uphold the constitutional order of the HKSAR as enshrined in the Constitution and the Basic Law, implement the legal system and enforcement mechanism for safeguarding national security and “patriots administering Hong Kong”, and maintain the social stability. This is necessary for the steadfast and successful implementation of “One Country, Two Systems” principle and better integration of Hong Kong into the overall development of the country, so as to let our economy and people's livelihood make continuous progress.

March 21, 2021

（一）中央對香港非常重視和關心、對全面貫徹落實「一國兩制」這方針的決心非常堅定。國家最高立法機關全國人大連續兩年為香港事務籌謀，去年為香港進行國家安全立法後，今年又為完善香港的選舉制度議決修法。

（二）港區國安立法和完善選舉制度，都是為香港好。目的是要讓香港長治久安，「一國兩制」、「港人治港」、高度自治可以貫徹實行。過去幾年的社會亂象，從違法佔中到暴力衝擊、到攬炒，甚至游說外國對香港和國家進行所謂制裁，這些行徑可謂愈來愈離譜。這已經不是政治內耗與空轉那麼簡單，而是危及香港以至國家的安全，損害香港市民以及全國人民的利益，迫使中央必須出手處理。

（三）這次「人大決定+修法」，是為落實「愛國者治港」這根本原則，是為「愛國者治港」提供堅實的法律和制度保障以及有效的支持。完善選舉制度讓香港特區的管治更有效，讓特區政府更有能力及空間處理積累已久的深層次問題、改善市民的生活，推動香港社會及經濟的可持續發展。

（四）在今天的座談會討論修法細節時，與會者就一些具體問題持有不同看法，這是開放多元的香港社會所常見的。但考慮到過往幾年香港的社會亂象，以及國際政治格局大變的牽引，我們必須要有大局意識、要團結、認清目標，往正確的方向堅定前行，這是參與管治者的責任。具體細節上的分歧，一定可以通過溝通協商來解決。

（五）英美為首的部份西方國家近日對人大議決的批評，對香港、對「一國兩制」的攻擊，可說是意料中事。中國特色社會主義市場經濟體制，以至「一國兩制」下的香港成功故事，對西方社會來說都與他們的固有觀念不同。國家過去幾十年不平凡的發展道路，香港一直以來的發展軌跡，告訴我們應該對自身的制度優勢有自信。我們必須團結一致、堅定不移、無畏無懼的將人大的決定執行好；全力推動行政機關與立法機關的良性互動，提升管治能力，努力改善市民的生活質素，把香港建設得更好。

2021年3月15日

近年，激進政治力量抬頭，加上外部勢力推波助瀾，政治抗爭在議會和街頭都愈演愈烈，甚至不顧對社會造成的傷害。先有2014年的違法佔中，過去兩年更加演變為「攬炒」的行動，議會內外冒起一股借助外國勢力推動政治主張，甚至搞分離主義的力量。2019年下半年的暴力衝擊、破壞議會，造成嚴重的社會動盪，亦令經濟受到重創，損害了市民的利益、窒礙了香港的發展。可以想像，如果按這路徑持續下去，香港繁榮穩定的前路將不復再，市民的無力感甚至困境只會更重，而香港更會被利用作牽制甚至威脅國家安全、穩定發展的缺口。

經歷這樣的困境和危機，突顯了香港過去在政制發展路途上缺少了在維護和保障國家安全方面的考慮，忽略了香港可能被利用作顛覆國家政權的地方。如果反中亂港份子可以進入香港的管治架構，如果外部勢力可以從中干預或進行分化，必定會造成社會動盪，危害香港自身的安全和穩定。全球各國都有嚴明的法例防止外國政治力量的干擾，且對危害國家安全或顛覆國家政權行徑施以極嚴厲的懲處。在香港這樣的開放型城市環境中，經歷了過去幾年的劇變，目睹過去幾年社會的亂象，這議題更顯必要和迫切。但是，如何在制度中落實這保障？如何在制度上排除外國政治勢力及其代理人的侵擾？如何避免國家及香港的安全和利益被損害？

全國人大剛通過完善香港選舉制度的決定，落實「愛國者治港」這根本原則，正是為了修補選舉制度的漏洞和缺陷，阻止分離勢力或外國利益代理人透過選舉機制進入香港的管治架構，或以此為平台損害國家及香港的安全和利益。這亦是為確保治港者可以全面準確貫徹「一國兩制」方針，讓「港人治港」、「高度自治」可以安全穩定地落實。選舉制度的完善將較正香港政治和社會發展的路徑，讓「一國兩制」的實踐行穩致遠。

連同去年實施的國家安全法，人大會議透過「組合拳」的方式，從法律和制度上賦能香港處理過去幾年出現的種種憲制秩序問題和社會亂象，讓香港恢復政治穩定和社會安全，走出政治泥沼困局，避免再內耗、空轉，將香港重置在符合國家和自身利益的基礎上運行，集中精力謀求發展。

完善選舉制度的另一目的，是提升特區政府的治理效能。一方面，行政機關和立法機關可以有更理性的互動，並讓行政主導的制度優勢可以再次展現。另一方面，日後選舉委員會和立法會的組成，將改變香港社會長期以來的固有利益結構，讓特區政府有較大的空間和能量，切實處理一些長久以來困擾香港的深層次社會和經濟問題，讓各持分者的利益得到更平衡合理的兼顧。總而言之，穩定、良性互動的政治環境，將讓我們能更好地匯集力量籌劃、部署和推動經濟及社會發展。無論是大灣區的協作發展，又或是產業層面的探索創新，不管是金融、創科和商貿，還是航運、物流或文化藝術發展，我相信在國家的強大支持和持續穩步發展的推動下，香港將繼續有廣闊的天地發揮所長。

2021年3月14日

Hong Kong has always been a pluralistic and open society with a close relation with the international community and deep connection with our Country. However, as the local political environment evolves in recent year, "loving the Country and Hong Kong" has been adversely labelled, and there were disrespectful acts towards national anthem, flag and emblem, as well as acts advocating Hong Kong independence and separatism inside and outside the institution at different level of platforms. Some have even turned the advocacy into actions and solicited external forces with the objective of denying the Country's sovereignty over Hong Kong and alienating Hong Kong from China.

Hong Kong is an inalienable part of our Country and is a special administrative region established based on the Constitution of the Country and the Basic Law. Being a part of the Country, Hong Kong has the duty and responsibility to safeguard the national security, the territorial integrity and the development interests of our Country. This is also of paramount importance to Hong Kong because national security is the basis for "Two Systems" and the cornerstone for Hong Kong's stability and prosperity. If the principle of "One Country" is jeopardised, there will be no basis for the operation of the "Two Systems", nor the development of Hong Kong, including our role as an international financial centre.

As the international political landscape intensifies in recent years, the problem has become more critical. After going through reform and opening up for more than 40 years, our Country's GDP now exceeds 1 trillion RMB. Many countries are expecting China to play a more active role in the enhancement of the global governance system. However, the US and some Western countries have been taking an unfriendly or even hostile attitude towards China, with an intention to disturb or even suppress its development. Under the ever-complicated international environment, Hong Kong has been used as a "pawn" over the past few years to hinder the development of the Country or even subvert the state power. As seen from the development of the social incident in 2019, the intervention of external forces not only have exacerbated the social unrest in Hong Kong and undermined Government's capability to address local discontents and other livelihoods issues, but also directly endangered the national security and dealt a serious blow to the basis of the "One Country, Two Systems".

Against this background, the legislation in safeguarding national security and the comprehensive implementation of the "patriots administering Hong Kong" principle are actually in the same vein and undoubtedly rightful. It helps to resolve a predicament that Hong Kong itself could not address and plug the loopholes of the national security in Hong Kong at the legal and institutional level. It is indeed fundamental political ethics and prerequisite for all those participating in the governance of Hong Kong, including the HKSAR Government personnel and others taking part in the whole governance system, to love the Country and Hong Kong, respect and uphold the Constitution and the Basic Law. In fact, other places around the world also requires people participating in governance to safeguard the national interests.

The purpose of amending the electoral system to implement the principle of "patriots administering Hong Kong" is to plug the loopholes in the existing system, so as to preventing separatism and other unconstitutional advocacy from entering Hong Kong's governance system. This is crucial to Hong Kong's long term stability, including whether we could provide a stable environment for developing our economy and improving people's livelihoods. Some people may concern whether the amendment will narrow down the space for councilors to deliberate policies and scrutinise the Government. Nonetheless, the amendment will eliminate the elements that endanger the security and interests of the Country and Hong Kong from the system, so as to avoid the situation of pan-politicisation and non-functioning of the Legislative Council in recent years. Only by doing so, we could make concentrated efforts to promote and enhance the development of Hong Kong on all fronts, and create space for us to gradually address the deep-seated economic and social issues.

Safeguarding the national security and interests is a universal requirement for different places around the world. Yet China's unique political system and the innovative "One Country, Two Systems" principle may have caused ill feeling for some strong advocates of Western-style democracy and economic system. We have seen negative reactions which are inexplicable, perhaps due to stubborn mindset, self-interested consideration, ideology or political bias.

Take the Index of Economic Freedom compiled by the Heritage Foundation of the US as an example. Before the sudden exclusion of Hong Kong from the Index this year, Hong Kong has topped the chart for 25 years, and ranked second last year, out of the 27-year history of the Index. Hong Kong always ranked high in the areas of financial freedom, trade freedom, business freedom and fiscal health, which are the long-established parameters used by the Foundation in compiling its Index. Our strength and leading position in these areas have not changed during the assessment period. Hong Kong's exclusion from the Index is a result of a change in game rules by the Foundation based on political bias. The more than 9000 Mainland and overseas companies now operating in Hong Kong and actively expanding their businesses is a strong testimony of Hong Kong's attractiveness to investors in terms of our market potential, development opportunities and investment returns. Nonetheless, in response to those unsubstantiated accusations and allegations, we have issued a statement to put forward our clarification.

The unprecedented principle of "One Country, Two Systems" have been implemented for over 24 years since 1997. Gradual enhancements are needed taking into account experiences learned in the process. The comprehensive and correct implementation of the "One Country, Two Systems" principle will enable Hong Kong to position itself in the Country's development and make our unique contribution, so that we could join hands with the Country to progress steadily.

March 7, 2021

Hong Kong's overall economy contracted in two consecutive years and the unemployment rate is at a high level. I have decided to maintain a countercyclical fiscal policy and give a stronger boost to the economy through allocating additional fiscal resources. Through this, I wish to provide support to our people and enterprises, benefit the overall economy to the largest extent, and relieve the pressure on the job market.

Taking the electronic consumption vouchers as an example. Even in the face of deficit of over $100 billion for two consecutive years, I have decided to issue electronic consumption vouchers with a total scale of $36 billion, with a view to stimulating consumption in the local economy. With its multiplier effect, we hope that local consumption could be boosted to the largest extent, and widely benefit our people and enterprises. Learning from overseas experiences, consumption vouchers that issued in instalment with a validity period may benefit more small enterprises, bringing them more businesses and also incentives to adopt e-payment, so that they can grasp the new business opportunities brought by technological advancement.

The design and the implementation details of the electronic consumption vouchers will affect user experience and the effectiveness of the scheme. Details such as the number of instalments and the amount to be issued in each instalment proposed are just preliminary ideas. I appreciate the feedback received over the past few days. When deriving the details of the scheme, including the application procedures and usage of the vouchers, we will consider carefully the views given by citizens and enterprises, and the need of those without digital wallet and people with limited mobility.

In fact, different arrangements will have their pros and cons and we have to make choices. It is understandable that we may not have a final proposal which satisfies all people's wishes. Say, some people prefer that the full amount could be credited into the consumption voucher in one go for use, but some might think this will lead to bias towards larger companies. Some people prefer a longer validity period for the vouchers, but that may weaken the scheme's effect on stimulating consumption. Nonetheless, when working out the scheme's details, we will make our best endeavours to cater both user experience and scheme effectiveness after taking into account the technological capability of the stored value facilities operators concerned.

The electronic consumption vouchers scheme is designed to ensure that resources could focus on providing support to local economy, benefiting people and enterprises, and creating more jobs opportunities. In fact, both the indirect pulling effect generated by the consumption vouchers, as well as the direct allocation of $6.6 billion proposed in the Budget for providing 30 000 time-limited jobs, can help create jobs opportunities.

For the unemployed who face financial pressures under the epidemic, they may need loans to tide them over the difficulties. There are only limited options provided in the market, and the loan products available are usually charged with a higher interest rate, which in turn add burden to the borrowers. In view of this, I have suggested in the Budget to set up a Special 100% Loan Guarantee for Individuals Scheme to address the needs of these people. The scheme, as a supplementary measure, is to provide an extra financing option for the unemployed, but not as an alternative to temporary unemployment assistance.

In proposing the initiatives in this Budget, I have made the best effort to strike a balance between the demands and affordability of different parties, so as to provide support to the needs of the society while avoiding adding burden to people's livelihoods. In raising the rate of Stamp Duty on Stock Transfers, I have also duly considered relevant factors such as the competitiveness and future development of Hong Kong's financial market.

With the Country's support and the SAR Government's efforts, Hong Kong's financial market has been flourishing. In view of the emerging economy and technological advancement, we amended the listing regime in 2018 to allow innovative technology companies with weighted voting rights structure and pre-profit biotechnology enterprises to list in Hong Kong, and facilitate China companies listed in other international markets to come to Hong Kong for secondary listing. By doing so, the composition of our stock market has started to go with the global development trend of tech-economy and the market capitalisation has increased by about a quarter. At the same time, the average daily turnover increased substantially from about $88 billion in end-2017 to nearly $130 billion in 2020, while the average daily turnover in January this year alone amounted to the record-high of $240 billion.

In fact, given the ample choices of companies with Mainland businesses or tech-companies from the Mainland, the free flow of capital and common law jurisdiction in Hong Kong, as well as our close connection with the Mainland stock market under the Connects Scheme arrangement, all these have contributed to the uniqueness and the core strength of Hong Kong's stock market, which cannot be copied by other markets. With these unique advantages, our market has been growing robustly with surge in turnover volume, providing us the room to slightly adjust upward the rate of the Stamp Duty. Based on our proposal, only an extra $30 Stamp Duty is needed for each stock transaction at the value of $100,000, which should be a level affordable to general trading participants.

There have been some fluctuations in the Hong Kong stock market in the past few days due to external factors and price adjustment of individual stocks (particularly tech companies). This will not affect our judgement on the broader situation of Hong Kong's market and our status as an international financial centre. In fact, a number of markets in the region, such as Tokyo, Seoul and Shanghai, have also shown downward adjustments of different extent over the past few days.

In making the decision of raising the rate, we have already carefully assessed and considered the potential impact which may be brought to the competitiveness of our market. We will continue to closely monitor the development of the situation and take it as a reference in future. Maintaining and enhancing our market's competitiveness have always been the main considerations in our decision process. We will also continue to promote the diverse and robust development of our financial market.

February 28, 2021

Given our work to combat economic downturn and the pandemic, the fiscal deficit of the current financial year will hit a record high. As the economy has yet to recover, we have to maintain a counter-cyclical approach to provide cushioning effects to the economy. This will nonetheless lead to a relatively high level of fiscal deficit, and present a rather challenging premise for the upcoming Budget.

To live within the means may sometimes give a feeling of limited. Nonetheless, no matter how big or small the meal is, what matters most is that all of us could stay together and support each other with optimism. The epidemic will be over one day and the difficulties can be overcome. After going through the challenges, we will come out stronger and more resilient.

There is a season for everything. There are also cycles for the economy. As humble as it may be, every seed carries with it the potential of life. This is the inspiration behind the colour of the Budget cover this year, which represents the hopes we all share for our future.

February 21, 2021

In my Budgets over the past few years, resources have been allocated for various aspects, with a view to making Hong Kong a more liveable city and improving our living environment. In the coming years, the Government will continue to promote infrastructures development which are closely related to people's livelihoods, such as public housing, new town development, land development, hospital redevelopment, road and railway networks development, as well as enhancement of urban landscape. It is estimated that the expenditure of public works in the coming few years will exceed HK$ 100 billion each year¹.

Facing the increasing construction volume in Hong Kong in the coming years, we have on one hand to ensure the works quality and control project cost, and on the other hand to complete the project on time for benefiting the public as soon as possible. The challenge is tremendous. In particular, we need to drive the construction industry to break through some bottlenecks, including the aging workforce and declining productivity. For this, we have been actively promoting the "Construction 2.0", promoting the wider use of innovation and technologies to "professionalise" and "revitalize" the construction industry.

Taking last year's Budget as an example, we have been investing resources in nurturing talents, strengthening project leadership and management, and taking forward digital works supervision system with a view to enhancing the efficiency and management of public works projects. Progress has been made in these measures over the past year.

Nurturing talents

Talents are always the key element to enhance productivity and competitiveness in any sector. Last year, the Legislative Council approved HK$ 200 million for the implementation of measures to strengthen construction manpower training in various trades of keen demand. These measures include (1) increasing the training allowance for trainees of the Hong Kong Institute of Construction's one-year full-time programmes from $3,600 to $4,800 per month to attract more youngsters to undertake systematic courses of construction training; (2) expanding the coverage of trades of keen demand under the Construction Industry Council Approved Technical Talents Training Programme (CICATP) by 7 trades to a total of 13 trades; and (3) offering incentives amounting to $10,000 per trainee in total to encourage in-service general workers to upgrade themselves to semi-skilled workers.

Centre of Excellence for Major Project Leaders

In addition, the experience and leadership capability of project leaders also directly affect the quality and cost-effectiveness of works projects. In the 2019-20 Budget, I supported the Development Bureau to establish the Centre of Excellence for Major Project Leaders (CoE) to strengthen the project delivery capability of major project leaders, so as to uplift the overall project performance. We appointed the Saïd Business School of Oxford University to conduct the first "Major Project Leadership Programme". The first cohort of about 50 candidates, including government directorate officers and major project leaders of public bodies, had completed the one-year course and were all well benefited. I hope that the epidemic will ease soon, and the CoE can organise a new cohort later this year for nurturing more major project leaders for Hong Kong.

Digital Works Supervision System

As announced in the Budget last year, all public works projects would adopt the Digital Works Supervision System (DWSS) in phases. In less than one year, about 60 public works contracts with a total value of more than 100 billion have already adopted the DWSS. More than 5,000 construction professionals are currently using the DWSS, which has greatly enhanced the efficiency of site supervision.

The market has currently developed more than ten DWSSs to cater for the needs of different projects, and most of these systems are developed by local digital enterprises. Many of these systems have adopted new technologies such as real-time remote monitoring, artificial intelligence, cloud computing, wireless sensor networks, and internet of things, so as to further enhance site safety, quality assurance, and efficiency of contract management etc.

Starting from this year, we will implement the integrated capital works platform in phases for capital works projects to enable real time monitoring by project officers on project progress and performance for enhancing the management of individual project as well as the whole Capital Works Programme.

Apart from enhancing the quality and efficiency of large scale public works, last year's Budget also allocated resources for the launching of various small works projects in different districts, such as improving the urban landscape to provide a better living environment for the public. At the same time, we strive to provide more up-to-date public services by riding on innovation and technology.

Harbourfront works

Over the past year, we have successfully extended our promenades by 1 km to 25 km as scheduled. The works departments have adopted the strategy of "Connect and Enhance", i.e. to carry out beautification works when releasing the harbourfront sites, so that the promenades can be open for public enjoyment as soon as possible. Taking the Watersports and Recreation Precinct in Wanchai North as an example. It only took seven months for the departments to complete the works of the 270km-long promenade. With innovative and open management, some time-limited creative installations, movable tables and chairs were put in the promenade, with a view to providing a more diverse, interesting and down-to-earth experience to users. Works departments will continue to adopt this approach in taking forward harbourfront development projects.

Geospatial Data

Living under the epidemic for a year, some of you may have the experience of using the "COVID-19 - Local Situation Dashboard" developed by the Government. With the application programming interface of related maps, we could understand the trend of the spread of virus more easily. In fact, this also reflected the value and application of geospatial data.

In the 2019-20 Budget, I allocated HK$300 million to promote a wider use of geospatial data in the society. The Development Bureau has started the design works for the system of the Common Spatial Data Infrastructure (CSDI) portal since 2020, which will set out the standard of spatial data and explore different types of spatial data. Free download and open uses for the public are aimed at end-2022.

Under the leadership of the Chief Executive, the SAR Government has been working at our best to curb the spread of epidemic as soon as possible, so as to provide a more stable and favourable environment for the recovery of the local economy. Economic recession in the past year or so has brought pressure to our public finance. Nonetheless, we will not slow down our pace in developing the society. Whether it is about land development, expansion of railway network or hospital development, we have to work with perseverance in order to break through the bottlenecks and constraints, and bring solid improvement to the living environment. In the coming Budget, I will continue to allocate resources to invest for Hong Kong's future.

February 14, 2021

Resources have been allocated in the past few budgets for environmental protection and urban development enhancement, with a view to improving our urban environment and air quality, and making Hong Kong a more liveable city. At the same time, we have been adopting a multi-dimensional approach, such as through initiatives relating to green finance and other policy areas, to promote the development of the green industry and create jobs.

For instance, in the Budget last year, I allocated an additional funding of over $10 billion to implement various environmental projects, including promoting popularisation of electric vehicles (EVs), phasing out Euro IV diesel commercial vehicles (DCVs), launching the pilot scheme for electric ferries, setting up the Green Tech Fund, extending the Cleaner Production Partnership Programme, and recycling waste paper. Progress has been made in all these projects.

Electric vehicles (EVs)

Promoting the decarbonisation of our vehicles and ferries is important for improving the air quality. To promote the popularisation of EVs, I announced last year that a $2 billion pilot scheme would be launched to subsidise the installation of charging-enabling infrastructure in eligible car parks of existing private residential buildings. Since its launching in December last year, more than 120 housing estates have submitted their applications, which involve a total of 36 000 parking spaces, i.e. about 10% of relevant parking spaces across the territory.

For promoting the testing of electric public light buses (e-PLBs), in last year's Budget, $80 million was set aside for launching a pilot scheme for e-PLBs. The Environmental Protection Department (EPD) has already issued the related specification requirements and guidance. Relevant departments are making early-stage preparation. It is expected that about 40 e-PLBs will be subsidised under the scheme for trial in different districts.

Apart from promoting the use of EVs, it is also important to gradually phase out existing high-emission DCVs, including goods vehicles, non-franchised buses and light buses. $7.1 billion was earmarked in last year's Budget for providing subsidies to the affected car owners. The EPD rolled out the scheme in last October with the aim of gradually phasing out some 40 000 Euro IV DCVs.

Electric Ferries

To pursue the pilot scheme for electric ferries in the Victoria Harbour, we have established an Inter-departmental Working Group and engaged a consultant to devise the design proposals. It is expected that an open tendering exercise for the construction of electric ferries will be conducted this year. In the Budget last year, $350 million was earmarked for providing full subsidies to the ferry operators of four in-harbour routes for the construction of four brand new electric ferries and charging facilities, as well as the relevant operational expenditure during the 24-month pilot period.

In fact, the EPD has also provided subsidies under the Pilot Green Transport Fund to convert two ferries in the fleet of The "Star" Ferry Company into "green ferries powered by diesel-electric propulsion systems (DEPS)" on a pilot basis. "Morning Star", the first green ferry powered by DEPS has been launched in September last year after undergoing six months of retrofitting, plying between Tsim Sha Tsui and Wan Chai/Central.

Green Tech Fund

To achieve carbon neutrality, not only do we need to take a multi-pronged approach, we also need to ride on innovation and technologies. In this regard, $200 million was earmarked in my Budget last year for setting up the Green Tech Fund to further promote deep decarbonisation, research and development, and the application of green technologies, as well as to create green jobs. The Fund was open for applications in mid-December last year. Projects under the themes of green technologies, including decarbonisation and energy saving, waste management, green transport, air quality and water quality, will be accorded priority.

Cleaner Production Partnership Programme

The Government has been encouraging Hong Kong-funded factories to adopt cleaner production technologies through the Cleaner Production Partnership Programme, so as to conserve energy and reduce emissions, thereby improving regional environmental quality in the Greater Bay Area. The Programme, which has been implemented for about 10 years and provided funding to around 2 300 Hong Kong-funded factories, has reduced the discharge of more than 38 000 tonnes of air pollutants and 19 million tonnes of waste water in the region each year, while more than 18 000 terajoules of energy and over $2 billion of manufacturing cost have been saved. Last year, I allocated an additional $300 million to extend the Programme for another five years to March 2025. It is estimated that over 1 000 new projects will be funded. The Programme started inviting new applications in June last year, and more than 100 projects have already been approved so far.

Waste Paper Recycling

Last year's Budget committed that a sum of not less than $300 million each year would be side aside for implementing a scheme to recycle waste paper, with a view to promoting waster paper recycling and supporting a circular economy, which can in turn stabilise the quantity and price of local waste paper recycling. In September last year, the EPD conducted an open tendering exercise to engage 17 contractors under service contracts to provide waste paper collection and recycling services across the territory. For frontline collectors, the price of waste paper recycling has been stabilised, rebounding from about $0.3 per kg at the lowest level to about $1 per kg.

In recent years, the repeated occurrences of extreme weather in different places around the world have clearly showed the serious impact brought by the global climate change, which not only threatened the livelihoods and safety of people, but also affected the operation of enterprises. Governments of different countries and regions have already been aware of the seriousness of the problem and hence set out the goal of carbon neutrality. Hong Kong would strive to achieve carbon neutrality before 2050. The SAR Government is considering the recommendations in the "Report on Public Engagement on Long-term Decarbonisation Strategy" submitted by the Council for Sustainable Development. We will announce our long term strategy by the middle of this year.

To cope with the climate change, it is essential for the community to have a deeper understanding on the environment and the climate, and to make adjustments to the style of living as well as social and economic activities, so as to promote sustainable living and economic development through structural reform. This will not only affect individual products and services, but also the industry chain and the structure of industry clusters, which will in turn create new business and job opportunities. We have to grasp the development potential brought by this Green Wave.

February 7, 2021

In my 2018-19 Budget, I announced the launch of the Government Green Bond Programme with a borrowing ceiling of HK$100 billion. The inaugural green bond, with a size of US$1 billion, was issued in May 2019 and the market response was enthusiastic. In the 2020-21 Budget, I announced the plan to issue a total of about HK$66 billion green bonds in the following five years.

Just last Tuesday (26 January), we completed the second offering of US$2.5 billion of government green bonds. The market response was again enthusiastic, with significant over-subscription and narrow yield spreads against the relevant US Treasuries. This green bond offering was significant in several aspects. Apart from being the largest ever USD-denominated government green bond deal globally, the 2051 green bond (i.e. the 30-year tranche) is also the longest tenor issued by the HKSAR Government and the longest-tenor USD-denominated green bond from an Asian government to date. Longer-tenor bonds provide institutional investors with more flexibility in their capital allocation, and help establish the bond yield curve in the long run, providing a benchmark reference for the market. The 30-year tranche attracted orders more than 7 times its issuance size, higher than the 5 times for the 5-year and the 10-year tranches respectively, with half of the allocation going to European and US investors. This is a testament of investor confidence in Hong Kong's long-term credit strengths and economic fundamentals, as well as their positive outlook on Hong Kong's long-term development.

To enhance the development of Hong Kong's green and sustainable finance market and infrastructure, and enhance Hong Kong's role as an international green finance hub, we have set up the world's first government Global Medium Term Note Programme dedicated to green bond issuances. This also demonstrates the government's clear commitment to regularise green bond issuance, so as to boost investors' confidence towards the continued development of Hong Kong's green bond market.

Green bond proceeds raised under the Programme will be credited to the Capital Works Reserve Fund to finance public works projects that provide environmental benefits and support the sustainable development of Hong Kong, which will complement Hong Kong's efforts in striving towards the goal of carbon neutrality by 2050 under the Paris Agreement.

By issuing green bonds to support designated public works projects with economic benefits, we can promote the development of our local bond market and avoid the progress of such works projects being hindered by the government's cash flow limitations in particular years. The early completion of works projects could also benefit our community, maintain a stable expenditure on public works projects, and support the employment in related industries. The financial strength and track record of the government provide the favorable conditions for us to issue bonds and raise funds for designated green projects.

There are also suggestions that the government may consider issuing bonds to raise funds to meet the recurrent expenditure. This approach will likely lead to greater negative impact and should not be taken on board lightly. If market participants misunderstand that the SAR Government intends to issue bonds to meet fiscal deficit and abandon its established fiscal discipline, their confidence in Hong Kong's medium to long-term fiscal position, as well as that in Hong Kong dollar and the Linked Exchange Rate, will be shaken. This will in turn affect Hong Kong's financial stability and security.

Under the Linked Exchange Rate System, funds can flow in and out freely with the exchange rate staying within the range of 7.75 to 7.85 Hong Kong dollars to one US dollar. According to the Currency Board system, the monetary base must be supported by an equivalent amount of US dollars, such that when Hong Kong dollars are converted into US dollars at any time, the exchange rate can still be maintained within this convertibility zone. On the one hand, the Linked Exchange Rate System has successfully maintained the stability of Hong Kong's exchange rate, providing a favorable business and social environment; on the other hand, it means that we cannot actively adjust exchange rates or interest rates to cope with the ups and downs of the economic cycle. At the same time, the stability of the Hong Kong dollar is underpinned by the Foreign Currency Reserve and the fiscal strength of the HKSAR Government. If we raised substantial amounts of debt to finance government expenditures, like what some developed countries have done, the market is likely to speculate that the government might need to monetise debts in future, which will put greater pressure on the exchange rate of the Hong Kong dollar or even attract speculative attacks. It is therefore our belief that the government must maintain its transparent and credible fiscal discipline, which is essential to the financial stability and social stability of our city.

January 31, 2021

We are also actively strengthening the application of technology to assist with the anti-epidemic work, including the development of electronic waistbands for home quarantine and CuMask. In addition, the Innovation and Technology Commission has funded a number of research and development (R&D) projects for anti-epidemic products and technology applications, such as the use of touchless lift button system to reduce physical contacts.

The driving force of technological development is to address the needs of the society, citizens and consumers or to resolve the pain points in business operations. They are the key behind innovation in products and services. When technology and innovative ideas converge, they can bring new impetus to promote sustainable economic development. However, R&D and application of technology require not only a substantial amount of resources, but also a suitable context. The involvement and support of the Government is therefore crucial, especially in early stages of innovation and technology (I&T) development. This includes allocating public resources to generate pull factors, introducing policies and creating an enabling environment for the I&T industry.

Over the recent years, I have been promoting the enhancement of the I&T ecosystem through policy measures and resource allocation in the Budget. Relevant initiatives include nurturing and pooling talents, attracting enterprises, encouraging scientific research, inducing market demand and establishing smooth financing channels. With years of work, our efforts have gradually borne fruits.

Talent is the key to I&T development. In order to nurture and pool talents in the field, the Researcher Programme and the Postdoctoral Hub were merged into the Research Talent Hub in July 2020 with an increased funding. Each eligible company or organisation may receive funding to employ up to four I&T talents with bachelor's, master's, or doctoral degrees, which provides the employers with greater flexibility in engaging scientific researchers for their R&D work. The scheme has so far funded more than 6 000 research positions, involving more than $2 billion of funding. As regards the Technology Talent Admission Scheme, about 220 people have been granted visas or entry permits since the introduction of the scheme in 2018 and almost 30% of them hold doctoral degrees.

In the Budget last year, I set aside $40 million to arrange short-term I&T internships for students taking STEM programmes in local universities. The STEM Internship Scheme, which was launched in June 2020 on a pilot basis, is well-received by the academia and the industry and has benefited more than 1 000 university students.

In order to provide secondary school students with more resources and opportunities to explore the application of technology through interest and practice, I allocated $500 million in the 2019-20 Budget to implement the IT Innovation Lab in Secondary Schools scheme. Each secondary school can apply up to $1 million of funding to organise information technology-related extracurricular activities. Since its launch in December last year, more than 40 schools have applied funding for organising courses on artificial intelligence and mobile application programming, as well as participating in robotics competitions.

In terms of building up business clusters, I allocated $10 billion in the 2018-19 Budget to establish two world-class I&T platforms. Through attracting internationally renowned universities, organisations or business entities to set up R&D laboratories at the Science Park, the initiative aims at strengthening collaboration in scientific research and enhancing our local R&D standard and capability, with a view to making Hong Kong an international scientific research centre. The two platforms, namely “Health@InnoHK” and “AIR@InnoHK” which focus on healthcare technologies and artificial intelligence / robotics technologies respectively, have been well-received.

To encourage research and application, we extended the funding scope of the Public Sector Trial Scheme (PSTS) under the Innovation and Technology Fund in early 2020, so as to assist more local technology companies to realise and commercialise their R&D outcomes. In March 2020, a special call was launched under PSTS to support product development and application of technologies for the prevention and control of the COVID-19 pandemic. More than 60 applications have been approved so far, involving funding of over $100 million. About half of the applications were submitted by local technology companies, an example being the touchless lift button system.

On promoting re-industrialisation, the Government launched the $2 billion Re-industrialisation Funding Scheme in end-July last year to subsidise manufacturers on a matching basis to set up new smart production lines in Hong Kong. The funding ceiling is one-third of the total project expenditure or $15 million per approved project, whichever is lower.

Separately, I enhanced the Technology Voucher Programme (TVP) in last year's Budget by raising the Government's funding ratio for each TVP approved project from two-thirds to three-quarters. The funding ceiling per applicant has been increased from $400,000 to $600,000 and the maximum number of approved projects is also increased from four to six. More than 3 000 projects have been approved so far, amounting to over $500 million of funding.

The Budget last year also featured our support for the development of I&T infrastructure, such as Phase II of the Science Park Expansion Programme, the Cyberport Expansion Project, the Advanced Manufacturing Centre in the Tseung Kwan O Industrial Estate and the Microelectronics Centre in the Yuen Long Industrial Estate. All these projects are progressing steadily.

On the development of smart city, the Government has released the Smart City Blueprint for Hong Kong 2.0 in December 2020, proposing over 130 smart city initiatives. Meanwhile, the “iAM Smart” Platform launched recently would allow citizens to access government and commercial services via the one-stop personalised service platform using a single digital identity. Services currently available include eTax, renewal of vehicle licenses, registration for employment services by job seekers, and services provided by electricity and gas providers. It is expected that by mid-2021, the number of services accessible through “iAM Smart” will increase to about 110.

As for creating smooth financing channels for the I&T industry, we revised the listing rules in 2018 to permit the listing of companies with weighted voting right structures and pre-revenue or pre-profit biotechnology enterprises in Hong Kong, and to provide facilitation for companies listed in other markets to come to Hong Kong for secondary listing. Also, the limited partnership fund regime which was introduced in August last year, together with other concessionary measures in the pipeline, would largely enhance our attractiveness to private investment funds (including private equity and venture capital funds), thereby facilitating the channelling of capital to I&T companies of different development phases. In fact, there are already over 70 relevant fund houses incorporated and registered in Hong Kong in the past few months.

We have been investing in and promoting I&T development in all aspects over the years, including developing I&T infrastructure, pooling talents and companies, allocating more resources to encourage research and application, and attracting private funding, with a view to building a vibrant I&T ecosystem. While there are still many challenges ahead, they would provide the motivation for us to keep exploiting creativity and exploring solutions, so that the development of I&T can better serve the community, improve the quality of life, and bring ongoing impetus for the diversified development of Hong Kong's post-pandemic economy.

January 24, 2021

The prolonged restriction measures have put enormous pressure on the economy and people's livelihoods. In particular, many enterprises have been struggling to keep themselves afloat since the outbreak in Hong Kong a year ago. Although the Government has rolled out series of supporting measures totalling more than HK$300 billion under the last Budget and the Anti-epidemic Fund, these financial subsidies are only a drop in the bucket. Enterprises and free-lancers from different sectors who have been fighting to stay alive are willing to introduce additional enhanced anti-epidemic measures proactively for a more effective infection control, with a view that their operations and business activities could be partially resumed and some breathing space could be provided for people.

Many enterprises and employees are indeed under tremendous pressure. By looking at the statistics, Hong Kong's economy in Q3 last year has turned the tide of recession, and it is very likely that there will be an overall growth in 2021. However, the current situation is still very severe. For instance, according to the Official Receiver's Office, almost 8700 applications for bankruptcy were received last year, representing an increase of 6.6% from the previous year. There were also about 450 filings of compulsory winding-up petition, which showed a 7.2% year-on-year increase. Hong Kong's PMI fell back into contraction in last December, showing the pessimistic business sentiment of SMEs. Given the impact of the fourth wave of pandemic, the soon-announced unemployment rate will likely rise and surpass the 16-year-high peak, exerting extra pressure to the local labour market.

What is more worrying is that many business sectors, including retail and catering, which are expecting a peak in consumer spending in the upcoming Chinese New Year holiday period, will likely be seriously affected by the epidemic situation. During the consultation sessions on Budget, many trade representatives also raised their views that there may be more business closures and lay-offs after the Chinese New Year if the epidemic situation is not under control as soon as possible.

Over the past year, apart from fighting against the virus, the Government has continued to adopt a countercyclical fiscal policy, increase social investment and create jobs, with a view to buffering the impact of economic downturn on the job market. For example, the Government has set aside HK$ 6.6 billion to create 30 000 time-limited jobs in both the public and private sectors within two years, which require different skill set and academic background. Among the jobs created so far, more than 40% are frontline posts, such as workers and foremen for gardening, cleansing, pest control and supporting staff.

As fresh graduates in the recent one or two year may experience more difficulties in job hunting due to the social incidents and the epidemic, about 4 400 jobs are dedicated for fresh graduates under the Job Creation Scheme. Such jobs are designed to include career development elements and trainings so as to help the young people accumulating working experiences and acquiring related professional qualifications. For example, under the scheme run by the Development Bureau, employers are subsidised to recruit graduates from the fields of engineering, architecture, surveying, town planning and landscape architecture. The employers can consider how they can facilitate the graduates to gain working experience through those short term posts, while the graduates equipping themselves to acquire the related professional qualifications. There are also 5 100 posts which are suitable for young people. For example, the Financial Services and the Treasury Bureau will subsidise local Fintech companies, start-ups and other Fintech-related enterprises to create jobs.

I have been meeting with representatives from different sectors recently to gauge their views on the Budget. In one of the sessions, I exchanged views with a dozen of young people from different professional background. Some of them are undergraduate students, while some are junior professionals. Apart from career development and property ownership, which are common concerns among young people, they also talked about macro issues such as economic diversity, public finance, health services and population ageing. Not only did they raise concerns about the pressing social needs amid the epidemic, but also Hong Kong's competitiveness and future development.

It is indeed important for us to tackle both present and future problems. Summing up the experiences we have gained in the past economic low tides, one of the lessons learnt is that we should not just focus on solving the present difficulties. We should also equip and prepare the society to face future challenges, seize the opportunities to restructure and upgrade amid crisis, and further promote the economic development of Hong Kong. In preparing the coming Budget, in addition to people's needs under the epidemic, we also have to prepare and invest for the future. This has become particularly imminent given the recent technological advancement and the changes in consumption behaviour and business model which have been catalysed by the pandemic.

January 17, 2021

The consultation work for the Budget has started since early last month. Let me share with you some of the common views we have gathered so far.

One of the common concerns is the supporting measures to be proposed in the Budget. In this regard, diverse views were heard over the past month or so. Some people hoped that the Government could hand out cash again to eligible citizens, while some suggested giving out consumption vouchers to boost the economy. Some said that at least tax and rates concessions should continue. On the contrary, considering the large fiscal deficit this year and that the next few Budgets will likely be in the red again, some people viewed that the Government should gradually reduce some of those sweeteners in the Budget, increase tax rate, or even impose new tax and broaden the tax base to increase income.

All these views are valid, but are also bound by limitations. With the shrinking of the economy for two consecutive years, I fully appreciate the pressure and pain that the middle-class and low-income families are facing and experiencing. Nonetheless, we also cannot take the continuous and rapid increase in Government's recurrent expenditure over the past few years lightly. For instance, the recurrent expenditure in 2020/21 is estimated to be about HK$ 480 billion, which represented a one-third increase from that in 2017/18 (i.e. three years ago), and tripled the recurrent expenditure in 1997/98. Coupled with the fluctuating pandemic situation, this year we are going to see a record high deficit and almost a 30% reduction in the fiscal reserve to about HK$ 800 billion within a year. And with the pandemic still not ending, economic recovery would be hindered. Moreover, given the uncertain outlook this year, we have to reserve resources to cater for known and unknown situations. Take the HK$10, 000 cash handout scheme announced in the Budget early last year as an example. At the time when we formulated the scheme, the estimated deficit for this fiscal year was HK$139.1 billion. However, with the outbreak of COVID-19, the Government has rolled out several rounds of measures under the Anti-epidemic Fund, leading to a surge in the deficit to about HK$ 300 billion. And at the beginning of the outbreak early last year, the market did not expect that it would become a pandemic and dealt a severe blow to the global economy, not to mention the fact that the situation in the US and Europe is still serious until today. Furthermore, the external political and economic environment is still complicated and ever changing. The China-US tension not only poses threats to the investment and financial market, but also bring some impacts on Hong Kong. In face of the uncertain internal and external environments, and the possible coupling of all these risks, we should remain vigilant, make comprehensive and balanced considerations, and reserve strengths to cope with needs arise from time to time.

Nonetheless, as Hong Kong is in the middle of a downward economic cycle, I will maintain a counter-cyclical fiscal policy in my next Budget. By maintaining or even increasing public expenditure, particularly on investment, with a view to buffering the impact of economic recession on the society and people's livelihoods, and paving the way for post-epidemic economic recovery.

During the consultation, some citizens also made suggestions on how certain existing government measures could be fine-tuned to better serve their needs. Such proposals may only involve adjustments in the implementation details without resorting to large amount of extra funding. I will follow up these suggestions with the related Bureaux. I would like to express my gratitude to citizens for sharing their views, which we have all along taken seriously. Although some of the suggestions may not be able to follow through due to policy or administrative constraints, some have indeed implemented well. For instance, the IT Innovation Lab in Secondary Schools Programme announced in 2019, which allowed each secondary school to apply for HK$ 1 million Government subsidy for enhancing students' experience in I&T learning, was inspired from the views offered by secondary school students during my exchange with them.

There were also suggestions involving some more important issues, such as to address income inequality through large-scale taxation reform. These issues are important as they involve profound restructuring of the whole society as well as our future direction of development, and the related issues are closely interlinked. The society needs to have thorough and informed discussion to forge consensus before any major changes could be put in place. It is unrealistic to expect that such issues could be resolved in one Budget or two. At the same time, in proposing any taxation adjustment, we have to take into consideration recent changes in the international taxation environment to ensure Hong Kong's competitiveness and our economic development direction. The Government would continue to keep a close eye and study on such taxation issues.

In the coming one month or so, I will continue to gauge people's views on the Budget from different sectors through various channels. Although in the reality, it would not be possible for me to address all the requests in one Budget, I will listen and consider carefully the views you have shared with me. I will make my best effort to strike a right balance between different sectors' interests, support people's imminent needs, ensure the stability of Hong Kong's public finance and financial system, and promote the economic development of Hong Kong.

January 10, 2021

Over the past two years, the Hong Kong economy has suffered successive shocks from China-US's tension, the local social incidents, and the COVID-19 pandemic, resulting in negative growth for two consecutive years for the first time on record. Entering 2021, the situation may remain difficult but signs of turnaround will gradually emerge. The economy is envisaged to continue to face considerable challenges in the first half of the year, but it can hopefully show stronger recovery momentum in the second half and will likely resume positive growth for the year as a whole. Yet, the speed and strength of the recovery will hinge on a number of external and internal factors, with the development of the pandemic being the most critical uncertainty.

Before the epidemic can be effectively contained, relatively intensive anti-epidemic measures will need to remain in place, which will inevitably pose pressures on the local consumption sentiment and economic activities. Cross-border movement of people and tourism activities may also take a longer time to resume. Enterprises are still facing a difficult operating environment at the moment, while employment and income conditions are unlikely to show significant improvement soon. This implies that the economy will still face considerable challenges in the first half of this year.

However, with the epidemic prevention and control work at different levels yielding effects and mass vaccination being carried out in phase as expected, the effectiveness of epidemic control is expected to gradually improve. As such, Hong Kong's economic recovery can hopefully gain a stronger momentum in the second half of the year.

Having experienced this once-in-a-century pandemic, we need to observe carefully and summarise the lesson, and ponder how to move towards a better tomorrow amid the crisis. In the past year, many companies' operating models and personal consumption behaviours have undergone structural changes, shedding light on future economic trends.

With the advent of smartphones, the growth in network coverage and bandwidth, and the change in consumer habits, online shopping has become an auxiliary option for business and consumption in recent years. In the past year, as people stayed home for longer period of time due to anti-epidemic reasons, online shopping has swiftly turned from an auxiliary option to mainstream, or even the preferred choice.

Take the Mainland as an example. In the first three quarters of 2020, total retail sales value fell by more than 7% (totalled RMB27.33 trillion). Yet, sales through online channels saw an increase of nearly 10% (involving more than RMB8 trillion). If we take a closer look, online retail sales of physical goods even increased by 15%, accounting for 24% of total retail sales in the Mainland. The respective share widened by nearly 5 percentage points year-on-year.

In fact, this trend is not unheard of in Hong Kong. We probably shopped online more frequently in the past year. Imagine if consumers, motivated by their prior positive shopping experiences, choose to shop more via online channels, this will definitely affect the positioning, service and demand of physical stores. However, be it physical stores enhancing their online sales channels and services, or e-commerce platforms expanding its usage, both would need to better integrate sales in virtual and physical space. It would also lead to a change in demand for logistics support and employees skills.

The need to stay at home for anti-epidemic purpose has also given rise to work-from-home and study-from-home routines, as well as home entertainment. Related equipment sales and content purchases, like video streaming platforms and online conference software have become more common. The emergence of the "Stay-at-home economy" has brought opportunities to internet-related industries, but at the same time posed challenges to traditional industries. From online to offline, production to shipment, and consumption to distribution, etc., all these changes will further accelerate the degree and depth of computerisation and digitalisation of various industries. Therefore, firms must make good use of information technology platforms and system applications to seize development opportunities when the economy recovers.

This is why we have been emphasising the promotion of innovation and technology (IT) as the core driving force of our future economic development. To achieve the vision of an international innovation and technology hub, we must enhance our IT's infrastructure, support system and ecosystem, and support traditional enterprises to expand the application of technology and data management. This is not only about the competitiveness of enterprises, but also the growth momentum of the Hong Kong economy.

On the other hand, the epidemic has accelerated the trend of deglobalisation, which may lead to changes in the current industrial and supply chains ecology. As a small and open economy, Hong Kong must get well prepared for it. In the face of protectionism and trade barriers, the HKSAR government is actively expanding the network of free trade agreements to ensure that Hong Kong's goods and services can enter different markets with better conditions. At present, we are seeking actively to become the first batch of economies to join the Regional Comprehensive Economic Partnership Agreement (RCEP) after it enters into force.

We all hope that the economy can recover from the epidemic this year, but in reality there are still many risks. We must therefore remain vigilant. Uncertainties such as the development of China-US relations and geopolitics will certainly continue to require close monitoring. Many governments around the world have drastically increased their expenditures in response to the epidemic, leading to a much higher debt level in many economies. We have to pay attention to the financial risks that may arise. Financial stability is the prerequisite for stable economic and social development. This is why we have repeatedly emphasised that while adopting countercyclical measures to support the economy, we must maintain the prudence and sustainability of public finance, allocate resources in a targeted and effective approach, and carefully control our expenditures. Only by taking both short and long term goals into consideration can Hong Kong's development progress steadily.

On the road to revitalising the economy, our Country is definitely the strongest support and backing force for Hong Kong. This year is the first year of the "14th Five-Year Plan". Our Country's development will rely on reform and innovation as the fundamental driving forces, and the establishment of a new development pattern will gather pace, featuring "dual circulation", which takes the domestic market as the mainstay while enabling internal and external markets to boost each other. As long as we grasp the gist of such development pattern and rightly position ourselves, it will surely speed up the economic recovery of Hong Kong after the epidemic. Stepping into the domestic circulation, the Guangdong-Hong Kong-Macao Greater Bay Area will be an important entry point for Hong Kong. Promoting the development and success of the Greater Bay Area has also become the key to Hong Kong's own success. Hong Kong has an obvious role as an "intermediary" and "facilitator" in the development of the country's external circulation, leveraging on its competitive edges in finance and international business and trade networks and providing professional, business and high value-added services that are in line with international standards. Actively participating in the development of domestic and international dual circulation will help create a wider room for Hong Kong's development.

January 3, 2021

Nonetheless, when we look back at the past 360 days, it is clear that regardless of our differences, the only true enemy we all faced is the virus itself. The epidemic has threatened the lives of our citizens as well as social and economic stability. Whatever anti-epidemic strategies and measures we adopt, we must curb the virus as quickly as possible to protect the health of people and the economy. The paramount importance of bringing the epidemic under control has become the consensus of the whole society.

How we view the epidemic and the anti-epidemic work would not change the fact that the virus is highly contagious. While some of those infected are asymptomatic, others' conditions could deteriorate rapidly. Swift and effective control of the epidemic is not only the key to protect the health of all citizens, but also the prerequisite for the restoration of normal daily lives as well as social and economic activities. To achieve this goal, the most imminent task is to strictly prevent imported infection cases and strive for zero domestic cases.

The Hong Kong SAR Government has implemented a series of measures to further prevent imported infection cases, including tightening up restrictions on entering Hong Kong, arranging special transportation for arriving persons, and extending the period of and designating hotels for quarantine. In order to strive for zero domestic cases, we are working tirelessly to identify infected persons, put them under quarantine and provide them with treatment to break the chain of transmission. Conducting virus testing with the widest scope could help us find out infection cases to the largest extent and cut off the sources of transmission. Together with the vaccination programme to be launched, there will be two lines of defence in our work against the epidemic.

We may have felt frustrated over the past year, but we are reminded of what is truly important amid difficult times. Many things that we usually take for granted in our daily lives have become less certain during the epidemic. With gathering with family and friends becoming difficult under social distancing restrictions, we treasure even more the time spent together. Our social and economic stability over a rather long period of time, which used to be taken for granted, is indeed the result of many factors together with the concerted efforts of citizens and the Government. Only by continuing economic development and maintaining social stability could we create more favourable conditions to address the deep-seated problems in our society.

Large-scale virus testing and vaccination, which are important steps in the anti-epidemic work, require the support and cooperation of citizens. The support of the community is equally important for promoting social and economic development. As we turn the page to a new year, we all hope to get over the epidemic soon and ride out of the stormy time. While we look forward to better times in 2021, let us join hands to seize the opportunities brought by our country's sustained economic development and other economies' gradual recovery.

December 27, 2020

Although festive displays and decorations can still be seen in shopping malls, under the threat of the fourth wave of the epidemic, many restaurants close early as dinner dining-in services are not allowed, and quite some premises suspend their operations given the tightened social distancing measures currently in place. As the year-end holiday period is always full of festive atmosphere, many businesses have been hoping to recover some of their previous losses in this festive season. The current epidemic situation means a further blow on them.

For those sectors hard hit by the latest round of restriction measures, the Government will make every effort to provide support and tide them over. It is with this intention that a further injection of HK$ 6.4 billion into the Anti-epidemic Fund (AEF) was announced some days ago for the implementation of 19 subsidy schemes to provide targeted assistance to sectors and people directly affected by the latest round of anti-epidemic measures. These include catering business, bars, Karaoke establishments, beauty parlours, massage establishments, cinemas, fitness centres, kindergartens, art practitioners and interest classes service providers, etc.

The amount of subsidies in this round almost doubles that of the similar measures launched under the third round of AEF in September. However, as I mentioned earlier, to many long-struggling businesses, the subsidies are only a drop in the bucket and temporary reliefs. They are not long-term solution to the root of the problem. As pointed out by many in the sectors, what they genuinely need is that people flow can be back to normal and their business operations can be resumed free of repeated restrictions. They also wish to see the resumption of travel between Hong Kong and the Mainland, as well as other places, as soon as possible so as to give a boost to the market.

Many breadwinners may share the same feeling. According to the latest figures released by the Census and Statistics Department, the unemployment rate and underemployment rate for the period of September to November are 6.3% and 3.4% respectively. Although the figures improved when compared with that in the previous period, still there are more than 240 000 people who have lost their jobs, and some 130 000 people who are underemployed. Indeed, quite some of them may have been unemployed or underemployed for a period of time and have to rely on savings and borrowings to pay for their daily expenses. This is extremely stressful to the families. If the epidemic could not be contained as soon as possible, it is likely that the unemployment rate will hike again.

To bring the epidemic under control is the most imminent task. I believe this is the Christmas wishes of many people. And indeed, it is also the request raised by most people during the Budget consultation sessions with individual sectors conducted over the past two weeks. Under the leadership of the Chief Executive, the Hong Kong SAR Government has all along been making our every effort to contain the epidemic, so that businesses and the public can be back to their daily routines. I wish everyone can support Government's measures and join hands together to fight back the virus.

The grassroots and the middle class have been particularly hard hit by the epidemic. The preparation of the upcoming Budget would be challenging given the current difficult situation. We need to consider how we can support people affected, protect the economy, and prepare for the recovery of the economy after the epidemic. The public consultation for the 2021-22 Budget commences today. Facing the changing and challenging future, we need your participation even more to plan for Hong Kong with collective wisdom.

This echoes the message carried out in the promotional video for this year's public consultation exercise: preparing a Budget is like cooking for your family, we can only cook to your taste if we know what is on your mind. The Government will be facing an unprecedented fiscal deficit of more than HK$300 billion in the current financial year, and the budget next year is expected to be in the red again. This is a huge challenge. Nevertheless, I am still looking forward to your valuable views to keep our works staying close to the community. I sincerely invite you all to share your thoughts with us through the website, the dedicated Facebook page, by email, by phone (2810 3768), by fax (2147 5770) or by post (Budget Consultation Support Team, 24/F, Central Government Offices, 2 Tim Mei Avenue, Tamar, Hong Kong). Let us join hands together to ride out the storm and build a brighter future for Hong Kong.

December 20, 2020

Hong Kong has been hit by the fourth wave of outbreak since end November. The situation has since been challenging. Daily recorded cases have risen to consistently high level with patients of different groups, background and districts. Many cases are asymptomatic or with untraceable sources, while some hospitalised patients are in more serious condition. We therefore have to remain highly vigilant against the epidemic and continue to fight in the prolonged anti-virus battle.

Vaccination is known as the most effective method in curbing the epidemic. The HKSAR Government has been pursuing with the procurement of vaccines proactively. Among the four major vaccine technology platforms available around the world, we have already secured two candidate vaccines from two different technology platforms, and will soon enter into an agreement with the third candidate vaccine of another technology platform. What we aim is to procure sufficient doses (initial plan is to serve at least two times the Hong Kong population) within the shortest time frame.

However, as global demand for vaccine is huge and some are still undergoing registration procedures, it is inevitably that the supply of vaccine would be in batches and we need to derive an appropriate staged vaccination plan based on risk and need. Moreover, the effectiveness of the vaccine in controlling the epidemic will be affected by people's receptiveness to the vaccine and how fast they are going to receive the vaccination.

It takes time for us to procure vaccines, derive vaccination programme, and start vaccinating high-risk groups. Moreover, while vaccination can avoid serious symptoms, it cannot completely eliminate the risk of infection. Therefore, even if we are equipped with vaccines as an important new tool in fighting the virus, we still cannot be complacent in the coming year. We need to remain vigilant and continue to do our best to control the epidemic, so as to prevent any resurgence that will add further pressure to our ailing economy and livelihood.

Looking ahead, 2021 will be another year full of uncertainty. Apart from the local and global epidemic situation, we also have to pay attention to China-US relationship and other geopolitical development. To prepare for possible changes in the future, we have to set priority and reserve flexibility in the use of public resources when planning the Budget of next year. Yet we will definitely allocate sufficient resources for any anti-epidemic works so as to ensure their maximum effect. Controlling the epidemic has all along been the most crucial factor in stabilising the economy and livelihood, and also the prerequisite for the resumption of travel with the Mainland and other places around the world.

As for the premises that have their operations suspended or restricted by the Government's anti-epidemic measures, it is reasonable to provide them with support by using public resources. However, Government's support would only be a drop in the bucket and could not last long. After all, the most important task is still to curb the epidemic, so that businesses could resume normal operation and people could get back to their daily lives. The Government's resources are finite. Since the beginning of the outbreak early this year, we have rolled out series of supporting measures for enterprises and citizens with the largest total amount ever, including those initiated in the Budget and under the three rounds of Anti-epidemic Fund. In the light of the fluctuating epidemic situation, while the Government will allocate adequate resources for anti-epidemic works, we have to reserve our fiscal strength at the same time to tackle both known and unknown needs, as well as to maintain Hong Kong's financial stability, which is particularly important amid the changing external environment and our weak local economy.

Accumulating fiscal reserve is not our objective. We have to make use of public resources to bring benefits to the society by addressing people's needs and facilitating long-term development. Our public finance principles have always been allocating resources appropriately and addressing both short- and long-term needs of the society, with a view to promoting the stable development of the society and the economy by leveraging our finite resources. All in all, to maintain the confidence of our people, businesses and the society in the future, what we need to do is to control the epidemic effectively, as well as to ensure the prudence of public finance.

December 13, 2020

For every year's Budget, it is fundamental to estimate the Government's revenue and expenditure. Through the allocation of resources, we on the one hand promote economic development or restructuring, and assist enterprises in exploring business opportunities. On the other hand, with the cooperation of policy bureaux, we roll out initiatives to improve people's livelihood and enhance social services. Most of you may already have an idea about the Government's fiscal situation this year: a deficit of more than $300 billion, which will be the largest deficit in Hong Kong's history. In previous years when huge surpluses were recorded, everyone focused on how the Government could allocate these surpluses to enhance services and share the fruits with the people. Now we are going to face an unprecedented huge deficit this year, how should it be dealt with in your view?

Perhaps, we must first understand the origin of the deficit. In the face of the economic downturn since the middle of last year, the damage to the society and people's livelihood as a result of violent acts, as well as the pressure on the economy caused by the epidemic at the beginning of the year, I introduced relief measures totalled over $120 billion in the Budget. These are mainly one-off expenditures and will not constitute long-term fiscal burdens. As for the three rounds of Anti-epidemic Fund measures, their nature is similar.

Economic cycles have their own patterns and usually fluctuates, but fiscal deficit may last for a prolonged period of time during down cycles. Take, for example, the economic downturn from 1998/99 to 2003/04 triggered by the Asian financial crisis, fiscal deficits were recorded in five out of these six years, and the Government's fiscal reserves dropped sharply from the equivalent of 28 months of Government expenditure early in the period to about 13 months at the end of the period. In contrast, the rate of fiscal reserve depletion has been very rapid amid the current economic downturn. From the equivalent of 23 months of Government expenditure at the beginning of the year, the fiscal reserves fell sharply to only about 14 months of expenditure in a years' time. Although it is understandable to increase expenditure by rolling out one-off measures under special circumstances, still we cannot take it lightly in the face of a surge in deficits and a drastic drop in reserves. In particular, the Government's recurrent expenditure is approaching the level of $500 billion a year, more than three times than that in 1997!

Why do I particularly emphasise the need to stay vigilant about the rate of increase in recurrent expenditure? Because this could pose potential structural challenges to our public finance and also affect the financial stability of Hong Kong. Last year our society was scarred by violent acts, this year we have to brace for the impact of the epidemic and the so-called sanctions imposed by the US. These have all affected economic and financial market sentiment, and even sparked concerns about the stability of the Hong Kong dollar. In fact, under the Linked Exchange Rate System, Hong Kong cannot cope with economic ups and downs through monetary policy or exchange rates adjustment. In this connection, a strong and stable fiscal strength of the SAR Government has become one of the important pillars for stabilising market confidence.

Even small numbers accumulate over time. We must exercise extra caution in dealing with recurrent expenditure as they will have a profound effect on the public finance once showing a compound increase. In the first ten years after Hong Kong's return to the Motherland, the recurrent expenditure of the SAR Government increased from $150 billion to $200 billion, i.e. just an increase of $50 billion. In the ensuing seven years, the recurrent expenditure rose by $100 billion to $300 billion (in the fiscal year 2014/15). After that, it only took four years to hike to $400 billion (in the fiscal year 2018/19). The growth pace accelerated further in recent years. It is estimated that the recurrent expenditure will get close to $500 billion in the fiscal year 2020/21. This has yet to take into account the 10 new initiatives to improve people's livelihood as announced by the Chief Executive early this year, such as lowering the eligible age threshold for the $2 transport fare concession scheme from 65 to 60, which alone would induce an additional recurrent expenditure of $6 billion a year. With the ageing population, the corresponding additional expenditure will grow at a rapid pace.

2020年12月6日

The shrinking economy and epidemic situation have made the operation of businesses very difficult. You may have noticed that more shops have become vacant in many areas while shopping recently, as has been the case for commercial buildings. According to data from the Rating and Valuation Department, prices of office space, retail shop space and flatted factory space have dropped by 19%, 17% and 13% respectively from their respective peaks in 2018 or 2019. Transactions of commercial property have been quiet over the same period. For instance, transactions of office space plunged from the high level of over 300 cases in the second quarter last year to the record low of 100 cases in the first quarter this year, while those of retail shop space also dropped from around 460 cases to less than 200 cases over the period. Many companies holding commercial properties may encounter difficulties if they wish to take out a mortgage loan or sell their property to meet urgent needs when facing operational or cash-flow pressures. As such, some have proposed to the Government the abolition of the Doubled Ad Valorem Stamp Duty (DSD) on non-residential property transactions, with a view to reducing transaction costs and facilitating property owners with financial difficulties to sell their property for liquidity.

In fact, the Government has rarely intervened in the non-residential property market in the past. Among the several rounds of demand-side management measures, only the DSD introduced in 2013 was applicable to non-residential properties. This is because for commercial properties, the Government respects the principles of free economy and is fully confident in the effectiveness of the market mechanism as the most efficient means to allocate resources in most situations. The Government will not intervene unless under exceptional circumstances, such as when there are excessive speculation activities in the market that could lead to potential risks in the macro-economy and the financial system. In 2012, when residential flat prices rose continually, prices of commercial properties also surged in parallel. The market showed clear signs of overheating, with prices of office space, retail shop space and flatted factory space risen by 25%, 41% and 46% respectively during the year. Therefore, when the DSD was introduced in 2013, the Government expanded its scope to include non-residential properties as well.

However, dented by the China-US trade tensions, the local social incidents and the COVID-19 pandemic over the past two years, the commercial property market has undergone a visible correction. The elevated prices and intense speculation activities at the time when the DSD was introduced are no longer evident. Taking the example of office space, prices have risen by a cumulative 21% since 2013 when the measure was introduced, similar to the rate of inflation over the same period, while prices of retail shop space have even declined by 1%. So far this year, transaction volume has dropped by around 80% to 90% from the level before the implementation of the DSD. Under the current economic environment, we believe the abolition of DSD for non-residential properties will unlikely lead to a revival of the intense speculation activities. This is the appropriate exit timing for the demand-side management measure. Abolishing the DSD would lower the relevant transaction costs and assist owners to sell their properties for meeting financial needs. Therefore, the Chief Executive announced this decision in the Policy Address delivered last week.

After the announcement of this decision, some commentators have mentioned whether there is also room for abolishing or relaxing the demand-side management measures for residential properties. While that is a natural question, we should first take a detailed look at the residential property market situation.

While the residential property market has undergone some consolidation recently due to the social incidents and epidemic, flat prices remain high given the firm end-user demand and the low interest rate environment. Flat prices have more than doubled that in 2010 before the demand-side management measures were introduced. Even when the Hong Kong economy registered negative growth for five consecutive quarters, flat prices only declined by less than 3% over the same period, reflecting the strength of the residential property market and that flat prices are still way over the affordability of the general public. These figures and trends all show that there is no room for relaxing the demand-side management measures for the residential property market at this stage.

As I have mentioned in my blog early last year, the Government shall exercise prudence when assessing whether the demand-side management measures on the private residential property market are still appropriate. The relevant framework and factors to be considered are still applicable now. The four factors include:

1. The magnitude and pace of downward adjustment in property prices, including changes in the premium between primary property prices and secondary market property prices of the same district;
2. Transaction volumes in both the primary and secondary markets;
3. Future supply of residential properties, such as completion, number of units ready for sale and potential supply in the short to medium term;
4. The overall economic situation and outlook, including local economic performance, employment situation, trend of interest rates and capital flow, as well as the external economic environment.

As always, we will continue to monitor the market situation closely and conduct dynamic assessments, but there is no need to designate hard indicators or timelines for the relaxation of the relevant measures.

2020年11月29日

Our Country adopts socialism as the core of its system, while accommodating cities built on capitalism. The Constitution is the foundation of the Country and it authorises the operation of Hong Kong's system through the Basic Law. These form the framework of the "One Country, Two systems". By upholding the bottom-line and premise of "One Country", respecting the socialism system of the Country, and safeguarding the national sovereignty, territorial integrity and development interest, Hong Kong's capitalism system will have a greater space for further development. Just like any other systems in the world, to maintain its vitality and keep abreast of the times, the "One Country, Two Systems" arrangement needs to be enhanced from time to time taking into account social development, changes in the internal and external environment, as well as implementation experience. Nonetheless, no matter how things change in time, we have to hold onto the purpose and mission of the "One Country, Two Systems" and the Basic Law, attach importance to Hong Kong's constitutional order, responsibilities and norms, and keep enhancing the implementation mechanism of the institutional and legal systems. Only by doing so, the implementation of the "One Country, Two Systems" and the Basic Law can continue to maintain Hong Kong's long term prosperity and stability.

The stable development of the Country has always been the greatest support to Hong Kong's development. Leveraging the benefits of "One Country", Hong Kong enterprises could ride on the Mainland's development and its huge market size to seize the enormous business development and collaboration opportunities. Hong Kong has continued to maintain and upgrade its role as the gateway and intermediary, and transformed itself from a trading port in the past to an international financial, transportation and trade centre today. Apart from serving the Mainland economy and the development needs of Mainland enterprises, we also facilitate foreign enterprises and capital to explore development opportunities in the Mainland market. This is the flexibility and advantages that we could enjoy under the "One Country, Two Systems" arrangement. Being a part of the Country, the Country has always been providing Hong Kong with the greatest support in people's livelihoods and social development. From daily food and water supplies to the recent fight against the COVID-19 pandemic, the Central government has been offering solid support and assistance to Hong Kong.

To rightly position Hong Kong and plan for the future, it is necessary for us to strengthen the framework of "One Country, Two Systems" and operate within the ambit of the Basic Law. The Country is now entering into a new phase of development, forming a new development pattern with the domestic market as the mainstay while letting internal and external markets boost each other. Against this backdrop, how could Hong Kong capitalise on our advantages under the "One Country, Two Systems" arrangement?

As a part of the Country, Hong Kong will definitely play a role in the domestic market. Hong Kong enterprises could sell their products and provide high-value-added and professional services in the domestic market, as well as to assist foreign products to establish their distribution channels in the Mainland. From the aspect of industrial chain, Hong Kong has advantages and potential in research and innovation, product R&D and standard setting. The Guangdong-Hong Kong-Macao Greater Bay Area development will also be a major springboard for Hong Kong to participate in the domestic market.

As for the international market, Hong Kong could surely play an important role in financial services and innovation and technology. Taking financial services for instance. With the Country's continuous economic growth and its increasing weight in the global economy, the international use of Reminbi and the demand for its derived investment and risk-management products will grow quickly. As the world's largest offshore hub of Reminbi services, Hong Kong will see greater potential in promoting the internationalisation of Reminbi.

China has recently signed the Regional Comprehensive Economic Partnership Agreement (RCEP) with 14 countries, including the 10 ASEAN countries, Japan, South Korea, Australia and New Zealand. This is the world's largest trade agreement so far, covering about one third of the world's population and the global GDP. Amid the worldwide advocacies for de-globalisation and the doubtful attitude towards multilateralism on trade, the signing of the RCEP is truly meaningful. Members will implement mutual tariff reduction, open up market access, remove trade barrier and simplify custom clearance procedures, all of which will help further lowering the cost of trade among the members region. RCEP will promote the Country's trade and foreign investment, expand the import of advanced technology, equipment and parts, and facilitate the further development of the regional industrial chain.

Last year, Hong Kong's bilateral trade on goods with the 15 RCEP members amounted to US$ 765.5 billion, accounting for 71% of our total trade on goods. Although Hong Kong does not levy any customs tariff on most imports and has a relatively small manufacturing sector, joining the RCEP could still benefit other sectors such as trade on services and investment. In view of the above, Hong Kong has already expressed our interest in joining the Agreement to all RCEP members in 2018. We will work in accordance with the related clauses of the Agreement, with the objective of enabling Hong Kong to be the first batch of new members after the Agreement taking effect.

While actively taking part in the Country's domestic market, Hong Kong will continue to make its best efforts to explore development opportunities in the international market, so as to give impetus to our economy. We will also play a more active role in the development of and resource allocation in regional industrial chain, and identify more potential markets and sectors for the promotion of high-quality economic development in Hong Kong.

November 22, 2020

The unpredictable epidemic and the related restrictive and control measures are the most crucial factors affecting our economic performance this year. To prevent further damage to the economy caused by the epidemic, we have to formulate a set of comprehensive and effective response plan. As a small and open economy, Hong Kong relies on its connections with people and commercial activities outside Hong Kong to support the economy. While the Europe and US are still struggling with the epidemic, the Mainland, in contrast, has effectively brought the epidemic under control with its economy already regaining momentum. It is of utmost importance for Hong Kong to tackle the epidemic properly, so that people in Hong Kong and the Mainland can feel at ease to resume the flow of people between the two places as soon as possible. As this is the key to stabilise Hong Kong's economy, we need to have determination in reviewing our strategy and measures in handling the epidemic.

We should set our target as "strictly preventing imported cases and striving for zero local cases". In fact, many COVID-19 cases reported in Hong Kong are related to imported cases. We therefore have to implement stringent measures targeting arrival passengers. A more comprehensive approach in the collection of specimens, quarantine at specified locations, as well as tracing of contacts are necessary.

Domestically, we should set a target of having zero local cases. As some infected persons may not show any symptom, the threat of hidden chain of infection still exists in the community. In view of this, when small-scale group outbreak or continuous sporadic cases occur, we may need to carry out mandatory testing programme of a wider coverage with a view to identifying all infected persons and break the chains of infection. Only by doing so, a safe environment could be restored to allow normal living and travel.

Some may consider mandatory testing not practicable. But the reality is that a persistent outbreak is not good for our economy, businesses and people's livelihood. We have to make difficult choices. Having all the cases cleared will offer the greatest protection to most people's health and interests. Even if mandatory testing would bring some inconveniences to people, it is still the most "cost-effective" option amongst others as we can create a safe space for living with relatively small disturbance to the community.

Once locking on the target, we could unite and handle the challenges together. There are many solutions for every problem. Yet in a pluralistic society, there hardly can be a perfect solution for all. In reality, we can only choose a solution which better suits the overall interest of the society. And we need determination in the implementation in order to achieve the best result. As seen from other examples in overseas countries, tightening and loosening the anti-epidemic strategy alternately cannot facilitate economic recovery. Neither can this achieve an effective and long-lasting effect in curbing the epidemic, impacting the health and livelihood of people.

In fact, Hong Kong has fallen into political turmoil over a period of time. The violent and illegal acts have even paralysed the operation of the Legislative Council (LegCo), hindering the development of Hong Kong in many aspects. The handling of routine issues has become very difficult, not to mention deriving plans for future development. Political quarrels and violent acts in the society have also led to strained relationships in many families.

The latest decision made by the Standing Committee of the National People's Congress (the decision) on the qualification of members of the LegCo of the Hong Kong Special Administrative Region (HKSAR) has established a legal framework for Hong Kong's institutional development, ensuring public servants to hold allegiance to the Country and HKSAR and plugging the loopholes in the implementation of the "One Country, Two Systems" principle in Hong Kong. The "One Country, Two Systems"principle is the corner stone for Hong Kong's prosperity and stability. We have to safeguard the bottom line of the "One Country" principle and keep the operation of the "Two Systems" on the right track, so as to ensure Hong Kong's stable and continuous development. The decision and the National Security Law share the same spirit and together they provide the anchoring effect for Hong Kong's stability and smooth development. Over the past year or so, Hong Kong has been hard hit by violent acts and the epidemic, leading to tremendous stress on the economy and people's livelihood. The decision could bring the LegCo back to the right track and provide the room and possibility for the government to boost the economy, improve people's livelihood, and address other deep-seated problems.

The Mainland has curbed the epidemic effectively. Although its economy was under stress earlier this year, it has regained strength quickly. According to the latest estimate of the International Monetary Fund, China would be the only major economy that could see a positive economic growth this year. Its rate of growth is expected to be 1.9% this year and accelerate to 8.2% by next year. Last month, the Fifth Plenary Session of the Central Committee approved the proposals for the "14th Five-Year Plan and 2035 Long-Range Objective", which outline the major direction for the Country's future development and provide enormous opportunities for Hong Kong's future development. At this historical new phase, if we could rightly position ourselves and participate in the national development plans more proactively, Hong Kong would enter a new era of development.

November 15, 2020

These figures help us better understand the actual situation of Hong Kong and provide useful reference for the HKSAR government in the consideration and formulation of public policies. However, these figures are not at our fingertips. They are compiled by our Census and Statistics Department (C&SD) colleagues through multiple scientific and regular sample surveys and researches. Their effort and professionalism make the first-hand materials and information readily available for government departments, economic assessment and academic studies. The statistics they compile not only deepens our understanding of the socio-economic phenomenon on top of our glimpse and perception, but also lays the foundation for objective, comprehensive and insightful observation and discussions as well as comparison and analysis by stakeholders.

Recently I paid a visit to the C&SD headquarters to show my support to the colleagues there. During the tour, I visited the Service Centre on Trade Statistics and learnt about the online collection and dissemination of trade statistics. I also took the opportunity to tour the Computer-Assisted Telephone Interviewing Centre and learnt about the operation of the Centre as well as the data collection method of the Quarterly Survey of Employment and Vacancies.

As the principal technical department which collects data and compiles statistics for the government, C&SD is responsible for a number of important and large-scale projects. One of them is the decennial and extensive population census, which relies on the participation of everyone. The next round of population census will be held from late June to early August in the coming year. Covering all citizens of Hong Kong, it aims to provide information on the demographic and socio-economic characteristics of the population and up-to-date benchmark statistics on its detailed geographical distribution.

It is essential to keep the benchmark statistics updated on a timely basis for the sake of policymaking by the government. For instance, a complete picture of the population structure and age distribution helps us understand whether the pace of population ageing is in line with expectations and its implications on a wide range of measures such as those related to medical services and social welfare. Another example is the geographical distribution of the population. It facilitates the assessment of the adequacy of public services and service facilities in different districts in meeting the actual needs. Therefore, the population census next year will be of great significance for government policies in terms of timely advancement and adjustment.

Nevertheless, the population census next year will face an unusual challenge, for the coronavirus pandemic may bring uncertainty to the relevant work. In view of this, C&SD will further extend the use of information technology in the data collection process, for example, census officers will immediately input the data collected to the system, or provide encrypted online questionnaires for the respondents. Such arrangements can enhance the work efficiency and reduce the risk of spreading the virus.

Considering the various needs of the citizens, the next population census still needs to recruit enumerators to carry out face-to-face interviews with respondents. C&SD will provide appropriate training and protective gear for all frontline staff to ensure the health and safety of both the respondents and our staff.

The success of surveys and population censuses conducted by the government cannot be achieved without the active participation of citizens and corporations. I hope everyone will support the surveys conducted by C&SD, especially the population census in 2021, to keep us abreast of the latest and comprehensive data of Hong Kong and help us examine the situations of different sectors in the society. This could facilitate the evaluation and formulation of appropriate policies and allocation of resources so that we can ensure our work is tuned in to the development of the society and meets the needs of our citizens.

November 8, 2020

However, for citizens and wage earners, job and income after all constitute the most personal feelings. Since the beginning of this year, the unemployment rate has risen from about 3% to 6.4%, and the underemployment rate from 1% to 3.8%, with industries directly affected by the epidemic under even greater pressure. Therefore, even though the overall economy shows improvement, the situation faced by ordinary wage earners is still difficult.

We all hope that the overall economy will continue to improve so that the job market can regain some strength. However, the fluid international political environment coupled with the unpredictable and austere global pandemic are taking heavy tolls on many economies. According to the World Economic Outlook report issued by the International Monetary Fund in October, all major economies, except China, have shown contractions of varying degrees this year. The global economy is forecast to shrink by 4.4%, and the road to recovery is expected to be long and difficult. Although the global economy will improve next year with a forecast growth of 5.2%, the momentum will gradually slow down thereafter, and the growth rate will ease back to 3.5% in the medium term. However, there are still huge uncertainties surrounding this forecast, which is predicated on the assumption that countries can effectively control the pandemic by the end of 2022. In addition to the evolving pandemic, the prevailing financial market valuation is too high and contrary to the performance of the real economy. The potential fluctuations and the resulting shifts in capital flows down the road will weigh on the global economy, with possibly greater shocks to the emerging economies.

In Mainland, the Fifth Plenary Session of the Central Committee just announced the proposals for the "14th Five-Year Plan" ("the Plan") and long-term goals for 2035, outlining the general direction of future social and economic development. In respect of economic development, the Plan proposes to achieve high-quality, sustainable and healthy development, fully unleash the growth potential, build a stronger domestic market, and enhance the economic structure, as well as to upgrade the industrial base and modernise the industrial chains by upholding the central role of innovation with the support of technological self-reliance. In addition, reform and opening up have to be pursued at a higher level.

The above proposals clearly illustrate that our country is entering a new phase of development, and give us a deeper understanding of the "new development pattern with the domestic market as the mainstay while letting internal and external markets boost each other". With the country's transitioning from a stage of rapid growth to one of high-quality development, the driving force of economic development will accelerate its shifting from external trade to domestic demand. To enhance domestic demand as a driver of development, there is a need to promote domestic demand expansion and consumption upgrades. Therefore, it is necessary to use innovation and technology as the leverage to improve the quality of domestic demand, enhance the industrial chains and supply chains, build a relatively independent and complete high-quality industrial system, and reduce the reliance on foreign technology.

The total retail sales of consumer goods in China amounted to nearly US$6 trillion in 2019, equivalent to 95% of that of the US. The scale of the consumer market is expected to surpass that of the US this year. However, China's per capita GDP is about US$10,000, still much lower than that of developed economies. As long as the Mainland economy continues to grow and people's income to increase generally, there will still be a lot of room for growth in the Mainland's consumption-related industries. In the future, Hong Kong businesses can actively participate in the domestic sales market by promoting high-quality products for domestic sales, expanding import distribution business, etc.

Owing to the fluid international environment, the industrial chains and supply chains may gradually shift from international division of labour to domestic division of labour, thereby providing catalyst for the domestic technology ecosystem to grow strong and be self-reliant. In recent years, the HKSAR Government has strengthened cooperation with Shenzhen in innovation and technology. Hong Kong has top-notch capabilities in basic scientific research, with five universities among the world's top 100, and enjoy competitive advantages in fields like biomedicine and artificial intelligence. Hong Kong also has an excellent innovation and technology support system and an increasingly well-established innovation and technology ecosystem, including an cosmopolitan social environment, intellectual property protection, research institutions and talents from all over the world, and first-class financial services etc.. This allows us to play a unique and important role in developing the Greater Bay Area into an international innovation and technology centre.

During the "14th Five-Year Plan" period, our country will implement measures for wider, broader and higher-level opening up. Hong Kong has a global business network, and can provide professional, business and high value-added services that are in line with international standards, thus playing a more active role in the promotion of domestic and international dual circulation.

Finance is an important support for the real economy. Comprehensive and excellent financial services are very important for the transition to high-quality economic development. Hong Kong has always been the offshore financing centre for Mainland enterprises and an important conduit for international capital to enter the Mainland market. Capital markets of Hong Kong and the Mainland can complement and promote each other. Hong Kong is an offshore Renminbi (RMB) business hub with the largest offshore pool of RMB liquidity, and handles more than 70% of the global RMB trade settlement. As the internationalisation of the RMB continues, Hong Kong will have great potential for development in RMB investment and risk management products.

Furthermore, Hong Kong continues to play an important function and serve as a platform for the two important national development strategies of the "Belt and Road" initiative and the development of the Guangdong-Hong Kong-Macao Greater Bay Area. The Greater Bay Area is also a key route for Hong Kong to participate in the country's internal circulation. Therefore, Hong Kong must seize this major opportunity to assist the country's development while creating broader room for our own development.

November 1, 2020

Taking a closer look at the three major driving forces of the Hong Kong economy, the local economy might have consolidated at a relatively low level in the third quarter. The sustained rapid economic recovery in the Mainland can be said to be the main force supporting the Hong Kong economy. In the past ten years, the Mainland was Hong Kong's largest export market and import source (accounting for 54% of Hong Kong's merchandise exports and 47% of imports respectively). The Mainland economy grew by 4.9% in the third quarter of 2020. In September alone, exports in US dollar terms rose by 9.9% and imports rose by 13.2%. These two sets of figures also indicate that Hong Kong's external trade performance would very likely improve in tandem in the third quarter. Although Hong Kong's merchandise exports had shown negative growth for six consecutive quarters, the rate of decline narrowed from 7.4% in May to 2.3% in August. It is expected that the export figures for September to be announced soon will show a considerable improvement.

As regards consumption, private consumption had fallen for four consecutive quarters, and the rate of decline enlarged from about 3% in the second half of last year to 14.2% in the second quarter of this year. Although government consumption expenditure continued to increase over the same period, with its growth rate accelerating from about 6% to nearly 10%, this could only slightly mitigate the impact of the plunge in private consumption on the overall economy. Entering September, as social distancing measures have been gradually relaxed alongside receding epidemic, many citizens have increased outings and consumption, and the performance of private consumption is gradually improving. As for fixed investment, the overall market attitude remains cautious.

Overall, judging from the current situation, the Hong Kong economy, having contracted for four consecutive quarters, is yet to emerge from the recession. However, the rate of decline in GDP in the third quarter should have improved notably from that of about 9% in the first two quarters of this year, partly also due to a lower base of comparison in the same period last year. With the Mainland economy regaining momentum and the local consumption sentiment gradually improving, if the local epidemic continues to be under control, the pressure of economic contraction can hopefully be eased slightly.

However, after all economic data can only outline the situation of several major segments. The actual perception of citizens in daily life is like the difference between the "average temperature" in a weather report and the "sensory temperature" in real life. Job security and stable income always constitute the most personal feelings. If you look at the latest unemployment rate in Hong Kong, this sensory temperature is obviously much colder than the macroeconomic situation. The unemployment rate reached a 16-year high of 6.4% in July to September, 0.3 percentage points higher than the preceding three-month period. Directly affected by the epidemic, the unemployment rate in the consumption- and tourism-related industries comprising retail, accommodation and catering services rose by 0.8 percentage point to 11.7%. Looking at the situation this year, the unemployment rate rose from 3.3% at the end of last year to 6.4% in the third quarter of this year, while the underemployment rate rose from 1.2% to 3.8% over the same period. This reflects the austere situation that Hong Kong is currently facing after the shock of social violence and the severe blow of the epidemic.

Against this background, everyone cannot help asking, when will the economy see the dawn? The answer to this question can be complicated, but it can also be very simple. The Mainland, which has the closest economic and trade relationship with Hong Kong, has the epidemic under control, and its economy continues to improve. If the smooth flows of personnel and commerce between the two places can be restored to facilitate a close link with the Mainland's "internal circulation", then even if the "external circulation" is temporarily impeded due to the epidemic and other factors, our economy can still be revitalised substantially. However, the crux of the issue, which is also more complicated, is how to ensure that the local COVID-19 epidemic can be controlled at a level where people in the two places feel at ease and are willing to travel around. Of course, we hope to shorten the time that people need to bear with the economic pressure as much as possible. Therefore, since the COVID-19 outbreak, the Government has devoted more than HK$300 billion in launching a number of support measures, the scale of which is indeed quite large. However, with limited public resources, it is difficult to sustain assistance for a long time, nor can such assistance fundamentally solve the actual problems our economy is facing. Therefore, from this perspective, compulsory testing of different scopes with various targeted groups, and even large-scale compulsory testing, are indispensable tools for epidemic prevention. This is not only conducive to controlling the epidemic, but can also create conditions for reviving economic activities and relieving economic pressures facing workers and enterprises. Hong Kong is a small, externally-oriented economy. This international city has always had relatively large volume of economic activity, and flows of people, goods and capital, which depend to a great extent on maintaining a high degree of business interaction and personnel flow with the Mainland and various places of the world. Only by effectively controlling the epidemic and thoroughly cleaning up local infection cases can we truly create an environment conducive to economic recovery.

October 25, 2020

Shenzhen and Hong Kong have developed hand in hand from different starting points to their respective economic scales and styles of today. It would be overly simplistic to compare the two places in indicators such as GDP. However, in recent years, I have heard various worries about the future economic development of Hong Kong from time to time.

In fact, every city or economy has its own unique development trajectory and pattern, with its historical background and own development obstacles and bottlenecks. Perhaps the real question is whether Hong Kong has fully utilized our own advantages and potentials over the years. Facing the future, are we heading in the right direction? Have we conducted a review and summary of past developments and the gains and losses? Do we have a sufficient and correct understanding of our own advantages and existing problems? And also the determination and courage to walk to the end!

Looking back, along with the Mainland's reform and opening up, Hong Kong has developed in the right direction. By grasping the changes and needs of the Mainland, seizing the opportunity, and transforming ourselves from a manufacturing base to a service economy, we fostered the rapid development in the 1980s and 1990s. Entering the 1990s, Hong Kong's financial services and professional services thrived and emerged as important pillar industries in response to demand for financing and professional services arising from the development of Mainland enterprises. Yet, entering the 2000s, Hong Kong missed the opportunity in respect of development and application of innovation and technology. Although the HKSAR government has strived to catch up and devoted vast resources in recent years, it takes time to nurture talents, build up infrastructure and establish a complete ecosystem. The development of innovation and technology is so far not satisfactory. However, the key to whether we can finally make use of our advantages and catch up depends on whether we can adhere to our determination and commitment to the development of innovation and technology, and embrace the challenges with an attitude of daring to experiment and actively seeking new ideas!

The Mainland is the second largest economy in the world with a continuously growing middle class. The swift and effective containment of the COVID-19 epidemic has also allowed the economy to regain momentum. The huge Mainland market and its continued two-way opening up at a higher level will render huge opportunities to the recovery and growth of the Hong Kong economy.

As China-US relations remain tense and the international politico-economic landscapes are undergoing profound changes, some people may ask whether Hong Kong can still uphold its role as a gateway, intermediary and platform to and from the Mainland market? It is true that the international climate is changing, but the country's adherence to reform and opening up has always been very stable, and the Central Government has determined to promote economic development with a new model featuring the dual domestic and international economic networks complementing each other. In the part of external circulation facing the international market, our institutional strengths of "one country, two systems" and other long-held advantages including the simple and low tax system, the free flows of capital and various factors of production, the rule of law, and judicial independence etc., allow Hong Kong to play a more critical and active role as a gateway, a hub and a high-quality platform.

In the face of sustained economic development in the Mainland, can Hong Kong maintain an edge in our competition with the various neighbouring cities? This is actually asking, is our development direction correct? Is the progress fast enough? Many people always compare Hong Kong with other cities from an "A Tale of Two Cities" perspective. However, what Hong Kong faces is not an "A Tale of Two Cities" competition, but a competition of "Hundred Horses". Cities all over the world are making every effort to develop, gathering more capital, talents, technology and cutting-edge research and other factors of production, so that their economies can flourish in multiple dimensions and at various levels.

Letting Hong Kong develop on the path to success is something we must do our utmost to promote. We may not be able to list all the industries that will win in the future, but we can lock in the right direction of development.

The Guangdong-Hong Kong-Macao Greater Bay Area will provide a diverse, rapidly-developing and huge market. Both Hong Kong and our brother cities in the Bay Area can play an important role in promoting the all-round and flourishing development of the entire Bay Area. It can not only provide a more complete and broader development space for finance, innovation and technology, high-end service industries and advanced manufacturing, but also provide residents in the region with an environment that is liveable, business-friendly, travel-friendly, beautiful, and culturally rich.

Hong Kong's past success was not only because we kept up with market development and needs, but also because Hong Kong people were not afraid of difficulties and had a practical attitude with flexibility. I still have full confidence in the future development of Hong Kong. As long as we chart the right course, keep pace with the times, and make forward-looking preparation, Hong Kong will definitely be able to write a brilliant chapter. To quote President Xi Jinping's speech at the celebration ceremony of 40th anniversary of the establishment of the Shenzhen Special Economic Zone: "A single flower is not spring, but a garden is full of spring when a hundred flowers bloom." As long as we work together, and continue to make good use of our uniqueness and advantages in the "beauty of a hundred flowers", and also promote the co-development of brother cities in the region while seeking our own development, Hong Kong will remain a legendary city.

October 18, 2020

After almost a year since the onset of the epidemic, people in different places start to accept the necessary measures for controlling the spread of the coronavirus, including wearing masks to prevent infections transmitted by respiratory droplets, keeping social distance or even more stringently staying at home, as well as identifying infected persons through testing. These measures help prevent the spread of the virus, but they are not sufficient to break the hidden chains of transmission in the community. Therefore, despite the occasional drops in the number of new infection cases, we are not able to eradicate the virus altogether. In particular, if physically weaker patients get infected, an outbreak is more likely to occur. This phenomenon has been seen repeatedly in many places which adopt similar anti-epidemic measures.

The Mainland has adopted a strategy to identify symptomatic or asymptomatic patients through large-scale and area-targeted testing, which is an effective way to break the chains of transmission. Nonetheless, such testing is not easy to implement and requires several rounds of cross checking to ensure precise results, the process of which requires time, determination, execution skills and the support of the community. At the same time, in order to achieve the goals of controlling the epidemic and supporting the economy, the Mainland has implemented the "health code" system. Under the risk assessment and identification mechanism, people who are confirmed not infected could resume travel and daily activities within a "safety circle" i.e. an area with effective anti-epidemic control. This is to allow the resumption of daily and economic activities to the largest extent for those people who have been tested and confirmed not infected.The experience of the Mainland shows that with large-scale community testing, together with quick containment at the early stage of an outbreak and a comprehensive risk identification system based on testing results, people could travel and carry out daily activities and enterprises could resume normal operation to the largest extent, within the shortest timeframe and under manageable risks. Of course, it is important for us to stay vigilant to prevent imported cases.

Most of us may agree that the current vicious cycle of "relax and rebounds" should be resolved, otherwise any real economy recovery would not be possible. Citizens and enterprises have been under huge stress since early this year and we have to find a way out. We should establish a response mechanism that could promptly handle any sudden cluster outbreaks. The mechanism should include large-scale and comprehensive testing and a risk identification system, allowing those citizens who are confirmed not infected to maintain convenient daily travel and the economy to function normally. More than 1.7 million citizens earlier participated in the Universal Community Testing Programme, which has provided us with valuable experience in handing registration, specimen collection, laboratory testing and result notification. The experience in running the process would facilitate us to establish a response mechanism that suits Hong Kong's situation.

This pandemic of the century has hit the global economy hard and no one could escape from the challenges. How we tackle the challenges depends on our will and resolve. The epidemic in the Mainland has largely been brought under control and its economy has generally regained momentum. If we can effectively control the local epidemic situation in Hong Kong, hopefully we could resume the flow of people and exchanges of businesses with the Mainland and other places, thus giving a substantial boost to our economy.

October 11, 2020

The stability of the financial system is of utmost importance to the economy and people's livelihoods. The financial services sector is one of our pillar industries which contributes to about 20% of our GDP. It serves the real economy by facilitating the development of different sectors and addressing the operation and financing needs of enterprises. While the development of the financial market could help drive up the economy, it would be even better if citizens could take part in the process and benefit from it. With this consideration, I announced the relaunch of the inflation-linked retail bond (iBond) in the Budget earlier this year. The preparatory works are all ready and we are going to announce the issuance details very soon.

So why is the issuance of the iBond could allow the general public to have a greater involvement in the development of the financial market? The first batch of iBond launched in 2011 has attracted over 150 000 applications, which rose to over 500 000 by 2016. The total issue size during the 6-year period amounted to $60 billion. Compared with other retail bonds also issued by the Government before the iBond, only around 35 000 applications were received with an issue size of $7.5 billion in total. This shows the popularity of the iBond among citizens. The issuance of the iBond indeed does not only facilitate the development of the retail bond market, but also offer a capital protected investment option with stable return to the general public.

Given the current low inflation rate and even the possible risk of deflation in Hong Kong, some may question the attractiveness of the relaunch of the iBond. In fact, the global low interest rate environment will very likely persist for a period of time, and we should not overlook the risk of inflation in the medium-to-long term due to the easing of monetary policies in major overseas markets. Against this backdrop, the design of the iBond could take care of both scenarios. If the Composite Consumer Price Index (CPI) turns out to be negative, the guaranteed minimum interest rate of the iBond could ensure that the return would not become zero even under deflation. Taking into account the current situation, we have enhanced some of the conditions of this batch of iBond, including the minimum interest rate, which will be set at 2%, higher than that of the previous batches. This rate is quite attractive under the current low interest rate environment. If inflation occurs, the interest of the iBond will be linked to the Composite CPI, ensuring a return which could catch up with the inflation.

In fact, the structure of the iBond is easy to understand, such as the semi-annual interest payments with an interest rate linked to the average annual inflation rate based on the Composite CPI. Principal will be repaid in full at maturity. This product has opened up a channel for small investors to invest in bonds. After the issuance of this batch of iBond, we are going to launch the Silver Bond which targets at people aged 65 or above. The total issue size of the two types of bonds would be up to $13 billion. If the bonds are well received, we could consider issuing more.

The issue of different types of bonds in Hong Kong, including iBond, Silver Bond, or other retail bonds by the Ministry of Finance of the Central Government or other enterprises, can facilitate the effective allocation of capitals, provide people with more investment options after taking into account their own risk appetite, and promote the further development of the bond market in Hong Kong.

October 4, 2020

Last week, I attended the Asia-Pacific Economic Cooperation (APEC) Finance Ministers' Meeting 2020, which was convened virtually. Member economies not only shared their anti-epidemic strategies as well as measures to support economy and safeguard jobs, but also discussed how multilateral cooperation can be strengthened to promote post-pandemic economic recovery. I also joined a webinar last week to exchange views with some European entrepreneurs, who recognised Hong Kong's efforts in combating the pandemic. While paying attention to the impact of the escalating Sino-US tensions on Hong Kong's status as an international financial centre, the entrepreneurs expressed strong interests in our financial and asset management services and in using Hong Kong as a platform to invest in the Mainland market.

Some analyses point out that the global economic order is being reshaped by the pandemic and international geopolitics. Against this backdrop, some suggest that the intermediary role of Hong Kong would diminish gradually. However, I reckon that it is a process of finding a new equilibrium – be it in the international landscape or Hong Kong's positioning – amid the changing circumstances. With the changes in economic structure and market demand, services and products provided by Hong Kong should be adjusted accordingly. It is crucial for us to have a good grasp of the situation, consolidate our edges and adjust our positioning and strategy, so that we can maintain Hong Kong's key – even leading – position in the global supply chain, capital flow and technology race.

While the global economy is still in recession, the Mainland economy has returned to growth in the second quarter. Many economic activities, even tourism and consumption, have regained momentum. Many foreign enterprises' businesses in the Mainland have seen noticeable growth, which have incentivised these enterprises to further expand their market in the Mainland. While international geopolitical relations may remain tense at times in the near future, the reality is that countries have to cooperate to foster a speedy economic recovery. The Mainland has earlier announced the dual circulation economic model, with domestic demand (internal circulation) taking a primary role in driving economic development, supported by international commerce and trade (external circulation). The mutually reinforcing circulations will ensure continuous two-way exchanges between the Mainland and the global economy. Factors of production, such as talents, goods, capital and technology, and market dynamics will bring new opportunities for Hong Kong's development.

Over the past several decades, from the establishment of China to her continuous reform and opening up, the intermediary role of Hong Kong has indeed undergone constant changes, strengthening and upgrading. The key is to flexibly adjust our direction according to the changing international politics and market demand. Take the changes of the capital market in recent year as an example. Currently, foreign investors can invest in the Mainland capital market directly through the Qualified Foreign Institutional Investor (QFII) or the Renminbi Qualified Foreign Institutional Investor (RQFII) schemes. Still, nearly 70% of foreign investors' A-share trading is conducted through the Stock Connect arrangement between Hong Kong and the Mainland, namely the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect. For the bond market, over 50% of foreign investors' trading of Chinese bonds in the Chinese Interbank Bond Market is carried out through Bond Connect, the turnover of which has already exceeded the overall turnover under QFII and RQFII.

In addition, MSCI, an international index company, has earlier announced the transfer of license of issuing index futures and options contracts based on a suite of indexes on Asia and Emerging Markets from the Singapore Exchange Ltd. to the Hong Kong Exchange & Clearing Ltd. This reflects Hong Kong's ability to draw investors from the international, regional and Mainland markets, connecting capital with projects, and investors with opportunities. Hong Kong is the best platform in the region to connect international talents, capital and enterprises.

The development path of Hong Kong has not been smooth. However, by overcoming enormous challenges and difficulties along the way, we have made Hong Kong the success we see today. We will overcome the pandemic someday. The imminent task for us right now is to make our best effort in fighting the pandemic, persevering the vitality of the economy, providing support to people hard-hit by the pandemic, and getting ready for future development.

September 27, 2020

The epidemic situation has been volatile since the beginning of this year. Various premises have been repeatedly required to suspend operation for the sake of epidemic control, resulting in a severe blow to the related businesses and employees. According to the latest statistics, the unemployment rate stood at 6.1% in the period of June to August 2020, the same as that in May to July 2020. The number of unemployed persons increased by around 5 800 to almost 250 000, doubling that of Q4 last year, amongst which a quarter are employees from the retail, accommodation and food services sectors. Take the food services sector as an example, its unemployment rate has been about 14%-15% in the past four surveying periods, much higher than the overall unemployment rate of 6.1%. The underemployment rate of the sector climbed up again from 6.1% in May to July to 8.3% in June to August, with around 20 000 underemployed persons. This reflects the tremendous pressure imposed by the epidemic on many sectors as well as the overall economy.

Effective control of the epidemic is the pre-requisite for restarting the economy, yet efforts in fighting against the virus and stabilising the economy are equally important. We need to take into consideration both aspects in deliberating related strategies and measures, with a view to addressing people's needs on health, family, economy and daily lives. Given the easing situation, some social restriction measures have been adjusted over the past few weeks, such as the slight relaxation in gathering and the seating cap per table in restaurants, extension of business hours for restaurants' dine-in services, and the reopening of those temporarily suspended premises under certain requirements, such as swimming pools, pubs and karaoke establishments.

I went out for a walk few days ago and noticed that restaurants had seen an improvement in business. Customers were also returning to reopened karaoke establishment. Staff working there told me that they are happy to do business again although normal operation is still not yet possible due to certain restrictions. They wish that the epidemic situation could be further improved so that their business and income can resume normal.

I believe seeing continuous improvement in the epidemic situation is our common wish. This enables us to return to our daily lives and fuels economic recovery. However, as the epidemic has yet been completely brought under control, we need to take a gradual and cautious approach in relaxing the restriction measures. There is still a long way to go before our economic activities can be fully resumed. All of us need to remain highly vigilant and maintain good personal hygiene.

Many health experts have indicated that the epidemic could hardly be tamed before the discovery of effective vaccine and its mass vaccination. And there may be a more severe wave of the epidemic to appear in winter. To prepare for that, we will continue to enhance our anti-epidemic capability in various aspects. At the same time, we will adopt a focused approach in supporting targeted sectors and individuals directly affected by the Government's anti-epidemic measures or hard-hit by the epidemic given our finite public resources.

Last week, we announced the measures under the third round of the Anti-epidemic Fund and other related anti-epidemic and support measures, which accounted for some $24 billion in total. Apart from the procurement of vaccine, the Government will provide assistance to the sectors and individuals whose income are directly affected by the Government's anti-epidemic measures or hard-hit by the epidemic. We will also increase the exemption ceiling of the rates concession to non-domestic properties, extend the waiver of water and sewage charges payable by non-domestic households, extend the rental concessions/waivers for government premises and short-term tenancies, as well as extend the waivers of 27 groups of government fees and charges. In addition, we have invited Hong Kong Housing Authority, Hong Kong Housing Society, Airport Authority Hong Kong, Hong Kong Science Park and Cyberport to provide rental concessions for their tenants. Some of them have already announced the details of the related measures.

The measures under the three rounds of Anti-epidemic Fund, together with the support measures under the Budget, involve over $300 billion in total, which is about 11% of GDP and is expected to have a supporting effect of slightly more than 5 percentage points of GDP on our economy. The consolidated deficit for the current financial year (2020-21) is expected to increase to over $300 billion, and our fiscal reserves will be reduced to around $800 billion, equivalent to around 12-13 months of government expenditure, close to the level after the SARS epidemic in 2003.

The global economy has been hard-hit by the pandemic and the tensions between China and the US continue to rise. Given the uncertainties and risks in the external economic environment, our road to economic recovery is paved with challenges. During a deep economic recession, the Government has to put forward counter-cyclical measures to support the economy. Yet as public resources are finite, we have to exercise fiscal prudence and preserve our fiscal strength, with a view to coping with known and unforeseen needs, as well as maintaining Hong Kong's financial stability.

September 20, 2020

As the epidemic has gradually subsided, some of the social distancing measures and operation restrictions on selected premises have just been further relaxed last Friday, including raising the restaurant seating cap from 2 to 4 per table. Over the last two days, many restaurants have seen a noticeable improvement in business. The epidemic over the past half year has indeed dealt a severe blow to restaurants and shops. We all wish that the epidemic could be tamed as early as possible, so that people's daily activities and travel could be resumed and enterprises could have their business improved. Although the number of daily confirmed cases has recently remained at a low level, quite some of them are cases which could not traced to a known source. The objective of the the Programme is therefore to identify asymptomatic patients with a view to breaking the chains of infection in the community, which is indeed crucial in ensuring the confidence of people and enterprises in resuming their daily routine and operation. I would like to appeal again to the citizens who have not yet taken the tests to do so by visiting a community testing centre by Monday, joining us in fighting against the virus.

As an international city, it is not possible for us to cut the flow of people and cargo between Hong Kong and other places. Nonetheless, given the highly contagious nature of the COVID-19 virus, we need to strive for eliminating cases with untraceable source and identifying asymptomatic patients in the community. Together with other effective measures for the prevention and identification of imported cases, we could create space for the resumption of daily lives, economic activities and people's travel, helping people and enterprises to regain confidence in future. It is even more important for us to set up a contingency mechanism for handling resurgence or small scale outbreak, so that the community can react and gear up quickly when needed to carry out large-scale testing and case tracing, with a view to containing the impact of any outbreak. Only by doing so, we could equip ourselves with the capabilities for handling resurgence and the possible winter outbreak proactively.

Learning from the experience in the past months, we understand that under the new normal of coexisting with the virus, many preventive measures may become routine arrangement. However, resurgence and outbreak should not become another routine. . Effective control of the epidemic is the key to support the economy and maintain confidence. This also has an impact on people's desire for travel and consumption, as well as the confidence of restaurants, shops and enterprises in business outlook. Among major economies around the world, the Mainland has achieved a remarkable result in both controlling the epidemic and supporting the economy. If Hong Kong could bring the epidemic under control and eliminate untraceable cases, we could ride on the testing capacity enhanced in the Programme to expedite the launch of the "health code", with a view to relaxing the travel restrictions on people flow between Hong Kong and the Mainland, as well as other places. This could give a boost to our economic recovery, benefit workers of different sectors, facilitate the reunion of families, and allow some travel.

Controlling the epidemic and restarting the economy are the most imminent tasks for us, as well as other places around the world. The Programme has enhanced our capability in conducting large-scale testing, and allowed us to gain useful experiences in the workflow of and coordination in specimens collection, logistics and testing arrangement. In addition, the society now has a deeper understanding on how a universal testing scheme actually works. If we could learn from the useful experience in operating the Programme, and turn those laboratory facilities with enhanced testing capacity into our general provision in our anti-epidemic works, we will have the ability to contain small scale outbreaks swiftly. Only by doing so, we would be able to pursue the dual-target of controlling the epidemic and supporting the economy, and rebuild hope of people and enterprises for the future.

September 13, 2020

On the first day of the Programme, I joined the entire political team of the Government to take the test, which is short and smooth. A few days ago, I visited the community testing centre at the Hong Kong Science Park to inspect the operation of the centre and to give encouragement to the staff working there. My thanks also goes to all the frontline medical staff, civil servant colleagues, support staff and other organisations running the Programme for their contributions to Hong Kong's anti-epidemic work.

As some testing centres have almost reached their full capacity and are fully booked for testing appointments, the Government has announced to extend the Programme for four days to September 11. I would like to appeal to all citizens who have not yet registered for the programme to take the test for the health of yourself and your family.

On the economic and social front, the Programme has positive spillover effects because if we do not identify the asymptomatic patients as soon as possible, when the restriction measures are to be lifted in future to restart economic activities, we will face the risk of resurgence which may lead to the need to restate those measures. This vicious cycle will dampen the recovery of our economy as well as the resumption of daily lives.

At present, our imminent task is to tame the epidemic as soon as possible, so that gradual relaxation of restriction measures would be allowed to facilitate economic recovery. At the same time, we have to equip ourselves for the economic development and business transformation under the "new normal" amid COVID-19.

In fact, the COVID-19 pandemic has brought a tremendous impact on the development and structure of the global economy. To adapt to the "new normal" under the epidemic, many business sectors have already sped up the application of technology in their operation, such as virtual meeting, e-commerce, online order and delivery service, smart self-service system, online customer service, online work-flow management, as well as electronic payment. The digitalisation of and the application of technology in all sectors have become an irreversible trend.

To support enterprises to adopt IT solutions to continue their business and services during the epidemic, we have launched the Distance Business (D-Biz) Programme under the Anti-epidemic Fund. The funding ceiling is HK$100,000 for each IT solution and the relevant training expenses for the employees, while the funding ceiling per enterprise is HK$300,000. Since its launch in May, the D-Biz Programme has received more than 18,000 applications, amongst which about 75 per cent were approved with a total funding of over HK$ 760 million. In view of the overwhelming response from enterprises, we have allocated an additional funding of HK$1 billion to the Programme and implemented enhancement measures.

In addition, the pandemic has changed the daily routines and consumption patterns of many people. These new routines and demands will very likely remain even after the pandemic is over. On the one hand this means challenges to the existing mode of operation for many businesses, but on the other hand it brings new business opportunities and discovers unknown possibilities of the future economic and industrial models.

Last week, I visited the co-working labs and spaces for biomedical technology in the Science Park and met with three biomedical technology partner companies of the Park to understand more about the latest development of the sector. I was pleased to learn about the remarkable progress they have made in Hong Kong. One company has developed a real-time monitoring system which can trace the health data of patients remotely through a wearable device. The system has been adopted by the Hospital Authority in the monitoring of isolated COVID-19 patients, which helps to reduce the risk of infection. Another company focuses on the development of precision monitoring and treatment for cancer through next-generation sequencing technology, with the long-term objective of lowering the cost of cancer diagnosis and treatment.

The development of biomedical technology, as well as other sectors in innovation & technology are of utmost importance to the future economic and social development of Hong Kong. Even facing economic recession and financial pressure, the Government is determined to promote the development of innovation & technology and will continue to invest in the area with the aim of creating room for Hong Kong's future economic development.

September 6, 2020

Nonetheless, the number of daily new cases still seesawed in recently days from about 10 to 20 cases per day, amongst which more than 30% could not be traced back to a known source of infection. This reflects the challenges brought by the hidden chains of infection in the community to our anti-epidemic work, posing threat to the resumption of people's travel and economic activities. Only by breaking these hidden chains, we could effectively protect our own health and the health of our families, and resume our normal daily lives.

The Universal Community Testing Programme (the Programme), which will commence on the coming Tuesday, is meant to serve this purpose. By identifying asymptomatic infected persons in the community and providing them with suitable medical treatment, we can protect their health and avoid the spreading to their families and friends, with a view to breaking the hidden chains of infection in the community.

Some people may be reluctant to join the Programme for different reasons. But if we give a deeper thought, it will be a suffering to us all if the chains of infection could not be broken and new infection cases persist, as we may have to stay at home for a long period of time for epidemic control purpose as a result. In addition to the inconvenience caused to daily lives, this would also weaken our economy and lead to reduction in income, or even affect our mental health.

If the trend of having about 10 to 20 daily new cases continues, there will be hundreds of people getting infected every ten days, and their close contacts with risk of infection will be even more, putting many families under pressure. While there are speculations on the cost-effectiveness of the Programme, for the sake of people's health and our economy, we should support any measures that could break the hidden chains of infection and stabilise the economy at the same time.

The political team of the Government will take the test this week. I would like to appeal to enterprises and chambers of commerce to make flexible working arrangement to facilitate their staff to take part in the Programme, so as to protect the health of their staff and clients.

Lifting the restrictions on evening dine-in services by restaurants, as well as allowing the resumption of operation for some previously affected premises, are our first step in resuming social and economic activities. Once we can break the hidden chains of infection, and continue to curb the epidemic and maintain good hygiene together, people's daily lives and the operation of businesses could be resumed to the largest extent, facilitating Hong Kong's economic recovery.

During this testing time, the Government has rolled out a series of measures and polices to support different sectors. With the supporting measures implemented under the two rounds of the Anti-Epidemic Fund and the Budget, the estimated deficit in 2020/21 would likely increase to about HK$ 290 billion. The fiscal reserve is expected to drop drastically from some HK$1,100 billion in end March to about HK$800 billion, equivalent to about 13-month of the Government's expenditure. This level of fiscal reserve is very close to that in 2003 after the SARS epidemic, which was equivalent to about 12-month of the Government's expenditure. In order to maintain sound public finances as well as the market's confidence, it is obvious that the continuous surge in the expenditure could not be sustained. On one hand, we need to reserve our strength in coping with the financial requirements brought by any possible resurgence and outbreak in winter . On the other hand, when our economy was last hit by the Asian Financial Crisis and other events, a quick V-shape recovery was shown as a result of the support measures by the Central Government and the good economic performance of our major trading partners at the time. Whereas for now, given the worsening global economy under the pandemic and the growing China-US tensions, the world economic outlook is gloomy and highly uncertain. We have to equip ourselves with sufficient resources and fiscal reserve to face the possible challenges ahead and maintain financial stability. Therefore, as we are entering a new phase in the pandemic in which we have to co-exist with the COVID-19 under the "new normal", our support measures in future should be rationalised and adjusted suitably to ensure the public money are used effectively with a focus on those in need.

Controlling the epidemic and supporting the economy have to be the dual targets of the Government's policy. With a multi-pronged approach to address the epidemic, economic needs as well as people's stress, we could unite together to fight against the virus and enable the sustainable development of our economy. Although the Programme is not flawless, it is the best we can arrange with our enhanced capability under the support of the Central Government. By breaking the hidden chains of infection proactively, we can focus our future work on the prevention of resurgence and resumption of economic activities, so as to safeguard people's livelihoods and income. Only if the epidemic is subsided, we would be able to resume the travel between Hong Kong and the Mainland plus Macao for a stronger push to economic recovery, and facilitate travel to other places under the arrangement of "travel bubbles".

Let us join hands to win this battle against the epidemic, and to save the economy and our livelihoods.

August 30, 2020

To identify asymptomatic affected persons through screening and testing, we could arrange quarantine and suitable medical treatment for them so as to safeguard their health, ensure the safety of their families, friends, colleagues as well as the community, and break the chain of infection.

With the support from the Central Government and the SAR Government's effort, we have greatly enhanced our testing capacity and set up additional facilities of quarantine and treatment. The number of beds will increase from some 3000 currently to more than 5000 by the end of this year, facilitating the isolation and treatment of affected persons.

On screening and testing, apart from strengthening the free testing service for targeted groups with higher risk, we are also going to launch the Universal Community Testing Programme for citizens to join on a voluntary basis with the assistance of the Central Government. I would like to express my gratitude to the Mainland nucleic acid test support team, who arrived a few days ago, for their keen support to Hong Kong.

The Universal Community Testing Programme, which will run for two weeks, will commence next Tuesday (September 1) to provide one-off virus testing services free-of-charge to all Hong Kong citizens. There will be an online booking system to prevent crowding of people at testing centres. We understand that some people may be reluctant to join the Programme due to different reasons, but for the sake of their health and that of their families and friends, and for the overall interest of the society, I sincerely appeal to you all for your participation. With more people taking part in the testing programme, the higher chance that we can reduce the risk of community infection. If every one of us can take one more step, we will find the way to win the battle against the virus, and go back to our daily lives and restart our economy.

It is noteworthy that among the recently confirmed cases in Hong Kong, the fatality rate is noticeably higher for the elderly. We have to break the hidden chain of infection to remove the threat posed to them. And only by doing this, we will have a chance to resume our daily activities and travel, and help hard-hit enterprises and workers to get out of the woods.

The COVID-19 pandemic has already dealt a severe blow to human life and the global economy. Resurgence of the epidemic is common around the world whenever restriction measures are lifted, reflecting the difficulties in striking a right balance between epidemic control and economic dynamic. Based on our experience learned over the past half a year and so, our strategy at this stage is to adopt a two-pronged approach: to control the epidemic and support the economy at the same time. Although the most imminent task right now is to contain the epidemic and break the hidden chain of infection, we also need to consider how to strengthen the cooperation and consensus among the community, so that our "suppress and lift" strategy can be implemented more flexibly. Facing the "new normal" of coexisting with COVID-19, we should aim at controlling the epidemic in a fast and effective way with flexible response to any resurgence, and at the same time allowing economic activities to take place at a manageable risk level, so that our anti-epidemic measures would not drag down the economy. Different bureaux have been actively engaging with their respective stakeholders with a view to working out a solution. Although social distancing measures could effectively curb the spread of the virus, we understand that in a longer run, it is impractical to restrict people from going outside and restrict the operation of selected businesses, as they will pose negative impacts on people's lives in different aspects, and deal a severe blow to the economy.

While the global fight against COVID-19 continues, we have to work out a suitable way forward for Hong Kong to break the chain of infection, control the epidemic, and support the economy, so that daily lives, travel, and people's income can be resumed to the largest extent. Let us set aside differences and speculations, and join the Universal Community Testing Programme together to help Hong Kong contain the epidemic as soon as possible.

August 23, 2020

However, in face of the impact brought by the pandemic, the global economic depression, as well as the mounting China-US tensions, the depth and the duration of Hong Kong's economic recession this time round are out of our expectation, seriously affecting enterprises and workers from different sectors. For instance, the unemployment and underemployment rates have been getting worse over the past few months. The pain being felt by workers is at a level much worse than that in the 2008 Global Financial Crisis. Hardest-hit sectors such as catering, retail and tourism are in a more acute situation.

So, when shall we see the dawn of economic recovery? Domestically, it depends on when our anti-epidemic works can effectively bring down the number of new confirmed local cases, facilitating the gradual resumption of people's daily lives and economic activities. Externally, it depends on when other countries could curb the pandemic, and also the development of the China-US relations. Indeed, for Q2 this year, Europe, US and Singapore have all seen a double-digit percentage decline in economy. Their economic outlook could hardly be optimistic before the epidemic is contained.

In the coming future, to adapt to the "new normal" of co-existing with the COVID-19 virus, we have to adopt a two-pronged approach: to curb the epidemic while supporting the economy at the same time. As seen from the experience of places around the world, if we only focus on implementing social gathering restrictions and contact tracing, we may slow down the spreading of the virus, but may not be able to break the chain of infection. Yet such measures would put further stress on the already troubling economy. To fight against the epidemic, it is crucial for us to have the capacity in conducting large-scale testing, as well as adequate quarantine and treatment facilities. With the support and assistance from the Central Government, the SAR Government will be better equipped in these two aspects very soon. While we have already strengthened our targeted testing on high-risk groups, our next step is to identify infected persons through the universal voluntary testing scheme, so that instant quarantine and medical treatment could be provided. And by breaking the hidden chain of infection, people's travel and daily lives could be resumed, facilitating the recovery of our economic activities. Only if the epidemic is brought under control, we would be able to resume the travel between Hong Kong and the Mainland as well as other places, giving a stronger push to economic recovery.

With the supporting measures implemented under the two rounds of the Anti-Epidemic Fund and the Budget, the estimated deficit in 2020/21 would likely increase to about HK$ 290 billion and the fiscal reserve is expected to drop from some HK$1,100 billion in end March to about HK$800 billion. This has not yet taken into account the impact of the expected decrease in revenue from taxes and land sale. The current third wave of infections is not over yet and experts have already predicted that there could be another wave of outbreak for winter. As in the case of Auckland of New Zealand, the epidemic resurged after the city had recorded zero new cases for a long period of time. And even with the discovery of vaccine in future, the pandemic may not be over in a year or so. Facing such a difficult and uncertain situation, the Government needs to remain prudent financially. When we provide financial assistance to relieve the pressure of enterprises and people, we have to ensure the proper use of public money and try our best to avoid the rapid shrinking of our fiscal reserve, so that we will continue to be capable of addressing the needs of the society and safeguarding Hong Kong's financial stability. As regards anti-epidemic efforts, such as facilities, testing, vaccine and manpower, we will allocate sufficient resources in order to safeguard the health of our people.

The Government fully understands the pain being felt by different sectors and is considering how to enhance our support. However, the effect of any supporting measures is limited and temporary. Only the restart of the economy can help increase the income of enterprises and workers.

We will also provide suitable assistance through measures with leveraging effects. For instance, The Hong Kong Monetary Authority together with the Banking Sector SME Lending Coordination Mechanism (Mechanism) have recently further extended a repayment deferment for 90 days for trade facilities under the Pre-approved Principal Payment Holiday Scheme. The Mechanism has already rolled out four rounds of relief measures for corporate customers, including the above Scheme, loan tenor extensions, and the conversion of trade financing lines into temporary overdraft facilities. As at the end of June, banks had approved over 42 000 related applications to support their corporate clients, involving an aggregate amount of over HK$500 billion.

August 16, 2020

Furthermore, without substantial details and evidence, the US has recently issued a President's executive order to ban the operation of the Chinese-background TikTok in the US with the allegation that TikTok is a national security threat. The US also forced TikTok to accept an acquisition and demanded that a substantial portion of the proceeds going to the US Treasury. However, the fact is that the company's servers for their business are placed in the US and there is no evidence showing the transferring of any personal data of its US users outside the territory. This incident shows that even a company operates legally in the US, it could still become a target of "bullying" or even "robbery" just because that its success in the market has threatened the US's dominance in certain aspects. Recently, the US has launched the so-called ‘Clean Network' programme with an aim to shut out Chinese companies from the US internet. These moves have blatantly undermine the claimed institutional values of the US, such as free market, rule-based operation and fair competition, and will eventually damage market's confidence.

All these acts are displaying double standards of the US, and adding doubts as to whether some so-called universal values claimed to be upheld by the US are indeed hypocritical propaganda.

Learning from history, for a country to take a leading role in the international political and economic aspects, it needs to enhance its competitiveness relentlessly. Hegemony and intimidation are not key to success in the long-run. Only by treating others fairly and on a mutually beneficial basis, a strong country could genuinely earn the respect of others.

The legislation of the Hong Kong National Security Law aims to safeguard the Country's sovereignty and safety, which is our legitimate right. However, the US took this as an excuse to pursue a series of high-profile despicable acts against China. As many critics have pointed out, Hong Kong has already become the frontline battlefield of the China-US conflicts, which justifies the urgent need for a national security law in Hong Kong. In any case, safeguarding the national security is a fundamental issue with no room for compromise. We do not have to be afraid of the so-called sanctions. With the solid support of our Country, what we need to focus on is to equip and improve ourselves to become stronger and more competitive.

Facing the complicated external environment, and probably a critical juncture of the century, the future direction of economic development of the Country is to expedite the construction of a more comprehensive system of domestic demand, and develop more new points of growth through innovation. By doing so, a new development model of a domestic economic network as the primary role, while having the dual domestic and international economic networks complementing each other could be built for the Country. For Hong Kong, what that will bring to us is the vast consumption potential from a bigger mass of middle-class, as well as a greater demand for high quality services and supply chain management. As for the financial sector, more technology-related and light-asset companies will have the need for fundraising and other professional services. Under the unique arrangement of "One Country, Two Systems", Hong Kong could certainly maintain our institutional strengths and other advantages, and contribute in the development process of the Country while furthering our own development.

Nonetheless, the most imminent challenge facing Hong Kong right now is to effectively curb the spread of the COVID-19 epidemic. The strategy of "early identification, early isolation and early treatment" has proven to be effective in fighting against the epidemic. However, with infected persons showing no symptom staying in the community, we could hardly break the hidden chain of infection. As seen from the experience in the Mainland, by conducting universal testing to identify the infected persons to the largest extent, together with suitable treatment, it could help provide a safer environment to facilitate the resumption of social and economic activities.

Based on the result of the Government's targeted testing on selected groups, it is expected to have some one thousand infected persons with no symptoms in the community. If we do not adopt a more proactive approach in identifying and treating them, our work against the epidemic will become more difficult, and the society and the economy will be facing a long-term risk of disruption. With the support in manpower and resources from the Mainland, Hong Kong's capacity in virus-testing and medical treatment has been greatly enhanced, enabling us to introduce a more comprehensive community testing scheme. As infected persons with no symptom are also highly infectious to others, for your and your families' health, for the effect of our anti-epidemic efforts, and for the speedy recovery of our economy and daily lives, I appeal all of you to take part in this voluntary testing scheme.

August 9, 2020

Globally there are currently more than 17 million confirmed COVID-19 cases, of which about 4.5 million are reported in the US, accounting for a quarter of the world's total. As the outbreak there has shown no signs of abating, the US economy remains in deep recession. Real GDP contracted by 32.9% on an annualised quarter-to-quarter basis in the second quarter, after declining by 5% in the first quarter, marking the worst-performing quarter in history. The French and German economies recorded negative growth of 13.8% and 10.1% respectively from the first to the second quarter.

As for Hong Kong, the economic situation is worrying. After contracting by 9.1% year-on-year in the first quarter, real GDP plunged further by 9% in the second quarter. As for the "three locomotives" of our economy, private consumption expenditure fell by 14.5% year-on-year in the second quarter, 3.9 percentage points wider than that in the first quarter. Overall investment, as measured by gross domestic fixed capital formation, also recorded an enlarged fall of 20.6%. As for exports, the decline in total exports of goods narrowed from 9.7% in the first quarter to 2.1% in the second quarter. However, the tourism industry remained at a standstill amid disruptions caused by the pandemic, and exports of services plummeted by 46.6% in the second quarter. This notwithstanding, the decline in retail sales value narrowed from 32.9% in May to 24.8% in June as the epidemic eased somewhat and our daily routines partially resumed. These data suggest that the epidemic is the largest constraint on economic activities.

Hong Kong is seeing a third wave of the epidemic since July. For the period from July 8 to the end of July, there are 1850 confirmed cases, which is 40% more than the total number of cases reported in the first half of this year, while recent daily figures still exceed 100. Against this backdrop, it is likely that Hong Kong's economy in Q3 will be facing even greater pressure.

While the US and the Europe were in deep recession, the Mainland economy already regained momentum, with real GDP growing by 3.2% year-on-year in the second quarter, reversing the 6.8% contraction in the first quarter. As we can see in the Mainland, even though there may be confirmed cases reported occasionally in individual cities, the strategy of "early identification, early isolation and early treatment" has effectively control the epidemic. We are now working hard to significantly enhance the testing capacity in Hong Kong, with a view to identifying COVID-19 patients, including those without symptoms early and providing them with suitable treatment, so as to safeguard the health of the patients, their families and friends, as well as the community. Coupled with social distancing measures, the above framework would allow us to suppress the epidemic more effectively, which in turn can facilitate the resumption of economic activities and normal daily life while ensuring public health and safety.

Thanks for the Central Government's full support in providing Hong Kong with manpower and resources in fighting against the epidemic, such as the building of "mobile cabin hospital" or new temporary hospital, as well as the conducting of large-scale COVID-19 community testing. All these could help Hong Kong to control the epidemic as soon as possible.Some people may doubt or even resist the assistance provided by the Mainland. However, the anti-epidemic strategy and measures adopted by the Mainland have indeed achieved remarkable results. Zero cases have been reported in many Mainland cities, and people there are therefore allowed to resume normal daily activities while maintaining high vigilance in epidemic prevention. We have to learn from these useful experiences to suppress the epidemic in Hong Kong as quickly as possible, so that people do not have to over worry about the risk of infection and can resume their daily lives, travel and work.

The most imminent task for us now is to fight against the epidemic, while supporting the economy and people's livelihood at the same time. During this testing time, the Government would consider how best we could support those affected by the pandemic. Nonetheless, with finite public resources, providing unlimited Government subsidies would not be a sustainable solution to the problem. In my view, we need to enable two "networks" in order to support people's livelihood and stabilise the economy.

1. The internal network: first of all, we need to bring the epidemic under control and clear all cases, allowing people to resume normal daily lives and travel, so that the local economy could regain its momentum.
2. The external network: many places around the globe is still struggling with the pandemic, hindering the resumption of Hong Kong's businesses, travel and other activities related to those places, whereas the epidemic in the Mainland has subsided and people can go out again. Once the epidemic is abated in Hong Kong , we can explore the setting up of "travel bubble" to allow people with a "health code" to travel between Hong Kong, Mainland and Macao for work and leisure. This could help our business activities to recover in full speed, which can in turn improve the income of employees in the relevant sectors such as tourism, retail and catering.

If we could enable this two "networks", and grasp the development opportunities brought by the Mainland's vast market and the Guangdong-Hong Kong-Macao Greater Bay Area development, our economy will likely see an earlier recovery, thereby increasing the income of enterprises and employees, and improving people's livelihood. Similar arrangement could also be gradually extended to other places in the Asia-Pacific region where the epidemic is under control, so as to facilitate further recovery in business and travel.

Facing this unprecedented pandemic, putting forward any measures in tackling the disease is not easy, or even controversial sometimes. One example is the decision of postponing the Legislative Council General Election. Though battling against the epidemic has always been difficult, it is of utmost importance for us to protect people's lives and health. Any efforts that are conducive to controlling the epidemic should not be hindered by political conflicts. The virus can only be eliminated by effective anti-epidemic measures, but not political quarrels. I appeal to everyone to set aside our differences, stand united and work together to get through the epidemic.

August 2, 2020

Over the past few months, many places around the globe have been struggling with the pandemic. To brace for a long battle against the virus, we have to keep up our vigilance and endurance and strike a right balance between epidemic control efforts and economic dynamic. When the situation gets worse, we have to prevent imported cases and break the chain of infection quickly. Once the situation is brought under control, we should resume economic activities timely, so as to avoid "pandemic fatigue" or damage to the economy.

The Government announced to further limit public gatherings last week. Restaurants are not allowed to provide dinner dine-in services, and some premises have to close temporarily. As the COVID-19 virus are highly infectious with a longer incubation period, it may take some time for the latest round of measures to show their effect through figures. During this period, we have to continue to monitor the situation closely, conduct dynamic assessment and be decisive in adjusting the measures. We need to have determination and endurance in carrying out the measures, as well as the vigilance in making swift response.

On the economic front, the already recovering business and economic activities are facing another blow due to the new wave of infection. I appeal to property owners again to reduce rents to help the retail shops, restaurants and other small and medium enterprises to tide over testing times. In the business world, apart from honouring the spirit of contract, shouldering social responsibilities is equally important. This is particularly the case for corporations receiving substantial amount of Government subsidies under the Employment Support Scheme. Only by making sincere contributions to the community and be socially accountable, enterprises could truly win the recognition and respect of the society.

Economic conditions in Hong Kong remained austere in the second quarter, though the contraction seemed to have eased somewhat and gradually stabilised. Retail sales volume still fell visibly by 33.9% in May, but the decline narrowed from that of March (-44.0%) and April (-37.5%). While retail sales figures for June are yet to be released, the decline might have narrowed further as the local epidemic abated and economic sentiment improved during the month.

As for exports, the external environment remained challenging with major economies sinking into deep recession. On the positive side, the swift recovery of the Mainland economy in the second quarter rendered support to Hong Kong's merchandise exports, partly offsetting the sharp fall-off in global demand. The year-on-year decline in the volume of merchandise exports narrowed from 9.1% in the first quarter to 4.8% for April and May combined. Nevertheless, as tourism remained at a standstill, exports of services still took a big hit. Investment activities also stayed weak amid uncertain outlook.

In the short run, the COVID-19 pandemic remains a key threat to the global economy and the economic outlook continues to face huge uncertainties. Furthermore, the abrupt worsening of China-US politico-economic relations and heightened geopolitical tensions also added uncertainty to the global economic outlook. These, together with the recent recurrence of the local epidemic, suggest that it may take longer than originally expected for the local economy to recover.

Nevertheless, the development course of the city in the past few decades demonstrate that there lies new opportunities in every crisis, and every difficulty holds the key to future development. Although COVID-19 has taken a toll on the economy, it also highlights the direction to which economic activities should be reformed or strengthened in the future.

For instance, thanks to our advanced digital infrastructure, our financial services sector and certain economic activities have been operating as usual during the epidemic. Digital technologies have enabled a wider range of industries to work from home or maintain effective operation in a remote mode. Besides, under social distancing restrictions, online shopping and foods delivery have become increasingly popular. Shops with online sales channels could hence partially offset the blow dealt by the epidemic. Conceivably, exploring how to develop and strengthen online sales channels would be the way forward for many industries and companies. In this regard, it is necessary for us to promote innovation and technological application in a holistic manner to possibly stand out from competition. On tourism, as we navigate through the epidemic, we should make early plans to explore the new model of operation and development under the "new normal", and putting priority to promoting high-value added tourism projects should be the future direction.

On the other hand, in the face of escalated China-US tensions, profound changes in the international landscape and the signs of de-globalisation, in addition to the Mainland economy having the domestic economic network taking the primary role while having the dual domestic and international economic networks complementing each other, how Hong Kong enterprises should position and transform themselves to better grasp the opportunities is also worth pondering.

July 26, 2020

Since the enactment of the Law, Hong Kong's financial market continues to operate smoothly as usual. The Hong Kong dollar exchange rate has remained stable and stayed near the strong side convertibility undertaking. There has not been any noticeable sign of fund outflow from the banking system. In contrast, we have seen an inflow of over US$ 11 billion into Hong Kong dollar since June, and bank deposits have continued to increase over the past months. Stock markets stay vibrant and orderly, with a continuous flow of IPO activities attracting strong market interest.

Recently, we have been reaching out to a broad range of financial institutions in different sectors. Their general feedback is that the Law will help resuming a safe and orderly business environment, which is of utmost importance for Hong Kong's continued development as an international financial centre. Given the importance of the Law and the concerns raised by some financial institutions over its application, I would like to highlight the following key points.

First of all, the Law is intended to target only the four specified types of acts and activities with an intent to seriously endanger national security. They will not affect the operation of the financial market, lawabiding financial institutions and market participants. The Law is not intended to affect the way they conduct business, engage in market activities or allocate their capital. The way in which they handle their proprietary data, access or transmit information, conduct commercial analysis or express opinion will neither be affected. It will not affect the normal exchange activities between individuals and organisations with their foreign counterparts. In other words, it would be business as usual for financial institutions operating within Hong Kong's existing legal framework.

As a free and pluralistic society, Hong Kong's success as an international financial centre thrives on the rule of law, free flow of information and capital, and freedom of speech and expression, etc. These fundamental values are upheld under the Law to ensure the continuous prosperity and stability of Hong Kong. Let me underline a few assurances reiterated by the Central Government and the Hong Kong SAR Government:

• The Law will not affect the legitimate rights and freedom enjoyed by Hong Kong people under the Basic Law as well as the relevant provisions of international covenants as applied to Hong Kong;
• The Law will not affect Hong Kong's judicial independence and the principles of the rule of law;
• The Law sets out to preserve "One Country, Two systems". Hong Kong's existing high degree of autonomy, legal system and capitalist system will remain intact, and the legitimate interests of foreign investors will continue to be protected; and
• The Law will not change Hong Kong's monetary and financial system. The Linked Exchange Rate System will remain and free flow of capital is guaranteed under the Basic Law.

Last Friday, I wrote to the Hong Kong Monetary Authority, the Securities and Futures Commission, the Insurance Authority and the Mandatory Provident Fund Schemes Authority to reaffirm these points, and asked them to brief their respective stakeholders and address their concerns.

With the support of our Country, the Hong Kong SAR Government has the determination and capability to safeguard Hong Kong's continuous prosperity and stability. We will continue to build a world-class business environment and regulatory framework to maintain investors' confidence in operating in Hong Kong. With the concerted efforts from all parties, I believe time will prove that the national security, prosperity and stability, as well market vitality can be all well achieved in Hong Kong, laying a more solid foundation and creating more development opportunities for enterprises here. The continuous implementation of the unprecedented "One Country, Two Systems" arrangement in Hong Kong will provide us with flexibility and institutional strengths to grasp the enormous opportunities brought by the Guangdong-Hong Kong-Macao Great Bay Area development as well as the continuous reforming and opening up of the Mainland.

Over the past few years, Hong Kong has been on the track of stable development by seizing opportunities around us. Yet our pace of development has been hindered by the violent acts happened in the latter half of last year. The enactment of the Law has shown obvious effect in restoring social stability, and it is understandable that it may take some time for the market to adapt to it. For the so-called sanction measures invoked by the US recently, although they may have raised some doubts in the market, their substantial impact on Hong Kong's economy is limited. Nonetheless, the move of the US seriously violates international law and the basic norms underpinning international relations. It has clearly demonstrated its double standards and hegemony by opposing other countries' move to protect their legitimate security and interests, while advocating the importance of national security in their own country. To this, we have to express our strong objection.

July 19, 2020

The unclear epidemic situation has added uncertainties to the road to economic recovery. With most citizens staying in Hong Kong due to the pandemic, this summer holiday used to be a golden period to boost local consumption and bring more businesses to retail shops and restaurants. However, as people reduces social gathering due to the latest epidemic situation, consumption activities may be delayed, affecting our economy to some extent.

Indeed, the efforts for both fighting against the disease and economic recovery are a test of our endurance.

The Government's anti-epidemic strategy is to strike a right balance and make timely response. When facing a surge in the number of cases, we have to tighten up restriction measures to suppress the increase so as to protect the health of the people and prevent the overload of our health and medical system. When the situation is brought under control, we should lift the restrictions in a timely manner so as to minimize impacts to the economy as well as inconvenience caused to people.

On promoting economic recovery, our strategy is to respond flexibly and maintain people's confidence. For example, even the number of confirmed cases bounced up again recently, many people do online shopping while staying at home. As long as we can maintain people's confidence in economic outlook and adequate capital in the market, people will for sure go out for shopping and dining again once the epidemic is subsided. During this testing time, if shops could make better use of their online sales platform to maintain business, they will be able to attract more customers through their physical shops once the economy starts to recover.

Economies around the world have gained experience over the past months in fighting against the pandemic. Keeping a high awareness of hygiene and taking preventive measures are important. Although going out less is also useful in combating the disease, prolonged suspension of most of the economic and livelihood activities could weaken our capability in fighting against the virus in the long run. Therefore, it is essential for us to maintain some of the economic activities and fulfill the daily living needs of people when we continue with our anti-epidemic efforts.

To stimulate consumption and maintain the confidence of the market, the HK$ 10,000 Cash Payout Scheme (the Scheme) is a significant part of our strategy.

Since the Scheme started to receive registration on June 21, more than 6.2 million registrations have been received as at last Friday. About 80 per cent of these registrations (i.e. 5 million registrations) were submitted electronically through banks, and most of them have started to receive the payment since last Monday. I would like to express my gratitude again to the banks, Hongkong Post, and other departments for their efforts made, as well as the support of the citizens, which contributed to the smooth implementation of the scheme.

As the ratio of registrations submitted through banks electronically is higher than expected, authentication procedures could be streamlined and the processing time could be speeded up. Therefore, citizens submitted registrations by using paper forms to receive payments through cheque or bank account transfer will start getting the payment by this Wednesday (July 15), which is five days earlier than our original plan. For the 630 000 citizens registered by using paper form under the first batch (i.e. those born in 1955 or before), if they choose to receive payment through bank account transfer, the payment will be credited to their designated bank account on this Wednesday. For those choosing to collect cheque, they will receive notifications from the Hongkong post on cheque collection.

Whether it is about boosting the economy, or fighting against the virus, we will deliver our best to bring the pandemic under control, maintain people's confidence and stabilise the economy.

July 12, 2020

Thanks to the support of the citizens, efforts made by the team, as well as the efficiency brought by digitalisation, about 4.3 million eligible citizens registered electronically via banks on or before June 30 will start receiving payment within two to three days from tomorrow (July 6), which is two days earlier than our original plan. People submitting electronic registration via banks from July 1 will also receive payment about one week after registration. For those not yet registered, I encourage them to register electronically through banks to receive payment through bank account transfer. For those submitting paper registration forms, they will also receive the payment later this month or next month by phases.

It is expected that more than HK$ 40 billion funding will be disbursed to the citizens' accounts in the coming week, and people registered subsequently will also receive their payment in turn. This lump sum of money not only will boost local consumption, but also trigger spill over effects to benefit other services sectors. The monthly value of total retail sales and the monthly income of the catering industry in Hong Kong are about HK$ 27 billion and HK$ 7 billion respectively. Therefore, even if only part of that tens of billions of funding flows into the market, effect will be shown for certain. The coming two months would be a golden period for consumption for local restaurants, shops and enterprises, providing substantial support in stimulating the economy and safeguarding jobs. I understand that the catering industry is pursuing a large-scale promotional discount campaign and different shops and malls are going to launch various concessionary plans to attract consumers.

Some may doubt about the stimulus effect of the tens of billions of funding as not all of the funding will be spent in the market after the payment is credited to citizens' bank accounts. In fact, consumer behaviours are often influenced by atmosphere and spending confidence. People buy and consume for many different reasons. While some are for basic needs, many consumptions are triggered by atmosphere and mood. Yesterday, I joined a social enterprise in Kowloon to give out meal boxes. Many elderlies shared with me happily that they planned to spend the cash payout on dining and clothing. I believe the Scheme could help creating a good consumption atmosphere and stabilising people's confidence in spending.

Indeed, no matter how much we have spent, the feeling and power of working hard together is far more important. And no matter how we are going to spend, when we do it with friends and family members, we can feel relaxed and happy, and the care and love in between.

Although I have yet to register for the cash payout, I have already spent them "in advance" to sponsor a social enterprise's free meal boxes to elderlies in need, and order cookies from another social enterprise for children in NGO's sheltering homes. Love can grow by sharing. By sharing what we have with family, friends, and those in need, we can bring care and love to them, and are indeed blessed.

The National Security Law in the Hong Kong SAR has come into effect and safety and stability are being restored gradually in the society. Let us join hands together to create a good atmosphere for consumption, so as to provide room for our struggling economy to recover and safeguard the livelihoods of the workers and their families. With the implementation of the HK$290 billion of supporting measures from the two rounds of Anti-epidemic Fund and the Budget, subsidies have been gradually delivered to the targeted sectors and citizens. Coupled with a stable and peaceful society and continuous improvement of the external environment, hopefully economic recovery will start to be seen later this year.

July 5, 2020

In the legislation process, the Standing Committee of the NPC had taken into account views from different parties and struck a suitable balance between safeguarding the national security and protecting individuals' right and freedom. While the Central Government has the ultimate authority on the issue of national security, the HKSAR Government still has a stake in the legislation. This arrangement honours the high degree of autonomy of Hong Kong and the legal differences between the Mainland and Hong Kong, upholding the principle of "one country, two systems".

The so-called sanctions inflicted by the US, using the national security legislation for the HKSAR as an excuse, have inevitably aroused the market's concerns over their impact on Hong Kong, and added new uncertainties to the continuous conflicted relationship between China and the US. Nonetheless, the HKSAR Government has carried out comprehensive assessments on the situation and drawn up contingency response plans. As we can see from the development in international politics in recent years, our country has been facing a very complicated external environment and the national security has become a fundamental, substantial and imminent issue to be addressed. The HKSAR Government shall shoulder our obligation to deliver and move forward. .

The political team of the Government has been closely engaging with different sectors recently to elaborate on the legislation issue, as well as to tap the pulse. For the banking and wealth management sectors in the financial services industry, the banks and their clients generally agree with the need for the legislation in safeguarding the national security in Hong Kong, which will help restore social order and safety and create a stable and favourable social environment for businesses, investments and living.

On flow of capital, we understand from the trade that so far there has been no noticeable capital flight. As shown in figures, the Hong Kong dollar exchange rate has remained on the strong side of the convertibility zone of HK$7.75 to one US dollar, and reached the strong-side convertibility undertaking on many occasions since April this year. The Hong Kong Monetary Authority has injected a total of some HK$57 billion to the banking system in the same period. At the same time, the HIBOR rate also remains low. All these are signalling a net inflow of fund into Hong Kong, enhancing the liquidity of our market. We will continue to communicate closely with stakeholders in the industry and provide them with timely information on the latest development of the legislation work on the national security, so that industry players and their clients can have a comprehensive understanding of the issue.

The COVID-19 pandemic is still developing across the globe and many economies are struggling in deep recession. Together with other unfavourable factors such as the widespread unilateralism and populism, conflicts between major economies, as well as geopolitical tensions, the global market is going to face continuous risks and uncertainties. As an open and small economy, Hong Kong's road to economic recovery would be hard.

Nonetheless, after the national security law comes into effect, I believe the social and political stability will soon be restored in Hong Kong, bringing us more development opportunities. On one hand, with a strengthened foundation for the "one country, two system" principle, Hong Kong could play a more active role in the continuous opening-up and reform of our country. The Central Government has also reiterated their solid support for Hong Kong's development. On the other hand, the global political and economic pattern has been changing from US-dominated in the past to multipolar. With the shift in global economic gravity from West to East, Mainland and other emerging Asia economies will become another large and vibrant market to Hong Kong.

Some may worry the China-US trade conflict will affect foreign investment in the Mainland, and manufacturing plants may be relocated from China. In my view, even if there are adjustments in the global supply chain in the coming few years, China will maintain its vital role in the process. In fact, after several decades of development, global supply chain has become a system with interdependent and mutually affected elements. China has developed comparative advantages in many aspects, including a comprehensive industrial system, well-established infrastructure, workers of relative high quality, relatively low overall cost, as well as scale efficient production. All these advantages could not be replicated easily. Moreover, the current global distribution of industries and the structure of supply chain are basically market-oriented results, already reflecting the optimal allocation of resources. To change the status quo upon political causes could be very costly and is difficult to achieve. . As the Asian Pacific region will still be the major area benefited from the future adjustment, by leveraging our advantages, experience and connection relating to the supply chain, Hong Kong will certainly be able to reposition ourselves and continue to contribute our best.

As long as we could take advantage of our unique institutional strength of the "one country, two systems", rightly position ourselves in the development, maintain and enhance our own competitiveness and grasp the opportunities to participate in our country's development strategy, we could definitely serve our country's needs with our strengths and promote the further economic development in Hong Kong. The People's Bank of China together with other three regulatory organisations have earlier proposed various measures that could strengthen and enhance the role of Hong Kong as an international financial centre, as well as promote the connection between financial markets inside the Guangdong-Hong Kong-Macao Grater Bay Area. We expect that there would be breakthrough in some concrete policies, such as the cross-boundary wealth management connect scheme longed by the local financial services sector, which would further enhance the connection of capital between the Mainland and Hong Kong, and offer more opportunities for residents and financial institutions of both sides.

June 28, 2020

Starting from today, eligible citizens can register electronically through webpages of the bank they selected to receive payment through bank account transfer, which is the fastest and most convenient mean under the Scheme. For people who are not online banking users, they could still register electronically through dedicated webpages of the banks. Those webpages are accessible for mobile phone users too. Only 3 pieces of information are required for the registration - first four alphanumer-ic characters of HKID card, mobile phone number and bank account number for re-ceiving payment. As the related banks have already kept their clients' personal in-formation, people do not need to provide all the information during registration. This can prevent fraudsters from stealing personal information through fraudulent webpages for unlawful use.

Payment for electronic registrations submitted through banks from today to June 30 will be deposited simultaneously into the accounts specified by registrants from around July 8. For electronic registrations submitted on or after July 1, registrants will receive the payment one week after registration.

For people who do not wish to register electronically, they could submit paper regis-tration form. Paper forms have been distributed at various specified locations since last Monday. Citizens can submit the forms to about 1000 branches of the 20 partic-ipating local retail banks, as well as about 120 post offices. No postage is needed if it is sent from Hong Kong.

We will notify the registrants through SMS or mail/email upon receipt of their regis-tration. There will also be subsequent notifications on the disbursement so as to keep registrants updated of the progress. We will not ask for more personal information through SMS. People should be aware of any fraudulent webpages and phishing email, message or phone calls and not to click the hyperlinks in suspicious emails, so as to prevent fraudsters from stealing personal information on the pretext of the Scheme. According to the guidelines issued by the Hong Kong Monetary Authority, banks will not ask for personal information, such as ID card number and bank ac-count number through phone call, email and SMS message, etc. Banks are also not allowed to send messages to customers with embedded hyperlinks to transactional websites or mobile applications.

With the registration for the Scheme begins, we expect most citizens will receive the payment by end of August. Last week, I met with representatives of the catering sec-tor to thank them for their positive response to the Government's appeal by rolling out promotional discounts starting from mid July. I notice that the retail, banking and some other sectors are also running different promotional campaigns with a view to grasping business opportunities and creating an atmosphere to boost consumption. With the epidemic situation in Hong Kong gradually subsided, some of the restriction measures have been relaxed. Businesses in many restaurants have started to recov-er.

Hong Kong's economy is still struggling in deep recession. Our unemployment rate is still on a rising trend. Nonetheless, with the rolling out of the series of Government's relief measures, including reduction in rates, electricity charges, and water and sew-age charges, as well as the Employment Support Scheme, we believe the operating pressure on enterprises could be eased to some extent. If we could all join hands to-gether to create an atmosphere to boost consumption, this could help improving the businesses of restaurants and shops, as well as the income of SMEs and employees. Just like the rainbow that many of us in Hong Kong witnessed after the rain last week, with the concerted efforts of all of us, Hong Kong's economy will come out of the re-cession and start again.

Lastly, may I wish you all a happy Father's Day, good business for all, and a speedy recovery for Hong Kong's economy!

June 21, 2020

Register electronically to receive payment through bank account transfer is the fastest and most convenient mean under the Scheme. Eligible citizens can register electronically through dedicated webpages of selected banks. Only 3 pieces of information are required for the registration - first four alphanumeric characters of HKID card, mobile phone number and bank account number for receiving payment. As citizens have already provided their personal information to the related banks when opening their sole name bank accounts, detailed information is therefore not required in the registration for the Scheme through banks. The guiding principles in designing this system is to provide a fast and safe mean with good user experience to registrants.

If the eligible citizen is an online banking user of the related bank, the registration process would be even simpler. After logging into the bank's online banking system, the citizen only needs to input 2 pieces of information for the registration, i.e. mobile phone number and account number of the sole name bank account for receiving payment.

Registration under the Scheme will start on June 21. We expect that morning will be the peak period for registration. Nevertheless, there is no need to rush for registration on the first day since successful registrants registered electronically through banks during the period of June 21 to 30 will start to receive payment from July 8 simultaneously. For electronic registrations submitted through banks after July 1, payment will be disbursed one week after the registration.

For people who wish to collect the payment through cheque, they can submit registration form to Hongkong Post. The form can be submitted online through Hongkong Post's website, by mail or by dropping in the drop box of any post office. Successful registrants can then collect the cheque in person from their specified post office after receiving notification from Hongkong Post. In addition, people who wish to receive payment through bank transfer but do not want to register online can also register by submitting paper form to their specified bank. Starting from June 15, paper registration forms will be available for download from the Scheme's dedicated website and distributed in various specified locations.

As the handling of registrations using paper form involves more manpower and administrative process, citizens are required to submit the forms in accordance with a batching arrangement based on year of birth. The batching requirement is not applicable to online registration. For more details, please visit the Scheme's dedicated website. Hong Kong permanent residents aged 18 or above on or before March 31, 2021 will be eligible for the Scheme, while the registration will close on December 31, 2021. Sufficient time is therefore provided for the registration.

Hong Kong's economy had been weakening when I formulated the Budget early this year. The China-US trade conflict, local violent attacks, as well as the COVID-19 pandemic together have dealt an unprecedented blow to our economy. From the relief measures totalling over $120 billion in the Budget, to the two rounds of support of $160 billion under the Anti-epidemic Fund, disbursement of different funding to targeted sectors and groups are currently in place. I believe these support measures are gradually taking effects.

With the epidemic situation in Hong Kong gradually subsided and brought under control, many people has resumed their daily activities. At the same time, people will start receiving the $10,000 payout from early next month. With these two favourable factors adding up, hopefully the mood in consumption can be boosted or even created.

Indeed, for consumption activities such as shopping and meal gathering, suitable atmosphere, mood and money are all important. The $10,000 Cash Payout Scheme would be useful in stimulating consumption. As the epidemic situation is still developing in some overseas countries, it is expected that citizens will mostly stay in Hong Kong, benefitting local consumption. I notice that many banks, shopping malls and different shops are rolling out various kinds of promotional campaigns riding on the cash payout, with a view to drawing consumers' attention.

The scale of the Cash Payout Scheme amounts to some $70 billion, almost equivalent to 3-month value of total retail sales In Hong Kong. Even if people are going to spend only a portion of the payout, it could still give a certain boost to our economy.

The retail, catering and service sectors have been struggling very hard to survive in the past year. What they need now is an opportunity to improve their business. For many employees, their current top priority is to secure their jobs. The employment situation has been worsening. Based on the current trend, it is inevitable for the unemployment rate to rise further from 5.2% in April, reaching a rate higher that that at the worst time of 2009 during the global financial crisis. The number of unemployed persons is likely to reach a 15-year record high. At this critical moment, any violent acts will kill off the chances of relief for SMEs and employees. I hope all of us could set aside our differences for a moment and focus on tackling the current economic difficulties, so that citizens with shrinking income and enterprises facing financial difficulties can have a chance to recover.

June 14, 2020

The substantial impact of the so-called sanctions recently mentioned by the US is very limited. Some have suggested other hypothetical questions, such as, how about Hong Kong is banned from using the US dollar or accessing the US dollar clearing system under the most extreme scenario. On this, I would like to emphasise that Hong Kong is the world's third largest USD forex trading centre, serving numerous multinationals enterprises in the Asia-Pacific region and across the globe, with services ranging from investment and wealth management to trade and settlement. With Hong Kong's financial system closely integrated with the global economic and financial systems, any move that hits our financial system would also send shock waves across the global financial markets, including the US. Confidence of international investors in using the USD and holding US financial assets could also be undermined. These extreme measures are therefore highly risky to the US itself. The Government will react vigilantly and there is no reason to over worry.

As regards whether Hong Kong could continue to be a hub of capital and talents and maintain its status as an international financial centre, I am optimistic and confident to that. I have touched upon this in my blog last week and would like to elaborate further.

Over the past 23 years, the total market capitalisation of Hong Kong stock market has increased from HK$3,200 billion in 1997 to more than HK$36,000 billion currently. Apart from giving impetus to Hong Kong's continuous economic development, the growth in the market has opened up channels for state-owned enterprises, red-chip and private enterprises of the Mainland to raise fund in Hong Kong. As a result, Hong Kong has become a hub for enterprises with growth potential and fundraising needs, as well as capital looking for returns. The establishment of the connection mechanism between Hong Kong and the Mainland stock markets has linked up the capital and market of the Mainland and the world, and enriched the base of investors for Hong Kong stock market. The stocks currently covered by the southbound and northbound transactions amount to 77% of the total market capitalisation of Hong Kong and the Mainland, giving rise to the development of the derivative products market. This explains why the international index company MSCI recently has transferred the license of issuing index futures and options contracts based on a suite of indexes on Asia and Emerging Markets from the Singapore Exchange Ltd. to the Hong Kong Exchange & Clearing Ltd. And this is just the beginning. With the development trend continues, Hong Kong stock market will become more internationalised and more comprehensive.

Looking ahead, Hong Kong stock market will go through another upgrading process. With the China-US conflict and the protectionism around the world intensifies, many global enterprises are now facing increasing geopolitical risks. To those Chinese enterprises listed in foreign markets, there are urgent needs for them to manage their risks arising from the new political uncertainties. Following Alibaba's return for listing in Hong Kong market last year, many large-scale Chinese enterprises currently listed in the US market have decided to come to Hong Kong for secondary listing this year. This indeed shows a new trend. According to some statistics, there were around 150 Chinese enterprises listed in the US stock market as at early last year. At the same time, innovation and technology enterprises and other companies in the Mainland seeking international capital, as well as foreign companies targeting the Mainland market, may also give higher priority to Hong Kong as their funding raising platform.

In 2018, with a view to bringing in new driving force to Hong Kong stock market, we reformed the listing regime to allow emerging and innovative companies with weighted voting rights structure, pre-revenue or pre-profit biotechnology enterprises to list in Hong Kong, and facilitate companies listed in other markets to come to Hong Kong for secondary listing. Over the past two years, 87 emerging-economy companies have already listed in Hong Kong and raised a total of HK$300 billion. Among these, HK$43.9 was raised by biotechnology enterprises, making Hong Kong the Asia-Pacific region's largest, as well as the world's second largest financing hub for biotechnology. This demonstrates that effective positioning and adjustments to established mechanism could bring us remarkable results.

By embracing the new development trend, we give new impetus to the Hong Kong stock market. The structure of the market can be transformed to covering both conventional businesses and innovation and technology enterprises. This allows us to address the financing needs generated by the change in economic structure, and ensure that our financial services could better serve the need of the real economy. It can also energise our market and enhance the efficiency of value and price discovery.

Of course, as an international finance centre, apart from being a capital hub, it is equally important for us to attract talents. Some people say that the national security legislation for the HKSAR would lead to a brain drain or deter international talents from coming to Hong Kong. This is over worrying. In fact, other international financial centres around the world have also put in place legislation for safeguarding their countries' national security. What has been pursuing in Hong Kong now is no different from them. To me, the most important elements to attract talents are the room and opportunities for development, as well as a free, secure and stable social environment that allow people to live and work happily. With Hong Kong's institutional strength under the "one country, two system" principle, people in Hong Kong could enjoy the capitalist system while at the same time grasp the development opportunities brought by the continuous reform and opening-up of the Mainland market . In addition, Hong Kong is a free, open and inclusive society which respects the rule of law. Our living environment is safe and convenient with an East-meet-West culture. We have fine wine and cuisines from all around the world and an easily accessible countryside. All these contribute to the attractiveness and uniqueness of Hong Kong. I wish everyone can join us together to treasure, safeguard and develop our beloved Hong Kong.

June 7, 2020

The market in general has expressed initial concerns in two areas. Firstly, whether the national security legislation will have impact on the free flow of capital and the Linked Exchange Rate System (LERS) of Hong Kong, as well as the future of Hong Kong's position as an international financial centre. My answer to these questions is a definite no.

Article 112 of the Basic Law stipulates that, "No foreign exchange control policies shall be applied in the Hong Kong Special Administrative Region. The Hong Kong dollar shall be freely convertible. Markets for foreign exchange, gold, securities, futures and the like shall continue. The Government of the Hong Kong Special Administrative Region shall safeguard the free flow of capital within, into and out of the Region." This is a venerable constitutional protection, and a critical factor for Hong Kong to maintain its position as an international financial centre. To reiterate, no foreign exchange control would be applied in Hong Kong. Hong Kong dollar shall be freely convertible and capital can flow freely.

As for the LERS, it is mechanism established by Hong Kong to back our monetary base by sufficient US reserve and to provide convertibility undertakings within the zone of HK$ 7.75 to HK $7.85 to one US dollar when there are inflows into or outflows from Hong Kong dollars. The mechanism is underpinned by strong foreign reserves position of over US$ 440 billion, which is more than two times of our monetary base. At the same time, we have our country at our back. All these provide the strongest support to Hong Kong dollar. In fact, implemented in 1983, the LERS proves to be a strong anchor amid countless challenges over time and has no correlation with the Hong Kong Policy Act enacted by the US Congress in 1992. As pointed out by the Hong Kong Monetary Authority (HKMA) and the banking sector in the past week, there has been no noticeable fund outflow. The Hong Kong dollar exchange rate has remained stable and on the strong side of the convertibility zone. Nonetheless, there are still rumours and misleading messages spreading around from time to time. We have to stay vigilant. The Government and the HKMA will closely monitor the situation and clarify when needed. We have the capability, experience and every confidence to tackle the challenges.

The second concern of the market is mainly on the so-called sanctions inflicted by the US, using the national security legislation for the HKSAR as an excuse. The US has announced that it would cancel its special treatment for Hong Kong in aspects such as tariff and export of advanced technology. However, the fact is that the annual amount of local manufactured goods exported to US only accounts for less than 2% in our local manufacturing and less than 0.1% of our total value in export. And it has never been easy to import advanced technologies and equipment from the US, while alternatives are available from the Europe or Japan markets. In short, although the US's actions so far would cause certain disturbances to the market, the actual impact is limited.

So how will the situation evolve? This has to be analysed from a broader view. The US is the biggest economy in the world and any of its actions could bring disruption to the normal operation of the market. We will stay alert, keep a close watch and react suitably. On the other hand, China is the second largest economy in the world and has been maintaining a quick growth for years. China's development potential and its huge market are crucial to the development interests of many transnational corporations. Impact to Hong Kong is inevitable in the China-US conflict. Yet, as long as we could continue to maintain our institutional strength and the stable operation of the market, Hong Kong still enjoys a unique position as an international financial centre in the Asian time zone.

Although the US claimed to impose restriction measures on Hong Kong, it is noteworthy that the US indeed has been enjoying substantial economic and other benefits in Hong Kong. In the past decade, the US's trade surplus with Hong Kong has been the biggest among all its trading partners, totalling almost US$300 billion. Hong Kong was US's third-largest market for wine exports and fourth-largest market for beef and beef products. In addition, US's service industries, particularly the financial and professional services sectors, are also having substantial interests in Hong Kong. Any restriction measure would only at the same time harm the interest of US's enterprises in Hong Kong.

In fact, the objective of the national security legislation for HKSAR is to restore social stability, public safety and in turn a stable environment for business and investment in Hong Kong. Enterprises with normal operation do not need to worry. Other leading international financial centres in the world are also having their own national security law. For foreign investors in Hong Kong, they can still take full advantage of Hong Kong's institutional strengths. For instance, under the principle of "one country, two systems", enterprises could set foot in Hong Kong to tap into the Mainland market with our westernised legal system and business models, our deep and wide capital market, as well as our deep pool of talents.

Hong Kong has always been in a unique position, and perhaps sometimes at the frontline of the competition between the two biggest economies. Yet it also brings us opportunities in furthering the development of Hong Kong's economy and financial services. Looking ahead, the latest development may speed up the process for those Chinese enterprises currently listed overseas to return to the Hong Kong market for listing. Innovation and technology enterprises and other companies in the Mainland seeking international capital may also give higher priority to Hong Kong as their funding raising platform.

With the Mainland as our hinterland, as well as our commitment to the LERS and the free flow of capital, Hong Kong will remain a hub for international capital, further strengthening the effective operation of our financing function. Last week, MSCI, a world-leading index company, has announced the license of issuing index futures and options contracts based on a suite of indexes on Asia and Emerging Markets to be transferred from the Singapore Exchange Ltd. to the Hong Kong Exchange & Clearing Ltd. This signifies the market's confidence in Hong Kong.

With the policy support of the Central Government, the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) development plan also provides a great room for Hong Kong's development. The People's Bank of China, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission and the State Administration of Foreign Exchange have together issued a total of 30 guidelines in supporting the development of financial services in the GBA. Hong Kong's financial sector is looking forward to the establishment of a two-way wealth management connect scheme in the GBA, which would bring enormous business opportunities to the industry and its employees.

Looking back in history, the development of any international financial centres can never be a gift granted by other countries. Hong Kong's status as an international financial centre is a result of the hard work of many generations, as well as the strong support by our country all along. As the second largest world economy, China's continuous reform and opening up will generate a vast demand for financial services. This is the strongest support and driving force for Hong Kong to maintain its status as an international financial centre and to keep moving forward amid changes.

May 31, 2020

While the society may need some time to understand and digest the bill, we should be familiar with the background of the exercise. Over the past one year, violent acts in Hong Kong have been escalating, from road blockage and vandalism at the beginning, to violent attacks targeting at people with different views and their stores. There are even cases involving possession of arms and making of explosives, which show signs of local terrorism. These acts have crossed the redline of expressing views in a peaceful and rational manner, and have been dragging Hong Kong into the turmoil of violence and hatred.

What's even more worrying is that some of these acts are associated with claims and actions of separatism, such as storming the Central People's Government (CPG)'s office in Hong Kong, defacing the national flag and emblem, and inviting foreign governments and organisations to interfere with the HKSAR's internal affairs and to impose sanction on Hong Kong. Some even outlined concrete steps for "burning together", threatening to harm the interests of Hong Kong and China if their demands cannot be addressed. These acts overstepped the "one country" principle and posed a national security threat.

Freedom of speech and expression have all along been core values treasured by Hong Kong. Nonetheless, freedom is not absolute. National security is the fundamental prerequisite for the survival and development of any country. For most countries in the world, either developed or developing ones, have put in place national security law or other legislation to prevent and penalize actions endangering national sovereignty and security.

For Hong Kong, there are obvious inadequacies in our existing legal framework in safeguarding the national security. Although it is stipulated in Article 23 of the Basic Law that the HKSAR has the constitutional responsibility and legal obligation to enact laws to safeguard the national security, the related enactment work has been suspended for a long time given the tremendous difficulties being faced in the past 23 years since the handover. Against such background, the CPG now chooses to plug the loophole proactively so as to safeguard the national security, which in turn can also ensure the successful implementation of the "One country, two system" in Hong Kong in the long run.

Some people may concern about the possible impact on foreign investment confidence and Hong Kong's position as an international financial centre. Any discussion on these issues should be put in the right context and take into account the macro environment and reality now facing Hong Kong. As the international environment getting complicated and Hong Kong's unique position in the China-US conflicts, if Hong Kong becomes a loophole in the national security, how could we ensure that Hong Kong would not be used as a tool against China, or turned into a battlefield of some sort? With our local society already highly politicised, if foreign interests and powers are allowed to mingle in Hong Kong to hinder the development of China, the future of Hong Kong will only be even more difficult. With social unrest on the surface and other disturbing factors underneath, not only people's livelihood and safety could be endangered, but the confidence of foreign investors will be shattered eventually. In fact, the outbreak of violent acts and social unrests since the legislative exercise of the Fugitive Offenders Bill of June last year, as well as the advocacy for "Hong Kong independence", have already made local and foreign investors worried about the political and social risks of Hong Kong. It is now necessary and urgent for us to enact the national security law in order to plug the loophole of the national security.

The enactment of the national security law could, through the legal system, protect Hong Kong from various threats, prevent secession, subversion of state power and the organization and carrying out of terrorist activities, as well as activities interfering with the HKSAR's internal affairs by foreign or external forces. It could also prevent extremism and chaos in Hong Kong and retore social safety and stability, which would in turn help maintaining a favourable environment for business and investment.

In fact, what actually affects investor confidence is not the national security law itself, but the misunderstanding people may have about the legislation. The CPG has already made it clear that the law targets at the minority of people who are suspected of threatening national security. For the general public, their legitimate freedoms and rights will not be harmed, their daily lives will not be affected and the safety of their properties will continue to be properly protected.

Some foreign chambers of commerce have expressed their concerns about the legislation and pointed out the importance for Hong Kong to uphold its established advantages, including free flow of information, freedom of speech, and a Government of high transparency and integrity. In fact, HKSAR Government has been working hard to protect and strengthen these values. The CPG has also emphasised that it will continue to protect the legitimate interests of foreign countries and investors in accordance with the law, support the maintenance and development of relations between Hong Kong and other countries in areas like economic and trade, culture and tourism etc, and support Hong Kong's external exchanges and cooperation. As normal investment, commercial and trade activities conducted by other countries in Hong Kong would not threaten the national security, such activities could be continued as usual.

We have all along emphasized that Hong Kong is the international financial centre of China and serves the role of connecting the Mainland and international markets. A safe society and political stability are prerequisites for an international financial centre. Enactment of the national security law could provide the necessary protection in these aspects and would not affect the normal flow of people, goods, information and capital. In fact, other international financial centres around the world are protected by their own national security law, and their development has not been affected by the law.

National security is the foundation on which Hong Kong's role in connecting the Mainland and international markets and its position as an international financial centre are built. If Hong Kong becomes the loophole of the national security, the foundation will be damaged and Hong Kong will no longer be able to serve its function.

When considering the subject on national security, rather than focusing from Hong Kong's local perspective, we should also take into account the national perspective, as well as the broader picture of international relations. Only by doing so, we could have a more comprehensive and in-depth understanding of Hong Kong's situation and enable the continued successful implementation of the "One country, two system" in Hong Kong in the long run.

May 24, 2020

The various measures proposed in the Budget are now in the pipeline. For the $10,000 cash payout scheme, we are going to sign service agreements with the 20 plus participating banks for making the disbursement through their channels as well as the Hong Kong Post. Our plan is to start the registration by end June. To register online through banks and receive the disbursement through sole name bank account will be the quickest way to get the money, in around mid July.

At the same time, we have engaged the retail and catering sectors and encouraged them to roll out promotion and concessionary campaigns to create an atmosphere and boost local consumption.

Apart from boosting consumption and businesses for shops, it is also important to provide liquidity to enterprises to relieve their operating pressure in this testing time. The 100% guarantee concessionary loan product proposed in the Budget has been open for application since last month. Until last week, the Hong Kong Mortgage Corporation Limited (HKMC) had received more than 2,500 applications involving a total loan amount of more than $4.4 billion within three weeks. In general, a loan application with sufficient information submitted could be approved within three working days, while about 60 per cent of the applications received were approved within the same day. We understand from many enterprises from different sectors that the product is useful in meeting their urgent financing needs. We also learned from HKMC that one of the applicant enterprises is a small won-ton noodle shop which has been operating in Hong Kong for several decades. The loan product not only help supporting the shop and the jobs of their employees, but also help preserving a taste of memory in the community.

After twenty-plus days of zero confirmed local case of COVID-19, the reoccurrence of the few new local cases last week has added uncertainty to the originally improving situation. Hong Kong's economy is still struggling in a deep recession. While Q1 GDP has already seen an 8.9% contraction, the worst since record, we could hardly be optimistic for Q2. The employment situation is also getting worse. The increase of unemployment rate has been speeding up from a pace of 0.1 percentage point in January to 0.5 percentage point in March, leading to an unemployment rate of 4.2% in March. As many businesses have been disrupted by the social-distancing measures implemented since end March, we have seen from time to time employees taking unpaid leaves, facing pay-cut or being laid off. It is expected that the unemployment rate in April will surge and the situation of underemployment will further deteriorate. All these will lead to shrinking income and hence greater pressure in making a living and supporting families. The Government has already announced the $80 billion Employment Support Scheme to provide wage subsidy to employers for a period of time to achieve job retention, which can in turn help alleviating the unemployment problem to some extent. The Scheme will start receiving application next week.

As COVID-19 is highly contagious and many of those infected show mild or even no symptom, we may need to prepare for a long-time coexistence with the virus before the discovery of any effective vaccine. When putting forward measures against the pandemic, we have to strike a right balance between our efforts in fighting against the virus and stabilising the economy, so that struggling enterprises could have a chance to survive while ensuring public health. This is also crucial in preserving the vitality of our economy.

Nonetheless, a stable social environment is even more crucial. If the pandemic subsides, but violence returns, it will drive away international investors and hamper local consumption, which in turn drag down the recovery of our economy. With many people and businesses already hard hit by the economic recession, it would be irresponsible and irrational to still advocate the concept of "burning together". This in fact may be the biggest obstacle to Hong Kong's economic recovery.

May 17, 2020

For many shops and restaurants, they have seen the longing rebound in businesses over this weekend. Hong Kong's economy has been dealt a double blow by the series of violent acts and the COVID-19 pandemic in the past year, and the businesses of the retail, catering and consumption sectors have since been going downhill. Boosting the number of consumers and businesses is therefore particularly crucial now for many small and medium enterprises to survive. Mother's Day, Father's Day, and other traditional festivals are all critical to bring business opportunities to the retail and catering sectors. However, while our economy is able to earn some breathing space as the pandemic subsided, social incidents are bouncing back and posing threat to the economic recovery.

Our economy is under an unprecedented stress. Hong Kong's Q1 GDP this year has seen an 8.9% recession, which is the worst quarterly performance in record. The near future is still full of uncertainties. The three major driving forces of our economy, i.e. trade, investment and consumption, have been losing their momentum. The outlook for Q2 is still pessimistic. Among the three aspects, the part of trade depends more on the economy and demands of the US and Europe, which are still very weak due to the development of the pandemic. It is hence difficult for us to expect a strong recovery on our trade with these regions in Q2.

For the part of local economic activities, about 30% of the businesses of the retail & consumption sector and 20% of that of the catering sector came from visitors. Quick recovery is not expected. For local consumption, as the pandemic has been gradually brought under control, we are trying to strike a right balance between our efforts in fighting against the virus and stabilising the economy. Some of the anti-pandemic measures may become the norms of our daily life, at least before the discovery of any effective vaccine. As such, how to maintain a sufficient level of economic activities under the changed environment would be an important issue to tackle.

On the other hand, the problem of violent acts is still troubling Hong Kong. Over the past few weeks, protests and conflicts reappeared and some of them disrupted the operation of shops and malls. This is no doubt bad news to the already weak local economy, retail businesses, small shops and their employees.

For instance, the decrease in the value of total receipts of the restaurants sector (the value) has been accelerating over the past year, from less than 1% in April 2019, to 14% and 32% in Q4 2019 and Q1 this year respectively. In February this year, the value decreased to $5.8 billion, equivalent to only about 58% of that in the same month of last year. It is doubtful if the restaurants could meet their operation cost with this low level of income. At this critical window for economic recovery, if customers are scared off by further protests and conflicts, or shops and restaurants are forced to close, it would be devastating for many people's livelihoods.

Even with different views, we should always express them peacefully and not to hurt the interests of others. Disrupting or harassing shops and malls and different forms of vandalism are all illegal acts, which bring harms to the overall interests of the society, and pose negative impacts on workers, retail shops, restaurants and Hong Kong's economy.

The outlook for Hong Kong's Q2 economic performance is still gloomy. Nonetheless, if we could keep up our efforts in fighting against the virus to facilitate the gradual resumption in economic and commercial activities, things might get better in Q3. Subject to the approval of the Legislative Council, the relief initiatives proposed in the Budget will soon be launched, which include the $10,000 cash payout for eligible Hong Kong citizens. Together with the measures under the two rounds of Anti-epidemic Fund, all the relief measures totalling $290 billion will provide significant support to the economy. For Instance, the scale of the $10,000 cash payout scheme amounts to some $70 billion. Comparatively, the monthly average value of total retail sales and the monthly average value of total receipts of the restaurants sector of Q1 this year are $27.8 billion and $7.2 billion respectively. I am therefore quite confident that even citizens only spent a portion of the cash disbursement in local consumption, the cash payout scheme could still bring a certain extent of stimulus to the market.

May 10, 2020

As the threat of the pandemic has slightly subsided, many Hong Kong people have resumed some of their holiday activities during this long weekend and shops have seen customers coming back. For many small and medium enterprises (SMEs) and their employees, it is critical to get their businesses back on track as soon as possible, particularly after the double blows of violent acts and pandemic over the past one year. By tomorrow (May 4), most of the civil servants will resume duty and the provision of government services will be back to normal by phases. The restrictions imposed on the operation of catering businesses and several commercial premises, as well as the prohibition of group gathering, will be due in the next few days. With the improvement in the pandemic situation so far, it is hopefully that some of the restriction measures could be lifted by phases to allow people's daily lives and businesses to get back on track. Nonetheless, we still have to remain cautious when doing so, as the pandemic is still under development around the world.

In fact, Hong Kong's economy is struggling in a deep recession. Back in 1998, the Asian Financial Crisis has dealt a severe blow to Hong Kong's economy and the Q3 GDP had seen a year-on-year decrease of 8.3%. About ten years later, Hong Kong's Q1 GDP in 2009 had experienced another plummet of 7.8% on year-on-year basis due to the Global Financial Crisis. It is worrying that the to-be-announced Q1 GDP of this year, affected by the violent acts and the pandemic, will be even worse, leading our economy to contraction for three consecutive quarters.

As we still have to remain vigilant and sustain our efforts in fighting against the pandemic for now, local economic activities could only be resumed to a limited extent and in a slower pace. For Western economies, economic forecasts are also pessimistic due to the development of the pandemic. The International Monetary Fund (IMF) expects a global economic recession of 3% for this year, while the US and the Europe will see recession of 5.9% and 7.5% respectively. The global economy is very likely facing the deepest recession since the Great Depression of 1930s. With this backdrop, we can hardly expect a strong recovery in the three major driving forces of our economy, i.e. domestic demand, export and investment. As such, we have significantly adjusted downward the GDP forecast of this year to -4% to -7%, which is much worse than our original forecast of -1.5% to 0.5% in mid-February. If the economic recession turns out to be close to our worst forecast because of the pandemic and other external factors, it would be the worst economic performance in Hong Kong's record since 1960s.

In fact, even without looking into the statistics, one can tell how bad our economy is by observing the business environment around. As such, in the Budget and the two rounds of Anti-epidemic Fund, we have put forward measures totalling $290 billion with a view to providing support and reliefs to citizens and enterprises in this testing time.

In the Budget, I have proposed to disburse $10,000 to eligible citizens, with a view to providing support on one hand, and boosting local consumption on the other. More than 20 banks will participate in the cash payout exercise and the related registration procedure will be kept simple. Eligible citizens with sole name bank account could apply online and receive the payout faster as this saves time in document processing. Therefore, we encourage people who do not have a sole name bank account now to consider opening one as soon as possible. Our current plan is to open the registration by end June, and start to handout money by mid July. We expect that most applicants will be able to receive the cash by end August. If the pandemic situation could be kept under control and the restriction measures could be gradually lifted by then, I believe the cash handout could encourage local consumption, and hence improving the income of workers and enterprises, and get set for economic recovery.

Nonetheless, the recovery of our economy can only built on a stable and peaceful social atmosphere. At this moment, what Hong Kong needs most is unity. Over the past hundred days, people in Hong Kong united together and fought against the virus with concerted efforts, leading to favourable result. Could we keep up the spirit to fight for Hong Kong's economic recovery?

May 3, 2020

In summary, the work on ensuring Hong Kong's financial and economic security over the past year focused on three major aspects, including (1) to prevent speculative activities which might affect the stability of the Hong Kong dollar exchange rate; (2) to ensure adequate liquidity in banks and relieve the cash flow pressure of enterprises for protecting our economy and banking system from capital chain rupture; and (3) to monitor the changes in the asset market and related activities for ensuring the orderly operation of the financial and asset markets.

Although the market confidence was once damaged by the social incidents and violent acts since last June, this did not lead to large-scale capital outflow. Such outflow was not seen during the recent COVID-19 pandemic despite the pressure faced by the stock market along with the external environment. On the contrary, the Hong Kong dollar exchange rate has continued to be strong recently, staying close to the strong-side Convertibility Undertaking (CU) of HK$7.75 against the US dollar under the Linked Exchange Rate System (LERS). In fact, the strong-side CU has been triggered several times, reflecting a net capital inflow into Hong Kong. As of last Thursday (April 23), the Hong Kong Monetary Authority (HKMA) had undertaken US dollar selling from the market four times and had released a total of HK$7.71 billion of funds, further increasing the aggregate balance of Hong Kong's banking system to HK$66.8 billion. This is part of the normal and automatic operation of the LERS, ensuring the hovering of Hong Kong dollar exchange rate within the target range of 7.75 to 7.85.

The LERS plays a role in maintaining the stability of the Hong Kong dollar exchange rate under either scenarios of capital inflow or outflow, forming a solid basis for market confidence towards the LERS. Moreover, our abundant foreign exchange reserves could readily meet the exchange needs in case of capital outflow. Confidence is the basis of the whole mechanism while our reserves back up the confidence. These effectively prevent over-speculation on Hong Kong dollar and consolidate the stability of the Hong Kong dollar exchange rate.

Despite the recent continuous capital inflow into Hong Kong, there have been no large-scale speculation or market-manipulating transactions so far. Since the global financial crisis in 2008, there has been a capital inflow of HK$1,000 billion into Hong Kong, most of which has remained here with only less than HK$140 billion flowed out of Hong Kong so far. As such, interest rates in Hong Kong have also been hovering at low levels. In fact, the Hong Kong dollar is freely convertible, and there is free flow of capital with no foreign exchange control in Hong Kong. Nevertheless, the Hong Kong dollar exchange rate has remained stable under the effective operation of the LERS, and the Hong Kong dollar market has always been operating smoothly and orderly. In other words, even if there is a net capital outflow in the foreseeable future, and if the exchange rate of the Hong Kong dollar weakens or even touches the weak-side CU of HK$7.85 against the US dollar, our long-standing LERS will continue its effective operation in sustaining the stability of the Hong Kong dollar exchange rate. In fact, the weak-side CU was triggered multiple times between April and August 2018. While there were some worries, the operation of the LERS was proven to be effective, and the Hong Kong dollar exchange rate was maintained within the designated range. This effective mechanism maintains the market confidence on the LERS, which is of utmost importance to the stability of Hong Kong's economy and people's livelihood.

In fact, the scale and flow of Hong Kong dollar capital in the market not only associate with the fluctuation of the Hong Kong dollar exchange rate, but also affect banks' liquidity and readiness to offer loans. This could put pressure on the cash flow of enterprises, which relates to the second major aspect of our work on financial security as mentioned above. The recent pandemic has caused a sudden freeze in economic activities and capital chain rupture in some enterprises. In the event of enterprises winding off and laying off staffs, people's livelihood and the banking system could be affected.

To ensure the liquidity of banks and space for offering loans, my colleagues at the HKMA and I have been putting forward various measures to ensure the availability of Hong Kong dollar, US dollar and internal resources of banks, with a view to facilitate banks in actively offering loans to enterprises to ride over the current challenges. This topic has been covered in my earlier blog entry. As for the concessionary low-interest loan with 100 per cent government-guarantee commitment announced in the Budget for easing the capital flow challenge of enterprises, 180 applications were approved in the first four days upon the launch of the scheme, involving over HK$400 million.

With regard to the financial and asset markets, I have been leading the Council of Financial Regulators in the "cross-market, coordinated, and around-the-clock" monitoring of the market. The financial regulators have been working closely together to monitor the fluctuations in currencies, stocks, futures and derivatives markets, and analyse the nature of such activities, including short-selling, speculation, and cases of concerted actions. To ensure normal operation of the market, we have, over the past year, increased the deposit requirement for the stock market, reduced the leverage risk of the spot market, conducted multiple rounds of stress tests, and enhanced on-site inspections of market players. As for the real estate market, rounds of prudent macro-demand management measures have been in place, while there is still an overall shortage in housing supply. Although the property prices are currently at a hardly affordable level, the risk of a dramatic fall in the residential property market is limited.

To sum up, although the COVID-19 pandemic has posed pressure on the global and local economy and the financial market, the financial risks in Hong Kong are still manageable. The HKSAR Government will continue to strive to safeguard Hong Kong's financial security, which is part of the important gatekeeping work for ensuring national security.

April 26, 2020

The concessionary low-interest 100% loan guarantee product, which I introduced in the Budget, will be open for application tomorrow. Through the second round of AEF, we have increased Government's total commitment from $20 billion to $50 billion, with a view to benefitting more enterprises. As at now, 10 banks are ready to receive applications, while some others engaging in SME loan businesses are also interested in joining the scheme. On processing time, the Hong Kong Mortgage Corporation Limited has pleged that in general, upon the banks' receipt of all necessary documents from applicant enterprises, it will only take 10 to 14 working days for an application to be approved.

The concessionary 100% loan guarantee scheme is applicable to companies of all sectors. Eligible enterprises should have been operating for at least three months as at end-December 2019, and have suffered at least a 30 per cent decline in sales turnover in any month since February 2020 compared with the monthly average of any quarter in 2019. An interest rate of the Prime Rate minus 2.5 per cent per annum, i.e. current interest rate at 2.75 per cent, will be charged. All guarantee fee will be waived. The maximum amount of loan per enterprise is the total amount of employee wages and rents for six months, or $4 million, whichever is lower. Enterprises may also apply for an optional principal moratorium for the first 12 months, so as to alleviate instant burden on repayment.

In addition, we have increased the maximum facility amount per borrower of the existing 80% and 90% loan guarantee products under the SFGS to $18 million and $8 million respectively. A subsidy up to equivalent of 3 per cent of the interest rate will also be provided, so that the actual interest rate will be largely the same as that of the 100% loan guarantee product.

Moreover, the Hong Kong Monetary Authority (HKMA) together with the Banking Sector SME Lending Coordination Mechanism has just launched the Pre-approved Principal Payment Holiday Scheme. All corporate customers that have an annual sales turnover of $800 million or less with no outstanding loan payments overdue for more than 30 days are eligible for the Scheme, covering more than 80 per cent of all corporate borrowers in Hong Kong. This is one of our measures which serves to relieve the cash flow pressure of enterprises by leveraging the power of the banking sector.

All loan principal payments of eligible customers falling due within a 6-month period between 1 May 2020 and 31 October 2020 will be pre-approved for deferment. Principal payments of loans (including revolving facilities) will generally be deferred by 6 months, whereas trade facilities, given their short-term nature, will be deferred by 3 months. Banks will begin informing eligible customers of the pre-approval under the Scheme as soon as practicable. Eligible customers do not need to apply. They only need to contact the bank within 14 days of the bank's notice to confirm the detailed arrangements of the principal payment holiday.

The Banking Sector SME Lending Coordination Mechanism may not be familiar to some of you. The Mechanism was established in last October to serve as a communication platform to strengthen the banking sector's support to SMEs. Under the HKMA's leadership, the Mechanism has rolled out four rounds of relief measures for corporate and retail customers, including principal payment holidays for SMEs and residential mortgages, loan tenor extensions, and the conversion of trade financing lines into temporary overdraft facilities. The measures have shown effects. For instance, nearly 9 000 applications for relief measures have been approved by major banks engaging in SME loan businesses, involving over $57 billion.

As shown in the measures above, one of our major directions in supporting enterprises and safeguarding jobs is to leverage the power and resources of the market as far as possible in order to maximise the effect of the measures and benefit more business sectors. In the second round of AEF, some $90 billion, including the $80 billion Employment Support Scheme, will be spent on safeguarding jobs, which can benefit more than 2 million people.

In fact, the growth of new confirmed COVID-19 cases in Hong Kong has recently shown a slowdown. Until yesterday, the number of new cases has dropped to single-digit level for seven consecutive days, a much slower increase than several weeks ago. If we could keep up our anti-epidemic efforts and sustain this positive trend, hopefully our daily life could gradually resume normal, and local consumption and different business sectors, such as catering, could gradually recover. By safeguarding jobs, we would be in a better position to grasp the opportunities of the upcoming economic recovery.

Fighting against the pandemic and stabilising the economy are the two major challenges facing us. Over the past year, social incident, violent attacks, together with the recent pandemic have dealt a severe blow to our economy. Businesses in many sectors like retail and tourism have been frozen, and the situation of unemployment is getting worse. In just eight months (June 2019 to February 2020), the unemployment rate has hiked almost one percentage point from 2.8% to 3.7%. The Census and Statistics Department will announce the latest unemployment rate up to March tomorrow. The situation of unemployment and underemployment is expected to further deteriorate at a faster rate. Although the second round of AEF may not be a perfect solution to all, still it could help slow down the increase of the unemployment rate to a certain extent, enabling us to safeguard jobs, support the enterprises and preserve the vitality of our economy.

April 19, 2020

Safeguarding jobs is one of the major objectives of the latest round of measures. Among which, $80 billion will be spent on the new Employment Support Scheme (ESS), which aims to provide the enterprises with incentive for not to lay off their employees as far as possible under the current difficult situation, benefiting more than one million employees. The AEF will also provide support for another 800 000 employees from the catering, construction, transport and tourism industries, and also 210 000 plus self-employed persons with MPF accounts. In addition, the Government will spend $6 billion to create 30 000 jobs in both the public and private sectors in the coming two years.

Why is it so important for us to safeguard jobs? It is not just a matter of the economy, but more importantly, a matter of people's livelihood. Hong Kong has a labour force of about 3.9 million. Just one percentage point increase in the unemployment rate implies that several ten thousand more employees, who are supporting their own families, are losing their jobs. Safeguarding jobs is therefore a critical part in protecting the livelihood of people.

Supporting enterprises is another crucial element in the latest round of measures. In the course of fighting against the pandemic, our two major economic drives, local consumption and trade, have been brought to a halt. Many enterprises are facing a severe blow to their businesses as well as great pressure on cash flow. In view of this, we have made substantial adjustments to our SME Financing Guarantee Scheme (SFGS). The maximum facility amount of the 80% guarantee product will be increased from $15 million to $18 million. For the 90% guarantee product, its maximum facility amount will be increased from $6 million to $8 million, and the application eligibility will be relaxed so that more enterprises affected by the pandemic, including listed companies, could apply. For the 100% guarantee product, the maximum facility amount will be increased from $2 million to $4 million, and the total guarantee amount committed by the Government will be raised to $50 billion to benefit more SMEs.

On interest rate, a new concessionary rate subsidy up to 3 per cent for one-year period will be provided under the 80% and 90% guarantee products to relieve the burden of interest rate expenses on the enterprises. In addition, the aforementioned ESS could also alleviate some of the operating cost of the enterprises, so that they can have more confidence in going through this testing time.

Why is it so important to support enterprises? As enterprises provide jobs and constitute a part of the supply chain, supporting enterprises could ensure the smooth functioning of our economic activities and provision of services for the people. Our support to enterprises needs to be broad enough so that it could help avoiding the occurrence of widespread credit risks and hence securing financial stability. This is the reason why we give higher priority to cross-sectoral and cross-services measures when considering the different options of relief measures. Moreover, since Government resource are finite, we should try our best to leverage the power and resources of the market to maximise the effectiveness of our measures. For instance, the SFGS allows us to leverage the capitals of the banking system to meet the financing needs of enterprises of different sectors. Although the Government still has to bare the risk of loan guarantee, it is still a relatively smaller amount of money when comparing with the loan amount.

In addition, we have made efforts to ensure sufficient money supply in the market through measures by the Hong Kong Monetary Authority (HKMA). HKMA has lowered the Countercyclical Capital Buffer (CCyB) ratio and the level of regulatory reserves within one month, further releasing around $700 to $800 billion of lending capacity in total. Moreover, HKMA plans to reduce the issuance size of Exchange Fund Bills this month in order to increase the overall Hong Kong dollar liquidity of an amount of $20 million in the interbank market. HKMA has also arranged repo transactions with the U.S. Federal Reserve to provide additional liquidity of US dollars for the local market, thus reducing the cost of capitals.

The scale of the second round of AEF amounts to $137.5 billion, which could provide a two per cent buffering effect to the GDP. Together with the first round AEF measures, as well as the relief measures of $120 billion proposed in the Budget, the total expenses amount to some $290 billion, equivalent to 10% of the GDP, the extent of which is very close to other major economies. The weak economic outlook this year is also expected to have an adverse effect on the tax and land sale revenue. Taking all these factors into account, the deficit of this fiscal year will very likely surge to over $280 billion.

Why is this scale of expenses affordable for the Government? It is because all these special measures are only one-off in nature under the current unique situation, despite the fact that they will reduce our fiscal reserve from about $1,100 billion to around $800-$900 billion, equivalent to 14 to 15 months of government expenditure. Indeed, now is the time for the fiscal reserve, which we have built up gradually in the past, to serve its function. The reserve allows us to roll out large-scale countercyclical measures during this difficult period, relieving the pressure on employment and livelihood.

Our top economic priority now is to safeguard jobs and support the enterprises through capitalising the power of our fiscal reserve and suitably leveraging market resources. Nonetheless, the most crucial task is still our anti-pandemic efforts and their effectiveness. A favourable environment for speedy social and economic recovery can only be created if we are able to sustain our efforts in fighting against the pandemic.

The development of the pandemic across the globe in the past three months has raised concerns on whether effective control over the pandemic and effective support to the economy can be achieved at the same time. Before the discovery of vaccine or other measures that can quickly contain the spread, would the anti-virus measures become new norms to us? If so, it would become a common challenge for the whole world to strike a balance between protecting people's health and supporting the economy and people's livelihood.

April 12, 2020

With a view to contain the pandemic, many places around the world has required their people to maintain social distancing and minimise the flows of people, which in turn has brought most of the business activities to a halt. For many Hong Kong companies, as more overseas clients failing to make outstanding payments, refusing to receive ordered goods, or even cancelling orders, they are now facing the difficulties in cash flow.

In fact, the pandemic is now affecting almost all sectors in the economy, and not just individual sectors like retail and tourism. As such, the Government's strategy in providing reliefs has to be changed. Instead of focusing on specific sectors, we need to cover all enterprises and address their critical pain points.

Companies in Hong Kong are now facing financial pressure from three aspects, (1) wages, (2) rental expenses and (3) difficulties in cash flow due to the sudden drop in businesses. For those with difficulties in paying wages and the subsequent pressure on pay-cut and layoff, we are now deriving new measures under the Anti-epidemic Fund. As for rental expenses, it is the moment for property owners, particularly major developers, to shoulder more social responsibility and respond more positively to the strong demand from the community on rent reduction in the past months.

For the problem of cash flow, we need to leverage the resources and power of the market for a more effective outcome. Since last August, the Government has enhanced or launched government-guaranteed loan products with guarantee coverage of 80%, 90% and 100% respectively. These products can leverage on the capital, professional knowledge and experience of the banking industry to provide SMEs with loans of different sizes*. In particular, the latest 100% guarantee product will provide concessionary low-interest loan. In our recent communications with the trade, we understand that the demand for financing has been growing across the market under the weak economic situation, and the demand is not limited to SMEs. We are now revisiting our current schemes along this direction.

Since the outbreak of the pandemic, I have invited the Hong Kong Monetary Authority (HKMA) to establish a lending coordination mechanism with the banks and associations and representatives of the trade in order to mobilise the industry to provide more effective support to SMEs. Some progress has been made so far. For instance, to assist individual company, banks will consider automatically offering extensions of loan tenor or principal repayment holidays to qualified SMEs without requiring them to make an application. Also, as the import and export and manufacturing sectors are now facing cash-flow pressure due to delays in shipments, banks will consider further extending the repayment period of trade financing facilities and allowing more customers to apply to convert trade financing lines into temporary overdraft facilities so that customers can manage their cash flow more flexibly. Hard-hit sectors such as transportation, import and export, retail and tourism will be able to benefit from these measures. As for personal customers, as at end March, banks have approved 2 800 principal repayment holidays for residential mortgages and emergency loans, amounting to over $8 billion.

On the macro-level, to ensure sufficient money supply, in recent months HKMA has lowered the Countercyclical Capital Buffer (CCyB) ratio and the level of regulatory reserves, further releasing around $700 billion of lending capacity in total, enabling banks to provide more credit. In addition, HKMA has arranged lending US dollar to local banks, as well as other measures, to provide more liquidity to our banking system.

With the pandemic getting worse and the economy under greater strain, the economic outlook is full of uncertainty. Recovery will depend on the progress of anti-pandemic efforts around the world. And consumer and investor pessimism will also put greater stress on the already weak economy. Based on the latest situation, it is unlikely that the economy will turnaround in the coming six months, hence enterprises and individuals should make early preparation and contingency planning for their operation and financial arrangement.

The Government is devising more support measures to provide reliefs to address the economic challenges brought by the pandemic, with a view to supporting the enterprises and safeguarding jobs.

The COVID-19 pandemic has brought an unprecedented threat to the global economy. In order to maintain people's confidence, ensure sufficient liquidity in the market and avoid the waves of bankruptcy, Governments across the globe have implemented aggressive fiscal and monetary policies also of unprecedented scale. From past experience, these policies would help stabilise the economy and facilitate its rebound. Nonetheless, the market is expected to remain volatile in the coming future, and the above policies may trigger other side effects in the long run. We need to stay vigilant and take precautions against risks.

*Remark: Under the latest SME Financing Guarantee Scheme, the loan products provided include Government guarantee coverage of 80%, 90% and 100% (to be rolled out this month), with the maximum facility amount of $15 million, $6 million and $2 million respectively.

April 5, 2020

The very weak economic data released of late has deepened the market's anxiety on recession. For example, initial jobless claims in the United States released last week soared by over ten times from a week earlier to a record high of 3.28 million, equivalent to five times of the historical high (around 700 000) in 1982. Domestically, the retail sales statistics to be released will continue to show a sharp decline. Judging from the current situation, it is expected that the epidemic would still be very difficult to tackle in the second quarter of the year. Therefore, the economies of Hong Kong, Asia Pacific region and even the global economy will be very weak in the coming days. While many people have already felt the pain at present, the market will inevitably experience even greater shock alongside the release of relevant data down the road. A worldwide economic contraction in the first half of the year seems to be a foregone conclusion.

In the context of economic globalisation, whether it is on disease prevention, anti-epidemic work as well as how to stabilise the economy effectively in the face of the epidemic, it is a must for the whole world to be united and work together to achieve success.

In the just-concluded special G20 summit, countries not only focused on enhancing the exchanges and sharing of information and experience in preventing and fighting the epidemic, but also particularly proposed economic stimulus measures worth over US$5 trillion to counteract the economic and social impacts of the epidemic, with a view to stabilising the economy and restoring global growth. Specifically, the rescue package in the United States alone amounts to US$2 trillion, equivalent to about 10% of its GDP. The Mainland authorities will also promote more proactive fiscal policies, and consider increasing local government special bond issuance quota, appropriately raising the fiscal deficit and issuing special sovereign bonds etc.

While minimising people contacts could effectively prevents the virus from spreading, it also brings commercial activities to a frozen state. Yet, if social contacts are not blocked completely to deter the spread of the virus now, once the spread accelerates, it would not only endanger public health and safety, but also lead to market panic which would intensify the hit to the economy and business prospects.

The past few global market turbulences were mostly triggered by financial turmoil, which subsequently dealt a blow to the real economy. The severe situation we are facing this time is different. In response to the rapid spread of the epidemic, countries have adopted stringent measures to reduce people contacts, restrict international and domestic travel, and even resort to city lockdowns. These measures would take a heavy toll on consumption, reduce demand for goods and services, and disrupt production, trade and supply chains etc. In other words, for this time the epidemic has hard hit the real economy, weighing on the financial sector subsequently. Judging from the current situation, it may be a bit unrealistic to expect the epidemic to disappear quickly. At present, we should focus on how to minimise the disruptions and impacts on the real economy under the premise of preventing and fighting the virus.

Taking the above into consideration, the Government has put in place new anti-epidemic measures, including prohibiting any group gathering of more than 4 persons in any public place, limiting the number of diners at restaurants, closing premises such as cinemas and fitness centres for a period of 14 days. Prevention and control of the epidemic remains our top priority, which requires public cooperation and observance of the relevant regulations. The sooner the epidemic is kept under control, the sooner the normal lives of citizens and business activities could resume, leading to improvement in business confidence, the economy and the employment market.

In the face of the difficult tasks of fighting the epidemic on one hand and stabilising the economy at the same time, there is no past experience for reference all around the world and we can only move on step by step. Under the premise of curbing the further deterioration of the epidemic and avoiding the collapse of the medical system, it is the general public's expectations for the government to maintain certain public services and economic activities while supporting different industries and employees who are under tremendous pressure.

We understand that these stringent anti-epidemic measures would add to the challenges faced by small and medium enterprises, which are under increased pressure of staff layoff and winding up. The Government has pledged that continual support will be provided to industries hard hit by the epidemic or affected by anti-epidemic measures, with particular support to employees. The Government encourages employers to ride out the difficult times with employees together. We are looking into different measures, including a second round of "Anti-epidemic Fund" for providing relief to industries and employees facing immense challenges.

The anti-epidemic efforts and work to stabilise the economy this time is full of challenges. Our society should be prepared for such challenges which may entangle us for a certain period of time. As advised by some local health experts, the pandemic may persist for quite some time before it subsides, and even vaccines could be developed successfully, they could only be deployed from mid-2021 the earliest. In other words, a rapid rebound in the local economy similar to that following the SARS epidemic in 2003 may not be seen this time. Nevertheless, no matter how difficult the road ahead is, we can surf through this testing time with bravery, strength and positivity.

March 29, 2020

The epidemic has been spreading across the globe, putting the worldwide economy under great pressure. Many international organisations and economists are pessimistic over the economic outlook and have warned the risk of global recession this year. To maintain the confidence of the market, many countries reduced interest rates and increased money supply, of which the magnitude is the greatest since the 2008 global financial crisis. At the same time, many governments have launched large-scale fiscal measures to address economic downturn. All these have manifested how worse the situation is.

The Hong Kong Monetary Authority (HKMA) adjusted downward the Base Rate to 0.86 per cent last Monday (March 16) and reduced the countercyclical capital buffer (CCyB) from 2 per cent to 1 per cent, which will release some $500 billion in capital and provide banks with a larger buffer to support the local economy. HKMA has also made clear that the rate of CCyB could be lowered to zero if the economy further deteriorated.

In fact, the current economic situation of Hong Kong is even worse than that of 2003 during the SARS epidemic. Many small and medium enterprises (SMEs) of different sectors are facing a free-fall-like decline in business and the risk of capital chain rupture, and they offer unpaid leave to employees, cut salary or even lay them off. I call on the banking sector to provide full support to SME borrowers under this difficult time. This includes handling enterprises' loan applications with a supportive, accommodating and flexible attitude at full speed, and providing the option of loan restructuring for those in need, so as to assist them in overcoming the challenges. I also call on property owners again to offer rent concessions to tide commercial tenants over through the hard time.

I proposed in the Budget this year a new concessionary low-interest loan with 100 per cent Government guarantee to provide timely assistance to enterprises in need. The scheme was approved by the Finance Committee of the Legislative Council Last Friday. I have urged the Hong Kong Mortgage Corporation Limited to speed up the preparation works with the banking sector, with a view to launching the scheme within April for application and help SMEs to pay rent and wages.

Under the new scheme, the Government will provide a total loan guarantee commitment of $20 billion. The application requirements and procedures will be simplified. Banks only need to check mainly the eligibility of loan applicants when processing the applications. As all default risks will be borne by the Government with the provision of a 100 per cent guarantee, I believe it will greatly enhance the chances for enterprises in securing loans. With a low interest rate fixed at Prime Rate minus 2.5 per cent per annum, guarantee fees waived and an option for a principal moratorium for the first six months, the new scheme will for sure help alleviate the burden of SMEs.

Hong Kong's economy is in deep water and figures are showing that the situation is getting worse. Since February 2019, both the value and volume of total retail sales have been decreasing continuously for 12 months. The decrease in retail sales value ranged from 18 to 24 per cent over the last 6 months, and the decline in sales volume exceeded 20 per cent in the same period. The latest figures will be announced by the end of this month and they will hardly be getting better under the current circumstances.

The unemployment rate announced last week increased by 0.3 percentage point to 3.7 per cent for the period of December 2019 to February 2020, which is the highest over the past nine plus years. In the same period, the number of unemployed persons increased by around 12 000 to more than 13 000. The unemployment rate and underemployment rate of the consumption- and tourism-related sectors combined have surged to 6.1 per cent and 2.5 per cent respectively, both the highest in about a decade. The unemployment rate of the construction sector also hiked to 6.8 per cent. Further rise in the rates are expected as the latest development of the epidemic is not yet fully reflected.

Hong Kong's economy is under a great stress and the future is full of uncertainty. We have to keep up our work of supporting enterprises and safeguarding jobs to preserve the vitality of the local economy. At the same time, we have to set aside our differences and avoid further self-harming. In the 2020 index of Economic Freedom recently published by the Heritage Foundation from the US, Hong Kong was ranked number two, losing the title of the world's freest economy we held for 25 successive years. In fact, Hong Kong still attained high scores of over 90 in 7 out of the 12 components adopted for measuring economic freedom. However, due to the security issues arising from the social unrest in the latter half of 2019, Hong Kong's score in "Investment Freedom" declined significantly, which in turn pressed down the overall score.

We need to treasure and safeguard the fundamental strengths of Hong Kong, and provide a facilitative environment for speedy economic recovery. At the same time, we need to keep up with our efforts in fighting against the virus and aim to restoring daily and economic activities as soon as practicable, so that we can maintain investor's confidence in Hong Kong's future.

March 22, 2020

The declining global economy has put further stress on our local economy. The unemployment rate is expected to get worse, and the catering, retail, accommodation services and construction sectors will remain the hard hit ones. Many companies shortened or even suspended their operation, laid off staff, cut pay or offered unpaid leave to employees. These led to the increase in both the unemployment and underemployment rates, as well as reduction in employees' income. Different fronts of the labour market are under greater pressure. The latest unemployment rate to be announced this week will hike to its highest level over the last nine years or so.

Expanding public expenditure is one of the ways to support the economy and secure jobs. For instance, there are a number of Governemnt works projects in the pipeline which can provide support to the construction industry, in which high unemployment rate can be seen. In addition, the block allocation of $22.3 billion under the Capital Works Reserve Fund, which was recently approved by the Financial Committee (FC) of the Legislative Council (LegCo), will enable the implementation of some 10 000 small works projects, supporting the livelihood of some 17 000 labourers, professional and technical staffs. The projects can also improve our public facilities for a better living environment.

However, due to the earlier filibustering in the LegCo, 37 work projects which have already obtained the support from the Public Works Subcommittee (PWSC) are still pending the approval of the FC. These projects involve a total cost of around $50.1 billion (in money-of-the-day price) and could provide some 7700 jobs. Many of the works are closely related to our livelihood, such as reallocation of water treatment plant, construction of columbaria, district library, elderly home, community hall; expansion of park and enhancement of playground etc. The approval of these works projects by the FC could relieve the unemployment situation of the industry and boost the demand in other sectors of the economy.

To further support enterprises and safeguard jobs, I announced a series of one-off measures amounting to $120 billion in the Budget. As almost half of our labour force is employed by small and medium enterprises (SMEs), I proposed in the Budget the introduction of a concessionary low-interest loan under the SME Financing Guarantee Scheme (SFGS), in which 100% loan guarantee will be provided by the Government, so as to facilitate the cash-flow of SMEs facing difficulties. The Hong Kong Mortgage Corporation Limited has been working with the banking industry on the relevant preparatory work. The scheme will be discussed by the Panel on Commerce and Industry of the LegCo on Tuesday before submission to FC for funding approval. Subject to approval within this month, the scheme will be formally launched in April.

This 100% loan guarantee product under the SFGS is applicable to SMEs in all sectors, including those mostly affected by the coronavirus outbreak such as retail outlets, travel agents, restaurants, cinemas, karaoke establishments and transport operators, etc. The maximum amount of the loan per enterprise is the total amount of employee wages and rents for six months, or $2 million, whichever is lower. An interest rate of the Prime Rate minus 2.5% per annum (i.e. current interest rate at 2.75%) will be charged. All guarantee fee will be waived. The maximum repayment period of a loan under the guarantee is 36 months, with an optional principal moratorium for the first six months. The overall design of the scheme is to help the SMEs to enhance their cash-flow and maintain their employees, so that they could survive this economic winter and have a better chance of sooner recovery later.

Since last August, the Government has launched four rounds of relief measures with a total amount of over $30 billion. In last month, the $30 billion Anti-epidemic Fund was launched. Another package of relief measures costing $120 billion was proposed in the Budget. We are now working at our best to implement measures with LegCo's approval. I hope that the Budget will be approved by the LegCo soon so that other relief measures could be put in place quickly to support our economy. We will also continue to keep an eye on the changing local and external economic situation, make assessment and take necessary response.

In addition to fighting against the epidemic, it is also our top priority to maintain the vitality and impetus of the economy, support enterprises and stabilise the employment. This requires the support of the entire community. In particular, the support of the LegCo in expediting the approval of long-pending funding items is important. I call on LegCo members to approve the various funding items as soon as possible to address the urgent needs of the people and facilitie the flow of money into local economic activities.

At the same time, I am leading various financial regulators to monitor the different parts of the financial market through a cross-market, coordinated and real-time approach, particularly to prevent the occurrence of systemic risk. Facing the turbulence of the global financial markets, Hong Kong's market has been volatile these days with a surge in transaction volume. Nonetheless, our stock, future and derivative markets are still operating orderly. The transaction, clearing service and risk management works provided by Hong Kong Exchanges and Clearing (HKEX) are also proceeding orderly. Short-selling and proprietary trading conducted by hedge funds and major market participants have not shown sign of abnormal activities. The exchange rate of Hong Kong Dollar and interest rate largely remained stable. Banks maintained sufficient liquidity with adequate capital support. We will continue to monitor the market situation, assess potential systemic risk and step up preventive measures if necessary to safeguard Hong Kong's financial stability.

March 15, 2020

Various international organisations have recently revised downward the global economic growth forecast of this year. The Organisation for Economic Co-operation and Development (OECD) lowered its global GDP forecast of 2020 by half a percentage point to 2.4 per cent, which is the lowest growth since the 2009 global financial crisis. At the same time, it adjusted downward the GDP growth of China to 4.9 per cent, a 0.8 percentage point drop from its original forecast. For the US, the expected GDP growth was reduced by 0.1 percentage point to 1.9 per cent. OECD also indicated that global growth could be slowed down to as low as 1.5 per cent if the spread of the virus continues. In parallel, the International Monetary Fund (IMF) some weeks ago also revised downward its annual global GDP growth forecast by 0.1 percentage point to 3.2 per cent, and stated that there would likely be further adjustments in the coming weeks.

Given the increasing downturn risk for the global economy, many central banks including those of the US, Canada, Australia and Malaysia, have increased their money supply by cutting down interest rates, ranging from half a percentage point to quarter of a percentage point. In the US, the emergency rate cut pushed through by the Federal Reserve before its upcoming regular meeting has sparked market speculations. With the series of rate cut, major global stock markets tumbled in the last week, reflecting market's worry over economic prospect and investment confidence. Different countries are now working at their best to fight against the virus. Investors' confidence and sentiment would hinge on the further development of the epidemic.

As the global economy is going through a stormy weather, it becomes more and more challenging for Hong Kong's economy to recover from the recession last year. To boost local consumption and revitalise the economy is our top objective. I have therefore announced in the Budget a series of counter-cyclical measures amounted to $120 billion in total in order to provide support for the already-frozen market.

Among all the measures, I have decided, in particular, a cash payout of $10,000 to Hong Kong permanent residents aged 18 or above, with a view to boosting local consumption and relieving people's financial burden. We are now working at full speed to take forward the scheme, including the arrangements for application through e-banking and printed forms, collection of applications and cash disbursement. We have been working with the banking industry on the establishment and testing of the relevant system, with a view to developing a simple and convenient mechanism while ensuring personal data privacy and protection. Our current plan is to accept application by early July and to start the disbursement in the summer holiday.

To expedite the cash payout process, we would make the application procedure and eligibility criteria as simple as we can. Those meeting the above criteria (i.e. Hong Kong permanent residents aged 18 or above) on or before March 31, 2021, i.e. by the end of the 2020/21 fiscal year will be eligible to apply. To facilitate citizens who could only meet the eligibility criteria close to March 31, 2021, we have set the application deadline at December 31, 2021 so that they can have sufficient time to renew their ID card for the application.

Fighting against the epidemic is now our top priority. Once the epidemic is over, how we could boost the local consumption and revitalise the economy in full strength would be another big challenge for us to tackle, which requires mutual co-operation among different sectors of the community. We will liaise with the business community and encourage them to roll out concessionary campaigns, so as to benefit the community and maximise the effectiveness of the $70 billion cash payout scheme. I also hope that members of the community can work together to put aside differences, make room for reviving the economy, so that businesses could overcome this testing time as soon as possible and the unemployment and underemployment situation can be relieved.

March 8, 2020

Over the past few days, I explained the details of the Budget through different channels, such as attending press conference, the Finance Committee meeting of the Legislative Council, as well as live TV and radio programmes. I also visited wet markets, hawker stalls as well as small local restaurants to talk with people and listen to their views. As I observed, people did care about the contents of the Budget. They expressed views on the cash payout scheme, and hoped that the Budget initiatives could help boost the economy and in turn relieve their financial pressure.

Indeed, our economy is now in deep winter, and the operation of some small businesses have been "frozen". In view of this, I adopted in this Budget a two-pronged approach to support the economy. For individuals, in addition to the cash payout scheme, we continued to implement one-off relief measures such as tax and rates reduction. For enterprises, we announced the 100% Government-guaranteed low interest loan scheme for SMEs, and provided subsidies for electricity, water and sewage charges etc at the same time. The overall objective was to boost consumption and stimulate the economy at its widest scope with the greatest effort.

With the four rounds of relief measures announced last year, the $30 billion Anti-epidemic Fund approved a week ago, the $120 billion one-off measures and other initiatives announced in the Budget, they would altogether bring a stimulus effect of 3% to our economy. Having regard to this factor, we expected our economy will grow by -1.5 per cent to 0.5 per cent in real terms this year.

With these substantial anti-cyclical measures, I wish the economy could recover as soon as possible. By minimising the extent of our economic downturn and mitigating the negative impacts of economic adjustment on our people, it can help preserve the vitality of our economy and make it easier to rebound later.

Looking ahead, I am still confident in Hong Kong's economy. I expect that our economy will grow by an average of 2.8 per cent per annum in real terms from 2021 to 2024, slightly lower than the trend growth of 2.9 per cent over the past decade. Nonetheless, some critics question this forecast as over-optimistic, without sufficiently taking into account the latest economic difficulties.

Learning from our experience since 1997, our economy has always shown sharp rebounds after overcoming economic low-tides, such as the Asian financial crisis in 1998, the SARS epidemic in 2003, as well as the Global financial crisis in 2008. It is true that we may not be able to replicate those measures that facilitate the swift economic recovery in 2003. But now we are enjoying the enormous opportunities brought by the Guangdong-Hong Kong-Macao Greater Bay Area development, the Belt and Road initiative, as well as the huge and affluent Mainland market. In addition, many nearby Asian countries have been growing very fast in recent years. For instance, the ASEAN countries have already surpassed the EU and become our second largest trading partner, bringing enormous development opportunities for our financial services, innovation and technology, transport and logistics, and professional services sectors.

In future, we will keep an eye on the changing economic environment and promote diversification of our economy. Apart from strengthening our priority industries, we will also nurture new industries, identify new impetus for economic growth, enhance the operation efficiency and productivity of enterprises and their upgrading and transformation through technology application, as well as to explore new solutions and development model for our economy.

March 1, 2020

It has been a turbulent year for Hong Kong, with our external trade affected by trade tensions between China and US, followed by the violent events which eroded our society and well-being, in addition to the novel coronavirus epidemic, all forcing our economy into a "chilly winter". Whilst we have sailed through many challenges and difficulties in the past, the anxiety coupled with new challenges and difficulties is unavoidable.

Looking back, the economy of Hong Kong could gradually get back on track after shocks, usually with a significant rebound after the toughest period. Providing support to the enterprises, safeguarding jobs and maintaining market confidence during the toughest times could help businesses get back on track and stabilise employment quickly upon economic recovery. With this in mind, supporting enterprises and safeguarding jobs would be our top priority under the current economic downturn.

For the coming Budget, people may focus on the relief measures or the scale of the Government's financial deficit. In fact, many measures in the Budget rooted from suggestions from the public and various sectors. Nonetheless, we could hardly satisfy the wishes of everyone with the public resources available. I must express my gratitude to all your suggestions, which facilitated my preparation for the Budget with focus on coming up with feasible solutions for issues of public concern.

February 23, 2020

As I pointed out last week, the actual impact of the disease on Hong Kong's economy is quite substantial and may be higher than that of SARS in 2003. The impact is not limited to retail, catering or tourism-related industries. Such "tsunami-like" shocks may cause the unemployment rate to deteriorate rapidly.

The Chief Executive has announced the setting up of a $25 billion fund for virus fight to help local sectors and businesses tide over the coronavirus situation, and strengthen the city's epidemic prevention work, We hope to support the sectors and industries that have been hit hard by the outbreak, so as to avoid large-scale business closures and layoffs.

In terms of anti-epidemic measures, to ensure the proper supply of masks and other personal protective gear, the government will continue to step up its global sourcing efforts and subsidise firms to set up local production lines for producing reusable masks and conducting related R&D work. The government will also allocate an additional $4.7 billion to the Hospital Authority to ensure that they have sufficient resources to tackle the epidemic. In terms of supporting enterprises, companies in the various industries directly affected by the epidemic will receive one-off allowances, covering travel agencies, licensed food premises, retailers, licensed hawkers, etc. We will also provide support to the exhibition, culture and arts, innovation and technology sectors, kindergartens and childcare centres, as well as front-line cleaning workers.

Following the launch of the four rounds of relief measures in the second half of last year, the announcement of the 10 new livelihood policies at $10 billion by the Chief Executive last month, and the latest $20 billion fund for virus fight, there have been discussions on the affordability of the government in the long run given the surging government spending. Indeed, the projected fiscal deficit for the new fiscal year (2020/21) may be a record high in terms of dollar value. Apart from the introduction of counter-cyclical support measures as the main reason, the significant increase in recurrent expenditure in the past 10 years and the reduced tax and land revenue due to the weakening economy also contributed to the deficit. In fact, the average annual growth rate of government expenditure has exceeded that of government income since 1997. Nonetheless, one of the major reasons for the increase in government expenditure in the past period of time is for improvement in public services (such as social welfare) or investment in the society so as to catch up with the need of the people. Further increase in spending has to take into account government's affordability in the long run, that is to commensurate with the growth in revenue.

Due to the complex and volatile external economic environment, the economic impact of the disease on the Mainland remains to be seen. Besides the virus outbreak, our society has not yet recovered from the social unrest last year, making it necessary for us to be cautious towards the short-term economic outlook. Fiscal deficits is expected for a period of time. More details and figures will be provided in the upcoming Budget. Concerns about whether the fiscal discipline of the HKSAR Government is following the principle of keeping the expenditure within the limits of revenues enshrined in the Basic Law, and the views of international rating agencies on Hong Kong's public finance are expected.

When interpreting fiscal deficit, we cannot only consider its magnitude or its percentage against GDP. The cause behind the deficit is also important. For example on the nature of expenditure, whether it is for essential operating expenses or flexible relief measures; whether it is recurrent, one-off or additional spending for special needs; how flexible and compressible the amount is; the growth trend of the expenditure, such as whether its growth will hinge on the aging of the population; or whether the expenditure is indeed for investment. On revenue, its volatility with economy and market fluctuations, and the room for upward adjustment and expansion should be considered. It is through analysis from different aspects that we can have a more thorough and accurate understanding of the deficit of a particular year, and an outlook of the public finance.

The current fiscal reserve of the HKSAR Government allows us buffers to launch counter-cyclical measures sustainably to stabilise employment and support the economy. However, in order to ensure the stability of public finance, we must pay more attention to fiscal sustainability in considering new expenditure items in future, in particular those with a recurrent nature, and keep expenditure within the limits of revenues. On the other hand, it continues to be pivotal for us to develop our economy, maintain the momentum of economic growth, and identify new growth drives to increase government revenue for supporting various public services and infrastructure. In addition, we need to work hard to break through various constraints that hinder economic development, including shortages of land, talents and labor, so as to create capacity and more favorable conditions for economic development.

February 16, 2020

At the same time, the outbreak has dealt a further blow to the already declining economy. Many group gatherings and spring receptions usually held during the Chinese New Year period were cancelled due to the outbreak. Tourist arrivals took a sharp plunge, and the catering, retail, consumption and tourism-related industries have been hit hard. Both enterprises and their employees are facing pressure on income cut or financing. Some companies have been offering unpaid leave, cutting salary and even laying off staff. In fact, with more citizens staying at home, business and economic activities as a whole have slowed down significantly. Economic situation has becoming more and more difficult, and we have to deal with it without delay.

To maintain people's confidence during economic downturn, it is crucial to address the financing problems of enterprises and employees. To this end, I have earlier appealed for positive response from the banking industry through the Hong Kong Monetary Authority. We are pleased that some banks have already taken the initiative to introduce relevant measures, including time-limited principal moratorium for mortgage loans for clients engaged in retail, catering, logistics, and tourism industries etc. I believe other banks will launch similar measures to support our SMEs very soon. In addition, I reiterate my appeal to property owners to tide over difficult times together and fulfil their social responsibilities by providing more substantial rent reduction for tenants whose business is in distress.

Indeed, Hong Kong's economic environment had been severe before the virus outbreak. According to the forecast estimate released by the Census and Statistics Department last week, GDP grew at a negative annual rate of 2.9% in the fourth quarter of last year, the second consecutive quarter of contraction. In which, exports of services (covering the tourism industry in Hong Kong) and total local capital investment (reflecting the business climate) fell sharply by 25% and 16.2% respectively. For the whole of 2019, GDP is expected to contract by 1.2% in real terms, the first annual decline since 2009.

Retail and catering are two of the most "hard hit" industries. The volume of retail sales fell by 24% in the fourth quarter of last year, which is the largest quarterly decline on record. For the catering sector, total restaurant receipts fell by 14% in the last quarter, and by about 6% for the whole of last year, showing the first annual decline since 2003.

It can be expected that our job market will be facing increasing pressure. The latest unemployment figures to be released in mid-February will very likely to rise from 3.3% in the fourth quarter of last year.

The extent of the disease's impact on our economy would depend on how the outbreak evolves, but it is quite certain that the outlook would not be optimistic and the impact may be higher than that of SARS (Severe Acute Respiratory Syndrome) in 2003. Internally, Mainland visitors now account for 78% of the total visitor arrivals in Hong Kong, much higher than the rate of 41% in 2002. Tourism accounted for 32% of Hong Kong's total service output in recent years, up from 21% during the SARS period. It follows that continued weakness in the tourism and retail sectors will bring a more significant blow to our economy. Moreover, compared with SARS, the rapid spread of the current disease over the whole country will have a huger impact on Mainland's transforming economy. If China's economic growth loses impetus, the global economy will suffer as well.

As regards the financial market, over the past two weeks, no irregularities have been seen in the bond, currency, foreign exchange and derivatives markets. The equity market has been operating smoothly in an orderly manner despite some volatility. This reflects the continued confidence of local and international investors in the Hong Kong market. We will continue to monitor the market closely.

The new Budget will be released in around two weeks. The evolving outbreak of the virus has posed great challenges to the preparation work. I am assessing the latest impact of the outbreak on our economy, and will consider suitable measures.

February 9, 2020

The Chief Executive announced a new round of anti-epidemic arrangements last week, including extending the suspension of secondary schools, primary schools, kindergartens, child care centres and special schools, and extending the special work arrangements for civil servants. Together with the earlier announced entry restrictions on Hubei Province residents and those who has been to Hubei Province in the past 14 days, and the suspension of issuance of endorsement under the Individual Visit Scheme, all these measures can help reduce cross-border and local flow of people, with the aim of minimizing the risk of spreading the disease in the community. We also appeal to employers to make flexible work arrangements for their employees so as to reduce unnecessary travels in the community. At the same time, the government will coordinate inter-bureau efforts to enhance the sourcing processes of needed anti-epidemic materials in the global market, and strive to stabilize their local supply.

Apart from government's work, individuals should also build up good body immunity, reduce travel, maintain good personal hygiene and stay alert. Rumors, hatred, and negative actions cannot help. We have to be united and support each other to add power to fight against the virus.

Hong Kong's economy experienced a negative growth in 2019. As we enter 2020, the virus outbreak together with the challenges already posed by the social unrest in the past months mean a double blow for our economy. The catering, retail, tourism and consumer-based industries, which have been under pressure in the past six months or so, will fall into a deeper winter, and small and medium enterprises (SMEs) and workers will face greater pressure too. Prior to the virus outbreak, different organisations estimated that Hong Kong's economic growth this year will range between negative 4.1% to 2%, with the median at zero. Government has yet to finalise the economic forecast for this year, of which the development and duration of the epidemic will be one of the main considerations. We expect that the virus outbreak will greatly increase the risk of continued economic contraction this year, leading to a decrease in government revenue and an increase in expenditure, which means that the fiscal deficit may rise further.

Nonetheless, to equip Hong Kong to fight against the disease, I will ensure that all anti-epidemic efforts, as well as the medical system, will be provided with sufficient financial resources. As for the financial market, I have been leading and coordinating relevant departments and financial regulators in monitoring the market timely and comprehensively. Although the spread of the virus has added pressure on the stock markets of Hong Kong and other major overseas markets, transactions and settlements in Hong Kong are still proceeding in a stable and orderly manner. In the future, we will remain vigilant and continue to monitor the market closely to ensure the financial security of Hong Kong.

February 2, 2020

Just like the uncertainties brought by the complex and changing external environment to the economy, the variables and unknown developments in the spread of the virus also pose a major impact on the society and people's livelihood. In facing these challenges, we need to have a comprehensive assessment of the "worst-case scenario". At the same time, we should adopt a positive attitude, prepare and implement response plans, and strive to control and contain the impact.

The Chief Executive announced yesterday that she would personally lead the inter-departmental Steering Committee cum Command Centre to mobilize the society and government departments to join hands in tackling the disease. Looking back, everytime when we faced challenges, we were able to get through the crisis by having comprehensive and scientific assessment, full implementation of formulated countermeasures, close monitoring of the development, and calm response to changes. The new virus has a longer incubation period and cold weather is conducive to its survival, so the spreading may not be easily and quickly stopped. The government will stay alert and do its best to coordinate the response, maintain openness and transparency, and tackle the disease with our people. In this difficult times, we hope that everyone will work together to fight the battle.

We are also closely monitoring the possible economic impact of the evolving disease. Hong Kong's economy has showed decline since mid last year and has not yet recovered from the violent attacks in the past months. The current virus attack makes things go from bad to worse. As the situation is still evolving, it is difficult to assess the extent of its impact on the economy for now. We will closely monitor the developments and put in place necessary and timely measures to alleviate the economic pressure on our society.

During this unusual festive period, I hope everyone can stay more at home and travel less and enjoy the time with your family. In this year of the Rat, may I wish you all a year full of health and blessings.

January 26, 2020

I have listened to many suggestions from citizens in the programme, including their wish for the government to improve public services, enhance administrative efficiency, develop a diversified economy and relieve the burden of the people. Some citizens also suggested the government to encourage local consumption to support the economy and employment, or simply give a free cash handout to all Hong Kong people.

Many of the views of the public are of high reference value. However, the introduction of new measures would require new public resources, and for some recurrent measures, the related expenses may increase rapidly with the growing ageing population. For example, the annual cost of the Government Public Transport Fare Concession Scheme for Elderly and Eligible Persons with Disabilities, which allows elderly to enjoy a $2 concessionary flat rate, has increased drastically from about $200 to $300 million in 2012 when the Scheme was implemented, to about $1.4 billion today. The Elderly Health Care Voucher Scheme costs about $36 million per year when it was implemented in 2009, but has already increased to about $2.8 billion per year in 2018.

Looking back at the expenditure pattern of the HKSAR Government over the past two decades, we can see that the recurrent expenditure in 1997/98 was about $150 billion; after ten years (2007/08), it increased by more than $50 billion to $200 billion. Another seven years later (2014/15), it increased by $100 billion to $300 billion; and then by another $100 billion to $400 billion in just four years (2018/19). In 2019/20, recurrent expenditures increased by $40 billion in a single year. The government's recurrent expenditure has increased significantly in the past decade, in a rate higher than the increase in revenue. Apart from the rapid growth of the ageing population, another major reason for the surge in recurrent expenditure is to respond to the community's demand for more public services and enhancement to service quality. These expenditures, to a certain extent, could help address the problem of inadequacy in public service provision, which are justifiable and reasonable. However, if the growth trend persists, it will be difficult for the society to bear.

Some commentators believe that the government does not need to worry in increasing its expenditure given its fiscal reserves of more than $110 billion, which can support 26 months of government expenditure. Yet if we look at the seven-year period after 1997 (1997/98 to 2003/04) as an example, economic downturn at the time had caused the government to run a fiscal deficit for most of the time and fiscal reserves decreased sharply. In 1997, fiscal reserves were able to support 28 months of government expenditure but was then dropped to 13 months in seven years. In fact, according to the medium range forecast released in last year 's Budget, even without economic recession, we expect that our fiscal reserves will only be equivalent to 19 months of government expenditure in 2023/24 due to the continued rise in recurrent spending in the coming few years. Based on the latest economic situation, the decline in fiscal reserves will be even faster in terms of number of months of government expenditures.

2019/20 will be the first time for a deficit budget in fifteen years. In 2020/21, due to the reduction in revenue (especially for land-related revenue), and the additional resources required for the implementation of government's counter-cyclical measures in supporting the economy and relieving people's burden, the deficit will be of even higher level. I stated earlier that a prudent level of fiscal deficit that is acceptable internationally should not exceed about 3% of GDP. I would like to add two remarks here. First, we have to consider whether the deficit is mainly caused by an increase in recurrent expenditure or one-off non-recurrent expenditure. If the deficit is a result of increase in one-off non-recurrent expenditure, the long-term impact on fiscal sustainability will be relatively small. Second, as mentioned above, Hong Kong's fiscal reserves accumulated in the past provide us with fiscal buffer to derive a more aggressive deficit budget when needed. As long as the relevant policies and measures will not cause long-term structural deficits, then we need not be too worried about higher deficit level in particular years.

The ten measures announced by the Chief Executive lately aim to improve the welfare of the elderly and the grassroots, and to address demands of the community over the years. According to preliminary estimates, the relevant measures, which will be implemented gradually in and after next year, involve recurrent expenditures of more than $10 billion. By then, Hong Kong's economy should have recovered, and government revenue should be able to return to a higher level. At the same time, we can explore the need to broaden our sources of income. In addition, the government has persistently introduced some one-off measures in the past, such as tax refunds, waiving rates and business registration fee, etc. The amounts involved are not small. When necessary, some adjustments to the measures may be made to spare more resources.

Hong Kong's economy is currently in recession. The HKSAR Government has launched several rounds of measures to support enterprises and relieve people's burden. In the 2020/21 budget, we will continue to adopt an expansionary fiscal stance and introduce counter-cyclical measures to "stimulate the economy, support enterprises, safeguard jobs, and smoothen livelihoods". Even if the budget deficit is of a higher level, I will maintain Hong Kong's financial stability and the soundness of public finance, so as to facilitate the sustainable development of Hong Kong's society and economy.

January 19, 2020

These consultations have provided a lot of references and ideas for the preparation of the Budget. I will channel back the suggestions to relevant policy bureaux to consider their feasibility, with a hope that the Budget initiatives can address people's concerns. Even though some suggestions may be more complicated and cannot be included in the Budget, the process still provides an opportunity for the bureaux to understand the views and voices of people on different policies.

Some people may think that conducting consultation sessions is a routine exercise of no practical use. Yet the truth is, we did put feasible recommendations into practice. For example, during a consultation session with a group of secondary students acting as "Junior Financial Secretary" last year, a student suggested that additional resources be provided to schools for strengthening learning support on STEM subjects. That idea was then translated into last year's Budget initiative of allocating $1 million to each aided secondary school for setting up an "IT Innovation Lab", which offers students with more chances to learn about information technology through extracurricular activities.

Among the many consultation sessions already held this year, the session with "Junior Financial Secretary" from secondary schools remains an exciting occasion. More than 70 students from different secondary schools put forward to me their specific proposals relating to seven areas covering land and housing, health care, education, diversified economic development, government revenues, environmental protection and caring and sharing community, which I have been deeply impressed.

Last week, I was invited to join another very special "consultation session", which was a group dinner for elderly living alone. Most of the participants were older than me, and one of the "most senior" participant is over a hundred years old. While sending our best New Year wishes to those "old friends", I also listened to their thinking so as to understand the expectations and needs of the elderly.

We all hope to make a good living in Hong Kong, and the society has been growing sustainably to be more people-oriented, supporting those in need. This is also the most important factor I have taken into account when considering the allocation of public resources. However, public resources are limited and cannot fulfil all the needs. Trade-off decisions are therefore unavoidable. In addition to allocating resources, good coordination in policy and execution is also essential to enable the smooth implementation of measures and prudent use of public resources, bringing benefit and good user experience to the public.

While the government is committed to spend resources on developing the economy, improving people's livelihood and strengthening public services, we also have to consider our financial affordability and capability. Looking forward, the downward pressure on Hong Kong's economy in the coming year will be huge, and the employment situation is expected to deteriorate in the coming few months. The government is facing a decline in revenues but an increase in expenditures. The current fiscal year ending end March this year will have the first fiscal deficit account in 15 years. While some people may comment that the government is able to spend a lot more given our sound fiscal reserves, I believe we are all reluctant to see consistent and large-scale budget deficit in the government accounts. We have to carefully manage future fiscal deficits to avoid any sharp and continued increase as it is pivotal in ensuring the confidence of citizens and market in the soundness and stability of public finance, as well as the stability of the Hong Kong dollar exchange rate and the financial system.

It has never been easy to manage public finance and allocate public resources prudently. In every consultation and exchange session I attended, I adopted an open mind with a view to gauging more opinions. The 2020-21 Budget will be released around one month from now. Just like the "little bee" serving as the consultation ambassador for this year's Budget, we will continue to fly around to listen to your views and insights.

January 12, 2020

In fact, in addition to the IMF, Hong Kong has been continuously recognised by different international institutions in the areas of economy and business, finance, transportation and infrastructure, security, and rule of law, etc. These are the results of the efforts made by several generations of Hong Kong people which we should be proud of and cherish.

Economically, Hong Kong has been rated as the world's freest economy by the Heritage Foundation of the United States and the Fraser Institute of Canada for more than 20 years. In terms of business environment, the World Bank's Doing Business 2020 ranks Hong Kong as the third most convenient place to conduct business in the world. Hong Kong's competitiveness has been repeatedly ranked among the top three in the world ("World Competitiveness Report 2019" by International Institute for Management Development and "Global Competitiveness Report 2019" by World Economic Forum).

Hong Kong is particularly outstanding in the financial field. We have been repeatedly ranked as the third largest financial center in the world, second only to New York and London, and ranked first in Asia (Global Financial Centers Index produced by Z/Yen Partners and China Development Institute of Shenzhen). In the past eleven years, Hong Kong has been the world's top IPO market for seven times. We are also the world's largest offshore RMB centre and Asia's premier fund management centre.

In terms of transport infrastructure, Hong Kong's infrastructure competitiveness ranked third in the world ("Global Competitiveness Report 2019" by World Economic Forum). In 2018, Hong Kong's airport ranked first in the world in air cargo volume and the third in international passenger volume (Airports Council International).

Apart from economic development, Hong Kong's security and rule of law are also highly recognised by the international community. Hong Kong's judicial independence is second in Asia, the eighth in the world (World Economic Forum); rule of law is second in Asia, eleventh in the world (World Bank); law and order is second in Asia and the fifth in the world (Gallup's law and order index 2018). Hong Kong ranks fourteenth in the world for our corruption- free society (Transparency International).

The various ratings and rankings of course are based on the different scoring criteria and methodologies adopted by the relevant institutions, as well as their value orientation. Yet it is obvious that Hong Kong is a competitive city in various aspects and assessments from different perspectives.

It is worth noting that the scores and rankings mentioned above have not fully reflected the social events taken place in Hong Kong last year. The social turmoil and violent acts in the past six months have hard hit Hong Kong's international image and competitiveness. This year, Hong Kong's scores in various aspects may be adversely affected.

On security and public order, the violent acts, arsons, and vandalisms repeatedly occurred during the past six months, as well as assault on people with different views, not only ruined the sense of security for people living in Hong Kong, but also deterred international investors and tourists from visiting the city. In fact, the number of visitor arrivals in Hong Kong has reduced significantly by 40% to 50% in the past few months.

In terms of transport infrastructure, roads have been occupied and blocked and transport facilitates have been damaged from time to time in the past half a year. Citizens often took extra time for work or travel, or had to cancel their travel plans worrying that they could not find the way home. some people even set fire to MTR stations and trains, threatening passengers' safety. As for the incident that hit the airport last year and caused injuries, it not only damaged Hong Kong's reputation as a reliable and efficient international aviation hub, but also severely hampered the confidence of overseas businesses towards Hong Kong. Some visitors, freight and international conferences have changed their destinations to neighbouring regions. If the situation continues, our economic benefits as well as employment opportunities will be adversely affected.

In terms of the business environment, Hong Kong has all along advocated freedom, openness and diversity, and private properties are duly protected. These are the core elements of an ideal business environment. However, mob protesters have repeatedly harassed, vandalised and set fire to shops. These acts have seriously attacked Hong Kong's civilization and core values.

As for the rule of law, some people have recently set fire to the judiciary and even made personal attacks and intimidation against individual judges. These acts undermine the spirit of the rule of law and the criminals must be brought to justice.

Anyone who disagrees with the rulings of the court should appeal through the current system, and the public can also discuss the rulings rationally. In fact, our judicial system has been protected by the Basic Law under the "One Country, Two Systems" arrangement. At present, the Court of Final Appeal has 15 non-permanent judges from other common law jurisdictions (including the United Kingdom, Australia and Canada) to provide valuable experience to the Hong Kong judiciary system. Recently, Madam Justice Beverley McLachlin, a Canadian Non-Permanent Judge of the Court of Final Appeal, said that Hong Kong's judiciary has always been independent and the judgment has not been affected by external pressure.

Hong Kong's economic development and international achievements are the result of the hard work of several generations. "Burning together" will destroy all the efforts made. The violent attacks damaged shops and public facilities, and hampered people's confidence in the future, adding pressure on the economy which is already in a downturn, and reducing Government revenue, This will in turn weaken our resources for public services, affecting the needy and underprivileged members of the community. I hope everyone of us can recognise the damages and harm of violence, cherish and protect Hong Kong, our home.

January 5, 2020

These scenes remained vivid in our mind and left many people in Hong Kong worried and despaired. They went out less and spent less, having safety concerns of their own as well as their relatives and friends. In October, Hong Kong's retail sales volume plummeted by 26%, the most significant monthly drop in history, and it was not much better for November. These scenes also scared off travelers for business or sightseeing. The number of arrivals dropped by about 50% even at the usual peak during Christmas Eve and Christmas day. Hong Kong's economy has entered into a recession, directly affecting a large number of grassroots workers, with shrunk income and risk of unemployment. In particular, the unemployment rate in the catering service industry shot over 6%, the highest in the past eight years. Among the 2.9% year-on-year negative economic growth in Hong Kong in the third quarter, 2% was caused by the social unrest and violent acts. Whilst the statistics for the fourth quarter will only be released early next year, the negative growth is expected to continue, judging from the trend in recent months. This also leads to the first deficit in government accounts since 15 years ago, implying that the government's flexibility in mobilising financial resources will be reduced under the economic downturn.

The turmoil of the past six months has severely hit the slowing economy of Hong Kong. And the larger impact is on people's hearts. The rioters threatened the citizens' safety and freedom of expression with the primitive violence of "my way or the highway", trampled on the freedom and rights of others to create a bluff, creating "black terror", and damaged the rule of law. The core spirit of the law as a social contract for dispute settlement is to prohibit the "Law of the Jungle" by bullying, and bringing a civilized and rational society. In fact, regardless of the motive declared, the very basic principle is that we should not resort to violence, which is illegal.

With two days left, the Year of 2019 will become history. Today's Hong Kong can no longer afford further violence and hatred. We should not turn a blind eye to the rampant or even brutal acts of rioters due to dissatisfaction or unhappiness, as such connivance is the culprit which ruins Hong Kong. Hong Kong may not be as good as we wish, but it is by no means as bad as some people described. The turmoil that has plagued Hong Kong for seven months still continues. Many people are asking, when can we return to peace? What hopes can we have for 2020?

Hong Kong currently faces several pressing issues: violent coercion (including assault, damage, malicious nuisance and doxxing), social disputes and economic recession. The three issues are intertwined, but should be addressed individually.

First of all, we must stop any acts of coercion and destruction. If goals could be achieved through destruction, who would be willing to build? Perhaps some people hope that the society will be chaotic enough to accumulate bargaining chips to promote social movements. However, for general citizens, only social stability will provide space for living and development.

As for social disputes, we should seek a way out through dialogue, mutual understanding, and actively moving forward. Opposition and curse are no more than venting of emotions, they will only push Hong Kong towards the heart of struggle, and will only give rise to hatred and despair.

Facing the economic recession caused by internal and external difficulties, we have to work together with one mind. In terms of the external environment, trade protectionism, unilateralism, and the geopolitical situation will continue to mediate the situation next year. On the local front, whether consumption and tourism can soon be improved would hinge on the pace of restoring stability of Hong Kong's social scene. If the business environment continues to be difficult and the unemployment rate rises, it will further hit the weak consumption market and increase the living pressure of workers. In order to alleviate the "pain" caused by the economic downturn to small and medium enterprises and citizens, the Budget to be released in February will focus on "supporting enterprises, safeguarding jobs, stimulating the economy and smoothening livelihoods".

The long-standing deep-rooted economic and social conflicts, such as issues of land and housing, poverty, etc., involve resource allocation and social justice. It is both a livelihood issue and a political issue, which must be dealt with in a specific, rational and prudent manner.

Fortunately, the core competitiveness of Hong Kong's financial markets has been maintained. The banking system, the securities market, the Linked Exchange Rate System, and the free flow of funds in and out of Hong Kong have all operated in sound and orderly manner. The Hang Seng Index is currently at about 28 000 points, about 3 000 points higher than early 2019. Since the beginning of this year, the IPO of Hong Kong's securities market has exceeded $280 billion, which has once again come first on the IPO league table, the seventh time in the past eleven years. This reflects the strong fund-raising capability of our financial market, which continues to provide support to the future economic development of Hong Kong.

As we walk through 2019, no matter with fear, anxiety, anger or confusion, we can choose to embrace the future with hope for the 2020. Over the past century or so, Hong Kong has sailed through storms and waves, every time we have turned crisis into opportunities and become more competitive and successful. I am convinced that, as long as everyone embraces challenges proactively, summarises experiences and makes concerted effort, we can certainly overcome the current difficulties, and Hong Kong can reach another peak again.

December 29, 2019

In November last year, we introduced enhancements under the 80% Guarantee Product of the SME Financing Guarantee Scheme (SFGS). The maximum facility amount was increased from HK$12 million to HK$15 million, the maximum guarantee period was lengthened from five years to seven years, and the guarantee fee was halved. As a result, in the first 11 months this year, the number of loans approved increased by 64% to over 2 500, and the amount of additional loans involved nearly doubled to $12.7 billion. With a view to relieving SEMs' cash flow pressure, we introduced a new relief measure in August this year under which SME borrowers may apply to their lenders under the SFGS for principal moratorium of up to 12 months in total. During such period, only interest payments have to be made.

In September, we launched a 90% Guarantee Product of the SFGS through the HKMC Insurance Limited. With the 90% guarantee from the Government, each company can borrow up to $6 million from banks with a maximum guarantee period of up to 5 years. The guarantee fee rate is the same as the 80% Guarantee Product. Taking a loan of $1 million with an annual interest rate of 5% as an example, the relevant annual guarantee fee is approximately $2,250.

The above products aim to help SMEs to obtain financing. With the approval of the Finance Committee of the Legislative Council earlier this month, the product was officially launched last week. In just one week, banks have received dozens of applications. Some companies submitted applications on the first day, and the loans were approved three days later. It was reported that the first company obtaining the loan is a typical micro-enterprise with only five employees. I am glad to learn the market's positive initial response to this new product. More than 20 lenders have expressed interest in participating the scheme and some even offer rebate of guarantee fee, waive handling fee and account opening fee, etc.

In addition to the credit guarantees, the past four rounds of support measures, which involve a total of more than $25 billion, include reduction of various license fees and rents of government properties, fee review moratorium, electricity charge subsidy, rates concessionary, water and sewage charges waiver, etc.

The trade shared that many companies are gritting their teeth to maintain their businesses. They hope that social tension will ease, violence will stop, and consumer sentiment will rise for Christmas and New Year. They all worry that if the market conditions do not improve in short term, there may be waves of shop closure after the New Year. Looking back at the past 12 months, the Protection of Wages on Insolvency Fund has received a total of around 3 000 applications. The five industries with the largest number of applications are construction (1 158 cases), catering services (716 cases), retail (233 cases), import and export trade (220 cases) and other personal service activities (80 cases).

Violent attack and vandalism targeting shops and shopping malls, etc. have caused substantial damage to Hong Kong's society and economy and also harmed the job market. The latest unemployment rate in Hong Kong deteriorated to 3.2% (September to November), an increase of 0.4 percentage points from the second quarter. The number of unemployed persons increased by about 11 200, bringing the total number of unemployed to 125 400. The retail, accommodation service and food service industries were hard hit, with the total unemployment rate rising significantly from 3.9% in the second quarter to 5.2%, the highest level in three years. The number of unemployed surged by 6 000 to 31 600, accounting for about 25% of the total number of unemployed. Among them, the unemployment rate in catering sector alone is as high as 6.2%, which is equivalent to about 15 000 people unemployed, the highest in eight years.

That is the reason why I have repeatedly emphasized the work direction of "supporting enterprises and safeguarding jobs". In the past few weeks, social tension has loosen a bit and restaurants have regained popularity. However, there are still scenes that we do not want to see: gathering and wandering in shopping malls, nuisance and vandalising shops, destroying facilities in shopping malls, and even roughing up and spraying paint on citizens with different opinions. Condoning violence means tolerating crime. These violent acts not only disrupted public order and freedom of the public, but also ruin many workers' jobs, hurting the elderly and the children in their families.

Christmas and New Year are approaching. No matter what differences have happened in the past, I hope everyone can give themselves and the society some breathing spaces. No matter how big the differences are, only through dialogue, mutual understanding, forward looking and joint exploration can we find a way out. One of the important meanings of Christmas is peace, love and hope. I wish you and your loved ones a peaceful, joyful and warm holiday. We also hope that our society can move forward with mutual understanding and find a way through dialogue, making all businesses to thrive.

December 22, 2019

The economy of Hong Kong is facing a complex and volatile external environment and conflicting and unsafe local condition. A shadow looms over our economic prospects and the outlook is full of challenges. Economic outlook remains gloomy, affecting both citizens and enterprises. We shall continue to "support enterprises and safeguard jobs" in the budget. In the light of the economic downturn and the rising unemployment rate, we will also aim to "stimulate the economy and smoothen livelihoods".

The China-US trade conflict has been the main cause of uncertainty for the global economy in the past one year or so. Recently, the two sides have reached the phase one deal of the trade agreement, bringing positive signal to the global market. While this is certainly a good news, yet taking into account the rise of unilateralism in the US and its suppression of China's development in various arenas including science and technology, we expect that the there will be ups and downs in the China-US relation for some time. This will bring volatility to the global economy and financial markets, which we have to closely monitor. And coupled with the external geopolitical changes, whether the global economy can accelerate its growth in the coming year is still uncertain.

As for Hong Kong, internal economic pressure remains high. The social turmoil and violent attacks that have lasted for half a year severely damaged the retail, catering, tourism and transportation sectors, and led to drop in local consumption. The impact also spilled over to other sectors such as media and advertising due to cut in promotional budget by companies, leading to reduced employee income. And because of the persistent social unrest, some large-scale trade fairs and events, business conferences and exhibitions, sports events and entertainment performances were cancelled. Many companies and employees are worried about the current situation and prospects of Hong Kong.

The four rounds of relief measures announced since August aimed at alleviating the pressure on citizens and businesses. The economy is currently going downhill. If the confidence of investors or the foundation of Hong Kong were weakened, any administrative means can only serve as "painkillers" but would not be able to stop the deterioration of the economy.

What is more worrying is that, if the global economy grows faster than expected next year, but Hong Kong's social situation does not show improvement, then we can expect that some international investors who originally planned to come to Hong Kong for investment and business expansion may lose their patience on Hong Kong's recovery. They may choose other cities in the region or the Mainland for development, which will pose a long-term adverse impact on Hong Kong. In addition, hosting high value-added activities such as large-scale international conferences, exhibitions and events has all along been one of the strengths of Hong Kong. We have been working hard in the past years to consolidate our advantages in this regard. If the events are relocated to other cities due to social unrest in Hong Kong, we will not only lose the potential gains of the past six months or the next year, but also bear the risk that they will go and never return as one can expect that the new host cities will offer their best to keep the events. In 2020, there will be many enterprises holding large-scale, representative and commemorative events, and Hong Kong must not miss the boat.

We must work together to restore order and calmness of the society and allow citizens and businesses to live and operate normally. Last week, I took a walk in the annual Hong Kong Brands and Product Expo in the Victoria Park to support this some 80-year-old local sales event. The atmosphere was lively that day, and I bought quite some snacks, accessories and handcrafts from social enterprises to support local businesses.

As we can see, once the violence and destruction are stopped, the streets has quickly become vibrant again. In the past two weeks, many shops and restaurants said that businesses have improved, slightly alleviating the suffocating operating pressure. The Chief Executive and all Principal Officials are working hard to engage in dialogues with all sectors of the community. Hong Kong is our home. No matter what differences we have, we can talk, communicate and discuss together to find a way out. Any violent and aggressive approach will only make things more difficult. Hong Kong needs everyone to work together to get back on the right track and relaunch again.

December 15, 2019

Since mid-August, we have so far announced four rounds of relief measures, with a total amount of some $ 25 billion. This has not yet taken into account measures launched by public organisations in response to government's appeal. In terms of supporting enterprises and safeguarding jobs, our strategy is to have some general measures to benefit most industries, supplemented by targeted measures focusing on industries that have been hit hard. General measures, such as subsidising electricity charges and waiving rates, will benefit most industries.  On targeted measures, the reduction of water and sewage charges in this round will benefit mostly the catering industry, while measures in the past rounds are more targeted at the tourism and transportation industries.  We hope that we can assist the enterprises in these industries by reducing their expenses.

On alleviating people's financial burden, funding for the first round of measures announced in mid-August, covering electricity subsidies for domestic accounts, additional allowances to social security recipients, allowances for students, and paying one month's public housing rental etc.   was approved by the Finance Committee of the Legislative Council last week.  These measures will be launched as soon as possible to benefit the general public.

The first round of measures also includes an enhanced rate for tax concessions, i.e. reduction of 100% of salaries tax, personal assessment and profits tax for the 2018-19 year of assessment, with a ceiling of $20,000. Under this concession, more than 1.2 million wage earners and 60 000 SMEs will no longer be required to pay tax. In the latest round of measures, we have waived the surcharges for payment by instalments by taxpayers. One point to note is that, the tax bills currently being issued comprises the payable tax for 2018-19 and the provisional tax for 2019-20, of which the latter is calculated based on the assumption that the taxpayer will receive the same amount of salary/ profit in 2019-20 as in the previous year (ie. 2018-19). If the taxable income of a taxpayer decreased by more than 10% due to various reasons, such as underemployment, reduction of bonuses, or drop in company's profit due to poor business, one can request the Inland Revenue Department (IRD) to review the tax assessment and adjust the provisional tax for 2019-20. Relevant applications must be filed to IRD within 14 days of the date of issue of the notice for payment of the provisional tax or 28 days before the due date for payment.（For details, please visit:
https://www.gov.hk/tc/residents/taxes/taxfiling/object/provisional.htm）

In the light of the worsening economic environment and the unsettled violence, both Government tax and land revenues will decrease this year. Together with the some $20 billion plus additional expenses involved in the several rounds of relief measures, it is estimated that the HKSAR Government will have a deficit for this fiscal year by the end of March 2020, which is the first time in 15 years but still affordable to us. As to whether the fiscal deficit will persist, it very much depends on the development of social events and external factors. We will pay close attention to the changes. Generally speaking, we consider that at the time of economic downturn, as long as it is financially affordable, the Government should adopt an expansionary fiscal policy to support the economy, relief people's burden and stabilise confidence through countercyclical measures.  We will therefore maintain or even increase Government expenditures with a view to reducing the pressure on citizens and enterprises as long as it is financially affordable.

Some of my friends joked that the various rounds of relief measures introduced in recent months together are akin to a small-scale budget, so what else could I deliver for the Budget to be announced on February 26 next year? Indeed, we have been working on the Budget in parallel and organised a number of consultation sessions.  We will start to gauge comments from the general public from tomorrow.  We welcome your views and insights through email, webpage and social media.

Hong Kong is now facing unprecedented challenges. The social turmoil in the past six months has caused tremendous operating pressures to many companies, especially SMEs.  Some citizens' incomes have dropped significantly, bringing heavy burdens and anxiety to livelihoods. And many citizens are feeling unsafe and depressed because of the social chaos, violent damages and attacks. No matter who is right and who is wrong, we must not ignore the damages to the economy, society and livelihoods caused by the social unrest. Ending violence and restoring social order are our top priority.  Christmas is around the corner.  If violence and attacks still persist in this peak season for retail, one can expect gloomy sales, business shutdown and layoff.  Government resources alone will not be able to address all the problems.  To ride out of the storm, we have to resolve our difficulties in a peaceful and harmonious manner and set aside fight and violence.  I am confident that sincere dialogues and mutual understanding will set Hong Kong on the path to peace and prosperity again.

December 8, 2019

The rise of emerging enterprises has triggered fundamental changes to business models, and has gradually reshaped the development of enterprises. The rapid growth of tech enterprises has brought huge demand to the financing market. Against this background, we reformed the listing regime in April last year to allow emerging and innovative companies with weighted voting rights structure, as well as and pre-revenue or pre-profit biotechnology enterprises to list in Hong Kong, and facilitate tech companies listed in other international markets to come to Hong Kong for secondary listing.

It is under this framework that Alibaba came to the Hong Kong market for its secondary listing. The exercise raised about $90 billion, making it the third largest one in Hong Kong, and has helped Hong Kong to climb up the IPO league table with total IPO raised amounted to $280 billion so far this year.

The effect of last year's amendment of the Listing regime is gradually shown, and it has brought new impetus to the Hong Kong stock market. So far, three tech enterprises with weighted voting rights structure and eleven biotechnology companies have been listed in Hong Kong. Their market value in total exceeds $ 5.1 trillion, accounting for 14% of the total market capitalisation. If Tencent (which was listed in Hong Kong in earlier years) is included, the total market value of all tech enterprises would exceed $8 trillion, accounting for more than one fifth of the total market capitalisation. This has increased Hong Kong's attractiveness to innovative companies and investors, and further enhanced the breadth, depth and vitality of Hong Kong's stock market. At present, the total market capitalisation of Hong Kong's stock market is around $36 trillion. We are confident that there will be considerable growth in the future.

The competitive edge and development of the Hong Kong financial market today are the result of years of joint efforts and continuous improvement by market stakeholders and the government. Looking back, the process in reforming Hong Kong's listing regime was not straightforward. There were different views in the market when the listing issue of companies with weighted voting rights structure was discussed. Since the current term government took office, I have gauged and considered comments from different stakeholders. Taking into account the need to enhance Hong Kong market's competitiveness while ensuring that investors' interests and rights are protected, we rolled out the reform swiftly after consulting stakeholders.

After more than a year, the reform has achieved some success. The listing of leading tech companies in Hong Kong would encourage more companies in the same sector to follow suit. And with the development of the area into an international innovation and technology centre under the Guangdong-Hong Kong-Macao Greater Bay Area (Greater Bay Area) development plan, it is expected that the area will become a cluster of innovation and tech companies in future. Apart from assisting in the I&T research in the Greater Bay Area, Hong Kong can also continue to contribute as an international financial centre and serve as Mainland's gateway to international funding. Hong Kong can support the growth and development of innovation and tech companies through IPO and post-listing financing, including angel investments, private equity funds and venture capital funds required during different development stages of the companies. Hong Kong is the second largest private equity market in Asia. As of mid last year, the value of assets managed by private equity funds amounts to some US$152 billion. In addition to funding support, these private equity funds often bring in management and operation experiences and consolidate the ecological chain required for technological innovation, business development, and financing.

Hong Kong's financial services industry continues to develop well and maintains its momentum. It is one of the pillars of our economy, accounting for nearly 20% of our GDP. However, we must keep in mind that the financial market is highly competitive and volatile, and funds and talent have high mobility. To sustain the strengths and competitiveness of Hong Kong, we must work on both market development and supervision. Along this thinking, we have consolidated our strengths and developed new competitive edges in different areas of finance services, such as providing financial support for companies issuing bonds or green bonds in Hong Kong, providing tax incentives for aircraft leasing, corporate treasury centres and captive insurance companies. In the future, we will continue to make an effort to further enhance the competitive advantage of Hong Kong's financial services industry and contribute to Hong Kong's economic development.

1, December 2019

We stated clearly that the passage of the Acts were unwarranted. The US government should not interfere in any form in the internal affairs of the HKSAR, and we expressed strong opposition. The US has enormous economic interests in Hong Kong, including earning over the past ten years from Hong Kong the largest bilateral trade surplus amongst US' trade partners in the world, at over USD 33 billion last year. Moreover, more than 1 300 US companies have set up offices in Hong Kong, many of which are regional headquarters. We believe that the US government should act prudently to avoid damaging the interests of both sides.

Over the past decade, with the rapid development of Mainland and other developing economies in Asia, the market landscape of Hong Kong enterprises has shown significant changes. In terms of total trade in goods, Mainland is our largest trading partner, and the Association of Southeast Asian Nations (ASEAN) has replaced the European Union (EU) to be Hong Kong's second largest trading partner, accounting for 12% of the total in the last year. Although US still ranks fourth, the percentage of total trade has dropped to 6.6% in 2018 from 8.7% in 2008.

Last week, I represented the HKSAR Government to sign the Agreement Concerning Amendment to the CEPA Agreement on Trade in Services ("Amendment Agreement") with the Vice Minister of Commerce, Mr Wang Bingnan, which assists Hong Kong enterprises and professionals to expand business in the Mainland more conveniently. The Amendment Agreement covers a number of important services sectors such as financial services, legal, construction and engineering, testing and certification, film and tourism. The new liberalisation measures includes removing or relaxing restrictions on equity shareholding, capital requirement and business scope in the establishment of enterprises, relaxing qualification requirement, etc., thus making it easier for Hong Kong enterprises and professional to enjoy the first mover advantage in developing businesses in the Mainland. Some of the measures in the Amendment Agreement would be for pilot implementation in Guangdong Province or the Guangdong-Hong Kong-Macao Greater Bay Area (Greater Bay Area), which will further facilitate the liberalisation of trade in services in the Greater Bay Area.

Taking legal services as an example, the Amendment Agreement removes the restriction on the minimum capital input ratio of the Hong Kong side for partnership associations set up by Hong Kong and Mainland law firms. The measure is beneficial to small and medium-sized law firms in entering the Mainland legal services market by way of partnership associations. For testing and certification sector, the scope of testing of products under the China Compulsory Certification (CCC) System that can be undertaken by qualified testing organisations in Hong Kong in cooperation with designated Mainland organisations will be extended to CCC products processed or manufactured in any place, providing huge business opportunities to the testing organisations in Hong Kong.

For cultural and creative industries, the Amendment Agreement has removed the restriction on the quantity of Hong Kong-produced television dramas and animation television programmes imported by television stations, and relaxed the restriction of broadcasting times and duration, etc. The measures will facilitate the entry of Hong Kong-produced television dramas and animation television programmes into the Mainland market.

For motion pictures co-produced by Hong Kong and the Mainland, there will be no restriction on the percentage of Hong Kong principal creative personnel and artistes as well as the Mainland-related content. The restriction on the number of Hong Kong people participating in Mainland film productions will be removed and the fees for establishing co- production motion pictures projects will be waived. These measures will help enhance the flexibility of producing co-productions, and promote the cooperation between film industries in the two places. Although the above measures were announced earlier in April, since the measures provide Hong Kong service suppliers with more preferential market access treatment than other external investors, they are included under CEPA so as to comply with the requirement of the World Trade Organisation (the WTO).

We believe that CEPA can assist Hong Kong enterprises from different sectors to grasp development opportunities across Mainland, while the regional cooperation in the Greater Bay Area can facilitate Hong Kong enterprises to establish a deeper footprint in the market and provide them with solid support. The Mainland's middle-class consumer market has a population of more than 400 million, with an annual increase of 5% to 6%. The demand for quality services and goods has been growing rapidly. The huge potential of the market provides Hong Kong enterprises with vest development opportunities and shapes Hong Kong as the preferred platform and springboard for foreign companies wishing to explore the Mainland market, which helps to strengthen Hong Kong's competitive edge. At the time of economic recession, I believe the Amendment Agreement can provide substantial support for Hong Kong enterprises and professionals.

It is clear from the various economic indicators, GDP and unemployment rate, etc that our economy has been experiencing a rapid decline. While external unfavourable factors are beyond our control, local social events and violent attacks indeed has dealt a greater blow to our economy. Repeated blockages of major roads and railways, malicious nuisances and criminal damages targeting shopping malls and shops, fatal attacks such as throwing bricks and even petrol bombs have caused concern of personal safety of tourists and citizens. As a result, the number of inbound tourists and business travellers has dropped sharply, which severely hit the retail, catering, tourism and other related industries, and destroyed respect between people and also protection of private properties. Turning a blind eye to violence would trample on rule of law and harm our economy as well as people's livelihood.

If the riots continue, it will certainly hurt Hong Kong's core competitiveness and the confidence of the international community towards Hong Kong, and lead to higher chances of wage cut and unemployment. I hope that everyone could focus on the wider picture, stop the violence, protect Hong Kong, maintain Hong Kong's strengths and competitiveness, and the opportunities for sustainable development. What we need most today is not battle, but to set aside differences and work with each other to resolve the problems. It would be in the best interest of the 7 million people in Hong Kong to support the stable development of the city and enjoy good livelihood

24, November 2019

Hong Kong has entered a recession. With reference to the quarter-to-quarter comparison of GDP, Hong Kong has experienced two consecutive quarters of contraction. The decline widened from 0.5% in the second quarter to 3.2% in the third quarter, marking the worst quarter in a decade and second only to the 3.4% negative growth in the first quarter of 2009. If the quarter-to-quarter decline widens significantly further in this quarter, it will be the weakest quarter since 1997.

What is worrying is that demonstrations have become increasingly violent and frequent entering the fourth quarter, significantly deterring visitors, taking a heavy toll on local consumption demand and seriously dampening economic and investment sentiments. The data showed that visitor arrivals still fell by over 40% in October and the first 10 days of November. Retail sales volume fell sharply by 19.5% year-on-year in the third quarter. While October figure is still being compiled, observations from the trade suggested that retail sales performance has worsened further, possibly posting the largest decline in sales volume on record. The business situation of the catering industry has also become more severe.

The increasing pressures facing the economy have affected the labor market. The unemployment rate in consumption- and tourism-related sectors has risen visibly to 5%, and the outlook is not optimistic. Although the overall employment situation was broadly stable with the unemployment rate only edging up to 2.9% in the third quarter, I have mentioned many times that the unemployment rate is a lagging indicator. If the overall economy, especially private consumption expenditure, continues to weaken significantly, the unemployment rate may surge within a short period of time.

As the drag on the economy due to the local social incidents in the fourth quarter is expected to be larger than that in the third quarter, the Government has lowered its economic growth forecast for 2019 as a whole from 0 to 1% in the previous round to -1.3%. This would be the first annual negative growth forecast since 2009.

Facing the weakening economy, any strikes will only add insult to injury and make it more difficult for the workforce to earn a living. Some rioters even tried to "force" the public to go on strike by blocking main roads. This is a very selfish and irresponsible behavior as it brought not only inconvenience but also safety threat to commuters. Many people in the past few days had to spend hours or more on commuting, and some even could not get back to home. These large-scale roadblocks and serious damages to transport infrastructures also affected the operations of hospital, clinics and schools, etc.

In addition, railways and carriages were severely burned by arson, and patrol bombs were thrown on cars and passenger carriages. Citizens attempting to clear roadblocks were attacked and threatened by objects thrown from height, bows and arrows, and petrol bombs. What is even more tragic was the passing away of a 70-year-old outsourced cleaning service contractor worker of the Food and Environmental Hygiene Department suspected to have been hit on the head by a hard object hurled by rioters. These serious violent and illegal acts are directly endangering the lives of innocent citizens and eroding Hong Kong's long-term treasured values of civility and rationality. Such acts are close to terrorism.

The whole of society is being swallowed up by violence and hatred. It has also led Hong Kong to an extremely dangerous situation. No excuse can justify violence. The need for severing ties with violence has become more important than ever.

I am touched by the scenes of people going on streets to clear roadblocks. This is a silent but solid force in the society, from people who do not want to see the situation continues to deteriorate and are willing to contribute to their beloved city.

Many Hong Kong people are feeling trapped and powerless by the chaotic and disorderly situation of the society. It is totally not acceptable to impose one's will on others and attacking people and shops of different views under the flag of "democracy". If we justify violence as the pursuit of "justice and democracy", it will be akin to terrorism.

Stopping violence and restoring order is the top priority of the Government. We will strengthen inter-departmental coordination to tackle the current difficulties, including coordination of work and dissemination of information, in order to step up our efforts. What we need as well is support from the public. We have now come to a critical crossroads, and how Hong Kong will move on is in our hands.

November 17, 2019

Financial security has been a subject dear to my heart in the past year or so.  It is because the trade conflict between China and the US not only affected the global economy, but also led to a more volatile financial market. From many overseas experiences, an unstable financial market would affect corporates and small and medium enterprises, as well as people's livelihood and social stability. In order to ensure financial security, we have been implementing substantial works on shock-resistance and market surveillance. In the past few months, even though the society was relatively turbulent and full of malicious rumours, the financial market in Hong Kong has remained largely stable.

Hang Seng Index was around 26,900 points at the end of May and closed at 27,651 points last week. The period's ups and downs were roughly in line with the external stock markets. In addition, the Hong Kong dollar exchange rate is stable, the funds are free to enter and exit, and there is no significant outflow. The banking system operates smoothly and has sufficient liquidity. This shows that social incidents in recent months have not seriously affected investors' confidence.

Funds and investors' decision to stay reflects their confidence in the Hong Kong market to a certain extent. In addition to the effort that we have made to ensure the smooth and orderly operation of the financial market, more importantly, the framework of "One Country, Two Systems" enables Hong Kong to maintain its institutional strengths and core competitiveness, and provides solid support and development opportunities to Hong Kong.

The financial services sector is a readily example. As an economy with a gross domestic product (GDP) of $2.8 trillion, Hong Kong holds a stock market with a value of more than $32 trillion (equivalent to 11 times of GDP). The total assets of the banking sector also reached $24 trillion (about 9 times of GDP). It is all supported by the pooling of funds, corporates and investors from both international and Mainland markets. Looking ahead, how we can further deepen and improve the mutual market access arrangements between Hong Kong and Mainland on stocks, bonds or fund products, and facilitate more Hong Kong financial services institutes to conduct businesses in the Greater Bay Area, would be an important issue.

The Leading Group for the Development of the Guangdong-Hong Kong-Macao Greater Bay Area (Leading Group) held its third meeting last Wednesday, and announced 16 new policy measures.  Several were aimed at deepening the financial cooperation in the Greater Bay Area, including continue to enhance the use of mobile electronic payment by Hong Kong and Macao residents in the Mainland, simplify the procedures for them to open  Mainland personal bank accounts in the Greater Bay Area, and explore the feasibility of establishing cross-boundary wealth management connect, and other measures supporting the development of the insurance industry.

The two-way wealth management connect scheme ('The Connect Scheme') will be implemented through the banking systems of the two places, bringing business opportunities to the entire financial industry value chain in Hong Kong, from wealth management product development, asset management, sales and distribution, risk management and other professional services. Asset management companies can make use of Hong Kong's platform to develop, launch and manage wealth management products to target the large investor base in the Mainland, driving a large demand for Hong Kong's financial and professional services, such as treasury, custody, risk management, auditing and legal service, etc. Banks in Hong Kong can also attract Mainland customers and benefit greatly from the distribution of wealth management products.

The Greater Bay Area has a population of more than 70 million and is one of most affluent regions of the Mainland. The region's per capita GDP is US$23,000, which is comparable to some European countries. Wealth in the region continues to accumulate at a high speed which makes it a very attractive market to asset management companies. The Connect Scheme will allow these companies to leverage Hong Kong's position as an international asset management centre to expand their business in the Greater Bay Area.  With a robust regulatory regime and a sound cooperation basis established through the current mutual access schemes, Hong Kong is an ideal testing ground for buying and selling a wide range of wealth management products for both international asset management companies as well as Mainland residents. We expect that more asset management companies or financial institutes will set up branches or further invest in Hong Kong. This will further strengthen Hong Kong's position as an international asset management centre and a global offshore Renminbi hub.

Facing the competitions from other Mainland and international cities, Hong Kong possesses institutional strengths under the "One Country, Two Systems" arrangement and has its unique position and contribution in the development process of China, which are difficult for other cities to replicate. These include the rule of law, independent judiciary, an open and free society, the free flow of funds, the free exchange of currency, and the free flow of talent, information, and goods. Similar to other international financial centers such as New York and London, Hong Kong is a common law jurisdiction but is unique in using both English and Chinese as official languages. Hong Kong also has a good tradition and practice of the rule of law. In recent months, Hong Kong's social order and security have been seriously challenged, which caused worries to investors. However, I believe that once we have stopped the violence, we will be able to identify the best way forward, continue to improve and upgrade ourselves, and strive for an even brighter future for our financial service sector. 

10 November, 2019

The latest figures reflected that the severe impacts of the local social incidents in recent months took a heavy toll on the already slackening economy. The situation showed an abrupt deterioration in the third quarter. Apart from government consumption expenditure, all major components of both external and internal demands registered declines.

Series of large-scale demonstrations and weekly frequent violent destructions have dealt an extremely heavy blow to local retail, catering and other consumption-related industries. Private consumption expenditure fell significantly by 3.5% in the third quarter, its first year-on-year decline over a decade. It is worth noting that private consumption is a rather important part of our economy, equivalent to more than two-thirds of GDP, and also has a bearing on labour market performance. For example, in 2003, although GDP only recorded negative year-on-year growth for a single quarter amid the drag from the outbreak of SARS (down by 0.6% in the second quarter of 2003 from a year earlier), as private consumption expenditure fell for six straight quarters, the unemployment rate surged to a record high of 8.5% (second quarter of 2003). A similar situation also occurred in 1998-99 when private consumption expenditure contracted for five consecutive quarters, which led to the unemployment rate soaring from 3% to over 6% in just a year's time.

With reference to past experience, we must closely monitor the performance of private consumption expenditure in the next few quarters, after the 3.5% decline in the previous quarter. If the considerable drop continues, it is expected to bring greater pressure to the labor market.

In particular, Hong Kong is currently facing mounting headwinds on both the internal and external fronts. The global economic momentum slackened progressively amid the adverse impacts of China-US trade tensions. Hong Kong's total exports of goods fell by 7% in real terms in the third quarter from a year earlier. With the recent social incidents taking a severe toll on inbound tourism, Hong Kong's exports of services fell sharply by 13.7%. Reflecting subdued investment sentiment, gross domestic fixed capital formation fell visibly by 16.3% year-on-year in the third quarter, 5.5 percentage points larger than the decline in the previous quarter. Various establishment surveys in recent months all showed that local business sentiment has remained very pessimistic.

With the significant weakening of the economy in the third quarter offsetting the mild growth in the first half of the year, the Hong Kong's economy contracted by 0.7% year-on-year in the first three quarters. Judging from the current situation, the economic growth forecast of 0-1% for the year as a whole will inevitably be lowered again. This will be the second adjustment during the year, and also means that the likelihood of a negative growth for the year as a whole is very high.

The continuous vandalism and the destruction of shops and public facilities have not only affected Hong Kong's economy, but also affected Hong Kong's international image as a safe business and financial centre. Last week I visited London to meet with local government officials, financial regulators, businesses and people from innovative and technological sector to explore further collaboration between the two places. Many people I met were concerned about the social unrest in Hong Kong. Some canceled their visit plans to Hong Kong and some even suspended their investment plans. They were worried about how the violent turmoil in Hong Kong would calm down. It is obvious that repeated violent incidents have significantly affected investment sentiment. This situation was similar when I visited New York and Washington DC last month. Yet one thing in common was that they were still interested in the investment opportunities in Hong Kong and the Guangdong-Hong Kong-Macao Greater Bay Area (the Greater Bay Area), and believed that Hong Kong is still highly competitive as long as it can restore social order. To them, Hong Kong is still a bridge between the Mainland and the world's financial markets and a springboard for foreigners to enter into the Great Bay Area.

During my visit to London, we held a number of round-table discussions with local government departments and different business and financial organisations on various subjects including the Belt and Road Initiative, the Great Bay Area, fintech, green finance and wealth and assets management. We conducted in-depth exchanges and explored how to further our cooperation.

Many participants believed that in the light of the upcoming Brexit, it is even more necessary for UK to strengthen ties with other markets and China is also an important market to them. I also met with the Chancellor of the Exchequer of the UK, Mr Sajid Javid during my visit to discuss financial and economic issues of mutual concern. Both Hong Kong and London are international financial centers, which are closely linked to the Mainland and European markets respectively. There is vast potential for enhanced cooperation between the sides. In addition, the political and business sectors in the UK showed strong interests in exploring the signing of a free trade agreement between the UK and Hong Kong after Brexit.

Fintech was also one of the focuses of this trip. I led a Hong Kong delegation to visit London, in which 20 members came from fintech startups in the Cyberport. Apart from participating in roundtable discussions with local industry and promoting Hong Kong's fintech development, they also attended various visits and exchanges to deepen their interaction with and understanding of local start-ups and the investment community. Indeed, since the signing of the UK-Hong Kong FinTech Bridge two years ago, we has conducted many exchanges and cooperation at the government, regulator, and business levels to explore investment and business opportunities.

Hong Kong has made good progress in fintech in the past two years, including virtual banking, virtual insurers, " Faster Payment System ", the standardisation of the Quick Response Code (QR Code) for retail payments, the Open Application Programming Interface (API) Framework for the Hong Kong Banking Sector and "eTrade Connect", etc. At present, there are some 600 fintech companies and start-ups in Hong Kong, of which nearly 40% are from overseas. In the past five years, they have raised more than US$1.1 billion, which is about 60% more than Singapore in the same period. This week (4-8 November 2019), "Hong Kong FinTech Week 2019" will be held in Hong Kong. About 10 000 fintech companies, start-ups, regulators and professionals from all over the world will once again gather in Hong Kong to explore cooperation opportunities.

3 November, 2019

The Government will announce the advance estimates on Gross Domestic Product (GDP) for the third quarter on the coming Thursday. Following the quarter-on-quarter negative growth recorded in the second quarter, the economy continued to contract in the third quarter, which means Hong Kong's economy is technically heading into recession. The extent of contraction has magnified. Worse still, the economy remains in the doldrums. It becomes extremely difficult to reach the 0 to 1% real GDP growth forecast for the year and we cannot rule out the possibility of negative economic growth for the full year.

The blow to Hong Kong economy is multi-faceted.

In September, the value of Hong Kong's total exports of goods decreased by 7.3% over a year. The drop in the third quarter was 6.4%, which was nearly 2% more than the drop in the second quarter. The decrease in export volume in the third quarter is expected to be over 7%, which is the largest quarterly fall in the past decade.

For the tourism industry, visitor arrivals recorded a single digit fall in July but the drop steepened to almost 37% in August and September. The situation in October gets even worse as a sharp fall of 50% was recorded in the first half of the month. Average hotel room occupancy rate in August fell by 28 percent points to 66%. Although the latest data for September and October is yet available, the tourism sector said that the situation is now the worst since the SAR outbreak in 2003. The room occupancy rate for hotels located in areas seriously affected by demonstrations was astonishingly low.

For the retail sector, some retailers expressed that in recent months their shops were forced to close earlier or even for the whole day. Staff has to worry about their personal safety and travel arrangements. The decrease in total retail sales volume enlarged from 13.1% in July to 25.3% in August. This registered the steepest year-on-year decline for a single month on record.

The Hong Kong SME Leading Business Index indicates a significant drop in SMEs' confidence in the business environment. The Government will try our very best to support the economy and safeguard employment.

Last week, I announced a new round of measures to support enterprises and safeguard jobs. This is the third round of measures since mid- August costing about $2 billion in total with a specific focus on sectors being directly hard-hit. The measures included, (1) providing fuel subsidy for the transport trade for six months or a one-off fuel subsidy. This will cost about $1,365 million and benefit around 61 000 taxi/red minibus drivers, 180 public transport operators, and owners of 130 000 commercial vehicles and vessels; (2) providing a one-off survey fee subsidy for local commercial marine vessels. This will cost about $16.5 million and benefit around 6 300 local commercial marine vessels, and (3) extending the coverage of the rental concession to public car parks, supermarkets, retail stores and light refreshment kiosks, etc. leased by the Government Property Agency.

For the hard-hit tourism sector, we hope to safeguard the jobs of over 6 000 tour guides and 17 000 more tour managers through our support to the operation of travel agencies. The Hong Kong Tourism Board and the Travel Industry Council of Hong Kong will launch a 4-month cash incentive scheme under which travel agents will get cash incentive for each inbound overnight visitor and every agent can receive up to $60,000.

We will continue to closely monitor developments on both the external and local fronts and formulate further relief measures. Yet, these supporting measures could only slightly alleviate pressure of the trade and citizens. After all, to fundamentally address the issue, we need concerted effort of the community to stop the violence, stop damaging transport infrastructure, targeted shops, banks or organisations; stop attacking people with different views, and stop any attempt for "mutual destruction". We need to restore social order, resume normal living of citizens and businesses operation, and create more rooms for rational dialogue. Our society and economy need breathing and healing spaces and a chance to start afresh. For the benefit of Hong Kong, our home, please set aside disputes, return to rational dialogue and find a way out. Only by doing so, we can study in detail and response to various demands and contradictions.

27 October 2019

From the meetings, there was a consensus among the IMF and representatives of the business and investment sectors that global economy has been undergoing a synchronized slowdown. The pressure for an economic downturn will be even greater if trade conflicts and geopolitical tensions escalate.

Due to the uncertainties ahead, IMF announced earlier in the World Economic Outlook to lower the global growth forecast of the current year and the next. The global growth for this year is expected to be 3%, which is the lowest level in the decade and a 0.2 percent point downward revision compared with the forecast in July. This is the 5th time for IMF to lower its forecast on global economic growth. The total adjustment so far is 0.9 percent points downward. Growth forecast for 2020 is 3.4%, which is a 0.1 percent point downward revision.

Facing this rigorous moment, Government officials and business sector of different economies were encouraged by the positive progress recently seen in the trade negotiation between China and the US, and they looked forward to concrete results of the negotiation.

IMF pointed out that, to tackle economic uncertainties, around 70% of global economies have been adopting an easing monetary policy. It also advised economies to implement appropriate macroeconomic strategies and expansionary financial policies, in particular enhancing investments in human resources and infrastructures, so as to avoid getting into prolonged recession and deflation.

In fact, this aligns with the HKSAR Government's thought in launching timely counter-cyclical measures to counter the impact of the current downside wave of global economy.

In mid August, we announced a series of measures totaling about $19.1 billion. Together with the one-off relief measures announced in the 2019-20 Budget which cost $42.9 billion, the above measures with a total sum of $62 billion are expected to provide a 2% impetus to our economy. In addition, we will expedite the implementation of minor works projects to create more job opportunities. In the light of economic downturn and local social incidents, Hong Kong's economy, especially the transportation, logistics, tourism, retail and catering sectors have been hard hit. We are therefore formulating the third round of relief measures, in the hope to reduce the pressure of the relevant sectors.

To alleviate the financing pressure of enterprises, in particular small and medium enterprises (SMEs), we called on banks to be more compassionate and provide their full support to SME borrowers while complying with their credit policies and risk management principles. The Hong Kong Monetary Authority (HKMA) has recently established the Banking Sector SME Lending Coordination Mechanism, and the banking sector provided positive feedback at the first meeting conducted last week. Moreover, HKMA has reduced the counter-cyclical capital buffer (CCyB) ratio to 2% from 2.5%, which allows banks to release the capital buffer built up in the past. Through this, it is expected that an additional funding of around $200-$300 billion can be provided for lending.

All the people I have met during the trip were very concerned about the current situation and development of Hong Kong. They were particularly concerned by the safety of Hong Kong as we have been a very safe city for years but blockage and vandalism of the airport and railways as well as violent acts on streets kept happening in the past months.

Many of the business people said that they did believe that the unique position and advantages of Hong Kong offer numerous investment and development opportunities. However, they were worried about the violent acts and damage to infrastructures, which led them to defer investment plans.

At my meetings with them, I provided an update on the current situation of Hong Kong, the Government's determination to stop violence, our commitment in safeguarding the free flow of capital within, into and out of Hong Kong, as well as ensuring the comprehensive and effective implementation of the "one country, two systems" principle. Hong Kong's institutional strengths and core competitiveness are still intact and widely recognized by many international agencies. Although their confidence remains, the persistent social unrest and violent attacks made them worried about the prospect of Hong Kong. They stated that if the current situation continues, they would have no choice but to consider other alternatives to plan for the worst.

October 20, 2019

The retail industry expressed that, some shops have to close down or lay off workers at no choice. The catering industry said that around a hundred restaurants have been closed and about 2 000 staff were affected. A number of mega local events, such as the Hong Kong Wine and Dine Festival, the Hong Kong Cyclothon, the Hong Kong Cross Harbour Race and a few sport events have been called off due to security concerns.

Despite different demands and views in the society, we should all know after these days that violence is never a solution. Any attempt for "mutual destruction" will only further hit the economy, the business of different sectors and the livelihood of our workforce. Our society has no more capital for a continued split. To sail through the unprecedented difficulty, we have to stop the violence and restore order quickly. The Government, various sectors of the community and every one of us should set aside the dispute and move forward to support each other during the hard times.

In the past few months, I have been emphasising the slow economic growth, as our economy is technically entering into a recession. Learning from past experience, prolonged negative economic growth will jack up the unemployment rate. We should keep an eye on the employment market in the coming future.

In order to support enterprises and safeguard jobs, I launched a series of measures with a total of $19.1 billion in August, in which tenants of government properties will receive a rent reduction of 50 per cent for six months. The rental reduction has come into effect. To echo the Government's call, the Hong Kong Housing Society, the Hong Kong Housing Authority, the Science Park, the Cyperport and Ecopark have announced rental concessions for six months.

I have also communicated with the MTR Corporation (MTR), the Airport Authority Hong Kong (AA), the Link and owners of some large-scale shopping malls. They all understand the difficult situation and are willing to support affected tenants to alleviate their operating pressure.

The MTR has offered rental adjustment solutions to shops experiencing harder hit and would, depend on the situation, offer relief solutions to other tenants. Furthermore, the MTR will offer rent refund to tenants whose shops were forced to close during closure of stations. On top of the spending rebate programme launched earlier on, the AA is considering measures to alleviate tenants' pressure. The Link is now collecting data to assess the impact of recent events on its tenants and will prepare solution to ease their pressure at the earliest time.

I hope that landlords and developers will also consider different measures, such as rent reduction, rent-free period or other means that could alleviate the operating pressure of their tenants and, at the same time, to sail through the gigantic challenges brought by global economic slow-down and the social incidents.

With concerted efforts, we can stop violence and support the economy together.

A number of supporting measures that I announced in mid-August require funding approval by the Legislative Council before implementation. These include paying one month's rent for tenants living in the public rental units, providing an extra one-month allowance to social security recipients, providing funding support to small and medium enterprises (SMEs) and introduction of a new loan guarantee product under the SME Financing Guarantee Scheme (SFGS), under which the Government will provide for a 90% guarantee for approved loans, etc.

In addition, a lot of public works items were piled up in the last Legislative session, including 28 items which have received support from the Public Works Subcommittee but are waiting for approval from Finance Committee. These items involve an estimated project cost of over $70 billion and will create 14 000 openings which are closely related to people's livelihood. Currently, quite a number of construction workers are underemployed. The salary of individual trades, such as bricklaying and metal formwork has dropped and is affecting the livelihood of workers. These works projects should commence without further delay.

Although we are facing tremendous challenges, our experience in the previous decades tells us that, as long as we embrace the challenge, learn from it and make improvement, we can turn into a better and more competitive Hong Kong. The rating agency Standard & Poor's (S&P) still affirmed "AA+" credit ratings on Hong Kong, which was the second highest rating in the agency, with a stable outlook. S&P stated that strong economic and financial metrics will allow the government's credit standing to withstand the fallout from ongoing social incidents. In addition, Hong Kong climbs from seven to third in World Economic Forum's Global Competitiveness Report 2019. In which, macro-economic stability, health, product market and financial system were ranked at first globally.

Dear citizens, despite the different views and standpoints, it is utmost important for us to stop violence, threat and conflict, and let our society return to a peaceful and rational manner. On one hand, it helps restore social order and people's daily routine; On the other hand, we can find a way out through dialogue. We have to make sure that people could express their views without fear or subject to intimidation and malicious nuisance. The Government will spare no effort in providing support to employers and SMEs to mitigate impacts brought by the uncertain economy. We need a stable society to support the economy, and the support from every citizen is indispensable. Only if we work together can we find a way out for Hong Kong and build a better tomorrow.

13 October, 2019

Anger and discontent have become the excuses for the attacks. Violence and destruction have become the means to vent. These violent acts destroyed the freedom and safety that we cherish and disturbed the peace of society. Many shops were temporarily closed as they worry about attacks by rioters, and citizen dared not to go outside. Against this background and after careful consideration, the Government has decided to introduce the Prohibition on Face Covering Regulation. It is obvious that almost all rioters participating in violent or illegal acts are covered up by masks to hide their identities with a view to escaping from responsibilities. Prohibition on face covering aims to deter protesters from taking part in violent and illegal acts, and facilitate Police investigation.

Following a torture of almost 4 months, despite the different demands and comments among the society, stopping violence and serious criminal offences like arson is the common census. If we continue to tolerate violence and illegal acts, the majority of us will be bullied and oppressed in the swirl of violence.

The sole objective of implementing the Prohibition on Face Covering Regulation is to uncover the radical protesters, maintain public safety and restore public order, and protect the safety and property of individuals. Only by stopping violence and the illegal acts, citizens and the entire society can have a breathing space, businesses and shops can operate without threats, and the society can restore the freedom that we have always enjoyed, including the freedom of travel and living.

I noticed the concerns about whether the Government will invoke the power under the Emergency Regulations Ordinance to restrict flow of capital. I would like to reiterate that capital control will never happen in Hong Kong. Hong Kong Dollars are freely convertible and the flow of capital is free, as enshrined in the Basic Law. According to Article 112 of the Basic Law, "No foreign exchange control policies shall be applied in the Hong Kong Special Administrative Region. The Hong Kong dollar shall be freely convertible. Markets for foreign exchange, gold, securities, futures and the like shall continue."

Besides assuring the freedom of capital flow, we also make use of the Linked Exchange Rate System (LERS) to stabilise the Hong Kong dollar exchange rate of HK$7.75 - $7.85 to one US dollar. This mechanism has been operating effectively for 36 years and allowing corporates and investors to conduct businesses and allocate funds in a stable financial environment. Moreover, Hong Kong has substantial fiscal reserves. Our foreign currency reserve assets stand at about US$430 billion at present, representing two times of the monetary base of HK Dollar. The Government has a robust fiscal position. As at the end of July this year, the fiscal reserves of the Government stand at HK$1140 billion, equivalent to 23 months of government expenditure or 38.3% of GDP. This is a solid and strong support to HK Dollars.

The implementation of LERS met numerous financial cycles. Even facing with a large amount of capital flows in and out, the mechanism has been operating orderly. The banking system of Hong Kong is very robust and healthy. The average capital adequacy ratio of local banks in Hong Kong is 20% and their liquidity coverage ratio reaches 150%, with low bad debt ratio of 0.56%. Since early this year, a slight rise of deposits has been recorded, and no abnormalities has been reported in the past few months. These reflect that, even Hong Kong has been facing difficulties in the past few months, Hong Kong's banking system has proved to be robust and the operation of financial market remains smooth. We are determined, capable and resourceful to maintain the stability of Hong Kong Dollars and the financial market. As regards online rumours and unfounded information spreading around, we will provide timely clarifications. I appeal to you all to stay vigilant and check the facts carefully.

Indeed, we have set up a coordinated mechanism to conduct comprehensive monitoring of the operation of the markets, including short-selling and derivative transactions in the stock market and the foreign exchange market, so as to ensure the stability of the financial market. I also chair the Council of Financial Regulators, with members from Hong Kong Monetary Authority, Securities and Futures Commission, Insurance Authority, Mandatory Provident Fund Schemes Authority and Financial Services and the Treasury Bureau, to facilitate the effective cooperation and coordination among regulators in regulating and monitoring the financial markets, and to minimise duplication or gaps in the regulation. The Government will continue to maintain a high degree of vigilance and stay alert at all times to enhance and ensure financial security.

The lately released figures on retail sales show a year-on-year decrease of 23.0%, which is the biggest ever drop in a single month. This reflects clearly that the social incidents in the recent months have been hitting the retail sector hard. I hope that while we support the freedom of expression, we should as well say no to violence, so that a safe, free, and fearless atmosphere can be created for us to find a way out for Hong Kong.

6 October, 2019

According to the latest statistics published by the Census and Statistics Department, Hong Kong exports have dropped for 10 consecutive months. The value of total exports of goods decreased by 6.3% in August, which is the third month in a row with a drop exceeding 5%. The volume of total retail sales recorded a 6-month consecutive drop from 1.4% in May to 11.4% in July. The figures in August, which will not be favourable given the current situation, are going to be released this Wednesday. Business sentiment has become extremely pessimistic following the series of social incidents. According to the Report of Monthly Survey on Business Situation of Small and Medium-sized Enterprises (SMEs) prepared by the Census and Statistics Department, the current diffusion index on business receipts amongst SMEs declined notably to 32.1 in August 2019, which was the lowest record since June 2011, reflecting the little incentive for investment.

With weak export, retail and investment, it is hard to have high expectation for the economy as a whole. The second quarter GDP recorded a 0.4% quarter-on-quarter negative growth. If the quarter-on-quarter growth in the third quarter continues to be negative, Hong Kong's economy would technically enter into a recession.

In fact, the shirking global economy and China-US trade conflicts have already caused a slowdown of manufacturing and trading activities in Asia. The reduction of local economic vibrancy together with the recent social incidents have hit the retail and catering sectors. It is noted that the situation of those sectors directly affected have worsened significantly. The total unemployment rate of retail, accommodation and food services sectors reached 4.6%, which is higher than that of the same month last year by 0.7 percentage points, and above the overall local unemployment rate of 2.9%. The decrease in employment of the construction industry is also relatively noticeable. These imply that in general, our labour market is facing increasing pressure.

As part of the relief measures I announced last month, the Employees Retraining Board was tasked to arrange training programmes for unemployed/under-employed workers in affected industries to upgrade their skills and receive allowances upon completion of the programme. Details of this "Love Upgrading Special Scheme" were announced last week. We have also announced the arrangement of principal moratorium for lenders of 80% guarantee product under the SME Financing Guarantee Scheme (SFGS) and the launch of a new 90% guarantee product, with a view to addressing SMEs' needs and relieve their financing pressure during the difficult times.

Regarding Moody's Investors Service's decision to adjust the credit outlook of Hong Kong to "negative" from "stable", and Fitch's downgrading of the credit rating of Hong Kong to "AA" from "AA+" and the outlook to "negative", we do not agree with their assessments. Despite the social incidents in Hong Kong over the recent months, the effective implementation of the "one country, two systems" principle in Hong Kong has not been affected and Hong Kong core competitiveness remains solid. Most importantly, the two agencies acknowledged Hong Kong's considerable financial buffer, and the stable operation of the financial market as supported by the Linked Exchange Rate System (LERS)

In fact, Hong Kong has all along been working hard to strengthen competitiveness. According to the 2019 ranking published by the International Institute for Management Development (IMD) in Switzerland, Hong Kong ranked No. 8 globally, 3 ranks higher than last year. Hong Kong continued to be the second among Asian economies. For the three key areas analysed in the study, Hong Kong's ranking on "Technology" and "Knowledge" are No.4 and No.7 respectively. On the area of "Future Readiness", Hong Kong's ranking has improved from No. 24 to No. 15.

The current term of Government spares no effort in promoting I&T development, and have committed funding of over $100 billion in the past two years to develop I&T infrastructure, finance research projects and build talent pools. By improving the I&T ecosystem, we can inject fresh impetus to Hong Kong's economy, and strengthen our innovative and economic capacities.

While we remain positive on the Hong Kong economy in the medium to long term, the short term economic performance is still hindered by unfavourable factors. Decrease in corporate profits will affect the income of Profits Tax. The slowdown in property and stock markets will lead to a lower than expected income on Stamp Duties. On the other hand, for the plot of commercial land in Kai Tak of which the sale had been cancelled earlier, the latest tender was again cancelled as no bids reached the reserve price, adding uncertainties to the annual revenue generated from land sale. In the Budget announced earlier this year, I forecasted a surplus of some $16 billion in the 2019/20 financial year. Yet taking into account the above considerations, and the expenses relating to the recently announced relief measures, there is a chance that deficit may occur at the end of this financial year.

With an increasing downward pressure on our economy, more support to both enterprises and employees is needed. During the difficult times, the Government will not cut spending, but will utilize our financial reserve to implement timely and suitable counter-cyclical measures, so as to stimulate economy and relieve people's hardship.

September 29, 2019

It is difficult for us to control the changes in the external environment, but we can proactively and continuously strengthen our competitiveness, including to enhance the operational effectiveness of local trade, logistics and freight transport industries through application of I&T. This can also consolidate our position as an international shipping and trading hub for the long run.

Last week, the Logistics and Supply Chain MultiTech R&D Centre (LSCM) oragnised the "Logistics Submit 2019" in the Hong Kong Science Park. Around 1000 participants from academia, business and government attended the event to explore how we can make use of I&T to further enhance industries' competitiveness and create more business opportunities. During the Summit, LSCM showcased the latest innovative technologies developed with its partners, including Deliverbot, Smart Service Robot and Warehouse Lifter, etc., on how they can streamline operation, enhance efficiency and occupational safety for the industries.

In fact, LSCM has been in close collaboration with the trade, universities and public organisations since its establishment in 2006. To date, LSCM has received a total funding support of around $700 million from the Innovation and Technology Fund to conduct more than 160 projects. Some of the research results have been deployed by the public sector for real-life applications. The followings are some quick examples.

(1) E-lock system – Partnering with the Customs and Excise Department, the E-lock Scheme provides seamless clearance and reduces border-crossing time. The Guangdong and Hong Kong Customs announced the launch of the Scheme in March 2016. To date, the Scheme covers more than 60 clearance points in Hong Kong and Guangdong, and provides over 600 routes for conveying cargoes across the boundaries. The Scheme has greatly enhanced the efficiency of customs clearance between Hong Kong and Guangdong.

(2) The Hong Kong-Zhuhai Trade Facilitation Platform – This is a collaborative project with the Zhuhai Electronic Port. By using big data analysis and artificial intelligence (AI) translation engine, the platform provides effective tools and information for logistics industry, enhances the efficiency of customs declaration and facilitates SMEs in the Greater Bay Area to explore business opportunities along the Belt and Road and around the world.

(3) Coordination of Airport Resources Management System – Collaborating with the Hong Kong Airport Authority, the System automatically monitors the availability of trolleys and provides real-time information to facilitate the management of trolleys at the Hong Kong International Airport (HKIA).

(4) Electronic Business Related Arbitration and Mediation (eBRAM) Platform – Working with the Department of Justice, eBRAM is an electronic platform for e-arbitration, mediation, negotiation and deal-making by using AI and other related technologies. To SMEs, eBRAM offers a safe, efficient and affordable platform for dispute resolution. This is conducive to a friendly business environment and promotes disputes resolution. Indeed, various international and regional organisations are taking active steps to develop similar online service platforms. On this, Hong Kong has its unique strength given the setting up of the Hong Kong International Arbitration Centre in earlier years. It is an opportune time for us to expedite the development of the online platform. I have therefore allocated $150 million in this year's Budget to support the development and initial operation of the eBRAM platform.

Besides making good use of I&T, we should also upgrade our hardware. We are going to establish a premium logistics centre in the HKIA cargo precinct. It will be the third largest warehouse in Hong Kong, which can promote the development of high value third-party logistics services in Hong Kong. The new centre is scheduled for opening in 2023. Moreover, we are actively considering the redevelopment of the Air Mail Centre at HKIA by installing advanced facilities to enhance its efficiency and capacity. The development of the Third Runway System is also in full swing. With the completion of the System, the annual maximum handling capacity of HKIA is expected to reach 100 million passengers and 9 million tonnes of cargo, meeting the demand in the coming ten years.

All of the above measures would improve Hong Kong's efficiency in trade, logistics, warehousing, transportation and customs clearance in different aspects. Although we cannot resolve the prevailing challenges in a snap, if we continue to improve and innovate in a conscientious and pragmatic manner and build a more efficient logistics and related systems, we can surely create a more favorable environment for the industries to flourish, at present and in future.

September 22, 2019

Infrastructure investment is always one of the Government major expenditures for enhancing the quality of public services, improving living environment and safety as well as enhancing the connectivity of the public transportation system. All these investments enhance integrated competitiveness of Hong Kong, drive economic growth and improve our livelihood. If we expedite and push forward these measures during the economic downturn, the counter-cyclical expansionary effect can be exploited to revive our economy.

In the past few years, the average annual expenditure for the public works reached the level of $80 billion. In the next few years, the annual capital works investment is expected to rise to over $100 billion, covering the public housing development, hospital redevelopment and expansion, as well as new towns development and extension, etc. However, the surging construction cost in recent years, fast ageing construction work force and rising aspirations from the general public for better performance of public works projects pose a great challenge for the implementation of public works projects.

In order to enhance the effectiveness and management of public works projects, we see the benefit of conducting a thoughtful and strategic planning as early as in the project inception and design stage to explore various design options and construction methods. It not only will help ensure the quality and fulfil users' needs, but also optimize complicated design to avoid potential construction difficulties. Public money can then be used more cost effectively and works are better value for money.

I was eager in promoting early intervention in project cost management model when I was the Secretary of Development and set up the Project Cost Management Office (PCMO) in 2016. PCMO has been upgraded and expanded to the Project Strategy and Governance Office (PSGO) this year. PSGO leverages the principles of "fitness for purpose" and "no frills" to conduct project vetting with a view to enhancing cost-effectiveness of the public works. We develop a cost benchmarking system for various types of works (e.g. schools, government buildings, fire stations etc.,) to have a better understanding of the project cost level. If the estimated project cost exceeds the relevant benchmark, we shall examine the major components of the project and optimize the design without compromising functionality and quality. In between 2016-2018, PCMO has scrutinised 230 projects and saved $55.6 billion, representing 13% of the original project cost.

Taking government building projects as an example, some buildings may need to construct basement due to the planning and height restriction leading to cost escalation for deep excavation works. In addition, the cost of constructing basement will be even higher in sites with rock strata situated at high level. Under this circumstance, PSGO will transforms limitation into advantages by collaborating with relevant departments to refine the design based on the actual site topography and geology, or take appropriate action to overcome the height limitation or eliminate other obstacles for land utilization. Some projects have achieved huge cost reduction through downsizing the extent of basement works by using this design principle.

Take another example, during the project vetting exercise, we came across some cases where the floor layout efficiency ratio has not reached an appropriate level resulting in an excessive project cost, PSGO will advise the relevant departments to examine and adjust the schematic design in order to optimise certain design features or installation to come up with a more pragmatic project cost estimate.

Learning from experience, it is necessary to enhance the level of technical know-how, management skills and leadership competencies of project managers for improving the cost-effectiveness of the public works. To this end, I announced in this year's Budget to support the Development Bureau to establish a Centre of Excellence for Major Project Leaders (CoE) to equip public officers with more innovative minds and enhanced leadership skills for delivering public works projects with a view to uplifting the overall performance and cost effectiveness of public work projects.

CoE was set up in July this year. The first two cohorts comprise government officers, as well as major projects leaders from the Hong Kong Science and Technology Parks Corporation, Hospital Authority and the West Kowloon Cultural District Authority. In August and September, the two cohorts have attended the first module of the 12-month Major Projects Leadership Programme in Saïd Business School, University of Oxford. They will conduct on-the-job study after returning from the UK.

Infrastructure development and nurturing project management talents are our major investments for the future. We shall commit wholeheartedly to delivering sustainable development of Hong Kong.

15 September 2019

While August, as summer holiday, is usually a tourism high season, the drop in tourist arrivals has accelerated from a 5 per cent year-on-year decrease in July to a 40 per cent plunge in August. According to the trade, hotels in some locations had seen occupancy rates drop to about half, while room rates plunged 40 to 70 per cent. Similar situation is observed in the retails and catering sectors. It is worrying that so far there is no sign of improvement in the near future.

Repeated vandalism and disruptions to major transport infrastructure, such as trunk roads, railway and airport, not only have disrupted the daily routines of citizens, but also affected many international conferences, exhibitions and mega events. Many conferences and business journeys have been postponed or even directed to other destinations.

In the aspect of trade, under the increasing tension of China-US trade conflict, the value of Hong Kong's total goods exports recorded a year-on-year decrease of 5.7 percent in July. For the first half of this year, the value of all Mainland exports via Hong Kong to US decreased by 15.2 per cent on a year-on-year basis.

To assist local small and medium-sized enterprises (SMEs) to counter the challenging external and local economic environment, I further announced two new initiatives to help our SMEs to cope with liquidity problem, in addition to the supporting measures announced in August. First, introducing a new 90% Guarantee Product under the SME Financing Guarantee Scheme (SFGS) with a maximum facility amount of HK$6 million. To benefit individuals with relatively less operating experience or looking to set up new businesses, the 12 months operating experience requirement was also waived. Second, allowing the SME borrowers under the SFGS to apply for principal moratorium of up to 6 months which is renewable, subject to a maximum of 12 months in total. During such period, only interest payments have to be made. I believe that the new relief measures could timely help SMEs to ease their cash flow pressure.

Nonetheless, all these measures could only alleviate some of the pressures faced by SMEs in short term. In the long run, to break the deadlock and make space for social and economic recovery, we need a more stable environment, without further vandalism and disruption to transport infrastructure, as well as our willingness to look for political solutions and cope with economic challenges.

Last week, Fitch downgraded the credit rating and outlook of Hong Kong, as they argued that the recent social incidents in Hong Kong are calling into question the effective implementation of the 'one country, two systems' principle. Furthermore, Fitch mentioned the gradual rise in Hong Kong's economic, financial and socio-political linkages with the Mainland of China implies its continued integration into the Mainland's governance system, which may present greater institutional and regulatory challenges over time.

Fitch's remarks are purely speculative and groundless. Obviously, it misunderstood the arrangement of 'one country, two systems', under which Hong Kong has always been serving the needs of China with our strengths, leading to a mutually-beneficial and closer economic and trade tie between the two places. On one hand, Hong Kong has been helping China to deepen the economic and financial opening and reform. At the same time, Hong Kong is connected with the fast-growing economic impetus and the large market of the mainland, bringing greater space for development and opportunities to various related industry in Hong Kong. It is of Hong Kong and China's fundamental interest to ensure the comprehensive and correct implementation of the 'one country, two systems'.

'One country, two systems' is the cornerstone of Hong Kong's success. The Basic Law of Hong Kong protects the freedom and rights of individuals, as well as social order, people's personal safety and the safety of their properties. We should not condone violence and acts breaching social order which are eroding our core values and institutional advantages. Desecration of national flag and national emblem by some radical individuals are blatant defiance of the 'one country, two systems' principle.

To find a way out of the current impasse, we need to conduct pragmatic dialogues. The Chief Executive is making her best effort and has initiated four actions to foster dialogue, including (1) formally withdrawing the Fugitive Offenders Bill; (2) appointing new members to the Independent Police Complaints Council (IPCC); (3) the Chief Executive and other principal officials will reach out to and begin direct dialogue with the community; and (4) inviting community leaders, professionals and academics to independently examine and review society's deep-seated problems. These actions, of course, are no silver bullets that could settle all the problems instantly, but still, they are making steps forward in a positive direction. Let us set aside our differences, stop violence, replace conflicts with conversations, and look for practical and constructive way out for Hong Kong.

8 September 2019

In the blink of an eye, the summer vacation has passed and tomorrow will be the first day of school. It is time for us to tidy up school bags, adjust schedule for work and rest and prepare ourselves to face the new environment and challenges in the coming new school year.

For parents, today may be a busy day for preparing stationaries, checking school bags, arranging new books and preparing school uniforms, etc. for their children. The expenses for preparing for a new school year are not small indeed. To grass-roots families, these may amount to some 20%-30% of their monthly family income and cause them a heavy burden.

What makes the situation more difficult is, local economy has been facing both internal and external complications. While external uncertainties have brought up immense pressure, the series of social incidents and violence attacks in Hong Kong have led to a drastic drop in the number of tourists visiting Hong Kong. Local consumption initiatives have decreased significantly, and the catering and retails sectors have been hard hit. According to the provisional statistics of retail sales released last week, the value of total retail sales in July decreased by 11.4% year-on-year, which shows a drop of 4.7 percentage points from the previous month. Excluding the factor of Chinese New Year, this is the biggest decrease in a single month recoded after the outbreak of SARS in 2003. It is worthy to note that the retail sales volume in July is also the lowest in the past two years.

These figures imply that employees in the relevant sectors, especially grass-roots workers or those with commission-based salary, will face increasing pressure of a reduction in income. They have to support the families and handle related expenses of the new school year for their children. One can imagine that if their income reduces, their living will become even more difficult.

In consideration of the severe challenges faced by the local economy, I announced a series of supporting measures last month, including the provision of a one-off grant of $2,500 to each day school student of kindergartens, primary schools and secondary schools. We expect that around 900 000 students will be benefited, with a view to alleviating their parents' burden. An expenditure of about $2.3 billion will be involved.

Furthermore, I announced earlier in this year's Budget to provide a one-off grant of $2,500 to 360 000 eligible needy students. We have started to issue the grant since the end of August, implying that those students with financial needs will be receiving a total of $5,000 subsidy, which should be able to relieve parents' pressure.

In addition, in this year's Budget, I allocated resources to strengthen social workers' support in secondary schools. Starting from this new school year, more than 460 secondary schools in Hong Kong will implement the measure of "two school social workers for each school", so as to enhance teenagers' mental health and stress resilience. New recurrent expenditure of about $310 million will be involved. In the light that there may be students suffering from emotional distress in facing the current social disputes, the Social Welfare Department has advanced the implementation of the"two school social workers for each school" arrangement in this summer to support those students in need. Besides, the Budget also proposed initiatives to further enhance the social workers and counselling services of public primary schools.

With the tension and opposing views in the society, people are concerned that bullying may happen in school in the new school year. In particular, there have been online messages trying to stir up bullying against children of police officers, which is totally unacceptable. No matter how diverse our views are on the various social and political issues, I firmly believe that we all care about the well-being and learning of every child and look forward to them growing up healthily and happily. It is common for us to have different views. The crux is that we all have to learn to respect, understand, accommodate, and support each other.

Schools should be places where children can grow and learn safely. No one should bring in political disputes and adversely affect the children in any aspect. No matter what the reasons and objectives are, and whether the actions are against children of police officers or the others, we must have "Zero Tolerance" to school bullying, and have to handle such cases seriously. If the society tolerates any bullying and those due to one's family background, or even finds an excuse for the bullying, social justice will fade, and seeds of hatred will be implanted, misleading the society away from the path of righteousness.

1 September 2019

In this "economic typhoon", some sectors which are more vulnerable are already suffering. As you may have heard from the news, total visitor arrivals to Hong Kong constantly dropped by almost 50% in August. Some hotels and restaurants have requested their employees to go on unpaid leave. Surveys on the retail and catering sectors recorded double-digit fall of income in recent months. If the situation persists, it might result in layoffs of employees. In fact, in the retail, accommodation and food services sector which engage some 600 000 employees (80% of which are low-skilled positions), the overall unemployment rate has increased gradually from a low level of 3.4% at the beginning of this year (December 2018 to February 2019) to the latest figure of 4.3%, representing 27 500 employees (May 2019 to July 2019).

The seasonally-adjusted general unemployment rate of Hong Kong from May to July is 2.9%, showing a 0.1 percentage point increase from that of April to June. The number of unemployed has increased by some 4 000 in the same period, reaching 118 000. Since the unemployment rate in Hong Kong has stayed low for some time and had not increased in the past two years, the public might not feel the immediate impact of the current increase. Nevertheless, if we look back from the experience of Hong Kong dealing with financial crises in the past twenty or so years, the unemployment rate indeed could worsen much quicker than one expected. For example in the 1997-98 Asian financial crisis, the unemployment rate by the end of 1997 was only 2.2%. Over a year, it rapidly increased to 6.9% by the end of 1998. In 2000 when the dotcom bubble bursted, the unemployment rate had leapt from 4.4% by the end of 2000 to 7.5% in one-and-a-half years (in mid-2002), and further increased to 8.5% in 2003 due to the outbreak of SARS. As for the 2008 financial crisis, the unemployment rate also sharply increased in a year, from 3.2% in Q2 2008 to 5.3% in Q2 2009. Although the context, causes and development of each past financial crisis are different, we cannot take the current situation lightly.

Besides, due to the completion of some major infrastructure projects, the demand for construction labour has turned weak in the last few quarters. What makes matters worse is that, since Legislative Council meetings are obstructed, a number of funding proposals for public works projects has been postponed, including 28 items already approved by the Public Works Subcommittee that are pending for the approval by the Finance Committee. These items amount to a total project cost of $74.9 billion and can provide about 14 000 jobs. Some of the affected projects, such as the redevelopment and expansion of four hospitals (Kwai Chung Hospital, Prince of Wales Hospital, North District Hospital and Princess Margaret Hospital) and the construction of Trunk Road T2 and Cha Kwo Ling Tunnel, are particularly relevant to the daily lives of Hong Kong residents.

To prevent the potentially worsening unemployment situation, I included initiatives to create jobs in the series of relief measures announced earlier. We will increase and expedite the implementation of minor works projects, for example advancing the Pier Improvement Programme. The Programme involves 10 public piers in remote areas of the New Territories and on the outlying islands. If funding approval could be obtained by the end of this year, we expect the first project will commence within this financial year. Besides, minor works under the Building Maintenance Grant Scheme for Elderly Owner-Occupiers, Operation Building Bright 2.0, Lift Modernisation Subsidy Scheme and Fire Safety Improvement Works Subsidy Scheme will also be expedited and expanded, with a view to creating more jobs for the construction industry.

To assist those adversely impacted industries, we have commissioned the Employees Retraining Board (ERB) to organise some special training programmes for the unemployed or those who are on unpaid leave, and provide special subsidies to encourage them to upgrade their skills. These skills upgrading programmes will cover over 20 sectors, including tourism, hospitality, retail, catering and imports and exports. Generic skills training courses, such as English, Putonghua and IT Applications will also be provided. ERB will announce more details later.

The adverse effects of the sustained conflicts in Hong Kong over the past two months to the economy are gradually emerging. Whether the impact will expand, widen or spread and affect the "rice-bowls" of more people depends on the goodwill of everyone. The Chief Executive is currently preparing a platform for dialogue, to sincerely discuss with people from all walks of life and to find a way out for Hong Kong. I hope that we could all "cease-fire" and let the society calm down, seek for conversations instead of conflicts, dialogues instead of disruptions. Let us safeguard our mutual hometown of Hong Kong, and avoid the jobs and lives of the common people being affected.

August 25, 2019

Since Q1 last year, the economic momentum of Hong Kong has been slow, with the year-on-year growth rate gradually falling from 4.6% in Q1 2018 to 0.5% in Q2 2019. On a quarter-on-quarter comparison, there is a 0.4% negative growth last quarter, weaker than the advance estimate of negative 0.3%. If the quarter-on-quarter growth in Q3 continues to be negative, the economy of Hong Kong would technically enter into a recession. Due to the continuously weak economic momentum over the past year, economic forecast is expected to be even worse. Therefore, the Government has revised downwards the economic growth forecast in 2019 as a whole from 2-3% to 0-1%.

The core reasons for the suffering economy include external factors like the China-US trade conflicts, which have caused external trade to shrink and directly impacted the trade, logistics and transportation sectors. Domestically, the recent social incidents have hit the retail, restaurants and tourism sectors. Violent disturbances have also seriously damaged Hong Kong's international image. This not only impacts people's freedom to travel and consumption incentives, but also weakens the incentives for foreign people to travel, do business and invest in Hong Kong.

From large corporates to small stalls, all have experienced the pressure brought by this "economic typhoon". Yesterday I chatted and exchanged views with vendors, shopkeepers and grocery shoppers when I walked along the street in Wan Chai. They expressed concerns about the decreased number of customers and declining business, and some employees in restaurants shared with me their difficulties to make ends meet as underemployment hits their income. They would be substantially benefited from the series of relief measures just announced to different extents, such as a $2,000 electricity charge subsidy and a $2,500 subsidy to each kindergarten, primary and secondary day-school students. There are also other measures which could briefly alleviate the pressure of the grassroot families, such as paying one month's rent for public housing tenants, providing extra allowance to social security recipients, equal to one month of the standard rate Comprehensive Social Security Assistance (CSSA) payments, Old Age Allowance, Old Age Living Allowance or Disability Allowance, Working Family Allowance and individual-based Work Incentive Transport Subsidy recipients, and inviting the Community Care Fund to provide a one-off living subsidy for the "N have-nots". In addition, the increase in the reductions of salaries tax from 75% to 100%, subject to the same ceiling of $20,000, could waive all taxes for some 1.2 million "wage-earners".

And with the aim to alleviate enterprises' pressure on operating cost and financing, we will waive 27 groups of government fees and charges for 12 months, reduce the rental for government land and property as well as public market stalls leased by the Food and Environmental Hygiene Department by 50 per cent for six months, and introduce a new 90 per cent guarantee product under the SME Financing Guarantee Scheme. In addition, we will inject $1 billion each to the Dedicated Fund on Branding, Upgrading and Domestic Sales ("BUD" Fund) and the SME Export Marketing Fund to better support enterprises in exploring business opportunities and building brands. We will also increase and expedite a number of minor works projects to create more employment opportunities for the construction sector. The above measures aim to prevent SMEs from dismissing staff and cutting salaries, so as to safeguard the jobs of wage-earners.

This series of measures (excluding public works expenditures) will cost a total of 19.1 billion. Together with the one-off relief measures announced in the Budget earlier this year, which cost 42.9 billion, the sum of 62 billion is expected to provide impetus for our economy by 2%.

Besides, the Hong Kong Housing Authority, Airport Authority Hong Kong, Hong Kong Science and Technology Parks Corporation, Cyberport, as well as the Construction Industry Council, are also formulating their own relief proposals. Details of their arrangements will be announced separately.

Some described the just announced relief measures as a "mini-budget". Indeed we have been closely monitoring the changes in the economic environment. In the past few months, both the external and internal economic environments have been constantly weakened. A warning signal number 3 is already issued for this "economic typhoon". With its path directly pointing to Hong Kong, we must brace ourselves for the storm, build breakwaters for the economy and keep more money in the pockets of the people so as to stabilise confidence, safeguard jobs, encourage spending and support the economy.

Yesterday when I was walking in the market and having breakfast in small restaurant, many citizens chatted and exchanged views with me. They said the just announced measures would be able to alleviate some of their living pressure. However, they also expressed their candid concerns about the current atmosphere, opposition and conflicts in the community, which had led to anxiety and tension among friends and in families. It is common for different people to have different views, but violent storming would undermine personal safety, affect the livelihood of the public and business of merchants, making these days tiring and frustrating to all. They all hope to stop the violence and give Hong Kong a chance to start afresh through consultation and discussion to resolve the crisis.

The "economic typhoon" is drawing near. I hope everyone can set aside differences for now, work together and equip ourselves to cope with the storm, with a view to minimizing the harm that may be caused.

^* Remark: Since the first quarter of 2018, the year-on-year quarterly growth rate of GDP is 4.6%, 3.6%, 2.8%, 1.2%, 0.6% and 0.5% respectively, showing a declining trend.

August 18, 2019

Under the current complicated, volatile and unconducive circumstances, Hong Kong's imports and exports are significantly weakened with a drastically slowed down economic growth momentum. We are now entering into a very difficult economic situation. The recent series of violent acts have resulted in a notable drop in income in sectors including retail, catering and transportation. The tense pressure in the society has hit all consumption-related sectors to different extents.

In the past two weeks, I appealed to readers in my blog to pay attention to the increasing downside pressure of the domestic economy and the tough economic situation. Recently, the external financial environment has become even more uncertain. Last week, the U.S. Department of the Treasury unreasonably designated China as a currency manipulator. As pointed out in many analyses, the decision of the U.S. could not be justified as it conflicts with the facts, and does not comply with US' own criteria of "currency manipulators". In fact, the International Monetary Fund (IMF) mentioned in a report last Friday that the Renminbi exchange rate is generally coherent with the economic fundamentals in China over the past year, with a generally stable exchange rate against a basket of currencies.

We have all along been closely monitoring the impact of the China-US conflict over the trade, the technology sector, and the financial market. We have equipped ourselves for necessary response actions to prevent malicious speculations. Recently, there were more ill-intentioned rumors online regarding the financial markets, and the Hong Kong Monetary Authority has taken prompt actions to clarify and stop the their spreading.

Last week, after chairing the meeting of the Financial Leaders Forum, I met the media with the Secretary for Financial Services and the Treasury, the Deputy Chief Executive of the Hong Kong Monetary Authority and the Deputy Chief Executive Officer of the Securities and Futures Commission. During which, I mentioned that the different areas of Hong Kong's financial system have been functioning smoothly and orderly so far. Risks have been manageable. In fact, Hong Kong's financial system has experienced various challenges and we have implemented a number of resilience measures and performed stress tests over the past years to strengthen its capacity in withstanding shocks while enhancing the regulations on related institutions and market behavior. We clearly have the experience, ability, determination and strength to maintain Hong Kong's financial stability. We will stay alert and gear up to continue our monitoring, strengthening and preventive works. （Please refer to this link for our work on financial safety.）

The recent violent disturbance, occupation and damage of public facilities by protesters have already undermined Hong Kong's international reputation as a safe city. At present, 22 countries have issued travel alerts to Hong Kong. Hong Kong is now seen to be unstable and unsafe to foreign enterprises and travellers, and hence affecting their desire to travel, do business and invest in Hong Kong. Besides, flash mob-style road blockage and obstruction to train service have adversely affected people's daily lives and plans. Some citizens who need to bring elderly for medical consultation, or to visit relatives in hospitals are particularly anxious about the disruption.

The radical protests, violent storming, as well as the unco-operative movements have not only taken a heavy toll on the already fragile economy, but also restricted the freedom and flexibility of the public's commute. Our usual sense of security on commuting has been receded.

Undoubtedly, violence will trigger more violence and leads to social problems that are detrimental to our society and the public. Any concessions to violence will only breed more violence. Being dissatisfied with the government definitely does not imply accommodating, tolerating or even encouraging violent acts.

After all, Hong Kong needs to have a safe and stable environment to resolve internal controversies and difficult situations as well as to address external challenges and to safeguard people's employment and livelihood. The entire team of the HKSAR Government is striving to explore way forward with a view to resolving challenges in different areas progressively. I hope everyone could break off with violence for the well-being of Hong Kong people and Hong Kong. I hope everyone could put aside disputes for now and stand shoulder-to-shoulder to ride out the difficult times for our homeland, Hong Kong.

August 11, 2019

The Census and Statistics Department announced last week the Gross Domestic Product (GDP) for the second quarter of 2019. A year-on-year increase in real terms by 0.6% is recorded, continuing to be the lowest figure in the past decade. Although the year-on-year growth seems to be on par with that in Q1, its shows a negative growth of 0.3% after seasonal adjustment since the quarterly growth is 1.3% from Q4 2018 to Q1 2019. That reveals that the economy has lost its momentum in the second quarter of 2019.

Going into the main components, gross domestic fixed capital formation decreased for three quarters in a row with a year-on-year decrease of 12.1% in real terms in Q2, reflecting negative investment sentiment. External demands continue to be weak, the year-on-year decrease of total exports of goods accelerated from 3.7% in Q1 to 5.4% in Q2, with a drop of around 10% in June alone. The drop in total imports even accelerated from 4.2% to 7%. In fact, conflicts between China and the US on trade and technology have dealt a blow not only to the trade performance of Hong Kong, but also the regional trade and production activities in Asia. Last Friday, US President Trump announced to impose a 10% tariff on another US$300 billion of Chinese goods starting from 1 September. Shortly after that, the Mainland authorities indicated that it would take necessary retaliatory measures if such tariffs are implemented by the US. It is clear that the global economy is facing increasing downside risks, and the impact on Hong Kong will be deepened.

Domestically, private consumption expenditure in last quarter only slightly increased. Coupled with soft retail figures, the outlook is certainly not promising. The year-on-year decrease of the total turnover of the retail sector accelerated from 1.4% in May to 6.7% in June. In particular, the drop in large expense items is more significant, with a 17.1% decrease in the value of sales of jewellery, watches and clocks, and luxury gifts in June. The sales value of electrical goods and other not elsewhere classified consumer durable goods decreased by 16.1%, while that of wearing apparel decreased by 8.2%.

The catering industry also faces grave challenges. Hong Kong's total restaurant receipts in Q2 is HK$28.7 billion, which amounts to a year-on-year decrease of 0.4%, and a 4.6% drop compared to the last quarter after seasonal adjustment. This is the worst performance in the past decade, and also the first time that both quantity and price recorded a decrease since 2009. With high fixed costs such as rent and wages, restaurants will be facing great pressure in their operations.

The continuous violent storming in the past two months has added pressure on the retail sector. Some shops even have to suspend their business intermittently, and people's daily lives and consumption sentiment are affected. The damage of Hong Kong's international image has weakened the desire of business travellers and funds to reach Hong Kong. The number of visitors to Hong Kong also reflected the same.

All the above will impact the overall economy, the operation and capital flow of enterprises (especially SMEs), as well as individuals' income and even employment. If the situation continues, the working population from the middle class and the grassroots with dependent children and elderly would face severe stress of earning a living. According to the Census and Statistics Department, inbound travel activities created more than 220,000 jobs in sectors such as retail, catering and accommodation, while practitioners in the trade and logistics sector exceed 720 000.

Internationally, two credit rating institutions have expressed their concerns about the impact of large-scale public processions and violent protests to Hong Kong.

I hope that public peace and citizens' livelihood will not be affected, and more importantly, law and order of the society will not be damaged while we express our views. Violent storming is gradually eroding the confidence of people and the international community on the future of Hong Kong, and affecting foreign traders' desire to do business and invest in Hong Kong. If the situation persists, the pressure faced by the working population and SMEs would be further intensified, and job security would be threatened.

Hong Kong's economy recorded a quarter-to-quarter negative growth of 0.3% in the second quarter. If the third quarter continues to reflect a negative growth, Hong Kong will enter a recession technically. In other words, the risk of Hong Kong entering a recession has been growing.

At times of weakened economic momentum, the Government would not contain public expenditure. We will explore and implement measures in a timely manner to serve the counter-cyclical effect. However, such effect will only be limited if we only rely on the Government's expenditure. We need concerted effort of the wider community to achieve a better effect. Hong Kong experienced various challenges in the past years, including the Asian financial crisis, the dot-com bubble crash and the SARS epidemic. At the time, cross-sector collaboration and alliance among the Government, citizens and business sectors, as well as the support of Mainland policies, help Hong Kong to ride out economic difficulties and move forward. The storming in the last two months, as well as some upcoming movements would affect the livelihood of people and the cornerstone of Hong Kong's success, giving a hard blow to the economy and the citizens. Would all of us please think twice.

August 4, 2019

The China-US trade disputes and conflicts in the technology arena have increased the downside risks facing the global economy. The International Monetary Fund recently revised the global economic growth rate forecast for this year downward to 3.2%, which is the fourth downward revision since October last year, with the total downward revision amounting to 0.7 percentage points. This is also the lowest growth forecast since 2009. Although the market expects a reduction in the federal funds target rate by the US's Federal Reserve, and central banks of other countries have started to reduce their interest rate or adopting a more relaxed monetary policy, the latest economic figures of Europe, America, Japan and advanced economies in Asia reflect that their economies are indeed in a modest growth. Combining with the possibility of "Hard Brexit" in the UK and tense geopolitical situation in the Middle East, there is downward pressure on the global and Hong Kong economic growth trends.

In the last few months, impacted by external factors, Hong Kong's export figures were weak. The value of Hong Kong's total goods exports has decreased for eight months in a row, with the decreasing rate accelerating from 1% at the end of last year to 9% last month. Regarding the tourism and retail sector, visitor arrivals on average increased by 15% per month in the first five months of 2019, but the growth was softened to 8.5% in June. Local consumption incentives have been significantly eroded, with the decreasing rate of domestic retail sales increased from 1.6% in Q1 to 3.3% in April to May combined. According to a survey by the Hong Kong Productivity Council, the Hong Kong SME Leading Business Index has dropped to a three-year low, implying a shaken confidence in doing business.

We will announce this week the advance estimates on GDP growth in the second quarter of 2019. Taking into account the external macroeconomic environment and domestic economic situation, we will conduct a midterm review of the GDP growth forecast this year, so as to bring the forecast closer to the current situation and possible changes in the coming months.

The overall economic downturn will inevitably affect the labour market, and hence the unemployment rate may rebound from the low figure of 2.8%. For those sectors which are more seriously affected, such as import and export, wholesale, and construction, the employment situations have already softened. If local consumption continues to stay weak, employment and income of sectors like retail and food & beverage will face downward pressure. The government will consider measures to "support enterprises, safeguard jobs", so as to stabilise the economy and benefit the livelihood of people.

For the financial market, it has been operated smoothly without abnormal Hong Kong Dollar fund inflows. We will continue to monitor the market situation closely and equip ourselves for possible risks. The assets of the Hong Kong banking system are of high quality with a sufficiency rate of liquidity and consolidated capital adequacy ratio above international standards, which is very robust and healthy.

The recent controversy over the amendment of the extradition bill has provoked large -scale public processions and protests, along with a series of violent storming, affecting both large and small local traders. Many people working in the retail and catering sectors saw a notable drop in business. I believe we all understand that the longer time the protests continue, the more significant the impact will be on SMEs and small traders, which will in turn affect the livelihood of some residents. Besides, these incidents have also undermined Hong Kong's international image and business environment. To foreign enterprises and tourists, Hong Kong seems to have become unstable and unsafe, affecting their desire to travel, do business and invest in Hong Kong. If the situation persists, our employment and livelihood will be affected.

All the people who care about Hong Kong are deeply concerned about the recent incidents and their development. Many people are experiencing emotional distress due to division and violence, as well as the tension and turbulence that filled the society. Apart from worrying about our relatives and friends, we are more worried about the future of Hong Kong. Regardless of one's stance on the matter, we are all yearning to find ways to resolve the current crisis.

At this critical moment, the decisions of each one of us are particular important, as they would influence the present circumstances, as well as the future of the next generation. I sincerely hope that everyone can pause and think before taking any action, reject violence, and do not let hatred and violence to be rooted and proliferated in our community.

Social division, hatred and violence are a strong force that would further tighten the already tense society into a deadlock. To resolve this serious conflict, every one of us could contribute. Even with difference stance, there can still be mutual respect, accommodation, and understanding. We must reject violence, communicate with each other, seek mutual understanding and find solutions for the society. Although it might not be a simple challenge under the current social atmosphere, I would urge everyone to treasure Hong Kong as our home, and make a concerted effort to safeguard our homeland.

July 28, 2019

Collaboration in technology and scientific research between Hong Kong and the Mainland has been a dominant trend. Tertiary institutions in Hong Kong have already established twelve "industry, education and research bases" and graduate schools, as well as two campuses in the Mainland. With the Fifth Protocol coming into effect, teachers and researchers who have to travel across the border frequently would be benefitted.

With the implementation of the GBA development plan, economic cooperation between Hong Kong and other GBA cities will continue to be deepened, especially in the areas of scientific research and innovation and technology. Complementary development between cities and free flow of production factors facilitate the development of a vibrant ecosystem and a comprehensive industrial chain, leading to maximum synergy. Furthermore, human capital is the key to successful development. We must better collate the differences in tax systems within the area, so that talents could flow freely in the area without worries on tax matters, and that Hong Kong people can unleash their potential in a larger market.

At the same time, the GBA also provides tax concessions to high-end talents and talents in short supply. Last month, the Department of Finance of Guangdong Province and the Guangdong Provincial Tax Service under the State Taxation Administration made an announcement on tax concessions to high-end talents and talents in short supply working in the GBA. In short, for Hong Kong people working in the area, if their personal income tax payable exceeds 15% of their taxable income, the exceeded amount will be subsidised by the 9 municipal governments. The list and definition of high-end talents and talents in short supply are defined by individual municipal governments according to local needs, so as to ensure flexibility.

Besides, many Hong Kong people frequently travel to the Mainland for work over the years. Even though they are not residing in the Mainland, they make a long stay. Hong Kong people are therefore very concerned about their tax burden in the Mainland. In December last year, the State Taxation Administration announced the Regulations for the Implementation of the Individual Income Tax Law of the People's Republic of China, stipulating the taxation arrangement of individuals who have no domicile in the Mainland. In March this year, it was announced that any stay of fewer than 24 hours on a particular day of the Mainland will not be counted as "Day of Presence" in the Mainland while the definition of "Having Domicile" is further explained. In sum, it is a distinct tax concessionary measure for Hong Kong people to enjoy.

In general, according to the aforementioned regulations, if a Hong Kong person has no domicile in the Mainland, while his "Day of Presence" aggregated for 183 days or more in a year of assessment, if in each of the past six consecutive years, his "Day of Presence" does not exceed 183 days in the Mainland or there is single departure for more than 30 days, he is not required to pay individual income tax with respect to his/her income derived from sources outside the Mainland and paid by institutions or individuals outside the Mainland. Moreover, when there is a single departure for more than 30 days, his continuous years of residence in the Mainland would be recounted.

As for the calculation of "Day of Presence", any stay of fewer than 24 hours on a particular day of the Mainland will not be counted. For example, if an individual arrives at the Mainland on Thursday and returns to Hong Kong on Saturday, his stay in the Mainland would be one day only (i.e. Friday) on taxation. This is an extremely attractive measure applicable to Hong Kong people working in the Mainland.

Apart from the Mainland, the HKSAR Government is committed to signing Comprehensive Double Taxation Agreements with more countries and regions in the world. These arrangements could reduce double taxation, facilitate the movement of goods, service trade and talents, attract investment, as well as encourage multinational and mainland enterprises to establish holding companies in Hong Kong when investing in other countries. Together with the current supporting measures, e.g. tax concessions for these enterprises' corporate treasury centres in Hong Kong, we aim to develop Hong Kong as a hub for regional headquarters of enterprises outside Hong Kong.

Since its inauguration, the current-term Government has signed Comprehensive Double Taxation Agreements with India, Finland, Saudi Arabia and Cambodia. Hong Kong so far has signed 41 Agreements in total, in which 13 are signed with Hong Kong's 20 largest trading partners. We will continue to expand this network proactively to develop Hong Kong as a more competitive springboard for overseas investment and the first-choice platform for regional headquarters.

July 21, 2019

On infrastructure financing, with the efforts of the Hong Kong Monetary Authority (HKMA)'s Infrastructure Financing Facilitation Office (IFFO) over the past three years, some 90 organisations have joined as IFFO's partners. They include multilateral financial agencies and development banks, public sector investors, reputed private sector investors/asset managers, insurance companies, banks, infrastructure projects developers and operators, international business councils, and professional services companies. The IFFO has hosted over 20 meetings, seminars, and workshops to facilitate co-investment in rewarding infrastructure projects among partners.

In Mach this year, a memorandum of understanding was signed between the Chinese Ministry of Finance, AIIB, the Asian Development Bank, the Development Bank of Latin America, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank, the International Fund For Agricultural Development and the World Bank Group to jointly establish the Multilateral Cooperation Center for Development Finance (MCDF). The MCDF provides a multilateral coordination mechanism to foster information sharing, project preliminary preparation and capacity building in order to promote multilateral collaborations on infrastructure financing.

While the MCDF enables collaborations between multilateral financial institutions, IFFO focuses on catalysing financing in the private sector. With the estimated worldwide funding requirement of some USD1,700 billion per year in the run up to 2030, this large funding demand cannot be solely met by multilateral financial institutions. IFFO therefore plays an effective role in bridging the private sector to fill the funding gap.

In addition, the Hong Kong Mortgage Corporation Limited under HKMA is currently promoting securitisation of infrastructure loans. The Securities and Futures Commission also issued guidelines last year on the listing of qualified infrastructure companies. Such measures will further channel capitals in the private market to enter into mature infrastructure projects with effective operation and stable cash flow, giving full play to the function of financial services in supporting the real economy, and offering more options to investors.

As for green finance, we rolled out several measures in these two years to promote related development, including:

• Green Bond Grant Scheme;
• Government Green Bond Programme;
• Qualifying Debt Instrument Scheme.

The total amount of green bond issued in Hong Kong reached USB 11 billion last year, doubling the amount of that in 2017. Issuers include various international multilateral financial institutions, such as the Asian Development Bank, the World Bank and the European Investment Bank, etc.

I also took the opportunity to visit the Luxembourg House of Financial Technology and exchanged views with dozens of local startups there. They showed interest in Hong Kong's Fintech development and the supporting policies. A delegation is being planned to join the Fintech Week in Hong Kong in November this year, during which a Luxembourg-themed pavilion will be set up to facilitate the exchange of ideas and collaborations with participants coming from all over the world. The Hong Kong Fintech Week last year attracted more than 8 000 startups and investors from over 50 countries and regions to join. In addition to business matching, a one-day tour to Shenzhan was arranged for delegates to visit leading local I&T companies, which was well received by the participants. This year, we will make unremitting efforts to bring this Fintech flagship event to new heights!

July 14, 2019

I was impressed by several scenes during the 18 district visits. A group of primary students gave a cappella performance, in which many of them are ethnic minorities' children. They gave a wonderful show which clearly demonstrated that language is not a hurdle of music. In another visit, I was impressed by the spirit and ambition of a group of secondary school students working hard in a primitive school laboratory in pursuing knowledge and exploring the innovation and technology (I&T) world.

There was once I played a card game with several high school students during my visit to a youth centre to share our views on friendship, society and future. I still remembered how excited I was when elaborating to them Hong Kong's future development on economy and I&T and that they should have forward-looking development opportunities. Yet what the students shared with me was the uncertainty and confusion towards future deep in their hearts. I was grateful that I had been given the chance to connect with them for a closer and deeper understanding.

Another scene was inside a wet market of an old district. Many people and business operators approached me to express their dissatisfactions about the market's environment and facilities, and their wish for the Government to follow up on their concerns.

We attach great importance to the voices of the people and the community. These are one of the important considerations in Government's allocation and prioritisation of public resources, with a view to ensuring that public services could be more targeted in addressing people's needs.

In fact, quite a number of initiatives proposed in the previous two Budgets were inspired or pushed by district visits. Some examples include the modernisation of markets, refurbishment of public toilets, strengthening of forestry protection and the increase in various welfare and district facilities and services.

During visits to schools, some teachers and students were concerned on whether our education can equip students to face the future needs and whether our society can provide multiple progression pathways to young people. To this end, we have allocated huge resources in recent years to enhance the quality of local education, including improving school premises and facilities, providing various types of scholarships and strengthening the promotion of STEM, etc. At the same time, we have been paying efforts to diversify our economy, and invest more in I&T, arts and culture and sports, so as to provide opportunities for young people to develop according to their interests.

Nonetheless, as we all know, many questions cannot be solved simply by allocating resources in the reality. And for the same problem, there are different ways to address it. In some cases, we may need to consider principles and judgments, history and reality, and the needs and feelings of different stakeholders in the process. This is akin to families comprising elderly, middle-aged, young people and children. There may be different views and even arguments, but we are still in the same family. Mutual respect, toleration, understanding and inclusion are the keys for us to move forward.

Many people are physically and mentally exhausted due to the torture in the past month. The society is filled with air of gloom and doom and marks caused by tensions are yet to be recovered. In any case, what we need most after disputes is communication and understanding. And no matter how huge the differences are, there is always one point recognised by all: cherish the present ones and cherish life.

After going through the turbulence these days, the Government has realised the need to improve our mechanism, in order to establish a better channel to interact, listen and respect voices from our people, and gauge more public opinions during policy formulation. With improvements in policy implementation, it is our hope to cement the gap between the public and the Government, and to rebuild mutual trust. I sincerely hope that we can all work together to safeguard and build a better Hong Kong, the home that we deeply love.

July 7, 2019

On these fronts, substantive progress has been made over the past two years. First of all, we reformed Hong Kong's listing regime last year under which emerging and innovative enterprises with weighted voting rights structure, as well as pre-revenue or pre-profit biotechnology companies, are allowed to be listed in Hong Kong, thereby reinforcing the depth and breadth of our financial market and boosting its competitiveness. In 2018, Hong Kong again claimed the global crown in terms of the value of fund raised through Initial Public Offerings (IPOs). At the same time, we are seeing encouraging results in the promotion of wider application of fintech. In addition to the successful launch of the Faster Payment System (FPS), quite a few licences for virtual banks and virtual insurers have been granted. We have also facilitated the banking industry to make available their financial data and information for public access via Open Application Programming Interface (API).

The launch of FPS has been well received by the general public and enterprises, while the granting of eight virtual baking licences has spurred competition. Several major traditional banks have removed their minimum deposit requirements and the associated charging fees. This will benefit the public and promote financial inclusion.

In promoting the development of Hong Kong's financial industry, we attach great importance to market quality and institutional arrangements with the aim to safeguard the efficiency, integrity, openness and transparency of our financial market as well as ensure proper regulation on par with international standards and best practices. In this regard, we fulfil our necessary obligations and play an active role in the governance of the global financial system thereby making us an international financial centre renowned for not only its competitiveness but also its commitment to upholding the integrity of the financial system.

I am pleased to share that we have achieved remarkable results in this aspect. To begin with, for the purpose of enhancing tax transparency and combating cross-border tax evasion in the international arena, we implemented the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which came into force on September 1, 2018 allowing Hong Kong to participate in tax information exchange with relevant jurisdictions and implement the automatic exchange of financial account information in tax matters (AEOI) as advocated by the Organisation for Economic Co-operation & Development (OECD). We have also amended the Inland Revenue Ordinance to combat base erosion and profit shifting by multinational enterprises as promulgated by the OECD.

In addition, as we can observe from the financial crisis in 2008, risks of one economy could be contagious to other regions and even globally. As such, managing financial risks properly is conducive to not only our own interest but also international financial stability. For the management of risk of our banking system and securities market, we have been implementing the requirements set by the Basel Committee on Banking Supervision and Financial Stability Board in a timely manner. The Staff Report released by International Monetary Fund (IMF) earlier this year recognized Hong Kong's efforts in maintaining robust financial regulation and supervision.

Another aspect of financial regulation which is equally important but might be overlooked is our effort in anti-money laundering and counter-terrorist financing (AML & CTF). With increasing degree of freedom in global capital movement, money laundering (ML) activities usually involve cross-boundary element and require effective international collaboration. Comprising 39 major economies, the Financial Action Task Force (FATF) is the key platform to combat ML. It conducts peer reviews of member jurisdictions regularly to assess their compliance with the international standards under a mutual evaluation process. So far only five out of 23 assessed jurisdictions have been rated overall compliant by the FATF under this mutual evaluation process.

Over the years, the Government has always been committed to establishing an AML regime on par with international standards. To gear up for the mutual evaluation of Hong Kong, the Central Coordinating Committee on Anti-Money Laundering and Counter Financing of Terrorism which I chaired has spearheaded the preparation at an early stage including the relevant legislative amendments. With the support of the Legislative Council, five relevant pieces of legislation on AML & CTF were passed. Various public bodies, including the law enforcement agencies, the Department of Justice, and the relevant regulatory bodies, have worked concertedly in enhancing the effectiveness of our AML regime.

Last year, the FATF kick started the 18-month mutual evaluation of Hong Kong. The exercise was undertaken by an assessment team comprising 10 experts from various jurisdictions. In mid-June, the Mutual Evaluation Report of Hong Kong was examined by the full FATF membership at its Plenary held in Orlando, the US. The Report finds that Hong Kong has a strong legal and institutional framework for combating ML and terrorist financing, and is particularly effective in the areas of risk identification, law enforcement, asset recovery, counter-terrorist financing and international co-operation. Hong Kong is the first jurisdiction in the Asia-Pacific region to have achieved an overall compliant result.

Apart from government bureaux and departments, various professional bodies and public organisations have together paid tremendous efforts in preparing for this mutual evaluation. This team spirit is a strong testimony to our determination to safeguard Hong Kong's interests. I would like to take this opportunity to express my heartfelt gratitude to our colleagues and friends from different sectors who took part in this exercise.

June 30, 2019

However, we have to redouble our efforts to maintain our advantages and be ahead of others, especially in enriching our pool of talent. Besides having talent with operational expertise, we also need leaders equipped with international perspective, macroscopic insight on future development, adaptability and leadership.

With the above in mind, I proposed to set up an academy of finance in last year's Budget. I am pleased to announce that, with the efforts made by the Hong Kong Monetary Authority (HKMA), other financial regulatory bodies and stakeholders, the opening ceremony of the Academy of Finance (AoF) will be held this Wednesday (26 June), followed by conferment of Fellowships to distinguished persons that make significant contributions to the financial sector in Hong Kong. Moreover, a number of world renowned financial leaders have accepted to be consultants and guest speakers for AoF. The list of names will be announced by AoF on Wednesday during the ceremony.

Leading by the HKMA, AoF will serve two key functions: (i) as a centre of excellence for promoting financial leadership development; and (ii) as a repository of knowledge and centre for monetary and financial research, in particular applied research in cross-sectoral areas. The existing Hong Kong Institute for Monetary Research (HKIMR) will be revamped and expanded to undertake this function.

The establishment of talent pool must be comprehensive and multi-level. We have been promoting relevant trainings under different sectors to enhance the capacity of financial practitioners and make room for their career development.

In banking sector, the HKMA collaborated with relevant professional bodies to set up a common Enhanced Competency Framework (ECF) to facilitate the on-going and all rounded capacity enhancement for banking practitioners. Competency standards on private wealth management, anti-money laundering and counter-financing of terrorism, cybersecurity, treasury management, retail wealth management and credit risk management have been launched since 2014. Competency standards on risk management and compliance are being prepared. By end December 2018, about 10 000 banking practitioners have obtained recognised certifications to meet ECF benchmarks in various professional disciplines.

For insurance sector, the Government launched a Pilot Programme to Enhance Talent Training for the Insurance Sector (Insurance Pilot Programme) from 2016. Industry players can apply subsidies to organise professional development programmes, including technical aspects and the latest international developments on regulation for the insurance industry. As at March this year, over 4 000 practitioners have taken courses under the Insurance Pilot Programme.

The asset and wealth management sector also has a similar funding programme. For example, after completing the designated courses under the programme, in-service practitioners will be reimbursed 80% of the eligible course fees, subject to a maximum of $7,000 over a three-year period. As at March this year, over 1000 practitioners have been benefitted.

On Fintech, the HKMA launched the Fintech Career Accelerator Scheme (FCAS) four years ago and upgraded it last year. In 2018/19, over 200 students participated in internship under four areas of FCAS (Cyberport University Partnership Programme, Shenzhen Summer Internship, Gap Year Placement and Fresh Graduate Job Programme). It is estimated that banks, operators of stored value facilities and HKMA will provide around 175 places in 2019/20 under the Gap Year Placement to provide opportunities for students to take part in Fintech projects.

We attach great importance to nurturing talent and value each and every people in Hong Kong. We together build Hong Kong as our home. In the past few weeks, the society was tired and stressed over the disputes relating to the legislative amendment exercise of the Fugitive Offenders Ordinance. The atmosphere of the society has become tense and distrustful. In the past few days, Government officials offered their most sincere apologies for the deficiencies in the work over the amendment exercise, and the controversies, disputes and anxieties arising in the society. I believe most Hong Kong people are not willing to see conflict, fierce confrontation and disruption to public services again. Whatever stance and position we are holding, we are people of Hong Kong under the same roof. Grievances and suspicion will not bring us a better society. Under the leadership of the Chief Executive, the Government team will make improvement in earnest. It is our wish to start afresh, deliver our best for the people of Hong Kong, rebuild mutual trust and confidence, and safeguard and develop Hong Kong, the home that we love.

June 23, 2019

With the atmosphere in the community becomes tense, economy and livelihood matters are inevitably affected. In this connection, I have been closely monitoring every aspect of our financial system with colleagues of relevant departments to ensure its smooth and efficient operation.

Firstly, regarding the foreign exchange and currency market, the Hong Kong Interbank Offered Rate (HIBOR) has been increasing in the past few days, but the overall operation of the market is in order. While the One-Month HIBOR has increased 60 basis points to 2.6% when comparing with that in early June, the rate is now coming down from the peak. The increase of HIBOR is led by seasonal factors, for example banks usually prefer to boost liquidity towards the half-year closing in end June. In response to the increase of the Hong Kong dollar (HKD) interest, the HKD exchange rate is generally strong recently, from the level of HKD7.84 to USD1 earlier to HKD7.81 in the last two to three days. This is mainly because the narrowed interest rate gap between HKD and USD makes it less attractive to sell HKD for USD in carry trade. Hong Kong currency is trading flat against USD, hence pushing up the HKD exchange rate.

In fact, when the HKD interest rates rise nearly to the level of that of USD, it will attract the buying of HKD which in turn strengthen HKD exchange rate. On the other hand, the rate will be weakened if the interest rates of HKD are lower than that of USD. This is in line with the automatic interest rate adjustment mechanism under the Linked Exchange Rate System (LERS).

Indeed, there is nothing to worry about the capacity of our banking system in meeting liquidity requirements. According to the regulatory requirements of the Hong Kong Monetary Authority (HKMA), banks of Hong Kong have set up proper mechanisms to manage liquidity risk. The banking system of Hong Kong has adequate capital and ample liquidity. As and when necessary, banks can make use of the Exchange Fund paper amounted to HKD1,000 billion in total to receive sufficient liquidity from HKMA. HKMA will keep a close watch on the market situation to ensure the efficient operation of the Hong Kong currency market and maintain the stability of HKD exchange rates according to LERS.

On securities and futures markets, both have been running smoothly and orderly so far. The exchange, clearing and settlement under the Hong Kong Clearing and Exchanges Limited are properly conducted. The Securities and Futures Commission (SFC) has all along been supervising the liquidity of its accredited funds and further reinforced market supervision to ensure that such funds are managed under a fair and orderly mechanism to serve the best interest of investors.

As regards the land and property market, due to blockage of public access to the Central Government Office (CGO) last week, the closing date of a tendering site has to be extended taking into account safety concern for those submitting tendering document to CGO. We will announce the new closing date for the tender in this week. And for another tendered commercial site in Kai Tak, since the buyer failed to pay the balance of the premium before the due date according to the Conditions of Sale requirements, the deposit previously paid by the buyer was wholly forfeited to the Lands Department. The Department also reserves the right to claim for recovery or compensation as a result. There are diverse analyses and speculations on the tenderer's decision to abandon the purchase and no unanimous conclusion can be drawn. Nonetheless, we believe that market demand on land is still huge and we shall arrange the re-tendering exercise as soon as possible.

To conclude, although the external situation continues to be unclear and tension rises in the community, the Hong Kong economy and financial market are still healthy and in order. We shall continue to monitor market situation and equip ourselves for potential financial risks, so as to provide a stable and reliable financial environment to our citizens and enterprises.

June 16, 2019

Besides visiting famous tourist spots, tourists nowadays are also keen to understand more about the history and culture aspects. The accessibility of relevant information, the attractiveness of events, and the convenience in transportation, etc. will influence tourists' impression on Hong Kong. Coordination among government bureaux and departments is needed to improve our work in these areas.

Recently, I convened a high-level co-ordinating meeting on tourism to pursue closer co-operation and co-ordination among bureaux and departments in the implementation of tourism-related projects and measures, as well as the Development Blueprint for Hong Kong's Tourism Industry proposed by the current term of the Government. The Development Blueprint strives to bring the edges of local tourism resources into full play, nurture and promote thematic tourism products and initiatives, and improve supporting facilities to bring better experience to citizen and tourists.

In recent years, we have been promoting district-based tourism in particular. District programmes such as "Old Town Central", "Hong Kong Neighbourhoods – Sham Shui Po" and "Design District Hong Kong", etc. are well received. We are going to launch a new project comprising art, cultural, heritage and green elements in Yim Tin Tsai of Sai Kung in end-2019. With a history of almost 300 years, Yim Tin Tsai is one of the few Hakka villages with Catholic characteristics and beautiful nature landscape. The renovation of the St Joseph's Chapel in the village and the Yim Tin area received Award of Merit and Award of Excellence from UNESCO Asia-Pacific Awards for Cultural Heritage Conservation in 2005 and 2015 respectively. We have attached great importance to the collaboration and communication with villagers in the process, with a view to revitalising the village into an open "museum" which can provide unique experiences to visitors.

The new Central harbourfront is not only a good place for leisure but also an ideal venue for various activities, including the FIA Formula E Championship which has been successfully organised for three times. This mega event attracted high-spending overnight visitors, such as racing drivers, staff and overseas Formula E fans to Hong Kong. It also helps enhance our city branding and international image. We are actively exploring with the organiser the possibility of holding the game in Hong Kong continuously.

In addition, we are planning to launch "water taxi" service which allows visitors to get on and off at various spots along the two sides of the Victoria Harbour, enjoy the splendid harbour scenery and access other nearby tourist spots more conveniently. We plan to kick start the tendering process in the latter half of 2019, with a view to commencing the service in 2020.

For theme parks, we have been actively supporting the development of new programmes and facilities in the Ocean Park and Hong Kong Disneyland. The first hotel adjacent to the Ocean Park has commenced operation, while the all-weather water park and the second hotel are under development. Regarding the Hong Kong Disneyland, besides actively pursuing its extension plan and launching new facilities and games by phases, the park has made use of its outdoor areas for open-air concerts in recent years. The well-received rock 'n roll band "MayDay" and British renowned singer, Ed Sheeran, held their concerts there earlier. More performances by international and regional famous artists will be arranged, which will surely attract local and overseas fans.

On smart tourism, we launched in last September the first official landing page for visitors - "Visit Hong Kong" (visithongkong.gov.hk), which aims to provide useful tourist information via mobile devices to visitors just arriving Hong Kong, including terminal facilities, attractions and events/festivals in Hong Kong, transportation, shopping and promotional offers, etc. so as to assist visitors in their itinerary planning. Arrival tourists at the Hong Kong International Airport, West Kowloon Station of the Guangzhou-Shenzhen-Hong Kong Express Rail Link and the Hong Kong boundary control point of Hong Kong-Zhuhai-Macao Bridge can now log in free Wi-Fi service at the spots to visit the landing page. We are planning to expand the service to boundary control point of Lok Ma Chau Spur Line and other locations.

I will continue to strengthen the collaborations between bureaux and departments to enrich local tourism initiatives and events, as well as to improve supporting facilities to bring more enjoyable experiences to citizens and tourists.

June 9, 2019

The favourable investment sentiment prompted by the positive signs and development of the US-China trade negotiations earlier this year has been totally twisted. In April, the International Monetary Fund (IMF) further revised downwards its global economic growth forecast for this year to 3.3%, which was the slowest pace of growth since 2009. The Organisation for Economic Co-operation and Development (OECD) and the United Nations have also lowered their economic growth forecasts. In revising their forecasts, the institutions generally predicted that the economic situation would improve in the second half of the year, as against the weak performance in the first half. However, given the further imposing of tariffs towards Chinese products and the series of actions against Mainland's technological enterprises by the US, as well as the countermeasures initiated by the Mainland, it is expected that the US-China trade conflict would not be settled within a short period of time, leading to a more negative economic outlook in the market.

Apart from the US-China trade conflict, we are also experiencing slower momentum of economic growth in Europe, uncertainties caused by Brexit and escalating geopolitical tensions of various regions. The global political and economic environment has become complex and fluid, and may lead to overlapping risks. Hong Kong is a small and open economy. We had already taken into account the above factors when we prepared the overall economic forecast of Hong Kong at the beginning of this year. However, with the changing attitudes of the US, the development of the issue would be far more difficult to predict. We will keep a close watch on the developments, assess impacts, and prepare for the worse.

Hong Kong is an international metropolitan with diversified values, and it is common to have diverse opinions on issues of concern. The key to resolution is to clarify misconceptions and achieve mutual understanding. In the past two weeks, colleagues of the Security Bureau and I met with various organisations and representatives of the financial sector to brief them on the proposed amendments to the Fugitive Offenders Ordinance (FOO). We explained the objectives and considerations of the amendments, and listened to their concerns. We were given chances to provide elaborations on the amendment details including the protection measures under the FOO. We also brought back some of their comments for the Government's further consideration. The mutual respect and open dialogue during the process is much appreciated.

In response to the grave concerns about the proposed FOO amendments, the SAR Government team has actively explained to different sectors on the implementation of and protection measures under the proposed amended procedures. After taking into account views from the public, the Government has introduced various adjustments to reduce the number of applicable offence items and raise the threshold of maximum imprisonment requirement so as to limit the application of the proposed surrender arrangements to the most serious offences only.

In respect of safeguarding human rights, the suspect can apply for judicial review and habeas corpus, put up a torture claim and seek legal aid if needed at any time during the course of all proceedings. The Government will carefully examine and consider every single request received from the requesting jurisdiction and add conditions on top of the FOO to safeguard the suspect's human rights. If the requesting jurisdiction does not agree with the additional safeguards or conditions proposed by the SAR Government, we reserve the right of not following up the request. This is the first administrative safeguard. During judicial proceedings, even if the court makes a committal order after open hearing, the Chief Executive can still make the final decision on surrender taking into account factors specific to the request, such as humanitarian or the latest development of the case. The suspect can also apply for judicial reviews for the decision. This is another administrative safeguard.

Another important point is that appeals can be made to the Hong Kong Court of Final Appeal (The CFA) in relation to all surrender decisions. During the hearing of such appeals, the CFA must include one overseas non-permanent judge. These judges are legal authorities from other common law jurisdictions with standing and credibility, and many of them were indeed past Chief Justices of Supreme Courts. This is another clear proof of fairness and independence of the CFA.

Last week, the Government further revised the amendment proposals to demonstrate our utmost willingness to accommodate and address views from different sectors. The revised amendment proposals can balance the concerns of various stakeholders. The Government team will continue to make an effort to explain and respond to questions in the Legislative Council and other occasions.

June 2, 2019

By strengthening support to the adoption of I&T solutions, we hope to provide better development opportunities for I&T solution companies as well as traditional businesses. Specifically, the Government is pursuing relevant work through the following three directions.

Firstly, as one of the major consumers in the market, the Government introduced a pro-innovation procurement policy last month to encourage tenderers to propose innovative solutions. When procuring stores, services and revenue contracts, government departments will no longer solely base on the "lowest bid wins" principle. The overall impact of the tender, such as its technological innovation, how innovative the solutions are, or its other social contributions in the course of public services provision will also be considered.

The new procurement policy encourages procuring departments to make wider use of marking schemes and increase the weighting for quality in tender evaluation from the existing 30% - 40% to 50% - 70%, with certain marks to be set aside for assessing innovative suggestions. The price weighting will be adjusted downward accordingly from the current 60% - 70% to 30% - 50%.

Furthermore, as a general rule under the new procurement policy, tenderer's experience would not be set as an essential requirement. To provide an enabling environment for small and medium enterprises (SMEs) and start-ups, the weighting on tenderer's experience should generally account for no more than 15% of the total technical marks.

This April, we set up a Smart Government Innovation Lab under the Office of the Government Chief Information Officer to invite SMEs and start-ups to submit innovative proposals and product suggestions to improve public services for consideration, adoption, trial and testing.

Secondly, a $500 million TechConnect Block Vote was rolled out in mid-2017 to support government departments to widely adopt innovation technologies and solutions with a view to enhancing operational efficiency and improving public service. To date, the scheme has supported 48 applied technology project with a funding of over $300 million. I injected another $500 million to the scheme this financial year to drive the adoption of technology by government departments for providing better services for the community.

Thirdly, the Government launched a Technology Voucher Programme (TVP) in end 2016 to subsidise local enterprises in using technological services and solutions to improve productivity, or upgrade or transform their business processes. Funding for each eligible applicant will be provided on a 2:1 matching basis. As at April 2019, we have approved about $170 million for over 1220 applications.

The TVP has benefited various trades, including mainly wholesale and retail, import and export trade and professional services. The TVP has also benefited many traditional businesses such as florists, restaurants, Chinese and western clinics, travel agencies, as well as shops selling dried seafood or furniture. With no restriction on the types of technological services funded, TVP applications involve a wide range of solutions, with the more common ones being enterprises resource planning solutions, document management and mobile access systems, electronic inventory management systems, point-of-sales systems, and electronic procurement management systems, etc.

Taking retail industry as an example. Some merchants are still handling quotations, orders and receipts manually. Some enterprises may have adopted computer billing, but their sales and inventory cannot be managed in real time. The TVP encourages SMEs to install retail management system to process and combine orders by electronic means. It also helps frontline staff grasp up-to-date and accurate product information to enhance customer service.

In response to the positive feedback, I announced in this year's Budget to regularise the TVP and double the funding ceiling per applicant to $400,000. The maximum number of approved projects per enterprise is increased from three to four. Enhancement measures on eligibility criteria, application procedures and application guidelines, etc. have also been implemented.

The above three examples demonstrated part of our enormous effort to promote I&T development in Hong Kong. We will continue to make sustainable efforts to facilitate I&T research and application in Hong Kong, create a better I&T atmosphere and opportunities for start-ups, as well as both new and traditional industries.

May 26, 2019

Moreover, a one-off grant of $2,500 will be provided to around 360,000 students in need. The examinations fees for school candidates sitting for the 2020 Hong Kong Diploma of Secondary Education Examination will be paid by the Government, benefitting around 46,000 candidates and alleviating the burden of the families concerned. Tax relief measures and the waiving of business registration fees are expected to benefit our middle class wage earners and small and medium enterprises.

This is the second Budget of the current-term Government. The whole process, from preparation, consultation and study, to announcement and passage by LegCo, spanned across a period of nearly ten months. Every step involved is not easy. It requires the effort of a dedicated team which listened attentively to the views expressed by the community, with the interests of the general public in mind and the will to take an extra step. It is our objective to make best use of the public resources to provide better service to the people.

However, for some important issues, such as housing, healthcare, education and the development of innovation and technology, we need to proceed in a pragmatic and sustainable manner, so as to ensure that the policy initiatives would suitably meet the needs of our society. All these require continuing exchange and discussion within and beyond the Government, engaging relevant stakeholders to identify major issues and formulate the best solutions. Facing the changes in the global political and economic landscape as well as changes in our society, it is important for us to gauge the pulse accurately and stay agile.

Macro-economic changes would affect Government's revenue and our consideration in resource allocation. If our economy is facing downward pressure, we should step up our supporting measures. In the first quarter of this year, our economy expanded modestly by 0.6% showing clear sign of slower growth momentum since last year. While some have already expressed concern over the decelerating trend of our economy, I believe we need to observe the development in this complicated and volatile external environment further in order to tell.

The US-China trade conflict and the negotiation are still ever-changing. While the worry on trade war has yet to ease, the fear of conflict on the technology front is already brewing in the market. We should therefore pay attention to how far these developments will affect the global supply chain and its structure, and the growth momentum of both the US and China. Furthermore, we should stay vigilant for the rising geopolitical risks worldwide as they may further dampen investment and affect the flow of capital.

The Government has been closely monitoring the changes in the macro-economic environment and the market outlook, as well as their implications on Hong Kong's economy. When necessary, we will introduce appropriate measures to support enterprises and safeguard jobs. We shall spare no effort in maintaining Hong Kong's excellent business environment and international competitiveness so that our city can progress steadily.

Recently a lot of questions have been raised by the society and the business sector on the proposed amendments to the Fugitive Offenders Ordinance (FOO). Some of these questions are originated from a lack of understanding if not misunderstanding (e.g. the amended FOO would not be applied to alleged offences committed outside Hong Kong which are not considered criminal offences in Hong Kong. Moreover, the amendments have put in place appropriate safeguards, setting out “No Surrender under EIGHT conditions” (remark)); while some other questions are concerned about the application and implementation details of the FOO. The Government is now stepping up its efforts to explain and clarify the amendments. To address the concern of the public, adjustment on the proposal has been made by the Government by removing nine offences from the FOO. If there are other constructive and feasible suggestions which are not in contrary to the objective of the amendments, the Government will give them due consideration.

I hope the community can understand that the objective of the proposed amendments is to ensure no offenders would be able to avoid trial by hiding in Hong Kong and to make Hong Kong safer. The proposed amendments have made reference to the guidelines and model prescribed by the United Nations. The FOO contains various substantive and procedural safeguards on human rights and the standards adopted in the mechanism are in line with the common practice in juridical assistance. All surrender requests will be scrutinised by both the executive authority and the judiciary. The alleged offender can also apply for judicial review at different stages and can seek legal aid if necessary. In the past four decades or so, the overall crime rate of Hong Kong has been declining steadily. This safe living environment which we enjoy today is indeed hard-earned and depends on our every effort in crime fighting.

Remark: “No Surrender under EIGHT conditions” – (1) No surrender if the “double criminality” principle is not complied with (i.e. it must be an offence in both places); (2) No surrender for offences of a political character; (3) No surrender for prosecutions on account of race, religion, nationality or political opinions; (4) No surrender for any conviction made in the absence of a trial; (5) No “double jeopardy” (i.e. no prosecution if a person has been previously acquitted or convicted of the same offence); (6) No surrender if charges go beyond the surrender order; (7) No re-surrender to a third party (i.e. the surrendered person will not be surrendered to a third jurisdiction); (8) No surrender if the offence attracts the death penalty.

May 19, 2019

I believe every child has their unique strength and talent which might be easily overlooked if we only focus on their academic achievement. We commit to provide more opportunities for our young people to discover their strength and allow our next generation to develop according to their interests, to showcase their talents and to work out their style and pathway. I believe that having their talent and effort being recognised and appreciated is the biggest motivation for our younger generation to explore and realise their dream.

The development of innovation and technology (I&T) has brought both challenges and opportunities to traditional business model and changed the demand on talent and skill sets. We encourage our students to pursue their interests and we believe that their passion and enthusiasm will help develop their problem solving skills and creative ability during the process. These elements are essential to cope with the future society and economic development.

In recent years, the Government has injected a vast amount of resources to launch various funding schemes and scholarships with an aim to revealing young people's aspirations and strength, to broadening their horizons and facilitating their diversified development.

As an example, Partnership Fund for the Disadvantaged set up a dedicated fund four years ago to implement more after-school learning and support programmes for primary and secondary students from grassroots families, and to support their participation in cultural, arts, sports and I&T trainings and exchanges, leadership and skill trainings, etc. It helps enrich their life experience, develop their potential and encourage them to pursue their dreams. After five rounds of applications, around $180 million has been granted to roll out about 240 after-school learning and support programmes. Together with the matching fund from business partners, the total grants reach $360 million, benefiting over 100 000 primary and secondary students.

In addition, I enhanced the District Support Scheme for Children and Youth Development in 2018-19 to provide enhanced cash assistance to children and youth in need. The ceiling of cash assistance was increased from $1,500 to $2,000 and the service quota was also increased from 6 000 to 10 000. Beneficiaries are subsidised to learn social skills, to join leadership training schemes and overseas exchanges, etc.

I also announced last year the injection of another $800 million into HKSAR Government Scholarship Fund to encourage students to pursue excellence in academic and non-academic areas. Two new scholarships and awards, namely the Talent Development Scholarship and Reaching Out Award, have been established to benefit a wider range of students not only with outstanding academic performance, but also achievements and talents in other non-academic fields to participate in learning, internship, service programmes or competitions conducted outside Hong Kong. There will be around 5 800Scholarships and awards for these two scholarships in 2019/20 academic year.

To fulfil the interests and needs of gifted students, I injected $800 million into the Gifted Education Fund last year. The fund supports different stakeholders to provide diversified outside school learning programmes such as aviation and robotic, which are not usually covered by traditional schools, to allow students with potential to develop their strength early.

Parents have different ways to raise their children but there is always one thing in common. They want their children to develop according to their interest, to have the opportunity to fulfil themselves and to serve the society. Let us work together to provide more opportunities for our young people to shine and strive for excellence.

May 12, 2019

With the frequent occurrence of extreme weather conditions, the global world has been facing challenges of climate change. The development of green finance is widely recognised as one of the fundamental measures to combat the challenges. To transform the world economies into a sustainable model, including developing renewable energy, and improving the resilience of infrastructures to extreme climate, huge capital investment is needed. The Organisation for Economic Co-operation and Development (OECD) estimated that in the period from 2016 to 2030, the annual funding required for green infrastructure projects worldwide will be as high as almost US$7 trillion.

As a global leading financial centre, Hong Kong can play an active and important role in the process. I proposed various initiatives in the past Budgets to promote the development of green finance in Hong Kong. Last year, green bonds arranged and issued in Hong Kong amounted to some US$11 billion, more than triple that of 2017.

To further promote Hong Kong as a green finance hub, facilitate exchange of views in the industry and cultivate support from the society on green finance, we have actively cooperated with a number of international organisations and industry associations (e.g. the International Capital Market Association (ICMA), Climate Bonds Initiative (CBI) and Hong Kong Green Finance Association (HKGFA), etc.) by co-organising large-scale conferences. For example, the Green and Social Bond Principles Annual General Meeting and Conference was held in Hong Kong last year, which was also its relocation from Europe to Asia for the first time.

This Tuesday (May 7), Hong Kong Monetary Authority (HKMA) is going to organise a Green Finance Forum in Hong Kong, inviting experienced representatives of the industry to talk about the prospect of green finance and encourage the industry to incorporate green elements into corporate governance and operations more effectively. Roadshow for the first batch of bonds to be issued under the Government Green Bond Programme will also be organised soon. Following the forum, the Securities and Futures Commission will conduct a meeting with regulators' representatives from the Mainland of China and the European Union on May 9, gathering relevant policy makers and regulators of the three parties as well as Financial Stability Board's Task Force on Climate-related Financial Disclosures, in order to deliberate on the future development and collaboration on green finance and related issues.

It is encouraging to note that in the last month, HKMA signed a Memorandum of Understanding with the International Finance Corporation (IFC), a member of the World Bank Group, to co-organise the 6th Climate Business Forum in Hong Kong in 2020. IFC's decision to organise large-scale international conference in Hong Kong reflects that our efforts in promoting green finance are highly recognised internationally.

Climate Business Forum is IFC's annual flagship event attended by political and business leaders from around the world. The forum covers a broad spectrum of themes. In addition to latest development of green finance, green city, buildings, infrastructure, transportation, energy storage and finance, etc. are also included. The Government will provide staunch support for this important event and will continue to implement measures to showcase Hong Kong's efforts in promoting green finance and combating climate change, as well as to consolidate Hong Kong's position as a green finance hub.

In fact, multilateral agencies like IFC have been playing an important role in promoting the sustainable development of developing countries in the past decades. Through cooperation with these agencies, we can leverage on their rich experiences, powerful network, resources and international recognition to create synergies, with a view to attracting more financial investments committed to social values to make use of Hong Kong as a transaction platform.

IFC has set up a regional office in Hong Kong since 2000. Hong Kong is now the regional hub of IFC in the East Asia and the Pacific region. HKMA has deepened its strategic partnership with IFC in recent years, including promoting and enhancing skills and knowledge of infrastructure investment and financing through HKMA's Infrastructure Financing Facilitation Office (IFFO).

Looking forward, the Government will continue to strengthen its collaboration with these multilateral agencies to promote the development of the international financial market and to enhance Hong Kong' image and influence as an international financial centre.

May 5, 2019

Under such circumstances, one would not expect Hong Kong's economy to have substantial growth in the first quarter. Indeed, the volume of merchandise exports fell by 4.8% year-on-year in the first two months combined this year, similar to the situations in many other Asian economies. Over the same period, the value of retail sales also declined by 1.6%, reflecting that consumer sentiment remained cautious. Yet, the further notable increase in visitor arrivals in the first quarter continued to render support to exports of services.

Last year, the changes and increased uncertainties in the political and economic environment have constrained the growth of Hong Kong's economy, with growth rate slowing down from 4.6% in the first quarter to 3.5% in the second quarter, to 2.8% and 1.3% in third and fourth quarter respectively. Based on the currently available figures and coupled with the high base of comparison resulting from the strong growth in the first quarter last year, we expect a modest year-on-year economic growth in the first quarter of 2019, which will be much lower than that in the fourth quarter of last year.

Having said that, there have been positive developments in both the global and local economy currently. The Mainland economy stabilised in March, with a 6.4% real GDP growth recorded in the first quarter, which is on par with that in the fourth quarter last year and higher than market expectation. Moreover, the US-China trade talks have been progressing well so far this year and there is a chance for the two sides to reach a deal. If the trade issues could be resolved to some extent and part or all of the tariffs previously imposed could be lifted, global economic sentiment will be boosted, facilitating the growth of Hong Kong's economy. In fact, sentiment of the global financial market has been positive in the recent months, and the local stock market has been going up, reflecting the market's expectation for the US and China to reach a trade deal.

Locally, our labour market remained robust. Unemployment rate held steady at a low level of 2.8% in first quarter of 2019, providing a stabilising effect on local consumption. Moreover, the results from the latest Census and Statistics Department (C&SD)'s Quarterly Business Tendency Survey for large enterprises indicated that, business sentiment among large enterprises in Hong Kong showed evident relative improvement of late. The proportion of large enterprises expecting their business situation to be better in the second quarter was outweighed by the proportion of those expecting their situation to be worse by just 1 percentage point, a notable narrowing in the difference from the 12 percentage points in the preceding quarter. At the same time, the Hong Kong SME Leading Business Index recently released by the Hong Kong Productivity Council increased sharply by 5.6 to 46.0 in the second quarter this year. The result indicates that business sentiment for SMEs has showed signs of stabilisation.

Around two weeks ago, the International Monetary Fund (IMF) revised downwards its global economic growth forecast for this year again to 3.3%, lower than the 3.6% growth in 2018, also the slowest pace of growth since 2009. The IMF anticipated that while global economic growth would remain weak in the first half this year, a pick-up is expected in the second half.

When I prepared the Budget at the beginning of this year, I forecast economic growth of 2-3% for Hong Kong in 2019, taking into account the sluggish global economic growth in the first half of the year. I have also proposed one-off relief measures in the Budget. If the US and China, as expected by the market, enter into a trade agreement shortly, we anticipate that both the global and local economy will be improved in the later part of this year.

Nonetheless, the uncertainties and changes of the external environment are still acute. We should not be too optimistic. As pointed out by President Xi Jinping, the world is facing the turbulent situation that we have ever met in the previous one hundred years. I reckoned that the deep-seated differences between the US and China may take longer time to reconcile. The fluctuating relations between the two sides may cause volatility in the global economy from time to time. Apart from that, other uncertainties including Brexit, geopolitical tensions and domestic politics in some advanced economies such as the EU and the US also warrant attention. While the global stock market has showed a notable rebound since the beginning of this year, any changes in external risk factors may hinder its performance. We have to stay vigilant.

In addition, starting from the reference period of the first quarter of 2019, the C&SD will advance the first release of the quarterly GDP to around one month after the reference period. Therefore, the first release of the GDP report, i.e. the advance estimates, will be issued on 2 May. When more statistical data are ready, C&SD will compile and release a set of revised figure. The revised GDP figure for the first quarter of 2019, together with the Government's latest economic forecasts for 2019, will be announced on 17 May.

April 28, 2019

Last week, I introduced at a seminar Hong Kong's efforts in maintaining financial security which I would like to share with you in the following paragraphs.

Factors affecting financial security
Safeguarding Hong Kong's financial security is no easy task.

First, it is quite unique that the scale of Hong Kong's financial market is much larger than that of our economy. For example, the $34 trillion total market capitalisation of the Hong Kong stock market is 11.6 times the size of our GDP while the $24 trillion banking assets is 8.9 times as much as our GDP. Moreover, Hong Kong's market has a high degree of international participation. For instance, two-thirds of the $24 trillion assets managed by our asset and wealth management business come from non-Hong Kong investors. Internationally renowned banks, insurers, investment banks, various funds, and professional service companies actively conduct their businesses in Hong Kong.

Second, international financial markets are fast-changing and interconnected with asset prices constantly affected by the flow of global "hot money". Past experience shows that when external uncertainties arise, as an open economy which allows free movement of capital, Hong Kong becomes a convenient source of liquidity for investors who wish to repatriate their funds from Asia. Hong Kong's economy and financial market are therefore susceptible to external forces and we shall stay vigilant and plan ahead.

Third, although different asset markets vary in nature and products, volatility in one market can be contagious, thereby affecting the overall financial stability. For example, when the property market is affected by fluctuations in the stock market, the banking system might also be affected by sharp corrections in property prices.

Fourth, "confidence" is the cornerstone of the entire financial market and the key to financial stability. This includes the confidence of Hong Kong people as well as the confidence of local and international investors in our financial system.

Changes in the factors above can take place separately or concurrently. Coupling with each other, they may give rise to complicated and challenging circumstances.

Supervision of the financial markets
In reality we cannot eliminate all the risks but have to learn to "co-exist" with them in the long run and maintain better control over them. The key is to establish a robust and effective regulatory system with suitable measures, stay vigilant about the latest local and international developments with a forward-looking approach, and identify the potential risks and adjust our response having regard to the market situation. At the same time, we need to constantly enhance the resilience of our financial system and build up our strength so as to maintain market and stakeholder confidence.

The Hong Kong Monetary Authority (HKMA), Securities and Futures Commission (SFC), and Insurance Authority (IA) supervise our banking system, our securities market, and our insurance market respectively.

Taking our securities and futures markets as an example, our regulatory objective is to ensure the transparency and orderliness of the securities and futures industry and to reduce systemic risks. In this respect, the most important work is to ensure the stability of the clearing houses and their normal functioning under extreme situations. Therefore, each clearing houses has a comprehensive risk management framework in accordance with international regulatory standards and best practices, which comprises the following five elements: (1) rigorous requirements on all clearing houses, including financial requirements; (2) adjustable margin rate having regard to market situation; (3) an effective mechanism to ensure the proper functioning of clearing houses in case of liquidity difficulty; (4) an emergency arrangement with HKMA on Lender of Last Resort to provide sufficient liquidity to clearing houses to avoid systemic risks; and (5) a series of statutory powers given to SFC to slow down the build-up of stock price bubbles, protect client assets, monitors risk management of brokers, and maintain market order in extreme situations.

Moreover, as a significant portion of our citizens' capital is managed by fund houses, SFC needs to monitor the liquidity of the SFC-authorised funds on an ongoing basis, including identifying any unusual or untoward activities, such as significant redemptions, suspension of dealing, and liquidity problems. In view of the recent volatility in local and international markets, SFC will ensure that funds are managed in a fair and orderly manner serving the best interests of investors.

Challenges arising from application of technology and cyber security
Innovation and technology are bringing challenges to our banking industry, securities industry, and insurance industry. With the advance of technology, cyber security has become increasingly important to the financial service industries in Hong Kong and beyond. For the banking industry, they are now implementing by phases the Cybersecurity Fortification Initiative proposed by HKMA in 2016. The overall resilience of Hong Kong's banking system against network attack is satisfactory. For the securities industry, SFC regularly reviews the compliance and resilience of licensed corporations regarding their network security, and reminds the industry about possible loopholes to improve their supervisory measures against potential network attack. To strengthen the cyber resilience of the insurance industry, IA is now drafting industry guidelines to be introduced by the end of this year.

Coordination among regulators to block the loopholes
With the development of technological innovations and fast-transforming modes of transaction, cross-sectoral financial activities are growing rapidly. To keep people from taking advantages on the loopholes or conducting regulatory arbitrage, we have set up a coordinated mechanism to conduct comprehensive monitoring of the markets. First, I chair the Council of Financial Regulators, the members of which include representatives from HKMA, SFC, IA, Mandatory Provident Fund Schemes Authority, and Financial Services and the Treasury Bureau. The objective of the Council is to facilitate the effective cooperation and coordination among regulators in regulating and monitoring of the financial markets (especially on issues that may have a cross-sectoral impact) to minimise duplication or gaps in the regulation. Moreover, the Financial Stability Committee chaired by the Secretary for Financial Services and the Treasury gathers representatives of financial regulators to closely monitor the functioning of the financial system of Hong Kong and report to me regularly.

Conclusion
To conclude, the Government should maintain a fine balance between the role of a facilitator and the role of a regulator. We should neither be too restrictive to dampen the vitality of the markets, nor too loose to allow potential threats to take roots, hampering the sustainability of the markets. While providing the markets the room for proactive development, we also need to set up relevant monitoring frameworks in response to the changing markets, control systemic risks, and protect investors' interests.

The ever-growing mutual market access between Hong Kong and the Mainland has been bringing enormous opportunities to Hong Kong's financial services industry and its overall economy in recent years. At the same time, Hong Kong plays the unique and important roles of "firewall" and "testing ground" for the opening up of the country's markets and the internationalisation of Renminbi. Therefore, ensuring Hong Kong's financial security is crucial not only to our economy and society but also the financial security of our country.

April 21, 2019

During the company visits, we were briefed on different researches and applications on cloud computing, artificial intelligence (AI), machine deep learning and big data, and were impressed by the continuous capacity expansion and speed enhancement of cloud computing, which lead to user-friendly solutions applying big data and AI. Enterprises can make use of technologies to improve business flow, enhance efficiency and restructure operation models, so as to promote business development. It is expected that in the coming 3 to 5 years, applying AI and machine deep learning to provide new solutions to different businesses will be the major development trend.

Cloud computing provides a more cost-effective and flexible capability to conduct analysis and comparison of huge volume of data. For example, it allows computers to recognize massive pictures and images, conduct statistical analysis and comparison and even identify the hidden relevancies between data. The result calculated by cloud computing sometimes may even be more accurate than those by experienced professionals with relevant knowledge. This is not possible before high speed computing is available. With this, more enterprises now conduct researches on the application of machine deep learning in pathology studies, clinical diagnosis, autonomous driving technology, as well as town and traffic management, etc.

It is expected that the handling of different procedures, no matter outdoor mechanical procedures or office formatting procedures, will be much easier with machine learning. This does not only enhance efficiency and lower production cost, but also assist enterprises to improve user experience, and release resources for the development of new services. However, we must also strengthen the training, retraining and skill upgrading of manpower, so as to bring benefits arising from I&T development to enterprises and their employees.

The core of I&T and R&D development is nurturing and pooling talents, and building up a vivid ecosystem. To address the funding needs of I&T companies in different stages, we have been promoting the collaboration between the financial services and the I&T sectors. For example, angel funds, private equity funds and venture funds can provide suitable support to start-ups at their different stages. As regards private equity funds, most of them are currently operated offshore. We have revised our legislation and will consider introducing a more competitive tax arrangement to attract these funds to set up and operate in Hong Kong.

In this trip, I also noted that the significant commitment in I&T by Hong Kong in recent years, and the development potential of the Guangdong-Hong Kong-Macao Greater Bay Area have attracted the attention of investors and tech companies in the Silicon Valley. The ecosystem of I&T in Hong Kong is indeed taking shape. As at December last year, there are 2600 start-up companies in Hong Kong, amongst which 8 are valued as a "unicorn".

With the implementation of various initiatives, including the provision of $10 billion to establish two innovative clusters in the Science Park, which focus on healthcare technologies (Health@InnoHK) as well as AI and robotics technologies (AIR@InnoHK), many international and Mainland renowned universities or research institutions have expressed interest in collaborating with Hong Kong through these clusters. More details are expected to be finalised in this year. These initiatives will help promoting the application of I&T in Hong Kong, pooling talents, and attracting more research institutions and tech companies to Hong Kong.

To build up Hong Kong's I&T ecosystem, solid basic scientific research, realisation of R&D results, tech enterprises, entrepreneurs, funding, talents and a conductive social and institutional environment are all essential elements. We will continue to work on these areas to further promote the I&T development in Hong Kong.

April 14, 2019

Indeed, tree management and maintenance is a specialised field of knowledge. And to keep our trees strong and healthy, we need not only the relevant personnel to look after them carefully, but also an enhanced level of interest and knowledge of the general public in this field.

The Government completed a manpower study in 2017. Its result showed that there would be a manpower shortage in arboriculture, horticulture and landscape architecture. The shortage is particularly serious for qualified arborists and skilled tree workers. Moreover, the varied competency standards of practitioners have raised concern. I proposed in this year's Budget to set up a $200 million Urban Forestry Support Fund to encourage young people to join the arboriculture and horticulture industries, to provide them with more trainings, and to establish a professional competency system. The objective is to enhance the knowledge and standards of the practitioners comprehensively thereby ensuring quality tree management. At the same time, we will step up public education and promotion. All these measures will promote better tree care and safeguard public safety.

The forthcoming Urban Forestry Support Fund will introduce initiatives in four aspects:

(1) Encourage people who have career aspirations in horticulture and arboriculture as well as practitioners to pursue relevant studies by providing subsidies or scholarships.

(2) Roll out arboriculture and horticulture trainee programmes to provide more training and internship opportunities as well as subsidies for new recruits. Besides assisting them to accumulate practical experiences, obtain professional qualifications and increase their promotion prospects, the programme will also help employers attract and retain talents systemically, thereby promoting the inheritance and enhancement of the related professional skills.

(3) Organise international urban forestry conferences to provide a platform for worldwide specialities, academics and practitioners to exchange and share relevant skills and experiences, in a bid to upgrade the expertise and practice standards of the local industry and further promote the professional development of arboriculture and horticulture.

(4) Promote community engagement activities to strengthen cross-sector collaboration among the Government, business sector, the community and academia to provide the public with more information on tree planting and maintenance as well as enhance their appreciation for our environment.

I do not expect the setting up of the Urban Forestry Support Fund will solve all problems related to trees and greenery, but this is a starting point. Through active promotion by the Government and cross-sector collaboration, we hope to nurture talents, enhance professional standards and promote a healthy and sustainable development for the industries. The front will pave the way for the introduction of a future registration system for tree management personnel and will promote a more liveable environment.

Development Bureau will widely consult stakeholders to formulate concrete implementation plans and identify suitable partnerships, such as post-secondary institutions and the Construction Industry Council, to implement the various initiatives.

April 7, 2019

The objective of government policies is always related to better serving our people and bringing convenience to them. The introduction of virtual banks can help promote financial inclusion and enhance user experience.

The banking sector has all along been a vibrant industry in Hong Kong. In recent years, many banks have strengthened their internet and mobile services. However, in certain aspects, the local banking industry has yet to get past the "last mile" in the provision of customer service. For example, taking into account operating cost, fewer banks are willing to set up branches in relatively remote areas, bringing inconvenience to residents in those areas. And with the same consideration, many banks impose requirements and charges on minimum account balance, which is not desirable to the public at large, in particularly grassroots customers.

Since the operation model and cost structure of virtual banks are different from that of traditional banks, they would have different considerations in calculating their returns. For example, virtual banks do not need to set up physical branches, and hence can make use of the savings in operating costs to rebate customers and increase their attractiveness to different customer groups. In fact, according to the requirements by HKMA, virtual banks are not allowed to impose any requirements and charges on minimum account balance. This implies that our citizens will be able to receive basic banking services disregard of their salary, wealth and address. Small depositors will be provided with more options as well.

Besides, technological breakthrough in biometric authentication, artificial intelligence, big data and robotic learning would turn impossible banking processes to possible. Take opening account as an example, customers can now make use of mobile apps for remote account opening. The verification of identity can be done by scanning identity cards via mobile phone, uploading a selfie, and providing personal information. Processing at physical bank branches is no longer required.

We learnt from other regions' experience that, apart from promoting financial inclusion and bringing convenience, the introduction of virtual banks can also enhance customer experience. What virtual banks provide is more than banking services. It is a combination of banking services and living experience. You may note from the press release of the licenced virtual banks that they are going to complement the everyday lives of consumers with flexible banking solutions, including entertainment, linking up online and offline services, etc. With the introduction of virtual banks, we expect that customers will receive a broad spectrum of brand new service experiences.

At the same time, I must emphasise that our role in bank supervision and deposit protection of the public would not be compromised in any way. License holders of virtual banks must complete a series of preparatory work to fulfil the regulatory expectations before operation. HKMA will also follow up the preliminary work closely, including assessment on technological platform and system, implementation of risk management and control details, set up procedures for remote account opening and anti-money laundering and counter-terrorist financing, etc. According to their business plans, these three newly licenced virtual banks are expected to launch their services within 6 to 9 months. HKMA will continue to process the remaining five virtual banking licence applications.

Fintech has been developing rapidly in Hong Kong in the past one plus year. Our determination in promoting Fintech is reflected through the launch of the Faster Payment System and eTradeConnect (a blockchain-based trade finance platform), the issue of licences for virtual insurers, and the new regulations by the Securities and Futures Commission over virtual asset funds. In future, we will continue with our efforts in utilising innovation and technology to enhance the standard and competitiveness of our financial services, and to promote the leading status of Hong Kong as an international financial centre.

31 March 2019

While social enterprises realise their objectives, they need to pay extra efforts in ensuring its efficiency in operation and the effectiveness in marketing, with a view to achieving a break-even balance and sustainable development. To promote the development of social enterprises, the Government launched the Enhancing Self-Reliance Through District Partnership Programme (ESR) in 2006. ESR aims at gathering the strength and wisdom from the community to support social enterprises in carrying out their social mission with business capability.

Over the past ten plus years, the number of social enterprises in Hong Kong has increased from 170 to over 650. ESR has so far provided support to around 220 social enterprises, among which 80% were able to continue with their operations after the funding period. These social enterprises together have over 5,000 employees and 80% of them come from the disadvantaged groups, including persons with disabilities, as well as women, elderly and young people with employment difficulties, etc.

ESR not only assists in providing more employment opportunities to the disadvantaged groups, but also brings positive changes to them, facilitates them to develop their full potential in job or interest, and make use of their abilities to contribute to Hong Kong's development.

One of the examples is Splendid under Lok Kwan Social Service. This social enterprise mainly hires experienced female workers previously employed in the garment industry. With the relocation of garment factories to the Mainland of China in the past decades, these workers can no longer earn a living with their skills in Hong Kong. With the arrangement of Splendid, the workers can now re-join the workplace and provide small-scale pattern design and clothing production services to young designers. They also organise workshops to share their experiences and skills.

Another example is Easy Escort Service under the Evangelical Lutheran Church of Hong Kong. In addition to medical follow up escort service for the elderly, it also addresses elderly's social needs by providing escort services for dining in restaurants, gatherings with relatives and friends, shopping, and attending wedding banquets or funerals, etc. These escort services help elderly with mobility difficulties to maintain a socially active life, which contribute significantly to their physical and psychological health. With the aging of our population, these heart-warming services which can fill the gap in the current elderly service market are particularly important and valuable.

Since its launch, ESR has brought long-term and sustainable benefits to the society, and promoted the diversified development of local social services. In the Budget this year, I provided an additional funding of $150 million to ESR to support its continuous operation. I hope that ESR can continue to promote the development of social enterprises in Hong Kong and provide rooms and platforms for different groups to develop their skills and capabilities.

24 March 2019

During my visits to some secondary and primary schools, I had a chance to understand their popular science education, and to visit their laboratories and related facilities. In another occasion, a group of secondary students handed in their Budget proposals, suggesting the Government to allocate more resources to schools for enhancing the teaching support of STEM subjects and providing more diversified activities, with a view to boosting the interests of students and nurturing more local technology talents for Hong Kong.

Their views prompted me to deploy $500 million to implement the IT Innovation Lab in Secondary Schools Programme in the coming three school years, so that more information technology (IT)-related extra-curricular activities could be arranged for the students. Given the importance of IT in innovation and technology and today's digital world, with a better IT foundation, students would be able to develop their knowledge in the principles of computer science and programming, as well as artificial intelligence, blockchain, cloud computing and big data.

After building up their knowledge, students may also apply them in resolving social problems such as city management, transport, healthcare and elderly care, etc. If innovation solutions can be developed, they may even start their own businesses.

The Budget has also earmarked $300 million to expedite the development of a geospatial data sharing platform and 3D digital maps of the territory, with a view to facilitating the dissemination, utilisation and innovative application of geospatial data. Students who are interested in maps and related applications may keep in view the development.

In an exchange session last week, a sports-enthusiastic student expressed his disappointment that the Budget only allocated $250 million in supporting Hong Kong athletes, which is even less than the $600 million allocated for refurbishing public toilets. This is in fact a misunderstanding since the $250 million funding allocated this year only forms a small part of the Government's continuous efforts in supporting sports development in Hong Kong.

In the Budget of the last two years, I injected $1 billion and then $5 billion into the Elite Athletes Development Fund to strengthen our support for elites athletes. In addition, I injected $1 billion into the Sport Development Fund to support the training of athletes and hosting competitions. Another $100 million was allocated for the launch of a District Sports Programmes Funding Scheme to encourage wider community participation in sports.

As most athletes would retire from sports before the age of 40, many of them wish to pursue academic studies in parallel with athletic trainings. The $250 million injection to the Hong Kong Athletes Fund in the Budget this year aims to serve this purpose by increasing scholarship awards in support of the dual-track development of athletes, as well as providing more incentives for full-time athletes when they retire from sports.

As regards the refurbishment of public toilets, it is to address the public's expectation on the continuous improvement and upgrading of municipal facilities. We will spend $600 million in the coming five years to refurbish 240 toilets, that is $120 million per year.

Apart from refurbishing public toilets, we have also put in resources for the improvement of other municipal facilities in the past two Budgets. For instance, I earmarked $20 billion in the 2017-18 Budget for launching 26 projects in five years to develop new or improve existing sports and recreation facilities in different districts, including sports grounds, sports centres, football pitches, swimming pools, cycling grounds, tennis courts and open spaces. In the last Budget, I set aside $8 billion for the building of community complexes, parks and improving pedestrian links in 18 districts, and also $2 billion for the modernisation of existing public markets. What other municipal facilities do you see a need for refurbishment? Suggestions are welcome and we shall take them into account in preparing the Budget next year.

March 17, 2019

Since early 20th century, the Hong Kong film industry has experienced several golden periods and produced more than 10 000 films, earning the reputation of the "Hollywood of the East". These films are not merely fictional stories. They reflect the thoughts of people, social changes and the city landscapes of a place at different times. They are precious collective memories and an important part of the local culture. The preservation of Hong Kong's invaluable film heritage is therefore of utmost importance.

For many years, the Hong Kong Film Archive (HKFA) of the Leisure and Cultural Services Department has taken up the mission of preserving Hong Kong's film heritage. However, the preservation and restoration of some very old films could be a challenging task. Given the hot and humid climate in Hong Kong, old films without proper preservation would deteriorate with time and be lost forever. As Hong Kong's film production in the 1950s and 1960s reached over a hundred per year, many films of that period have been badly deteriorated over time.

To support the work of HKFA, I announced in the Budget to allocate $20 million to speed up the employment of additional technicians and procurement of specialist equipment for digital conversion of sole copies and 35mm films in urgent need of archiving. In the coming five years, HKFA plans to restore and digitalise 150 carefully selected 35mm films. Very soon, we would be able to view these precious Hong Kong old movies again through HKFA's film screenings programme. Through this, I wish our young audience would appreciate the contribution of the predecessors of the industry and value the precious Hong Kong film heritage.

Apart from preserving film heritage, we also need to further promote the development of our film industry. To this end, I will inject another $1 billion into the Film Development Fund in 2019-20 to help the local film industry thrive further.

With the injection of new funds, we will upscale the sixth First Feature Film Initiative by doubling the number of winning teams to six and increasing funding by about 50 per cent, thereby giving new impetus to the Hong Kong film market. We will also raise the production budget limit of the Film Production Financing Scheme to $60 million and the maximum subsidy for each film to $9 million to support local mid‑budget film productions.

Our young generation is full of creativity. With opportunities and necessary support provided, I believe more films with Hong Kong's characteristics will be produced, rekindling the reputation of the "Hollywood of the East".

March 10, 2019

Apart from these one-off measures worth of $40 billion plus, the rest of the surplus, together with the revenue of the coming year and some of our fiscal reserves, will be used for developing a livable city, improving our healthcare services and livelihoods, as well as promoting economic development for Hong Kong. While some of the initiatives were proposed by the related bureaux during the internal resources allocation process, I also raised my suggestions to them for their consideration. Some of my ideas were inspired from meetings with political parties, organisations and stakeholders during Budget consultation, while some were arising from observation and discussion during my visits to districts, schools, various organisations and facilities. Moreover, people I met in daily life also expressed their expectations for the Government in improving their livelihoods, which I held them dear to my heart and followed up through.

Public healthcare service is one example. A patient I met shared with me her experience in a cancer treating centre of a public hospital, including the deterioration of medical equipment. There were also medical staffs explaining to me how their morale had been deeply affected by the unsatisfactory working environment and hospital management, the overload of administrative works, as well as the slow progress in introducing new medical equipment. As such, I took my initiative to exchange views with different players in the public healthcare sector, so as to have a clearer and more comprehensive picture of the actual situation. These first-hand sharing allowed me to understand the seriousness and urgency of the problems, and pushing me to come up with a number of preliminary proposals for improving the public healthcare services. Followed by deliberations with relevant bureaux, the agreed initiatives were put forward in this Budget.

To be honest, we have to admit that the four initiatives proposed in this Budget could not settle all the deep-rooted problems in our public healthcare services. For instance, increasing the special allowance for over-time working, which has been frozen for some time, could only provide limited effect in boosting morale. Nonetheless, this only marks the beginning. Through these initiatives, I wish to express my gratitude and appreciation to all the hardworking and dedicated healthcare staffs who have been safeguarding our health. In addition, by improving medical equipment and working environment, the public can also enjoy healthcare services of higher quality and efficiency. Certainly, as the frontline public healthcare provider, there is a pressing need for the Hospital Authority to improve its administrative efficiency, listen to the views of its employees and initiate changes to address the problems.

With this example, I would like to illustrate the point that the problems we are facing now may have been formed and accumulated for a long time, making it much harder to be resolved quickly. And some problems cannot be resolved merely by money. What we need to do is to identify the crux of the problems and issues requiring attention in the short, medium and long run, formulate solutions, and to implement the measures with determination. During the process, we have to set off from the bottom of our heart and listen with care, so as to achieve mutual understanding among all to face and address the problems.

Some critiques have misunderstood that the Budget could only passively adopt the suggestions from policy bureaux, thus limiting the scope of the Budget. In fact, I have proactively studied with related bureaux on many proposals in various policy areas, such as public healthcare services as mentioned, innovation and technology, etc, and put forward in this Budget measures which are feasible and useful. For other proposals which may be constrained by other factors for the time being, we will continue to study outside the Budget context.

There are widespread discussions on the different Budget initiatives. I will continue to explain its content to the public. I would also like to take this opportunity to express my gratitude to all the Government colleagues who support me during the preparation of the Budget, in particular colleagues from the Treasury Branch and the Financial Secretary's Office. Their hard work, dedication and professionalism are highly appreciated.

March 3, 2019

The media usually shows interest in the cover colour. Besides personal preference, the choice of the colour, to certain extend, reflects the challenges and feeling towards the economic situation at the time. When the global economy was booming last year, the colour we chose for the Speech's cover was a relatively vibrant one. Turning to this year, the current economic outlook has become uncertain. It would be a pivotal stage with both risks and opportunities, and we should keep faith and work hard. Against this background, we have chosen pale green as the cover colour for this year. The thinking behind is that Hong Kong is just like fertile soil to us, but we still need to sow, irrigate and cultivate to produce a good harvest.

The Budget will be announced in only a few days. Some of the measures covered were proposed by citizens and representatives from different sectors. Of course there are some suggestions which we cannot accept from policy viewpoint, and there are some others which we would continue to follow up outside the Budget context. Anyway, my team and I have paid our utmost effort to give our very best in the process.

Lastly, I would also like to express my gratitude to all the friends and organisations who have offered their valuable comments.

February 24, 2019

However, similar to enterprises from different industries, government income and expenditure also have seasonal variations. The period of November to January of the following year is the peak season for tax collection, especially on corporate profits tax and employees' salaries tax. Investment return from the Exchange Fund is usually received at the end of January as well. On the other hand, quite a lot of departmental and capital expenditures are settled before the end of financial year. Together with other recurrent expenditures such as monthly salary, government spending in February to March in general is relatively higher than the revenue received in the same period.

This explains the reason why the government usually records a higher surplus in the first 9 to 10 months of a financial year. However, it cannot be interpreted as a full year indicator. To project the full year financial situation, expenditures in the remaining two months of the year have to be taken into account. In the 2019-20 Budget to be released on next Wednesday (27 February), I will announce the revised estimates of the government's accumulative consolidated surplus in the full year.

According to the preliminary economic data of the fourth quarter last year, the economy shows a clear downward trend. First of all, the trade conflict between China and the US showed its impact on Hong Kong's export performance in end 2018. By eliminating price changes, the export of goods had zero growth in the fourth quarter, which was a very drastic decrease when compared with the 6% average increase in the first three quarters. At the same time, consumer sentiment has also been affected. Retail sales volume in the fourth quarter only showed a slight increase of 2.1% year-on-year, which was far behind the 12% plus increase recorded in the first half of the year.

Based on the information currently available, the year-on-year economic growth of the fourth quarter of 2018 would be lower than 1.5%, which was significantly lower than the 3.7% increase in the first three quarters. It was also the weakest increase since the first quarter of 2016. The overall economic growth in 2018 is estimated to be around 3%, which is the lower limit of the range predicted in the last Budget, i.e. 3-4%. For the current quarter, according to the Report on Quarterly Business Tendency Survey issued by the Census and Statistics Department, the number of large-scale enterprises expecting their business situation to be worse is 12% higher than that expecting it to be better. The situation is not optimistic. The political and economic uncertainties and the pressure on the downfall of the global economy are acute. Therefore, we put much emphasis to support enterprises, preserve employment, stabilise economy, and alleviate the burden of citizens.

I will announce in the coming Budget economic growth in the fourth quarter of last year and economic outlook for this year. As of now, there is a possibility that the economic growth this year may be lower than the trend growth rate.

February 17, 2019

In fact, I have been taking every opportunity to listen to the views from the public during daily interactions. When riding on the MTR, eating in cafe, taking a walk or visiting markets, quite some citizens shared with me their views and expectations towards the coming Budget. Housing, elderly and rehabilitation services, healthcare and economic development were always issues of concern which they considered should be tackled with priority. During the exchanges, I also tried to explain the policy considerations so that citizens can understand the rationale behind.

Sometimes suggestions from the community involve relatively major policy adjustments which cannot be handled by the Budget alone. In general, major policies and their adjustments are brought up by the blueprint of the Policy Address, followed by implementation details by responsible policy bureaux and then resource support in the Budget. Taking into account the social and economic development during the period between the Policy Address and the Budget, suitable measures may also be proposed under the Budget to alleviate the pressure of livelihood.

And without compromising policy principles, we would consider proposing minor policy adjustments and allocate additional resources to address issues of concern. Together with policy bureaux, we are now making an effort in reviewing comments from the public and different sectors, and would propose appropriate measures in the upcoming Budget.

The Government's fiscal surplus for the next financial year would unlikely reach a hundred-billion-dollar level and relatively fewer resources would be available. Yet temporary economic fluctuations should not affect our long-term development goal and investments in the future, which should be carried out with policy substantiality and implementation persistence. At the same time, while external uncertainties have weakened domestic consumption and exports as well as undermined businesses' confidence, the Government should play a more proactive role in utilising the surplus in time of adversity. Therefore, we need not drastically cut spending in the light of the short-term economic and financial change, but the key is that we have to act and spend prudently, so as to maintain a fiscal balance broadly in the medium to long term.

In brief, for issues which can be tackled by additional resources, we have been seeking support from stakeholders with a view to proposing solutions in the coming Budget. However, we have to admit that some problems cannot be solved merely by putting in more money, e.g. for pain points like housing, healthcare and elderly services. We need to identify the root causes of these problems and tackle them step by step. This requires persistence, patience and unwavering determination, as well as the support of the community. With we all moving forward together for a common goal, we will be able to resolve the problems with least delay.

February 10, 2019

A few days ago, I took a chance to visit the New Year market in the Victoria Park. With the coming Chinese New Year being the Year of the Pig, stalls in the market are selling wide range of products under the theme of "pig", which are very creative and blended with local cultures.

During the tour, I met with some college students running stalls in the market, and found their self-designed piggy dolls very impressive. These dolls have now become the greeting ambassador of my official residence in the New Year.

Unique designs, good quality and marketing are all important elements in making a product stands out in the market. A good understanding of the need and demand of the market and a reasonable pricing strategy are also essential. Particularly, during economic downturn, uniqueness will be the key factor for a product to survive and succeed.

Last year, the total value of retail sales in Hong Kong amounted to more than $480 billion, i.e. a year-on-year increase of 8.8%, which is the best performance over the last five years. However, retail growth rate indeed has gradually slowed down from over 10% in the first half of 2018 to a single-digit growth in the second half of the year. In last December, the value of retail sales is only $44.9 billion, i.e. a year-on-year increase of 0.1%, which is the weakest performance over the last 18 months.

With the uncertainties in the external environment and the slowdown pressure of local consumption, apart from maintaining a robust financial position, it is even more important for enterprises to enhance product competitiveness and operational efficiency through creativity and application of technology. In my Budget last year, I allocated resources to promote the development of the creative industry and support Hong Kong enterprises in exploring new markets outside Hong Kong, which I believe could increase the overall competitiveness of Hong Kong enterprises in the long run. For the coming Budget, I will continue to support businesses, preserve employment so as to stabilise the economy, and improve the livelihood of people.

Lastly, may I wish you all a prosperous and fulfilling new year ahead!

February 3, 2019

There are many aspects which Hong Kong can be proud of. On economic freedom, besides the Heritage Foundation, the Fraser Institute of Canada also names Hong Kong the world's freest economy. On competitiveness, Hong Kong is ranked second and seventh globally according to the International Institute for Management Development (IMD) of Lausanne, Switzerland and the World Economic Forum (WEF) respectively.

Turning to business environment, we are the fourth most business-friendly economy according to the World Bank, and our tax regime is regarded as the most friendly to business by the World Bank and the global accounting firm PricewaterhouseCoopers. Our digital competitiveness is the second best in Asia. As the leading international financial hub in the Asian region, as well as the third largest financial centre in global level, Hong Kong's performance in financial services is particularly outstanding. Last year, we topped the world in initial public offerings (IPOs), which is the sixth time out of the past decade. We are also the largest offshore RMB business hub in the world and the largest fund management hub in Asia, managing a total of USD3.1 trillion of asset while two-third of which came from overseas.

Hong Kong's transport infrastructure is named the second most competitive in the world according to WEF. Hong Kong International Airport is the busiest in the world in terms of cargo volume and the third busiest in terms of number of passengers for six consecutive years. Every day, there are more than one thousand flights connecting Hong Kong with over 220 destinations around the world, reaching half of the world's population within 5 hours of flight time.

Regarding education, three universities of Hong Kong rank within the top 50 around the world while being the top 10 in the Asian region. Two EMBA courses rank the first and the fourth in the global level. The Prince Philip Dental Hospital and the School of Hotel and Tourism Management of the Hong Kong Polytechnic University are also regarded as the best within the professions by some surveys.

With an ever decreasing crime rate since 1971, Hong Kong is one of the safest cities around the world.

During my stay in Davos of Switzerland for the World Economic Forum annual meeting over the past week, and my visit to Europe, US, Japan and other major economies for international conferences and trade missions over the past two years, we took every opportunity to promote all these advantages of Hong Kong.

Gathered from my contact with overseas businessmen and government officials during the above occasions, they are usually aware of the various advantages of Hong Kong, and regard Hong Kong's unique arrangement of "One Country Two System", our independent judiciary as well as the rule of law as the core values which give them confidence in doing business in Hong Kong. Therefore we have to treasure and uphold all these values to sustain Hong Kong's prosperity and development, and continue to play a unique and irreplaceable role in the further development and opening up of China.

January 27, 2019

As revealed in survey, while about 80 per cent of the people of Hong Kong have financial goals, less than half have taken the necessary action to realise these goals. Among those respondents who have borrowed money, about 20 per cent of them fail to make repayments on time. Moreover, some 40 per cent of the respondents lacked emergency funds to respond to unexpected financial needs. Given our ageing population, it becomes even more imminent for people to make adequate financial preparation for their retirement.

With the support of the Securities and Futures Commission, Hong Kong Monetary Authority and other supervisory bodies, the Investor Education Centre has been established six years ago to provide financial and investor education to the public. Recently, the Centre was renamed as the "Investor Financial and Education Council (IFEC)" and launched the latest version of the Financial Literacy Strategy, which aims at providing comprehensive education on a wide range of money matters to help and empower the people of Hong Kong to make informed, rational and responsible financial decisions. The new Strategy pays particular attention to the different financial needs of various groups, including the elderly, the youth, working adults, students and vulnerable groups (such as low income families, new immigrants, ethnic minorities and foreign domestic helpers), with a view to drawing up more targeted and suitable education materials for them.

For instance, layman language should be used in elderly education with the key message of avoiding risky investment choices. For young working adults, an earlier planning for long term investment could help accumulate returns for preparing their retirement. Students should also be equipped with knowledge of responsible consumption and the risk of over-consumption or over-borrowing. All these educational works may take time to show tangible effects, but in the long run, they can gradually reshape people's financial behaviours which in turn promote the healthy development of our society.

Some people may not be convinced by the idea of financial literacy given the limited cash on hand. However, financial literacy is indeed the attitude and ability to differentiate "nice-to-have" and "must-have" during consumption. To lead a stable and healthy life, we have to manage the risks in our investments, as well as to avoid over-consumption or over-borrowing.

In fact, people's behaviours on daily consumption, borrowing, investment and saving have an impact on the ecology behind our financial system. After the 2008 financial crisis, one of the lessons the global society has learned is that a financially educated and informed public contributes to the solid foundation of the financial system. It is therefore important for us to strengthen the educational works of financial literacy in order to maintain Hong Kong's position as an international financial hub.

January 20, 2019

The MiC Display Center is a two-story structure constructed and installed using Modular Integrated Construction (MiC) method. A total of 10 steel building modules form the showroom of 3,000 square feet to demonstrate how the application of MiC can speed up the construction of residential flat, hostel, elderly home and even hotel room. The residential show flats in MiC Display Center includes one 1-bedroom unit and one 3-bedroom unit, both designed and modelled on typical residential flats of Hong Kong.

Applying prefabrication in building construction may not be new to many of us. The unique feature of MiC is that the related prefabricated modules are not only completed with building structure and internal partitioning, but are fully furnished with interior fitting out, even with kitchen cabinets, oven, bed frame, mattress, curtains and TV wall mount all in place. The completed modules can then be delivered to the building site for direct installation.

These construction processes seem as simple as block building. In fact, most conventional in-site construction activities of building structures and interior fitting out could be completed in off-site manufacturing facilities. Connection between modules and installation of plumbing and electrical wiring are completed before delivery of the modules. Good planning at the design stage allows completed units to be transported to the building site for immediate and quick installation.

Interior fitting out usually takes place after the completion of the building structural frame in conventional construction. This approach is labour intensive, time consuming and generates more substantial construction wastage. By adopting MiC, design and production of prefabricated modules can proceed in parallel in manufacturing facilities, while the foundation construction works is in progress on site. The prefabricated modules would then be delivered to the construction site for direct installation, which can shorten the construction period by some 30% and in turn help alleviate labour shortage, improve working environment, enhance site safety and quality control.

MiC is a mature technology widely adopted for the construction of hostels, hospitals, elderly homes and residential flats in the U.K., the United States, Germany, Singapore, etc. For example, a residential flat of some 40 storeys is being constructed in Singapore using MiC. A 5-star hotel in Tibet was also built by using MiC. Hospital projects in Europe have achieved lower construction cost by adopting MiC.

In Hong Kong, the Government has been taking the lead in piloting MiC in public works projects. These pilot projects include the Disciplined Services Quarters for the Fire Services Department at Pak Shing Kok and the Wong Chuk Hang student residences project of the University of Hong Kong. The Housing Authority is also planning to adopt MiC for elderly home project in Shatin. In the last Budget, I injected $1 billion to set up the Construction Innovation and Technology Fund (CITF) to support innovation in construction technology, and MiC is one of the targeted areas. The CITF is operated on a co-fund basis, with Government grant capped at 70% of the project costs involved. The funding covers the hiring of specialist consultant, purchase or rental of construction related equipment, and even purchase of MiC modules.

While the development of Hong Kong is constrained by land shortage, the use of innovation and technology can transform limitations into opportunities, and promote the upgrading of traditional industries in Hong Kong.

January 13, 2019

In response to the overheated property market in the previous years, the Government has introduced several rounds of "harsh measures" of different purposes and policy objectives. When we consider the requests for relaxing the harsh measures, we need to differentiate them by their different functions.

The objective of Special Stamp Duty (SSD) is to curb short-term speculative activities. Therefore, additional stamp duty is imposed to residential property resold within three years from the date of acquisition. The rates of SSD depend on the period the property is held for, with a view to increasing significantly the costs for speculative activities in the property market. Doubled ad valorem Stamp Duty (DSD) aims to reduce investment demand for properties by doubling the ad valorem rates on transactions for buyers who own other properties in Hong Kong. Buyer's stamp duty (BSD) is to supress the investment demand of non-Hong Kong permanent resident and is applicable to non-Hong Kong permanent residents (including companies) only. Indeed, both BSD and DSD serve to facilitate Hong Kong residents to acquire a property if they do not own one.

Since Hong Kong residents are still encountering difficulties in owning their properties, the government has no intention to relax these three measures at the moment.

As regards to the several rounds of macro prudential measures introduced by the Hong Kong Monetary Authority in the past, including lowering the loan-to-value ratio, tightening the debt-servicing ratio for borrowers and requiring lenders to go through mock stress tests on interest tax etc, they can help ensure that risks borne by our banking system are still manageable while the property market is volatile.

We understand that the tightened loan-to-value ratio has led to difficulties experienced by some people in Hong Kong that although they can afford the mortgage repayment, they may not be able to come up with the upfront down payment for acquiring a property. Provided that we would not fuel the market or affect the risk management of the banking system, it is not impossible to explore solutions for such cases. This can also enhance the chance for buyers to acquire properties from the secondary market.

We have to be prudent in exploring the solutions. The following four factors would be taken into account :

• The downward adjustment in property price and the pace of the adjustment, including changes in the premium between first-hand property price and secondary market property price of the same district;
• Transaction volumes of both first-hand and secondary markets. ;
• Future supply of residential properties, such as production volume, number of units that are ready to be sold and potential supply of residential properties in the short to medium term;
• The macro-economic situation and outlook, including Hong Kong's economic performance, employment situation, trend of interest rates and capital flow, as well as the external economic environment.

We shall consider the above factors in a totality. Assessments will be conducted continuously to identify a right timing for the relaxation without designating hard timelines or indicators.

January 6, 2019

2018 is coming to an end. This year, the global market grew along with a positive trend, though accompanied with some unforeseen fluctuations. Early this year, the global economy experienced widespread and solid growth. Amid this trend, Hong Kong economy recorded a robust growth of 4.1% in the first half of the year.

However, the interest rate hike and unexpected development of the international trade conflicts have weighed on global economy, with repercussions on business sentiment and investment activities, and affected the atmosphere of global stock market. The residential property market in Hong Kong has shown some cool-off since August.

As a result, the pace of economic growth in Hong Kong was slowed down from 4% in the first half of the year to 2.9% in the third quarter. With adjustment in asset markets and external uncertainties, it is expected that the growth in the last quarter will further slowdown.

The global economy will face greater challenges and rising external headwinds next year. We have to brace ourselves for the volatile external environment.

The stable and growing Mainland economy has provided important support to our economy and helped hedge negative impacts from external environment. Domestic demand becomes a crucial stabilising force to the Mainland economy. The Mainland authority is putting forward a series of monetary, fiscal and other policy initiatives to stabilise employment, financial market, trade, foreign investment and domestic investment, as well as to manage market expectation. In addition, to sustain stable economic growth, the Mainland also pledged to further relax market access and other opening and reform measures.

The impacts of trade conflicts on the US economy begin to surface. In the fourth quarter, the US stock market became more sensitive and volatile. Alongside a lowered growth forecast, the risk appetite of the investment market could probably shrink further.

We should not hold any false hope for a soon improvement of the global environment. Amid slower momentum of growth across economies, our economy may be subject to more pressure in the coming year. Therefore, I propose the theme of "stabilising economy, supporting enterprises, and preserving employment" for the Budget next year. To ensure a stable economy and to relieve people's plight, I will make the best use of our fiscal reserve and, when necessary, initiate suitable counter-cyclical measures.

To maximise the potential of our economy, the Government will continue to invest for the future, address the constraints brought by shortage of land and talents, as well as promote the development of innovation and technology.

December 30, 2018

My friends and members of the public have recently shared with me their views on the coming Budget. Many of them would like the Government to further promote economic development and create more job opportunities.

Responding to these views is never an easy task. Choices have to be made among diverse aspirations given the finite public resources. Also, as policies are interrelated, we have to strike a proper balance and maintain consistency when making policy decision. In some cases, there are also legal constraints limiting the room for discretion, such as the non-viability of Government rent exemption.

I will study with relevant Government bureaux the views received during the consultation and assess their long term implications. Proposals involving substantial changes in policies would be announced in the Policy Address. I will ensure the provision of adequate resources to implement policy initiatives put forth in the Policy Address. Subject to the prevailing social and economic circumstances, I will also initiate suitable measures to promote economic development and to ease the burden on the public.

There are diverging views on whether and how a Government initiative should be modified. Take for an example the recent discussion on whether new restrictions should be imposed on rate concession. Views are diverged among LegCo members of different parties having considered the actual situation, stakeholders' views, as well as the cost of administration. There is no perfect solution for all, but only a balanced decision after thorough consideration of possible solutions, priorities of policy objectives and resources allocation.

Through this consultation, I hope we could better understand the needs of members of community and stakeholders of different sectors. With the collective wisdom of people, we aspire to make improvements, may be even some breakthroughs, under the constraints of resources and reality, planning a brighter future for Hong Kong.

December 23, 2018

The number of visitor arrivals to Hong Kong has been on the rising trend this year. In October, there were over 5.8 million visitor arrivals to Hong Kong. With the recent opening of the Hong Kong-Zhuhai-Macau Bridge (HZMB), the number of arrivals is estimated to further increase in November. If this trend goes on, the number of visitor arrivals this year will very probably exceed 60 million, breaking the record of 2014.

Industry players of the tourism sector, operators of major tourist spots and the hotel industry have observed an improvement in business since this year. To ensure a sustainable development of the tourism sector in the long run, we have to provide sufficient supporting facilities to avoid disturbance to the daily lives of the community.

In fact, tourism accounts for 4.5% of the GDP and 6.7% of the employment in Hong Kong. Under the uncertain economic outlook induced by the international trade conflicts, it would be particularly important for us to continuously strengthen our tourism so as to stabilise the economy.

Apart from promoting through various channels, we also initiate innovative exchange programme for secondary students outside Hong Kong. By combining traditional school exchange and cultural tourism exchange, participants would have chance to join cultural and conservation tours, including the famous attractions in the "four corners" of Hong Kong, i.e. the Hong Kong UNESCO Global Geopark in the east, the Ocean Park in the south, Ngong Ping 360 in the west and the Hong Kong Wetland Park in the north. Together with Tai Kwun, PMQ and Dr Sun Yat-sen Historical Trail, I believe the programme could impress the youths with a more in-depth understanding of Hong Kong.

As an international metropolis with unique features, Hong Kong is a big tourism attraction in itself. With a clear goal and direction, as well as good planning and solid implementation, we could definitely develop Hong Kong as a high-value added tourism hub.

December 16, 2018

How to better prepare for retirement is a common concern to many employees in Hong Kong. Hence, in the previous two Budgets, I put much emphasis on how to assist them to prepare financially for retirement. In this year's Budget, I initiated the provision of tax deduction for deferred annuity premiums and Mandatory Provident Fund Tax Deductible Voluntary Contributions (MPF TVCs).

The society responded positively to the initiative. After taking into account views from different sectors, I decided to raise the maximum tax deductible limit from the originally proposed $36,000 to $60,000. This amount is the aggregate limit for deferred annuity premiums and MPF TVCs, which allows a greater flexibility for the taxpayers to claim tax deduction according to their financial plans.

In addition, we propose to allow a taxpayer to claim tax deductions for deferred annuity premiums covering his/her spouse as a sole annuitant. A taxpaying couple can also allocate tax deductions for deferred annuity premiums amongst themselves in order to claim the total tax deductions with flexibility.

We shall introduce the Bill into the Legislative Council. Subject to the Council's approval, we expect the new measures would take effect on 1 April 2019. At the same time, the Insurance Authority will publish the list of eligible deferred annuity products on its website for public information and members of the public can set up their new separate MPF TVC accounts. I also entrusted the Insurance Authority and Mandatory Provident Fund Authority to enhance public understanding of annuity products and MPF TVCs, and how to evaluate different retirement planning tools to suit one's needs.

With an aging population, the demand on healthcare would definitely increase. With this in mind, I announced in this year's Budget that, starting from the 2019-20 financial year, a tax deduction will be provided for people who purchase eligible health insurance products for themselves or their dependents under the Voluntary Health Insurance Scheme. The annual tax ceiling of premium for tax deduction is $8,000 per insured person, without ceiling on the number of beneficiaries for each taxpayer.

The Government's recurrent expenditure on social welfare has increased by 86% over the past 6 years. Whilst this demonstrates Government's effort to support the poor and low-income group, we cannot ignore the needs and pressures faced by the middle-class. Therefore, in the past Budgets, I introduced measures from the structural and long-term perspective to relive the tax burden of the middle-class, while at the same time avoid narrowing tax base.

The consultation for the 2019-20 Budget has started to gauge views from the public and different sectors. This year, we have introduced a dedicated Facebook Page to collect views. You can also find relevant information at the Budget website . I sincerely invite you to express your views to assist us to better prepare the Budget.

December 9, 2018

Last week, I attended the Group of Twenty (G20) Leaders' Summit in Buenos Aires, Argentina, as part of the delegation of the People's Republic of China. Under the theme of "Building consensus for fair and sustainable development", the Summit focuses on key issues such as the future of work, infrastructure for development and a sustainable food future.

However, the greatest concern of the political and financial sectors worldwide would probably be the meeting between President Xi Jinping and US President Donald Trump on Sino-US trade conflict and the subsequent development, which will bring changes to the global economic outlook. Due to the uncertainty of economic prospect, International Monetary Fund and Organisation for Economic Co-operation and Development have already adjusted downward the growth trend of global economy earlier.

The global economy is now facing a high risk from the arising tension of the trade conflict, interest rate hikes, capital flows and difficulties in emerging markets, etc. In case crises arise in global economy, it would be more difficult to handle the situation when comparing to the financial tsunami in 2008. At the time of 2008, different economies joined hands to solve the problem. The policy buffer was wider, allowing various means on currency, finance and exchange rates, etc. to tackle the issues. The current policy buffer is however limited. Quite some countries nowadays have fiscal deficit or even in heavy debt, making them difficult to initiate large scale borrowings. On exchange rates, if their volatility escalates, livelihood or even financial stability will be adversely affected. US' unilateralism also discouraged international coorporation.

The outcome of the meeting was yet to be known when I was writing this article. We should not expect all problems to be resolved in one single meeting, but at the same time, we should not be too pessimistic. To attract more foreign investment, China has all along been pursuing firmly economic reform and opening up to enhance business environment. It also fulfils its own responsibilities in various aspects and develops market advantages. For the US, due to market concern on the rising of interest rates and the worries brought by the trade conflict, US stock has registered a significant decrease recently. In case the conflict is further escalated, it will bring significant impact to US' investment atmosphere and economy.

Hong Kong is a small and open economy. We uphold the principle of free trade and the success of Hong Kong is a result of win-win situation. We hope that the international community can reconfirm the advantages of free and open trade, protect the multilateral trading system, and come up with a consensus in resolving the dispute.

Afterword:
The media has already widely reported on the outcome of the meeting between President Xi Jinping and US President Donald Trump. The two leaders reached a consensus on not imposing additional tariffs under a friendly atmosphere. It should help ease market worries and tensions and provide more room between the two parties for negotiations.

However, the trade tension is merely a symptom of some deep-rooted, structural conflicts which cannot be resolved quickly. The two sides may not be able to reach a consensus in a short time and there may be ups and downs in the negotiation process, leading to fluctuations in the financial market. Having said that, the general principles reached by the two leaders, i.e. to develop based on a complementary and mutually-beneficial partnership; to manage divergence under mutual respect; and to pursue a cooperative and stable Sino-US relationship, have aroused expectation on the negotiation direction and outcome. At the same time, we should make preparations prudently to handle possible risks.

December 2, 2018

Free and fair competition has all along been one the core values of Hong Kong. Through market competition, consumers can receive more choices, better quality services and products at a more favourable price. Hong Kong's ongoing efforts in maintaining a free and fair competitive market have been widely recognised and contribute to our competiveness in the international market.

Hong Kong's Competition Ordinance (the Ordinance) came into full force three years ago. This was the first time the Government introducing a cross-industry anti-competition regime, demonstrating its determination to uphold the principle of fair competition. Since the launch of the Ordinance, public awareness on fair competition has been increasing. Empowered by the Ordinance, the Competition Commission (the Commission) would investigate and take enforcement actions against alleged anti-competition conduct.

In fact, with the commencement and increasing public awareness of the Ordinance, more industries have taken action to correct their deep-rooted "hidden rules". I believe such move will bring in changes to other industries' practices which can in turn benefit consumers.

The Commission enhances public awareness on fair competition through a variety of publicity and educational activities, and shares knowledge and experiences with overseas organisations to increase its professionalism. In this November, the Commission organised its inaugural international conference, Hong Kong Competition Exchange 2018. It also launched an online platform, Competition Exchange (www.compex.org), to provide valuable resources on competition related matters.

Given the Commission's important role in safeguarding fair competition in Hong Kong, I have increased the annual subvention for the Commission from $80 million to $120 million starting from this financial year and would further strengthen our assistance gradually. In addition, another $238 million dedicated fund will be allocated for the Commission's litigation expenses. I shall provide sufficient resources to support the Commission's work, with a view to fighting against all kinds of anti-competitive practices so as to protect consumers' right.

November 25, 2018

Last week, a delegation comprising over 200 representatives from Hong Kong and Macau attended the celebration activities in Beijing for the 40th anniversary of the country's reform and opening up. The reform and opening up of the country in the past 40 years was a remarkable process, and as well the glorious and momentous days to Hong Kong people who were involved. While the outside world adopted a wait and see, skeptical or even denial attitude towards the reform during the initial stage, many Hong Kong people devoted themselves into the exercise, investing in infrastructures, sharing knowledge, experiences and technologies, and providing support to poverty alleviation and education in the Mainland.

Back to the 1980s, I also witnessed the accounting professionals' contributions towards the reform and opening up of the Mainland, and the unique and key role played by Hong Kong. At the time, many Hong Kong accountants, including myself, gave lectures in the Mainland to explain accounting principles and standards, and to share Hong Kong's experience and international practices in accounting. In addition, we took part in assisting the Mainland's integration into the international accounting and auditing standards.

After the establishment of the Chinese Institute of Certified Public Accountants (CICPA) in 1988, Hong Kong accounting professionals assisted in building up network among the Mainland, Asia Pacific and international accounting professional bodies, so as to support the country to play a more significant role in international accounting practice and professional governance.

In 2006, when I was the Chairman of the Hong Kong Institute of Certified Public Accountants, the Institute signed a memorandum with CICPA to adopt alignment on the accounting systems of the two places, which in turn promote the international recognition of the Mainland's accounting standards.

In fact, similar to accounting professionals, many other professional sectors in Hong Kong also supported the reform and opening up by taking part in the establishment of systems which take into consideration the development and condition of the country, as well as the need to connect to international standards. This was also a learning process for the Hong Kong sectors involved to develop further.

Taking financial services as an example, with the internationalisation and expansion of the Mainland market, we gave full play to Hong Kong's role as a spot for demonstration and pilot schemes, testing ground and firewall. Since 1993 when the first Mainland enterprise had secured a listing in Hong Kong, the overseas listing channel for state-owned enterprises was established. The subsequent development of Red Chip Shares and A+H Shares facilitated the adoption of international accounting standards and governance in state-owned enterprises' operation and management. It also contributed to building Hong Kong's global leading position in IPO. Another example was the launching of Shanghai Connect in 2014, which allows international and Mainland investors to trade securities in each other's markets through the trading and clearing facilities of their home exchange.

Looking ahead, with the changing circumstances in the Mainland and other parts of the world, the role and position of Hong Kong in assisting the development of the country will need to be adjusted. Having said that, as far as we have a clear understanding and a good grasp of the overall situation, Hong Kong will continue to leverage its competitive edges in performing a unique and irreplaceable role in the course of the country's further reform and opening up.

November 18, 2018

The key features of 5G technology, when compared with the current mobile network, include ultra-high speed in wireless data transmission (10-20 times faster than the current 4G services), high reliability on mobile broadband services and low latency. This implies further enhancement of the fluency of mobile broadcasting, and at the same time, a wider application of Visual Reality (VR) and Augmented Reality (AR).

5G will revolutionise mobile user experience and is the basic element in the development of smart city. Many advanced economies have been actively developing 5G infrastructures, reflecting the potential and importance of the technology. Hong Kong is also proactively preparing the launching of 5G network and services. In terms of spectrum supply, a total of 4500MHz will be made available for the development of 5G services in 2019, which is eight times of the spectrum currently assigned for public mobile services for 2G, 3G and 4G.

Since the roll-out of 5G networks involves installing a larger number of base stations, the Government plans to launch a pilot scheme in the first quarter of 2019 to proactively open up around 1000 suitable Government premises for installation of base stations. The application procedures will be streamlined to speed up the application and approval processes, so as to facilitate the operators in establishing 5G networks as much as possible, thereby benefitting the end-users.

November 11, 2018

Last week, I attended an award presentation ceremony relating to application of innovation and technology (I&T). During my sharing with the winning team from a local university, I realised that we had met in the opening ceremony of the Youth Internship Programme at the Chinese Academy of Sciences (CAS) in Beijing months ago. The students told me that the internship in CAS, during which they learnt various problem-solving methods and application of technologies, was inspirational and useful to their future development.

In recent years, the Government has been actively promoting the development of I&T. While resources deployment is essential in pursuing our work, arousing the interest of youngsters and the general public in I&T is also of prime importance. The InnoCarnival, which is now running in the Science Park, is one of the large-scale events we organised in recent years to raise public awareness and knowledge on I&T.

We also hope that industry players can be more responsive in embracing technologies and have been focusing our efforts in the development of Fintech in Hong Kong. The Fintech Week of this year attracted business leaders, start-ups, investors, academics and representatives of regulatory bodies from a number of countries and regions. Apart from forums and exhibitions, this year's Fintech Week introduced a new feature named "Fast Track 2018" which matches selected start-ups with exclusive partners to receive consultation services on legal and tax, regulation, marketing and financial services, so as to facilitate their business expansion in Hong Kong and beyond.

Last week, the Hong Kong Monetary Authority officially launched eTradeConnect, a blockchain-based trade finance platform developed by a consortium of 12 major banks in Hong Kong. It aims to improve trade efficiency and reduce the risks of handling mistakes and fraud by digitising trade documents and automating trade finance processes. The operators of eTradeConnect and the we.trade signed a Memorandum of Understanding to conduct a proof-of-concept on connecting the two platforms, so as to enable cross-border trade financing.

At the same time, in light of the significant risks that virtual assets may pose to investors or performance of illegal acts by law-breakers such as money laundering, Securities and Futures Commission announced last week new measures to enhance protection to those who invest in virtual asset portfolios or funds. On the whole, we put equal emphasis on facilitation and regulation in respect of the application of I&T in the industries. We shall maintain a good control to bring the utmost convenience and protection to the public.

November 4, 2018

Thanks to the efforts paid by the Hong Kong Tourism Board over the years, the Wine and Dine Festival has become a vivid and impressive event in Hong Kong. The Festival this year is of the largest-ever scale, with 450 booths in total and attracted exhibitors from over 30 countries and regions. Besides fine food and wine, the Festival this year has set up zones for speciality coffee and worldwide traditional cuisine to offer a variety of choices to visitors. The number of visitors this year is expected to reach 140,000, with tourists contributing to around 10 percent. With more and more thematic events establishing their reputations, Hong Kong has been created as a city for tourism, events and gourmet.

Last year, I convened a high-level tourism co-ordinating meeting and discussed about our work in nurturing and developing local and international mega events. Besides the Wine and Dine Festival, mega events that get word of mouth in the recent years include Hong Kong Cyclothon, Hong Kong Sevens, Hong Kong Tennis Open, Hong Kong Dragon Boat Carnival, Tai Hang Fire Dragon Dance and E-sports & Music Festival etc. In fact, expectations of tourists around the world have been rising with diversifies tastes. Apart from the above mentioned mega events, we also promote local culture, heritage, green and creative tourism, with a view to providing rich and diversified choices and experience to our visitors.

On heritage tourism, the "Tai Kung", which is a revitalisation project at the former Central Police Station Compound, was opened in May this year. It has attracted over a million visits since its opening, which is very encouraging.

On culture tourism, the Xiqu Centre in the West Kowloon Cultural District will be open soon. It will provide Hong Kong with a larger stage to showcase our traditional Chinese opera culture to international tourists.

The recent opening of strategic cross-border infrastructures, including the Guangzhou–Shenzhen–Hong Kong Express Rail Link and the Hong Kong-Zhuhai-Macao Bridge, will facilitate passenger flow and attract more visitors to Hong Kong, consolidating our position as an international tourist city. The trade will also grasp the opportunities to develop more new tourism products.

The various measures mentioned above are part of our strategies set out in the Development Blueprint for Hong Kong's Tourism Industry released last year. In future, we will continue to pursue and implement the various supporting measures, so as to enhance Hong Kong's tourism resources.

October 28, 2018

Last week, I paid my very first visit to Papua New Guinea (PNG) to attend the Finance Ministers' Meeting (FMM) of the Asia-Pacific Economic Cooperation. Most Hong Kong people may find this Australia's neighbouring island country unfamiliar. Given various historical and geographical factors, the economic development of PNG is lagging behind with relatively weak infrastructure. To attract investment and develop the economy, improvement to the transportation network to facilitate the circulation of people and goods would be necessary.

In fact, even though we have entered into the era of "Industrialisation 4.0" of internet, internet of things and artificial intelligence, the importance of infrastructure never diminishes. Global funding demand for infrastructure development is huge. It is necessary to attract more funding and investment from the private market, instead of relying on resources from governments and multilateral development agencies.

On the other hand, more investors and capitals around the world are looking for long-term projects with stable return. Infrastructure projects are one of the options. How to make infrastructure projects more investible and bankable, and direct funding of the financial market towards projects with practical needs, manageable risks and better return is the key to success. Hong Kong has extensive knowledge and experience in infrastructure financing and has been pursuing different measures in this regard.

Looking ahead, we need to be innovative in infrastructure financing. Securitization of infrastructure loans is one option. The Hong Kong Mortgage Corporation Limited under the Hong Kong Monetary Authority has conducted a study in this area.

Study findings show that the securitisation of infrastructure loans would allow banks to cash in and at the same time, meet the needs of investors looking for long-term projects with manageable risk and stable return (e.g. pension funds and insurance companies). The setting of investment quota by investors for individual projects would be more flexible, achieving a multi-win situation.

Besides infrastructure financing, the FMM also discussed about application of Fintech and financial inclusion, which are also focus areas of our current work.In gist, our work direction aligns with international trend on funding and financial services. We will continue with our effort to break a new ground in our local financial services, and enhance Hong Kong's position as an international financial centre.

October 21, 2018

The worldwide stock market was volatile last week. Hong Kong stocks dropped around a thousand points in a single day. Although it rebounded afterward, the accumulative drop on Hang Seng index had exceeded 7%. There were also substantial fluctuations in the U.S. and Mainland stocks. Market sentiment quickly became fragile and pessimistic.

The stock and exchange markets are ever changing, so as the situation of the global economy.Following the intensification of the international trade conflict, gradual increase of US interest rate, the strengthening of US dollar and flowing out of international capital, the exchange rate and economy of the emerging markets have been under stress. The International Monetary Fund has indeed adjusted downward the estimation of global economy growth for this year and the next.

Hong Kong is a small and open economy. Facing the looming national conformation,it is difficult for Hong Kong to intervene or stay away from the impact brought about. It is of utmost importance for us to manage the risks, provide support to enterprises, preserve employment and explore new business opportunities, so as to mitigate the negative impacts led by external changes and uncertainties, facilitating continuous stable development of our economy.

I shall kick start the consultation for next year's Budget soon. We look forward to the active participation of different sectors and valuable views on how we should equip ourselves for combating external changes and meeting future development needs.

October 14, 2018

Nowadays, trainings for the construction industry are diversified. Besides trainings on professional skills, and project supervision and management, application of innovative construction technologies and elements on whole person education are also covered. Moreover, through the "designated workers for designated skills" arrangement and recognition under Qualifications Framework, the industry has become more professional and is able to assist young people in establishing pathway for career development.

The overall capital expenditure of Hong Kong will maintain at the level between $250 billion to $300 billion annually in the coming 5 years. The Government will continue to support the work of the Construction Industry Council, offer more quality training opportunities to young people and improve the professionalism and image of industry practitioners.

Although the quality of Hong Kong's infrastructure and property constructions is internationally renowned, there is still much room for improvement in construction methods and application of innovation and technology. The Construction Industry Council has set up the Construction Innovation and Technology Application Centre to provide the industry with information on local and overseas new technologies, and assist small-and-medium-sized enterprises in adapting those technologies in their operations. I have also set aside $1 billion in the Budget to set up the Construction Innovation and Technology Fund. The Fund has started receiving applications since October.

We hope to collaborate with the industry to promote the further development of the construction industry towards a more professional, innovative, efficient and safer direction. This can also support the development of Hong Kong's economy, and provide better career prospects to industry practitioners.

October 7, 2018

Faster Payment System (FPS) has officially launched. It represents the start of a new era for Hong Kong's retail payment system. It operates on a round-the-clock basis and enables the public to make instant transfer of funds anytime, anywhere, across different banks or stored value facilities (SVFs).

FPS is an open platform which can continuously support the bloom of the electronic payment market and provide diversified payment options to the public. FPS will significantly change the local retail payment ecology, facilitate healthy competition among the market, and provide brand new and better experience to users and merchants. Moreover, I will encourage government departments to actively explore the use of FPS, so as to provide the public with greater convenience in paying government bills or charges.

Apart from promoting the use of electronic payments, I also announced in the Budget to issue licenses for virtual banks. Although virtual banks have no physical branches, they must set up an office in Hong Kong and provide a protection limit of HK$500,000 per depositor per bank, same as the practice for conventional banks. Virtual banks will facilitate the use of financial services by small-and-medium enterprises and minorities in the community through enhancing service effectiveness and inclusiveness. The Hong Kong Monetary Authority has received around 30 applications for the licenses of virtual banks and is expected to start issuing the first batch of licenses by the end of this year.

September 30, 2018

The US Federal Reserve's Open Market Committee is going to hold a meeting session this week and the market is expecting another round of interest rate hike thereafter, which will be the eighth increase in interest rate since the end of 2015. Considering the trend of interest rate in Hong Kong over the last few months, the odds for Hong Kong banks to follow suit and increase the prime rate stand high, which will be the first hike of prime rate ever since 2006. The extremely low interest rate environment over more than a decade is coming to an end soon. Coupled with a number of unfavourable and uncertain factors ahead in the near future, it is important for us to well manage the risks.

In fact, after the two earlier interest rate hikes by the US this year, the HIBOR in Hong Kong has already been increased. Many of those who are making payments on mortgage should have felt the burden led by the rate increase. The current flat prices of residential properties in Hong Kong have surged ahead of the affordability of the general public. According to some market figures, the property market has shown signs of cooling over the last few weeks with both prices and volume of transactions falling. We have to stay alert to the risk of possible downturn of the property market and manage our risk vigilantly.

September 23, 2018

Insurance industry is an important element of the diversified financial businesses in Hong Kong. The insurance density and penetration rate of Hong Kong are amongst the best in Asia. As at June 2018, there are about 13 million Individual Life policies in Hong Kong. Insurance industry plays a key role in Hong Kong's economy, representing 3.7% of the GDP. Last year, the gross premiums of Hong Kong insurance industry were about $489.6 billion, representing an increase of 9.1% over 2016.

The number of service providers in the industry is voluminous. There are about 160 insurance companies with around 100 000 insurance intermediaries, contributing to the economic development and employment of Hong Kong. Hong Kong's insurance industry is highly competitive, and has become one of our "export" service industries. Last year, new office premiums of policies issued to Mainland visitors in last year was $50.8 billion, representing around 30% of the total new office premiums for individual business.

One of the researches conducted by the Financial Leaders Forum chaired by me is on how to promote the development of Hong Kong's insurance industry. I have also invited the Insurance Authority to work together with the industry to explore how the competitiveness of Hong Kong as an insurance hub can be enhanced, including measures relating to taxation and regulation. The preliminary findings showed that businesses relating to captive insurers, reinsurance, marine, Guangdong-Hong Kong-Macao Greater Bay Area and Belt and Road initiatives will have tremendous development potentials.

To attract more new blood for the industry, the Government launched a $50 million Pilot Programme to Enhance Talent Training for the Insurance Sector in 2016, in order to provide more professional training and work placement opportunities for the industry. The government will continue to work closely with the Insurance Authority to further enhance talent training.

September 16, 2018

Last week, I led a four-day business mission to Israel. The delegation was comprised of more than 30 business leaders representing companies in the fields of biotechnology, Fintech, artificial intelligence, smart city development, financial services and venture capital investment. Quite a number of these companies were based in the Hong Kong Science Park and Cyberport. Also joining the delegation were representatives of the Hong Kong Trade Development Council, Invest Hong Kong, Science and Technology Park and Cyberport.

While in Israel, the delegation visited a number of innovation and technology (I&T) institutions, research and development facilities of local universities, incubation platforms for I&T companies, and participated in several rounds of business matching meetings. The objective of the visit is to attract more Israeli companies to start their operation in Hong Kong and in turn further promote the development of I&T industry in Hong Kong.

I also hosted several seminars for the Israeli I&T companies and start-ups and highlighted to them the many advantages of doing business in Hong Kong, which a lot of local companies found attractive. As the international financial centre in Asia, Hong Kong's financial market could provide the funding these companies need to support their fast development. These companies were also particularly interested in our recent listing regime reform, under which new-economy companies with weighted voting right structures and pre-revenue biotech companies could be list on the Main Board of Hong Kong Stock Exchange. While the Israeli companies boast strong research capabilities and advanced technologies, they lack the scenarios for large-scale application of their new technologies. Hong Kong can act as the "guide" to help them find suitable and reliable business partners and tap the massive markets in the Mainland of China and Asia.

September 9, 2018

This week, I am leading a four-day business mission to Israel to strengthen business and economic ties between Hong Kong and Israel, and seek closer collaboration on the innovation and technology front. The delegation is comprised of more than 30 business leaders representing companies in the fields of financial services, venture capital investment, biotechnology, Fintech and smart city development. Representatives from the Hong Kong Science and Technology Park and Cyberport are also joining the mission.

We will visit Tel Aviv and Jerusalem, and attend a briefing by the Israeli Government on business opportunities in Israel and meet the representatives of the local business sector. While in Tel Aviv, I will speak at the 6th Annual Summit for business with China to showcase Hong Kong's unique strengths which make us the ideal platform for enterprises in seizing new opportunities under the Belt and Road Initiative.

After five years of exploration and implementation, the Belt and Road Initiative is beginning to bear fruit and will continue to bring tangible benefits to the local communities. As a leading global financial centre, Hong Kong can serve our motherland's needs with our unique strengths, and be the financing hub for the Belt and Road projects. We can provide diversified financing means and solutions to mitigate investment risk, enhancing projects' commercial attractiveness and facilitating early completion of these projects for improving people's livelihood.

Established two years ago, the HKMA Infrastructure Financing Facilitation Office (IFFO) is providing a platform to channel international funds to profitable and valuable infrastructure projects and bridge the funding gap for these projects. With the support of the State-owned Assets Supervision and Administration Commission of the State Council, the HKMA is now in discussions with some Central State-owned Enterprises to explore opportunities for cooperation and joint investment in overseas projects with stable return, in the form of equity investment. The Securities and Futures Commission also issued last year a statement setting out factors relating to the listing of infrastructure project companies in Hong Kong.

September 2, 2018

I attended a few days ago the opening ceremony of the e-Sports & Music Festival Hong Kong organised by Hong Kong Tourism Board (HKTB). More than 7.4 million viewers watched online broadcast of e-sports matches of the first-ever Festival held last year, and the event has received extensive local and international media coverage. Last year's Festival indirectly generated publicity value of over $150 million worldwide and helped reinforce Hong Kong's image as the events capital of Asia. HKTB estimated that 80,000 visitors, including many from overseas, will be joining this year's Festival and bringing more businesses for relevant sectors including catering, hotels and the retail industry.

For the first time, E-sports has been featured as a demonstration sport at the Asian Games 2018 currently held in Jakarta, Indonesia. E-sports will also be included as a medal event at next Asian Games in Hangzhou in 2022. In this year's Asian Games, Hong Kong is sending six athletes to compete in four of the e-sports events.

In this year's Budget, I have allocated $100 million to promote the development of Hong Kong's e-sports industry. In which $50 million will be used to establish a well-equipped local e-sports and digital entertainment node in Cyberport Arcade for organising small to medium scale competitions and training sessions. The remaining $50 million will be used to support the development of the industry, including organising local and regional competitions and major events, training programmes and promotional activities. Cyberport will also strengthen nurturing start-ups and talent related to e-sports development.

I believe that with suitable guidance, such as support from schools and welfare organisations, young people can strike a balance among interests, learning and living, and turn their hobbies into careers. E-sports can offer more opportunities for young people and facilitate diversification of Hong Kong's economy.

August 26, 2018

Manufacturing has a solid foundation in Hong Kong. Hong Kong enjoys close proximity to the vast Mainland market and has been the gateway connecting China and the international markets. Our excellent technology infrastructure, telecommunication network as well as strong service industries offer manufacturers integrated support across the value chain. We should capitalise on these edges, and seize the opportunities arising from the new wave of innovation and technology and the development of the Guangdong-Hong Kong-Macao Bay Area, with a view to supporting the upgrade and transformation of Hong Kong's manufacturing sector.

The Government in recent years has been promoting "re-industrialisation" along four major fronts, namely, provision of infrastructure, financial support, technological support, and nurturing of talent. Our goal is to develop high value-added and less land-intensive manufacturing industries. The Advanced Manufacturing Centre in the Tseung Kwan O Industrial Estate is expected to be completed in 2022. Apart from the space reserved for manufacturing procedures, the Centre will also offer space and facilities supporting research and development (R&D), logistics, prototyping and design for tenants who are adopting advanced manufacturing technologies.

Enhancing Hong Kong's R&D capability is the key to re-industrialization. I visited some time ago the five R&D canters established by the Government, to understand more about the application of their R&D results on various fronts. The development of I&T will bring benefits to different sectors and industries. While we endeavor to re-build the "Made in Hong Kong" brand, we should leverage on advanced research and technologies in integrating manufacturing industries into our knowledge-based economy, thereby sustaining high value-added and diversified economic development.

August 19, 2018

The Hong Kong economy expanded by 3.5% the second quarter of 2018 over a year earlier. While it seems to be slower than the growth of 4.6% in the first quarter, Hong Kong's economic fundamentals remain solid, with a low unemployment rate and wages and earning continued to improve in real terms. It is worth to noting that exports of services expanded notably by 6.1% year-on-year in real terms. In particular, inbound tourism continued to register double-digit growth. The GDP growth for 2018 should meet my forecast of 3% to 4% mentioned in the Budget this year.

Being an externally-oriented economy, Hong Kong's economic growth will largely be affected by external factors. For the second half of the year, we should be mindful of uncertainties arising from international trade conflict and the changing US monetary policy and capital flows.

In view of the external uncertainties, it is important for us to manage the potential risks effectively and sustain the strong economic momentum. Overall, Hong Kong household debt situation has not caused problems to our financial safety. As for the banking system, it has an overall liquidity coverage ratio of around 150% and its capital adequacy ratio is over 19%, which is among the highest in the world and way above the international minimum requirement of 8%. Hong Kong's banking system has sufficient capital and liquid assets to weather shocks.

August 12, 2018

Last week, I visited three cities in the Guangdong-Hong Kong–Macau Bay Area (the Bay Area), namely Guangzhou, Foshan and Jiangmen, to learn more about the latest social and economic development of these places, especially the upgrading of local enterprises through innovation and technology.

Hong Kong boasts a number of unique strengths that enable us to benefit from this new wave of innovation and technology. For example, at a Hong Kong-invested company specialising in air-conditioning products that I visited in Jiangmen, Hong Kong engineers are taking charge of the research and development (R&D) and product design, and some of the R&D results are patented in Hong Kong. Hong Kong offers a robust intellectual property rights protection regime and can help these products gain international recognition.

On the other hand, Foshan City has co-initiated a LED-FPD Technology R&D Center with the Hong Kong University of Science and Technology. Focusing on technology development for LED and FPD, the Centre provides technical support and skills training for relevant manufacturers in Guangdong, and vividly illustrates Hong Kong's strength in innovation and technological research. Hong Kong can join hands with the vibrant supply chain and manufacturing sector in Guangdong to promote innovation and technology development of the Bay Area.

I believe that Hong Kong can play a pivotal role in the development of the Bay Area, and at the same time we will be able to maintain our distinctiveness amid Hong Kong's economic integration with the Mainland. This is the very reason why many Mainland enterprises and international technology institutions appreciate and value what Hong Kong can offer.

August 5, 2018

Last Friday, Vicky and Kitty, two senior secondary school students participating in the newly launched "Be a Government Official for a Day" programme, joined my office during the summer vacation and shadowed me on the job for one day.

On that day, they joined me to attend the opening ceremony of Ani-Com & Games Hong Kong, several meetings related to my portfolio and a Policy Address Consultation session with the academics.

The "Be a government official for a day" programme offers a valuable opportunity for young people to better understand the operation of the government and the process of policy formulation. It also gives us the chance to learn more about young people's ideas and goals. I will continue to promote the prosperity and diversification of our economy, so to create more opportunities for our young people to realize their strength and potential.

July 29, 2018

Last week, I briefed Members of the Legislative Council on Government's latest assessment on economic impact on Hong Kong arising from the trade conflict between the United States (US) and the Mainland, as well as the follow-up actions taken by the Government. Members generally agreed with the Government's support measures targeted at the trade and the small and medium enterprises. Some Members suggested that Hong Kong should expedite the diversification of economy, and support local companies in exploring more markets.

The trade conflicts will affect business environment, investment and market sentiment, and may in turn reduce global trade volume and slow the economic momentum, and leading to changes in the global supply chan. Hong Kong's economy may face broader and faster impact, both directly and indirectly, in the next year.

The escalating trade conflict between the Mainland and the US has also created uncertainty for the financial market and added volatility to the stock market. Having gone through the several financial crises in the past, Hong Kong's financial system now is much more resilient against external shocks.

The banking system in Hong Kong currently has an overall liquidity coverage ratio of around 150%. Its capital adequacy ratio is over 19%, which is among the highest in the world and way above the international minimum requirement of 8%. The Hong Kong Monetary Authority (HKMA) also regularly conducts on-site and thematic supervisory reviews and stress tests on banks.

In respect of leading statistics, as at the end of March 2018, the overall classified loan ratio of the Hong Kong banking sector's Mainland-related lending portfolio stood at 0.06%, which stays in a very low level internationally. As for the securities market, the Securities and Futures Commission (SFC) will conduct stress tests for the intermediaries, and will work closely with the Stock Exchange of Hong Kong and HKMA to address potential systemic issues.

In light of the potential risks arising from the trade war, we will stay vigilant and closely monitor the developments and be prepared for necessary actions.

July 22, 2018

Taking place every four years, the FIFA World Cup has again become the talking point of the town. There are so many memorable moments in the World Cup matches that vividly illustrate the fascinating and enchanting nature of sports and athletics. In this year's budget, I have proposed a host of initiatives to allocate resources to support elite sports, to promote sports in the community and to develop Hong Kong into a centre for major international sports events.

We will inject a total of $6 billion into the Elite Athletes Development Fund to enhance support for elite athletes. We have also been providing additional funding for disabled elite sports to support full-time training of disabled athletes. We launched a five-year development plan in January this year to provide additional funding of $130 million to the sports associations of eight team ball sports of Asian Games (namely baseball, basketball, handball, hockey, ice-hockey, softball, volleyball and water polo).

To promote sports in community, I will inject $1 billion into the sports portion of the Arts and Sport Development Fund to support sports organisations in training athletes and hosting competitions. I will also allocate $100 million for the launch of a five-year District Sports Programmes Funding Scheme to encourage sports associations in the 18 districts to organise more sports activities. In order to encourage the business sector to sponsor large-scale sports events and thereby providing our athletes with more opportunities to complete on home ground, I shall allocate $500 million for a new Major Sports Event Matching Grant Scheme.

The 2018 Asian Games and Asian Para Games will be held in Indonesia in August and October respectively, and Hong Kong will be represented by a largest-ever squad of athletes. Let's join together to support Hong Kong's athletes in achieving greater results in the 2018 Games.

July 15, 2018

The Hong Kong Mortgage Corporation Annuity Plan ("The Plan") was officially launched last week, providing another option of financial arrangement for the elderly. Under the Plan, retirees can turn part of their savings into life-long streams of guaranteed, stable and fixed annuity income.

The Plan is an insurance product that opens for application by Hong Kong permanent residents aged 65 years or above. The minimum and maximum premium is $50,000 and $1,000,000 respectively. The insured can immediately receive a guaranteed stream of fixed income after paying a single premium, and can continue to receive fixed monthly annuity payments even when he/she turns 100 years old or older. Therefore the Plan provides an annuity for lifelong income and the longer you live, the higher cumulative annuity payments you will receive. If there is an oversubscription of the Plan by the public, we are prepared to double the first tranche quota from currently $10 billion to $20 billion. You can find more details of the Plan at the designated website - https://www.hkmca.hk.

We have also proposed two initiatives in this year's Budget to encourage citizens to make early planning for their retirement. Firstly, I have tasked the Insurance Authority to issue guidelines to assist citizens to identify and select suitable products on deferred annuity. Citizens purchasing these products meeting the guidelines can enjoy tax concessions. Secondly, for people who are making voluntary contributions into their mandatory contribution accounts for retirement use under the Mandatory Provident Fund, their relevant contributions can also enjoy tax concession. The maximum tax deductible limit is set to at $36,000.

July 8, 2018

Last week, the Government announced six new initiatives on housing, among which are the proposed Special Rates on vacant first-hand private residential units collected at two times the ratable value of the units concerned (the so-called vacancy tax), and the amendment of the Lands Department Consent Scheme to require developers to offer for sale no less than 20% of the total number of residential units subject to the relevant pre-sale consent at each turn of sale.

The objective of the Special Rates is to ensure those unsold and completed first-hand private residential units can be timely and effectively made available in the market for sale or rent. In addition, the amendment of the Lands Department Consent Scheme will discourage developers to sell flats in small batches, and thereby facilitate healthy development of the market.

When considering the measure of Special Rates, we cannot just focus on the number of completed first-hand flats at the moment. According to Government's projection, the average number of units completed per year in the past five years (from 2013 to 2017) was 13500, while that in the next five years will be around 21000. As at end April, the number of residential units that can be put up for sale by the developers amounts to 18000. In addition, the number of units in the property projects meeting the criteria for applying for pre-sale consent totalled 28000. Therefore we need to take forward looking measures so that the housing supply can reach the market as early as possible.

July 1, 2018

Last week, I visited Beijing and called on a number of central authorities that I have been working closely with. We had a fruitful exchange on matters related to finance, trade and commerce, innovation and technology and Guangdong-Hong Kong-Macao Bay Area Development.

During the visit, I also officiated at the kick-off ceremonies of two internship programmes for university students from Hong Kong and had a chance to chat with the students. They were taking part in the Youth Internship Programme at the Chinese Academy of Sciences and the summer internship programme organised by the Fin Society, and will work and study respectively in the country's top scientific research institute and several major financial institutions. The Home Affairs Bureau also organise three other internship programmes for young people at the Palace Museum in Beijing, the Wolong National Nature Reserve in Sichuan as well as in Dunhuang, Gansu. These programmes offer valuable opportunities for participants to deepen their understanding of the latest development in heritage, cultural and nature conservation in our country.

All these internship programmes are worth supporting, as they provide young people the chances to experience different cultures, customs and lifestyles of different places, and help broaden their horizon through mutual understanding, respect and inclusion. I believe the experience participating in these internship programmes will bring substantial benefit to their future career.

June 24, 2018

I visited Sham Shui Po district last week. The district, which is often described as an old district, has in recent years developed with more creative, design and cultural activities, while maintaining its rich cultural, historical and architectural heritage. These activities have provided new impetus for continued development of the district.

Housed in the former Shek Kip Mei Factory Estate, the Jockey Club Creative Arts Centre is no longer a base of cottage industries, but a hub of studios and display venues for 140 artists and art organisations. Another project in a revitalised industry building located at Lai Chi Kok supports startups and entrepreneurs in developing their businesses through concessionary rental, as well as in their operations and marketing.

The Government has stepped up effort to support the development of the creative industries. I announced in this Budget to inject another $1 billion into CreateSmart Initiative (CSI) to strengthen support for the development of the creative industries, especially in nurturing youths and helping startups, and also to enable the Hong Kong Design Centre to implement initiatives to enhance public understanding of the value of creativity and design.

The Hong Kong Design Centre will collaborate with the Urban Renewal Authority to establish a new design and fashion hub under the redevelopment project of the Tung Chau Street/Kweilin Street, with a view to nurturing the next generation of designers for Hong Kong, and to building a vibrant and energetic community in Sham Shui Po.

June 17, 2018

Last week, I was invited to attend the 9th Shanghai-Hong Kong Metropolitan Development Seminar in Shanghai. During the process of reform and opening-up of China in the past 40 years, it was clear that Hong Kong's pivotal role has not diminished amid the country's further opening up and enhanced connection with the world. On the contrary, Hong Kong has achieved significant development through continuous transformation and leveraging of our advantages in meeting the country's needs. As its development enters a new era, China will continue to forge deeper reform, give equal emphasis to "bringing in" and "going global", with a view to boosting two-way investment and trade flows between China and other countries, thus making new ground for opening up on all fronts. Hong Kong's financial sector can further develop and integrate into the overall development of the country and scale new heights.

Hong Kong is China's international financial centre, the world's largest offshore Renminbi business hub and Asia's largest asset management centre. Under "one country, two systems", our financial market boasts a number of unique strengths, such as a free and open market, a robust regulatory system with efficient financial infrastructures, a common law system and the fine tradition of the rule of law, a simple and low tax regime, a wide range of financial products, top-class trilingual professionals (who speak Cantonese, Putonghua and English) with a good command of two languages (English and Chinese), and a lifestyle blending Eastern and Western cultures.

Going forward, as China deepens its opening up and its connection with the international community, Hong Kong's role as the gateway and hub connecting China and the world will become even more prominent and our advantages under the "one country two systems" will be even more notable. These advantages cannot be developed or replicated by other places in a short period of time. As long as we uphold the strategy of "Leveraging the Mainland while Engaging the World" and can identify the right position for ourselves, Hong Kong can better serve our country's needs in the new phase of China's development, and continue to flourish.

June 10, 2018

I visited Dublin, Ireland last week to attend the seminar organised by Invest Hong Kong and Enterprise Ireland to promote collaborations between Hong Kong and Ireland in different aspects.

Ireland has positioned itself as the gateway and aviation hub connecting Europe and the North America. With its young and well-educated workforce, and a highly competitive tax regime, Ireland has successfully attracted many leading multinational technology companies to set up regional headquarters there, creating a large number of quality job opportunities for the locals. In recent years, Ireland has seen rapid developments in the areas of Fintech, aviation, aircraft leasing and pharmaceutical industry.

As an international financial centre with excellent telecommunication infrastructure and R&D capabilities, Hong Kong is well positioned to develop into a Fintech hub. Cyberport currently houses a vibrant Fintech community, comprising some 250 local and overseas companies of various sizes. On aircraft leasing, we have amended the relevant laws to create a competitive tax environment, and will further enhance Hong Kong's attractiveness as a hub of aircraft leasing by expanding our network of Comprehensive Double Taxation Agreements with other tax jurisdictions.

June 3, 2018

When I wrote this article, I was attending the 4th China International Big Data Industry Expo in Guiyang to understand the recent development of big data, artificial intelligence and smart city initiatives in the Mainland. Senior officials of Guizhou Province identified the potential of big data development and gained policy support from the country in the recent years. This makes Guizhou Province significantly change from a backward economy to a fast and determined development.

Recently, President Xi Jingping made an important instruction to support Hong Kong to become an international innovation and technology centre. This instruction affirms Hong Kong's important role in contributing towards the country's strategy on innovation development and allowing Hong Kong to participate direct into her research and development projects.

To Hong Kong, development of innovation and technology is not a question of do it or not, but with an urgency to proceed further. In order for our innovation and technology pathway to break a new ground, we need to set a clear goal, invest resources, pool and nurture our talent and resolve the problems that we are facing.

May 27, 2018

Last week, I accepted the invitation from Hong Kong Trade Development Council to attend SmartHK Forum held in Hangzhou, China. I also took the opportunity to visit some local internet technology enterprises to understand how would internet technology and artificial intelligence assist citizens to meet their daily needs and enhance living quality.

The driving force for the Mainland to develop innovation and technology came from the urgency of solving social issues. On the other hand, Hong Kong possesses a lot of good conditions and accumulates certain assets in developing into an innovation and technology centre. With the policy support from our country, the society gathers more consensuses to develop I&T and the urgency of raising a new height on this industry is increasing.

To develop I&T in Hong Kong, we need collaborative wisdom, vision and passion. We can achieve a bigger breakthrough by seeking new solutions, daring to try and overcoming our limit in creating room for enhancement.

May 20, 2018

The Hong Kong economy turned into robust growth of 4.7% over a year earlier in the first quarter of 2018, which is the highest quarterly growth rate in the past seven years. Nevertheless, we should not be complacent and the HKSAR Government will continue to drive economic development with a forward-looking and strategic approach, to support the innovation and technology industry as well as other industries with advantages and potentials, and build a diversified economy that can create more career development opportunities for our young people.

The Innovation and Technology Bureau has recently announced a 3-year pilot Technology Talent Admission Scheme to provide a fast-track arrangement for technology companies and institutes to recruit from overseas and the Mainland technology talent that are in short supply or not readily available in Hong Kong. While the industry generally supports the Scheme, I noted there are concerns that the Scheme will induce competition for local workers. In order for Hong Kong's innovation and technology industry to break new ground, we should invest aggressively in nurturing local talent and at the same time attracting more talent and companies to Hong Kong. Only with the pooling of talent and through the agglomeration of enterprises, we can enhance the capacity and capability of the entire industry and benefit from bigger economies of scale. These job opportunities and prospects will in turn attract more local talent to join the industry, resulting in a virtuous cycle.

May 13, 2018

Last week, I attended the 51st Annual Meeting of the Asian Development Bank (ADB) in Manila, the Philippines. ADB aims to help developing member economies to reduce poverty, promote economic growth and improve the quality of life of their people. The Asia and the Pacific was the fastest-growing region in the past decade. Population in extreme poverty (with daily income below USD$1.90) in Asia and the Pacific significantly declined from 53% in 1990 to about 9% of the total population of the region in 2013.

Nonetheless, based on ADB's estimates, Asia and the Pacific will need to invest USD$1.7 trillion annually for infrastructure until 2030, in order to improve economy, eradicate poverty, and respond to climate change. Given the massive funding gap, it is critical to attract private capital as a source of financing for these infrastructure projects. As a leading international financial centre in Asia and the world's largest offshore Renminbi business hub, Hong Kong is well equipped to contribute to the prosperous, inclusive and sustainable development of the region.

Bond issuance is a commonly used financial instrument for financing infrastructure projects. To enhance the competitiveness of Hong Kong's bond market, I have proposed a host of initiatives in the Budget, including the Pilot Bond Grant Scheme, tax concessions measures, as well as the Green Bond Grant Scheme.

On the other hand, the Hong Kong Monetary Authority established the Infrastructure Financing Facilitation Office in mid-2016 to provide a platform for information exchange and experience sharing, and to help build the capacity and knowledge of various stakeholders and to facilitate collaboration in this area.

May 6, 2018

Green finance has been developing quickly in recent years amid the growing concern around the world about environmental protection and climate change. We need to recognise the importance of green finance. The Organisation for Economic Co-operation and Development (OECD) estimated that during the period from 2016 to 2030, the annual investment needed for green infrastructure worldwide will be as high as nearly US$7 trillion.

To promote the development of green finance in Hong Kong, I announced in the Budget that we will launch a Government Green Bond Programme with a borrowing ceiling of HK$100 billion. The proceeds of issuances under the Programme will be credited to the Capital Works Reserve Fund for funding green public works projects meeting specific criteria. We expect to issue the first batch of government green bond in this financial year.

On the other hand, the Hong Kong Quality Assurance Agency established at the beginning of this year a Green Finance Certification Scheme (GFCS) to provide third-party conformity assessments for issuers on their green financial instruments. To attract more corporate green bond issuance in Hong Kong, I also announced in the Budget the implementation of the Green Bond Grant Scheme. Under the Scheme, we propose providing a grant to offset 100% of the cost incurred by issuers issuing green bond at a minimum size of HK$500 million for obtaining an external review under GFCS, with a grant ceiling of HK$800,000 per issuance.

To further enhance the competitiveness of Hong Kong's bond market, I have also rolled out a host of measures in the Budget. These include a Pilot Bond Grant Scheme to attract local, Mainland and overseas enterprises to issue bonds in Hong Kong, and proposed amendments of tax arrangements to offer tax concessions to bond investors.

April 29, 2018

Last Saturday, I attended the opening ceremony of Shape Our Future: WeCan! -Project WeCan Career Exploration Day. This meaningful project offered a wide range of life planning activities for more than 2,000 students from 53 secondary schools, to empower them for pursuing further study and future careers.

The Government has been promoting life planning education for students, to enable them to explore and understand better their own interests, potentials and career aspirations. For instance, the Business-School Partnership Programme, launched by the Education Bureau in collaboration with the business sector, NGOs and schools, leads students out of the classroom to gain a deeper and specific understanding about operation of different trades and day-to-day work of different job positions.

I have also allocated additional resources in this year Budget to regularise the Pilot Training and Support Scheme, to inject $800 million into the HKSAR Government Scholarship Fund for offering more incentives to outstanding students, and to enhance the operation of the Continuing Education Fund to facilitate continued education by working people. The Government is also committed to diversifying economic growth and we have provided resources to support development of innovation and technology, cultures and art, as well as to nurture talented athletes. We hope that our work in this regard would provide our younger generation with more opportunities in realising their potential and fulfilling their aspirations.

April 22, 2018

The US Federal Reserve has raised interest rates six times since December 2015, widening the spreads between the interest rates of HKD and that of USD, and thereby attracting arbitrage transactions with funds flowing from the HKD into the USD The HKD has weakened recently as a result. However, I don't think that should be a cause for concern.

Firstly, according to the mechanism of the Linked Exchange Rate system: outflow of funds contraction of aggregate balance HKD interest rates to increase HKD exchange rates to stabilise. The capital outflow of HKD will slow down or even cease when the HKD interest rates normalise and the spreads between the interest rates of two currencies diminish. The HKD exchange rates will also subsequently stabilise. All these are part of normal operation in accordance to the design of the currency peg.

Secondly, the Government has made early preparation for this situation. Since the introduction of the Quantitative Easing by the US in 2009, there has been roughly US $130 billion worth of capital flowing into Hong Kong. The Hong Kong Monetary Authority (HKMA) has placed these funds, equivalent to about HK $1 trillion, entirely in highly liquid, high quality US dollar-denominated assets (such as US Treasuries) that can be readily converted into USD cash.

Even under extreme circumstances where there is a huge demand for buying USD and selling HKD, the HKMA is fully capable to meet such a demand. Currently, the HKD Monetary Base amounts to about HK$1.7 trillion and is fully backed by USD assets, providing a strong buffer in the event of fund outflows. Moreover, the HKMA has been strengthening risk management of the banking sector and enhancing the vigilance and preparedness of the banks through stress tests. Therefore, I am confident that Hong Kong can rise up to challenges from potential fund outflows in extreme situations.

April 15, 2018

The annual Hong Kong SciFest opened in mid-March has attracted a large number of citizens participating in its wide-ranging activities. I am glad to have the opportunity to officiate at the opening ceremony of the large-scale event promoting public awareness and interest in science and technology. I am particularly interested in how the biomedical technologies developing rapidly in recent years help enhance individual's quality of life, maintain their physical and mental health, and help our society cope with the challenge of an ageing population. In my Budget this year, I have earmarked resources to set up the Innovation and Technology Fund for Application in Elderly and Rehabilitation Care for promoting research and development of innovative tech products to strengthen the support for the elderly staying at homes.

Another significant purpose of the SciFest is to enable our younger generation to learn more about the application of technology in daily lives, so to help develop their interest in innovative technologies and in further studying Science, Technology, Engineering and Mathematics (STEM) related subjects, or even in pursuing a career in research and development. Resources have been allocated through the Budget to attract more and research and technology institutions and companies to come to Hong Kong, to create a conducive atmosphere for technological development and nurturing local talent. Other initiatives also include enhancing school-based teaching activities on STEM related subjects and expansion project of the Science Museum.

This year's SciFest will be held until 25 April. You may explore the many interesting programmes and activities at the website of SciFest(http://www.hk.science.museum/scifest2018/eintroduction.php).

April 8, 2018

One of the major global trends that I highlighted in this year's budget is the rise of protectionism in some advanced economies. The risk in this aspect has heightened following a host of trade measures recently announced by the US against China's import and investment, which many people fear that may result in a trade war.

Hong Kong is a highly open and small economy. Free trade is the cornerstone of our economic success. The total value of merchandise and services trade of Hong Kong amounts to 375% of our GDP. Trading and logistics industry is one of our pillar industries that contributes 22% of GDP and employs about 730,000 people.

Both Mainland and the US are our major trading partners. In 2017, the total value of Mainland's merchandise export to the US routing through Hong Kong amounted to $280 billion, representing 7% of Hong Kong's export. The trade disputes between China and the U.S will inevitably impede relevant trade activities and may negatively impact Hong Kong's Economy to a certain extent. We will closely monitor the progress of the ongoing negotiation between China and the US, and constantly evaluate the latest situation.

April 1, 2018

I highlighted three objectives in my 2018/19 Budget delivered at end February – diversified economy, investing for the future and caring and sharing. I am glad that many people support our work in respect of diversifying economic development and investing for the future, such as nurturing the innovation and technology industry, improving healthcare facilities and enhancing training of healthcare professionals.

In order to share the fruits of our economic success with more people in a targeted manner, we announced on last Friday a Caring and Sharing Scheme. Our initial assessment is that around 2.8 million people may be eligible under the Scheme that will be implemented by the Working Family Allowance Office. We are aiming at receiving applications for the Scheme by February next year, and we will keep the administration cost as low as possible. We understand that the public is concerned about whether they and their families are eligible for the Scheme. We are happy to respond to enquiries and will endeavour to shorten the processing time, so that people will receive payments early and conveniently.

With the announcement of the Scheme, I hope that the community can again focus on the long-term development of Hong Kong when discussing the Budget, and work together for the betterment of our future.

March 25, 2018

In my government Budget delivered not long ago, many resources have been allocated to enable the people, in particular the elderly, to live well and healthily in the community. Relevant initiatives include the one-off provision of additional $1000 elderly healthcare vouchers; setting up of the first district health centre in Kwai Tsing District in the third quarter of next year, followed by such centres in all 18 districts; regularising the Colorectal Cancer Screening Programme and extending its coverage to individuals aged between 50 and 75; increasing the number of vouchers under the Pilot Scheme on Community Care Service Voucher for the Elderly; and setting up of the Innovation and Technology Fund for Application in Elderly and Rehabilitation Care. We have also earmarked $8 billion for improving district facilities and $20 billion for enhancing cultural facilities.

We are also committed to increasing subsidised residential care places for the elderly. We are planning to provide more care facilities for the elderly in the public housing projects as far as suitable, and at the same time require private developers to provide residential care homes for the elderly through terms and conditions of land leases or land sale. I hope the public would continue to support our future proposals to increase care facilities for the elderly in the community.

March 18, 2018

One of the key objectives of the Budget is to promote diversified economic development, in particular in providing more quality employment and development opportunities for our younger generations. I had the chance to meet and talk to quite a number of young people while I was preparing for the Budget, and I felt that many of them were very hardworking and highly committed to furthering their career.

For young people who wish to join the innovation and technology industry, we have set aside in the Budget $50 billion to support the development of the industry, to enhance the infrastructure and attract talent. For those who are interested in creative industries, arts and culture, we will inject another $1 billion into the CreateSmart Initiative for nurturing youths and helping start-ups. For those who are good at sports and want to become elite athletes, we will be injecting another $5 billion into the Elite Athletes Development Fund. On e-sports, I will allocate $100 million to Cyberport to promote the technological development and nurture talent for the sector.

Our young people have different interests and aspirations. Whether they wish to pursue a career in academic research, innovation and technologies, creative industries, arts, sports or in other sectors, or wish to showcase their talent in the e-sports arenas, I hope we can provide the environment and opportunities for them to realise their potential.

March 11, 2018

The initiatives put forward in the first Budget of the current-term Government are underpinned by three main objectives: (1) Diversified economy: we have to diversify our economy to create wealth for Hong Kong and provide wider and better development opportunities for our young people. (2) Investing for the future: we have to prepare facing the challenges posed by aging population and make Hong Kong an ideal smart city to work and to live in. (3) Caring and sharing: apart from materialistic improvements, we have to enhance the quality and substance of people's lives as well. Caring and sharing is a key theme of the Budget. In addition to a series of new initiatives to alleviate tax burden of the salary earners, I also indicated in the Budget that I will invite the Community Care Fund to consider providing short-term relief targeting "N have-nots households", so to help plugging the gaps of the proposed arrangements.

One-off and short-term initiatives cannot address the long-term needs of our community. This is the reason why I proposed to increase the long-term commitments on education, social welfare and healthcare in this Budget. In 2018-19, the estimated recurrent expenditure on these three areas accounts for about 60% of government recurrent expenditure, exceeding $230 billion in total. The increase of recurrent allocation can substantively improve public services and is far more effective than the one-off measures in supporting the people in need.

March 4, 2018

I will announce the first Budget of the current-term Government at the Legislative Council this Wednesday. This year, the fiscal surplus will be higher than last year. As the people in charge of public finances, we have to ensure that the resources are allocated in a fair and proper manner, in order to relieve people's hardship and prepare for our future.

Recently, there were suggestions that instead of investing for the somewhat distant future, it would be better if we just give the money directly back to the people. However, I would like to stress that planning ahead does not mean that we are neglecting the present needs. Healthcare, housing, education as well as development of innovation and technology industry are all subjects that are close to our hearts. Shouldn't we be proactively planning ahead to enhance our healthcare system and facilities when our public finances are healthy, so that the community can still enjoy quality healthcare services amid the ageing population?

While some of these long-term planning may not achieve instant results, but if we do not make sufficient preparation in our good days, it would be even harder for us to do so in times of financial difficulties, and people may suffer when the care is most needed.

February 25, 2018

The Hong Kong tourism industry has gone through a period of consolidation in the past two years. We have launched a number of initiatives in the past two Government budgets to support the industry in coping with the challenges. With the concerted effort of the Government and the industry, these initiatives have achieved results and the tourism sector continued to recover in 2017. On visitor arrivals, the year-on-year rate of increase visibly accelerated to 6% in the fourth quarter last year, while the overall number of visitor arrivals in 2017 rose by 3.2 per cent to 58.47 million over a year earlier. The number of overnight visitor arrivals also increased by 5%. The average hotel room occupancy rate rose from 83% in the first quarter of 2016 to 83 % in the fourth quarter of 2017. The Hong Kong Tourism Board recently announced its promotion plan for this year and it is expected that the total number of visitors will edge up by 3% to 5% in 2018.

The Government released the "Development Blueprint for Hong Kong's Tourism Industry" in last October. Our vision is to develop Hong Kong into a world-class premier tourism destination. Four major strategies to achieve this vision are (a) to develop a diversified portfolio of visitor source markets for Hong Kong, with a focus on attracting high value-added overnight visitors; (b) to nurture and develop tourism products and initiatives with local and international characteristics, including cultural, heritage, green and creative tourism; (c) to develop smart tourism with the use of creative media and new technology; and (d) to upgrade the service quality of the tourism industry.

February 18, 2018

I paid a visit to Kwun Tong District last Wednesday and met with the elderly as well as children and young people. I am glad to see that the elderly centre and youth centre I visited on that day have established a caring network for the senior citizens and families in the community.

In the past few years, the Government has been increasing recurrent expenditure on education, social welfare and healthcare services to improve people's livelihood. In 2017-18, the recurrent expenditure on these three areas is estimated to reach $78.6 billion, $73.3 billion and $61.9 billion respectively. Notably, the recurrent expenditure on social welfare has increased by 71 per cent when compared to 2012-13. Going forward, the Government will continue to allocate resources to improve healthcare services for senior citizens and elderly care services, and to nurture the young generation and empower them to pursue their dreams and fulfil their aspirations.

February 11, 2018

Currently, more than 3.5 million people, or almost half of Hong Kong's population, are living in the new towns. Most of the land in these new towns is reclaimed land, and these land has played a pivotal role in addressing our housing needs. However, no new towns have been built since 2000, which is also one of the factors leading to the existing shortage in land supply. Moreover, for various reasons, the pace of reclamation has slowed down in the recent decade. Land created through reclamation has reduced nearly by 80 per cent from 3000 hectares during the period of 1985 to 2000 (i.e. an annual average of some 200 hectares of land) to only about 690 hectares within the period of 2000 to 2015 (i.e. an annual average of only some 40 hectares of land).

With the advancement of technology, the modern-day reclamation projects can better preserve the ecological environment and neighbouring communities, and strike a balance between development and conservation. We are now taking forward several key reclamation proposals and new town projects, including the developments in Hung Shui Kiu, Kwu Tung North/ Fanling North, Yuen Long South and Kam Tin South. I believe as long as we have the determination to increase our land supply and are willing to consider these proposals in a pragmatic manner, we can continue to write the successful stories of reclamation and new town development in Hong Kong.

February 4, 2018

The concept of bay area economy is not new. The New York Bay Area, San Francisco Bay Area and Tokyo Bay Area are well-known global examples. The Guangdong-Hong Kong-Macau Bay Area (the Bay Area) is already comparable to those economic clusters in US and Japan in terms of the size of population and economy, and shows even greater potential. The Bay Area, covering 9 cities and 2 special administrative regions, has a population of over 60 million and a total area of 56 000 square km, both of with exceed that of the bay areas of Tokyo and San Francisco. While the aggregate GDP of the Bay area ($US 1.4 trillion) is still trailing that of the Tokyo Bay Area ($US 1.8 trillion), it is very close to that of the New York Bay Area ($US 1.44 trillion). The GDP of the Guangdong-Hong Kong-Macau Bay area is comparable to that of Australia (ranks 13th globally) and South Korea (ranks 11th globally).

Under the "One country, Two systems" principle, Hong Kong is performing unique functions and is indispensable to the development of the Bay Area. For young people who aspire to start their own business, the Bay Area also has another important meaning: that our "local market" will be expanded from the existing 7 million residents of Hong Kong to the entire 67 million population of the Bay Area. The huge market will be a useful leverage point for our young entrepreneurs to develop their businesses.

January 28, 2018

China is now the second largest economy in the world. The Mainland's economy is undergoing transformation from "high-speed" growth to "high-quality" growth, and will continue to deepen its supply-side structural reform to promote long-term economic development. In this context, how should Hong Kong utilise our own competitive advantages to complement our country's development needs, and at the same time to expand our capacity for further development? I believe there are three areas that we should focus on, namely the "Belt and Road" initiative, the Guangdong-Hong Kong-Macau Bay Area development, as well as turning innovation and technology as the engine our economy.

The ratio of Hong Kong's GDP to that of the Mainland has shrunk from 20% in early 1990s to less than 3% in recent years. Some may regard that Hong Kong is now less relevant to the Mainland economy. But looking from a different angle, it is only natural that the ratio has decreased given that Hong Kong is a small economy with a population of 7 million, while China is a fast growing economic power with 1.4 billion people. This also reflects the rising economic status and prosperity of our country. I firmly believe that as long as Hong Kong maintains its "flexibility", we can continue to play a unique role in contributing to China's continued economic transformation and in seizing the opportunities ahead arising from further advancement of our country.

January 21, 2018

It has been 40 years since China implemented the reform and opening-up policies. Our country has achieved enormous and remarkable economic and social developments during this period and became the second largest economy in the world in 2010. The GDP of the Mainland of China has seen an explosive growth since 1978 and exceeded 80 trillion yuan (US$ 12 trillion, accounting for 15% of the global GDP). China's total value of import and export has expanded 178 times since its opening-up, while the urbanisation rate gradually increased from 18 per cent to 57 per cent, substantially improving people's living standard.