Hong Kong AI governance frameworks are evolving rapidly to balance innovation with safety, requiring comprehensive regulatory structures that address data protection, risk management, and cross-border compliance for emerging artificial intelligence technologies.
As artificial intelligence becomes as essential as electricity and running water, Hong Kong faces a critical challenge: how to harness AI safely while maintaining its competitive edge as a global financial hub. Recent research reveals alarming gaps in AI usage—66 percent of users rely on AI output without evaluating accuracy, while 56 percent make workplace mistakes using AI tools.
The path forward requires strengthening Hong Kong AI governance through unified regulatory standards, clear risk classification, and robust privacy protection. Expert consensus points to establishing a dedicated AI oversight body to position Hong Kong as a leader in responsible AI development.
The Current AI Governance Landscape in Hong Kong
Fragmented Regulatory Framework
Hong Kong currently operates without dedicated AI legislation, relying instead on existing laws covering data protection, intellectual property, anti-discrimination, and cybersecurity to regulate AI applications by default. This fragmented approach creates uncertainty for organizations seeking consistent guidance.
The regulatory framework spans multiple bodies:
• Digital Policy Office - coordinates AI policy development
• Office of the Privacy Commissioner for Personal Data - enforces personal data privacy
• Hong Kong Monetary Authority - governs AI in financial services
• Securities and Futures Commission - oversees AI in capital markets
"Effective governance requires coordination among these agencies to prevent regulatory gaps," notes Roman Fan Wei, managing partner of the Deloitte China AI Institute, who emphasizes that good AI governance at the corporate level makes Hong Kong companies more competitive.
The Innovation-Safety Balance Challenge
A recent University of Melbourne and KPMG survey of 48,000 people across 47 countries revealed concerning AI usage patterns. While 66 percent already use AI—some regularly—only 46 percent trust AI systems, reflecting apprehension over benefits versus perceived risks.
The study found that almost half uploaded sensitive company information onto public AI tools like ChatGPT, creating complex organizational risks. Such findings underscore the urgent need for comprehensive AI governance frameworks that address both innovation enablement and risk mitigation.
Expert Recommendations for Hong Kong AI Governance
The Case for Dedicated AI Legislation
Nick Chan Hiu-fung, a partner at Squire Patton Boggs and Hong Kong deputy to the National People's Congress, suggests Hong Kong should consider a stand-alone AI ordinance based on principles of accountability, traceability, fairness, ethical practice, privacy, safety, and human oversight.
"The proposed AI legislation should be people-centric to encourage AI development by reducing illusions and biases created by AI. At the other end, such legislation should not restrain development of the AI industry and technology," Chan tells China Daily.
Peter Kwon Chan-doo, a Hong Kong-based partner at global law firm RPC, emphasizes the importance of regulatory consistency: "It is important for regulators to ensure that guidelines and legislation are consistent to help enterprises conduct business planning and budgeting in AI deployment."
Establishing a Unified AI Oversight Body
Current governance challenges stem from the absence of a dedicated government department overseeing AI governance. Fan advocates for creating a dedicated AI regulatory body comprising government regulators, industry leaders, academic researchers, cybersecurity professionals, public representatives, and legal experts.
"As AI technology is complex and evolving rapidly, having a dedicated AI regulatory body is absolutely important for strengthening international alignment and the city's status as a global AI hub," Fan explains.
Deloitte China Trustworthy AI Partner Silas Zhu Hao believes forming systems and organizational structures should be the priority. "It should provide a reliable framework to help organizations set up AI regulatory principles by customizing those precepts into detailed procedures, processes, or interpretations to formulate a risk-based approach for AI governance."
Key Components of Effective Hong Kong AI Governance
Risk Classification and Management Framework
Hong Kong adopts a risk-based approach requiring that risk mitigation measures are proportionate to risk levels. This approach recognizes AI's unlimited potential upside and downside, demanding careful resource allocation for optimal control outcomes.
"For high-risk AI applications whose outputs may significantly impact individuals, companies should adopt a human-in-the-loop approach to ensure human operators control the decision-making process to mitigate potential errors or improper outputs from AI models," Kwon explains.
Organizations implementing AI management systems must establish clear risk classification frameworks that address:
• Model performance and reliability risks
• Data quality and bias concerns
• Operational deployment challenges
• Regulatory compliance requirements
Data Privacy and Protection Challenges
Personal data protection presents unique challenges for AI governance in Hong Kong. AI models may use publicly available texts, including personal data, conflicting with data minimization principles. When users unintentionally feed personal data into generative AI models, the information becomes embedded in large language models and cannot be easily erased.
"Hong Kong's data remains largely open to global access, with few restrictions on cross-border data flows. Such level of exposure necessitates a robust risk management framework," suggests Zhu.
The Personal Data Ordinance governs data protection, requiring enterprises to erase personal data in AI systems when no longer needed for development or use. Organizations must balance accessibility requirements for AI training with strict privacy protection obligations.
Current Regulatory Guidelines and Frameworks
The Digital Policy Office issued the Hong Kong Generative Artificial Intelligence Technical and Application Guideline in April, addressing risks including data leakage, model bias, and misinformation. This complements the Ethical Artificial Intelligence Framework introduced in 2023, requiring government departments to incorporate ethical elements in AI adoption.
The Office of the Privacy Commissioner for Personal Data published the Artificial Intelligence: Model Personal Data Protection Framework last year, providing recommendations for organizations procuring, implementing, and using AI systems involving personal data.
Sector-Specific AI Governance Requirements
Financial Services AI Regulation
The Hong Kong Monetary Authority requires robust governance for AI deployment in banking and financial services. Key requirements include senior management accountability, regular risk classification reviews, and enhanced cybersecurity controls for AI systems.
Financial institutions must implement comprehensive AI governance frameworks addressing algorithmic bias, model validation, and operational risk management throughout the AI system lifecycle.
Intellectual Property and Copyright Considerations
The Commerce and Economic Development Bureau and Intellectual Property Department have proposed introducing copyright infringement exceptions in the Copyright Ordinance, allowing reasonable use of copyrighted works for text and data mining in AI model training.
Chan supports refining the Copyright Ordinance to encourage international AI companies to settle in Hong Kong and enable local AI companies to expand globally. This addresses concerns about whether Hong Kong's existing intellectual property laws adequately regulate AI usage, particularly regarding copyright protection for AI-generated content.
Cybersecurity and System Security
Hong Kong's open data environment necessitates robust cybersecurity frameworks for AI systems. Zhu notes that Hong Kong companies' access to international and local AI models, apps, and agents could allow malicious actors to exploit AI tools and data, potentially increasing privacy violation risks and deepfake-related crimes.
Organizations must implement comprehensive security measures including:
• Encryption technologies for sensitive data
• Access controls for AI training datasets
• Monitoring systems for AI-generated content
• Incident response procedures for AI-related security breaches
International Coordination and Future Directions
Global AI Governance Standards
Hong Kong's unique position enables significant contributions to international AI governance efforts. "By combining the advantages of Western technological frameworks and Chinese regulatory standards, the city could play a contributing role in shaping global AI standards," Zhu affirms.
Fan suggests Hong Kong should actively participate in activities by multilateral organizations like the Organization for Economic Cooperation and Development and United Nations through bilateral partnerships, helping the city stay ahead on best practices, data flows, and research initiatives.
Regional and Cross-Border Cooperation
Chan advocates leveraging international mechanisms like the Asian-African Legal Consultative Organization, which has established a regional arbitration center in Hong Kong, to engage Global South countries in achieving AI governance consensus.
Hong Kong's legal experts familiar with common law, continental law, and Islamic legal systems could help draft AI regulatory standards for international recognition. The city's position within the global AI regulations landscape provides unique opportunities for bridging different legal traditions.
Building Hong Kong as an AI Hub
Creating a comprehensive development blueprint, bringing adequate technical expertise into regulatory bodies, strengthening public engagement on social and ethical aspects, and developing cross-border AI governance frameworks within the 11-city Guangdong-Hong Kong-Macao Greater Bay Area represent key opportunities for Hong Kong.
The territory's common law system, financial regulation expertise, and abundant cross-border knowledge exchange channels provide foundational strengths for buttressing AI governance frameworks.
Frequently Asked Questions
What is the Hong Kong AI model?
The Hong Kong AI model refers to a risk-based regulatory approach that balances innovation with safety through sector-specific governance rather than comprehensive AI legislation. It emphasizes proportionate risk controls, senior management accountability, and coordination across multiple regulatory bodies while maintaining Hong Kong's competitive advantages as a global hub.
What is the Chinese government strategy for AI?
China's AI strategy emphasizes technological leadership, comprehensive governance frameworks, and ethical development principles. The mainland approach influences Hong Kong through coordination requirements and shared principles, though Hong Kong maintains regulatory autonomy under "One Country, Two Systems." Understanding China AI regulations helps organizations navigate cross-border compliance requirements.
What are the applicable laws with respect to data ownership, security and information privacy in Hong Kong?
Hong Kong's primary data protection framework centers on the Personal Data (Privacy) Ordinance, which governs personal data collection, use, and transfer. Additional relevant legislation includes the Copyright Ordinance, cybersecurity regulations, and sector-specific requirements from HKMA and SFC. Organizations must navigate these fragmented requirements while ensuring comprehensive data protection.
How can organizations prepare for Hong Kong's evolving AI governance landscape?
Organizations should implement comprehensive risk-based governance frameworks, establish senior management accountability, and engage proactively with regulatory developments. Key steps include conducting regular risk assessments, implementing human oversight for high-risk applications, and developing sector-specific compliance strategies aligned with relevant regulatory bodies.
What role does Hong Kong play in international AI governance coordination?
Hong Kong's unique position bridging Western and Chinese regulatory approaches enables significant contributions to global AI standards development. The territory participates in multilateral organizations and leverages its legal expertise across different systems to help shape international governance frameworks while maintaining its competitive advantages as a regional hub.
Building Trustworthy AI Governance for Hong Kong
Hong Kong's path forward in AI governance requires balancing innovation enablement with comprehensive risk management. The territory's strengths—including its common law system, financial regulation expertise, and international connectivity—position it uniquely to lead responsible AI development in the region.
Success depends on establishing unified regulatory frameworks that provide certainty for businesses while protecting individual rights and societal interests. The expert consensus points toward creating dedicated AI oversight bodies, implementing risk-based governance principles, and strengthening international coordination on governance standards.
Organizations operating in Hong Kong's evolving AI landscape must proactively address governance requirements through comprehensive frameworks that enable innovation while ensuring regulatory compliance. The integration of AI lifecycle management principles with robust risk management creates sustainable competitive advantages.
Ready to navigate Hong Kong's complex AI governance requirements? Understanding and implementing appropriate governance frameworks positions organizations for success in Hong Kong's dynamic AI ecosystem. Expert guidance on AI regulatory compliance helps transform regulatory challenges into strategic opportunities for sustainable growth and innovation in the region's evolving digital landscape.
