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At the South China Morning Post SCMP forum, “Redefining Hong Kong Series 2025: Budget Edition,” Associate Dean of HKU Business School and Director of the Asia Global Institute Prof. Heiwai Tang emphasised that Hong Kong's debt-to-GDP ratio is significantly lower than other developed economies such as Singapore, Japan, and the U.S. This leaves much room for the government to proactively use government-backed bonds to invest in new growth drivers, given the historically positive economic returns on investments in large infrastructure projects. In a related article published in the Singapore-based The Straits Times, Prof. Tang shared insights on upgrading Hong Kong's economic sectors that were consistent with the views mentioned earlier. “Hong Kong’s highly ranked and globally recognised universities have lots of great basic scientific and academic research that should have some commercial value that needs to be realised,” Prof. Tang said. He also stressed the importance of fostering better synergy between Hong Kong and other cities in the Greater Bay Area. With these efforts, Hong Kong can unlock new opportunities and solidify the city’s role as more than just a financial centre.

Associate Dean of HKU Business School and Director of the Asia Global Institute Prof. Heiwai Tang shared his views on the Hong Kong budget during interviews with the South China Morning Post SCMP and Hong Kong Economic Journal. He highlighted that the government is taking "a conservative approach" to address the significant deficit, with a proposed 2% reduction in recurrent expenditure for the 2025-26 financial year, followed by similar cuts in the following two years. He argued that increasing this reduction to a more ambitious 3% may be necessary to address the structural deficit, especially given that the government's ability to boost revenue to match rising spending is in question. Regarding Hong Kong's projected debt-to-GDP ratio of up to 16.5% over the next five years, Prof. Tang described it as at a "completely safe" level. As for renminbi bonds, they appeal to institutions that require and hold RMB. Such state-owned enterprises have good cashflow, so investments in RMB bonds with a maturity period of 3-5 years is considered more effective. Prof. Tang also emphasised that issuing bonds aimed at institutional investors is more cost-effective. With the current stock market doing well, retail investors require higher yields of at least 4% to 4.5% to be interested in bonds. Therefore, he recommended maximising institutional market engagement, as a yield of 3.5% is still appealing to institutional investors.

Hong Kong's economy faces many challenges, particularly given the current geopolitical climate. Nevertheless, Associate Dean of HKU Business School and Director of the Asia Global Institute, Prof. Heiwai Tang expressed optimism during his interviews with TVB (Television Broadcasts Limited) News, iCable News, and Radio Television Hong Kong (RTHK). He stressed that the latest budget includes several measures aimed at economic transformation, as well as important plans to reduce spending. He said it’s essential to distinguish between short-term and long-term impacts. Prof. Tang is confident that the government can achieve a 2% annual reduction in recurrent expenditure, with a targeted 7% reduction within four years. He noted that social welfare, healthcare, and education spending each exceed 100 billion dollars, we also face challenges from an ageing population that will likely bring greater spending in these areas. Prof. Tang also highlighted that HK's debt accounts for about 10% of our GDP, which is much better than Singapore's, for example, which is more than 170% of their GDP. He expects that interest rates won’t rise in the next year to two years, and thinks issuing bonds with a maturity of 10-15 years is reasonable for supporting long-term infrastructure development.

According to Prof. Heiwai Tang, Associate Dean of HKU Business School and Director of the Asia Global Institute, there is no consensus from an economic perspective that a government debt-to-GDP ratio exceeding a certain level poses a danger to the economy. Currently, the proportion of the government's outstanding debt has not reached a level that requires attention, and Hong Kong has the capacity to issue over HK$100 billion in bonds. It is estimated that the issuance amount for the new fiscal year may be similar to last year. If the financing is matched with long-term infrastructure spending, longer issuance terms are preferable. Even if the relevant ratio gradually increases to 20% in the future, there will still be room for issuing debt. The key considerations are the market's absorption capacity and interest costs.

The "Flying Geese Paradigm," proposed by Japanese economist Kaname Akamatsu in the 1930s, describes the industrial upgrading process of East Asian countries from labor-intensive manufacturing to capital- and technology-intensive industries. According to this theory, Japan, as the "leading goose," was the first to achieve industrialization and stimulated the development of other countries through foreign direct investment. This created a mutually dependent and progressively advancing industrial division of labor in East Asia, resembling the formation of a flying geese flock in the sky. The theory was validated through decades of post-World War II economic practice. Japan's global expansion strategy not only shaped the manufacturing landscape of East Asia but also became a model for the globalization of enterprises in countries such as China and South Korea.

Hong Kong, historically a vital trade hub, faces challenges from the development of cargo ports in Asia, the rise of cross-border e-commerce, and disruptions caused by the COVID-19 pandemic and geopolitical tensions. Increasing number of companies are adopting strategies like "China+N" to diversify production networks and mitigate risks. As China and neighbouring nations drive industrial development in Asia, Prof. Heiwai Tang, Associate Dean of HKU Business School and Director of the Asia Global Institute, explains that Hong Kong must redefine its strategic position and focus on becoming a gateway between China and emerging economies, identify segments where it has a competitive advantage in regional supply chains, and adapt to geopolitical tensions by capitalising on new globalisation trends.

Since China joined the World Trade Organization in 2001, Hong Kong's role as a transshipment hub had been steadily declining. Prof. Heiwai Tang, Associate Dean of HKU Business School and Director of the Asia Global Institute, shared his insights in a TVB (Television Broadcasts Limited) interview and explained that the rapid development of mainland ports had led to increasing competition and mounting cost pressures. He said, “Mainland productivity was rising, and transportation costs were falling, for example, handling a container in Hong Kong cost around $2,000 and took three to five days, while the same process in cities like Shenzhen or Shanghai could be much cheaper” Prof. Tang added that, “In 2000, for every dollar coming to Hong Kong for re-export, we earned about fifty cents; today, that was only twenty cents.” This trend affecting not just traditional Chinese medicine exports but the overall export landscape, revealing the challenges Hong Kong faced in the global trade arena. He stressed the need for industries that once depended on transshipment trade to explore new avenues.

As Hong Kong faces an ageing population alongside a low birth rate, many retirees find themselves financially unprepared. Prof. Heiwai Tang, Associate Dean of HKU Business School and Director of the Asia Global Institute, shared his thoughts at the Asian Financial Forum (AFF), pointing out that “The subscription of pension life insurance products in Hong Kong is actually very small.” He further noted that the city’s Mandatory Provident Fund (MPF) can cover only around 40% of pre-retirement income, leading to a significant quality-of-life downgrade. With the city's public health system becoming increasingly crowded and private services costly, the Greater Bay Area (GBA) offers a promising alternative where living and healthcare costs are significantly lower. Prof. Tang also stated, “We started seeing a lot of Hong Kong people going north to consume... but increasingly more people are also going up for very generic medical and dental services.” He suggested that one potential path is to develop insurance products to cover citizens when they retire in the Greater Bay Area.

The Hong Kong government is expecting a deficit of nearly HK$100 billion for the current year, significantly higher than the initial estimate of HK$48.1 billion made last February. The IMF has highlighted the necessity for Hong Kong to enhance its tax revenue to address increasing spending pressures linked to an ageing population. Prof. Heiwai Tang, Associate Dean of HKU Business School and Director of the Asia Global Institute, supports raising revenue either by raising tax rates or by broadening the tax base to address the issue of possible structural fiscal deficits. He highlighted a “mental trap” among government officials who believe that higher taxes would harm productivity, and he pointed out that Singapore’s implementation of a goods and services tax (GST) did not hinder productivity in the medium run. He stated, “Broadening the tax base, especially introducing the sales tax, will be a one-way street,” emphasising the need for sustainable revenue sources as government expenses grow.