In recent years, China has been putting increasing resources into research and development.
The ratio of its R&D expenditure to gross domestic product is among the highest in the world.
The number of applications for patents is also soaring, ranked third globally.
As regards the supply of talent supply, one in four researchers in the world is Chinese and the proportion continues to climb.
Hong Kong has many world-renowned schools, a high level of economic development, a reliable legal system and free information flow — providing solid ground for R&D.
Tighter cooperation with the mainland in the high-tech sector could help the economic transformation of the city.
Competitiveness in the future is about innovative technologies. Those who hold the technologies win.
Hong Kong should follow the country’s push for innovation and set proper talent communication policies and encourage emerging industries.
As everyone knows, the big engines of manufacturing and real estate drove China’s remarkable growth in the past years.
But the shortfalls are clear.
After the 2008 financial crisis, Chinese manufacturers were among the first victims.
At present, as China has entered into a “new normal”, innovation is a key factor to pull the country out of the pain of structural reform.
The State Council has launched several stimulus measures since last year and is expected to announce tax cuts and to step up support for technology innovation.
Studies show that Hong Kong, as an Asian financial center, has plenty of money to invest, but the more difficult thing is to find targets for that investment.
We should know that, in the early years when China lagged the developed countries in technology, many traditional industries in Hong Kong achieved low-cost competitiveness by scale effects and imitation.
But the model no longer works, because of overcapacity.
Innovative technologies can make things different.
For example, although steel products are in overall oversupply, there is a shortage of high-end steel products, which still need to be imported.
If more capital is allotted for R&D on such high-end steel products, enabling them to be produced domestically, we will no longer need to import them.
Therefore, industrial investment should focus more on R&D, and policymakers should offer more incentives for enterprises to make such investments.
In April, Hong Kong’s Innovation and Technology Commission launched a new Enterprise Support Scheme to encourage more private-sector investment in R&D.
The new scheme will provide funding to companies of all sizes to support their R&D projects.
Funding of up to US$10 million for each approved project will be provided on a dollar-for-dollar matching basis, and the applicant firm will own the intellectual property of the project.
In short, if Hong Kong can make a timely adjustment of its policies to push forward economic reforms, there is huge room for developing new industries in terms of investing, consuming and exporting.
This article appeared in the Hong Kong Economic Journal on Oct. 12.
Translation by Myssie You
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