1. The Rise of AI
Artificial intelligence (AI) has advanced dramatically in recent years. In particular, deep learning and generative AI models have gained widespread popularity at both organizational and individual levels, with a range of innovative and viable applications being developed. Deep learning techniques focused on classification and prediction have substantially improved the performance of various fundamental AI tasks such as speech, image, and facial recognition, resulting in many real-world applications including identity verification, self-driving cars, medical diagnosis, and supply chain management. Meanwhile, generative AI has widened access to sophisticated content creation tools for texts, images, and videos, particularly the easy-to-use ChatGPT released by OpenAI in November 2022 and similar chatbots based on large language models. These developments have fuelled worldwide interest in AI across government, industry, academia, and the general public.
While AI brings promising applications to society, it also presents significant challenges. For example, many people fear AI-driven automation will disrupt some industries, eliminating certain job categories and potentially causing mass unemployment. Organizations and people must therefore adapt and prepare for AI’s rapid growth. Another area of concern is AI safety and responsibility. The legal consequences of AI’s actions have not been clearly defined in many situations involving fast-growing applications. Criminals are also using AI to conduct sophisticated scams and other illegal activities. This article explores three key dimensions linked to AI, namely Hong Kong’s competitiveness, the labour market, and safety considerations. Following these discussions, we make several policy recommendations related to education, funding mechanisms, and regulatory frameworks.
2. AI and Hong Kong’s Competitiveness
AI has seen its fair share of ups and downs in past decades. The rise of generative AI in 2022 symbolizes the industry’s current boom, but its foundation lies in deep learning and large language models that have been gradually gaining momentum since the 2010s. AI’s renaissance today has yielded breakthroughs across virtually every domain, from scientific research and medicine to engineering, business, and the arts.
To maintain Hong Kong’s competitiveness globally, it is important for all sectors to embrace AI. While AI’s potential is particularly evident in areas such as financial technology, e-commerce, marketing, logistics, healthcare, and smart city solutions, its applications extend far beyond these industries. The city must think about where and how it can strategically use AI to boost productivity and efficiency across society. By leveraging AI technologies, Hong Kong can improve its business environment, attract more investment, and foster economic growth. Without such planning, we will easily lag behind our peers and competitors.
Many people have asked: Can Hong Kong become a leading AI hub? Hong Kong offers a number of advantages, including its free-market economy, business-friendly environment, access to the Greater Bay Area and the China market, and a diverse talent pool. But Hong Kong also faces fierce competition from regional rivals such as Shenzhen, Taiwan, and Singapore. Or worse, Hong Kong is caught in the technology war between China and the United States. For example, OpenAI has suspended services to users in Hong Kong, while Nvidia has banned export of powerful computer chips to Hong Kong and mainland China. These moves severely hamper Hong Kong’s potential role as a regional leader in AI.
To address these challenges, Hong Kong must forge a distinctive strategy and consider alternatives. One solution is to develop our fundamental research capabilities. While some prominent applications like AlphaGo and ChatGPT were developed by large organizations with strong financial backing, startups can still succeed and achieve breakthroughs in this field. One notable example is SenseTime, a leading AI company founded in Hong Kong that focuses on image recognition.[1] Building our own strengths in both basic research and real-world applications is crucial for keeping Hong Kong ahead in the global competition.
3. AI and the Labour Market
AI has the ability to fully or partially automate many tasks in the job market. The International Monetary Fund estimated that AI will impact nearly 40% of global employment, with that figure reaching up to 60% in advanced economies like Hong Kong.[2] Job categories at high risk of being disrupted or even replaced by AI include data entry and administrative jobs, customer service, manufacturing and assembly lines, retail checkouts, analytical roles, graphic design, translation, and commercial photography.[3] Others have suggested that vehicle drivers and jobs that involve content creation, such as social media marketers, computer programmers, and technical writers, are also particularly vulnerable.[4]
While technology has upended labour markets before, what’s distinct about this AI wave is its likely impact on high-skilled, high-income jobs, compared to earlier waves of industrial automation that mostly affected lower-wage occupations.[5] Optimistically speaking, AI will substantially enhance the productivity of high-income workers, allowing these individuals to direct their time to more value-adding work that could only be done by humans. However, a more sobering perspective suggests that many high-income professionals will be displaced from their jobs. Without appropriate training, these individuals may find it even harder than low-income workers to adapt to the AI era, as AI may now be able to perform their once-valuable skills at a much lower cost.
At the same time, AI can create entire job categories, like how the Internet revolution brought about new ones like blogging and live-streaming. Examples of novel professions include prompt engineers, AI experience designers, and AI trainers. In any case, AI will profoundly impact global and local labour markets, replacing and creating many jobs in a complex interplay.
4. Responsibility and Safety of AI
AI can automate many tasks currently performed by humans, and is expected to take charge of even more functions without human intervention. Examples include verifying identities, managing an investment fund, driving a car, or even making medical diagnoses. Any missteps could result in disastrous consequences, from investment losses to traffic accidents involving casualties.[6] AI systems, like other information technologies, are subject to hacking, viruses, and software bugs. AI may also suffer from bias and discrimination inherited from the data it was trained on. These issues, which could lead to unintended and costly results, make clear that AI poses safety issues to society. Moreover, bad actors may take advantage of AI; for example, a company was scammed HK$200 million through a video meeting produced by deepfake technologies.[7] Governments must therefore educate the public about the power and risks of AI, and devise regulations and guidelines on the responsibilities and ethical considerations of AI usage.
Since AI technologies and applications are advancing rapidly, laws and regulations are often playing catch-up, like in the autonomous driving industry. Regulators must strike a balance between providing a legal basis for the latest AI technologies and clearly defining their responsibilities and boundaries.
5. Policy Recommendations
To prepare for the AI era, Hong Kong could consider the following recommendations:
- AI Education: AI literacy, competencies, and its responsible uses should be woven into education at all levels. Citizens should understand the benefits, risks, and limitations of AI from a young age. Primary and secondary schools can incorporate AI into formal curriculums. Authorities and educators can set up a council dedicated to boosting AI literacy through public seminars, workshops, television and online videos, and other activities. These initiatives will allow the general public to use AI more effectively and responsibly and better prepare the workforce for the changing dynamics in the labour market.
- Help Organizations Get On Board with AI: Many organizations, especially small and medium enterprises and non-government organizations, are eager to apply AI to improve their productivity, but do not have the resources or expertise to do so. The government can provide assistance, such as training workshops and funding focused on AI, to help these organizations.
- Support Frontier AI Research: With a wide range of applications, AI is critical to Hong Kong’s future economic success. To maintain global competitiveness, the government must support cutting-edge AI research and development across universities and startups. Increased funding for both fundamental research and practical applications will not only accelerate Hong Kong’s AI capabilities but also create high-value job opportunities.
- Attract Non-local Investments on AI: Hong Kong should attract non-local companies, including both mainland China and overseas companies, to develop and apply advanced AI technologies in the city. Various incentives and subsidies can be provided to non-local companies to establish offices and businesses in Hong Kong. At the same time, authorities should facilitate non-local investments into homegrown AI companies to bring in expertise, resources and collaboration opportunities, fostering AI’s growth in the city.
- Regulations and Guidelines on AI: Given the ethical, legal, and safety challenges associated with AI, the government should continuously review and update existing AI and data-related laws in Hong Kong. New regulations or amendments should be introduced as needed in response to the rapid advancements in AI. These laws should also consider frameworks from other advanced economies and mainland China. More industry-specific regulations and guidelines, such as those published by the Hong Kong Monetary Authority[8] on AI usage, can help different sectors embrace AI responsibly.
[1] https://www.sensetime.com/
[2] https://www.imf.org/en/Blogs/Articles/2024/01/14/ai-will-transform-the-global-economy-lets-make-sure-it-benefits-humanity
[3] https://www.forbes.com/sites/bernardmarr/2024/06/17/what-jobs-will-ai-replace-first/
[4] https://www.techtarget.com/whatis/feature/Will-AI-replace-jobs-9-job-types-that-might-be-affected
[5] https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/the-economic-potential-of-generative-AI-the-next-productivity-frontier
[6] https://www.bbc.com/news/technology-67133409
[7] https://www.scmp.com/news/hong-kong/law-and-crime/article/3250851/everyone-looked-real-multinational-firms-hong-kong-office-loses-hk200-million-after-scammers-stage
[8] https://www.hkma.gov.hk/media/eng/doc/key-information/guidelines-and-circular/2024/20240819e1.pdf
