The Hong Kong Economic Policy Green Paper 2025 (“Green Paper”) was officially launched yesterday by HKU Business School. This comprehensive document provides an in-depth analysis of Hong Kong’s economic challenges and opportunities, offering actionable policy recommendations to strengthen fiscal stability, revitalize the stock market, enhance the startup ecosystem, and position Hong Kong as a leader in global supply chain management.
As the fourth annual edition of the Green Paper, this year’s report addresses critical economic concerns, including fiscal deficits, stock market performance, the MPF system, housing affordability, artificial intelligence (AI) development, and climate risks. It also examines Hong Kong’s evolving role in the global supply chain and explores new pathways for economic growth and sustainability.
Green Paper 2025: Driving Hong Kong’s Economic Development
Professor Hongbin CAI, Dean and Chair of Economics at HKU Business School, emphasized the institution’s commitment to analyzing Hong Kong’s economic landscape and providing evidence-based policy recommendations.
“Deeply rooted in Hong Kong, the HKU Business School has been committed to analyzing Hong Kong’s economic landscape and proposing policy recommendations through our expertise and exceptional research. Building on the success of the previous Green Papers, this annual publication serves as a testament to our dedication to fostering innovative solutions and stimulating constructive discussions about Hong Kong’s future development. By collaborating with esteemed faculty and international scholars, we aspire to provide actionable strategies across a range of key sectors that will revitalize our economy and secure a prosperous future for our city.”
The Need for a Forward-Thinking Green Paper
Professor Heiwai TANG, Associate Dean (External Relations) at HKU Business School, highlighted the importance of Hong Kong redefining its strategic role in the global supply chain.
“As Hong Kong navigates the complexities of evolving global supply chains, it must redefine its strategic role, not just as a bridge to the West, but as a vital gateway to emerging markets across Asia and beyond.”
With its robust financial system and professional services ecosystem, Hong Kong has the potential to thrive as a supply chain management hub. The Green Paper 2025 outlines key policy recommendations to help the city adapt to changing global trade dynamics.
Tackling Hong Kong’s Fiscal Deficit Through Proactive Policies
Professor Yang LIU, Associate Professor in Finance at HKU Business School, addressed Hong Kong’s fiscal sustainability and the need for long-term financial strategies.
“Hong Kong’s fiscal challenges won’t simply be resolved through natural economic recovery. The city’s reliance on land-based revenues has proven to be a double-edged sword, exposing it to substantial financial risks when the real estate market cools. Looking ahead, the Hong Kong government should fully leverage the government bond program to raise funds for infrastructure investment.”
The Green Paper 2025 identifies structural deficits as a major issue and urges the government to implement proactive fiscal policies rather than relying on economic growth alone.
Key Policy Recommendations from the Green Paper 2025
Revitalizing Hong Kong’s Stock Market
Hong Kong’s stock market has faced declining liquidity, reduced IPO activity, and foreign capital outflows. The Green Paper 2025 proposes several solutions, including:
- Attracting investors from the Middle East and Southeast Asia
- Lowering the Shanghai-Hong Kong Stock Connect threshold
- Launching government-guided investment funds
- Promoting high-frequency trading
- Encouraging tech startups to list on the Hong Kong Stock Exchange
- Strengthening regulatory oversight and investor protection
Addressing Weaknesses in the MPF System
The Green Paper 2025 identifies the MPF system’s underperformance as a critical issue, citing conservative asset allocation, suboptimal investment products, and high fees as key challenges.
Professors Alan KWAN and Mingzhu TAI emphasized the importance of improving the MPF system, stating:
“The MPF is a crucial aspect of financial inclusion in Hong Kong. However, its return performance is less than satisfying. Our findings uncover three primary drivers of its underperformance, which include overly conservative asset allocation; inferior products, even after accounting for asset allocation; and high fees.”
The Green Paper 2025 recommends reforming the MPF system by:
- Lowering fees and increasing competition among service providers
- Enhancing financial education to improve asset allocation decisions
- Expanding investment options within the MPF framework
- Boosting data transparency for better oversight
Strengthening Hong Kong’s Startup Ecosystem
Professor Alberto MOEL, Professor of Practice in Finance at HKU Business School, pointed out a critical weakness in Hong Kong’s startup ecosystem—the “Valley of Death” stage where early-stage startups struggle to scale.
“According to the research, the startup ecosystem is weakest at the intermediate ‘Valley of Death’ stages – precisely where they need the most support. By fostering partnerships that bridge academia and industry, we can better translate innovative ideas into market-ready products.”
The Green Paper 2025 outlines key strategies for nurturing startups, including:
- Promoting cross-university collaboration
- Bridging the gap between academia and industry
- Expanding venture capital funding for early-stage startups
- Encouraging corporate investment in innovation
Positioning Hong Kong as a Global Supply Chain Hub
With global supply chains evolving, the Green Paper 2025 argues that Hong Kong must leverage its financial strength to become a key player in supply chain management.
- Supporting Chinese enterprises expanding into global markets
- Enhancing financial services for supply chain financing
- Adapting to geopolitical shifts in global trade
Harnessing AI for Economic Growth
The Green Paper 2025 also highlights artificial intelligence (AI) as a transformative force in Hong Kong’s economy. To remain competitive, Hong Kong must:
- Develop AI talent through education programs
- Encourage AI adoption across industries
- Attract AI investment with incentives and subsidies
- Enhance regulations on AI ethics and governance
Turning Climate Risks into Economic Opportunities
As climate change increasingly affects Hong Kong, the Green Paper 2025 urges a proactive approach to climate adaptation.
- Developing climate risk insurance markets
- Investing in resilient infrastructure
- Supporting climate-tech startups
- Integrating climate data into urban planning
The Green Paper 2025: A Roadmap for Hong Kong’s Future
The Hong Kong Economic Policy Green Paper 2025 offers a visionary yet practical roadmap for strengthening Hong Kong’s economy. By implementing targeted policy recommendations, Hong Kong can overcome fiscal challenges, attract investment, support startups, and position itself as a leader in finance, AI, and global supply chain management.
HKU Business School’s Green Paper 2025 serves as an invaluable resource for policymakers, businesses, and researchers looking to shape the city’s economic future. As Hong Kong faces an era of rapid transformation, this Green Paper provides actionable insights to ensure long-term prosperity and resilience.
