CBN丨Hong Kong releases new budget, pushing for AI & expediting tech listings

Hi everyone. I’m Stephanie LI.Coming up on today’s programHong Kong will set aside HKD1 billion for R&D in AI and HKD3.7 billion in Hetao Cooperation Zone in new budget;China is set to cement legal protection for private sector.Here’s what you need to know about China in the past 24 hours Hong Kong stocks rallied on Wednesday after the Financial Secretary Paul Chan Mo-po proposed multiple measures to support the city's tech sector and set up a new channel to fast track tech listings in his latest budget speech.As the nation affirmed the positioning of scientific and technological innovation as a core area of development, the edge of “one country, two systems” and the city's internationalized characteristic will be leveraged to develop Hong Kong into an international artificial intelligence (AI) exchange and cooperation hub, Chan said on Wednesday while delivering the 2025-26 budget.Chan announced that HKD1 billion had been set aside for the establishment of the Hong Kong AI Research and Development Institute as he referred technological innovation as the city's “core engine.”Total HKD100 million had been set aside for a scheme benefitting some 400 enterprises. Chan said funding of up to HKD250,000 each on a one-to-two matching basis will be made available to enterprises to introduce smart and advanced technologies into existing production lines.Meanwhile, Hong Kong seeks to leverage its strategic positioning as the "three centers and a hub" with a special focus on the Association of Southeast Asian Nations (ASEAN) and the Middle East with the Hong Kong Stock Exchange (HKEX) set to step up promotion there.Chan said the government will regularize the issuance of tokenized bonds. The linkage of faster payment systems between the mainland and Hong Kong is expected to be launched in the middle of this year.  The third InnoHK cluster is envisaged, he said, focusing on research in advanced manufacturing, energy and materials development. This apart, HKD3.7 billion has been allocated to the Hong Kong Park of the Hetao Cooperation Zone, which upon completion is expected to generate 52,000 job opportunities and contribute HKD52 billion to the Hong Kong economy annually. Chan also proposed a a dedicated "technology enterprises channel" on the stock exchange to expedite listings of tech companies. The channel will facilitate specialist technology and biotechnology companies' listings in Hong Kong, particularly those already listed in the mainland, Chan said.The market's watchdog Securities and Futures Commission is working with the exchange to enable a smoother application process, he added.As for the city's economy, Chan announced a "reinforced version" of the government's fiscal consolidation program.With the city’s budget deficit in the red for the third year in a row, the financial secretary said the level of deficit will decline year‑on‑year from 2026‑27 onwards. He said the 2024‑25 revised estimate on total government revenue was HKD559.6 billion, lower than the original estimate by 11.6 percent. Hong Kong will record a deficit of HKD87.2 billion for 2024-25, Chan said, with fiscal reserves estimated to drop to HKD647.3 billion by the end of March.Chan forecast that Hong Kong's economy will continue to grow moderately this year, rising by 2-3 percent in real terms for the year and by 2.9 percent a year in real terms from 2026 to 2029.  The average underlying inflation rate was forecast to be 2.5 percent a year.Chinese lawmakers advanced the draft private economy promotion law during a recent National People's Congress Standing Committee session, in a move to reinforce fair competition, improve financing conditions, foster technological innovation, and strengthening legal protections. The proposed legislation, set to become China's first fundamental law dedicated to the private sector, stipulates that private enterprises, like all market participants, may operate in any industry unless explicitly restricted by a negative list. It also mandates regular reviews to eliminate market entry barriers, prohibits discriminatory bidding practices, and ensures fair competition. China’s market regulatior held a seminar yesterday on fair competition and solicited advice from seven companies, including Longi Green Energy, Alibaba, JD.Com, Mercedes-Benz, and BAIC Group.Chinese lawmakers will review a draft revision of the Civil Aviation Law this week to enhance safety in the civil aviation industry, and a draft amendment has been proposed suggesting that airspace allocation should consider the development of low-altitude economy to support the high-quality growth of the civil aviation industry. Greater Bay Area, Greater futureThe Greater Bay Area is home to 108 companies among the nation’s top 500 non-State-owned enterprises, according to the latest Hurun China 500 ranking released on Tuesday. Of those 108 companies, 49 are based in Shenzhen, 29 in Hong Kong, and 13 in Guangzhou.Hong Kong’s first homegrown artificial intelligence large language model, HKGAI V1, was unveiled on Tuesday, with capabilities like interactive dialogue, content generation, meeting summarization, legal case referencing, and environmental analysis. The model, developed through collaborative research among five local universities and the SAR government’s InnoHK research and development platform, had been pilot-tested at more than 70 government departments, and could be ready for public use by the end of this year.Next on industry and company newsMixue Ice Cream & Tea’s IPO on the Hong Kong stock exchange, which wrapped up today, was oversubscribed by more than 5,125 times, with margin loans taken out by retail investors reaching HKD1.77 trillion, setting a new record for the Hong Kong stock market. The Chinese bubble tea chain is seeking to raise HKD3.5 billion through the IPO. Avatr Technology, the smart EV brand of Changan Automobile, and Huawei Technologies have strengthened their partnership, as Huawei will take part in the complete development cycle of new autos, from defining products and doing user research to marketing and launch, according to Chen Zhuo, president of the carmaker. He added that Avatr and Huawei have also set up a joint project team, with about 300 employees from the latter.Chinese cloud and tech firms, including ByteDance, Alibaba Cloud, Baidu, Ant Group, JD.Com, Meituan, and Kuaishou, will participate in ChinaAIDay, a special online session of the GTC2025 held on March 19, to share their progress on LLM, multi-modal model, and data science.ByteDance is testing a deep thinking model in its AI assistant Doubao, where a small number of selected users will see a chain of thought prompting after question inquiries, media reported today, adding that the tested model is not DeepSeek’s. The Zhongshan Hospital affiliated with Fudan University will collaborate with the Shanghai Academy of AI for Science to jointly release the test version of Guanxin, China's first heart AI model, today, media reported. Meanwhile, public hospital doctors in Hong Kong will start using generative AI to help them draft medical reports from next month.The Hurun China 500 Most Valuable Private Companies in 2024 was released on Tuesday, with high-tech firms making up the majority of the list. The ranking shows that 26 percent of the private firms are involved in software or services. Many companies specialize in AI, robotics or smart manufacturing.Wrapping up with a quick look at the stock marketChinese stocks rallied on Wednesday with the benchmark Shanghai Composite and the Shenzhen Component each up 1 percent. Hong Kong’s Hang Seng index also jumped 3.3 percent, hitting a near 3-year high, and the TECH index soared 4.5 percent.