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【Press Release】

December 11, 2025

 

Cross-Border Data Flow & Computing Infrastructure Key to

Hong Kong's AI Competitiveness

 

POD Research Institute released its latest research report, " Can Hong Kong Be AI Leader in Asia? A Comparative Analysis with the Region’s Other Advanced AI Economies" on December 11, offering an in-depth analysis of Hong Kong's competitiveness in artificial intelligence (AI) development. The report indicates that while Hong Kong ranks first globally in technology application adoption and societal adaptability, and its business agility has rebounded to 7th place worldwide, it faces significant shortcomings in cross-border data flow, legal and regulatory coordination, and computing power infrastructure. These gaps hinder their potential to become a leading AI hub in Asia. The research emphasizes that Hong Kong must break free from existing governance paradigms, actively establish internationally aligned data flow standards, and invest in a national-level supercomputing center to avoid being sidelined in a potential "winner-takes-all" competition against rivals like Singapore.

The study employs the International Monetary Fund's (IMF) "AI Preparedness Index (AIPI)" as its framework, integrates data from the IMD World Digital Competitiveness Rankings (2021-2025), and incorporates extensive stakeholder consultations to systematically examine the key factors influencing Hong Kong's AI development.

 

Key Findings: Strengths Coexist with Bottlenecks

Principal Researcher Mr. Martin Cheung noted that Hong Kong's societal adaptability to high technology climbed to global first in 2025. High smart device penetration (96.3%) and widespread e-payment usage provide fertile ground for AI implementation. Concurrently, Hong Kong's "business agility" rose to 7th globally in 2025, reflecting the positive impact of recent government AI and digital governance initiatives—such as the establishment of a data policy office, an AI ethics framework, and funding schemes—on boosting corporate willingness to adopt AI.

However, several structural weaknesses are constraining the translation of these advantages into industry leadership:

1.     Weak IT Integration: Hong Kong ranks 29th in "IT integration," with particularly low scores in government cybersecurity capability (44th) and privacy law protection (49th), dragging down overall AI momentum.

2.     Lagging AI Laws and Institutions: Hong Kong currently lacks dedicated AI legislation, suffers from ambiguous copyright attribution rules, and has no clear framework for cross-border data flows, creating compliance uncertainty for businesses.

3.     Insufficient Talent Supply: Despite over 70% of companies allowing employees to use AI, the local AI talent pipeline remains chronically underdeveloped, with relatively insufficient investment in education and R&D, posing a medium- to long-term bottleneck.

4.     Lack of National-Level Computing Infrastructure: Hong Kong is the only economy among the top 20 in the IMF AI Index without a national-level supercomputing center. Enterprises rely on cross-border cloud computing power, subject to compliance and geopolitical risks.

 

Hong Kong vs. Singapore: A Six-Year Gap and Catch-Up Challenges

The comparative analysis shows that Singapore, through over a decade of forward-looking deployment and coherent national-level AI strategies (e.g., the Smart Nation initiative, National AI Strategy, AI Verify framework), has built a stable and leading AI ecosystem. Hong Kong's overall AI development progress lags behind Singapore by approximately six years, with significant gaps particularly evident in cross-sector governance, data architecture, and computing infrastructure.

 

Necessary Conditions & Policy Recommendations to Become Asia's AI Leader

The report argues that for Hong Kong to break through in the global AI race, it must simultaneously address the twin structural challenges of inadequate infrastructure and institutional uncertainty. It offers five key policy recommendations:

1.     Establish a Hong Kong National-Level AI Supercomputing Center: Government-led investment to provide affordable, high-performance computing power as a public good, lowering entry barriers for SMEs and research institutions, and strengthening computing sovereignty and data security.

2.     Develop a "Hong Kong Version of AI Verify": Drawing on Singapore's experience, launch a localized, cost-effective national-level AI certification and testing regime, offering one-stop compliance guidance to reduce confusion and costs for businesses facing multiple regulatory demands.

3.     Formulate a Cross-Border Data Governance Framework: Establish internationally aligned standards for cross-border data transfer, moving away from the current fragmented, siloed approach among departments, and boosting foreign investors' confidence in Hong Kong's data security and regulatory predictability.

4.     Promote "Computing Interconnection + Data Collaboration" with the Greater Bay Area (GBA): Leverage the GBA's rich linguistic, industrial, and behavioral data to enhance AI model generalization capabilities, forming a cross-cultural AI R&D cluster.

5.     Deepen "AI x Finance" and "AI x Professional Services" Applications: Combine supercomputing power and certification frameworks to develop AI-powered financial regulatory sandboxes, LegalTech, and tax tech platforms, consolidating Hong Kong's status as an international financial center. 

 

Principal Researcher Martin Cheung concluded that global competition in the AI era increasingly hinges on the ability of nations and regions to build long-term, autonomous capabilities. If Hong Kong fails to achieve simultaneous breakthroughs in local computing infrastructure, data governance, and AI system mutual recognition frameworks, it will struggle to convert its current application strengths into lasting industrial competitiveness, potentially repeating historical missed opportunities in key industries. The report calls on the SAR government to assume a more proactive and strategically coordinated role in driving institutional innovation and infrastructure investment, seizing the critical time window to avoid falling behind in a "winner-takes-all" competition.

 

For the full research report, please visit: https://podresearch.hk/uploads/file/202512/a7ecbfd125dd3da49efef5e382fbd427.pdf

 

For inquiries, please contact POD Research Institute at 2509 3131.