Hong Kong and Shanghai authorities are stepping up efforts to digitize trade finance and cargo documentation through a new blockchain collaboration aimed at improving cross-border data sharing.

The Hong Kong Monetary Authority HKMA has signed a memorandum of understanding with the Shanghai Data Bureau SDB and the National Technology Innovation Center for Blockchain NTICBC to jointly study the development of a blockchain-based cross-border platform. The initiative will focus on linking cargo trade data, electronic bills of lading and financial applications to make trade financing more efficient and transparent.

Joint Research Under Project Ensemble

The collaboration will be carried out under the HKMA’s Project Ensemble, launched in 2024 to explore tokenized market infrastructure and new digital rails for financial services. The partners will examine how blockchain technology can integrate trade documentation with financing processes, particularly in cross-border transactions between Hong Kong and Shanghai.

At the core of the project is the idea of building a shared digital infrastructure that can securely connect cargo information with financial institutions, allowing lenders to access verified trade data in real time. Authorities believe this could reduce paperwork, speed up approvals and lower risks associated with trade finance.

Leveraging Commercial Data Interchange and Project CargoX

The research will draw on the HKMA’s Commercial Data Interchange CDI, a blockchain-based financial data infrastructure launched in 2022. The CDI was designed to enable institutional access to corporate data, helping banks streamline lending processes by relying on trusted data sources rather than manual verification.

In addition, the partnership will build on Project CargoX, another HKMA initiative developed on the CDI framework. Project CargoX focuses on strengthening trade data capabilities to support financing and related services. By combining cargo data with financial systems, the authorities aim to create a more connected trade ecosystem.

Through these initiatives, the parties intend to test how electronic bills of lading and other digital trade documents can be integrated into financing workflows, potentially cutting down processing times and reducing operational friction.

“Important Milestone” in Digital Cooperation

Howard Lee, Deputy Chief Executive of the HKMA, described the agreement as an important milestone in digital innovation cooperation between Hong Kong and Shanghai. He said the goal is to promote new digital applications in cargo trade and finance while exploring infrastructure that links the two cities more closely.

According to Lee, the agencies plan to drive wider adoption of digital technology in trade finance, helping businesses access funding more efficiently while maintaining data security and regulatory standards.

Shao Jun, Director of the SDB, said the partnership aligns with Shanghai’s broader strategy of building a data-driven and innovation-led economy. He emphasized the importance of developing a secure, efficient and open digital infrastructure that can support cross-border trade and financial services.

Hong Kong Expands Digital Asset Tax Incentives

Separately, Hong Kong is advancing policy changes to strengthen its position as a digital asset hub. Hui Ching-yu, Secretary for Financial Services and the Treasury, announced a proposal to expand tax concessions for investment funds and family offices by including digital assets as qualifying investments.

Under the proposed changes, profits generated from digital assets held by overseas funds and family offices could become eligible for tax exemptions, subject to legislative approval. The move is intended to enhance Hong Kong’s attractiveness to global investors seeking exposure to digital assets within a clear regulatory framework.

The proposal was outlined during a meeting of the Legislative Council’s Financial Affairs Committee. If approved, it would align digital assets with other investment categories already benefiting from preferential tax treatment.

Building a Digital Bridge Between Two Financial Hubs

The blockchain trade initiative and the proposed tax reforms reflect a broader push by Hong Kong to strengthen its role in digital finance. By linking trade data, cargo documentation and financial systems through blockchain, authorities hope to reduce inefficiencies that have long challenged cross-border trade.

For Shanghai, the cooperation offers an opportunity to expand the practical use of blockchain technology in commercial and financial sectors, while reinforcing its position as a major financial center.

As the joint research progresses, both cities will test whether a shared digital platform can serve as a foundation for more integrated trade and financial services across the region.