Hong Kong as a knowledge-based economy?

The story ought to start with Hong Kong's history as a trading port, our rise to become one of the four Asian Dragons and later the world's premier financial centre. But it is also about our attempt to seek a new role in the context of a rising China, our failure to find a strategy for the much needed economic diversification and creation of high-end jobs expected by the younger generation.

This is the story of Hong Kong and China's quest for economic competitiveness. The latest "Global Competitiveness Report" of the World Economic Forum rated Hong Kong the ninth most competitive territory in the world; China ranks 29th. Along with Japan, South Korea, Singapore and Taiwan, Hong Kong is among the five countries or territories in Asia at stage three of economic development where the key economic driver is no longer "basic requirements" or "efficiency".

As an unofficial member of the Organisation for Economic Co-operation and Development (OECD), Hong Kong is innovation-driven. Yet we rank 22nd in terms of "innovation and sophistication" among 144 places surveyed, a rating that is near the bottom third of the 35 developed economies listed.

So does Hong Kong have the potential to become the Silicon Valley of China? The fact is, Silicon Valley is not just about research and development; it has a solid industrial base, a liberal culture, tolerance of rebels such as Steve Jobs and therefore the freedom to be creative. Most important, Silicon Valley also has the presence of entrepreneurs who are willing to spend their own time and money to help the next generation. Hong Kong is also a very liberal city that is tolerant of rebels, many of whom challenge dominant market players. But we still do not have all the success factors of Silicon Valley.

The proposed "Beijing-Guangdong-Hong Kong Knowledge Corridor" hopes to maximise our external economy of scale by linking it to Beijing's strength in research and development and Guangdong's hi-tech production capacity.

At a practical level, Beijing and Hong Kong will jointly apply for local membership of Enterprise Europe Network, the world's largest technology transfer organisation, owned by the European Union.