By Wei Lai
On 7 July, Governor of the People's Bank of China, Pan Gongsheng, visited the Hong Kong Special Administrative Region (HKSAR) and announced 11 measures designed to strengthen the depth, connectivity and resilience of its financial system. The package advances two complementary priorities. The first is to broaden Hong Kong's markets beyond their traditional strength in equities by deepening fixed-income and currency activity and improving the infrastructure for trading, settlement, collateral and risk management. The second is to reinforce Hong Kong's role as the leading offshore RMB hub by expanding liquidity, enriching financing and investment channels, and making the currency easier to use in corporate and regional transactions. Together, the measures will help international investors allocate capital to Chinese assets and enable Mainland institutions to access global capital through Hong Kong. They also represent concrete support from the Central Government for consolidating and enhancing Hong Kong's status as an international financial center—an objective at the heart of Hong Kong's first Five-Year Plan for Economic and Social Development (2026–2030).
A high-quality international financial center is an ecosystem resting on five pillars: laws and institutions; capital and money; markets and infrastructure; products and services; and talent. Hong Kong's Five-Year Plan should develop these pillars as a connected system. Its consultation document already calls for deeper connectivity with the Mainland and international markets, digital transformation, "Finance+" empowerment, and the integrated development of education, technology and talent. Pan's measures give practical substance to these strategic directions.
The first pillar is laws and institutions. Under "One Country, Two Systems", Hong Kong combines an open and internationally familiar legal and regulatory system with strong support from the motherland—a distinctive institutional advantage that other international financial centers cannot replicate. This arrangement generates two complementary strengths. First, it enables Hong Kong to connect international capital with one of the world's principal growth engines: the World Bank projects China's economy to grow by 4.4 per cent in 2026, compared with a global forecast of 2.5 per cent. Second, support from the motherland strengthens Hong Kong's capacity to withstand systemic shocks, as demonstrated during the 1998 Asian financial crisis and by the continuing commitment to Hong Kong's financial stability today. In implementing its Five-Year Plan, Hong Kong should preserve this institutional advantage by ensuring that the 11 measures—and future market initiatives—are implemented through clear and predictable regulatory and operational arrangements for international market participants.
The second pillar is capital and money, with the offshore RMB at its core. China accounts for around 12 per cent of global merchandise trade, yet the RMB represents only about 4 per cent of global trade settlement and 2 per cent of global central bank reserves. This imbalance is not an argument for replacing the US dollar. Rather, it suggests that the RMB has considerable scope to assume a role more commensurate with China's economic weight within an increasingly diversified international monetary system. The five offshore-RMB measures address liquidity, pricing and practical use. Expanding the HKMA's RMB Business Facility from RMB200 billion to RMB500 billion, with maturities extending to three years, will support financing, direct investment and treasury-management needs. Seven-day liquidity tenders and short-term offshore RMB instruments can strengthen the yield curve, while direct Indonesian rupiah–RMB transactions and improved banking practices can reduce conversion costs for real-economy users. These initiatives align closely with the Five-Year Plan's objectives of strengthening Hong Kong as a global offshore RMB business hub, an international asset management center and an international risk management center. The next stage is to extend the RMB's role beyond trade settlement to treasury management, clearing, investment, collateral and reserves, with Hong Kong providing the innovative RMB-denominated products, liquidity, and risk-management tools needed for that transition.
The third pillar is markets and infrastructure. Hong Kong's equity market has achieved a strong revival. Official HKEX data show that 87 companies were newly listed in the first half of 2026, while IPOs raised HK$210.2 billion—92 per cent more than a year earlier. Average daily securities-market turnover reached HK$283.0 billion, up 18 per cent year on year. Yet a successful international financial center should not depend disproportionately on one asset class, however vibrant. The Five-Year Plan calls for the collaborative development of equity, bond, asset management, wealth management, insurance and risk management markets, alongside a commodities-trading ecosystem. Pan's fixed-income and connectivity measures help turn that ambition into a more complete market architecture. A new electronic bond platform can improve price discovery and secondary liquidity; a direct infrastructure link and longer Northbound settlement hours can reduce operational friction; and allowing Bond Connect holdings to serve as margin collateral can release balance-sheet capacity. Expanding Southbound Bond Connect from RMB500 billion to RMB800 billion, introducing repo transactions, broadening eligible products and linking with Macao can also deepen the regional bond market. Ultimately, these measures should be assessed by their ability to attract issuers, investors and market makers, lower transaction costs and generate sustained market liquidity.
The fourth pillar is products and services. Infrastructure creates value only when market participants have access to suitable instruments with which to finance economic activity, manage liquidity and control risk. Five-year China Government Bond Futures and swaps linked to the seven-day Fixing Depository-Institutions Repo Rate (FDR007) can help international investors hedge RMB interest-rate exposure, thereby supporting bank and corporate treasury management. These product developments, together with the market and infrastructure advances discussed under the third pillar, support the RMB internationalization objective under the second pillar. By expanding the range of offshore RMB use cases, they can facilitate the currency's evolution beyond trade settlement towards investment, treasury management and risk management. Hong Kong should therefore consider the interaction among capital, markets and products holistically when formulating policies and implementing the Five-Year Plan.
The fifth pillar is talent. While not formally listed among the 11 measures, talent underpins every other pillar. Electronic markets, cross-boundary settlement, AI-assisted risk control, fintech and regulatory technology (regtech) require professionals who understand both finance and technology while operating within sound legal, ethical and regulatory boundaries. This directly connects financial development with the innovation-and-talent agenda in Hong Kong's first Five-Year Plan. Part 3 calls for deeper implementation of the "AI+" initiative, stronger collaboration among government, industry, academia, research and investment, and far-sighted planning for interdisciplinary education and skills. Lingnan University plans to contribute through its first double degree jointly offered by the Faculty of Business and the School of Data Science: a BBA in Finance and a BSc in Innovative Design and Artificial Intelligence. The proposed program will combine finance with AI, data science, systems engineering and human-centered design. Graduates should be equipped to develop AI-enabled financial products, strengthen risk analytics and regtech, and translate complex data into responsible and commercially viable solutions. The need is pressing: official projections point to an innovation-and-technology manpower shortage of 18,000–23,000 by 2028, together with shortages in specialized financial roles including fintech. The Five-Year Plan should therefore link new market initiatives with industry placements, continuing professional education and sustained collaboration between universities and employers.
The 11 measures provide Hong Kong with greater liquidity, connectivity and market diversity. Their lasting value will depend on whether the five pillars reinforce one another: trusted institutions attract capital; deep and secure markets support better products and services; and interdisciplinary talent keeps the financial system innovative, competitive and resilient. Hong Kong's first Five-Year Plan should translate this framework into clear implementation timelines and indicators for market participation, liquidity, technology adoption and talent development. With disciplined execution, Hong Kong can strengthen its status as an international financial center while serving national development and connecting China with the world.
The author is the Head and Professor of the Department of Finance of Lingnan University.
The views do not necessarily reflect those of DotDotNews.
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