Commentary: Hong Kong Can’t Afford to Rest on Its Economic Rebound

1. In 2025, Hong Kong experienced robust economic performance, posting a 3.5% increase in GDP, a 28% surge in its equity markets, and a 12% rise in tourism. Despite these successes, the article cautions that Hong Kong must not become complacent, warning of numerous challenges that need addressing to maintain progress. These include both financial and demographic pressures expected to shape the city’s trajectory over the next five years.[para. 1][para. 2]

2. A key focus for Hong Kong’s next phase of growth is its ability to adapt to major transformations in global supply chains, the rise of AI-driven manufacturing in China, and its aging population. Research conducted by the Oliver Wyman Forum, based on roundtable discussions with over 80 regional executives, highlights the need for financial policy reforms, leveraging Hong Kong's status as a conduit for mainland companies expanding globally, and capitalizing on the so-called "silver economy" by developing more products and services tailored to older citizens.[para. 3]

3. The dynamics of global supply chains offer both risks and opportunities for Hong Kong. Business leaders interviewed anticipate that as companies seek more resilient supply chains, Southeast Asia and South Asia will draw more manufacturing activity, importing more components from China in the process. This is expected to drive new trade corridors, with trade between China and Southeast Asia forecasted to grow significantly—from $890 billion in 2024 to $1.4 trillion by 2030, per Oliver Wyman estimates.[para. 4]

4. China’s export sector is poised to remain globally influential due to efficiency, innovation, and scale, and its move toward "mass-AI" aims to overhaul the economy with artificial intelligence. Hong Kong is expected to benefit as China shifts from component exports to exporting AI-enabled products, especially to the Global South, where there is less resistance to technological sovereignty. This transformation is likely to see Chinese firms expanding internationally rather than simply exporting, increasing Hong Kong’s strategic importance.[para. 5]

5. Already serving as the world’s fourth largest foreign exchange hub and the largest Renminbi hub, Hong Kong is well-positioned to further cement its role as a treasury base for Chinese companies with global ambitions. The Chief Executive’s recent policy address acknowledged this opportunity, with government agencies working to enhance related business through measures like tax incentives, relaxed visa rules, and marketing campaigns.[para. 6]

6. Beyond trade and treasury functions, Hong Kong is also recognized as a bridge for global investors targeting Chinese firms. Investment from countries like the UAE and Saudi Arabia in China’s tech sector is on the rise, with one Saudi firm reportedly making over 15 investments in the past year. Hong Kong’s continued success here hinges on maintaining its financial strengths and actively promoting itself through outreach efforts, particularly in the Middle East and other capital-rich regions.[para. 7]

7. The evolution in trade and investment occurs against a backdrop of demographic change. Hong Kong's rapidly aging population poses risks of labor shortages, particularly in finance and trade sectors, but also presents business opportunities. By 2030, the average age is projected to be 50, with 285,000 more residents aged 60 or older. Across Asia, the senior population is projected to double to 785 million by 2030. Hong Kong’s businesses are already adapting to meet these needs with products like fixed yield financial instruments, off-peak travel, and health insurance for older consumers. Expanding such efforts could drive further economic growth.[para. 8][para. 9]

8. Success amid shifting trade, technological, and demographic realities depends on talent. Hong Kong stands out for its strengths in STEM education, multinational corporation presence, venture capital, and favorable visa policies, as revealed by a survey of 1,500 cities. To fulfill its 2030 potential, Hong Kong must continue to be an attractive destination for top talent from China and the world, capitalizing on its tradition of agility and innovation to seize emerging opportunities.[para. 10][para. 11]

9. The article concludes by attributing the opinions expressed to Ben Simpfendorfer, a Partner at Oliver Wyman, and clarifies that these views are not representative of Caixin Media's editorial stance.[para. 12][para. 13]