As China’s annual two sessions kick off in Beijing, discussions on how to promote balanced and inclusive growth — including in the Hong Kong Special Administrative Region — are likely to take center stage in shaping the country’s future policy direction. As one of the world’s leading hubs for trade and finance, Hong Kong stands out for its global reach, financial sophistication, and commercial dynamism.

While these achievements are widely recognized, the growing global emphasis on inclusiveness underscores the importance of looking beyond the bright lights of Hong Kong’s economic success and assessing whether prosperity is being shared broadly across society. Achieving more inclusive development is not only a social imperative but also a cornerstone of long-term, sustainable growth. In this context, it is timely to take stock of the state of inclusiveness in Hong Kong.

Inclusiveness can be assessed across multiple dimensions, including income inequality, minimum wage levels, female labor force participation, and housing affordability. Some frameworks also incorporate the development of green finance as part of inclusive progress.

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Hong Kong has made significant progress in several spheres. Housing affordability in the city has improved, and the minimum wage has steadily risen in recent years. Income inequality, as measured by the Gini coefficient, has improved modestly after accounting for redistributive government policies. However, Hong Kong still lags behind its peers in female labor force participation.

Encouragingly, the overall inclusiveness index for Hong Kong has shown gradual improvement. Since the COVID-19 pandemic, the economy has moved toward more inclusive growth, driven by expanded public housing provisions and enhancements to minimum wage policy. Given the risk of widening income gaps between renters and homeowners, progress in housing affordability represents an important step toward greater inclusion. Similarly, increases in the minimum wage have helped narrow wage disparities among workers.

Despite these gains, an aging population poses a growing challenge to achieving sustainable and inclusive development. Between 1998 and 2024, the number of economically inactive individuals in Hong Kong rose sharply from 2.07 million to 2.88 million, largely reflecting demographic shifts. A shrinking labor force could weigh on overall economic output and exacerbate income inequality. Reduced labor input may dampen wage growth and weaken human capital accumulation, undermining productivity over the long term. Unless there are targeted policy interventions, these dynamics risk widening social and economic disparities. Against this background, several policy directions warrant consideration to further strengthen inclusiveness.

Raising female labor force participation and addressing the challenges posed by an aging population should be central priorities. Enhancing flexibility in working hours and employment conditions is essential. Female and elderly workers often face barriers linked to rigid work structures, caregiving responsibilities, and health-related limitations. Expanding part-time employment, remote work options, and family-friendly workplace policies could encourage broader participation. Such reforms would not only boost labor supply but also promote a more inclusive labor market.

Sustaining an inflow of skilled talent is equally important in offsetting the economic impact of aging and enhancing productivity growth. Hong Kong has already introduced various programs to attract professionals from the Chinese mainland and overseas, with some success. Further strengthening Hong Kong’s attractiveness as a place to live and work — through high-quality public services, adequate housing supply, and a supportive business environment — would help draw and retain top-tier talent. A deeper and more diverse talent pool would mitigate workforce constraints while fostering innovation and investment.

Demographic change also offers opportunities, particularly through the expansion of the “silver economy”. The elderly care sector, for example, can create job opportunities for semi-retired individuals and women with lower formal education or training. These roles often have lower entry barriers and can bolster both care provision and labor market inclusion. As demand for elderly services rises, this sector could become a meaningful source of income and social engagement for elderly or female job seekers, helping to reduce inequality and support inclusive growth.

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Achieving sustained inclusive growth requires broad-based dialogue and cooperation across society. Policy responses to population aging, such as extending the retirement age, are more effective when they reflect consensus among government, employers, and workers. Japan’s experience offers useful lessons. Its road map for continued employment of older workers has been supported by ongoing revisions to the legal framework, including the Act on Stabilization of Employment of Elderly Persons. Adapting similar forward-looking policies tailored to Hong Kong’s context could be explored.

Ultimately, inclusiveness is shaped not only by the outcome of economic policies but also by collective societal choices. Hong Kong has the resources, policy tools, and social capital to advance toward a more inclusive and sustainable future. The key challenge now lies in sustaining reform momentum and ensuring that economic growth continues to deliver broad-based benefits across all segments of society.

The author is a policy analyst and desk economist for the ASEAN+3 Macroeconomic Research Office, focusing on the Hong Kong Special Administrative Region.

The views do not necessarily reflect those of China Daily.