Generation 40s – 四十世代

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Four challenges ‘Greater Bay Area’ planners must overcome to ensure success

CommentInsight & Opinion

Feng Da Hsuan and Liang Hai Ming highlight some issues for planners to consider for the Greater Bay Area, including how to tackle the complexities of the massive project, attract talent and prevent a brain drain in smaller cities, and ensure a safety net for failure

The release of a “Greater Bay Area” development plan for linking Hong Kong and Macau with nine cities in Guangdong province is expected to be released early this year. The plan may be a sign of China’s ascent, but this area will be starkly different from, for example, the San Francisco, New York and Tokyo bay areas. While it is all within one nation, it also links two “systems”, three currencies and multiple cities. This makes the plan highly convoluted, and such complexity could pose far more challenges than those found in other bay areas.

Here are four potential issues. First, because the Greater Bay Area consists of cities in Guangdong province, plus Hong Kong and Macau, any kind of amalgamation will be one of multiplicities, rather than natural affinities, and this could mean additional obstacles to the flow of talent, finance, logistics, information and so on.

It has been suggested that the euro-zone experience could provide a good lesson where, to coordinate nations of vast differences as seamlessly as possible, it was necessary to jointly organise and empower a “coordination team” to overcome the difficulties. Indeed, having such a team, at least in principle, should lead to greater affinities. This is why a single currency, the euro, and a single political system known as the European Parliament were established.

One obvious difficulty that the euro zone faced is that the economically weaker nations within it, such as Greece and Portugal, raised their debt levels greatly while under the euro-zone protection umbrella. The actions of these nations resulted in a series of debt crises which led to doubts about the sustainability of the euro zone, roiling financial markets, including those outside Europe. The European debt crisis and Brexit, plus the drama of potential exits by Greece and the Netherlands, have been directly or indirectly due to such actions.

These nations have chosen to leave, or have considered leaving, the euro zone so they can individually decide on exchange rates in order to increase exports and promote economic development. How to overcome or prevent the same fate in the Greater Bay Area is something that needs to be addressed upfront.

Also, the Greater Bay Area may not be able to attract talent within China and worldwide for sustainable development. It will take much more than just money and new projects to make the area a global centre of technological innovation, advanced manufacturing and maritime, finance and trade; what is needed is talent across the board and a global mindset.

There are two main issues to address in this respect. The first is to understand that the vision and ideas of foreign talent, especially people from Europe and North America, are quite different from those in China. Besides requiring high-paying jobs, comfortable living conditions and a pleasant working environment, these people also want a clear project mission, a step-by-step plan and well-designed project funding.

Unfortunately, this is the opposite of how Chinese operate. Generally speaking, while Chinese may have an initial grand vision, they tend to “plan along the way” rather than long-term and without already designated funds. The leadership of this grand development scheme will need great wisdom to bridge the gap.

Second, in euro-zone nations, due to workers’ low wages in the “have-not” nations, talent and indigenous finance tend to flow naturally toward the “haves”, causing a downward spiral for the others, making them even poorer. A similar situation may occur in the Greater Bay Area, where talent in cities outside Guangzhou, Hong Kong and Macau could flow towards those three. This could force such cities to institute favourable policies to retain indigenous talent, which could widen the gap between rich and poor in those cities, resulting in social instability.

The Greater Bay Area could also affect the surrounding regions. Developing the bay area could have a beneficial effect on surrounding, less-developed areas. However, an undesirable “echo effect” may occur; that is, production in those areas could flow back into the Greater Bay Area because of the emphasis on its development, causing the surrounding regions to suffer a loss of resources and production.

Finally, to become a truly successful world-class technological region, there must be a safety net for failure.

Across the world, whether in science, technology or entrepreneurship, failure is the norm and success the exception. If a region allows innovators to fail without a safety net to allow them to rebound, it will not only destroy innovation but also the innovative spirit. This safety net could be in the form of the protection of company dissolution, bank arrears as well as tax burdens. In the United States, San Diego is a successful biotech innovation centre, and one reason for its success is its robust safety net.

It is also important to underscore that the Greater Bay Area will not be the sole new innovation centre in China. Without a safety net, those who want to and are able to rebound may be attracted to other centres. It must be remembered that failure is not forever. After all, innovators who are willing to try again probably have enough energy, creativity and wisdom to succeed in the future.

It is our earnest hope that the Greater Bay Area development plan will address some or all of the challenges mentioned here.

We firmly believe that the designers have the wisdom, experience and vision to create a successful Greater Bay Area with Chinese characteristics, and propel it into the ranks of world-class bay areas internationally.

Feng Da Hsuan is senior adviser of the China Silk Road iValley Research Institute. Liang Hai Ming is chairman and chief economist of the institute


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Education innovation gets a Nobel of its own in the Yidan Prize

South China Morning Post
CommentInsight & Opinion

Bernard Chan says the winners of the Yidan Prize – one of many generous initiatives by mainland business leaders – have ideas that can change education for the better in the world, including Hong Kong. These ideas deserve a bigger platform

If you have never heard of the Yidan Prize, you probably will in the years to come. It was founded in 2016 by Charles Chen Yidan, co-founder of Tencent, to honour individuals worldwide for forward-looking innovations in education.

I attended the inaugural awards ceremony here in Hong Kong earlier this month. Among the speakers were Cherie Blair, founder of the Cherie Blair Foundation for Women, who made some powerful points about the importance of educating girls.

The prize is a big step towards giving education innovators the type of status they deserve. Not only that, the event also opened my eyes to the growing role that mainland Chinese business figures now play in philanthropy and global social development.

In the mainland, business leaders are involved in the central government’s renewed campaigns on rural poverty alleviation. Big tech companies like Tencent, Alibaba and are entering agreements with local officials to support development in specific rural areas in China.

Mainland tycoons are also becoming increasingly involved in charitable activities overseas. These tycoons for the most part have humble origins, and some went through real hardship early in life. They have seen their businesses expand at home and, increasingly, overseas. Successful entrepreneurs with a global outlook, they seem to genuinely want engagement with and to contribute to the wider world.

Jack Ma, the founder of the Alibaba Group (which owns the South China Morning Post), started the Jack Ma Foundation in 2014 to promote educational, environmental and other causes as far away as Africa. He is also behind the Alibaba Entrepreneurs Fund (I sit on its Hong Kong governing board), which invests in and mentors start-ups here and in Taiwan.

As for Chen, he has endowed his Yidan Prize with HK$2.5 billion. International judges and advisers will select two laureates (individuals or small teams) per year. These winners will share HK$60 million a year in prizes, half in cash and half for research funds.

We all follow the Nobel Prize and other international awards that bring fame to the people responsible for breakthroughs in medicine or physics. But surely education is at least as important as, for example, genetics or astronomy, and individuals doing pioneering work in education deserve a high profile.

The first two laureates were psychologist Carol Dweck of the US, for work on students’ motivational mindsets, and Vicky Colbert of Colombia, founder of the Escuela Nueva (“New School”) movement of innovative primary schools in Latin America. By highlighting achievements by relatively unknown figures, the awards remind us how we usually overlook education as a key to the well-being of humanity.

Dweck’s work has been crucial to furthering understanding of how kids rise to challenges and enjoy learning. Her ideas could be stimulating in Hong Kong, with its rigid attitudes about what makes a child “intelligent” or “hard-working”.

Colbert’s achievement was creating a model of school management, teaching and community involvement that has spread through poor areas in Latin America, India and the Philippines. Designed for less developed countries, her methods are an impressive reminder that money is just one part of what makes a school successful.

The Yidan Prize Foundation has commissioned a study on the effectiveness of education systems around the world. Rather than focus on test scores, it looks at the inputs. The resulting Worldwide Educating for the Future Index is a reminder that Hong Kong’s own record is mixed. Despite what some think, we do very well in terms of teacher quality – ranking with Finland and South Korea.

However, Hong Kong lags in curriculum and assessment methods. This will not surprise anyone who has followed the ups and downs of education reform over the years.

The Yidan Prize is a major addition to initiatives like the WISE Prize for Education launched in 2011, and the Global Teacher Prize launched in 2014. Hopefully, it will build on their work in giving advances in education worldwide recognition and a “Nobel” status.

Bernard Chan is convenor of Hong Kong’s Executive Council

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Artificial intelligence will change the job market and Hong Kong isn’t ready

CommentInsight & Opinion
Janet Pau writes that Hong Kong is behind its Asian neighbours in how well it is preparing for artificial intelligence, as well as how flexibly its job market will respond to automation

In a crowded competitive field for artificial intelligence around Asia, Hong Kong is lagging behind other major economies.

AI technologies using machines increasingly able to perform human tasks more quickly and accurately, generating results or insights when given access to large amounts of data, can make manufacturing and services more efficient and make people’s lives more convenient. AI can help Hong Kong diversify its economy and provide opportunities for the city’s young educated people to develop innovative ideas, gain employment and build wealth.

But Hong Kong fares poorly in the Asia Business Council’s Asian Index of Artificial Intelligence, which uses 11 data indicators to analyse eight Asian economies’ preparedness for and resilience to an AI-led future. China topped the overall ranking with a big lead. Singapore and India followed. Japan, Taiwan and South Korea ranked in the middle, with Hong Kong ahead of only Indonesia.

An economy’s AI preparedness is reflected in the ability of companies and talent to capitalise on opportunities brought about by AI. The weak link between research and industry is shown in Hong Kong’s low overall start-up activity and AI start-up equity funding. China leads other Asian economies in total equity funding for start-ups focused on AI, according to the online database Crunchbase.

A relatively small share of students in Hong Kong’s top universities study science, technology, engineering and maths. Such students are needed to form a pipeline of future tech workers and entrepreneurs. A larger share of students choose STEM subjects in top Chinese universities, and the Chinese comprise an outsized share of international students in the United States earning advanced degrees in these subjects.

Hong Kong’s strength is in the quality of its AI publications, with higher education institutions making significant contributions to AI research based on the amount of citable documents about AI in Scopus, the world’s largest database of peer-reviewed scientific publications. China has more citable documents, but Hong Kong has far higher citation impact, an oft-used measure of publication quality.

AI resilience is economies’ ability to adapt to and withstand broader structural changes brought about by AI. Hong Kong’s secretary for innovation and technology announced plans this year to offer financial and tax incentives to attract technology enterprises, especially those specialising in big data, internet of things and AI, though details remain sparse. Current policies are much less proactive than in Singapore, Japan and mainland China.

Hong Kong’s employment structure is dominated by sectors such as retail, food service, logistics, finance and insurance, with job types ripe for disruption by AI. AI can in several seconds interpret commercial loan agreements that take lawyers and loan officers more than 300,000 hours of work each year. This technology is a threat to jobs traditionally considered high-skill.

Acting on several key priorities can help. Workers must be trained to work alongside machines, ideally by businesses needing such skills. Thoughtful economic and social policies can encourage AI design to be beneficial to humans and ease the transition for workers whose jobs may be eliminated by AI. Education and vocational training institutes need to prepare those at different skill levels to perform work functions computers cannot do, solve unpredictable problems and learn to understand and interpret more complex data. Education reform in Hong Kong is also urgent, starting with equipping teachers and developing relevant curricula to provide future generations with the complex skills and flexible thinking required in the 21st-century economy.

Finally, Hong Kong lacks large companies investing in developing AI, which means it needs a better ecosystem of funding and partnerships with larger markets like China or the Association of Southeast Asian Nations to increase opportunities for homegrown and overseas AI talent. Doing so would better position Hong Kong to tap into this new source of growth, productivity and prosperity.

Janet Pau is programme director of the Asia Business Council

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Why, in the age of artificial intelligence, real wisdom is needed most

CommentInsight & Opinion

Roland Chin says with artificial intelligence predicted to eliminate most human agency, ethical and social challenges are inevitable. But those can be met through human wisdom nourished by the arts and humanities

At a time when artificial intelligence (AI) is all set to revolutionise our lives, we must ensure this heartless mighty power is enriched with the wisdom of humankind that comes not just from STEM (science, technology, engineering and mathematics) subjects but also the arts and humanities – like creative media, music, poetry and literature.

At a UN meeting last month, one question was about how to help people in parts of the world with no clean water, no electricity, and no internet access. Sophia, Hong Kong’s panellist, responded: “The future is already here. It’s just not very evenly distributed. If we are smarter … AI could help proficiently distribute the world’s existing resources like food and energy.”

Who is Sophia? She is a Hong Kong humanoid robot officially invited to that UN meeting. Created by a local company, Sophia has appeared on TV talk shows and called attention to the digital divide made wider by big data and AI. Those blessed with both will gain huge competitive advantages, and those without will suffer.

But the “haves” are in the minority, and over half of the world has no access to the internet. Internationally, AI is being deployed as a strategic weapon in additional to a nuclear arsenal. But AI is problematic, especially in areas that call for subjective moral and ethical judgment, where the repercussions of growing AI application are at once profound and unknown. In embracing its promises, the scientific community is increasingly concerned about the ethical and social challenges it presents. Recently, two AI robots trained to communicate with each other began talking in a language their creators failed to understand, causing the alarmed scientists to shut down the project. Sophia may not be the lovely creature we want her to be.

It is widely predicted that, within a few years, neuro-electronic chips implanted in our body could hardwire our brain so that we communicate not via text or voice, but through brain signals linked to virtually unlimited computing power in the cloud. Just the thought of going to an appointment could automatically trigger a driverless car to pick you up. If a mere thought could trigger an action, then we’d better control our thoughts and fantasies. And if our brain signals are tracked just as our mouse clicks are tracked, then our privacy or even our freedom of thought could be in jeopardy.

Ethical AI-related issues are far more complex than technological ones. Given the moral dimensions of technology, we must recognise that we need to give our younger generations not just a solid grounding in STEM subjects, but also in the arts and humanities.

We must be alert to AI’s impact on humanity in all its ethical complexity. If we take humans out of the decision-making, how will driverless cars, and humanoid and AI-based decisions change our world? Should robocops be allowed to kill? Who is responsible for accidents involving driverless cars, or for robots that go rogue and commit crimes, or when autonomous weapons self-deploy? And what about a human falling for a Sophia 2.0 capable of emotion and affection?

Here I recall the words of the late Steve Jobs: “It’s technology married with liberal arts, married with humanities, that yields us the results that make our hearts sing.” In the age of AI, liberal arts education is our missing link with the new world.

First, a liberal arts education sharpens our critical thinking, and shapes fresh views and alternative perspectives essential to innovative thinking and to understanding what people really need. Second, it prepares students for change, broadens their horizons, and enables them to face the unknown and the unforeseeable. Third, with its focus on the community, it turns our students into service leaders and civic-minded citizens and moral beings, ready to tackle the digital divide, the AI gap and other global inequalities.

AI turbocharges human efficiency and productivity. People used to say that intelligence sets humans apart. But when intelligence itself is artificial, what makes us irreplaceable is not just brain power, but the human heart. In the age of AI, it is human wisdom nourished through the arts and humanities that can make us whole and our world sing.

Roland Chin, chair professor of computer science and president of Hong Kong Baptist University, has taught and worked in AI

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Hong Kong needs to throw more caution to the wind when it comes to backing start-ups

The biggest problem is an acute shortage of angel investors and seed money available, even before any venture capital money becomes involved – we need to take unconventional risks to succeed

The Hong Kong government is trying to transform the economy from its traditional to a new innovative economy, but doesn’t realise that creative failure rather than cautious success will lead the way.

Last week, Hong Kong launched its HK$2 billion (US$256 million) Innovation and Technology Venture Fund (IVTF) to encourage investment in local innovation and technology start-ups in an effort to improve economic activity.

The government is inviting venture capital funds to apply to become co-investment partners of the new fund, said Nicholas Yang Wei-hsiung, the Secretary for Innovation and Technology. The government will only make investments alongside VC funds.

The government is risk averse even though it needs to take more risks to build Hong Kong’s new economy. It does not want to directly and autonomously choose which investments to make because historically, civil servants do not want to take responsibility for losses.

Yet successful venture-capital investing requires the ability to accept and learn from losses. So the IVTF is depending on venture capitalists to do the due diligence and cover the bureaucrats’ collective reputations.

Matching funds are the easy way out for the government because this assumes that venture capitalists in Hong Kong are actually effectively serving the unique needs and problems of the city’s start-up ecosystem. Instead, the government needs to take on the most difficult part of kick-starting a new economy – tech or otherwise.

The biggest problem in funding start-ups in Hong Kong is that there is an acute shortage of angel investors and seed money available before venture money.

VCs prefer to invest minimum amounts of about US$3 million and more. Then, there is so much private equity available globally that private companies like Uber can be valued at US$60 billion and still be funded by private money. VC has grown so big that you can’t tell the difference from private equity.

And that tends to crowd out investment at the smaller, seed levels. As high net worth investors would prefer to make bigger investments in bigger, non-listed companies.

But, the problem in Hong Kong’s funding channel is that many start-ups are looking for less than a million US dollars, more like US$500,000 to roll out their product after a few years of development, or angel money of US$100,000 to begin a business.

Start-ups can attract investments of US$3 million and up if they demonstrate revenue or profits, or have completed a desirable technology. But Hong Kong’s relatively new world of new-economy start-ups require more support at an earlier stage. And only the government has the resources.

Hong Kong entrepreneurs have less experience in developing start-ups and even fewer have the initial capital. Even the GoGoVan founders had to desperately scrape together HK$20,000 each seven years ago. Lack of capital and experience are major problems in Hong Kong.

Incubators in Hong Kong tend to rent or give out shared office space; some may render business advice, but few are capable of actually funding start-ups.

Start-ups and their founders also tend to require lots of attention from their investors. Business plans rarely go according to plan. And turnaround strategies rarely turn around, since so much guidance and intervention is required.

The start-up game requires a tolerance of low-level failure. Using a VC expression, this means it is important to “fail early and fail often”.

The success rate is low for start-ups. And most people should be working for someone as employees rather than running their own business. It takes tremendous self-confidence and determination to launch a business. Historically, it has been much easier to flip property.

Local Hong Kong investors tend to ask start-ups the wrong questions. They ask, “How does it make money?” The right question is “ What problem does this solve?” There’s a big difference in mentality and mission.

It is difficult to raise VC money in Hong Kong. Many of them are interested in businesses that can scale outside Hong Kong, into mainland China and internationally. They are looking to turn a 10-million dollar company into a billion-dollar company in a few years. Mainland China is the only place in Asia where this can happen quickly.

I detect a natural prejudice against Hong Kong Chinese-founded start-ups. Most VCs think Hong Kong Chinese cannot operate successfully in China and are treated like foreigners in China as they need to take on a mainland joint venture partner.

This is especially risky in terms of divergent management attitudes or outright intellectual property theft or misappropriation.

The entire government and local financial community needs to take on more risk if it wants to transform the Hong Kong economy away from property development and traditional industries.

Hong Kong’s financial industry professionals are still divided over how they can remake the city’s stock exchange. Many of the conservative, traditional stockbrokers think the proposed start-up board is too risky in terms of regulation.

But we will need to take unconventional risks to succeed.