Hong Kong and Shenzhen's move to jointly develop an innovation and technology park in the Lok Ma Chau Loop could prove to be a milestone in the SAR's economic development.

It is a widely accepted notion that Hong Kong's narrow economic base has not only compromised its economic stability, but stifled its further development. Because of its over-reliance on service industries, particularly real estate and financial sectors, the Hong Kong economy has been vulnerable to external factors such as rate hike cycles in the US and both regional and global financial crises. Over the past two decades, the city's economy has been riding a roller coaster, suffering one crisis after another as mature markets fluctuate greatly. As a result of such economic instability, Hong Kong people have suffered immense hardship over the years.

There has long been a consensus among economists and experts in the city that Hong Kong's economy desperately needs to diversify. The city's declining global competitiveness and increasing social tensions have made it all the more imperative for Hong Kong to speed up its pace of diversifying the economy.

In the absence of different economic activities aside from those in the financial and real estate sectors, the local economy offers far fewer rewarding jobs than what is demanded. Many young people, specifically new university graduates, have a slim chance of achieving any upward social mobility. This has contributed to youth discontent and social divisions - as suggested by more social movements in recent years.

Confronted by the problems of land scarcity and lack of natural resources, it is simply not viable for Hong Kong to revive the manufacturing sector and other traditional industries that are low valued-added in nature and need bigger spaces. Hong Kong has no way out but to resort to innovation and the advancement of technology.

Cooperation with neighboring Shenzhen, a city widely hailed as the new innovation capital of China, is a natural and logical choice for Hong Kong in its effort to innovate the local economy. In fact, the two cities have been working together in many areas of innovation and technology. But the latest joint efforts to build "the biggest-ever innovation and technology platform for Hong Kong" will still excite many in both cities. The combination of Shenzhen's prowess in technology and innovation with Hong Kong's traditional competitive advantages will prove to be a win-win game for both.

(HK Edition 01/04/2017 page10)