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Denise Tsang

Vivian Au

In the first of a two-part series on the economy as Hong Kong marks 29 years since its return to Chinese rule, Denise Tsang and Vivian Au look at efforts at transformation, including the city’s bet on the Northern Metropolis, and the challenges ahead. Read part two here.
Molly Lam lives alone in a public housing flat in Tsuen Wan but fear is a constant companion as she worries about losing her job.
The restaurant worker in her sixties has seen how her company is shrinking its operations amid an industry downturn.
Earning HK$12,000 (US$1,540) a month, which is just enough to cover living expenses, she has little interest in news about a buoyant stock market, a stable unemployment rate or even a strong turnaround in the city’s economic growth.
“These things mean very little to working-class families like me,” she said.
“The administration focuses heavily on high-end IT industries, which offer no safety net for low-skilled labourers like me.”
In North Point, Celeste Yeung, co-founder and chief operating officer of Chinese pastry restaurant Time To Gold, is battling a host of issues. She fears the city’s food and retail sectors are faring worse now than during the three years of the pandemic, which began in 2020.
“Cash flow is severely strained by weakened domestic spending, soaring rents, and many residents heading to mainland China or overseas during holidays,” Yeung said.
The struggles of frontline workers like Lam and small and medium-sized enterprises such as Time To Gold reflect a disconnect for sections of Hong Kong society. The city may have emerged from Covid-19 with a much stronger economy but they feel they have not been part of the recent boom.

Since Chief Executive John Lee Ka-chiu took office in 2022, he has focused on driving the city out of the malaise of the 2019 protests and the pandemic, trying to improve livelihoods and embarking on an economic transformation. On top of that, he is shepherding the city to launch its first-ever five-year plan to align with national development.
A thriving stock market and other robust macroeconomic indicators point to success but mask pain points, experts and industry leaders say.
The city’s leader will have to address the plight of those struggling with the transition, plug the gaps in the uneven economic recovery and provide more immediate support to lower-income groups, they suggest.
“There is a gap between mid- to long-term strategic policy intent and the immediate, daily operational survival of frontline businesses,” said Kenny Shui Chi-wai, vice-president of Our Hong Kong Foundation think tank.
Undercurrents behind bumper growth
Against the backdrop of recovery, Hong Kong has also been in the crosshairs of the geopolitical tensions between China and the United States. Since March, it has also had to deal with the impact of the Middle East war.
Hong Kong has had to reinvent itself through an economic upgrade and transformation of its approach to its four traditional pillar industries – financial services, trading and logistics, tourism and professional services.
Its gross domestic product (GDP) rebounded from negative territory in 2022 to show growth in the first quarter of 2023.


The recovery has since accelerated to the strongest quarterly growth in nearly five years in the first quarter of this year, at 5.9 per cent year on year.
Retail sales, an economic bellwether, rose only marginally between 2023 and 2025, and have stabilised at around HK$30 billion a month in the past year or so.
“This macro-driven growth is expected to eventually stimulate local consumption, but the traditional retail and catering sectors are still facing severe hardships despite the broader economic transition,” lawmaker Peter Shiu Ka-fai said.
He said GDP figures reflected increased capital inflows that had boosted financial development and strengthened overall economic momentum, while the retail and catering industries continued to sputter.

Shiu added that bricks-and-mortar industries such as retail and food and drink were being heavily squeezed by a structural shift towards cross-border shopping, both via online e-commerce and travel to the mainland, and would need time to adapt.
Hong Kong’s initial public offering market has raised HK$140 billion (US$17.9 billion) in the first four months of the year, maintaining its global lead, in addition to the city being the world’s largest cross-border wealth management centre.
Swiss-based business school IMD earlier this month ranked Hong Kong as the second most competitive economy in the world after Singapore, its best performance in seven years.


Shui of the think tank said top-line GDP growth had “masked a prolonged period of economic weakness over the past year that has left domestic sectors trailing behind but commercial property and traditional retail remain highly challenging, squeezed by high vacancy rates”.
Changing consumption patterns of Hongkongers and mainland tourists were aggravating the economic dilemma, he said, with residents heading across the border on weekends and holidays to spend while visitors to the city were on a shoestring budget.
“Traditional enterprises are navigating deep-seated challenges including strict commercial credit environments, limited liquidity, shifting regional consumption habits, heavily compressed retail and catering revenues, and high inflation across rent and logistics,” Shui said.
Will bets on tech and Northern Metropolis pay off?
To create new sources of growth, the chief executive is pressing on with a series of innovation and technology-led initiatives, ranging from artificial intelligence (AI) applications across the city to the Northern Metropolis megaproject. He also recently led a high-level business delegation to Central Asia to explore new opportunities.
Lee is expediting the Northern Metropolis, especially after the recent visit of Beijing’s point man on Hong Kong affairs, Xia Baolong. The project aims to transform 30,000 hectares of land along the border with Shenzhen into a housing hub, a university town and an innovation-driven economic engine.


Sue Lam Wai-han, chief operating officer of biotech start-up Pentide Therapeutics, based in the Hong Kong Science Park, felt the Northern Metropolis was strategically vital to the city’s future development but said emphasis was on attracting larger corporations and multinational pharmaceutical companies.
She said pharmaceutical start-ups such as Pentide needed clinical trial support, capacity to make their products following Good Manufacturing Practice – a quality assurance standard – and efficient regulatory and approval processes. The government has pledged to build an ecosystem.
“There are products and infrastructure, but there is a missing link in clinical trials,” she said. “We are desperate to start a clinical trial, which is crucial for a biotech start-up like us, before putting products on the market.”

Lam, 49, and her two co-founders have persisted with their biotechnology ambitions since establishing Pentide in 2021. The start-up focuses on developing innovative drug delivery methods such as nasal sprays to enhance treatment effectiveness.
To bridge funding gaps, they have tried to generate revenue from their core intranasal peptide treatment development by branching into health supplements while hoping the government will connect them with pharmaceutical factories.
“We were educated in Hong Kong, our products are local inventions and we ultimately want to become a leading local biotech start-up, but the road to success is very rough and tough,” Lam said.
Hong Kong General Chamber of Commerce CEO Patrick Yeung Wai-tim said the city’s economic transformation would inevitably cause some pain during the process.
“Business transformation is like a woman having a baby,” Yeung said.
“Even after a woman gives birth, the baby needs special care in the initial period. Hong Kong’s transformation is like going through this process.”
He added: “Hong Kong is finding its direction of transformation, but success is not guaranteed and everyone must work hard.”
A case in point is fast-food chain operator Cafe de Coral Holdings. Chairman Sunny Lo Hoi-kwong described last year as a period of restructuring to adapt to the city’s new spending patterns.
He said the group closed underperforming outlets and expanded into new residential areas, provided more discounts, offers and menu options, adopted digital tools and AI, improved efficiency and controlled overheads and rental expenses. Its workforce shrank by 8 per cent to 17,444 employees as of March 31, compared with a year earlier.

Lo said these measures helped Cafe de Coral recover some lost ground in the second half of 2025, but net profit still fell 29.4 per cent to HK$164.1 million in the financial year ending March 31.
“In tough times, a purely defensive strategy is not enough. After the setbacks of the first half, we have regrouped and recovered – and are now ready to return to offence,” he said.
Shui said rapid AI transformation was opening up new avenues for business survival. Rather than relying solely on top-line consumer growth, many firms were successfully deploying generative AI and automation to cut operating costs, optimise logistics and improve overall operational efficiency, he added.
“Authorities can look at boosting SME knowledge regarding available public resources and expanding one-stop services for corporate upgrading, as many firms remain unaware of their eligibility across over 40 funding schemes,” he said.
Maverick entrepreneur Ricky Wong Wai-kay has gone even further by diversifying from his mainstay, HKTVmall, the city’s largest online shopping platform, into life sciences.
Although his flagship firm, Hong Kong Technology Venture Company, sparked an outcry over controversial experiments involving detached animal heads and limbs, Wong said in April that his goal was to improve quality of life for the elderly through technology.
However, businesses such as the restaurant Time To Gold, which supports the elderly by employing them, face significant difficulties in adopting AI.
Co-founder Yeung admitted that deploying technology could lead to unemployment among the elderly staff, which would defeat the purpose of hiring them.
“I am eager to find a solution to our current problems,” she said.
Big policies, but little urgent support?
For logistics worker Willian Chu, 65, who lives in a subdivided flat in Sham Shui Po, all the ambitious talk and plans for the Northern Metropolis and technological developments are above his head. He just fears how they will eat into social welfare disbursements.
Chu makes HK$15,000 a month and his main worry is that the massive project may drain government coffers and result in smaller social subsidies for lower-income groups.
“Once the government said the budget was tight, subsidies like the transport allowances were cut,” he said, recalling a past cutback.
He noted that the government had rolled back standard welfare subsidies for low-income families rather than helping to improve their living standards.
“I believe the final outcome of the Northern Metropolis will ultimately have no meaningful impact on the city’s poorest people,” he said.

Terence Chong Tai-leung, executive director of the Chinese University of Hong Kong’s Lau Chor Tak Institute of Global Economics and Finance, said the Northern Metropolis had yet to deliver tangible benefits to low-income workers as it was still in the development phase.
“Consequently, labourers and the retail industry must navigate this transition and restructure by themselves,” Chong said.
He suggested the government cap imported labour to reduce job competition for local workers.
While acknowledging that the shifting environment and broader economic transition had inevitably hit certain sectors more than others, Chong said he believed that Hong Kong’s overall economy would continue to perform well.




Political observer Lau Siu-kai, a consultant to the semi-official Chinese Association of Hong Kong and Macau Studies think tank, said the city was facing a structural erosion of its traditional competitiveness even as professional services retained a residual advantage.
The city lagged behind regional competitors in IT development and traditional sectors such as tourism were no longer sufficient to sustain the economy, Lau said.
He added that the city simply lacked the land required for IT development.
“Hong Kong has no choice but to press ahead to develop technology, and the Northern Metropolis is probably our only choice,” Lau said.
Lawmaker Lam Chun-sing, chairman of the Federation of Hong Kong and Kowloon Labour Unions, urged the government to provide AI courses and retraining programmes, and to limit imported labour to support local employees.
“The government could consider a hire first, train later approach,” he said of the collaboration between the government’s Upskill Hong Kong, formerly the Employees Retraining Board, with the private sector over manpower training.
Yeung of the chamber pointed to the government’s determination in formulating its first five-year plan, which would give the city its direction for mid- to long-term development.
“Hong Kong must not give up its international status, which will create synergies with Shenzhen in the Greater Bay Area regional economic development,” he said.
Yeung added that Hong Kong could also play a critical role in helping mainland companies “go global” while businesses had a window of opportunity to explore new markets amid improved US-China ties.
“The chief executive had opened the giant doors in new markets such as Central Asia by leading a trade delegation there,” he said. “Now it will be the turn of business chambers to open the smaller doors.”
For restaurant worker Molly Lam, her immediate concerns revolve around whether she can keep her job.
“The government seems completely fixated on the Northern Metropolis, betting everything on it to turn the economy around,” she said.
“But honestly, the authorities should bet on citizens like us, the working class.”


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Hong Kong economy

Hong Kong’s big economic dreams: what’s the reality and where do the poor fit in?

Illustration: Henry Wong 

Celeste Yeung of Time To Gold says some sectors are faring worse than during the pandemic. Photo: May Tse

Lawmaker Peter Shiu says the  retail sector is feeling the squeeze. Photo: Jelly Tse

Sue Lam is a co-founder of biotech start-up Pentide Therapeutics. Photo: Sun Yeung

Cafe De Coral chairman Sunny Lo says the firm has “regrouped and recovered”. Photo: Jonathan Wong

Logistics worker Willian Chu says standard welfare subsidies have already been rolled back Photo: Dickson Lee

More of Northern Metropolis set to benefit from eased flow of cross-border resources

The Hong Kong side of the shared tech zone. Photo: Eugene Lee

The San Tin Technopole area of the Northern Metropolis. Photo: Edmond So

University town framework unlikely to be unveiled before five-year plan released

One of the sites for the proposed university town is in the Hung Shui Kiu/Ha Tsuen area. Photo: Elson Li

Lawmaker Lawrence Tang. Photo: Karma Lo

News

Hong Kong

Hong Kong Economy

Experts and industry leaders say thriving stock market and other robust macroeconomic indicators point to success but mask pain points


Experts and industry leaders say thriving stock market and other robust macroeconomic indicators point to success but mask pain points.


Hong Kong’s big economic dreams: what’s the reality and where do the poor fit in?

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Experts and industry leaders say thriving stock market and other robust macroeconomic indicators point to success but mask pain points

Experts and industry leaders say thriving stock market and other robust macroeconomic indicators point to success but mask pain points