Institutional Scars Illuminated by Blood-Red Flames

When the flames at the Hong Kong housing estate were finally extinguished, 146 lives had been lost in the city’s deadliest fire in decades, with approximately 100 people still missing. The tragedy occurred in residential buildings undergoing external wall renovations, where foam panels and bamboo scaffolding allowed the fire to rapidly spread through multiple blocks. Superficially, this was a safety incident; fundamentally, it was a bloody demonstration of Hong Kong’s structural dilemmas.

Colonial Legacy: The Ghost of the Concession Economy Still Lingers

The economic development model established during the colonial period was essentially a privilege-based economic structure. British conglomerates, through concession operating systems, controlled lucrative, low-risk businesses in real estate, telecommunications, transportation, and public utilities. This wealth accumulation model—requiring no innovation but relying on rent-seeking—shaped Hong Kong’s economic DNA: prioritizing rent-seeking over creation, speculation over industry.

After the handover, this model did not fundamentally change but was continued by new proxy families. Finance and real estate became absolutely dominant, while manufacturing and technological innovation requiring long-term investment were marginalized. According to Hong Kong government data, in 2023 the value-added of manufacturing and new industrial development in Hong Kong was only HKD 76.8 billion, accounting for just 2.6% of GDP—a figure that confirms the severity of industrial hollowing out.

Industrial Hollowing Out and the Survival Dilemma of Ordinary People

Missed Transformation Opportunities

While Hong Kong was drawn in the frenzy of finance and real estate, the world was undergoing waves of technological and industrial transformation. Although the SAR government released the “Hong Kong Innovation and Technology Development Blueprint” in 2022, focusing on life sciences, AI and robotics, advanced manufacturing, and new energy technology, it was already decades behind.

Essential infrastructure for industrial upgrading was severely lagging, and there were few leading enterprises capable of substantial R&D investment and driving technological progress. While the government launched the “New Industrialisation Acceleration Scheme” and the “Innovation and Technology Industry-led Fund,” compared to the huge profits in finance and real estate, these investments were a drop in the bucket.

The Narrow Path for Ordinary People

For most ordinary Hong Kong residents, due to industrial hollowing out, personal development paths are extremely limited:

• Either squeeze into high-profit sectors like finance and real estate
• Or work in re-export trade and related industries
• Or seek livelihoods in service industries like tourism, accommodation, catering, and healthcare

Having missed high-tech, high-profit fields like IT and electronics, a generation of Hong Kong youth lost the opportunity for upward mobility through technological innovation. This lack of opportunity is not just an economic issue but a profound social crisis.

The Tai Po Fire: The Inevitable Result of Structural Problems

Why Was Safety Sacrificed for Speed?

The mechanics of the Hong Kong estate fire reveal deep-seated governance issues in Hong Kong. The use of flammable materials for external wall renovations and bamboo scaffolding point to an imbalance between cost control and safety standards. Under the concession economic model, short-term profits often take precedence over long-term safety, and superficial efficiency frequently trumps substantive quality.

Why Are Livelihood Improvements So Difficult?

The fire also exposed the fragility of basic livelihood facilities. When wealth is highly concentrated in a few sectors, when economic resources are monopolized by privileged classes, investment in public safety, living environments, and infrastructure inevitably becomes insufficient. This is not just Hong Kong’s problem but a common ailment of all societies practicing a privilege-based economic model.

The Dawn of Transformation and Its Obstacles

Government Efforts and Limitations

Facing industrial structural imbalances, the SAR government is indeed seeking change. Plans for the Northern Metropolis, the San Tin Technopole, and the Hong Kong-Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop all demonstrate a desire for technological innovation and industrial diversification. The 2025 Policy Address also proposed measures to strengthen capital market competitiveness, promote AI development, and advance tokenization.

However, deep-rooted structural problems cannot be solved by policy adjustments alone. Deloitte China’s launched “Hong Kong LEAP” strategy, planning to invest HKD 500 million over four years to support Hong Kong’s economic diversification, but whether such investments can shake the entrenched economic structure compared to the vested interests of the concession economy remains to be seen.

The Fundamental Contradiction

Hong Kong’s core dilemma lies in this: an economic system designed to serve privileged interests struggles to transform into an innovation economy that benefits the masses. The economic genes formed during the colonial period remain powerful; the temptation of rent-seeking far outweighs the drive for innovation, and the returns from short-term speculation far exceed those from long-term technological investment.

Where Lies the Path Forward?

The bloody warning of the Hong Kong fire must not fade with time. What Hong Kong needs is not minor repairs but fundamental reform of its economic system:

• Break the concession economic model, reduce rent-seeking opportunities, increase innovation incentives
• Reshape industrial policy, genuinely prioritize technological innovation and real economic development
• Improve livelihood infrastructure, place public safety above profit
• Widen development paths for ordinary people, create diversified channels for social mobility

The flames of the Hong Kong estate will eventually die out, but the institutional scars they illuminated must not be forgotten. Only when Hong Kong completely shakes off the ghost of the concession economy and builds an innovation-driven economic and social structure with inclusive opportunities can such tragedies truly be prevented.

Where does Hong Kong’s path to transformation lie? Feel free to share your views in the comments. 🔥