September 26, 2024 · 《Ming Pao》
The principle of “50 Years of No Change” is an important policy and commitment within the “One Country, Two Systems” framework. For more than 20 years after Hong Kong’s return, “50 Years of No Change” was treated as a golden rule. Social elites and public discourse used past “unchanging” values and standards to judge new developments, and society grew accustomed to looking backwards rather than forwards. As a result, the community lacked a vision for the future and struggled to shape it. Hong Kong’s development gradually lost momentum and even stalled, and the city’s competitiveness was overtaken by neighbouring major cities.
Today, under the urging of the central government, the refrain “recognise change, respond to change, seek change, and achieve better development through reform” is being sung from the rooftops. If “50 Years of No Change” was the marker of the “first return”, the reform under “recognising, responding, and pursuing change” will become the main theme of the “second return”.
Recently, Hong Kong’s media has carried many articles discussing how the city should reform — covering government administrative reform, industrial policy reform, and land and housing reform, among others. This article does not intend to repeat those discussions. Instead, it adopts a higher-level and more macro perspective, drawing on reform experiences from China and abroad to explore Hong Kong’s reform.
For reasons of length, this article is divided into three parts — upper, middle, and lower: Part 1 (published on September 5, 2024 in Ming Pao) analysed the merits and faults of the “50 Years of No Change” policy and sketched out the background to reform; this article (Part 2) focuses on why reform always faces obstacles that are difficult to overcome; Part 3 will explore how to overcome opposition and successfully carry out reform.
1. Do Historical Reformers Always Meet Bad Ends?
China’s reform and opening-up was pioneered by the Shenzhen Shekou Industrial Zone, which began a year before the establishment of the Shenzhen Special Economic Zone — a “zone within a special zone”. The commander-in-chief at Shekou at the time was Yuan Geng of the Hong Kong-based China Merchants Group. Although he enjoyed strong central support, dissenting voices still rang out. When Hu Yaobang inspected Shekou in early 1983, Yuan Geng voiced his anxieties about reform: “There are many things we want to change. Every step we take meets with difficulties and resistance. Looking back at history, reformers have mostly met bad ends — from the reforms of Shang Yang and Wang Anshi, to the Kang-Liang Reform Movement, and the subsequent failure of the Six Gentlemen.”
China’s reform achievements are impressive, showing that reformers do not necessarily meet bad ends. Yet Yuan Geng’s anxieties tell us that reform, whether in China or abroad, is often fraught with setbacks — China’s reforms being no exception. Even when reform benefits the majority, the process still tends to provoke fierce opposition, so that many reforms that would benefit the broader community are aborted before they begin. Why is reform always so “inflammable”? This is the focus of the detailed discussion that follows.
2. The Losers and Winners of Reform
Reform always has losers and winners: losers suffer “losses” while winners enjoy “gains”. Yet in terms of individual psychology, social psychology, and political and economic influence, the two sides’ “gains” and “losses” are not equal — losers care more about their “losses” than winners care about their “gains”; society values the losers’ “losses” more than the winners’ “gains”; and political mechanisms likewise place greater weight on the losers’ “losses” than on the winners’ “gains”. It is therefore hardly surprising that many reforms beneficial to the broader community are stillborn.
From the perspective of individual psychology, the losers’ “loss” is the seizure of benefits already in hand, and they will naturally resist with all their might. The winners’ “gain”, by contrast, lies in the future (after reform) — and future benefits are not as tangible as present ones (in economic terms, they must be discounted). Moreover, the future is always uncertain: even if a large group of winners emerges after reform, whether one will be among them is unknown (as the Western proverb has it, “a bird in the hand is worth two in the bush”). Thus losers care more about their “loss” than winners care about their “gain”.
From the perspective of social psychology, the failures easily attract sympathy, while the successful easily attract envy. From the workings of political mechanisms, the “status quo” (whether reasonable or not) already exists; to change it requires not just a host of arguments, but the accumulation of sufficient political momentum. Moreover, losers will take to the streets in protest, while winners generally will not openly support reform — out of fear of provoking envy — and will simply “grow rich in silence”. Social psychology and political mechanisms thus likewise place greater weight on the losers’ “loss” than on the winners’ “gain”.
3. The Stumbling Block: ‘Special Interest Groups’
The losers of reform are often “special interest groups” that hold vested interests. Although small in number, these groups often manage to push democratic governments into adopting policies that harm the general interest in order to enrich themselves, producing the strange phenomenon of a minority exploiting the majority. Mancur Olson, the founding scholar of public choice theory, clearly explained as early as the 1960s why so many small groups in the United States and other Western countries are able to exploit the masses for their own benefit.
In simple terms, the broad masses are too numerous to organise effectively (the cost of organisation is too high), whereas the cost of organising a small group is much lower. Through peer pressure and mutual monitoring, the group can ensure that every member shares the cost of organisation (in economic terms, this overcomes the “free-rider problem”), enabling it to lobby successfully for policies that work to its own advantage.
For example, in 2021 the US auto-manufacturing industry employed around 180,000 workers, equivalent to 0.05% of the US population and 0.1% of the labour force that year — clearly a small group, not a mass one. Yet this small group was able to push the government to use tariffs or import quotas to restrict foreign cars, exploiting the broad US consumer base by raising car prices for its own benefit. The harmed majority, precisely because of their numbers, found it hard to organise against this “rob-the-many-to-help-the-few” policy.
4. Special Interest Groups in Hong Kong
Hong Kong has no shortage of special interest groups — including many licensed professional bodies, indigenous inhabitants of the New Territories, taxi associations, and others. Unhappily, the “50 Years of No Change” principle in the Basic Law, by constitutional means, entrenches the special interests of the New Territories indigenous inhabitants, making it the biggest obstacle to the city’s acquisition of new land.
The quality of Hong Kong’s taxi service has long been a public complaint, and the government’s prolonged refusal to open up shared ride-hailing (such as Uber) has become a sore point in transport policy. Calls to reform the taxi trade have grown louder in recent years, but the reform the government favours — a tendered “taxi fleet” scheme — still does not open up shared ride-hailing. It is a watered-down reform package.
Many major cities abroad and in mainland China have long opened up shared ride-hailing. Why is it so hard to reform Hong Kong’s taxi trade? The city currently has some 18,000 taxis and around 40,000 drivers, against as many as 210,000 Uber drivers, a labour force of more than 3.8 million, and a population of over 7 million. The taxi trade and taxi drivers are clearly a minority, not a majority. Moreover, those who hold vested interests in the taxi trade are mainly the small number of merchants who snapped up taxi licences, not the drivers themselves with their meagre incomes.
The prolonged inertia of taxi reform in Hong Kong amply demonstrates how difficult it is to overcome opposition from “special interest groups”. The political clout of the taxi trade should not be underestimated: during the 2014 Occupy Central movement and the 2019 anti-extradition bill unrest, the taxi trade was a steadfast supporter of the government. On grounds of political propriety alone, it is hard for the government to “turn the knife” on the taxi trade.
Moreover, the taxi trade is capable of paralysing Hong Kong’s traffic: in early 1984, a taxi strike protesting the government’s increase in taxi-licence fees and first registration tax not only brought traffic on Hong Kong’s main roads to a standstill but escalated into rioting, leaving many injured and requiring the police to fire tear gas to restore order. The government quickly capitulated to the taxi trade and withdrew its fee-and-tax-hike proposals. Since then, the government has proceeded very cautiously with any policy that might affect the interests of the taxi trade.
Recently, three mainland ride-hailing giants — Alibaba’s “Amap (Gaode) Taxi”, “Didi Chuxing” and Geely’s “Cao Cao Mobility” — have successively entered the Hong Kong market, bringing with them the possibility of a “regime change”. These three ride-hailing giants are mainly operating online-hailed taxi and cross-border hire-car services in Hong Kong, rather than Uber-style shared ride-hailing. However, these three giants are financially powerful and well-resourced: they have the capacity to run the taxi fleets the government has earlier put out to tender, and the capacity to reshape the ecosystem of Hong Kong’s hire-car industry, which will substantially weaken the political power of local taxi merchants.
The author sincerely hopes that the government will seize the opportunity presented by these three new entrants and move further to fully open up shared ride-hailing, rather than allowing these three giants to become the new vested-interest conglomerates.
5. The Stumbling Block to Land and Housing Reform
As central government officials have stressed, land and housing is a deep-seated contradiction in Hong Kong. Many commentators in the community argue that Hong Kong should follow Singapore’s public-housing model, which gives all Hong Kong permanent residents the right to purchase public housing. The author also endorses this direction of reform, but wishes to point out that Hong Kong’s land and housing reform faces two stumbling blocks that Singapore does not.
First, Hong Kong’s Basic Law entrenches the traditional land rights of the New Territories indigenous inhabitants, so that land resumption in Hong Kong is far more difficult than in Singapore. Second, the entrenched interests facing public-housing policy in the two cities differ greatly. The Singaporean government had the foresight early on to push a public-housing policy oriented towards owner-occupation. At the time, the great majority of Singapore’s citizens were “homeless snails” (i.e. without their own homes), with property owners only a small minority — who did not have the political clout to oppose the government’s public-housing policy.
Hong Kong’s public-housing policy, by contrast, has lacked long-term planning and has evolved in response to changing historical conditions — from resettlement blocks to rental public housing, plus the Home Ownership Scheme — becoming an immensely complex system. It now includes transitional housing, public rental housing, subsidised sale flats, “sandwich-class” housing, as well as the Donald Tsang-era “My Home Purchase Plan” housing, the CY Leung-era “Hong Kong Property for Hong Kong Residents” housing, the Carrie Lam-era “Starter Homes for Hong Kong Residents” housing, the John Lee-era “Light Public Housing”, and more (it seems every Chief Executive has to come up with a new gimmick). As a result, multiple special interest groups have emerged, forming a vast and unmanageable monster that resists reform.
Currently, around 51% of Hong Kong households own their own homes, while the remaining 49% are “homeless snails” (without a home of their own). For would-be reformers, this situation is deeply awkward: if property prices rise, half of Hong Kong benefits while the other half is harmed; and vice versa. How, then, should Hong Kong’s land and housing reform be carried out? Fortunately, Professors Yue Chim Richard Wong and Baldwin Wong of the University of Hong Kong have already put forward detailed and well-developed proposals for housing reform in Hong Kong, so the author need not show off his limited skill here. What the author wishes to emphasise is that housing reform in Hong Kong is a hugely complex social, economic, and political system-engineering project.
For reasons of length, this article ends here. Part 3 (the final part) will explore the various ways in which the opposition of interest groups can be overcome and reform successfully carried out.
(Translation supported by AI)
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