The new year of 2025 brings new opportunities and risks to the Hong Kong Special Administrative Region of China. At this point, the legacy of unrest and the pandemic are far behind it and it is now time for the city’s leadership to focus on attaining economic growth. One might describe this, notwithstanding any unanticipated challenges, as the second full year in the “return to normality”.

The Hong Kong economy has endured several shocks in recent years. These include the impact of the riots of 2019-20, the COVID-19 pandemic, and a less favorable worldwide economic climate consisting of stagnant growth in developed economies, high inflation, an energy crisis and other supply chain-related shocks. Many of these factors also stem from an uncertain geopolitical environment, the proliferation of international conflicts, and tensions between the United States and China. The return of Donald Trump to the White House later this month is likely to pose additional challenges.

However, there are many reasons to be optimistic too. First, the priority of the Chinese central government is also to focus on economic growth and recovery. Zhao Chenxin, deputy director of the National Development and Reform Commission (NDRC), said in the first week of the year: “No matter how the external environment changes, full of uncertainty, China’s determination, and actions to open up to the outside world will remain unchanged. In the new year we will certainly take many new measures … to steadily expand systemic openness and further build a business environment that is marketized, under rule of law, and internationalized.”

This is good news for Hong Kong. The SAR plays a critical role as a financial gateway to the Chinese mainland and its financial markets will be boosted by monetary action taken by the central government, especially if further reform and opening-up measures are taken. At the end of 2024, the mainland’s Purchasing Managers’ Index in manufacturing and services saw substantial improvement, with the latter expanding at the fastest pace since May. Hong Kong is obviously deeply integrated with the mainland’s consumption, being a critical destination for mainland visitors in the areas of retail, hospitality and services.

However, the city is also taking some of its own measures too, which started in the previous year. These include continuing pushes to increase inbound tourism from other destinations. For example, the city is making a robust effort to attract tourists from the Persian Gulf states in the Middle East, including increasing Arabic support services. Moreover, integration with the Middle East seems to be a wider strategy of the city’s leadership, with moves to more readily integrate capital markets too. As Arab news reported last week: “The UAE (United Arab Emirates) and Hong Kong are set to deepen ties in cross-border debt securities issuance and investment after their central banks signed a memorandum of understanding to enhance connectivity between their financial markets.”

Likewise, deeper integration with Southeast Asia is also high on the agenda. As China Daily Hong Kong reported recently (HK Biz Leaders Set to Strengthen Ties with SE Asia at Jakarta Forum, Jan 6): “Scores of Hong Kong business leaders … have pinned their hopes on Southeast Asian markets, in particular Indonesia, a market with a relatively young population and the potential to lead its ASEAN peers… They believe that fostering deeper integration with ASEAN markets will be instrumental to the city’s joining the Regional Comprehensive Economic Partnership — the world’s largest free trade agreement by members’ GDP.”

Although the US factor is likely to bring additional challenges and uncertainties, Hong Kong will devote 2025 to diversifying and deepening its ties with other regions of the world to unlock new markets, strengthen its position as a global financial center and thus ensure that the domestic economy continues to grow. With this, the city will also continue to play an important role in driving forward economic development on the mainland, particularly in the Guangdong-Hong Kong-Macao Greater Bay Area.

The author is a British political and international-relations analyst.

The views do not necessarily reflect those of China Daily.