It is often assumed that the economic structure of Hong Kong is "excessively biased toward finance and real estate". Commentators would like to see more manufacturing in Hong Kong, and they believe that the "bias" is policy-driven. Without that bias, Hong Kong would be less "focused on real estate", its land costs lower, and the economy more diversified.
Many people are unhappy about the "hollowing out" of the Hong Kong economy, but this is really a natural development arising from market forces. During the 1980s Hong Kong's manufacturing activities migrated north to the Pearl River Delta area, before moving further inland and then north again.
Hong Kong's entrepreneurs are sensitive to market opportunities. They go where opportunity lies, and Hong Kong's land and labor costs have now risen to an extent that most traditional manufacturing activities cannot survive in Hong Kong.
Hong Kong has become more and more service-oriented, and trade and finance continue to be the main engines driving economic growth.
It is true that if Hong Kong's land and labor costs were lower, its economic structure would have been different. But why are Hong Kong's land and labor costs so high?
Hong Kong's land costs are high because land in Hong Kong is in high demand! Land is in demand for housing, for recreation, for commercial uses, for its financial industry. Additionally, Hong Kong people have indicated a preference to preserve its country and marine parks.
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