If we simply look at the major economic indicators, Hong Kong has continued to record moderate growth over the past two years. However, many industries have identified structural issues in the economy that have affected their business operations. Consider, for example, Hong Kong’s traditional role as a financial and trade connector, which has been hit successively by Sino-US frictions. In addition, factors such as the slowdown of the Chinese mainland’s economy and high operating costs have presented challenges for some enterprises. As it is hard to revive some businesses which used to thrive in the past, and there seems to be no clear path forward, many voices in society have expressed concern.

This is not the first time that Hong Kong has come to a crossroads in its economic development. Indeed, the city has undergone multiple periods of economic restructuring in the past. Thanks to its residents’ ability to respond swiftly and correctly to each restructuring period, the city has performed an ongoing economic miracle. So why don’t we sort out the patterns of success achieved since the 1997 handover?

Asian economies fared very badly during the Asian financial crisis, which started in 1997. Subsequently, the condition of advanced economies deteriorated rapidly after the dot-com bubble in 2000. The effects of a massive evaporation of wealth lasted until the ravages of SARS in 2003, causing the local economy to hit rock bottom.

The key to Hong Kong’s emergence from the gloom was the rise of the Chinese mainland as a growth hotspot of global interest. In 2001, China became the 143rd member of the World Trade Organization, marking a new step forward in its economic reform and opening-up. Hong Kong’s close economic and trade relations with the mainland spurred the rapid expansion of the city’s trade, logistics, legal and financial sectors, which in turn benefited the whole of society.

In 2008, Hong Kong’s economy was once again hit hard by a financial tsunami that threw the world into its worst recession in 60 years. Nevertheless, the mainland launched a 4-trillion-yuan ($550 billion) stimulus package and a series of interest rate cuts, effectively stabilizing its economic growth. Since then, Hong Kong has fully leveraged its distinctive advantage of having strong support from the motherland and close connections with the world, and has acted as a participant, contributor, and beneficiary during national reform.

The beginning of the Sino-US trade war in 2018 has begun to shape a complex and volatile international landscape. Increasing trade, financial and technological barriers, coupled with the outbreak of the COVID-19 pandemic in early 2020, have severely weakened consumer confidence and business sentiment.

Since the resumption of normalcy, the US has resorted to all sorts of tactics to suppress China, which have posed significant challenges in Hong Kong’s four traditional pillar industries, including financial services, tourism, trading and logistics, and professional and other producer services. Hong Kong is once again at a crossroads.

By contributing to Chinese modernization via new industries and new paths, Hong Kong will undoubtedly achieve faster and better development. In other words, the accomplishment of “China’s success stories” itself is a significant driver for the achievement of “Hong Kong’s success stories”

It is crucial for us to consider Hong Kong’s future position and chart a new path to success. Two patterns can be identified from the above.

First, Hong Kong’s economic take-off has consistently been linked to our country’s prosperity and progress. Having developed in leaps and bounds over the past 75 years, China has captivated the world with remarkable achievements, as manifested in its status as the world’s second-largest economy as well as the largest industrial manufacturer and goods trader. Its pivotal role in global development cannot be overlooked. As a small and highly open economy, a prudent strategy for Hong Kong would be to ride on the momentum of the mainland’s reform and opening-up, and actively integrate into overall national development to inject continuous impetus into the growth of the local economy.

Second, Hong Kong’s growth engines have all achieved a “multiplier effect”, whereby they conduct business with the entire country, based on the capacity of the city alone. For example, our financial and trading sectors have been able to capitalize on the opportunities brought about by Chinese modernization. They provide high-value-added services to customers across the country and around the globe, thereby transcending the constraints of geography and customer base.

In light of the aforementioned patterns, there are two viable avenues for transformation.

First, China has been transitioning from a stage of rapid growth to one of high-quality development. Cutting-edge fields such as artificial intelligence, biotechnology, quantum information, new energy and internet of things are the key growth areas. China is pursuing a strategy of driving industrial innovation through science and technology innovation. Hong Kong’s unique position as the only place where global and Chinese advantages converge presents a significant business opportunity. This includes contributing to the export of Chinese innovations, such as by aligning technical standards with international regulations and applying the above technologies in product development.

The digital economy is another key driver of high-quality development, backed by e-commerce, 5G, blockchain technology and more. In 2023, the value-added of the digital economy accounted for 10 percent of China’s GDP. Hong Kong is well-positioned to become a high value-added base, capitalizing on opportunities such as developing digital solutions, expanding the international market share for China’s digital products, and enhancing Chinese information and technology enterprises’ international recognition and voice.

Second, Hong Kong has yet to fully utilize the Belt and Road Initiative (BRI) as a window for economic transformation. At present, our support for the initiative focuses mainly on integration of traditional financial and trade industries. On the other hand, China has proposed the development of “small-scale yet impactful projects”, which means that future BRI cooperation will also engage with green development and the digital economy. Local enterprises are encouraged to provide more comprehensive and technologically advanced services, such as assisting mainland enterprises to expand market access for digital products and linking the Belt and Road partner countries for the establishment of joint technical standards.

By contributing to Chinese modernization via new industries and new paths, Hong Kong will undoubtedly achieve faster and better development. In other words, the accomplishment of “China’s success stories” itself is a significant driver for the achievement of “Hong Kong’s success stories”.

The author is a Legislative Council member representing the technology and innovation functional constituency, a tech entrepreneur, and a tech investor.

The views do not necessarily reflect those of China Daily.