Why Hong Kong’s Trade Finance System Needs an Overhaul Through Project CargoX

For an economy where trade accounts for more than three times its GDP, inefficiencies in trade finance are a critical roadblock. They affect how capital moves, how quickly goods flow, and which businesses are able to access financing.

In response to this challenge, Hong Kong has unveiled a roadmap to modernise its trade finance landscape through to 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 from banks, data providers, credit reference agencies, export credit insurers, government agencies, international organisations, and the Hong Kong Monetary Authority (HKMA), the strategy focuses on increasing data availability, leveraging enhanced trade infrastructure, and expanding digital capabilities.

Source: HKMA

What is the Strategy Behind 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: data, infrastructure, and connectivity.

Source: HKMA

Firstly, under the Data pillar, CargoX aims to enhance digital trade infrastructure and advance the digitalisation of trade documentation to increase efficiency, security and transparency in trade transactions. This involves embracing digital documents, digital identity, and digital payments foundations.

Next, under the Infrastructure pillar, the Project CargoX it will enable data connectivity to accelerate trade finance automation, 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.

Finally, under the Connectivity pillar, Project CargoX will strengthen connectivity and integration with key trade corridors to optimise 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.

A Three-Horizon Roadmap for Digital Trade Integration

CargoX efforts aim to integrate data exchange with international partners and are rolled out into three phases: Horizon 1, Horizon 2, and Horizon 3.

The infographic below showcases the key initiatives, which includes a set of “evergreen” initiatives aside from the three distinct horizons.

Source: HKMA

Horizon 1 Lays the Foundations for Digital Trade

Horizon 1, running through 2027, focuses 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 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.

By integrating cargo and trade data into CDI, banks gain clearer, real-time information on an SME’s trading activity and overall business health. This allows lenders to make faster and more accurate trade finance decisions compared to traditional, paper-based shipping documents.

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

Ultimately, this will help banks in streamlining data flows, improving credit assessments, and enhancing the efficiency of trade finance operations.

Horizon 2 Builds on the Momentum

Horizon 2, expected to run from 2027 to 2028, will leverage the newly enhanced trade infrastructure to accelerate the adoption of digital trade documents.

These include the full rollout of the CorpID digital identity platform, the complete implementation of the Trade Single Window (TSW), and the enactment of legislation aligned with the MLETR.

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

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

Thirdly, the MLETR is a legislative framework developed by the United Nations Commission on International Trade Law (UNCITRAL), aimed at enabling the use and recognition of electronic documents of title for engaging in commercial activities. Its purpose is to enable international trade, enhance legal certainty, and boost investor and trader confidence.

With these foundations in place, the next phase will focus on using the enhanced trade infrastructure to speed up the adoption of digital trade documents and strengthen connectivity with key international trade corridors. This ultimately facilitates the smooth cross-border flow of digital trade documents and data.

Horizon 3 Focuses on Broadening Connectivity

Finally, Horizon 3, set to run from 2028 to 2030, will mark the full realisation of Hong Kong’s vision of a globally connected digital trade hub.

Building on its robust infrastructure and enhanced connectivity from Horizon 2, Project Cargox will fully leverage these foundations to expand digital capabilities and seamlessly integrate data exchange with international partners.

By its conclusion, Hong Kong will have established a highly efficient and globally integrated digital trade hub.

Release of the Project CargoX Recommendation Report”, produced by the Expert Panel on Project CargoX, Source: Hong Kong Monetary Authority, Jan 2026

Why Trade Finance Inefficiencies Are a Structural Issue for Hong Kong

Hong Kong stands as a prominent global trading center. In 2024, the total value of goods trade, based on the GDP compilation framework, reached HK$ 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 continues to face structural inefficiencies that constrain access, scalability, and competition.

Currently, the 12 banks with the largest outstanding trade finance loan balances in Hong Kong collectively account for 80% of total trade finance loans. This high level of concentration highlights limited competition and substantial control within the sector.

Furthermore, only a small number of local banks cater to the SME market, largely due to the inherent costs, inefficiencies, and operational burdens associated with current systems.

Many banks still rely heavily on manual paperwork and paper-based transactions, which constrain scalability, complicate regulatory compliance, and undermine cost efficiency. As a result, banks often choose to avoid SME trade finance altogether.

Digitalisation 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.

As trade volumes grow and global supply chains become more complex, the limitations of paper-based trade finance are becoming harder to ignore.

Improving efficiency through digitalisation and enhanced data connectivity through initiatives like the Hong Kong Project CargoX is therefore central, as it addresses long-standing gaps in SME access and ensures the trade finance ecosystem evolves in step with Hong Kong’s global trading role.

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

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