Hong Kong’s Project CargoX Aims to Digitally Transform Trade Finance by 2030

Hong Kong has released a new roadmap to modernize its trade finance landscape by 2030. The initiative, called Project CargoX, aims to transform Hong Kong into a trusted, data-driven hub for digital trade finance.

Developed by a panel of more than 20 experts representing banks, data providers, credit reference agencies, export credit insurers, government agencies, international organizations, and the Hong Kong Monetary Authority (HKMA), the strategy focuses on increasing data availability, leveraging enhanced trade infrastructure, and expanding digital capabilities to integrate data exchange with international partners. It’s divided into three phases.

Horizon 1, running through 2027, will focus on increasing data availability and laying the foundations for digital trade. It will involve integrating government logistics and customs data into the Commercial Data Interchange (CDI), allowing banks to gain access to digital trade data and enhance access to trade finance, especially for small and medium-sized enterprises (SMEs).

CDI is a financial data infrastructure launched in 2022 by the HKMA. It’s a platform for consent-based sharing of commercial data, in particular the data of SMEs, between 26 banks and 17 data providers, facilitating easier access to financial services for SMEs.

Integrating cargo and trade data into CDI will allow banks to see clearer, real-time information about an SME’s trading activities and overall business health. This will help lenders make faster and more accurate decisions on trade financing, compared to using traditional paper-based shipping documents.

Over time, more sources and trade-related data from other providers will be connected to CDI to complement these government datasets. This includes borrower cash flow data, allowing banks to develop accurate credit scoring models specifically for SMEs.

Horizon 1 will also see the rollout of key foundational trade infrastructure projects, including the CorpID Platform, the Trade Single Window (TSW), and the enactment of legislation aligned with the Model Law on Electronic Transferable Records (MLETR).

The CorpID Platform, a digital corporate identity platform, is anticipated to be launched by the end of 2026. Developed by the Digital Policy Office (DPO), it aims to facilitate electronic government services for businesses and streamline their online business transactions.

TSW is an one-stop electronic platform for lodging various types of import and export trade documents with the government for trade declaration and customs clearance purposes.

MLETR is a legislative framework developed by the United Nations Commission on International Trade Law (UNCITRAL) with the goal to enable the use and recognition of electronic documents of title to engage in commercial activities. It aims to facilitate international trade, enhance legal certainty, and boost investor and trader confidence.

Horizon 2, expected to run from 2027 to 2028, will leverage the newly enhanced trade infrastructure to accelerate the adoption of digital trade documents. This phase will also seek to increase connectivity with key international corridors, and facilitate the seamless flow of digital trade documents and data.

Finally, Horizon 3, set to run from 2028 to 2030, will mark the full realization of Hong Kong’s vision of a globally connected digital trade hub. Building on its robust infrastructure and enhanced connectivity from Horizon 2, Horizon 3 will expand the city’s digital capabilities and seamlessly integrate data exchange with international partners.

Project CargoX

Project CargoX is a multi-year, public-private collaborative project led by the HKMA that aims to make Hong Kong a leading global trade and finance hub. The initiative is articulated around three pillars:

Enhancing digital trade infrastructure and advancing the digitalization of trade documentation to increase efficiency, security and transparency in trade transactions. This involves embracing digital documents, digital identity, and digital payments foundations;

Enabling data connectivity to accelerate trade finance automation and allowing for a transition towards more streamlined and paperless trade finance processes. This foundation will underpin the automation of trade finance processes, the enhancement of credit decision-making by financial institutions, and the innovation of new trade finance products;

Strengthening connectivity and integration with key trade corridors to optimize cross-border flow of digital trade data. Collectively, connectivity with key trade corridors, interoperable standards and overall ecosystem enhancements will ensure that Hong Kong stands as a globally connected trade hub.

Addressing trade finance inefficiencies

Hong Kong stands as a prominent global trading center. In 2024, the total value of goods trade, based on the GDP compilation framework, reached HKD 9.9 trillion (US$1.3 trillion), equating to 311% of GDP, according to government data. Including the value of trade in services, the ratio of total trade to GDP stood at 359% that year, significantly surpassing the global average of approximately 58% in 2023, according to World Bank data. This underscores an economy deeply integrated with and dependent on global markets.

Despite the critical role of international trade in Hong Kong’s economy, the trade finance ecosystem still faces significant inefficiencies and issues.

Currently, the twelve banks with the largest outstanding trade finance loan balances in Hong Kong collectively account for 80% of total trade finance loans. This concentration highlights limited competition and substantial control within the sector.

Furthermore, only a few local banks cater to the SME market primarily due to the inherent costs, inefficiencies, and operational burdens associated with doing so under current systems. Many banks still rely on manual paperwork and paper-based transactions, which constrains scalability, complicates regulatory compliance, and undermines cost efficiency. As a result, banks often choose to avoid SME trade finance altogether.

Digitalization promises to address these challenges. By replacing paper-based processes with electronic documents, and leveraging interoperable digital networks, transaction times can be shortened from weeks to days or even hours. At the same time, operational and compliance costs can be reduced, fraud risks mitigated through enhanced traceability, and credit and risk assessments improved through access to real-time data.

Importantly, digital trade finance promises to expand access to financing for SMEs. In 2022, the global trade finance gap grew to a record of US$2.5 trillion, representing 10% of the total global export value, according to the Asian Development Bank (ADB). SMEs were the most impacted. While 38% of the applications received by banks were from SMEs, a larger share of rejections, 45%, was attributed to these businesses.

Featured image: Edited by Fintech News Hong Kong, based on image by HKMA and lifeforstock via Freepik

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