Financial Secretary Paul Chan on Thursday warned of the problems posed by digitalisation, such as data security and job losses, adding that the city must properly address these issues.

Speaking at the Digital Economy Development New Opportunities Conference, Chan acknowledged that while digitalisation can improve business efficiency, it also brings challenges and social consequences.

“For example, how do we ensure data security? How do we properly handle the legislative and ethical issues raised by the application and usage of data? How do we deal with the social cost of digitisation - such as how A-I will affect existing jobs?” he said

“These are all important and pressing issues for us to think about, and if they can be handled properly, we can develop the digital economy much faster."

Chan noted that a committee set up to advise the government on the development of the digital economy will come up with proposals this year.

The finance chief added that the government plans to discuss with mainland officials how to increase the amount of data from the mainland that can be used in Hong Kong.

He said the initiative was aimed at boosting the city's competitiveness.

Chan said both sides would explore the establishment of a framework for managing cross-border data exchange and explore the potential for data trading.

At the same event, Liu Guangyuan, deputy head of the liaison office, praised Hong Kong for its innovation and technology infrastructure, scientific research capabilities and start-up ecosystem.

He said Beijing would offer Hong Kong full support in developing its digital economy.

“At present, in developing an international digital economy, companies face challenges such as unilateralism and protectionism from a few countries. And Hong Kong is also subject to unreasonable suppression by certain countries, but no containment or suppression can stop the pace of China's development,” he said.

“I believe as long as we work together, Hong Kong’s digital economic development is bound to prosper and the Liaison Office will continue to offer its full support to the SAR.”

Echoing Liu, former chief executive CY Leung said Hong Kong must combine its needs and capabilities with the mainland if it is to integrate into the national development of the digital economy.