Budget 2026-27: Hong Kong bets big on AI, Northern Metropolis with new tax breaks
South China Morning Post
by SCMP ReportersFebruary 25, 2026
AI-Generated Deep Dive Summary
Hong Kong’s 2026-27 budget focuses heavily on artificial intelligence (AI) and the development of its Northern Metropolis, with significant investments and tax incentives aimed at bolstering innovation and technology. Financial Secretary Paul Chan Mo-po revealed a surprise operating surplus after three years of deficits, driven by a booming stock market. Despite public expectations for increased spending, Chan emphasized the need to maintain financial reserves to address geopolitical risks and support long-term growth.
The budget outlines several key initiatives, including new measures to strengthen Hong Kong’s global financial standing and innovation capabilities. A major focus is on establishing a cross-border Innovation and Technology (I&T) hub near the border with Shenzhen, which will receive HK$20 billion in funding. This hub aims to position Hong Kong as a leading tech center, aligning with China’s national 15-year development strategy. Additionally, the city plans to boost its intellectual property (IP) economy and support aerospace development, further cementing Hong Kong’s strategic role in regional growth.
The financial secretary also highlighted the importance of maintaining adequate reserves to navigate potential geopolitical challenges while investing in future-proof industries like AI and technology. These measures are part of a broader effort to diversify Hong Kong’s economy and ensure its continued relevance as a global financial and tech hub. The initiatives underscore the city’s commitment to fostering innovation and solidifying its position as a key player in Asia’s tech ecosystem.
This budget reflects Hong Kong’s strategic pivot toward high-tech industries, signaling its determination to remain competitive in an increasingly digital world. By leveraging its unique position as a gateway between China and global markets, Hong Kong aims to establish itself as a leading destination for innovation and investment. These
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Originally published on South China Morning Post on 2/25/2026