Paul Chan warns of risks from geopolitical uncertainty

Financial Secretary Paul Chan warned on Tuesday that geopolitical uncertainties pose downside risks for the financial market and urged a cautious approach to address them. At a plenary session of the Asia-Pacific Economic Cooperation finance ministers’ meeting, he pointed out that while the global economy has shown resilience, growth remains uneven and under pressure.

"Asia continues to outpace global growth, driven by technology-related trade and investment," Chan explained. "In Hong Kong, merchandise exports have risen over 40 percent in value over the first eight months of this year, and approximately 70 percent of our IPO proceeds have been tied to AI-related companies." However, Chan cautioned that focusing solely on AI-related assets could result in amplified market corrections across sectors and regions, while geopolitical disruptions could limit fiscal space.

"Addressing these risks demands fiscal prudence, close financial oversight, and enhanced cooperation in information sharing, risk monitoring, and emergency response," he said. Chan stressed that sustained investment is essential to convert technological advancements into productivity gains, broader AI adoption, as well as green transition and other innovations.

He also emphasized the importance of open channels for trade and investment to facilitate productive capital usage and cross-border technological adoption. At a separate luncheon with the Apec Business Advisory Council, Chan noted that the key to financing digital infrastructure is making it investable and accessible to underserved communities.

He stressed the need for proactive government engagement to reduce uncertainty and delays for investors. Chan also advocated for adjusting financing approaches to prevent unnecessary subsidies and excessive tariffs that burden consumers.