Li Jiachao: Explore shortening the stock settlement cycle to T+1, implement a stablecoin issuer system, and build a regional gold reserve hub

The Chief Executive of the Hong Kong Special Administrative Region, John Lee, delivered the Chief Executive's 2025 Policy Address at the Legislative Council of the Special Administrative Region on the 17th at 11 a.m. This is the fourth policy address delivered by John Lee since taking office.

John Lee stated that the Policy Address is both a roadmap for Hong Kong to fully "strive for economic development and improve people's livelihoods," accelerating the process of "from governance to prosperity," and a strategic deployment for Hong Kong to actively align with the national development strategy and achieve breakthroughs in new situations. In the report, John Lee proposed specific measures for accelerating the development of the Northern Metropolis, industrial development and innovation, and consolidating Hong Kong's status as an international financial center.

John Lee stated, "Assist mainland technology enterprises in financing in Hong Kong, explore shortening the stock settlement cycle to T+1. Assist Chinese concept stocks in returning to Hong Kong as the preferred location; promote the inclusion of Hong Kong stock RMB trading counters in the southbound trading of 'Stock Connect.' Accelerate the establishment of an international gold trading market, with specific measures including promoting the Hong Kong Airport Authority and financial institutions to expand gold storage in Hong Kong, aiming to exceed 2,000 tons in three years and build a regional gold reserve hub."

At the same time, he also mentioned the continuous optimization of the "Cross-Border Payment Link," expanding remittance application scenarios related to people's livelihoods. The Special Administrative Region government will optimize the distribution arrangements for portable cash assistance next year, allowing Hong Kong elderly beneficiaries living in Guangdong and Fujian provinces to choose for the government to directly transfer funds to their designated bank accounts in the mainland.

Five Key Areas to Consolidate Hong Kong's Status as an International Financial Center

In consolidating Hong Kong's status as an international financial center, John Lee emphasized the stock, bond, gold, and family office sectors in the report.

In the stock market, John Lee stated that Hong Kong will assist mainland technology enterprises in financing through the "Technology Enterprise Special Line," strengthening financial support for the national construction of a technology powerhouse; further improve the main board listing and structured product issuance mechanisms; study the optimization of "dual-class share" listing regulations; explore shortening the stock settlement cycle to "T+1"; promote more overseas enterprises to list in Hong Kong for a second time; assist Chinese concept stocks in returning to Hong Kong as the preferred location; promote the inclusion of Hong Kong stock RMB trading counters in the southbound trading of 'Stock Connect.'

In the bond market, the government will promote the consolidation of Hong Kong's bond center status, including enhancing financial infrastructure, such as the Hong Kong Monetary Authority's CMU OmniClear collaborating with the Hong Kong Stock Exchange to study allowing investors to manage and collateralize different assets like stocks and bonds on a single platform, facilitating the linkage of different "connectivity" mechanisms; at the same time, connections will be established with markets in Switzerland, the UAE, and other places; and promote the use of offshore Chinese government bonds as collateral for different clearing houses, further enriching the application scenarios of RMB assets. Meanwhile, the Hong Kong Securities and Futures Commission is studying the feasibility of a market-established and operated electronic bond trading platform and actively promoting the establishment of a commercial repurchase market and central counterparty system in Hong Kong to enhance market liquidity.

In addition, the government will continue discussions with relevant mainland institutions to implement the launch of offshore government bond futures in Hong Kong, expand the types of interest rate derivatives under the swap link, promote the development of over-the-counter derivatives, and timely launch cross-border RMB repurchase business with the mainland. At the same time, the Hong Kong Securities and Futures Commission, the Monetary Authority, and the Hong Kong Stock Exchange will increase market engagement, encouraging more enterprises to issue bonds in Hong Kong, allowing more global funds to participate in the Hong Kong bond market. The Hong Kong Securities and Futures Commission and the Monetary Authority will publish a "Fixed Income and Currency" roadmap to elaborate on the relevant details In the gold market, John Lee stated that the establishment of an international gold trading market will be accelerated. Specific measures include promoting the Hong Kong Airport Authority (AA) and financial institutions to expand gold storage in Hong Kong, aiming to exceed 2,000 tons in three years and build a regional gold reserve hub; encouraging gold merchants to establish or expand refineries in Hong Kong and collaborating with the mainland to research processing materials in the mainland, refining gold, and exporting it to Hong Kong for trading and delivery purposes; establishing a central clearing system for gold in Hong Kong to provide efficient and reliable clearing services for internationally standardized gold trading, and inviting the Shanghai Gold Exchange to participate, preparing for future connectivity with the mainland market; enriching gold investment tools, assisting issuers in launching gold funds, and supporting the development of new products such as tokenized gold investment products; supporting the industry in establishing a gold industry association to create a communication platform with the government and regulatory agencies, enhancing promotion and attracting "Belt and Road" clients, and strengthening talent training.

In the commodities sector, Hong Kong will collaborate with exchanges in the Greater Bay Area to explore new businesses such as commodity trading and carbon trading. The Hong Kong Stock Exchange (HKEX) is the controlling shareholder of the Qianhai Joint Trading Center and will continue to strengthen cooperation between the two regions to develop the offshore soybean spot market. The HKEX carbon market, Core Climate, will also conduct cross-border trading settlement research trials with the pilot carbon market in the Greater Bay Area.

In terms of family offices, the Hong Kong SAR government will further optimize the preferential tax system for funds, single-family offices, and associated rights to attract more funds to settle in Hong Kong; the Hong Kong Securities and Futures Commission (SFC) will actively promote the inclusion of Real Estate Investment Trusts (REITs) in the connectivity targets to enhance the liquidity of REITs in both regions; it will also optimize the Qualified Foreign Limited Partner (QFLP) mechanism, particularly strengthening cooperation with Qianhai and Shanghai to introduce more foreign capital into the mainland private equity market. The Hong Kong Investment Corporation will cultivate more promising local private equity and hedge fund institutions through direct or joint investments.

Hong Kong is implementing a stablecoin issuer system

John Lee stated that the Hong Kong Monetary Authority (HKMA) will promote commercial banks to launch tokenized deposits and facilitate the trading of real tokenized assets. For example, using tokenized deposits to settle tokenized money market funds, assisting the government in normalizing the issuance of tokenized bonds, and encouraging banks to strengthen risk management through regulatory sandboxes.

Hong Kong is implementing a stablecoin issuer system and is formulating legislative proposals for the licensing system of digital asset trading and custody services. The Hong Kong Securities and Futures Commission is studying the expansion of the types of digital asset products and services available to professional investors while fully protecting investors, and strengthening international tax cooperation to combat cross-border tax evasion. The SFC will build a risk defense line for digital assets in Hong Kong by introducing automated reporting and data monitoring tools.

Supporting local funded institutions to attract top international research talents in AI and other fields to Hong Kong

In terms of industrial development and innovation, John Lee emphasized artificial intelligence (AI), including advancing AI research and talent advantages, strengthening AI funding advantages, enhancing AI data advantages, and expanding AI applications. John Lee stated that the government previously announced a HKD 3 billion "Frontier Technology Research Support Program," which will soon accept applications to support local funded institutions in attracting top international research talents in AI and other fields to Hong Kong to lead cutting-edge technology basic research In addition, the government has reserved HKD 1 billion to establish the "Hong Kong Artificial Intelligence Research Institute" in 2026, promoting upstream AI research and development, midstream results transformation, and expanding application scenarios. Hong Kong Investment Management Company (HKIMC), as a wholly-owned patient capital institution of the government, has invested in several AI companies, including AI large language models, cloud computing, and AI drug development, and will continue to invest in the AI industry in the future.

Accelerating the Development of Autonomous Driving in Hong Kong

John Lee stated that the SAR government established a regulatory framework for autonomous vehicles last year. This year, three areas will be designated for testing, aiming for autonomous vehicles to travel across regions and connect with other modes of transportation, accelerating the unmanned and large-scale development of autonomous driving in Hong Kong, and achieving commercial operations as soon as possible, promoting the industry to explore overseas markets, especially right-hand drive vehicle markets, using Hong Kong as a platform. The SAR government will strive to pass the ride-hailing regulatory ordinance before the current Legislative Council session adjourns.

Establishing the "Commodity Strategy Committee"

John Lee stated that the Hong Kong SAR government will establish a "Commodity Strategy Committee," led by the Financial Secretary, to gather industry representatives and strengthen the top-level design and long-term strategy formulation for commodity policies. At the same time, Hong Kong will continue the direction of last year's "Policy Address" to promote the development of Hong Kong's commodity trading ecosystem, including: the Hong Kong Stock Exchange's wholly-owned subsidiary, the London Metal Exchange, has approved eight delivery warehouses in Hong Kong, and Hong Kong will support the industry in establishing more recognized warehouses; providing half-tax incentives for commodity traders to settle in Hong Kong, driving demand for Hong Kong shipping and professional maritime services; utilizing financial innovation to optimize international commodity trading processes, including the Hong Kong Monetary Authority's cooperation with the Central Bank of Brazil to test bill of lading digitization and deposit tokenization technologies to facilitate trade; deepening connectivity and development with the Guangzhou Futures Exchange and other domestic commodity markets to assist in the internationalization of the national commodity market.

John Lee mentioned that he has accepted the recommendations of the "Working Group on Promoting the Development of the Gold Market," which will be implemented by the Hong Kong SAR government's Financial Services and the Treasury Bureau, including:

1. Promoting the Hong Kong Airport Authority (AA) and financial institutions to expand gold storage in Hong Kong, aiming to exceed 2,000 tons in three years and build a regional gold reserve hub;

2. Promoting gold traders to establish or expand refineries in Hong Kong and researching with the mainland to conduct processing in the mainland, refining gold for export to Hong Kong for trading and delivery purposes;

3. Establishing a central clearing system for gold in Hong Kong to provide efficient and reliable clearing services for internationally standardized gold trading, and inviting the Shanghai Gold Exchange to participate, preparing for future connectivity with the mainland market;

4. Enriching gold investment tools, assisting issuers in issuing gold funds, and supporting the development of new products, such as tokenized gold investment products;

5. Supporting the industry in establishing a gold industry association to create a communication platform with the government and regulatory agencies, enhancing promotion and attracting "Belt and Road" clients, and strengthening talent training.

Hong Kong to Launch a Blueprint for Traditional Chinese Medicine Development

John Lee stated that the permanent building of the Hong Kong Chinese Medicine Hospital and the government’s Chinese Medicine Testing Center will be put into service in phases starting this December. The SAR government will intensify efforts to promote the development of traditional Chinese medicine in Hong Kong, assisting the country in promoting the internationalization of traditional Chinese medicine, including:

1. A "Blueprint for the Development of Traditional Chinese Medicine" will be announced by the end of the year, covering the establishment of governance structures and service systems, leveraging advantages and promoting collaboration between Chinese and Western medicine, and facilitating scientific research innovation and cultural heritage.

2. The Hong Kong Chinese Medicine Hospital will launch multiple specialized Chinese medicine services in its first year, including common diseases among the elderly (such as age-related degenerative diseases and post-stroke rehabilitation).

3. Promote the Chinese medicine industry to connect electronic health records through the Medical Health Connect, and further expand the scope of interconnectivity of information between Chinese and Western medicine within the Medical Health Connect.

4. Advance the development of collaborative services between Chinese and Western medicine, expand the Hospital Authority's "Knee Osteoarthritis Treatment" project to all connected hospitals, and launch a pilot project for "Palliative Care."

Will Attract More International and Mainland Top Pharmaceutical Companies to Settle in Hong Kong

Lee Ka-chao stated that the SAR government will attract more pharmaceutical companies to settle in Hong Kong to conduct clinical trials and treatments for rare disease drugs, high-end cancer drugs, and advanced therapy products. Actively improve patient recruitment and trial initiation efficiency; and through the "Greater Bay Area Clinical Trial Collaboration Platform" in He Tao, allow pharmaceutical companies to conduct trials simultaneously in Hong Kong and Shenzhen. Preparations are also underway to establish an "International Clinical Trial Academy" to cultivate clinical trial talents in the Greater Bay Area, as well as to hold international summits and forums.

The SAR government will establish the "Hong Kong Drug and Medical Device Regulatory Center" by 2026 and submit legislative proposals to regulate medical devices, aiming to become an internationally recognized authoritative regulatory agency for drugs and medical devices as soon as possible. At the same time, Hong Kong will accelerate the "1+" new drug approval mechanism, trialing priority approvals for innovative drugs recommended by the Hong Kong Hospital Authority (HA) that can address severe or rare diseases, helping pharmaceutical companies bring innovative drugs to market faster. Hong Kong will also promote the standardization of clinical data within the Greater Bay Area, building a real-world data platform to assist pharmaceutical companies in bringing innovative drugs to the mainland and international markets more quickly.

In addition, the HA will establish an "Office for Introducing Innovative Drugs and Medical Devices," using big data to determine local patients' needs and benefits from innovative drug treatments, actively introducing innovative drugs and devices that are in the best interests of patients and cost-effective into Hong Kong.

New Capital Investor Entry Program

Lee Ka-chao stated that the "New Capital Investor Entry Program" requires applicants to invest no less than HKD 30 million in Hong Kong, of which the real estate investment amount (whether residential or non-residential) currently counts for a maximum of HKD 10 million. The SAR government will optimize the program, allowing the count for non-residential property purchases to increase from HKD 10 million to HKD 15 million, while the property transaction price remains unrestricted; for residential property purchases, the count will remain at HKD 10 million, but the criteria for residential property investment will be relaxed, with the transaction price threshold lowered from HKD 50 million to HKD 30 million.

He stated that the Hong Kong Monetary Authority will promote the banking industry, especially mainland banks, to establish regional headquarters in Hong Kong, expanding into Southeast Asia and the Middle East markets. Attract more mainland enterprises to set up treasury centers in Hong Kong, completing research to optimize tax relief measures by the first half of 2026.

Lee Ka-chao also stated that the government will continue to optimize the "Cross-Border Payment System," expanding remittance application scenarios related to people's livelihoods. The SAR government will optimize the arrangement for the distribution of portable cash assistance next year, allowing Hong Kong elderly beneficiaries living in Guangdong and Fujian provinces to choose for the government to directly transfer funds into their designated bank accounts in the mainland The Hong Kong Monetary Authority will promote the banking industry, especially mainland banks, to establish regional headquarters in Hong Kong, leveraging Hong Kong's advantages to expand into markets in Southeast Asia and the Middle East, providing more comprehensive cross-border financial solutions; attracting more mainland enterprises to set up treasury centers in Hong Kong, with research on optimizing tax relief measures to be completed in the first half of 2026.

Additionally, it is reported that by 2024, foreign enterprises based in Hong Kong will have over 1,400 regional headquarters in Hong Kong, with more than 300 from the mainland. Moving forward, diverse plans will be formulated for "going global" enterprises, including a memorandum of understanding signed between the Monetary Authority and the Public Investment Fund (PIF) of Saudi Arabia to establish a new investment fund of up to USD 1 billion for enterprises from Hong Kong and other Greater Bay Area cities to "go global" to Saudi Arabia.

Chief Executive John Lee stated that to enhance the customs clearance experience, the newly rebuilt Huanggang Port and Sha Tau Kok Port will implement a "cooperative inspection, one-time release" customs clearance model, relax the registration conditions for frequent visitors to Hong Kong using e-channels, and establish Hong Kong's first "seamless customs clearance" pilot at the Hong Kong port of the Hong Kong-Zhuhai-Macao Bridge, completing clearance procedures through facial recognition technology.

Establishing a "Department Head Responsibility System" to Further Strengthen Governance

John Lee stated that the SAR government will establish a clear "Department Head Responsibility System" to further strengthen governance. He mentioned that to enhance the accountability awareness of senior civil servants and improve the overall management level of departments, the most direct and effective method is to strengthen the responsibility of department heads, clearly emphasizing that department heads must be responsible for building a good management team and leading their senior civil servants to effectively manage personnel and operational systems.

John Lee introduced that the "Department Head Responsibility System" will establish an investigation mechanism, categorizing investigations into two levels based on the severity of issues. General issues will be investigated by department heads, while serious issues, systemic problems, and issues that may involve department heads will be investigated by a dedicated investigation team established for the responsibility system, which will identify shortcomings and clarify responsibilities. This team operates independently of the government system to ensure impartial and independent investigations.

Hong Kong Innovation and Technology Industry Guiding Fund to Launch in 2026-2027

John Lee pointed out that the Hong Kong Innovation and Technology Bureau is advancing the Hong Kong Microelectronics Research and Development Institute to assemble two pilot lines and will complete the establishment of the Life and Health Research Institute and the Hong Kong Artificial Intelligence Research Institute within the next year. In addition, Hong Kong will accelerate the construction of the third "InnoHK Innovation Hong Kong Research Platform," focusing on sustainable development, energy, advanced manufacturing, and materials, with its research centers to be established in the first half of 2026. The highly anticipated "Innovation and Technology Industry Guiding Fund" will also be launched in the 2026-2027 fiscal year, with the government actively guiding market investment in strategic emerging and future industries