I just noticed some interesting news about digitalization efforts in trade between Shanghai and Hong Kong. In early March, the Hong Kong Financial Regulatory Office, the Shanghai Data Office, and the National Blockchain Innovation Center signed a memorandum of understanding to develop digital trade finance. The three parties plan to jointly study the application of digital technology, explore the creation of a “cross-border platform” through the Ensemble project, and attempt to connect with trade data exchange systems.

What’s interesting is that they place emphasis on electronic bills of lading. It may sound like a minor detail, but in reality it is a crucial turning point. When you think about it, the lingering problem in global trade finance is the large funding gap—about 2.5 trillion US dollars—for small and medium-sized enterprises. Banks are not unwilling to provide loans to small businesses, but they lack reliable ways to verify trade data.

Traditional paper documents are vulnerable to forgery, and there is no way for banks to see the cargo status in real time. This collaboration aims to address that by using digitalization to enable electronic bills of lading to circulate across different platforms and be recorded on an immutable blockchain.

Interestingly, there are already real-world examples. Last January, a major Chinese shipping company issued electronic bills of lading to a Thai company through the ICE CargoDocs platform, and then forwarded them to banks in Hong Kong and Shanghai. After that, the Chinese bank received them on the same platform. This end-to-end process proves that the technology is already working.

But the next step is more complex. It requires connecting three larger systems: the provincial-level data platform, the national blockchain infrastructure, and Hong Kong’s international financial system. This is not only a technical issue, but also involves data standards, cross-jurisdiction legal requirements, and business incentives.

What I like about this cooperation is that it shows Hong Kong’s new role. It is no longer just a conduit for capital flows; it has become a “rule converter” for data and assets. Data from the mainland can, through digitalization and legal certification in Hong Kong, be transformed into assets that the global financial markets recognize.

Looking ahead, the global trade finance market is about 52.4 billion US dollars in 2025 and is expected to grow to 68.4 billion US dollars by 2030. The Asia-Pacific region accounts for most of the share and is also the fastest-growing area. This cooperation between Shanghai and Hong Kong is therefore well positioned to navigate this major transformation.

Of course, there are still many obstacles to overcome. Developing data standards takes time, legal certification requires patience, and business models must pass tests in the market. But the direction is clear: once data can flow across borders legally and efficiently and be converted into financial assets, the funding problem for small and medium-sized businesses may be solved in a fundamental way—something the industry has been waiting for a long time.