JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Hong Kong Special Administrative Region Annual Report for 2023
Date: 2024-06-13
Institutions: European Commission, European External Action Service
Subjects: Hong Kong, activity report, bilateral relations, economic cooperation, economic development, economic situation, fundamental rights, political situation, regional integration, social development

EN 

  EN 

   EUROPEAN COMMISSION HIGH REPRESENTATIVE OF THE UNION FOR FOREIGN AFFAIRS AND SECURITY POLICY Brussels, 13.6.2024  JOIN(2024) 20 final  JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Hong Kong Special Administrative Region  Annual Report for 2023  
 
 
JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

HONG KONG SPECIAL ADMINISTRATIVE REGION: 

ANNUAL REPORT FOR 2023 

Summary 

Since Hong Kong’s handover to the People’s Republic of China (PRC) in 1997, the European 
Union (EU) and its Member States have closely followed political and economic developments 
in the Hong Kong Special Administrative Region (SAR). 

In line with the commitment given to the European Parliament in 1997, the Commission and 
the High Representative/Vice-President issue an annual report on developments in Hong Kong. 
Over the years, this has included a particular focus on the implementation of the ‘one country, 
two systems’ principle and on Hong Kong’s autonomy as stated in the Basic Law. 

This is the 26th report, covering 2023. The year was marked by: (i) an electoral overhaul of the 
District Council and the first election after its implementation, leading to a further decrease of 
political pluralism in Hong Kong; (ii) an ongoing focus on national security in the third year 
after the imposition of the National Security Law (NSL); and (iii) a push for normalisation of 
economic relations after the end of COVID-19 related travel restrictions. The erosion of Hong 
Kong’s autonomy and fundamental freedoms and rights, meant to be protected until at least 
2047,  continued.  2023  also  saw  court  rulings  supporting  the  advancement  of  the  rights  of 
LGBTI+ people. 

Trials brought against pro-democracy activists, advocates and politicians under the NSL and 
related legislation continued, in some cases with considerable delays. Hearings for the national 
security trial against the 47 pro-democracy activists who had participated in a primary election 
started in February 2023 and closed in early December 2023. A verdict is expected by spring 
2024. The Stand News trial with charges under the colonial era sedition law against two former 
chief editors of the disbanded independent media outlet was interrupted in November 2023 and 
postponed  to  spring  2024.  The  national  security  trial  against  media  entrepreneur  and  pro-
democracy advocate Jimmy Lai started on 18 December 2023. The hearing schedule for the 
trial against the Hong Kong Alliance in Support of Patriotic Democratic Movements in China, 
including prominent activist Chow Hang-tung, had not been announced by the end of 2023. 
Many  defendants  have  been  held  in  custody  since  March  2021,  in  some  cases  in  solitary 
confinement. 

In  an  extra-territorial  application  of  the  NSL,  Hong  Kong  authorities  twice  issued  arrest 
warrants  against Hong  Kong pro-democracy activists in  exile. In Hong  Kong, relatives  and 
other contacts of wanted activists were subsequently interrogated by police. 

Despite internet freedom being generally upheld in Hong Kong, the authorities continued to 
block online content considered sensitive, such as the website of Hong Kong Watch, a London-
based advocacy non-governmental organisation. 

These developments continue to undermine confidence in the rule of law in Hong Kong. 

1 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
The EU has publicly and in personal exchanges raised concerns about developments in Hong 
Kong. 

The High Representative/ Vice-President issued the following post on X (formerly Twitter) 
relating to Hong Kong: 

✓  5 July – Post related to the arrest warrant on eight activists1 

The EU Spokesperson issued statements on Hong Kong covering the following issues: 

✓  6 July – Statement by the Spokesperson on the changes to the District Council electoral system2 

✓  18 December – Statement by the Spokesperson on the start of the national security trial against 

Jimmy Lai3 

The EU Spokesperson’s posts on X (formerly Twitter) on Hong Kong covered the following 
issues: 

✓  11 March – Post on the sentencing of 4 June vigil organisers for failing to comply with a notice 

from the national security police4 

✓  11 December – Post on the District Council election5 

The  EU  raised  concerns  about  the  deterioration  of  the  freedom  of  peaceful  assembly  and 
association  and  freedom  of  expression  in  Hong  Kong  at  the  38th  session  of  the  EU-China 
Human Rights Dialogue on 17 February in Brussels6. 

The European Parliament adopted a resolution on the deterioration of fundamental freedoms 
in Hong Kong, notably the case of Jimmy Lai, on 15 June7. The resolution expressed ‘concern 
about the extra-territorial application’ of the NSL. 

EU leaders raised concerns about developments in Hong Kong during the EU-China Summit 
on 7 December in Beijing. 

The Hong Kong economy grew by 3.2% in 2023. This follows 4 years of mostly negative 
growth (-1.7% in 2019; -6.5% in 2020; -3.5% in 2022). However, even with growth in 2023 
factored  in,  Hong  Kong’s  economy  remained  below  the  level  of  2018  when  adjusted  for 
inflation. In 2023, inflation remained under control, standing at 2.1%. 

1 Post by the High Representative/ Vice-President on the arrest warrant on eight activists, 5 July, available at: 
https://twitter.com/JosepBorrellF/status/1676663898886361088 
2 Statement by the Spokesperson on the changes to the District Council electoral system, 6 July, available at: 
https://www.eeas.europa.eu/eeas/hong-kong-statement-spokesperson-changes-district-council-electoral-system_en 
3 Statement by the Spokesperson on the start of the national security trial against Jimmy Lai, 18 December, available at: 
https://www.eeas.europa.eu/eeas/hong-kong-statement-spokesperson-start-national-security-trial-against-jimmy-lai_en 
4 Post on the sentencing of 4 June vigil organisers for failing to comply with a notice from the national security police, 
available at: https://twitter.com/NabilaEUspox/status/1634573843116220419 
5 Post on the District Council election, available at: 
https://twitter.com/nabilaEUspox/status/1734134836573479177?s=48&t=DhTwM2QUg9VBLA9NCBIQXw 
6 https://www.eeas.europa.eu/node/425784_fr 
7 https://www.europarl.europa.eu/doceo/document/TA-9-2023-0242_EN.html 

2 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
On employment, the recovery to pre-COVID-19 levels was confirmed – with unemployment 
in the range of 3% during the year. In 2022 (latest available data), the SAR was the seventh 
largest trading economy in the world (2022, HK statistics and WTO data)8. The EU was 
Hong Kong’s third largest trading partner in the first 10 months of 2023, after mainland 
China and Taiwan. 

Development of the COVID-19 situation 

Authorities lifted the last  COVID-19 related travel  restrictions in  February 2023. The strict 
measures  taken  in  response  to  the  COVID-19  outbreak  in  2020  –  including  3  weeks  of 
quarantine for incoming travellers – had de facto isolated Hong Kong from the rest of the world. 

I. 

Political and social developments 

District Council ordinary election 

The District Council election on 10 December saw a historically low turnout rate of 27.54% 
for the directly elected constituency, as compared to 71.23% in 2019. Following the imposition 
of the National Security Law in 2020 and the overhaul of the electoral procedures for the Chief 
Executive and the Legislative Council elections in 2021, the District Council election process 
was also  revamped, implementing the political doctrine of ‘patriots ruling Hong Kong’. No 
pro-democracy  candidate  qualified  to  stand  in  the  election  due  to  a  redesigned  nomination 
process. 

On  2 May,  the  Chief  Executive  announced  a  plan  to  overhaul  the  electoral  system  for  the 
District  Council  for  the  new  term  starting  on  1 January  2024.  On  31 May,  the  Hong  Kong 
government tabled the District Council (Amendment) Bill 2023 to the Legislative Council for 
the first reading. On 6 July, the Legislative Council, which since its 2021 electoral overhaul 
has no representatives from the pro-democracy camp, passed the bill unanimously. 

Under the new framework, the total number of seats in the District Council was reduced from 
479 to 470, with directly elected seats down from 452 to 88. Members of Area Committees, 
District  Fight  Crime  Committees  and  District  Fire  Safety  Committees  –  all  government 
appointees – vote for another 176 seats; the government itself appoints the remaining 179 seats. 
27 ex officio seats continue to remain reserved for indigenous representatives. 

Under the amended law, candidates for the elected seats need to secure three nominations from 
each of the local district committees and pass through a vetting process involving the National 
Security  Committee,  a  body  beyond  judicial  review  established  by  the  NSL  in  2020.  Civil 
servants, instead of elected district councillors, assume the roles of chairperson in each of the 
18 District Councils, following the principle of ‘executive-led’ government. On 12 October, 
the  government  announced  the  composition  of  the  District  Councils  Eligibility  Review 
Committee, a new vetting body created by the District Councils (Amendment) Bill 2023. 

During the nomination period for the election, from 17 October to 30 October, politicians from 
both the pro-Beijing and the pro-democracy camps highlighted difficulties in securing enough 
nominations. Ultimately, no candidate from the Democratic Party met the criteria to stand in 

8 https://www.censtatd.gov.hk/en/web_table.html?id=81 (adding up EU MS). 

3 

 
 
 
 
 
 
 
 
 
 
 
 
 
the  election.  The  pro-democracy  opposition  has  now  de  facto  been  excluded  from  both  the 
Legislative Council and the District Council. 

On 9 November, the Vetting Committee confirmed the nomination of 399 candidates, stating 
that ‘all candidates meet the legal requirements and conditions for upholding the Basic Law 
and  bearing  allegiance’  to  the  Special  Administrative  Region  of  the  People’s  Republic  of 
China. On 1 December,  in  a judicial review case, the High Court ruled that the nomination 
requirement did not constitute an excessive restriction on the constitutional right to stand for 
election. 

On Election Day on 10 December, the Electoral Affairs Commission announced the extension 
of the voting period by one and a half hours, due to a technical problem in the electronic poll 
register system. Law enforcement officials arrested six people for allegedly inciting others to 
cast blank votes; at least one was charged and granted bail. 

While  the  turnout  rate  for  the  directly  elected  seats  (Geographical  Constituency)  was  at  a 
historic low, turnout  for  the indirectly elected seats  (District  Committees constituency) was 
96.92%, i.e. around 2 454 eligible votes. On 12 December, the government announced the 179 
appointed members of the new District Council. 

National security and patriotism 

National security remained a top priority for the Hong Kong authorities throughout 2023. The 
government continued its efforts to prepare legislation as stipulated by Article 23 of the Basic 
Law9, adding to the four national security offences under the National Security Law10. On 17 
January, the Chief Executive said that the new law would target espionage activities, ‘disguised 
organisations’  and  cover  new  media  and  technologies.  On  25  October,  the  Chief  Executive 
announced in his annual Policy Address that the government would complete the Article 23 
legislation process within 2024. 

The Chief Executive continued to call for ‘staying ‘vigilant’ against ‘soft resistance’, notably 
in his speech delivered on 1 July at the reception in celebration of the 26th anniversary of the 
establishment  of  the  Hong  Kong  Special  Administrative  Region.  The  concept  of  ‘soft 
resistance’ has not been defined or explained further, adding to widespread caution and self-
censorship within Hong Kong society. 

The  Hong  Kong  government  also  increased  its  emphasis  on  patriotic  education.  After 
quarantine-free travel between Hong Kong and the mainland resumed, a first batch of around 
200 secondary school students travelled to the mainland on 3 April, fulfilling a requirement of 
the compulsory Citizenship and Social Development curriculum that has replaced the subject 
of Liberal Studies since 2021. 

9 Article 23 of the Hong Kong Basic Law requires the Hong Kong Special Administrative Region to enact laws on its own to 
prohibit any act of treason, secession, sedition, subversion against the Central People’s Government, or theft of state secrets, 
to prohibit foreign political organisations or bodies from conducting political activities in the Region, and to prohibit political 
organisations or bodies of the Region from establishing ties with foreign political organisations or bodies. The last attempt at 
drafting Art. 23 legislation in 2003 triggered widespread public protests, leading to the halt of the legislative project. 
10 The Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative 
Region outlaws secession, subversion, terrorist activities and collusion with a foreign country or with external elements to 
endanger national security. 

4 

 
 
 
 
 
 
 
 
 
 
 
 
On 24 October, the Standing Committee of the National People’s Congress in Beijing adopted 
the  Patriotic  Education  Law.  In  his  annual  Policy  Address,  the  Chief  Executive  pledged  to 
promote patriotic education in Hong Kong. Within a month, on 23 November, the Education 
Bureau unveiled a new Humanities Curriculum Framework for primary schools. The guiding 
principle  for  developing  this  new  subject,  due  to  be  implemented  in  the  academic  year 
2024/2025, was to ‘align with the national direction of patriotic education’. 

On  15 November,  the  Legislative  Council  passed  the  Regional  Flag  and  Regional  Emblem 
(Amendment) Bill 2023, intended to ‘better preserve the dignity’ of the two official symbols. 
The bill listed inappropriate use of the two symbols and mandated the Secretary for Education 
to include the teaching of the two symbols in primary and secondary education. 

The space for pluralistic voices in Hong Kong shrank further in 2023. The Democratic Party 
–  once  the  largest  pro-democracy  political  group  –  failed  to  organise  fundraising  events  in 
February, March and September as at least five venue providers cancelled at the last minute. 
On 14 November, the government rejected a bid from the party to set up a stall at the annual 
Lunar New Year Market. The Civic Party, a political group founded in 2006, disbanded on 
27 May. The group once had the second highest number of pro-democracy lawmakers in the 
Legislative Council. The decision came after no members took up positions in its Executive 
Committee. 

Activists and politicians continued to leave Hong Kong. On 3 December, activist Agnes Chow, 
who had been arrested in August 2020 and was on bail and studying in Canada, announced that 
she would not  return to Hong Kong to  report to the police. On 27 December, activist Tony 
Chung,  who  tried  to  seek  political  asylum  at  the  US  consulate  in  Hong  Kong  in  2020, 
announced  that  he  had  arrived  in  the  UK  and  planned  to  seek  asylum  there.  Chung  was 
convicted of secession under the National Security Law and received a sentence of 43 months. 

On 19 October, the High Court ruled against the judicial review case over the forced retirement 
of a civil servant. The civil servant had not submitted a signed declaration pledging allegiance 
to the Special Administrative Region on time. 

On  13 December,  the  government  launched  the  consultation  process  to  update  the  Civil 
Service Code that applies to over 180 000 government employees. The updated draft not only 
reminded government employees to be cautious in expressing their opinions about government 
policies, but also expanded the scope of loyalty for civil servants to include the Central People’s 
Government of the People’s Republic of China in Beijing. The government also required all 
civil servants to attend a national security training course. 

Implementation of national security legislation 

30 June  marked  the  third  anniversary  of  the  imposition  of  the  National  Security  Law. 
According to the Security Bureau, 290 people have been arrested under the NSL and related 
clauses as of 29 December 2023, with a conviction rate of 100%. In March, the Hong Kong 
government allocated an extra HK$5 billion (EUR 590 million) to the ‘special fund’ dedicated 
to safeguarding national security. 

In 2023, the Hong Kong authorities for the first time issued a wanted list targeting individuals 
residing overseas, including foreign nationals, implementing the NSL extra-territorially. On 
3 July, the national security police placed a HK$1 million (EUR 118 000) bounty each on eight 

5 

 
 
 
 
 
 
 
 
 
 
 
self-exiled  activists  over  alleged  collusion  with  foreign  countries  or  external  elements.  The 
following day, the Chief Executive stated that the eight would be ‘pursued for life’. 

The bounty list created a ripple effect in Hong Kong. On 5 July, the national security police 
arrested  four  members  of  the  now-defunct  political  group  Demosisto  for  raising  funds  to 
support ‘anti-China’ activities overseas. On 6 July, the Law Society and the Bar Association 
stated that they had launched investigations against two of their overseas members. So far, the 
police has taken in at least 26 family members and friends of the wanted eight for questioning. 

On  14 December,  the  police  published  a  second  wanted  list  of  five  self-exiled  activists, 
accusing  them  of  ‘incitement  to  secession,  incitement  to  subversion  and  collusion  with  a 
foreign  country  or  with  external  elements’,  with  a  bounty  of  HK$1  million  (EUR 118 000) 
placed on each of them. As of 31 December, no person on the bounty lists has been extradited 
to Hong Kong. 

The Hong Kong authorities also extended the implementation of the NSL to other areas. For 
example, the government added national security clauses to land auctions and will require free-
to-air TV and radio stations to air programmes about the NSL for at least 30 minutes per week 
once their licences are up for a midterm review. The government also launched new ways for 
library users to report titles deemed inappropriate or endangering national security. 

On 15 December, the government for the first time amended the implementation guidelines for 
Article 43  of  the  NSL,  which  regulates  the  applicable  law  enforcement  measures.  The 
adjustment granted the Secretary for Security the authority to freeze the assets of suspects and 
defendants  involved  in  national  security  cases  until  all  their  legal  proceedings  had  ended, 
removing an earlier limit that capped the period at 2 years unless the High Court authorised an 
extension. 

Judicial  proceedings  of  the  cases  charged  under  the  NSL  and  the  colonial  era  sedition  law 
continued, albeit with considerable delays. Many of the defendants have been held in custody 
since March 2021, in some cases in repeated solitary confinement. 

In the mass trial of the 47 pro-democracy lawmakers and activists who participated in a 
primary election in 2020, the prosecutor accused the defendants of ‘conspiracy to subversion’ 
under  the  NSL.  The  maximum  penalty  is  life  imprisonment.  This  is  the  NSL  trial  with  the 
highest number of defendants. A total of 16 of the defendants pleaded not guilty. As the court 
denied bail to most of the defendants in March 2021, many of them have since remained in 
custody. The trial started on 6 February and lasted for 118 days, exceeding the 90 days that had 
originally been scheduled. The closing submission finished on 4 December. It was announced 
that the verdict would be issued within 3 to 4 months from that date. 

The  NSL  trial  against  the  Hong  Kong  Alliance  in  Support  of  Patriotic  Democratic 
Movements of China (the Alliance) entered the trial stage. However, as of 31 December 2023, 
the High Court has not announced a date for the beginning of court hearings. The civil society 
group  had  organised  the  annual  candlelight  vigil  to  commemorate  the  1989  Tiananmen 
crackdown.  The  prosecutor  accused  the  Alliance  and  its  core  members  of  incitement  to 
subversion. The maximum penalty is life imprisonment. 

In  an  opinion  dated  1 May,  the  United  Nations  Working  Group  on  Arbitrary  Detention 
qualified the arrest and detention of Chow Hang-tung, one of the core members of the Alliance, 

6 

 
 
 
 
 
 
 
 
 
 
 
as  ‘arbitrary’11.  On  12 December,  the  German  and  the  French  Foreign  Ministries  awarded 
Chow  with  the  ‘Franco-German  Prize  for  Human  Rights  and  the  Rule  of  Law’.  On 
21 December, Chow Hang-tung applied for bail for the 16th time and was rejected. She has 
repeatedly been held in prolonged solitary confinement. 

The  NSL  and  sedition  trial  brought  against  media  entrepreneur  and  pro-democracy 
activist Jimmy Lai started on 18 December. Alongside Lai, six former journalists of the now-
defunct newspaper Apple Daily, who pleaded guilty in November 2022, and three Apple Daily-
related companies were charged. The prosecution accused Lai and the others of two charges 
under  the  NSL  (‘conspiracy  to  commit  collusion  with  a  foreign  country  or  with  external 
elements to endanger national security’) and one charge under the colonial era sedition law 
(‘conspiracy to print, publish, sell, offer for sale, distribute, display and/or reproduce seditious 
publications’). The maximum penalty under the NSL is life imprisonment. The trial, which was 
expected  to  last  for  83  days,  was  rescheduled  twice  –  once  from  1 December  2022  to 
25 September 2023, and then ultimately to 18 December 2023. 

In 2023, Jimmy Lai filed three legal reviews concerning the NSL trial, losing all of them. Lai 
filed two legal actions from February to April to assert representation in the NSL case by his 
UK-based  lawyer  and  to  ask  for  the  rejection  of  the  latter’s  work  visa  application  to  be 
retracted. On 19 May, the High Court dismissed both challenges. On 29 May, Lai’s legal action 
to end his NSL trial on grounds of unfairness, arguing against the lack of a jury and the hand-
picked NSL judges, was dismissed by the High Court. On 19 June, the court blocked Lai’s 
appeal  against  the  search  warrant  relating  to  his  phone.  On 22  December,  the  Court  ruled 
against Lai, whose legal team argued that the prosecutor pressed the sedition charge outside of 
its legal six-month time limit. The case was then adjourned to 2 January 2024. 

26 September marked the 1 000th  day of Jimmy  Lai  being  in  prison. His  case  continued to 
draw international  attention.  In a letter dated 16 May 2023, over 100 publishers, editors-in-
chief  and  senior  editors  from  42  countries  signed  a  joint  statement  organised  by  Reporters 
Without  Borders  to  express  support  for  Lai12.  In  a  petition  dated  1 November,  10  overseas 
Catholic Church leaders called for his release13. 

In the NSL trial of Joseph John, also known as Wong Kin-chung, a Portuguese national and 
UK resident, John was charged with ‘conspiracy to incite secession’. The maximum penalty is 
10 years of imprisonment. 

On 10 August, police arrested 10 people, accusing them of allegedly colluding with the 612 
Humanitarian  Relief  Fund  that  offered  assistance  to  protesters  involved  in  the  2019  anti-
extradition bill movements. The Fund’s secretariat ceased operations in October 2021. 

On 12 October, the United Kingdom Privy Council ruled in relation to a case in the Republic 
of Trinidad and Tobago that sedition offences ‘must include an intention to incite violence or 
disorder’. To take this decision into account, the judge presiding over the sedition trial brought 
against the now-defunct online news outlet Stand News announced that the ruling would be 
handed down only in April 2024. The trial brought against two former journalists of the outlet 

11 https://www.ohchr.org/sites/default/files/documents/issues/detention-wg/opinions/session96/A-HRC-WGAD-2023-30-
AEV.pdf 
12 https://rsf.org/en/more-100-media-leaders-around-world-join-rsf-calling-release-hong-kong-press-freedom-emblem-jimmy 
13https://www.doughtystreet.co.uk/sites/default/files/media/document/Lai%20Petition%20%28Final%29%20%2801.11.2023
%29.pdf 

7 

 
 
 
 
 
 
 
 
 
 
who are charged with publication of seditious articles, had previously been expected to end in 
November 2023. 

On 3 November, the West Kowloon Magistrates’ Courts sentenced a 23-year-old student to 2 
months in jail for ‘inciting secession’ after she had pleaded guilty. Evidence included social 
media  posts  the  student  posted  when  studying  in  Japan,  raising  concerns  about  the  extra-
territorial application of the NSL. She was arrested after she had returned to Hong Kong in 
March to renew her identity card. 

On 17 April, the High Court sentenced activist Joshua Wong to 3 months in jail for disclosing 
a police officer’s personal information online. 

Legal proceedings related to the 2019 protests continued in 2023. On 11 April, the Judiciary 
Administrator informed the Legislative Council that around 90% of over 2 200 cases related to 
the  2019  protests  and  around  80%  of  some  170  national  security  trials  were  concluded  by 
January 2023. 6 000 people, mostly young people, arrested during the 2019 protests but not yet 
charged, remain in a state of uncertainty about their future. 

Against the background of these legal proceedings, Hong Kong’s ranking in the Rule of Law 
Index fell for the third consecutive year. In the league table, as compiled by the World Justice 
Project and published on 25 October, Hong Kong dropped from 16th in 2020 to the 23rd place 
among 142 regions14. 

Hong Kong’s judiciary in 2023 continued to adjust its legal practice to the NSL, which prevails 
over  the  common  law  system  on  matters  considered  relevant  to  national  security.  In  a 
judgement handed down on 22 August, the Court of Final Appeal ruled that pleading guilty in 
serious national security cases could no longer guarantee a one-third reduction of the sentence, 
as used to be the practice. Instead, the penalty  'could not be below the minimum set by the 
NSL. 

On 9 June, the Court of Appeal ordered the retrial of a case based on doubts over the quality 
of the judicial work. The ruling noted that the Court of First Instance judge who had presided 
over  the  original  trial  had  copied  ‘over  98%’  of  the  plaintiff’s  written  submission  into  his 
judgement. The judiciary told media that the judge, who was one of the three judges who heard 
the first NSL trial in 2021, had received a serious reprimand over his actions from the Chief 
Justice. 

On 10 May, the Legislative Council unanimously passed the Legal Practitioners (Amendment) 
Bill  2023,  which  requires  the  Chief  Executive’s  approval  for  the  representation  of  foreign 
lawyers in  national  security cases. This  amendment  was  based on  the interpretation handed 
down by the Standing Committee of the National People’s Congress on 30 December 2022. 
On the question of admitting a UK-based lawyer in the Jimmy Lai case, on 28 November 2022 
the Chief Executive had for the first time requested from Beijing an interpretation of the NSL. 

On 12 July, the Legislative Council passed the Criminal Procedure (Amendment) Bill 2023 
that provides prosecutors with additional powers to appeal acquittal rulings of the Court of First 
Instance of the High Court, both in NSL cases presided by a panel of three judges and non-
NSL cases presided by a jury. 

14 https://worldjusticeproject.org/rule-of-law-index/global 

8 

 
 
 
 
 
 
 
 
 
 
 
 
 
Hong Kong’s external relations 

Hong  Kong’s  external  relations  in  2023  were  marked  by  efforts  to  diversify  trade  and 
economic links with countries in the Middle East and Southeast Asia. In February, the Chief 
Executive  travelled  to  Saudi  Arabia  and  the  United  Arab  Emirates,  where  he  signed  13 
memoranda  of  understanding.  In  July,  his  delegation  visited  Singapore,  Malaysia  and 
Indonesia, signing 33 memoranda of understanding. Separately, on 4 May Belarus opened a 
Consulate General in Hong Kong. 

Emigration from Hong Kong continued. In 2023, as of 30 September, the UK Home Office 
announced that it had received 30 300 applications for British National (Overseas) visas. The 
United Kingdom has received a total of around 191 000 applications by Hong Kong citizens 
for  the  special  visa  scheme  that  can  pave  the  way  to  citizenship.  Canada  and  Australia 
continued  to  receive  visa  applications  under  bespoke  immigration  schemes  for  Hong  Kong 
residents. 

On 26 January, the US extended the ‘safe haven’ policy for Hong Kong residents by 2 years, 
effectively  allowing  them  to  stay  beyond  the  expiry  of  their  visas.  US  lawmakers  also 
introduced the ‘Hong Kong Economic and Trade Office Certification Act’, the ‘Safeguarding 
Internet Freedom in Hong Kong Act’ and the ‘Hong Kong Sanctions Act’. On 14 December, 
the US Congress passed the 2024 National Defence Authorization Act that listed the People’s 
Republic of China including Hong Kong as a ‘foreign adversary’, on a par with Cuba, Iran, 
North Korea, Russia and Venezuela. 

Finland granted refugee status to a Hongkonger for the first time in 2022. 

COVID-19 pandemic restrictions lifted 

On  8 January,  the  government  resumed  the  operation  of  four  border  checkpoints  for  the 
mainland and Macao, with a daily quota of 50 000. On the same day, the ‘LeaveHomeSafe’ 
system used to track the footprint of users ceased to operate. On 6 February, the government 
reopened  all  checkpoints,  scrapping  the  daily  quota  and  COVID  testing  requirements.  On 
1 March, the government lifted the obligation to wear masks. 

Rights, freedoms and equal opportunities 

On  15  and  16 February,  the  United  Nations  Committee  on  Economic,  Social  and  Cultural 
Rights  considered  the  fourth  periodic  report  of  Hong  Kong  on  the  implementation  of  the 
International Covenant on Economic, Social and Cultural Rights. Subsequently, on 22 March 
the  Committee  published  its  concluding  observations15,  urging  Hong  Kong  to  review  the 
National  Security  Law  to  ‘ensure  the  full  independence  of  the  judiciary  and  to  ensure  that 
national security legislation is not arbitrarily used to interfere with it’. The Committee further 
called  on  Hong  Kong  to  ‘immediately  provide  all  due  process  guarantees  to  human  rights 
defenders,  civil  society  actors,  journalists,  lawyers  working  on  human  rights  and  others 
working to defend economic, social and cultural rights’. 

15 
https://tbinternet.ohchr.org/_layouts/15/treatybodyexternal/Download.aspx?symbolno=E%2FC.12%2FCHN%2FCO%2F3&
Lang=en 

9 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
One  of  the  38  contributions  by  civil  society  organisations  submitted  in  preparation  of  the 
review process contained edits by the Hong Kong government’s Constitutional and Mainland 
Affairs Bureau. The Bureau later stated it had merely advised the respective NGO on document 
submission.  None  of  the  20  organisations  that  expressed  support  for  the  NSL  had  filed  a 
submission during the previous review process 9 years before. 

On  12 May,  the  United  Nations  Committee  on  the  Elimination  of  Discrimination  against 
Women  reviewed  the  fourth  periodic  report  of  Hong  Kong  on  the  implementation  of  the 
Convention on the Elimination of All Forms of Discrimination against Women. On 31 May, 
the  Committee  published  its  concluding  observations16.  The  Committee  recommended  that 
Hong  Kong  ‘take  into  consideration  the  paramount  importance  of  the  right  of  peaceful 
assembly  and  refrain  from  over-prioritising  public  order  and  security  concerns  when 
considering restrictions on democratic manifestations such as the annual Labour and Women’s 
Rights and Gender Equality March’. 

On 17 March, the United Nations Working Group on Arbitrary Detention and several Special 
Rapporteurs  on  human  rights  expressed  ‘grave  concern  relating  to  the  arrest,  detention  and 
multiple prosecutions of Jimmy Lai [and the forced closure of the news outlet Apple Daily] 
which appeared to be related to his criticism of the Chinese government and his support for 
democracy’ in Hong Kong’17. On 19 April, the UN Special Rapporteur on the independence of 
judges  and  lawyers  expressed  concern  about  certain  provisions  under  the  National  Security 
Law, the amendments to the Legal Aid Scheme and the amendment to the Legal Practitioners 
Bill18.  On  25 July,  five  UN  Special  Rapporteurs  stated  that  the  proposed  regulations  on 
crowdfunding activities ‘may result in the violation of certain fundamental rights and freedoms 
under  international  law’19.  In  his  2022  Policy  Address,  the  Chief  Executive  had  announced 
plans  to  regulate  online  and  offline  crowdfunding  activities.  Opposition  groups  have  since 
criticised the proposal as a lack of funding could force them to cease operations. 

On 31 August, in relation to the issuing of arrest warrants for activists in exile, four UN Special 
Rapporteurs expressed ‘consternation at the charging of the seven individuals, who appear to 
stand  accused  under  the  NSL  for  activities  that  are  protected  by  international  human  rights 
law’. The Special Rapporteurs also said that the mass trial of the 47 pro-democracy activists 
raised ‘serious due process concerns of its own’20. 

On 9 October, four UN Special Rapporteurs expressed ‘serious concern about the first mass 
trial  of 47 people’ and  ‘the issuance of arrest  warrants  and bounties  against  pro-democracy 
figures from Hong Kong currently in exile overseas’21. 

In 2023, Hong Kong continued to slip in various rights-related global rankings. In the Human 
Freedom Index 2023 compiled by the Cato Institute and the Fraser Institute, Hong Kong fell 
from  34th  place to  46th  place22. In the Democracy Index 2022 published by the Economist 

16 
https://tbinternet.ohchr.org/_layouts/15/treatybodyexternal/Download.aspx?symbolno=E%2FC.12%2FCHN%2FCO%2F3&
Lang=en 
17 https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=27848 
18 https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=27992 
19 https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=28178 
20 https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=28323 
21 https://www.ohchr.org/en/press-releases/2023/10/chinahong-kong-sar-un-experts-concerned-about-ongoing-trials-and-
arrest 
22 https://www.cato.org/sites/cato.org/files/2023-12/human-freedom-index-2023-county-profiles.pdf 

10 

 
 
 
 
 
 
 
 
 
Intelligence  Unit  in  February  2023,  Hong  Kong  fell  by  three  spots  to  88th  place23.  In  the 
Democracy Report published by the Swedish organisation Varieties of Democracy, Hong Kong 
dropped to 139th place from 123rd place in the Liberal Democracy Index24. 

Press freedom also continued to be under pressure. Hong Kong ranked 140th among the 
180 countries and regions in the 2023 World Press Freedom Index compiled by the organisation 
Reporters Without Borders and published on 3 May25. The Press Freedom Survey conducted 
by the Hong Kong Foreign Correspondents’ Club (FCC) and published on 5 July26 found that 
65% of the respondents, who are journalists in Hong Kong, said that they have self-censored 
in their own writing over the previous 18 months. The FCC also said it had developed a set of 
guidelines  for  releasing  statements  on  press  freedom  issues,  which  included  seeking  legal 
advice and contacting government departments ahead of publishing. The Press Freedom Index 
published  on  7 July  by  the  Hong  Kong  Journalists  Association27  said  that  both  the  general 
public and journalists witnessed a decline in press freedom in 2022. 

In  the  course  of  2023,  at  least  two  Hong  Kong-based  journalists  were  reported  missing  in 
mainland China. These were an editor of the political  magazine Exclusive Character,  and a 
reporter covering Chinese defence policy and diplomacy for the South China Morning Post. 

On 15 April, the government barred several media outlets from covering a National Security 
Education  Day  event  attended  by  Xia  Baolong,  the  Director  of  the  Hong  Kong  and  Macao 
Affairs  Office  in  Beijing.  In  July,  the  Office  of  the  Ombudsman  concluded  that  since  the 
decision had been issued by the National Security Committee, it needed to ‘refrain from making 
comments on the matter’. 

On  14 May,  Ming  Pao,  a  local  news  daily,  stopped  carrying  the  comic  strips  of  political 
cartoonist Wong Kei-kwan, who went by the pseudonym ‘Zunzi’, after his work had received 
repeated criticism from government officials. 

On 25 September, a court convicted Ronson Chan, Chairperson of the Hong Kong Journalists 
Association,  of  obstructing  a  plainclothes  police  officer  in  2022.  Chan  was  on  a  reporting 
assignment at the time of the arrest and had insisted on asking the officer to show the relevant 
credentials.  The court sentenced Chan to  5  days  in  jail  but granted him bail while awaiting 
appeal. 

2023  saw  the  disbandment  of  news  outlet  Transit  Jam  in  May  after  attacks  from  Beijing-
controlled media. On 21 April, Wen Wei Po, a local newspaper, criticised the online media’s 
founder for protesting during the Hong Kong visit of Xia Baolong, Director of the Hong Kong 
and Macao Affairs Office, earlier in the month. 

During the year, the Hong Kong government banned the entry of three freelance journalists. 
These were Michiko Kiseki and Yoshiaki Ogawa from Japan, and Matthew Connors from the 
United States. Reportedly this was due to their coverage of the 2019 pro-democracy protests in 
Hong Kong. 

23 https://www.eiu.com/n/campaigns/democracy-index-2022/ 
24 https://www.v-dem.net/publications/democracy-reports/ 
25 https://rsf.org/en/index 
26 https://www.fcchk.org/statement-on-results-of-fccs-press-freedom-survey/ 
27 https://www.hkja.org.hk/en/press-release/hong-kongs-press-freedom-index-hits-new-low-with-most-hesitation-in-
criticising-the-central-government/ 

11 

 
 
 
 
 
 
 
 
 
 
 
 
In contrast, the Court of Final Appeal on 5 June ruled that journalism was a valid reason for 
freelance  producer  Bao  Choy  to  access  the  official  car  registration  database  for  her 
investigative  documentary  on  the  mob  attack  against  pro-democracy  protesters  in  2019.  A 
lower court had convicted her of making false statements to the Transport Department and had 
handed down a fine of HK$6 000 (EUR 705) in April 2021. 

Separately, in an interview published on 29 June, the Chief Executive said that he did not wish 
to proceed with the drafting of fake news legislation as long as the press could ‘exercise self-
discipline’. 

In the name of national security, freedom of expression experienced further strain in 2023. 
On  14 April,  the  Secretary  for  Culture,  Sports  and  Tourism  told  a  lawmaker  that  the  Hong 
Kong Arts  Development  Council  had terminated funding for two projects,  involving a total 
amount of HK$1 million (~EUR 118 000), as the projects were deemed to have violated Hong 
Kong laws, including the NSL. The Council confirmed in July 2021 that it had withdrawn a 
grant of more than HK$700 000 from Ying E Chi Cinema, the distributor of the protest-related 
documentary ‘Inside the Red Brick Wall’. 

The Hong Kong government also attempted to ban the circulation of the popular protest song 
‘Glory to Hong Kong’ through an injunction order. The Court of First Instance rejected the bid 
in July, citing that the ban could have a ‘chilling effect’ on freedom of expression. The Court 
of Appeal first heard the case on 19 December and adjourned hearings to 14 February 2024. 

On 12 September, a student from the mainland was convicted of an ‘attempt to carry out an act 
or acts with seditious intent’ for planning to display a banner bearing the image of the Pillar of 
Shame  –  a  copper  sculpture  by  Danish  sculptor  Jens  Galschiøt  commemorating  the  1989 
Tiananmen crackdown  which authorities had seized in  December 2021.  She received a six-
month jail term. Separately, a Japanese music busker known as ‘Mr Wally’ was denied entry 
into Hong Kong as he had expressed sympathy with the protesters in 2019. 

On  freedom  of  religion  or  belief,  religious  organisations  are  under  increasing  pressure  to 
conform to the government’s new emphasis on patriotism. To mark the Chinese National Day 
on 1 October 2023, the Anglican St John’s Cathedral, for the first time, displayed a Chinese 
national  flag  during  its  morning  service.  The  Hong  Kong  Buddhist  Association  and  the 
Kowloon  Mosque organised flag-raising ceremonies to  mark the occasion on 28 September 
and 17 October respectively. 

On 17 April, the Roman Catholic Bishop of Hong Kong, Stephen Chow, led a delegation of 
senior priests to Beijing for a 5-day visit at the invitation of the Archbishop of Beijing, Joseph 
Li Shan. This visit was the first of its kind in nearly 40 years. Archbishop Li reciprocated with 
a visit to Hong Kong starting from 14 November. 

Freedom  of  assembly  remains  significantly  restricted  since  the  imposition  of  the  National 
Security  Law.  Organisers  cancelled  a  planned  march  to  mark  International  Labour  Day  on 
1 May. The authorities again stifled the 4 June candlelight vigil marking the anniversary of the 
1989  Tiananmen  crackdown.  The  Pride  Parade  was  not  restored  to  its  original  format  of  a 
march despite the end of COVID-related restrictions. 

The pro-Beijing Federation of Hong Kong and Kowloon Labour Unions called off its plans for 
a Labour Day march on 17 April after it had failed to secure police approval. On 26 April, a 

12 

 
 
 
 
 
 
 
 
 
 
 
former leader of the now-disbanded pro-democracy Confederation of Trade Unions in Hong 
Kong called off plans for a march, after being interrogated by the police and citing ‘tremendous 
pressure’ from the authorities. 

In the case of the 4 June commemoration, the annual  candlelight vigil  in the Victoria Park, 
originally  organised  by  the  civil  society  group  Hong  Kong  Alliance  in  Support  of  Patriotic 
Democratic Movements, did not take place for the fourth year in a row. The Catholic Diocese 
of Hong Kong announced it would not organise a memorial mass, following its practice from 
2022.  On  the  evening  of  4 June,  the  police  arrested  11  men  and  12  women  for  suspected 
‘breaches of the peace’ in the vicinity of Victoria Park. The police also intercepted a Polish 
exchange student for lighting candles. 

The Office of the United Nations High Commissioner for Human Rights on 5 June stated that 
it was ‘alarmed by reports of detentions’ in Hong Kong linked to the 4 June anniversary and 
urged  ‘the  release  of  anyone  detained  for  exercising  freedom  of  expression  and  peaceful 
assembly’28. 

The  annual  1 July  protest,  which  last  took  place  legally  in  2019,  did  not  return.  Individual 
demonstration  attempts  were  suppressed  as  the  Hong  Kong  police  deployed  thousands  of 
officers. A total of 16 protesters were searched and interrogated. The civil society group Civil 
Human Rights Front that had organised the protest since 2003 disbanded in August 2021. 

The  first  authorised  protest  after  the  lifting  of  COVID-related  restrictions  took  place  on 
26 March. A group of property owners protested against a land reclamation plan. The police 
required the participants to wear numbered badges around their necks, not to wear masks and 
to limit the group size to 100. 

The President of the Legislative Council stated that the authorities would consider reopening 
the  designated  demonstration  area  at  the  Legislative  Council  Complex  in  early  2025  at  the 
earliest.  Meanwhile,  the  Chief  Executive  cancelled  the  practice  of  receiving  letters  from 
protesters  ahead  of  weekly  Executive  Council  meetings,  saying  that  there  were  ‘too  many 
channels to express opinions’. In the past, pressure groups saw this as an opportunity to directly 
voice concerns to the Chief Executive. 

2023 also saw court cases in relation to the freedom of assembly. On 22 November, the Court 
of Final Appeal heard the appeal of the Department of Justice against a lower court’s decision 
to acquit Chow Hang-tung of incitement to join a banned candlelight vigil at Victoria Park on 
4 June 2021. On 8 December, the Court of Appeal granted the application from seven pro-
democracy leaders to appeal to the Court of Final Appeal in relation to their conviction for 
participating in a protest on 18 August 2019. 

Freedom of association also continued to be under pressure. On 22 March, national security 
police took away four former members of the now-disbanded Hong Kong Confederation of 
Trade Unions to  assist in an investigation. Hong Kong’s formerly largest independent trade 
union had disbanded in 2021. 

On 9 November, the Hong Kong Professional Teachers’ Union announced the next step of its 
dissolution, informing all eligible members they could each receive HK$3,190 (EUR375) out 

28 https://twitter.com/UNHumanRights/status/1665415438514176002 

13 

 
 
 
 
 
 
 
 
 
 
 
 
of the union’s funds. The group expected the official dissolution process to be finished within 
2024. 

Association in political groups other than the pro-Beijing parties appeared to be increasingly 
difficult. In the case of the League of Social Democrats, three of the group’s bank accounts 
were  terminated  in  May.  Several  banks  also  terminated  the  personal  accounts  of  four  core 
members of the League.  

Academic  freedom  also  continued  to  be  under  pressure.  Hong  Kong  dropped  to  the  152th 
place from 149th among 179 countries and territories in the Academic Freedom Index compiled 
by  the  Swedish-based  V-Dem  Institute  and  the  German  Friedrich-Alexander-Universität 
Erlangen-Nürnberg and published in September29. 

On 24 October, the Immigration Department rejected the work visa application of Rowena He, 
a history professor whose research focuses on the 1989 Tiananmen crackdown. On 27 October, 
the Chinese University of Hong Kong dismissed the Guangzhou-born Canadian citizen, citing 
He’s inability to receive a work visa. 

On  6 June,  the  independent  Hong  Kong  Public  Opinion  Research  Institute  cancelled  the 
publication  of  its  ‘4  June  Anniversary  Survey  Report’  a  few  hours  ahead  of  the  scheduled 
release. The Institute stated it had received advice from ‘relevant government department(s)’ 
to call off the publication. On 20 June, the Institute announced it would cancel about a quarter 
of its regular survey questions. Responses to one third of the remaining questionnaire would 
not be made available to the public. 

2023 saw hopeful signs of progress on the rights of LGBTI+ people in Hong Kong, mainly 
carried forward by the judiciary. On 7 February, the Court of Final Appeal ruled that the policy 
of barring transgender people from changing the gender entry on their identity card unless they 
underwent full sex reassignment surgery violated their rights and was unconstitutional. 

On 5 September, the Court of Final Appeal ruled that it was the government’s obligation to 
provide an alternative framework to protect same-sex partnerships within the following 2 years. 
The court, however, also ruled against recognising same-sex marriage, including those married 
abroad. 

The court also handed a victory to same-sex couples in the following areas: on 15 September, 
the  High  Court  granted  parentage  to  the  genetic  mother  of  a  child  born  through  surrogacy 
conducted  in  South  Africa,  after  the  Births  and  Deaths  Registry  had  only  recognised  the 
gestational mother as a parent. On 17 October, the Court of Appeal rejected two appeals from 
the Housing Authority and upheld the rights for same-sex couples to apply for public rental 
housing  and  live  together  in  subsidised  flats  under  the  Home  Ownership  Scheme.  On 
24 October,  the  Court  of  Appeal  upheld  a  lower  court  ruling  that  same-sex  couples  should 
enjoy equal inheritance rights. 

Public attitudes towards LGBTI+ people have become more favourable. According to a survey 
conducted by researchers from the University of Hong Kong, the Chinese University of Hong 
Kong and the University of North Carolina, around 60% of the 1 551 respondents supported 
same-sex marriage legislation, representing an increase of 22 percentage points as compared 

29 https://academic-freedom-
index.net/#:~:text=The%20AFI%20assesses%20de%20facto,and%20the%20V%2DDem%20Institute 

14 

 
 
 
 
 
 
 
 
 
 
 
 
to  the  same  survey  conducted  10  years  before.  Meanwhile,  71%  of  respondents  supported 
measures against discrimination on the basis of sexual orientation. 

The  Hong  Kong  government,  however,  launched  appeals  to  overturn  the  court  rulings 
concerning subsidised housing policies and equal inheritance rights. The government also did 
not fully support the 2023 Gay Games in Hong Kong, the first ever in Asia. The event, which 
took place between 3 and 11 November, attracting 2 300 participants from 45 countries, was 
organised by civil society and mainly funded by multinational companies. 

The annual pride event Pink Dot on 10 December returned outdoors after having been restricted 
to an indoor venue in 2021 and 2022 during the COVID pandemic. 

The  guarantee  of  prisoners’  rights  continued  to  cause  concern.  Chow  Hang-tung,  the 
detained pro-democracy activist and member of the Hong Kong Alliance in Support of Patriotic 
Democratic Movements of China, has repeatedly faced solitary confinement. 

On 2 February, the Office of the Ombudsman indicated that there was room for improvement 
in  the  ‘Justices  of  the  Peace  Visit  Programme’,  a  legal  feedback  mechanism  for  detainees, 
among  other purposes.  The Office of the Ombudsman criticised the fact that in  some cases 
people in custody were not sufficiently informed about their rights under the programme, for 
example they could request feedback meetings held in private. 

On asylum seekers, in December 2022 the government implemented a new removal policy for 
non-refoulement claimants. Under the arrangement, the Immigration Department can remove 
an unsubstantiated claimant once the judiciary dismisses the respective application for judicial 
review. As of October 2023, the Immigration Department had deported 150 claimants under 
the new policy.  

In the financial year 2023/2024, the government budgeted HK$1.4 billion dollars (EUR 165 
million) to spend on the handling of non-refoulement claimants, an increase of around HK$300 
million year on year. This is to prepare for an expected increase in claimants after the end of 
the COVID pandemic. 

Foreign domestic workers in Hong Kong remain a vulnerable group. Between 21 March and 
15 May, the government conducted a public consultation on the review of the Code of Practice 
for  Employment  Agencies.  To  discourage  so-called  ‘job  hopping’,  the  major  proposals 
included  requiring  employment  agencies  to  explain  clearly  to  foreign  domestic  helper  job 
seekers that ‘under the prevailing policy, an application for change of an employer in Hong 
Kong within the two-year contract period would normally not be approved save for exceptional 
circumstances’. The NGO International Migrants Alliance criticised this policy, arguing that 
helpers ought to be able to change jobs at will in a free market. 

II. 

Economic developments 

15 

 
 
 
 
 
 
 
 
 
 
 
 
Hong Kong is the seventh largest trading economy in the world (2022)30, the world’s fourth 
destination for investment flows and seventh largest source of investments globally31 (2022). 
Trade in goods accounts for about 290% of GDP32, indicating the openness of the economy. 

Hong Kong exercises independent authority in implementing commercial agreements and sets 
monetary  policy  autonomously  from  mainland  China.  Hong  Kong  remained,  notably  on 
economic  policy  issues,  a  separate  legal  jurisdiction  from  mainland  China,  maintaining  a 
separate currency not limited by capital limitations, as well as separate regulatory structures to 
supervise companies operating in the territory. Reaching out to the world after the end of the 
pandemic  restrictions  –  including  to  bring  back  talent  and  companies  to  Hong  Kong  –  and 
enhancing the competitiveness of Hong Kong, as well as economic integration with mainland 
China, were among the government’s priorities during the year. 

Hong  Kong  fell  by  one  place  in  the  World  Investment  Report  2023  by  the  United  Nations 
Conference  on  Trade  and  Development  (June),  making  it  the  world’s  fourth  largest 
investment  destination  for  foreign  direct  investment  (FDI)  in  2022  (down  from  third  in 
2021)33. The latest survey on foreign companies by the Hong Kong government indicates that 
the number of non-Chinese foreign companies in the territory stabilised in 2023 (at a lower 
level  than  before  COVID),  after  several  years  of  decline  amid  strict  pandemic-related 
restrictions.  Hong  Kong’s  population  also  largely  recovered  after  a  drop  of  about  170 000 
people  during  the  pandemic.  As  of  mid-2023,  the  population  increased  by  2.1%  (126 500 
people) from a low in mid-2022 – but was still 0.3% lower (39 500) than before the pandemic 
(end-2019)34. 

Hong Kong’s economy returned to growth in 2023, with a 3.2% increase in GDP year on 
year (after a contraction of 3.7% in 2022)35, but is yet to recover to its level of 2018. The 
financial industry and the trade and logistics industry faced significant challenges. Industries 
dependent on tourism partially recovered to pre-pandemic levels. 

Inflation  remained  moderate,  with  an  annual  2.1%  increase  in  the  consumer  price  index 
during  the  year36.  The  unemployment  rate  continued  to  improve  and  was  back  to  pre-
pandemic levels – at 3.0% for the full year 2023, down from 4.3% in 202237. 

30 World Trade Statistical Review 2023 by the World Trade Organization 
https://www.wto.org/english/res_e/publications_e/wtsr_2023_e.htm 
31 World Investment Report 2023 by the United Nations Conference on Trade and Development 
https://unctad.org/system/files/official-document/wir2023_en.pdfs 
32 Ratio calculated using GDP and external trade statistics (10-month 2023) from the Census and Statistics Department of the 
Hong Kong Special Administrative Region 
https://www.censtatd.gov.hk/en/scode250.html 
https://www.censtatd.gov.hk/en/scode230.html 
33 World Investment Report 2023 by the United Nations Conference on Trade and Development 
https://unctad.org/system/files/official-document/wir2023_en.pdf 
34 The Census and Statistics Department of the Hong Kong Special Administrative Region: 
https://www.censtatd.gov.hk/en/scode150.html 
35 Advance estimates on gross domestic product for 2023, January 2024, the Census and Statistics Department of the Hong 
Kong Special Administrative Region 
https://www.censtatd.gov.hk/en/press_release_detail.html?id=5380 
36 The Census and Statistics Department of the Hong Kong Special Administrative Region 
https://www.censtatd.gov.hk/en/press_release_detail.html?id=5378 
37 The Census and Statistics Department of the Hong Kong Special Administrative Region: 
https://www.censtatd.gov.hk/en/scode200.html 

16 

 
 
 
 
 
 
 
 
 
The trade and logistics sector – which accounts for 23% of Hong Kong’s GDP – continued 
to face challenges. GDP from the import and export industry contracted by 11.0% year on year 
in the first 9 months of 202338 and the value of Hong Kong’s external trade in goods dropped 
by 6.7% to HK$8.82 trillion (EUR 1.04 trillion)39 in the year 202340. External trade returned to 
growth in the last 3 months of the year, ending 16 months of consecutive decline. Hong Kong’s 
trade in goods has a large exposure to the external trade of mainland China, by far its largest 
trading partner, given Hong Kong’s role as a transit and re-export centre for the mainland. 

The financial industry (22% of Hong Kong’s GDP) contracted by 1.7% year on year in the 
first 9 months of 2023. The industry was a key growth driver for the city in the past years until 
it halted in 2022 (growing by only 0.1% year on year) and contracted in 2023. 

The number of initial  public  offerings (IPOs) further decreased to  73 in 2023, from  90 in 
2022. The amount  raised through  IPOs dropped by 55.8%  year on year  to  HK$46.3 billion 
(EUR 5.4 billion). Hong Kong was the world’s eighth largest hub for IPOs in 2023, down from 
fourth in 2022 and 2021, second in 2020 and first in 2019. 

During  the year, the  Hong Kong Hang Seng Index  lost 13.8% of its  value, while  market 
capitalisation  on  the  Hong  Kong  Stock  Exchange  dropped  by  13.0%  to  HK$31.0  trillion 
(EUR 3.6 trillion). Average daily market turnover was down by 15.9% year on year to HK$105 
billion  (EUR 12.4  billion)41.  As  of  the  end  of  October  2023,  Hong  Kong  was  the  world’s 
seventh largest and Asia’s fourth largest stock market by market capitalisation and the largest 
offshore renminbi business hub. 

The  drop  in  market  capitalisation  and  in  IPOs  was  due  to  a  combination  of  factors.  These 
included high interest rates in the US, investor concerns over the Chinese economy and the 
quality of Chinese assets (Chinese companies accounting for about 78% of Hong Kong’s stock 
market capitalisation), and geopolitical tensions. 

Tourists  are  a  source  of  revenue  for  several  sectors  in  Hong  Kong’s  economy.  Industries 
exposed to tourist spending include retail, food and beverage, transport, travel and hospitality. 
Hong Kong welcomed 34 million visitors in 2023, a significant increase from 604 564 in 2022, 
but  half  (52%)  of  the  number  in  2018)42.  In  the  second  half  of  the  year  visitors  increased, 
reaching about 60% of the 2018 level. Mainland Chinese visitors constituted the largest group 
of tourists (78% in 2023; similar to 2018) and accounted for an estimated 40% of the city’s 
retail sales before the pandemic. 

In the first 9 months of 2023, GDP from accommodation and food services industries and 
from wholesale and retail sales increased by 35.8% and 29.2% respectively year on year. This 
supported Hong Kong’s economic growth, but the sectors still accounted for only 56% and 
68%  respectively  of  GDP  in  the  same  period  in  2018,  showing  that  the  recovery  was  only 

38 Chain volume measures of  GDP by economic activity - in chained (2021) dollars, the Census and Statistics Department of 
the Hong Kong Special Administrative Region https://www.censtatd.gov.hk/en/web_table.html?id=310-34501 
39 Exchange rate dated from December 2022 of EUR 1 = HK$8.0965. 
40 The Census and Statistics Department of the Hong Kong Special Administrative Region 
https://www.censtatd.gov.hk/en/scode230.html 
41 Market statistics, website of Hong Kong Exchange and Clearing Limited 
https://www.hkex.com.hk/Market-Data/Statistics/Consolidated-Reports/HKEX-Monthly-Market-Highlights?sc_lang=en 
42 Visitor Arrivals to Hong Kong; Hong Kong Tourism Board 
https://partnernet.hktb.com/en/research_statistics/latest_statistics/index.html 

17 

 
 
 
 
 
 
 
 
 
 
partial.  During  the  year,  retail  sales  increased  by  16.2%  from  2022  to  HK$406.7  billion 
(EUR 47.9 billion) but were still only 83.8% of the 2018 level. Restaurant receipts increased 
by 33.9% year on year in the first 9 months to HK$82.1 billion (EUR 9.7 billion), 92% of the 
same period in 2018. Hotel room occupancy was 82%, compared to 65% in 2022 and 92% in 
2018. 

The aviation industry and related industries partially recovered. The number of flights at Hong 
Kong International Airport roughly doubled compared to 2022 but were still only 65.8% of 
their pre-pandemic level (2019). The number of passengers increased to 39.4 million (from 5.6 
million  in  2022),  accounting  for  only  slightly  more  than  half  (55.3%)  of  the  71.3  million 
passengers  in  2019.  Air  cargo  volume  decreased  by  3.2%  year  on  year,  to  91.4%  of  2019 
levels43. 

The construction and real estate industries recorded increases of 4.8% and 6.7% respectively 
in the first 9 months of the year. Property prices decreased during the year, but Hong Kong 
remained one of the most expensive cities in the world. 

The  SAR’s  Linked  Exchange  Rate  System  remained  in  place  during  the  year,  within  a 
HK$7.75-7.85  to  one  US  dollar  band.  Foreign  currency  reserve  assets  were  mostly  stable, 
ending 2023 at USD 425.5 billion, from USD 424.0 billion at the end of 2022.  

Hong Kong is expected to retain a fiscal deficit for the 2023-2024 financial year (ending in 
March  2024).  This  would  be  the  SAR’s  fourth  deficit  in  5  years,  unusual  for  an  economy 
accustomed to recording fiscal surpluses. The budget presented in February 2023 forecasted a 
deficit for the 2023-2024 fiscal year of HK$119 billion (EUR 14 billion), excluding proceeds 
from  the  issuing  of  government  bonds,  but  the  government  later  warned  that  it  would  be 
noticeably  higher.  The  budget  was  presented  with  the  expectation  that  the  economy  would 
grow by 3.5% to 5.5%, instead of the actual 3.2%. 

The recent deficits were largely funded by tapping into Hong Kong’s large fiscal reserves. 
The  fiscal  reserves  amounted  to  HK$692  billion  (EUR 81.4  billion)  in  December  2023,  a 
decrease of 10.5% year on year and of 40.3% from HK$1.2 trillion in March 2020. Reserves 
are  equivalent  to  an  estimated  12  months  of  expenditures,  compared  to  24  months  before 
COVID-19. 

In December, Moody’s downgraded the credit rating outlook of Hong Kong to negative 
from stable. This followed Moody’s outlook change on China’s A1 rating to negative from 
stable  and  its  assessment  of  tight  political,  institutional,  economic  and  financial  linkages 
between  Hong  Kong  and  the  mainland  resulting  in  a  credit  rating  gap  between  the  two 
economies which should not be wider than one notch. The outlook also mentioned signs of 
reduced  autonomy  of  Hong  Kong’s  political  and  judicial  institutions.  Even  after  the 
downgrade,  Hong  Kong’s  rating  (Aa3)  still  reflected  Moody’s  assessment  of  the  SAR’s 
‘significant credit strengths, including its wealthy and competitive economy, substantial fiscal 
and external buffers, and track record of effective monetary and fiscal policy’. These strengths 
continued to offer a ‘significant degree of resilience’ to shocks and to negative trends such as 
a  rapidly  ageing  population,  the  structural  slowdown  in  mainland  China’s  economy  and 
sustained geopolitical and strategic uncertainty. 

43 Air Traffic Statistics, Civil Aviation Department 
https://www.cad.gov.hk/english/statistics.html 

18 

 
 
 
 
 
 
 
 
 
 
 
The International Monetary Fund, in its latest Article VI consultations (May 2023), forecasted 
growth  of  below  3%  in  the  mid-term.  The  Fund  recommended  not  returning  to  a  balanced 
budget  too  quickly  as  the  economy  still  needs  support.  Hong  Kong  was  also  advised  to 
introduce unemployment benefits, broaden its tax system and increase the housing supply. The 
IMF  praised  the  city’s  high-quality  financial  sector  oversight  and  substantial  buffers  and 
welcomed plans for positive countercyclical capital buffers. Risks to growth relate to global 
banking stress, monetary policy tightening, a global growth slowdown and to Hong Kong being 
‘at the forefront of rising geo-economic fragmentation as a financial gateway to China’. The 
SAR needed to monitor credit risk and financial stability in the light of exposure to mainland 
China’s real estate and the remaining impact of the pandemic on Hong Kong firms’ financial 
situation. Regarding an ongoing debate on the usefulness (and political desirability) of the USD 
peg,  the  IMF  considered  that  the  Linked  Exchange  Rate  System  was  still  the  appropriate 
arrangement for the territory as an anchor for macro and financial stability. Hong Kong should 
continue  to  guarantee  the  free  flow  of  capital  and  preserve  the  rule  of  law  while  boosting 
innovation  and  strengthening  links  with  the  Greater  Bay  Area  and  with  countries  that  are 
members of the Regional Comprehensive Economic Partnership (RCEP). 

Business environment 

Political developments, including implementation of the National Security Law, freedom of 
information,  data  privacy  and  sanctions,  remain  a  concern  for  the  international  business 
community and affected the perception of Hong Kong as an international business hub. 

More pronounced issues cited in the business surveys are the challenges in accessing talent and 
the  economic  outlook  of  Hong  Kong.  In  the  meantime,  many  in  the  business  sector 
acknowledge that the SAR remains a competitive place for business, thanks to its simple tax 
system, connectivity and access with mainland China, common law system, free movement of 
capital and full convertibility of its currency. 

The lifting of the COVID-19 restrictions  improved the business  environment  in  the SAR. 
With the reopening of Hong Kong, and of mainland China, businesses were again able to make 
full use of Hong Kong as a regional hub. However, several sectors of the economy continue to 
underperform  (tourism-related  industries  for  instance).  The  outflow  of  talent  during  the 
pandemic is also still having an impact on companies’ capacity to hire staff. The strict COVID-
19 policies and continued political concerns have eroded the attractiveness and perception of 
Hong Kong for overseas talent. At the end of 2023, Hong Kong’s labour force was still 4.0% 
smaller  than  before  the  start  of  the  pandemic  (equivalent  to  160 000  workers),  due  to  a 
combination of emigration and foreign employees leaving the city. 

An annual survey on foreign companies in Hong Kong44 indicated that as of 1 June 2023, the 
decrease in the number of foreign companies (excluding mainland Chinese companies) had 
halted (0.0% change in number of companies from June 2022). However, it had stabilised at a 
level  5.2%  lower  when  compared  to  June  2019  (pre-COVID  level).  The  number  of  staff 
employed by these companies also dropped by 5.2% from June 2019. The number of foreign 
(non-Chinese) regional headquarters dropped more noticeably (-6.1% year on year and -17.8% 
compared to 2019), indicating that Hong Kong might be losing relevance as a regional business 

44 Report on 2023 Annual Survey of Companies in Hong Kong with Parent Companies Located outside Hong Kong, the 
Census and Statistics Department of the Hong Kong Special Administrative Region 
https://www.censtatd.gov.hk/en/EIndexbySubject.html?pcode=B1110004&scode=360 

19 

 
 
 
 
 
 
 
 
 
hub.  While  non-Chinese  foreign  companies  dropped  in  the  survey,  mainland  Chinese 
companies in Hong Kong increased by 3.0% year on year and by 21.0% from 2019. 

Attracting talent and companies back to Hong Kong and promoting the SAR to the world 
was a policy priority during the year. The Office for Attracting Strategic Enterprises (OASES) 
commenced operations in December 2022, with the mission to attract strategic enterprises to 
Hong Kong, including in targeted key technologies. On 4 October, it signed an agreement with 
a first batch of 20 enterprises setting up or expanding their businesses in Hong Kong45. Talent 
schemes were enhanced and, to attract wealthy individuals, in December 2023 the government 
reintroduced the Capital Investment Entrant Scheme (CIES) (suspended in 2015). This is an 
investment-migration scheme that offers a faster route to residency for people who invest at 
least  HK$30  million  (EUR 3.5 million)  in  the  stock  market  or  other  assets,  excluding 
residential real estate. 

In the annual Policy Address on 25 October 2023, the Chief Executive proposed policies to 
support  the  growth  and  recovery  of  the  economy,  to  further  advance  integration  with  the 
Greater Bay Area (GBA) of economic, financial and people-to-people flows (including visa 
facilitation for expatriates) and to participate further in the Belt and Road Initiative. Attracting 
more talent and enterprises to set up a presence in Hong Kong, including headquarters, will 
remain a priority. For the economy, the Chief Executive announced measures to support the 
tourism industry and the setting-up of a New Industrialisation Development Office, as well as 
a HK$10 billion (EUR 1.18 billion) New Industrialisation Acceleration Scheme. Cultural and 
creative  industries  will  also  be  further  promoted.  With  regard  to  the  financial  industry,  the 
priorities  are  to  improve  market  liquidity,  strengthen  mutual  access  with  mainland  China’s 
capital market (including via the ‘connect’ schemes), facilitate the internationalisation of the 
renminbi and support financial technologies (Fintech) and green finance. The Policy Address 
also  announced  an action plan to  develop  Hong  Kong into a leading  international  maritime 
centre, promote high value-added maritime services and facilitate GBA maritime collaboration 
(an action plan on maritime and port development strategy was released in December). New 
energy transport, decarbonised buildings and recycling will also be promoted. 

Developing Hong Kong into an innovation and technology (I&T) centre is another policy 
objective. In March 2023, China’s Ministry of Science and Technology and the Hong Kong 
government  signed  the  ‘Mainland  and  Hong  Kong  Arrangement  on  Accelerating  the 
Development of Hong Kong into an International Innovation and Technology Centre’. The aim 
of the arrangement is to deepen scientific collaboration, share innovation and exchange talent, 
leveraging  Hong  Kong’s  advantages  as  an  international  city.  Hong  Kong  is  establishing  an 
artificial intelligence supercomputing centre (the first phase is to be completed in 2024 as per 
the  Policy  Address).  The  Policy  Address  furthermore  announced  plans  to  establish  a  Hong 
Kong  microelectronics  research  and  development  (R&D)  institute.  The  2023-2024  budget 
(February 2023) earmarked HK$3 billion (EUR 352 million) to develop international scientific 
research  collaboration  and  attract  leading  I&T  talent,  research  teams  and  enterprises. 
Construction of the Hong Kong-Shenzhen Innovation and Technology Park (HSITP), on the 
border with Shenzhen (and geographically located within the Northern Metropolis), continued 
with Shenzhen. Batch 1 should be completed by 2027. 

Works  to  develop  the  Northern  Metropolis  continued.  The  development  zone,  which  will 
include residential districts, an I&T zone, a logistics hub and connecting railway infrastructure 

45 Press release by the Government of the Hong Kong Special Administrative Region: 
https://www.news.gov.hk/eng/2023/10/20231004/20231004_173732_399.html 

20 

 
 
 
 
 
 
 
 
with the rest of Hong Kong and Shenzhen, will further integrate Hong Kong with the Greater 
Bay Area. The Northern Metropolis Coordination Office was established in June to formulate 
and  promulgate  an  action  agenda  and  an  implementation  plan.  Another  large  development 
project is the construction of the Kau Yi Chau Artificial Islands (1 000 ha, for new residential 
and business districts). A public engagement report was released in August. 

On  green  finance,  Hong  Kong  issued  additional  green  bonds  during  the  year  under  the 
government green bond programme launched in 2018. The Hong Kong Monetary Authority 
also launched preparatory work to establish a green taxonomy for Hong Kong, including using 
the  Common  Ground  Taxonomy  (developed  jointly  by  the  EU  and  mainland  China)  as  a 
reference.  Hong  Kong  also  pledged  to  adopt  the  international  financial  reporting  standards 
(IFRS) sustainability disclosure standards. 

On 1 June 2023, Hong Kong’s new licensing regime for virtual asset trading platforms came 
into  force,  setting  out  regulatory  requirements  for  licensed  virtual  asset  trading  platforms. 
Under the new regime, centralised virtual asset trading platforms operating in Hong Kong will 
need to apply for a licence under the Securities and Futures Ordinance and/or the Anti-Money 
Laundering and Counter-Terrorist Financing Ordinance. 

Trade policy 

Hong Kong has eight free trade agreements (FTAs). These are with mainland China (CEPA, 
June 2003 and enhanced thereafter), New Zealand (March 2010), the Member States of the 
European  Free  Trade  Association  (EFTA)  (June  2011),  Chile  (September  2012),  Macao 
(October  2017),  the  Association  of  Southeast  Asian  Nations  (ASEAN)  (November  2017), 
Georgia (June 2018) and Australia (March 2019). Hong Kong has also signed 23 investment 
promotion and protection agreements (IPPAs) with foreign economies (including with 10 EU 
Member States) and negotiations have been concluded (pending signature) with Bahrain, the 
Maldives and Myanmar. 

Hong  Kong  continues  to  seek  early  accession  to  the  Regional  Comprehensive  Economic 
Partnership (RCEP). Hong Kong submitted its accession request in January 2022. In January 
2023, Hong Kong started negotiations for an FTA with Peru. In October, an IPPA was signed 
with Türkiye46. IPPAs with Bangladesh, Russia and Saudi Arabia are under negotiation. 

In his Policy Address of October 2023, the Chief Executive said that Hong Kong will continue 
its efforts to join RCEP and would also be holding or participating in 70 related events with 
RCEP members and stakeholders in 2024. Hong Kong will also be actively seeking to enhance 
its  Closer  Economic  Partnership  Arrangement  (CEPA)  with  mainland  China,  including  by 
striving for further liberalisation, aiming especially at those sectors where Hong Kong enjoys 
competitive advantages (such as financial services). 

Economic integration with mainland China 

On financial integration and mutual access, in May the northbound trading leg of the ‘Swap 
Connect’ scheme was launched47. It aims to provide a channel for international investors to 

46 Press release by the Government of the Hong Kong Special Administrative Region: 
https://www.info.gov.hk/gia/general/202310/31/P2023103100544.htm 
47 Press release by the Hong Kong Monetary Authority: 
https://www.hkma.gov.hk/eng/news-and-media/press-releases/2023/05/20230515-3/ 

21 

 
 
 
 
 
 
 
 
 
 
 
 
trade  interest  rate  swap  products  in  the  mainland  via  a  connection  between  infrastructure 
institutions in Hong Kong and the mainland. The scheme aims to facilitate global investors’ 
management of interest rate risks arising from their allocation to mainland bonds and increase 
their participation in the onshore bond market via Hong Kong. In June, Hong Kong Exchanges 
and  Clearing  Limited  (HKEX)  launched  the  HK$-RMB  Dual  Counter  Model,  which  offers 
investors in Hong Kong a choice of trading the shares of a Hong Kong-listed company in either 
HK$ or renminbi. 

In September 2023, regulators in Hong Kong and mainland China announced that the Greater 
Bay  Area  ‘Wealth  Management  Connect’  scheme  would  be  expanded48,  including  with 
regard to eligibility criteria, scope, products and quota. 

During  the year, policy  directions and initiatives  were issued with  regard to  developing the 
Qianhai  Shenzhen-Hong  Kong  Modern  Service  Industry  Cooperation  Zone  (located  in 
Shenzhen) and enhancing links between Qianhai and Hong Kong. This included facilitating 
the opening of bank accounts, Hong Kong insurance firms establishing an insurance after-sales 
service  centre  in  Qianhai,  and  helping  Qianhai  enterprises  to  make  use  of  Hong  Kong  for 
fundraising and establishing overseas operations. 

With regard to the Greater Bay Area, the Policy Address proposed: (i) a joint investment fund 
with the Guangdong provincial government to invest in GBA projects; (ii) the promotion of 
cross-boundary  data  flows;  (iii)  logistics  clusters  in  the  north  of  Hong  Kong  to  serve  as  a 
logistics  gateway  to  the  GBA;  and  (iv)  further  bolstering  of  mutual-access  financial 
cooperation (including with Qianhai and the setting-up of a cooperation committee on financial 
cooperation with Shenzhen). Hong Kong also sought to extend to the whole GBA (currently 
only in Qianhai and some free trade  zones) options for mainland enterprises to adopt Hong 
Kong’s law and dispute resolution services by enhancing cross-border cooperation on issues 
like  bankruptcy  proceedings.  Cross-boundary  medical  collaboration  will  be  increased 
(including medical research, healthcare and elderly care). 

III.  Relations between Hong Kong and mainland China 

The  Chinese  central  government  underwent  a  leadership  reshuffle  in  the  annual  plenary 
sessions  of  the  National  People’s  Congress  and  the  Chinese  People’s  Political  Consultative 
Conference, known as ‘Two Sessions’, in March. This resulted in a series of personnel changes 
pertaining to Hong Kong. 

Ding  Xuexiang,  a  member  of  the  Politburo  Standing  Committee  of  the  Communist  Party, 
became a Vice Premier and the Head of the Central Leading Group on Hong Kong and Macao 
Affairs. Former Chief Executive Tung Chee-hwa stepped down from his position as a Vice-
chairperson  of  the  Chinese  People’s  Political  Consultative  Conference.  Former  Chief 
Executive CY Leung kept his seat as the Vice-chairperson of the same body. 

On 11 March, Starry Lee, a lawmaker and a former  chairperson of the pro-Beijing political 
party ‘Democratic Alliance for the Betterment and Progress of Hong Kong’ (DAB), succeeded 
Tam Yiu-chung as Hong Kong’s sole representative in the Standing Committee of the National 
People’s Congress. 

48 Press release by the Hong Kong Monetary Authority: 
https://www.hkma.gov.hk/eng/news-and-media/press-releases/2023/09/20230928-4/ 

22 

 
 
 
 
 
 
 
 
 
 
 
 
At the local level, on 14 January Beijing appointed Zheng Yanxiong, the former Director of 
the Office for Safeguarding National Security of the Central People’s Government in the Hong 
Kong SAR, as the Director of the Liaison Office of the Central People’s Government in the 
Hong  Kong  SAR  and  the  National  Security  Adviser  to  the  Committee  for  Safeguarding 
National  Security  of  the  Hong  Kong  SAR,  succeeding  Luo  Huining.  On  18  July,  Beijing 
appointed Dong Jingwei as Head of the Office for Safeguarding National Security in the Hong 
Kong SAR, succeeding Zheng Yanxiong. 

Alongside the personnel changes, Beijing announced on 16 March its plan to elevate the Hong 
Kong and Macao Affairs Office under the State Council to the Hong Kong and Macao Work 
Office of the Communist Party of China Central Committee. Between 13 and 18 April, Xia 
Baolong, the Director of the Hong Kong and Macao Work Office, visited Hong Kong. During 
his stay, Xia met with senior officials from the executive, legislature and judicial branches of 
the Hong Kong government as well as representatives from the business, legal, technology and 
education  sectors.  Xia  also  attended  the  opening  ceremony  of  the  city’s  National  Security 
Education Day on 15 April. In a speech delivered on 22 December, Xia Baolong laid out his 
expectations  for  various  sectors  of  Hong  Kong  society,  including  the  government,  political 
groups, businesses and ordinary people. 

Between 29 October and 5 November, a delegation of 17 judges and judicial officers visited 
Beijing for an exchange visit that was part of the ongoing professional exchanges between the 
Hong Kong and mainland judges and judicial officers. Between 19 and 25 November, over 30 
officials visited the mainland for the first national studies programme for politically appointed 
officials of the current administration. 

The facilitation of Hong Kong’s integration with mainland China remained a political priority 
for authorities both in Hong Kong, the Pearl River Delta region and Beijing. On 7 November, 
the  Guangdong  provincial  government  published  the  ‘Three-Year  Action  Plan  for  the 
Construction  of  the  Digital  Greater  Bay  Area’.  The  plan  seeks  to  provide  comprehensive 
electronic services in areas such as business start-up and financing services. 

Mainland China was Hong Kong’s largest trading partner in goods during the year, accounting 
for 49.2% of Hong Kong’s total trade. In turn, Hong Kong was an important trading hub for 
mainland China and ranked as China’s fifth largest trading partner in 2023. 

The province of Guangdong remained an important outward-processing base for Hong Kong. 
The  Closer  Economic  Partnership  Arrangement  (CEPA)  with  mainland  China  (2003)  was 
Hong  Kong’s  most  substantial  trade  agreement.  There  was  no  major  amendment  to  the 
agreement in 2023. The value of goods re-exported through Hong Kong from and to mainland 
China accounted for about 85.4% of Hong Kong’s total re-export trade value (2022). 
Hong Kong remained mainland China’s key offshore financial centre and investment hub. At 
the  end  of  2022,  mainland  China  was  Hong  Kong’s  largest  source  of  inward  foreign  direct 
investment, excluding offshore centres, and the first destination for Hong Kong’s outward FDI, 
accounting for 30% and 49% of total stocks respectively49. In turn, Hong Kong was the largest 
source of FDI in mainland China, accounting for 55.9% of the total FDI into the mainland (at 
the end of 2022), and the leading destination for mainland China’s FDI, with 55.9% of the total 

49 Statistical report on External Direct Investment Statistics of Hong Kong (2021 Edition), 8 December 2023: available at 
https://www.censtatd.gov.hk/en/EIndexbySubject.html?pcode=B1040003&scode=260 

23 

 
 
 
 
 
 
 
 
 
(at the end of 2022). There were 1 447 mainland enterprises listed in Hong Kong, accounting 
for 76.5% of the total market capitalisation and 86.5% of the equity turnover. 

Hong  Kong  and  mainland  China’s  capital  markets  are  connected  via  the  ‘Stock  Connect’ 
scheme,  linking  the  Hong  Kong  Stock  Exchange  with  its  counterparts  in  Shanghai  and 
Shenzhen, and the ‘Bond Connect’ mutual market access scheme for bond markets. This was 
complemented  in  September  2021  by  the  launching  of  a  ‘Wealth  Management  Connect’ 
scheme for the GBA, allowing eligible mainland Chinese, Hong Kong and Macao residents to 
invest in wealth management products distributed by banks in each other’s market. In 2023, 
the  ‘Stock  Connect’  schemes  were  enhanced  and  the  northbound  trading  leg  of  the  ‘Swap 
Connect’ scheme was launched.  

IV. 

EU-Hong Kong bilateral relations and cooperation 

In 2023, Hong Kong reopened for business and travel following the very restrictive measures 
in place during the pandemic. This presented new opportunities in terms of physical meetings, 
events and visitors. 

The Head of the EU Office and Member State Consuls-General engaged in regular dialogue 
with senior officials of the Hong Kong government, including the Chief Executive. 

The EU Office, together with the European Chamber of Commerce in Hong Kong (Eurocham), 
organised the second edition of the ‘Green Way’ event with high-level participation, resulting 
in  recommendations  that would allow greater participation  of EU industry and standards in 
support  of  Hong  Kong’s  environmental  agenda.  In  addition,  public  outreach  took  place  on 
relevant EU policies including the Carbon Border Adjustment Mechanism, the Due Diligence 
Directive, circularity, the Battery Regulation, green finance, ESG reporting standards, etc. 

The EU and Hong Kong continued their dialogue on taxation issues and Hong Kong amended 
its tax regime with regard to foreign sourced income exemptions. Hong Kong and the EU also 
agreed on equivalence of the digital COVID certificate. 

In 2023, the Hong Kong authorities decided to continue supporting the participation of Hong 
Kong entities  in  ‘Horizon Europe’. The  Hong Kong Research  Grants Council proposed the 
‘EU-Hong  Kong  Research  Cooperation  Co-funding  Mechanism  by  the  Research  Grants 
Council’ to financially support entities based in Hong Kong seeking to join Horizon Europe 
consortia. Events promoting people-to-people exchanges between the EU and Hong Kong were 
organised. 

The EU remained the largest foreign business community in the city, ahead of Japan, the 
US  and  the  UK,  according  to  the  annual  survey  on  foreign  companies  by  the  Hong  Kong 
Census and Statistics Department50. As of June 2023, at least 1 548 EU companies had set up 
business in Hong Kong. Many of them (797) were using the city as their regional headquarters 
or regional offices. EU businesses were present in a wide range of sectors, including financial 
and business services, trading and logistics, retail, food and beverage, and construction. In the 
survey, the number of EU companies recorded a decrease of 3.4% from their pre-COVID level 
(June 2019), while the total number of non-Chinese foreign companies dropped by 5.2% in the 

50 Report on Annual Survey of Companies in Hong Kong with Parent Companies Located outside Hong Kong, 2023 edition, 
the Census and Statistics Department of Hong Kong Special Administrative Region, available at: 
https://www.censtatd.gov.hk/en/EIndexbySubject.html?pcode=B1110004&scode=360 

24 

 
 
 
 
 
 
 
 
 
 
 
 
period. This indicates that EU companies were more resilient to local developments than other 
foreign  business  communities.  However,  EU  companies  that  have  cut  or  relocated  some 
activities and/or staff while remaining in Hong Kong are not reflected in these statistics. 

In the first 11 months of 2023, bilateral trade in goods between the EU and Hong Kong 
amounted to EUR 28.5 billion, an increase of 4.2% on the same period in 2022. EU exports 
of goods to Hong Kong amounted to EUR 23.4 billion, while imports from Hong Kong totalled 
EUR 5.1 billion, resulting in a surplus of EUR 18.2 billion for the EU51. The EU was Hong 
Kong’s third largest trading partner in goods in 2023, after mainland China and Taiwan52. 
Hong Kong remained an important platform for trade between mainland China and the EU. 

The EU was Hong Kong’s third largest trading partner in services (latest available data, Hong 
Kong statistics)53. In 2022, Hong Kong was the EU’s 10th largest partner for Extra EU imports 
of services and eighth largest partner for Extra EU exports of services  (Eurostat)54. Eurostat 
data shows that EU trade volumes in services with Hong Kong reached a total of about EUR 41 
billion in 2022, with increases in recent years (+8% in 2022, +30% in 2021). The main services 
traded are transport, telecommunications, financial services and other business services. 

The EU was the fifth largest investor in Hong Kong and the second destination for Hong 
Kong’s foreign direct investment globally. According to Eurostat, Hong Kong was the ninth 
largest source of FDI stock into the EU in 2022, with EUR 194.5 billion (11.6% higher year 
on year but down 4.2% from a high in 2019), and the 15th destination of EU FDI stock, with 
EUR 95.7 billion (3.1% higher year on year but down 42.8% from a record high in 2019)55. 

The  EU-Hong  Kong  Policy  Dialogue  Support  Facility  continued  to  provide  a  platform  for 
discussions on topics such as sustainability and higher education exchanges. 

On 18 September, the Commissioner’s Office of the Ministry of Foreign Affairs issued a Note 
Verbale, requiring foreign diplomatic representations to submit personal information relating 
to local staff. On 8 December, the government adopted a bill that required foreign diplomatic 
missions  to  apply  for  approval  with  the  Commissioner’s  Office  of  the  Ministry  of  Foreign 
Affairs to extend land leases. 

The EU Office organised the European Union Film Festival 2023, opened by a Ukrainian film. 
Other events included a photo exhibition marking one year of the Russian war of aggression 
against  Ukraine,  an  event  on  the  World  Press  Freedom  Day,  a  panel  discussion  with  civil 
society representatives on the rights of LGBTI+  people in Hong Kong in the context of the 
Hong  Kong  Gay  Games  and  a  movie  screening  with  a  subsequent  discussion  to  mark 
International Human Rights Day 2023. 

51 Source: Eurostat: European Union trade in goods 
https://ec.europa.eu/eurostat/comext/newxtweb/ 
52 Census and Statistics Department of the Hong Kong Special Administrative Region: 
https://www.censtatd.gov.hk/en/scode230.html#section4. 
53 The Census and Statistics Department of the Hong Kong Special Administrative Region: 
https://www.censtatd.gov.hk/en/EIndexbySubject.html?pcode=B1020011&scode=240 
54 Eurostat: European Union trade in services 
https://ec.europa.eu/eurostat/data/database and https://ec.europa.eu/eurostat/web/products-eurostat-news/w/ddn-20240130-1 
55 Source: Eurostat: European Union foreign investment statistics 
https://ec.europa.eu/eurostat/databrowser/view/bop_fdi6_geo/default/table?lang=en 

25 

 
 
 
 
 
 
 
 
 
 
 
The Council Conclusions of July 2020 on Hong Kong56 mandated the continued observation 
of the trials of pro-democracy activists. The EU Office and the EU Member States in Hong 
Kong conducted 122 trial observations in 2023. 

56 https://www.consilium.europa.eu/media/45222/council-conclusions-on-hong-kong.pdf. 

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