by
Marco Lam
As Hong Kong prepares to mark National Security Education Day this Wednesday, Financial Secretary Paul Chan Mo-po said the city must see economic development and national security as mutually reinforcing, arguing that financial resilience, technological innovation and closer alignment with national strategies will be central to safeguarding the city’s long-term future.
He said a safe and stable environment is the foundation for growth, but stressed that security cannot rest on defense alone.
“Without a safe and stable environment, we cannot talk about development,” Chan said. “But we can’t just stick to defense and not develop, because development is the best guarantee of security.”
The financial chief said the 15th Five-Year Plan’s emphasis on high-quality development carried clear implications for Hong Kong, especially in two areas: technological innovation and self-reliance, and high-level two-way opening-up.
For Hong Kong, this means not only aligning with the national development strategy but also making fuller use of the city’s own strengths, including internationally connected financial markets, strong universities, deep professional services, and a talent pool drawn from Hong Kong, the mainland and overseas.
Chan said local universities are well placed to contribute to scientific research, while the city’s access to both mainland and international data and application scenarios can support emerging sectors such as AI.
He also framed Hong Kong’s financial system as part of the city’s security architecture, and said Hong Kong must remain alert to risks that can spill across markets. Authorities must maintain cross-market surveillance spanning equities, banks and external transactions so that regulators can detect shocks and manage chain effects when turbulence in one market affects another. He added that the city also needs strong buffers to absorb external shocks.
The finance chief pointed to Hong Kong’s foreign exchange reserves of more than HK$4 trillion – about 1.7 times the monetary base – as evidence of that buffer. He also said the banking sector’s liquidity ratio stood at around 170 percent, well above the international minimum requirement of 100 percent.
Chan said safeguarding security did not mean slowing financial development. Rather, Hong Kong must keep sharpening its competitiveness by reforming its stock market, attracting new economy firms and improving market efficiency.
Recent rankings that show Hong Kong maintained third place among global financial centers, with an improved overall score, reflected the city’s underlying strengths, Chan said. He pointed to Hong Kong’s capital-raising ability, banking system and global leadership in fintech, while also highlighting room for expansion in wealth and asset management.
He said Hong Kong’s strategy could not rely only on traditional Western markets. While ties with Europe and the United States should be consolidated, the city must also deepen links with newer markets such as the Middle East, Southeast Asia and Central Asia.
Chan said investors in the Middle East had shown strong interest in allocating assets across Hong Kong, the mainland and Asia in recent years, while Hong Kong was also working to attract more overseas companies to list locally.
In the broader context of National Security Education Day, Chan also referenced the State Council Information Office’s white paper on Hong Kong and national security, saying it underscored the need for the public to stay alert to international risks and threats.
Chan said cybersecurity and system protection have become especially important. Whether in financial systems or cyberspace, he warned, modern threats could inflict serious damage on society and the economy.
For Chan, the answer lies in keeping Hong Kong open, competitive and forward-looking while building stronger safeguards around its institutions. The city, he suggested, should not see growth and security as competing priorities, but as two parts of the same task.
Chan said Hong Kong’s integration into national development, especially through the Greater Bay Area and the Northern Metropolis, can strengthen both the city’s economic resilience and its contribution to national security.
He said Hong Kong should position itself as a platform through which mainland enterprises can raise funds, tap international professional services and expand overseas. But the city’s value, he added, goes beyond fundraising.
Chan noted that Hong Kong’s legal, accounting and other professional sectors could work alongside mainland firms as they enter overseas markets, allowing the city to contribute both capital and expertise. He cited the example of mainland battery giant CATL, which came to Hong Kong for an initial public offering to support the development of its factory in Hungary.
Hong Kong should encourage more firms not only to list in the city, but also to carry out research and development locally, making use of its universities, talent base and international connections, he added.
Chan said the Northern Metropolis’s proximity to Shenzhen, together with Hong Kong’s academic resources, made it an important platform for future innovation and industrial collaboration.
Hong Kong should go out together with Shenzhen, Guangzhou, Dongguan and other mainland cities as a team, Chan noted, which will allow Hong Kong and the wider Greater Bay Area to present overseas investors with a broader proposition combining finance, technology and manufacturing capability.
Hong Kong should embrace stablecoins and digital assets as part of financial innovation, but only within a regulatory framework that protects investors and guards against risks to financial security, Chan noted. He said innovation and regulation must move together, and digital assets represent a future-oriented technology with strengths including decentralization, efficiency and lower costs, and described them as part of a wider trend that Hong Kong should not ignore.
“We need to encourage financial innovation. Otherwise, there will be no breakthrough,” he said. “But at the same time, you need to be safe.”
The government’s approach was based on the principle of “same activity, same risk, same regulation,” meaning different technologies should be subject to equivalent safeguards where the underlying risks are similar.
Chan said digital asset exchanges will need to be licensed, with regulators assessing matters such as capital adequacy, the segregation of client assets and compliance systems. Similar attention will also be given to stablecoin issuers.
Chan stressed that Hong Kong viewed stablecoins primarily as a payment instrument rather than an investment product. He said authorities will look for genuine application scenarios and sustainable business models, rather than speculative uses with little real-world value.
He also said applicants will need to demonstrate effective arrangements for anti-money laundering, investor protection and broader risk control, so that financial innovation will not undermine financial stability.
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