(Feb 25): Hong Kong’s financial secretary struck a confident tone on Wednesday, raising the city’s growth forecast and pledging billions in technology spending to sustain the momentum.
Paul Chan forecast growth of 2.5% to 3.5% in 2026, above the pace he initially projected for last year, with the high end matching 2025’s surprisingly strong expansion.
The economy’s recovery and improved fiscal standing gave the government room to “suitably reinforce support” for the people, including modest tax sweeteners, while investing more in new industries. Chan earmarked at least HK$30 billion (US$3.8 billion or $4.9 billion) to accelerate development of a border tech hub and vowed to boost artificial intelligence (AI) adoption.
“We are pressing ahead with the industrialisation of AI and deepening its integration across various industries, while encouraging wider AI application,” he said.
Hong Kong’s Hang Seng Index extended gains to an intraday high during Chan’s speech before paring the gain to 0.4%. Shares of Hong Kong Exchanges & Clearing Ltd gained as much as 1.2% before nearly wiping out the rally.
See also: Hong Kong Exchange’s quarterly profit rises 15% on trading jump
As part of his innovation push, Chan will establish and lead a committee to facilitate AI use in various industries, with an initial focus on life and health technology and embodied AI, such as smart robots.
Hong Kong is pushing to inject AI across public services, from traffic management and employment services to flood alerts, allocating HK$100 million to accelerate the transformation. It will also spend HK$50 million to train residents how to use the technology.
Chan said he will seek to inject a funding of HK$10 billion to speed up infrastructure development and support start-ups in the Hetao Park, an innovation hub developed in collaboration with neighbouring Shenzhen with a focus on sectors like AI, data science and biotechnology.
See also: Hong Kong suddenly flush with cash as budget returns to surplus
Another HK$10 billion will be allocated to a dedicated company as initial capital to take forward the development of the San Tin Technopole. The government will also set aside the same amount of money to support the development of the Hung Shui Kiu industrial park.
All three zones are part of a broader Northern Metropolis, an ambitious cross-border project the city seeks to turn into a growth pillar.
Beyond the sweeping technology agenda, Chan also turned his attention closer to home with measures made possible in part by improved public finances.
The government recorded a consolidated surplus of HK$2.9 billion, a turnaround from the HK$67 billion shortfall originally forecast. The operating account — which covers day-to-day government revenue and expenditure — achieved a surplus a year sooner than expected, Chan said.
The government will resume a mechanism to adjust salaries for civil servants, Chan said. The review was suspended last year, leading to a pay freeze for government workers.
He also modestly raised tax exemption thresholds, increased allowances and restored a salaries tax reduction to the 2024 level of HK$3,000 after halving it last year.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
The fiscal turnaround follows a surge in stock market activity and a property rebound, while three years of belt-tightening reined in spending.
Chan repeated Hong Kong authorities’ vow to accelerate the city’s integration with — and contribution to — China’s overall development. Beijing is set to release its 15th five-year plan in March to outline national priorities. For the first time ever, Hong Kong will draft its own five-year blueprint to align with the mainland version.
“With the synergy between a capable government and an efficient market, we aim at driving high-quality, high value-added and diversified economic growth,” he said.
Uploaded by Tham Yek Lee
