Government sets eyes on improving high-value-added industries

It's shifting to productivity-led growth model.

The recently concluded Policy Address was largely in step with observers’ expectations and addressed three key issues: 1) increasing the housing supply; 2) ageing population considerations; and 3) enhancing economic competitiveness.

According to a research note from Hang Seng Bank, for the third key issue, policies to help domestic firms cope with competitive pressures will continue to be explored via a targeted approach. Dedicated funds will be channeled to viable projects.

Beyond the measures already being pushed, the government will make a one-off injection of HKD5 billion into the Innovation and Technology Fund. HKD100 million will be allocated to the Construction Industry Council to strengthen its work on talent training.

The Address also touched on the development of the financial industry, but there were only general discussions on
the strategic positioning of Hong Kong’s financial services.

The Address offered little insight into how the city would fit Guangdong’s proposal for a free trade zone.

Here's more from Hang Seng Bank:

Overall, in comparison with previous blueprints that focused on infrastructure capacity enhancement, the government is now placing stronger emphasis on bolstering high-value-added industries.

This shift presumably highlights the government’s intention of moving away from an investment-driven to productivityled growth model.

This will involve complex challenges as productivity growth is much harder to achieve from the services sector relative to the manufacturing sector.

We look forward to the government to taking a more active role to address any gaps that emerge in the market.