The Ambitious "Don't Jinx It" Policy Address
Hong Kong wants to keep its winning streak going, and hopes to get some success in everything, everywhere, all at once.
Chief Executive John Lee Ka-chiu announced his latest policy address on Wednesday, amid growing positive signs for the city after years of stagnation politically and economically.
Lee decided in June to deliver the address in September instead of the usual month of October, citing the upcoming Legislative Council (LegCo, Hong Kong’s legislature) in December. Last week, Lee boasted that the city has shot up in the global talent ranking to fourth place, the highest spot yet. More broadly, Hong Kong has been on a hot streak since the last policy address. Hong Kong’s financial industry has bounced back thanks to a boom from new Chinese companies and startups listing their IPOs in the city’s stock market. New listings at the Hong Kong Exchange (HKEX) have outpaced many of its peers in the US, India, and even those in mainland China, with some calling Hong Kong “China’s world city” instead of “Asia’s world city.” The city has also put forward ambitious schemes like the Northern Metropolis megaproject, which aims to shake up the city’s more rural areas into a tech hub in connection with the mainland. Higher education has seen a boom in the city, partly thanks to Donald Trump’s crackdown on its universities within the US, as well as a rise in global rankings for many local institutions. The University of Hong Kong (The city’s oldest university, and where yours truly is currently studying) reaps the biggest reward with rising student applications and an increase in academic staff. Regarding tourism, a major revenue sector for the city, visitor arrivals have seen a rise compared to previous years, thanks to mainland holidays and large-scale events that target regional tourists.
However, challenges still linger. Even though the city’s economy is growing, some sectors are still feeling the pain, especially in retail, which has suffered tremendously due to the lackluster influx of money-spending tourists and Hong Kongers travelling up north for cheaper deals. For investors, Trump’s erratic and uncertain tariff policy affects their willingness to invest in the city. The unemployment rate in the city has risen steadily amid harder job prospects, with recent figures showing the figure is at 3.7% between May and July this year, a 0.7% year-on-year increase. With a growing number of mega-events designed to attract tourists to the city, fiascoes like the city’s supposedly first hot-air balloon festival (Long story short, licensing issues and a local mother’s righteous fury rant put the festival into the headlines, and not in a good way) show the limits and perils of failed large-scale events. Hong Kong’s talent scheme is another part where the city’s potential strengths and challenges are interconnected with mainland China, with applicants reconsidering whether to stay on due to issues like expensive rent, harder job applications, and challenging education prospects for their children. Mental health has become a more relevant issue for many, as the disturbing rise of suicides has affected both the elderly and struggling young Hong Kongers. Even though many Hong Kongers are less interested or attentive to politics, the recent water procurement scandal (Or as yours truly dubbed it, “water-gate”) has affected the government’s standing. Despite victories in the courts, LGBT rights in the city have faced a major setback after LegCo vetoed a bill that would have granted limited rights for same-sex couples. Regarding the environment, with the impacts of heatwaves and typhoons being felt more prominently in the city, environmental groups have urged the government to set a more progressive carbon emission reduction target in accordance with the 2015 Paris Agreement.
All of this comfortably brings us to the lead-up and policy previews leaked to the press. On education, Lee aims to boost the non-local student quota at universities to a maximum of 50%, while not affecting the 15,000 local places for Hong Kong students. Following the “water-gate” scandal, SCMP reported Lee would introduce a mechanism aimed at holding senior civil servants accountable, but political observers argue it could cause a backlash from within the government. Additionally, Lee plans to exhaust all means to speed up the Northern Metropolis megaproject, including through political, legal, and private sector means. Now TV News reports the government would further promote eco-tourism and yacht tourism, including asking the tourism industry to study "island hopping" tours. On the Sunday before the address, Lee announces he and his team will wear specially designed ties that symbolize the city’s connection to the mainland and the world. In a social media post, the CE said the ties were designed by instructors and students of three fashion courses, and were inspired by three major bridges in the city. In a hint of artificial intelligence becoming a main focus of Lee’s address, the first 8 seconds of the promotional advert were made with AI technology. On Monday, local media reports that the government will change a decades-old rule in order to allow pet dogs at restaurants. Amid continued low birth rates, authorities plan to entice potential parents with a doubling in tax allowances for newborn children and extend it from the first year to the first two years. During a press briefing on Tuesday, Lee said his address will focus on deepening reforms and prioritizing public welfare, aiming to improve people’s livelihoods. Lee added the government would explore administrative means to protect LGBT rights, praising last week’s legislative exercise and veto as “in full fulfilment of the rule of law.” Among the final leaks before the Wednesday address, the CE aims to push forward with AI-powered governance in response to last month’s AI policy blueprint by Beijing, while proposals to help small and medium businesses would also be included.
Entering into Wednesday for the big policy address, most of us have some idea about its direction on accelerating the development of new industries while providing support for other sectors through deepening reforms. Hours ahead of the address, there were no protests outside the Legco building, while the Hang Seng Index rose in anticipation of the speech. All female ministers wore green silk scarves around their necks, while male ministers donned green ties in theme with the cover of the policy address.
Opening his address, Lee said this year’s policy blueprint will serve as a strategic roadmap to a more vibrant economy and advance the city’s prosperity and stability, talking aboutHong Kong’s economy and its connection with livelihoods. Hong Kong’s leader predicts the city’s economy will grow by 2% to 3%. The CE said Hong Kong will be “going out” after years of attracting investments into the city, vowing the government “will leverage Hong Kong’s strength as a platform for going global to reinforce the role of Hong Kong as an international center.” A committee will lead the development of the Northern Metropolis, with Lee as its leader. This committee will undertake tasks such as studying the operational model for various development areas and eventually introducing dedicated legislation to expedite its development. The working group will also work on plans for a University Town, while the government will adopt mainland methods to streamline administrative procedures and reduce costs. The government plans to roll out parcels of land for the Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone. The San Tin Technopole will see sped-up development as it becomes a “strategic base” for innovation, and Lee vowed a speed-up of cross-border railway infrastructure to cooperate with the wider schemes.
Regarding harsher civil servants' accountability, Lee announces the creation of a new mechanism to hold government bureau leaders, while boosting existing measures to hold civil servants accountable. Under a two-tier system on wrongdoing, serious probes will be subject to an investigation under an independent panel that guarantees impartiality. Lee also introduced a Heads of Department Accountability System to work towards effective governance.
In a move to attract more industries, Lee cited an agreement that the Hong Kong government inked with a French company regarding aircraft technology, while plans are being made to develop clinical trials expertise with the Greater Bay Area and beyond. On boosting energy development, Hong Kong would work with mainland authorities to enable a local enterprise to develop green tech. In medicine, the government pushes a sped-up system for approving drugs and medical devices, while giving priority approval for recommended innovative drugs. The CE supports measures to expedite the city as a gold trade hub, including issuing gold funds and developing new gold investment products. A planning study on developing Hung Shui Kiu as a logistics center will be released soon, and the government will draw up tender conditions for any interested industry players in 2026. New I&T infrastructure and the space economy are also mentioned in the address, including $100 million HKD funds given to six university projects working on R&D relating to aerospace technology. Continuing the government’s push for the low-altitude economy, the CE said authorities will improve the legislation and regulation framework relating to civil aviation. In other measures, the CE adds that the government will boost intellectual property trading, there will be market-based measures for leisure facilities, and measures will be introduced to attract premium art trading and establish such institutions to have a presence in the city.
New strategies are developed to encourage mainland companies to expand their operations overseas by using Hong Kong as a stepping stone, including using the Hong Kong Monetary Authority (HKMA) to encourage mainland banks to set regional headquarters in the city. Moreover, the city will establish a task force for mainland enterprises as they pursue overseas expansion. For the first time, Lee considers using the Chinese Yuan to settle government expenditures in Hong Kong, which has its own currency. The city plans to integrate its financial services, like government disbursements, into the Greater Bay Area. In some extra notes on integration with the Greater Bay Area, Lee said mainland packages can be directly sent to the city airport for transshipment after security checks in Dongguan.
Vowing to ramp up international exchanges, Lee said the Asian Infrastructure Investment Bank will set up an office in the city, while the HKEX will deepen cooperation with Southeast Asian exchanges. As outreach efforts expand, Lee hopes connectivity and secondary listings can keep the already vibrant stock market getting better. Enhancing the New Capital Investment Entrance Scheme, Lee introduced refining measures for how much and where investors can put their money. Hong Kong will open new Economic and Trade Offices (ETOs) in places like Kuala Lumpur, while increasing trade agreements in places like Latin America and the Middle East. Expanding the city's role as a maritime trade hub, a more digitalized port system will be pushed to link trade flows.
Speaking of international exchanges, the city aims to diversify its tourism offerings, which include a red tourism route themed as “Chinese Cultural Celebrities Rescue.” Some village houses could be converted to holiday camps or lodgings with government approval. In support of Muslim tourism, the city’s tourism board prepares to launch a funding scheme that will give some subsidies for restaurants with halal certification. Continuing the government’s obsession with mega-events, the Lee administration agreed on a multi-year deal with LIV Golf from Saudi Arabia, while the Kai Tak Sports Park will continue its role in developing the sports industry. Boosting the yacht economy, the government will relax requirements for visiting yachts to anchor at designated waters without reservation, while yacht travel between the city and the mainland is promoted.
Pushing forward with AI governance, the CE announced the establishment of an AI Efficacy Enhancement Team and introduced measures to coordinate and apply the technology in government work. More broadly, Lee talked about pushing AI as a core industry for Hong Kong’s future development. Arguing the city is now well-positioned to become a global hub thanks to its strengths, Lee said $1 billion HKD has been designated for the Hong Kong AI Research and Development Institute, pending establishment in 2026. Carers will get AI assistance as the tech gets applied in the medical field, and AI use in government systems is being explored to make life easier for the public and civil servants. In schools, Lee said the Education Bureau has allocated $2 billion HKD to support digital education in primary and secondary schools, with a blueprint ready to be released next year. The blueprint includes provisions to establish AI literacy learning and integrate the technology into school subjects. Two vacant sites in the Northern Metropolis have been allocated for international schools, pledging to remove barriers in order for them to have increased quotas.
Hong Kong will “transform into a global education centre,” said Lee. Hong Kong plans to double down efforts on patriotic education, including cooperating with nearby Shenzhen to promote a new red educational route to promote understanding of the history of the War of Resistance in Hong Kong, centered around the theme of “Chinese Cultural Celebrity Rescue” history. Moreover, the government will conduct restoration and protection work on historic sites. As previously reported, Lee expands the non-local student ratio to a maximum of 50% in the 2026-2027 school year. The government plans to earmark new sites to build new student hostels in accordance with the inflow, including some potential commercial sites. Lee said his administration will push forward with efforts to recognize the city’s university entrance exam, the Diploma of Secondary Education (DSE), in both the mainland and around the world. A crackdown on the unauthorized provision of DSE programs and operations of “shell schools” is promised. Lee touted two of the city’s universities as having been given the title of “university of applied sciences.” In a bid to broaden student horizons, the government pushed a Young Talent Training Program to attend international conferences and get internships at international organizations. Regarding medicine, a task group has finished its overall assessment on developing the city’s third medical school. A Chinese medicine blueprint will be released later this year, as the government plans an internationalization of the profession. A three-tier emergency mechanism will be established for secondary schools to help students who are at risk of suicide, as part of broader measures to tackle mental health.
On national security, Lee said the city has moved away from chaos and disorder to governance and prosperity, and vows to improve the law and its enforcement mechanism. The government will devote “all efforts” to prepare for December’s LegCo elections, specifically under the “patriots administering Hong Kong” principle. The city’s DOJ plans to construct the Hong Kong International Legal Service Building, right next to the headquarters of the International Organization for Mediation, to promote the city’s potential status as a mediation hub. Regarding the media, Lee said the government would help local media expand their network beyond the city, aiming to tell “good stories about Hong Kong”.
Lee said the policy address will heavily focus on improving the livelihoods of residents, saying it is the “most extensive chapter” of the address. On healthcare, there will be quicker applications for medical fee waivers, while a bill will be introduced next year to empower citywide standards for primary healthcare. The government will enhance cancer research and service, including optimizing screening and applying AI to such efforts. A two-year scheme will be introduced that grants full subsidies for amputees using high-tech prostheses, and the government will also provide funding for those making the prostheses.
On housing, Lee had promised to increase the supply of subsidised housing, hoping to offer more homebuying options for different social classes. Measures include adjusting quotas for public rental housing tenants and eligible families from the original 40:60 ratio to 50:50, and aiming the supply target for private housing to 126,000 flats. To reduce construction costs, the government will simplify approval procedures and speed up approvals through improved department cooperation. There will be a sufficient amount of land reserved for long-term development needs, said Lee, as he compared land reserves to bank savings. In a boost to urban renewal, the transfer of plot ratios will be relaxed and increased for private development projects in seven areas related to the Northern Metropolis. For foreigners, the city allows cheaper home purchases for people applying with an investor visa.
Concerning the environment, Lee said the disposal rate of municipal solid waste has been decreasing, with recycling facilities set to see an improvement in part with the government’s vision. The city will become a “demonstration base for green technology,” adopting measures like supporting battery development.
As for the local economy, the government aims to inject billions into the BUD fund, which dedicates its efforts to branding, upgrading, and domestic sales to small and medium-sized businesses (SMEs). Public works will get an extra $30 billion in spending, as part of an effort to drive economic growth. To curb abuse in the imported labor scheme, rules are tightened that include measures targeting imported waiters and junior cooks. For SMEs, the government released a raft of new measures that include cutting water and sewage charges and extending a financial scheme that supports SMEs for two years. A new platform is also designed to boost overseas business opportunities for SMEs. Pushing forward with the pet economy, Lee says a licensing arrangement can be made that allows restaurants to open their doors to let dogs enter the premises. A new hotline is established for residents to report on potential illegal workers, while vowing to safeguard employment opportunities for local workers. Speaking of the local workforce, there will be a strengthening in skills training. For the food industry, Lee proposes introducing a tourist element to the mix, including a strengthening of the “Food from Hong Kong” reputation. In other policy developments, Lee said there will be a new tender exercise for the operation of the Kai Tak Cruise Terminal.
Targeting social welfare, Lee pushed forward numerous poverty alleviation schemes, including community living rooms and time-limited cash incentives. On an aging population, Lee said a working group will be set up and will submit a report later this year, while there will be enhanced measures to facilitate the elderly living at home through a capacity increase for financial aid. A pilot scheme will be launched by the end of the year, which will subsidize 1000 elderly residents who choose to live in designated care homes in the Greater Bay Area. On the city’s low birth rate, aside from the additional child allowance for newborns already reported before, new care centers will be established over the next three years. There is also greater disability support, including more care services for the vulnerable.
Wrapping up the second-longest policy address in Hong Kong history, Lee said the city is moving through an “irreversible economic transition,” urging citizens not to be complacent or underestimate the city’s abilities. By the end, Lee spoke shy of three full hours, but still half an hour longer than last year’s address. At the policy address press conference, Lee touted his administration’s successes in housing and healthcare. The CE points out $1 billion HKD is spent on welfare, public health, and education daily, while boasting that other economies are “really jealous” of Hong Kong. Regarding government accountability, Lee said he wants the “heads of department looking after their own staff would be best. If you use military terms, it would be like a general looking after their own soldiers.” Responding to a question about government support for local media, the CE touts the good quality and worthiness of the media sector, adding that its connections with foreign media can help tell the city’s story well. On the “water-gate” scandal, Lee said the issue will be handled under the existing system.