This photo shows the city view of Hong Kong on May 5, 2023. (PHOTO / XINHUA)

Hong Kong’s political and business leaders on Friday called on the Hong Kong Special Administrative Region government to explore the possibility of establishing an investment fund and bringing in more Chinese mainland funds to help local technology firms that may be affected by the United States’ forthcoming restrictions on technology investments to China.

They also said the restriction will have minimal impact on local startups as many of them have stopped seeking American investments and turned to seek funds from the mainland over the past few years.

 A government spokesperson said the measures the US has taken to target Hong Kong are unreasonable and undermines normal trade and investment activities

On Wednesday, US President Joe Biden signed an executive order that will impose restrictions on some new investments in China's sensitive high-tech sectors including semiconductors, quantum computing, and artificial intelligence. The restrictions will also involve Hong Kong and Macao special administrative regions.

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In a statement issued on Thursday, the HKSAR government expressed strong objection and disapproval against the US’ recent move. A government spokesperson said the measures the US has taken to target Hong Kong are unreasonable and undermines normal trade and investment activities.

Duncan Chiu, a lawmaker representing the technology and innovation constituency, believes that over the past two years, many of Hong Kong or mainland companies engaged in artificial intelligence or semiconductor business have abandoned the pursuit of American investments and shifted their focus towards seeking domestic capital.

He suggested the HKSAR government should establish a city-owned investment fund, just like Singapore’s, to invest in local technology firms. Meanwhile, Chiu also said the city should attract more mainland capital to bridge the funding gap.

Legislator Jesse Shang Hailong, who is also the general manager of leading AI software provider SenseTime, argued that what US did is tantamount to giving up the lucrative Chinese market and could lead to a lose-lose situation.

Shang said he believes most Hong Kong start-ups should have foreseen this situation and been prepared to navigate the challenging environment. 

Finance sector lawmaker Ronick Chan Chun-ying said US’ restriction may affect the current government’s ambitious plan of attracting more strategic companies to Hong Kong. Yet he said that the immediate impact may not be significant as many of the US companies the Hong Kong government aims to attract may not be directly involved in sectors like quantum computing or artificial intelligence.

Hendrick Sin, president of Hong Kong’s Internet Professional Association, noted that there may be political motivations behind the restriction as US presidential election is approaching. Sin also expects the measure will only have short-term effects on Hong Kong.

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Sin suggests that the HKSAR government should enhance communication with the central government and establish more channels to promote flow of capital from the mainland. 

He said it would be a good idea to exempt currency exchange fees for cross-border funds for innovation and technology use, saying it would also strengthen Hong Kong’s integration into the development of the Guangdong-Hong Kong-Macao Greater Bay Area and the nation.

Lau Siu-kai, a consultant for the Chinese Association of Hong Kong and Macao Studies, said the move reflects that containing China's technological development is a bipartisan consensus in the United States. He also warned that more drastic action may follow as the US presidential election approaches.

Mike Wong contributed to the story.