With the economic changes brought about by the 2019 coronavirus epidemic, coupled with changes in the geopolitical landscape, and new plans for Hong Kong's economic development proposed by the central government and the SAR government, Hong Kong has entered a critical moment of economic transformation.
Recently, the SAR government announced plans to reorganize the Innovation and Technology Bureau into the Innovation, Technology and Industry Bureau to enhance the policy function of "re-industrialization". The Chief Executive also proposed the development of the northern metropolitan area in his policy address earlier, suggesting that a large amount of land should be allocated for the development of innovation and technology. and advanced industries.
Only when Hong Kong's industries and labor market become more diversified can the opportunities for upward mobility of young people and ordinary citizens increase, and the long-term economic development, people's livelihood and deep-seated conflicts in society can be improved.
In the coming period, the author will focus on discussing the potential, challenges and opportunities of Hong Kong's economic transformation and development of innovative technologies in this new column, and discuss rationally with policymakers, the business community, academia, and the general public, so as to jointly shape the future of Hong Kong.
As an introduction, this article first introduces readers to the new "five industries" that I believe Hong Kong is well-positioned to develop under the great tide of Industry 4.0 technology development, including health technology, food technology, green technology, agricultural technology and semiconductors.
These five industries were chosen both based on Hong Kong's existing strength and comparative advantages, and because they can enhance Hong Kong's status as an innovation and technology hub.
Deng Xiwei, professor of economics at the School of Economics and Management of the University of Hong Kong and deputy director of the Asia Global Institute.
Hong Kong takes the lead in health technology research and development
Health technology includes the production and research and development of health and medical products. In related fields, Hong Kong has always had a world-class medical team and research foundation. Among them, the long-term development of Western medicine is rare in the world.
These advantages of Hong Kong are beneficial to the development of pharmaceutical production and life science and technology.
According to data from the Trade Development Council, there were about 250 biotechnology-related companies and 160 medical and health equipment manufacturers in Hong Kong in 2019.
Hong Kong will be the largest IPO center for biotech companies in the Asia-Pacific region in 2021. Since 2018, 79 healthcare companies have been listed in Hong Kong, raising more than 200 billion yuan. Recognition and confidence in the ecosystem.
In the "Guangdong-Hong Kong-Macao Greater Bay Area Development Plan" released in 2019, biotechnology and pharmaceuticals were listed as emerging pillar industries in the Greater Bay Area. In addition to the aging population in many countries, consumers' health awareness has increased, driving the global demand for medical and health services. and rising product demand.
Driven by policies and continued growth in global demand, Hong Kong should be able to leverage its traditional advantages in biotechnology and medicine, and transform world-renowned basic scientific research into products that benefit users around the world.
Hong Kong has always had a world-class medical team and research foundation, which is conducive to promoting the development of the health technology industry.
Food technology can boost the reputation of "Made in Hong Kong"
In terms of food technology, "future technology" includes many foods or materials made from synthetic organisms. In addition to using scientific research and innovative thinking to make food, it is also expected to solve environmental problems.
In recent years, due to rising domestic production costs and subsidies from the SAR government, many Hong Kong-owned food manufacturers in mainland China have planned to relocate some or even all of their production processes back to Hong Kong.
Although the share of manufacturing value added in the overall economy has declined rapidly since the early 1990s, the food, beverage and tobacco products industries have become increasingly important. According to the Census and Statistics Department, its share of value added in Hong Kong's manufacturing industry has grown from 1973 From 4.4% in 2019 to 34.1% in 2019, employment also increased from 30,037 in 2013 to 34,053 in 2019.
Under a well-established food safety supervision system, the "Made in Hong Kong" food label symbolizes product safety, brand awareness and a reputation for quality.
Industry stakeholders expect to use new technologies, including artificial intelligence and the Internet of Things, to promote advanced food manufacturing, scientific research, and design, and to export diversified products to the global market.
Green and agtech fit with transformational trends
As for green technology and sustainable development, it is a global trend.
The development of green technology can not only improve the environment, but also increase the diversity of employment.
The International Renewable Energy Agency's 2020 report states that the renewable energy industry creates as many as 11.5 million jobs globally and predicts that employment will increase to 42 million by 2050.
Waste disposal has always been an urgent issue in Hong Kong. According to the statistics of the Environmental Protection Department, the total amount of solid waste dumped in landfills has been dropping sharply since 2002, and it was only after 2011 that there was a slight recovery.
In order to ease the pressure on landfills, the SAR government actively advocates the development of the local recycling industry, but the progress still needs to be improved.
According to statistics from the Census and Statistics Department, in 2019, 44,670 people directly or indirectly participated in environmental recycling activities in Hong Kong, and their proportion in the total number of local employment increased slightly from 0.9% in 2008 to 1.2% in 2019.
The SAR Government actively advocates the development of local environmental protection industries, but the progress still needs to be improved.
Agricultural technology, which is closely related to food and green technology, is in urgent need of transformation in the contemporary society pursuing sustainable economy and environmental, social and governance (ESG).
Agtech advocates ecologically sustainable solutions that provide enough food to feed an expanding world population.
In recent years, all parts of the world, such as the United States and Japan, have been developing indoor vertical farms, using greenhouse technology to avoid external environmental impact on production, and creating indoor environmental protection ecological chains through a central Internet of Things system to control the growth of crops and adjust production and output. product quality.
As the related technology can reduce labor and land costs, consumers can enjoy fresh vegetables that are both cheap and environmentally friendly.
In recent years, many Hong Kong start-up companies have also tried to use vertical farms and other methods to develop local agriculture in traditional industrial buildings with sustainable and advanced big data technology.
"Northern Capital" can bring together the new semiconductor industry chain
Finally, Hong Kong also has the conditions to design and produce a new generation of semiconductors.
The new generation of semiconductors is composed of silicon carbide SiC and gallium nitride GaN, which has higher efficiency, lower energy consumption and higher thermal conductivity than the first and second generation semiconductors.
According to a market study conducted by semiconductor market research firm IC Insights, different semiconductor leaders are expected to grow steadily from 3% to 34% in the third quarter of 2021.
The continued shortage of semiconductor supply is expected to continue to put pressure on the production of several important manufacturing industries in the next few years.
Coupled with the digital transformation of the global economy and the construction of smart cities, driving the development of data centers, big data analysis, electric vehicles and even 5G communication equipment, the demand for chips will only increase unabated.
The development of a new generation of semiconductors is not only to meet the needs of global economic development and consumption, but also to contribute to and integrate into the overall national development.
Although Hong Kong may face a certain degree of pressure from the United States in the context of tense Sino-US relations, the United States should not intend to put any pressure on China's 28nm+ semiconductor development, especially because 28nm+ semiconductors are in great demand in the market, especially in both China and the United States. In the vigorously promoted electric vehicle industry.
The semiconductor industry covers multiple processes, including integrated circuit design, silicon wafer fabrication, chip fabrication, packaging, application testing, sales, downstream industries, and more.
In 1999, Hong Kong missed a once-in-a-lifetime opportunity to develop semiconductors and is now far behind mainland China and the other three members of the "Asian Tigers".
The SAR government should take active measures to establish R&D centers and design centers for the semiconductor industry. It can also cooperate with national policies to attract semiconductor-related manufacturing companies from all over the world to settle in Hong Kong. In the long run, the entire new-generation semiconductor industry chain can be gathered through the northern metropolitan area.
Hong Kong can bring together the entire next-generation semiconductor industry chain through the development of the northern metropolitan area.
Policy Suggestions: Boldly Promote the Interaction of "Government-Industry-University-Research"
The author recently collaborated with the Hong Kong Productivity Council to write the "Reindustrialization Research in Hong Kong" report. From July to September 2021, I led a research team from the University of Hong Kong to visit the three major industries of food technology, health technology and green technology. 184 companies headquartered in Hong Kong analyze the current challenges and opportunities in the manufacturing industry with micro data.
On the whole, companies in the three major industries are facing different challenges, especially in terms of plant facilities and hiring suitable talents, but at the same time, many companies have plans to return to Hong Kong for production or research and development.
Hong Kong's single economic industry and slowing productivity growth stem from multiple intertwined problems, including the mismatch between talent supply and demand, high rents, investors and entrepreneurs have long concentrated on real estate financial investments with fast and high returns, and young people are increasingly Pessimism about economic prospects and employment prospects, and continued integration with domestic economic development that does not reach most citizens, etc.
Fragmented economic policies cannot solve these intricate problems, nor can they effectively improve people's livelihood.
In recent years, the SAR government has tried to abandon the "small government, big market" mentality, and began to formulate long-term economic development plans and provide more targeted subsidy programs for certain industries and talents. These are all good starts.
The author hopes that the government will implement a multi-pronged approach while addressing the shortage of talents, housing and supporting facilities, and boldly promote the interaction and platform development of "government-industry-university-research".
The order of policies should not be divided first, because Hong Kong's economic problem is not as simple as lack of land or talent, but also includes imbalances in industrial chains and resources, including serious mismatches in talent.
At the same time, the government can also intensify the existing new economic policies, such as various subsidy programs, and at the same time, "remove the wall" as soon as possible, which is increasingly documenting the bureaucratic process.
The restructured government needs to strengthen co-ordination among various departments.
On the whole, Hong Kong can still play its role as a "super liaison" to help the country achieve both internal and external circulation in all aspects of capital and talent.
In addition, the government has to formulate an industrial policy based on the creation of good jobs for the local people. The promotion of re-industrialization will not only improve the level of innovation and technology in Hong Kong, but also provide young people with broader employment choices and opportunities for upward mobility. Economic research has long found that the manufacturing industry driven by innovative technology can provide more upstream employment and on-the-job learning opportunities than the service industry, and can create synergies for upstream and downstream industries.
The author plans to make a more detailed discussion and case analysis of the five industries mentioned above in the next year, and will also discuss the successful economic transformation experience of other countries and cities and the policies behind them. To jointly promote the future development of Hong Kong.
Professor of Economics, School of Economics and Management, The University of Hong Kong, Deputy Director of Asia Global Institute