Policy Address

Chapter III    Strengthen the Four Centres and Develop the Hub for High-calibre Talent

(A) International Financial Centre

31. We will consolidate and enhance Hong Kong's status as an international financial centre, and stay committed to our global positioning. Hong Kong will deepen the development of its global offshore Renminbi (RMB) business and capital market, develop an international asset and wealth management centre and international risk management centre, enhance the securities market and expand fixed income and commodity trading. Through upgrading our real economy with the introduction of green elements, digitalisation and innovation, and reinforcing our connection with the Mainland and the world, we will cement our status as a global capital financing hub.

Global Offshore Renminbi Business Hub

32. In 2025, offshore RMB lending in Hong Kong registered a record high of RMB 935 billion, while bond issuance reached RMB 1 trillion for two consecutive years, consolidating the city's status as a global offshore RMB business hub.

33. We will continue to boost our market development:

Enhance Liquidity

1. The RMB Business Facility introduced last year provides banks with a stable and relatively lower-cost source of RMB funds, supporting the wider use of RMB in the real economy and radiating funds to regions such as the Association of South East Asian Nations (ASEAN), the Middle East and Europe. The facility size has been expanded to RMB 500 billion, with loan tenor extended up to three years. The Hong Kong Monetary Authority (HKMA) is exploring enhancements of the Currency Swap Agreement with the People's Bank of China to strengthen offshore RMB market liquidity and consolidate Hong Kong's position as a global offshore RMB hub.

2. The HKMA will introduce a tendering mechanism of seven-day offshore RMB liquidity to expand channels for banks to meet their short-term financing needs. It will also explore the issuance of offshore RMB short-term debt instruments, to provide more high-quality investment and liquidity management products for the market, while supporting the building of an offshore RMB yield curve.

Expand the Dim Sum Bond Market

2. Expand dim sum bond issuance with an enhanced tenor structure in due course, seek support from the Ministry of Finance to increase the scale and frequency of bond issuance in Hong Kong, encourage policy financial institutions to issue bonds in Hong Kong.

3. The Hong Kong Exchanges and Clearing Limited (HKEX) will launch the HKEX Offshore RMB Bond Index as a reference for market trends and an underlying index for exchange-traded funds (ETFs).

Diversified Products

4. The HKMA will explore expanding product scope under the Southbound Bond Connect to include products with Hong Kong Dollar bonds and RMB bonds as underlying assets.

5. The Securities and Futures Commission (SFC) is preparing for the inclusion of RMB counters under the Southbound Trading of Stock Connect, while the HKEX will encourage listed companies to set up RMB counters.

Diversify Risk Management Tools and Asset Uses

6. Following the official launch of China Government Bond Futures, the SFC will support the HKEX to enrich its RMB foreign exchange futures products.

7. The scope of acceptance of Northbound Bond Connect bonds as collateral will be expanded to the three clearing houses under the HKEX; a bond repurchase business using Southbound Bond Connect bonds as collateral will also be developed, with a view to vitalising the assets of local and non-local investors.

Deepen External Collaboration and Promotion

8. The HKMA, the People's Bank of China and Bank Indonesia are expected to kick-start the bilateral currency transaction framework between offshore RMB and Indonesian Rupiah this year, and the HKMA will explore arrangements for direct exchange between offshore RMB and other currencies.

9. The HKMA will encourage more foreign banks in Hong Kong to directly join the Cross-border Interbank Payment System (CIPS) to expand the clearing network, and will deepen collaboration with the central banks in such areas as ASEAN and Middle East countries, forge closer ties with regions including Central Asia and Latin America, and visit Indonesia with the Hong Kong Association of Banks to promote Hong Kong's offshore RMB services.

Develop New Growth Areas in Fixed Income Markets

34. Hong Kong is the largest hub for arranging international bonds issued by Asia-based entities, with the volume of issuance arranged in Hong Kong accounting for about a quarter of the global total in 2025. We will further consolidate Hong Kong's position as an international fixed-income hub:

1. The SFC will refine the regulatory framework for the fixed income market by formulating internationally aligned standards for issuance and trading practices.

2. The Bond Connect Company Limited, a joint venture established by the China Foreign Exchange Trade System and the HKEX, will develop an electronic fixed income and currency trading platform in Hong Kong. It will initially support bond trading, gradually expanding to money market and foreign exchange trading.

3. The SFC will encourage the HKEX to include a new reference rate¹ under Swap Connect in the fourth quarter of this year. The rate, which reflects interbank financing costs in the Mainland, will help global investors manage RMB interest rate risks. The HKEX will also explore the introduction of a central clearing mechanism for bond repurchases to enhance market liquidity.

35. Between 2025 and the first half of 2026, digital bonds issued in Hong Kong captured nearly 50% of the global market, reflecting our leading position in the area. The Government will work to broaden use cases and popularise digital bonds through the following measures:

1. The issuance of digital bonds will be regularised to drive innovation, such as using digital currencies for settlement and exploring their full-cycle application for digital bonds (such as dividend payment and redemption).

2. The HKMA will conduct tests on the operation of the tokenisation of Exchange Fund Bills by year's end to facilitate banks to further harness the advantages of tokenisation technology to make efficient, round-the-clock use of more than $1.3 trillion worth of Exchange Fund Bills to boost the efficiency of asset and liability management.

3. The HKMA's Tokenised Bond Expert Group will explore innovative solutions and launch its second-phase legal review in collaboration with the Financial Services and the Treasury Bureau (FSTB) to facilitate the application of Distributed Ledger Technology (DLT) in the capital market.

4. CMU OmniClear Limited (CMU Omniclear) will establish a digital asset platform this year, providing one-stop service in areas such as the issuance and settlement of digital bonds.

Enhance the Securities Market

36. The performance of Hong Kong's stock market has been strong. As of the end of August, funds raised through IPOs amounted to over $340 billion, surpassing last year's total. To further enhance the stock market regime:

1. The SFC will begin consultation on streamlining prospectus disclosure requirements in 2027 to facilitate the listing of quality overseas enterprises in Hong Kong.

2. The SFC and the HKEX will promote dual primary and secondary listing of overseas enterprises, including enterprises from places including Southeast Asia and Belt and Road (B&R) countries, in Hong Kong, and advance the inclusion of Kazakhstan's qualifying exchanges to the list of recognised stock exchanges.

3. The SFC and the HKEX will begin second-stage consultation on increasing the competitiveness of the listing mechanism in the third quarter of this year to refine requirements concerning notifiable transactions, connected transactions and spin-offs. The goal is to reduce compliance costs and increase the flexibility of listed companies in corporate mergers and acquisitions, re-structuring and spin-offs.

4. Technology stocks listed in Hong Kong have accounted for over 40% of overall market liquidity. The HKEX will launch a consultation in the first half of next year on amendments related to specialist technology listing, including a review of the market capitalisation threshold.

5. The HKEX is conducting preparations with the market for launching a "T+1" settlement cycle for the cash market upon co-ordination with relevant Mainland units. It is also collaborating with the HKMA to introduce a wholesale central bank digital currency (i.e. an e-HKD payment solution) for after-hours trading of derivatives. Real-value transactions are targeted for this year.

37. We will deepen cross-product and cross-market integration, as well as the liquidity of capital markets:

1. The Central Moneymarkets Unit (CMU), operated by CMU OmniClear, will launch global securities services in phases. It will also strengthen connectivity with markets in Europe and America, the Middle East, Central Asia and ASEAN, to facilitate investors' global asset allocation through the CMU.

2. The HKMA and the HKEX will promote mutual access between CMU OmniClear and Depository and Nominee System (DNS) to pursue institutional and technological breakthroughs for exploring the establishment of a unified asset management framework for bonds and stocks, thereby creating cross-asset synergy.

38. The Government will develop a multi-tiered derivatives system, with strengthened risk management and price discovery functions, to raise the efficiency of the market's asset allocation:

1. The HKEX will support the industry in developing a variety of thematic indices, broaden the diversity of bond indices, explore the development of commodity indices and launch more index-based ETFs and derivatives, to foster a financial index ecosystem.

2. The Derivatives Market Consultative Panel of the HKEX will explore enriching derivatives further, including launching more short-dated stock options and thematic futures and options.

39. The SFC will encourage and support the HKEX to continue to boost market liquidity and improve capital flexibility:

1. Enhance the margin arrangement across clearing houses and conduct overall assessments on participants' offsetting position risks in different markets, lowering costs and improving efficiency.

2. Expand eligible non-cash collateral types and reduce related fees.

International Asset and Wealth Management Centre

40. Hong Kong has become the world's largest cross-boundary wealth management centre this year. We will continue to develop a more attractive asset and wealth management ecosystem. This includes stepping up promotion following the passage of a bill on the enhancement of preferential tax regimes for funds, single-family offices and carried interest. The goal is to attract funds and family offices to establish a presence in Hong Kong and more global capital to be managed in the city, while also promoting product innovation and market upgrading:

1. We will introduce a bill this year to enable the privatisation or restructuring of real estate investment trusts (REITs), and another bill in the first half of 2027 to provide a stamp-duty waiver for the transfer of non-residential properties into REITs seeking to list.

2. The SFC will streamline its procedures to attract quality overseas REITs to Hong Kong for dual-listing. It will also revise the codes in the fourth quarter of this year to promote innovation in fund products and broaden investor choices.

3. We will continue to seek early inclusion of REITs under mutual-market access.

41. Attracting allocation of diverse capital to quality assets in Hong Kong:

1. Promote investment by Mainland insurance funds in Hong Kong ETFs through mutual market access, expand the scope of eligible ETF products under the scheme, and promote cross-listing of ETFs on the HKEX and Southeast Asian exchanges.

2. Lift the total investment limit on eligible index-tracking ETFs by MPF funds, facilitating MPF funds to take advantage of quality local ETFs.

International Risk Management Centre

42. Hong Kong will further enhance its insurance regulatory regime and establish a multi-layered risk management system to develop a leading risk management centre in Asia, safeguarding the development of the real economy through financial security.

Strengthen the International Reinsurance Hub

43. The Insurance Authority (IA) is actively developing reinsurance and captive insurance businesses to enhance synergy between the capital market and the insurance industry in building an international risk-transfer platform:

1. Three captive insurers have been authorised this year, bringing the total to nine. They help companies develop comprehensive global risk management capabilities.

2. Continue to promote insurance-linked securities (ILS), work to narrow the protection gap for catastrophe risk and review investor restrictions to invigorate the ILS fund trading market.

3. Explore legislative amendments to introduce a protected cell company (PCC) structure to lower the costs of establishing captive insurers and issuing ILS.

Develop Specialty Insurance to Meet the Needs of Emerging Industries

44. The development of emerging industries will generate increasing demand for new specialised insurance. The Government and the IA will suitably increase the insurance sector's underwriting appetite to cover such areas as gold storage, commodity trading and green-fuel bunkering.

Develop a Commodity Trading Ecosystem

Expedite the Development of an International Gold Trading Market

45. The Government will seize the gold trading market's momentum and strengthen its development:

1. Officially launch Hong Kong's central clearing and settlement system for gold in the first quarter of 2027.

2. The HKEX will announce details of the new RMB-denominated and physically settled gold futures contracts this year to boost the global influence of the RMB in the pricing of precious metals.

3. The Mandatory Provident Fund Schemes Authority optimised its approval mechanism for gold ETFs in July this year, increasing the flexibility of MPF funds investing in gold ETFs.

4. The SFC will enhance the regulatory regime for over-the-counter derivatives to facilitate risk and capital management in gold and commodity trading.

5. The IA will strengthen co-ordination with the industry in arranging insurance for precious metals, and has launched a dedicated specie insurance hotline to connect policyholders with insurers.

6. The HKMA is exploring the possibility of increasing the Exchange Fund's gold holdings and participating in Hong Kong's spot and futures markets. It is also considering gradually transferring its physical gold holdings to designated vaults appointed by the Hong Kong Precious Metals Central Clearing Company Limited.

7. The Government will set up a dedicated Gold Hotline to provide one-stop support for Mainland and overseas gold traders to take part in Hong Kong's gold trading ecosystem, while encouraging the sector to establish an industry association for gold and host a flagship event in 2027.

8. Collaborate with the Financial Services Development Council (FSDC) to launch gold trading-related courses featuring full-chain development and ancillary facility operations.

Expand the International Metal Trading and Delivery Network

46. Since the London Metal Exchange (LME) included Hong Kong in its global warehousing network in 2025, the city's storage area has exceeded 60 000 square metres, with an inventory of more than 20 000 tonnes of metal to date. We will accelerate the development of a secure and efficient commodity trading hub with international influence:

1. Implement a half-rate tax concession for physical commodity trading to attract more commodity traders to set up or expand their businesses in Hong Kong; explore a proposal to provide tax concessions for qualifying activities within the gold and commodity trading ecosystem for consultation with the Legislative Council (LegCo) next year.

2. Facilitate the establishment of more LME-approved warehouses in the Northern Metropolis (NM) by warehouse operators to promote clustering of physical delivery, financing and risk management services.

3. The HKEX plans to launch the LME Steel HRC Shanghai contract on the LME in October to expand international application scenarios of onshore prices and enhance the international influence of China's futures.

4. The HKEX is striving to launch a pilot project for tokenised warehouse-receipt financing in collaboration with designated banks in 2027, using physical tracking technologies to promote the use of commodity inventories as collateral by enterprises in securing liquidity.

5. The HKEX is establishing a blockchain-backed, multi-asset tokenisation platform, with carbon credits listed on Core Climate² already incorporated. It will also include commodity warehouse receipts from LME-approved warehouses for a pilot next year, to facilitate the flexible allocation of collateral and cross-collateralisation in the market.

6. The Customs and Excise Department (C&ED) will explore how to facilitate the customs clearance for commodities.

7. Encourage the International Organization for Mediation (IOMed) to explore the establishment of a special panel of mediators for commodity trading. This would lower the risk of cross-border transactions and attract more international traders and financial institutions to use Hong Kong as a base for trading and settlement.

47. The Government will establish a Joint Working Group on Commodity Trading to be led by the Secretary for Financial Services and the Treasury. In collaboration with relevant financial regulators, it will holistically identify market opportunities and prospects for cross-exchange collaboration.

Development of Green and Sustainable Finance

48. In 2025, green and sustainable bond issuances arranged in Hong Kong accounted for around 40% of Asia's total issuance volume. This year, the Ministry of Finance arranged its inaugural issuance of RMB sovereign green bonds in Hong Kong. Measures for further expanding sustainable finance include:

1. Achieve full adoption of the International Financial Reporting Standards – Sustainability Disclosure Standards (ISSB Standards) by large publicly accountable entities by 2028 to improve the quality of market disclosure.

2. The HKEX will introduce a "Green Equity Designation Scheme" to raise the market profile of eligible green securities issuers. The HKMA will explore new application scenarios for the Hong Kong Taxonomy for Sustainable Finance.

3. The HKEX's Core Climate and the Hong Kong Quality Assurance Agency will explore Hong Kong's participation in cross-boundary carbon trading, in a bid to support the country in building a carbon market of greater international influence.

4. The HKMA will continue organising Hong Kong Green Week to promote Hong Kong's leading status as a sustainable finance hub.

Foster Fintech Innovation

49. The SFC will promote fintech to empower industry upgrading. Details include:

1. Enhance virtual-asset licensing regimes and formulate specific regulatory guidelines to map a clear compliance pathway for virtual-asset service providers.

2. Improve the regulatory framework for tokenised investment products to facilitate the issuance and trading of tokenised products of gold and other suitable real-world assets on licensed platforms, as well as the launch of innovative products.

3. Promote the trading of regulated stablecoins on licensed virtual-asset trading platforms and their use in the settlement of tokenised money market funds, raising Hong Kong's competitiveness as an international digital asset hub.

50. The HKMA is planning to implement central bank digital currency (CBDC) settlement and 24/7 operations under EnsembleTX by around the end of this year, and will continue to explore more use cases for tokenised deposits.

Co-ordinate the Management of New Financial Risks

51. Adhering to the principle of prudent risk management, the Government is committed to increasing the efficiency and security of fintech in serving the real economy:

1. We will explore enhancing the legal framework to bolster the detection and removal of fraudulent content, including content generated through the misuse of artificial intelligence (AI) by sectors such as technology and telecommunications, launching a public consultation on the proposed legal framework by the end of the year. The HKMA is considering using AI technology to analyse payment data, enhancing the capabilities of banks in detecting suspicious transactions. The HKMA is driving the adoption of "iAM Smart" Step-up Authentication in banks and stored value facilities. The first phase of testing related to remote account opening has commenced.

2. While quantum computing can enhance financial services in the future, cryptography will need to be upgraded. The HKMA has launched the Quantum Preparedness Index to guide the industry in this regard. It will work with research institutes to facilitate adoption progressively.

3. The SFC will begin operation of the digital-asset custody surveillance system in the second half of the year, and will activate the CrypTech initiative's big data market surveillance and anti-money laundering surveillance components in 2027.

52. In addition, the FSTB will consult the public on a legislative proposal enhancing beneficial ownership transparency of companies and express trusts this year, with a view to implementing the latest international standards for anti-money laundering and counter-terrorist financing.

(B) International Maritime Centre and Aviation Hub

International Maritime Centre

53. As our country's sole international maritime centre operating as a separate customs territory, Hong Kong has ranked fourth globally in maritime comprehensive strength for seven consecutive years. We will drive a "volume to value" transformation of the Hong Kong Port, capitalising on our strengths in high value-added maritime services, to develop Hong Kong into a "Global Maritime Capital".

Develop a Green Fuel Bunkering and Trading Centre

54. We will ensure a stable supply of green maritime fuel, providing additional facilities and promoting trading:

1. Announce the first "Green Energy Corridor" in collaboration with a Mainland city later this year, with plans to develop a network of Hong Kong-centric "Green Energy Corridors" in the future, with Mainland cities supplying green maritime fuel for bunkering or trading in Hong Kong.

2. Begin the planning application and other statutory procedures regarding green maritime fuel-storage facilities in Tsing Yi South next year, with tenders to be invited in early 2028; and facilitate the development of new storage facilities and the retrofitting of existing oil storage tanks.

3. Support the industry in conducting preliminary studies on establishing a green maritime fuel-trading platform and in strengthening related promotional efforts.

4. In collaboration with local universities, establish a clear and transparent carbon-emission calculation framework for the bunkering and trading of green maritime fuels.

Strengthen the Ecosystem of High Value-added Maritime Services

55. The Government has introduced an amendment bill into the LegCo to enhance the tax-concession regimes for maritime services and introduce a half-rate tax concession for physical commodity trading, promoting the development of Hong Kong's high value-added maritime services industry.

56. We will revamp Hong Kong's ship registration system, introducing a dual registration arrangement³ to increase flexibility in catering for the diverse commercial operating models of the international maritime sector.

Develop "Finance + Shipping"

57. Taking advantage of our well-established maritime finance, insurance and maritime arbitration under common law, we will build an integrated ecosystem under which Hong Kong-invested enterprises adopt Hong Kong law, take out Hong Kong insurance and choose for arbitration to be seated in Hong Kong. Hong Kong's international influence will be reinforced through the provision of comprehensive solutions for ship finance, contractual governance, risk management and dispute settlement. To promote the high-quality synergistic development of financial and maritime centres, we will work with the Hong Kong Maritime and Port Development Board and the industry to explore proposals for the synergies between financial and maritime services, with a particular focus on marine insurance and ship finance.

58. The IA will drive the expansion of the underwriting capacity of the industry's marine specialty risk pool to better manage risks. With the support of the China Shipowners Mutual Assurance Association and the assistance of the Government and the IA, the Hong Kong Shipowners Mutual Assurance Association will conduct international business in Hong Kong.

59. Maritime arbitration cases in Hong Kong have increased in recent years. The Government will continue to promote Hong Kong's maritime arbitration services.

Promote the Development of a Green and Smart Port and Green Corridor

60. The Government will, in collaboration with port operators, formulate a roadmap for the smart transition and green transformation of the Kwai Tsing Container Terminals. This will include introducing more autonomous electric vehicles, expanding the application of remotely-controlled cranes, supporting operators in developing onshore power-supply facilities, including exploring port dues incentives, to attract international liners to use these services.

61. We will announce the first green shipping corridor with a trading green port this year. Using green fuels and improving bunkering facilities will propel our maritime routes towards net-zero carbon emissions.

Develop the Port Community System

62. Over 8 000 enterprises have registered with the Port Community System since its rollout this year. By using trusted cargo-flow data, there have been more than 20 successful applications in which enterprises have secured trade finance. We will further:

1. Develop offshore trade-cargo tracking with blockchain technology to expand system coverage.

2. Launch the Port Community System Enabler Recognition Scheme to commend enterprises that actively participate in and promote the system's application.

3. Provide better support, with funding from the Future Innovative Logistics Acceleration Scheme, for small and medium enterprises (SMEs) to adopt innovative logistics solutions that interface with the Port Community System.

Enhance the Comprehensive "Rail-sea-land-river" Intermodal Transport System

63. We will strengthen the Chongqing-Shenzhen-Hong Kong⁴ and Chengdu-Shenzhen-Hong Kong⁵ scheduled freight train services, in combination with the Shenzhen-Hong Kong Connect feeder service, as a sea-rail intermodal network that shortens total cargo transportation time between the Chengdu-Chongqing region and Hong Kong from two to four weeks down to approximately three days. A container terminal operator has also launched the Chongqing-Qinzhou-Hong Kong sea-rail intermodal service, backed by daily liner service, to connect Hong Kong Port with the New International Land-Sea Trade Corridor.

64. The Government will continue to explore the development of inter-provincial land freight transport and direct river-sea intermodal transport modes to expand our cargo hinterland.

65. The Government will study application scenarios, regulatory considerations and other support measures in relation to autonomous ships in Hong Kong, to prepare Hong Kong for participation in the national development of a smart and green logistics model. It will use "water-to-water transhipment", which focuses on river-sea intermodality.

Expand the Partner Port Network

66. The Government will announce the second batch of partner ports, and channel more maritime routes from Central and South America to call at the Hong Kong Port. We will also expand collaboration with Mainland ports and promote the establishment of a "brother port" relationship with Shanghai this year.

Establish a Maritime Academy

67. We will promote the establishment of a maritime academy in Hong Kong, and support representative maritime institutions to establish a presence in the city. The goal is training high-calibre maritime talent under an "institution-enterprise collaboration" model. We will also work with the trade to formulate cross-disciplinary, career-progression pathways within the industry, while expanding talent development co-operation with international maritime organisations.

Promote Modern Logistics Development

68. A feasibility study on the development of a "business and trading zone for re-export" will begin this year to remove barriers and ease restrictions for the development of high value-added logistics services. We will also make preparation for the update of the Roadmap for ESG Development for Logistics Industry to promote green and sustainable logistics development.

69. We are inviting the market to submit expressions of interest for the Hung Shui Kiu/Ha Tsuen modern logistics cluster. We will formulate the development mode, taking industry views into account, with the target of releasing the first batch of land parcels starting from the end of 2027 at the earliest.

International Aviation Hub

70. In 2025, Hong Kong's passenger throughput recorded a year-on-year increase of 15%, to 61 million, with flights to over 220 destinations. The city's air cargo throughput reached 5.07 million tonnes, making our airport the world's busiest cargo airport for the 15th year since 2010. Passenger departure facilities at Terminal 2 have begun operations, while the Terminal 2 Concourse will be commissioned before the end of next year, enhancing the airport's overall capacity.

Expand the Aviation Network

71. Since last year, the Government has updated or expanded existing bilateral air-services arrangements⁶, or entered into new arrangements⁷, with 20 aviation partners. We will continue to take the initiative to visit South America, Africa, Central Asia, the Middle East and the Caucasus to expedite the conclusion of new air services agreements and the expansion of traffic rights, thereby assisting the industry in exploring new passenger and cargo sources.

72. The Airport Authority Hong Kong (AAHK) will continue to encourage airlines to launch new routes and increase the frequencies of existing ones. As at the end of August, 40 airlines had launched 94 new routes covering regions in Asia, Europe, North America and Africa, while flight frequencies on 15 existing routes were increased.

Develop a New Ecosystem for the Aviation Industry

73. To support the large-scale development of home-grown aircraft, we will actively press ahead with the development of production of high-end parts, parts processing and storage, maintenance support and leasing and sale of aircraft and parts. We will also collaborate with international partners in the aircraft dismantling and recycling business, to develop a globally competitive aviation industry chain and enhance training for pilots and aviation professionals.

Foster the Development of the Sustainable Aviation Fuel Industry

74. The Government has spearheaded the establishment of Hong Kong's world-leading sustainable aviation fuel (SAF) production base in Dongguan, which will begin production by 2030. We are planning to construct the first SAF blending facility in Hong Kong, and are studying the establishment of a mandatory consumption-ratio mechanism and the development of a green energy certification system to boost our green energy value chain and maintain a long-term supply of competitive SAF.

(C) International Trade Centre

75. Hong Kong was ranked the world's fifth-largest entity in merchandise trade in 2025, two places up from the previous year, according to the "Global Trade Outlook and Statistics" report, published by the World Trade Organization (WTO). We will consolidate and enhance Hong Kong's status as an international trade centre, playing a greater role in the high-level opening up of our country.

Deepen the Work of the GoGlobal Task Force

76. Since the Task Force on Supporting Mainland Enterprises in Going Global (GoGlobal Task Force) was established last October, it has provided assistance, including listing and raising capital in Hong Kong, aligning with overseas standards, acquiring industry certifications and fulfilling compliance requirements for more than 340 Mainland enterprises. About 30% of them position Hong Kong as their regional/international headquarters or corporate treasury centre (CTC).

77. In June, I led a delegation, which included representatives of Mainland enterprises, to visit Central Asia, where we met with local enterprises to open up business opportunities. Many of the Mainland companies successfully matched with local partners for collaborative projects. The GoGlobal Task Force will continue to help enterprises expand their businesses into Central Asia.

78. The GoGlobal Task Force will further consolidate Hong Kong's role in helping Mainland enterprises establish their presence abroad. It will:

1. Deepen collaboration with trade associations of both places to provide more targeted support services to Mainland enterprises.

2. Strengthen collaboration with professional organisations to train talent for the GoGlobal initiative and enhance professional services.

3. Extend the Cross-sectoral Professional Services Platform, adding a new sector to provide environmental, social and governance (ESG) services, with a view to leveraging Hong Kong's international expertise to assist Mainland enterprises in meeting the requirements of their target markets.

4. Enhance the platform's matching function to encourage connections between Mainland enterprises and Hong Kong professional service providers, and keep track of the effectiveness of individual cases.

79. The IA will promote the development of a specialty insurance business that aligns with the real economy to diversify and manage risks for enterprises to "go global".

80. The Government will continue to assist the local media to expand their network beyond Hong Kong, telling the good stories of Hong Kong.

Build a High Value-added Supply Chain Services Centre

81. As our country improves the comprehensive overseas services system and guides the orderly development of cross-border industry and supply chains, it creates enormous opportunities for Hong Kong. Since announcing the building of a high value-added supply chain services centre in the 2024 Policy Address, the Government has been enhancing strategies to encourage Mainland enterprises to leverage Hong Kong as their supply chain services centre.

82. Hong Kong will better align with our country's modern industrial system, including driving the upgrade and transformation of traditional industries, as well as cultivating emerging pillar industries, in order for enterprises to take advantage of our strengths in international finance, trade, shipping, scientific research, branding, design and exhibitions, as well as our global network, to connect with overseas supply chains and launch international businesses.

Encourage More Financial Institutions to Set Up Headquarters in Hong Kong

83. Mainland financial institutions with stronger capital strength and higher level of compliance and internal control standards are encouraged to set up international headquarters in Hong Kong, on the premise of compliance with laws and regulations in a risk-controlled manner and voluntary commercial participation, to consolidate their businesses and management functions outside the Mainland. We support major Chinese securities firms' plans, in compliance with laws and regulations, to increase capital for their subsidiaries in Hong Kong, and utilise Hong Kong as a booking centre for risk management and capital market operations.

Encourage Enterprises to Establish Corporate Treasury Centres and Sourcing Centres in Hong Kong

84. The Government has completed its review of tax concessionary measures applicable to CTCs, as well as a public consultation on recommendations to provide pre-approved CTCs and their associated companies with additional tax benefits and flexibilities. An amendment bill is expected to be introduced into the LegCo in the first half of 2027.

85. A tax concession of 5%, or half-rate, may be offered under the preferential policy packages on attracting enterprises and investments, depending on the investment plan of individual enterprises and their actual contribution to Hong Kong's economy. This will attract high value-added enterprises to set up headquarters or regional headquarters in Hong Kong to manage their supply chain and sourcing businesses.

Strengthen Innovation and Technology Enterprises

86. The Government launched the Pilot Innovation and Technology Accelerator Scheme in January. It was designed to accelerate the growth of innovation and technology (I&T) companies, by attracting professional I&T enterprise service providers with proven track records in and beyond Hong Kong to set up accelerator bases in Hong Kong.

87. One of them has set up an accelerator base at Cyberport, serving nearly 100 member enterprises, including eight listed companies with a total market value exceeding $180 billion. Focusing on key industries such as AI, embodied intelligence and robotics, new energy and new materials, and biomedicine, the company assists I&T companies in going global by leveraging Hong Kong's I&T ecosystem, application scenarios, capital markets and overseas networks.

88. The Green Tech Fund also supports Hong Kong research institutions and companies in conducting research and development (R&D) in Hong Kong and the Mainland to develop low-carbon technologies with commercialisation potential, helping more green technologies and products to go global.

Empower the Transformation and Upgrading of Traditional Industries through Supply Chain Services

89. The Development Bureau (DEVB) has signed a co-operation agreement with the relevant Mainland organisation to establish a collaborative mechanism for construction standardisation and jointly formulate the GBA construction standards. This will help local and Mainland construction companies venture into the global market by making good use of Hong Kong's strengths in areas such as testing and certification. Advanced construction technology will be showcased by organising international conferences and large-scale events, reinforcing Hong Kong's position as an international infrastructure centre.

90. The Government will establish the Task Force on High Quality Development of Textile and Fashion Industry, to be led by the Secretary for Commerce and Economic Development. It will enhance collaboration between government and industry representatives to pursue high-quality development of the textile and fashion industry in areas including I&T, fashion design, supply chain management, sustainable development and brand promotion, as well as nurturing talent, thereby assisting the industry to connect with Mainland and overseas markets.

Pursue the Comprehensive Upgrade of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA)

91. Following the signing of an amendment agreement under the framework of CEPA in 2024, which further liberalised trade in services with the Mainland, the Commerce and Economic Development Bureau (CEDB) will sign a Memorandum of Understanding (MoU) with the Ministry of Commerce and continue to jointly pursue the comprehensive upgrade of CEPA, with a view to deepening co-operation with the Mainland services sectors, as well as further expanding the Mainland market access and liberalised areas.

Expand International Economic and Trade Network

92. We will continue to deepen our ties overseas, including the European, American, ASEAN and Middle East markets, while actively exploring emerging markets such as Central Asia and Africa, and focus on economies of high potential and strategic importance, with a view to forging closer economic and trade co-operation.

93. With the Economic and Trade Office (ETO) in Kuala Lumpur having officially commenced operation, the four ASEAN-based ETOs will deepen Hong Kong's trade and investment promotion in ASEAN and neighbouring Asian countries.

94. We are exploring the establishment of an ETO in Kazakhstan, and in the meantime leveraging the existing networks of the ETOs, the Hong Kong Trade Development Council (HKTDC) and InvestHK to step up trade and investment promotion work in priority Central Asian countries.

95. We signed an investment agreement with Bangladesh just last week, and will work towards signing investment agreements with Qatar and Peru as early as possible. We are negotiating new investment agreements with Saudi Arabia and Egypt. We are also exploring new investment agreements with Kazakhstan and Uzbekistan.

Promote the Development of Digital Trade

96. Upon coming into full operation, Phase 3 services of the Trade Single Window will provide a single consolidated platform for submission of import and export declarations and cargo information regarding different transport modes, to help the trade improve efficiency and reduce operating costs.

97. The Government will expand the "Single Submission for Dual Declaration" Scheme with the General Administration of Customs of the People's Republic of China to cover more trade documents and transport modes, and advance connectivity with ASEAN's Single Window. The Trade Single Window will also connect with the HKMA's Commercial Data Interchange (CDI) in mid-2027, facilitating banks in making reference to trade data for processing financing applications.

98. The Government will introduce, within this year, a bill on facilitating the digitalisation of "business-to-business" trade documents, to reduce the administrative costs of businesses and improve traceability of trading activities.

99. The HKMA will explore further applications of tokenised deposits, including collaborating with the Mainland to study trade-financing use cases, with pilot transactions to be completed by the end of the year.

Promote the Development of Convention and Exhibition Industry

100. The Government is taking forward the Wan Chai North Redevelopment project, as planned, for the expansion of the Hong Kong Convention and Exhibition Centre and related facilities⁸. A task force to be led by the Deputy Financial Secretary will be set up to steer the project. The HKTDC will submit a proposal on the development approach of the project to the Government early next year.

101. The Government has earmarked $100 million to attract high-quality, large-scale international exhibitions with new elements to Hong Kong. The first such international flagship exhibition brought to Hong Kong will be held in November, centred around super yachts, as well as premium lifestyle elements, and featuring international leading brands.

(D) International Innovation and Technology Centre

Application and Risk Management of Artificial Intelligence

102. Over the past few years, the Government has adopted development-governance and institution-industry strategies on AI. Measures include promulgating guidelines to provide risk management and application recommendations for society, the establishment of the Hong Kong Artificial Intelligence Research and Development Institute (AIRDI) to promote upstream R&D and outcome transformation, and the setting up of the Committee on AI+ and Industry Development Strategy, chaired by the Financial Secretary, to expedite the development and application of AI.

Deepen AI Application and Development

103. The Government will step up its efforts to promote AI applications across various trades, and continue to strike a balance between encouraging innovation and protecting security, thereby enhancing Hong Kong's international competitiveness in AI development.

AI Application in Finance

104. The HKMA's Generative Artificial Intelligence (GenA.I.) Sandbox was upgraded to the cross-sector GenA.I. Sandbox++, with use cases and participating sectors expanded beyond banking to include securities, wealth management, insurance and MPF. Testing of selected use cases in the new cohort will commence within this year.

105. The HKMA is also conducting assessments and responding to risks through the Joint Task Force on AI-Driven Cyber Risks. To strengthen risk management, it is also developing a Cyber Resilience Testing Framework for banks and regularising the cross-sectoral Cyber Mapping⁹ exercise.

106. Ten major insurers have participated in the AI Cohort Programme of the IA and have committed to establishing their respective AI Centre of Excellence in Hong Kong, nurturing talent and sharing experience.

107. The SFC will foster a deeper understanding within the sector through training and development of regulatory technologies in collaboration with I&T enterprises.

AI Application in Healthcare

108. The Health Bureau (HHB) will co-ordinate the orderly introduction and effective use of AI technologies in the healthcare sector in collaboration with the Department of Health (DH), the Hospital Authority (HA), the Hong Kong Academy of Medicine and Institute for Medical Advancement and Clinical Excellence (IMACE), among others.

AI Application in the Legal Sector

109. A short-term funding scheme will be launched by the Department of Justice (DoJ) to promote a wider application of LawTech (including the use of AI technologies) in the legal sector to enhance competitiveness.

AI Application in Construction

110. The Hong Kong Housing Authority (HKHA) will enhance the self-developed AI+ "HA-PIMAP" Project Information Management and Analytics Platform to adopt AI for analysis of site topography, terrain, landscape, views, wind and sunlight etc. to automatically adjust building layout. Starting from 2027-28, AI+ "HA-PIMAP" will be applied to the planning of all new projects.

AI Application in Transport

111. To advance the large-scale development of driverless autonomous vehicles (AVs) towards commercialisation, the Transport Department (TD) has issued nine pilot licences covering over 60 AVs for trials at various locations. As a next step, AV operators' applications for the commercial operation of individual projects will be accepted from this year onwards, while the Airportcity Link autonomous transport system will be put forward as the first commercially operated project in Hong Kong.

112. More AV application scenarios are coming into play. For example, the AV connection between the Express Rail Link at West Kowloon Station and the Airport Express at Kowloon Station is expected to begin operation in the second quarter of 2027. Also, passenger transfer vehicles at the SkyPier Terminal of Hong Kong International Airport (HKIA) will undergo autonomous driving trials along the Hong Kong-Zhuhai-Macao Bridge, which is a pioneering, cross-boundary application scenario taking place on an expressway.

AI Application in Social Welfare

113. A sum of $300 million will be allocated to set up the "AI for Welfare Lab" (WelfareHK.ai) to identify AI application scenarios in social welfare services, as well as fund the development and pilot implementation of AI solutions. These include analysing the usage of welfare facilities to meet user needs in a more targeted manner.

AI Application in Tourism

114. Starting from the end of this year, the Hong Kong Tourism Board (HKTB) will introduce an AI personalised travel recommendation function on Discover Hong Kong, and, by integrating with third-party data platforms, set up a dedicated HKTB smart travel page in map applications.

AI Application in Broadcasting

115. Radio Television Hong Kong will strengthen the use of AI technologies and new media platforms to enhance production quality and efficiency, and expand its audience reach.

AI Upgrading for Small and Medium Enterprises

116. The Government will enhance the Digital Transformation Support Pilot Programme (DTSPP) by providing subsidies, on a matching basis, to support more SMEs in applying AI and cybersecurity-related solutions. The BUD Fund¹⁰ also provides more targeted funding support for enterprises in implementing projects involving AI elements.

117. The Hong Kong Productivity Council (HKPC) will expand the functions of its "Digital DIY Portal" to integrate AI-assisted advisory services for SMEs, and assist enterprises in assessing and addressing cybersecurity risks, as well as adopting AI. The HKPC will also enhance the awareness of AI and its application within the community, particularly among SMEs, through training and exhibitions under the "AI with HKPC" programme.

Promote AI Training for All

118. The Government will roll out more than 200 training courses and activities under the "AI for All" Inclusive Programme by the first quarter of 2028, promoting AI awareness and responsible use in a tiered manner. This will help the general public, university students, young researchers and professionals harness AI for professional empowerment, and support working people and SMEs in applying AI for practical enhancement.

119. The Government will also roll out the "Robots in the Community" Pilot Programme to raise citizens' awareness of embodied AI and promote digital inclusion.

120. Upskill Hong Kong, upon its upgrade, will launch an 18-month AI upskilling campaign in the first half of 2027, including a free online training course for all with a focus on the workplace application of AI. Participants who complete the course may enrol for free in short-term, advanced AI application courses across various industries. The initiative is expected to benefit around 40 000 employees.

Risk Governance

121. Ever-evolving AI technology is the core driving force of the digital era. While promoting industry upgrades and enhancing public convenience, AI also brings new challenges, including the misuse of AI to commit crime, user responsibilities, the protection of minors, the management and control of AI Agents and the impact of AI on employment.

122. To achieve technology for good and ensure safety and control, the Government's AI risk-governance strategy focuses on seven aspects: combating the use of AI in criminal activities; protecting underage users; establishing a governance framework to regulate AI ethics; promoting application safety; clarifying liability for accidents caused by AI products; formulating safety-management guidelines for AI Agents; and assessing the impact of the widespread use of AI.

123. The Government will take forward the following under the co-ordination of the Chief Secretary for Administration, with the creation of the post of Commissioner for AI under the Digital Policy Office (DPO) to assist various bureaux with the related work:

1. Combating the use of AI in criminal activities:

   1. Studying regulation of deepfake by legislation: The Cybercrime Sub-committee of the Law Reform Commission (LRC) is reviewing existing laws from the angle of cyber-enabled crimes¹¹, and will seek public views in due course on, among other things, ways to tackle the production of pornographic images, as well as online scams and fraud that involve the use of deepfake technology. The Government will, in accordance with the recommendations of the LRC, consider formulating relevant legislation.

   2. Legislative powers to remove online content that may constitute financial fraud (including AI-generated fraud): The FSTB will conduct public consultation later this year on expanding the legal framework to encourage sectors such as technology and telecommunications to enhance their ability to detect and remove fraudulent content (including content generated through the misuse of AI).

2. Enhancing the Protection of Users who are Minors: Under the Values Education Curriculum Framework (2026), the Education Bureau (EDB) will support schools in guiding students to make good and prudent use of AI tools and resources with proper values and attitudes. A dedicated task force on minors' use of social media will be established under the Working Group spearheaded by the DoJ. It will co-ordinate with relevant bureaux/departments to review the risks associated with the use of social media by minors (including interaction with AI), and assess the need for more targeted solutions, including legislative and administrative measures.

3. Promoting Market Assessment of AI Ethical Risks: The Innovation, Technology and Industry Bureau (ITIB) will select pilot departments requiring bidders to comply with AI guidelines issued by the DPO and submit safety and ethics compliance declarations for AI technologies used in procuring public-facing AI service projects. Subject to the pilot results, this requirement will be gradually extended to all bureaux and departments, ensuring that every AI service project implemented by the Government meets safety and ethical standards.

4. Promoting the safe and orderly application of AI across industries: The DPO will reach out to industry bodies to drive the industry-led development of sector-specific AI application guidelines, accreditation and governance frameworks, and to provide professional advice and support. The HKMA and the IA have drawn up respective action plans to foster responsible AI adoption and facilitate competency development among practitioners. The SFC will supervise the establishment of robust governance frameworks, as well as industry risk management and internal control measures.

5. Examining legal liability arising from accidents caused by AI products: The Working Group to be spearheaded by the DoJ will review whether existing law is adequate in addressing liability issues arising from accidents or damage caused by AI products. It will also study ways to address these issues through legislative or regulatory measures (including soft law such as codes of practice, codes of conduct and guidelines).

6. Introducing guidelines on AI Agent management: AI Agents can autonomously integrate and execute multiple tasks to boost efficiency. The DPO is piloting the use of AI Agents in the Government and has incorporated provisions into an AI adoption guide for departments¹². Based on the practical experience gained, the Government will promulgate, in collaboration with the AIRDI, AI Agent safety-management guidelines applicable to society at large next year.

7. Examining the impact of AI on employment: The Labour and Welfare Bureau (LWB) will soon publish the mid-term update of Manpower Projection, which will analyse the impact of AI adoption on Hong Kong's labour market. We will develop such measures as upskilling, manpower training and reskilling support accordingly.

Enhance the Institutional Framework for Innovation and Technology Development

124. Hong Kong is pressing ahead with the development of an international I&T centre, which is based in the GBA, serving the entire country and connected to the world. We aim to promote an accelerated transformation and industrialisation of R&D outcomes, expand the new industrialisation system and the layout of emerging industries, and bring in top talent from around the world. We will also expedite the development of smart government, digital infrastructure and application scenarios, drive the digital intelligent transformation of public services, and take forward digital education ranging from primary and secondary schools to the workplace. We will attract global capital for diversified financing, and make full use of the NM's development to expand the industry's capacity and economies of scale, consolidating our I&T industry's competitiveness.

Press ahead with the Development of "Three Major Innovation and Technology Parks¹³ and Five Key Research and Development Institutions¹⁴"

125. Hong Kong's three major I&T parks are located in the NM and Pak Shek Kok in the New Territories, and Pok Fu Lam on Hong Kong Island, forming a "north-central-south" layout.

1. To the north, the Hong Kong Park of the Hetao Shenzhen-Hong Kong Science and Technology Innovation Co-operation Zone (Loop Hong Kong Park) officially opened at the end of 2025, driving the development of life and health technologies, AI and data science, advanced manufacturing and new-energy industries, as well as high-end productive services.

2. In the centre, gathering around 16 000 R&D professionals and about 1 800 enterprises, the Science Park, together with the InnoCentre in Kowloon Tong and the three InnoParks located in Tai Po, Yuen Long and Tseung Kwan O, accelerates the development of new industrialisation. The Hong Kong Science and Technology Parks Corporation (HKSTPC) will continue to provide infrastructure facilities, incubation programmes and one-stop support services for I&T enterprises.

3. In the south, Cyberport is positioned as Hong Kong's digital technology hub, AI accelerator as well as a State-level Scientific and Technological Enterprise Incubator. It has provided capital, office space, partnership networks, overseas market expansion and other forms of support for over 2 400 enterprises with a cumulative total of 29 onsite enterprises going public so far. Cyberport will continue to focus on the fields of AI, data science, blockchain, cybersecurity and fintech, supporting enterprises in raising capital for going global and nurturing talent.

126. Hong Kong has given rise to about 20 unicorns, engaging in emerging industries including fintech, AI, logistics innovation, Web3 and blockchain, biotechnology and smart manufacturing. We also boast approximately 5 200 start-ups. Many of them originate from local universities, and have established a presence in the Hong Kong Science Park and Cyberport. This is a manifestation of the effectiveness of synergistic collaboration among industry, academia and research sectors.

127. To promote industry-academia-research integration in support of our country's pursuit of breakthroughs in frontier technologies, the Government has made the five key R&D institutions a strategic priority. We have established three high-quality R&D institutions in addition to the HKPC and the Hong Kong Applied Science and Technology Research Institute. They include:

1. The MRDI, established in 2024.

2. The AIRDI, expected to begin operation this year.

3. The LHTRI, whose preparatory work will be largely completed this year, will focus on "AI+life sciences". Local universities will lead three branches in setting key development directions based on their institutional strengths in scientific research, such as advanced diagnostic technologies, new-generation prevention technologies and therapeutics techniques, and ageing-related diseases.

Accelerate the Development of Hong Kong's New Industrialisation System

128. The Government's efforts to accelerate the transformation and realisation of midstream outcomes and support the development of downstream industries have begun to bear fruit. The New Industrialisation Funding Scheme has achieved its smart production lines target one year ahead of schedule. It has supported 80 applications to date, involving over 130 smart production lines and a total investment of nearly $1.7 billion. As for the New Industrialisation Acceleration Scheme launched in 2024 to support the setting up of new smart production facilities in Hong Kong by enterprises engaging in industries of strategic importance, such as life and health technology and advanced manufacturing, support for nine projects has been announced to date, involving a total investment amounting to over $4 billion.

129. To accelerate the development of the new industrialisation system, we have drawn reference from the Mainland's scheme on specialised, sophisticated, distinctive and innovative "little giant" enterprises, as well as overseas experience. We launched the New Industrialisation Elite Enterprises Nurturing Scheme in June to provide targeted support for high-growth enterprises developing in Hong Kong. Over 100 nominations have been received, and the results will be announced this year.

130. We will release a medium-to-long-term development plan for new industrialisation in Hong Kong this year, setting out a new industrialisation development pathway centred on "high technology, high value-added" activities, accelerating the growth of emerging industries and producer services of strategic value, laying the foundation for future industries.

Strengthen Support for Start-ups

131. The Government will step up support for local start-ups:

1. The Innovation and Technology Industry-Oriented Fund is expected to launch this year. Around 20 fund managers have been preliminarily shortlisted to raise capital for the setting up of sub-funds.

2. An additional $1 billion has been earmarked for the Innovation and Technology Venture Fund's enhanced scheme, with a view to selecting more fund managers to participate.

3. Funding schemes under the Innovation and Technology Fund (ITF) for promoting new industrialisation¹⁵ have been consolidated into the New Industrialisation Support Scheme. It will promote the realisation of R&D outcomes and new industrialisation in a more focused manner. Ongoing reviews will be conducted on other ITF funding schemes.

4. Build an I&T and financial ecosystem by leveraging patient capital. The Hong Kong Investment Corporation Limited (HKIC) has invested in over 200 projects, covering such areas as hard and core technology, life and health technology, new energy and green technology. Within the HKIC's investment portfolio, 11 enterprises have been listed in Hong Kong, and more than 30 others have applied or are planning to apply for listing in 2026. In addition, about 70% of them have set up or are expanding their business overseas. The HKIC will continue to mobilise international long-term capital to co-invest in its projects.

Support the Transformation of Universities' Research and Development Outcomes

132. The Government has been providing extra funding through the ITF for the Technology Transfer Offices of designated universities (the funding ceiling for each university in 2026-27 is $12.8 million). Support has also been provided for the transformation and commercialisation of R&D outcomes through the Technology Start-up Support Scheme for Universities (TSSSU) ¹⁶ and the $10 billion Research, Academic and Industry Sectors One-plus (RAISe+) Scheme. Since the launch of the RAISe+ Scheme in 2023, 73 projects in various technology areas have been approved, with the government funding commitment amounting to over $3 billion.

Explore the Establishment of the Hong Kong Innovation and Technology Application Scenario Promotion Centre

133. The ITIB will support the HKSTPC in exploring the establishment of the Hong Kong Innovation and Technology Application Scenario Promotion Centre. Through applying precise matching between the application scenario needs of both the public and private sectors and the innovative technological solutions provided by I&T enterprises across the three major I&T parks and five key R&D institutions, it will become a premier launchpad for innovative technologies, and help companies align with industry standards to obtain market certification and assist I&T enterprises in going global.

Expedite Innovation and Technology Industry Development

Healthcare Innovation and Biomedical Industry Chain Development

134. We will accelerate the development of an international health and medical innovation hub and progressively optimise the drugs and medical-devices industry chain, spanning from R&D translation, clinical trial, regulatory regime to access to the GBA and international market, as well as the capital markets. Our aim is to expedite the development of a holistic ecosystem to achieve economies of scale. This involves pooling enterprises, talent and capital in the global medical-products sector and integrating with our "Finance+" strategy, to dovetail with our country's strategic development of the emerging industries of biomedicine and medical devices.

135. Regarding the promotion of registration, regulation and the R&D translation of drugs and medical devices:

1. Hong Kong has become a participating authority of the Pharmaceutical Inspection Co-operation Scheme (PIC/S). Under the guidance of the National Medical Products Administration, Hong Kong is expediting the compliance of biomedicine manufacturers with international standards to facilitate the registration of their innovative drugs in Hong Kong. Hong Kong has also joined the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) as an observer, and is preparing to become a regulatory member.

2. Over the past three years, the Government has driven the regulatory reform of drugs and medical devices by launching the "1+" mechanism and implementing, in phases, the "primary evaluation" for new drugs. Our next step is to set up the Centre for Medical Products Regulation (CMPR) and submit a legislative proposal on regulating medical devices within the year, to establish CMPR as an internationally recognised regulatory authority for medical products in the long run.

3. The Greater Bay Area International Clinical Trial Institute (GBAICTI) has been established. Taking advantage of the synergies of the "one zone, two parks" and "one institute, one centre" models in the Hetao area through the "Greater Bay Area Clinical Trial Collaboration Platform", it will promote exemplary multi-centre clinical trials, while enhancing clinical trial infrastructure. In conjunction with reform in medical products approval and regulation, the initiative will provide one-stop support for innovative pharmaceutical and medical-device enterprises.

4. Promote the use of real-world data in the industry through the Real-World Study and Application Centre under the GBAICTI. This will accelerate the registration of innovative drugs and medical devices in Hong Kong, the Mainland and overseas markets.

5. The International Clinical Trial Academy will be established next year to build a Greater Bay Area Clinical Research Talent Pool.

6. The Government will allocate a total of $900 million in the coming three years, through the Health and Medical Research Fund, to continue funding innovative medical research with translation potential. Priority areas include prevention and treatment of cancers, clinical trials and digital healthcare.

7. We will host the annual meeting of the Global Harmonization Working Party in December. Coinciding with the 30th anniversary of the working party, the meeting will bring together experts from around the world for high-level professional discussions on global medical-device regulation.

136. The HA will set up the HA Technology Convergence Hub (HA-TCH), based on the demand-driven principle. Through interactions between real-world scenarios and clinical application, it will accelerate the adoption of innovative medical technologies. Besides, through co-operation with stakeholders, it will set up a healthcare technology demonstration base in HA facilities and bring in innovative drugs and medical equipment. It will also set up a demand-side feedback loop to relay clinical practical needs to the pharmaceutical and medical device industries in a timely manner.

Promote the Development of a Low-altitude Economy Ecosystem

137. The Government is committed to developing Hong Kong into the Asia-Pacific hub for innovative low-altitude applications. The low-altitude economy (LAE) "Regulatory Sandbox" has facilitated the regularisation of diverse applications. Over 140 regularised projects have been approved, covering the use of unmanned aircraft for façade cleaning, infrastructure inspection, facilities surveillance, drone shows, lifting materials and low-altitude technology evaluation. We will take further steps to implement pilot projects under the LAE "Regulatory Sandbox X" and broaden application scenarios. About 10 projects have begun testing, including unmanned aircraft traffic management system demonstrations and unconventional aircraft.

138. At least 15 insurers are currently offering LAE products for various types of unmanned aircraft in the market. The IA and the industry will fully support the regulatory framework for unconventional aircraft (e.g. manned aircraft weighing over 150 kilograms) to be established by the Government.

139. The Government will formulate the Action Plan on Developing Low-Altitude Economy, including the following actions:

1. Collaborate with the Mainland to launch cross-boundary, low-altitude logistics trial flights as early as possible, and progressively expand the low-altitude cross-boundary logistics network across the GBA.

2. Take forward the technical study on low-altitude infrastructure facilities and begin the development of the Smart Low-altitude Traffic Management System, with a target for progressive implementation from 2028. This will enhance low-altitude airspace management, with the support of relevant monitoring, law enforcement, meteorological observation and three-dimensional spatial data systems.

3. Begin drafting legislation for unconventional aircraft weighing over 150 kilograms.

Formulate the Development Plan of Frontier Technology

140. The ITIB will set up a new Task Group on Frontier Technology to plan for the development of frontier technologies covering AI, new energy, new materials, aerospace technology, quantum technology and other areas to explore technology and industry development. It will report its findings to the Committee on Innovation, Technology and Industry Development, assisting in policy formulation and industry planning.

Support Deep Space Exploration and Promote Commercial Aerospace Development

141. Aerospace technology is a key area in frontier technology development. With the staunch support of the country, Hong Kong's first payload expert, Lai Ka-ying, is taking part in the glorious national, manned spaceflight mission. This is testimony to the country's recognition of Hong Kong's efforts in advancing frontier technology and talent development. It also reflects its support and care for Hong Kong. We are all excited and inspired by this achievement.

142. To support the development of aerospace technology, the Government has funded more than 30 R&D centres covering various technology areas under the InnoHK Research Cluster (InnoHK), with two of them focusing on space missions. The Government has also launched the Frontier Technology Research Support Scheme to foster international co-operation and attract top overseas researchers to Hong Kong.

143. The scope of global aerospace development has expanded from scientific research and exploration to the transformation of R&D outcomes and commercial operations. The aerospace industry is undergoing a paradigm shift from government-led High-Earth Orbit staging to business-led Low-Earth Orbit (LEO) constellation. According to the latest statistics of the International Telecommunication Union, our country has filed plans to deploy over 200 000 satellites, entering a new stage of large-scale development, resulting in a much greater demand from Mainland enterprises for alignment with international rules, compliance standardisation and professional services.

144. Hong Kong maintains a mature common law system and an internationalised regulatory environment, as well as a wealth of professional expertise in law, finance and insurance, enabling the city to serve as a vital bridge for the global expansion of Mainland commercial aerospace enterprises. We will support aerospace science R&D and the commercial development of the aerospace industry. Relevant measures include:

1. The Innovation and Technology Commission (ITC) will launch a new round of Special Call on Aerospace Technology, with an emphasis on supporting technology research related to national space missions, covering satellite technologies, space exploration instruments, aerospace materials, remote sensing and other areas.

2. The Government will announce this year arrangements for streamlining the vetting of LEO satellite licence applications to attract enterprises and talent to Hong Kong. The Office of the Communications Authority (OFCA) will assist satellite operators in international co-ordination in the use of satellite orbits and spectrums, while providing them with licence application support.

3. We will promote the development of future 6G application scenarios, including LAE and LEO satellites. The OFCA will adopt a multi-pronged approach to encourage mobile network operators to expedite the advancement of telecommunications technologies and spectrum refarming, expand mobile network infrastructure to tie in with future development needs, and facilitate the alignment of 6G technology and spectrum planning with the Mainland.

4. The HKEX will consider enhancements to Chapter 18C of the Listing Rules to attract enterprises in emerging industries such as aerospace to raise capital in Hong Kong, consolidating our position as a financing hub for new economy enterprises.

5. The HKIC will leverage patient capital to engage in early strategic investment, paving the way for future industry development. This includes assisting Mainland commercial aerospace enterprises in going global through investment and ecosystem development.

6. The IA and the industry will study systemic risks arising from commercial aerospace development and the functional positioning of Hong Kong's market, so as to make proposals on the development of related insurance products based on the study results.

7. We will step up innovative popular science education and talent development in aerospace, including increasing the quotas for the Young Astronaut Training Camp organised by the Hong Kong Space Museum next year. This will enable 35 students to visit our country's key aerospace and astronomy facilities. We will also support local institutions in promoting aerospace-related programmes, nurturing future talent.

8. The Government Flying Service will set up a dedicated team in the second quarter of 2027 to co-operate with relevant organisations in taking forward the "Youth Aerospace and Aviation DreamChaser Programme", an education activity on aerospace and aviation technology. It will raise Hong Kong young people's understanding of the development and achievements of national aerospace endeavours, and foster their interest in pursuing a career in aerospace and aviation.

(E) International Hub for High-calibre Talent

145. Last year, Hong Kong placed fourth in the World Talent Ranking and third globally in education competitiveness, with five universities among the world's top 100. We will promote the integrated development of education, technology and talent, and improve strategic co-ordination and implementation mechanism, while strengthening the roles of institutions, research institutes, innovation platforms and enterprises in attracting and nurturing talent. We aim to cultivate talent in a co-ordinated manner for technological innovation, industry development and national strategic needs. We will also improve the process for identifying, selecting and nurturing young innovation talent. A targeted approach will be adopted to attract those with the skills required for the development of our country and Hong Kong. We will also strengthen our strategies in drawing overseas talent in a more proactive manner, and establish the "Study in Hong Kong" brand. These initiatives will enhance our competitiveness and build Hong Kong into an international hub for high-calibre talent.

Deepen the Development of an International Education Hub and Establish the "Study in Hong Kong" Brand

146. To promote post-secondary education in Hong Kong and attract outstanding students from around the world, the EDB has established the Task Force on Study in Hong Kong, and organised the first "Study in Hong Kong Week", as well as the largest-ever Asia-Pacific Association for International Education 2026 Conference and Exhibition. The first International Symposium of the Alliance of Universities of Applied Sciences (UAS) was also held, bringing global education leaders together to exchange views on critical issues and the latest trends in post-secondary education.

147. The Government makes every effort in developing Hong Kong into an international hub for post-secondary education and high-calibre talent through the following measures:

1. Drive the "Hong Kong: Your World-class Campus" international promotion and organise exhibitions in target areas (such as countries and regions along the B&R).

2. The University Grants Committee (UGC)-funded universities plan to organise more than 160 recruitment activities in the Chinese Mainland and overseas in the 2026/27 academic year to attract outstanding students from around the world.

3. Extend for two years the pilot arrangement of including graduates from the GBA campuses of Hong Kong universities under the Immigration Arrangements for Non-local Graduates. This will allow more outstanding talent to remain in Hong Kong or come to our city for employment.

Promote the Quality and Quantity Development of Student Hostels

148. The Hostels in the City Scheme, launched by the DEVB and the EDB in July 2025, has removed barriers and eased restrictions to encourage the market to convert or redevelop existing commercial buildings into student hostels on a self-financing and privately-run basis. Since the launch of the Scheme, 41 applications have been confirmed, securing the provision of about 10 800 bed spaces. The DEVB will put the first student hostel site up for sale this financial year.

149. The thriving development of the private student hostel market reflects stakeholder confidence in Hong Kong's education. The EDB will support the Hong Kong Direct Subsidy Scheme Schools Council in formulating the Code of Practice for Operating Student Hostels. It will set standards for accommodation, hygiene, safety and warden arrangements for compliance by operators intending to provide accommodation facilities for non-local students (especially minors), so as to ensure suitable living conditions for incoming students.

Promote the Development of Schools under the Direct Subsidy Scheme and International Schools

150. The EDB will continue to take forward the "Direct Subsidy Scheme (DSS) Expansion", while strengthening publicity and attracting overseas students to encourage more DSS schools to admit non-local students. To date, 48 DSS schools have been allowed to participate in the programme. They will begin their intake of new overseas students progressively from September this year.

151. To meet society's demand and support talent development, the Government plans to allocate sites in the NM or other areas next year for the development of international schools.

Enhance Visa Arrangements for Talent

152. To focus our efforts in attracting the necessary talent for Hong Kong's development, and to promote talent exchange and training, we will:

1. Consider adding more talent categories relating to AI application to enrich the Talent List. The current list covers 60 professions in short of local talent (including finance and healthcare, as well as I&T).

2. Relax the requirements on extension of stay under the Top Talent Pass Scheme (TTPS) for technology start-up talent. Incoming talent who establish start-up businesses in Hong Kong may face significant uncertainty when applying for extension of stay due to their lower income from unstable business during the initial stage of operation. Proprietors of technology start-ups supported by designated public sector organisations will be exempted from requirements such as providing proof of company income when applying for extension of stay under the TTPS, to facilitate their development in Hong Kong.

3. Expand the Immigration Facilitation Scheme for Invited Persons by extending its coverage from the current Member States of the ASEAN to countries and regions in Central Asia and the Middle East, and allowing all bureaux and departments to issue invitations under the Scheme. This will promote economic and trade interactions and exchanges.

4. Introduce a new visa category to allow non-locals to participate in short-term training programmes in Hong Kong, as recognised by bureaux and departments, advancing Hong Kong's development into a regional training hub.