Funding that drove China’s tech rise now available to Hong Kong scientists, as Xi Jinping pledges to make city global innovation hub

In a potential game changer for Hong Kong’s hi-tech industry, local scientists will have greater access to national-level funding once only available to mainland Chinese researchers, after President Xi Jinping directed state agencies to help the city become an international innovation hub.

Xi’s move, state news agency Xinhua reported on Monday, was in response to an appeal by 24 of Hong Kong’s leading scientists and university professors who wrote to him last year to “express their pressing hope to make a contribution to the motherland”.

The group, among the 40 Hong Kong members of either the Chinese Academy of Sciences or the Chinese Academy of Engineering – two of the country’s top science and technology research institutes – had complained of problems with“the cross-border usage of national scientific research funds in Hong Kong, as well as the tariff imposed on scientific research equipment”.

The Xinhua report said these issues had been resolved after Xi’s “important instructions” to the ministries of finance, and science and technology. Hong Kong’s 16 national laboratories, and the two in Macau, had also received “direct support”, it added.

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Commentators noted the president’s move to underscore Hong Kong’s importance as an innovation hub came as China’s quest to dominate hi-tech industries faced suspicion and pushback from governments around the world.

Last month, Shenzhen-based telecommunications equipment provider ZTE Corp was banned from buying crucial American technology for seven years, with the threat of a Sino-US trade war looming large.

Since Hong Kong returned from British to Chinese rule in 1997, Beijing has tapped the city’s scientists for research projects, and some of the city’s universities have set up branches on the mainland.

The 40 Hong Kong members of the academies include Nobel Prize-winning physicist Charles Kao Kuen; Joseph Sung Jao-yiu, former vice chancellor of Chinese University; and the University of Hong Kong’s top microbiologist, Professor Yuen Kwok-yung.

Baptist University was the sole institution from Hong Kong last May to join a project led by a mainland university to conduct an experiment on China’s first cargo spacecraft, Tianzhou-1, to find cures for bone loss resulting from space travel.

But scientists and researchers have bitterly complained of being deprived of Beijing’s generous grants even when they were collaborating with mainland researchers, adding that it was costly for them to move machines and equipment across the border for research work.

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Following Xi’s directive, the two ministries in February issued a 12-point regulation on how central and regional authorities on the mainland should encourage Hong Kong and Macau institutions to take part in Beijing’s funding schemes.

Professor Henry Wong Nai-ching, former dean of science at Chinese University, was among the 24 signatories of the letter. He welcomed the initiatives.

“Those problems existed for many years … the amount of funding from the mainland could be as large as 1 million yuan (US$158,000), but due to foreign-exchange policies in the past, you could only use the funding if you had a lab on the mainland,” the chemistry professor said.

“Now the funding can be transferred to Hong Kong, and the tariff has been greatly reduced if you want to move your equipment, whether it is new or second-hand, from Hong Kong. This will attract more local scientists to do research on the mainland.”

Professor Lau Siu-kai, vice-chairman of the Chinese Association of Hong Kong and Macau Studies, a semi-official think tank, suggested Hong Kong, while developing new economic drivers for itself, was valuable to China’s bid to be a global technology power.

“There can be mutual benefit for Hong Kong’s researchers to collaborate with mainland manufacturers, as Hong Kong is strong in areas such as biotech and artificial intelligence ... and China is worried about the US and Europe’s suppression,” Lau said.

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“It could be easier for Hong Kong to import goods from the US … and to do better in marketing.”

Christopher Balding, an associate professor of business and economics at the HSBC Business School in Shenzhen, linked Xi’s move to Beijing’s concern over US actions. But his view was that the US government was more concerned about how technology was used than preventing China from becoming “scientifically important”.

Balding added he was sceptical as to whether “throwing money”at efforts to turn Hong Kong into an innovation hub would work, given how past attempts had failed.

“Government policymakers are very poor at deciding which projects to promote and get funding for. In Hong Kong you see the government has been pushing, but it really hasn’t gotten much traction,” he said.

The Xinhua report said mainland ministries together with Beijing’s liaison office in Hong Kong would “fully listen” to the views and recommendations of the city’s government and technological sector, and “implement them quickly through pilot schemes and with preferential treatment”.

The report also announced that mainland branches set up by Hong Kong’s scientific research institutes would benefit from China’s import tax incentives aimed at encouraging technological innovation.

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“Xi emphasised that technological cooperation between Hong Kong and the mainland should be fostered and strengthened, and Hong Kong should be supported to become an international centre for innovation and technology,” the report said, noting these goals were part of the implementation of Beijing’s “one country, two systems” governing policy on Hong Kong.

A Hong Kong government spokesman on Monday said: “We are very grateful for President Xi Jinping making these written directives in person … All these are extremely encouraging to Hong Kong’s technology sector.”

Additional reporting by Su Xinqi and Nectar Gan