1
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to produce staggering economic inequalities. Nevertheless, due to
the favorable conditions which sustained effective' governance in
the past, the great potential for social conflicts had been
largely dissipated.
With the intrusion of the 1997 issue and the souring of the
economic miracle, Hong Kong can no longer remain a low-conflict
society. At least three major types of social conflict are
emerging, though all of them are still in the early stage of
formation. They are class conflict, conflict of identities and
the Hong Kong-China conflict.
(1) Class conflict The factors accounting for the gradual
increase in class consciousness in recent years are legion. In
the first place, the continuous decrease in income inequality in
the first three decades of the post-war period was interrupted in
the mid-1970s, since then income inequality has widened. The Gini
Coefficient was .49 in 1960, it fell to .43 in 1971. Between 1971
and 1976 it remained at .43, but then it gradually rose to .45 in
1981.28 It appears that income inequality in the 1980s continued
to widen, and the prospect in the 1990s is not encouraging.
The reversal of the process of narrowing income gap is
related to the growing significance of the service sector and
large-scale organizations in the economy. The exodus of
28 See for example Benjamin K.P. Leung, 'Poverty and Inequality,' in Benjamin K.P. Leung (ed.), Social Issues in Hong Kong (Hong Kong: Oxford University Press, 1990), p. 71; Laurence L. C. Chau,
'Economic Growth and Reduction of Poverty in Hong Kong, The Philippine Economic Journal, Vol. XVIII, No. 4, 1979, pp. 570- 615; and Steven C. Chow and Gustav F. Papanek, 'Laissez Faire, Growth and Equity Hong Kong, The Economic Journal, Vol. 91 (June 1981), pp. 466-85.
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