Hong Kong leader outlines plans to build Northern Metropolis and expand AI, education and biotech sectors

Hong Kong Chief Executive John Lee unveiled a package of initiatives Wednesday aimed at speeding development of a Northern Metropolis near the Shenzhen border and nurturing industries from artificial intelligence and data science to higher education and pharmaceuticals as the city searches for new economic growth engines.

In his annual policy address, Lee said he would lead a committee to push the Northern Metropolis — a project first proposed in 2021 — that envisions building a new information-technology hub and a university town. The development is designed to provide about 650,000 jobs and house some 2.5 million people, Lee said, and the government will introduce financing schemes and legislation to simplify procedures for setting up industrial park companies and to speed building-plan approvals.

Lee singled out development of artificial intelligence and data science as priorities. Officials said the government will put a 10-hectare (24.7-acre) site up for tender this year for a data-facility cluster and plans to launch an AI research-and-development institute next year. Other sectors targeted for growth include pharmaceutical and medical products and new energy technologies.

The administration also set out measures to bolster Hong Kong as a higher-education hub. Lee announced plans to raise enrollment ceilings for international students at government-funded universities starting next academic year and to earmark new sites for student hostels. The University Grants Committee will allocate HK$40 million (about US$5 million) to support eight publicly funded universities in promoting recruitment of teachers and students outside Hong Kong.

Lee framed the measures as aimed at improving livelihoods through economic growth. “My ultimate objective in governance is to improve people’s livelihood,” he said in the address. “The well-being of our people is intertwined with the health of our economy. Economic growth is the foundation of improving livelihood.”

Hong Kong’s economy has begun showing signs of recovery. The government estimated gross domestic product grew 3.1% in the second quarter of 2025, driven by strong exports and improved domestic demand. For the first half of the year Hong Kong led the world in funds raised through initial public offerings as a wave of Chinese companies sought listings amid U.S.-China tensions.

Despite those gains, sectors reliant on tourism and local consumption continue to struggle. Retail sales between January and July fell, some restaurants have closed and empty storefronts remain in various districts. Officials and analysts have pointed to reduced tourist spending and a trend of residents spending weekends across the border in mainland China where some goods and services can be cheaper or more varied. The city’s latest reported unemployment rate was 3.7%.

Lee, a former security chief, has overseen policies aligning the city more closely with Beijing, including the enactment of a national security law last year. Officials have argued those measures were necessary to restore stability after large anti-government protests in 2019. As part of cultural and patriotic education efforts, Lee said the city would work with Shenzhen to promote a “new red educational route” intended to help Hong Kong residents and visitors better understand the city’s wartime history; Beijing held a military parade earlier this month marking the 80th anniversary of the end of World War II.

The Northern Metropolis project and the broader push to diversify Hong Kong’s economy reflect a broader effort by Lee’s administration to distinguish the city from neighboring mainland megacities and regional competitors while seeking fresh sources of employment and revenue. Government officials said the legislative and financial tools unveiled in the address are intended to speed implementation, though detailed timetables and cost estimates for the full Northern Metropolis plan were not provided in the speech.