The Macao Special Administrative Region (MSAR) celebrated its 15th anniversary last Friday. President Xi Jinping led the central government delegation for a 28-hour visit of the city. This was to join celebrations and meet residents as well as MSAR principal officials. Xi also attended the inaugural ceremony for the new Chief Executive. After touching down in Macao, Xi went to the largest residential estate to visit two working-class households.

Xi asked about the families' housing arrangements and how consumer prices affect their lives. He also talked to their children. The president asked the young people if they were close to libraries, the cost of their education and their future career aspirations.

"I am convinced that under the leadership of the Chief Executive and government of the Macao SAR, the Macao people from all walks of life will be united as one and make continued efforts to write an even more brilliant chapter in the story of Macao," Xi said.

His comments are surely the highest accolade a head of state has ever given Macao.

Macao's fast development since the handover has been remarkable. According to the World Bank, the city's per capita gross domestic product (GDP) in 2013 stood at $91,376, which was one of the highest in the world with countries like Qatar, Luxemburg and Norway. It was 2.41 times that of Hong Kong's in the same year; 1.72 times the United States; 2.37 times Japan's; 2.32 times Britain's; and 4.35 times its former colonial ruler Portugal's.

Singapore has long been seen as Hong Kong's main competitor in the region. It has surpassed Hong Kong in terms of per capita GDP, which was 1.45 times that of Hong Kong's last year. Macao was nowhere near the levels of these economies during its colonial era. It has not only caught up with them but surpassed them in terms of per capita GDP - which was 1.66 times Singapore's in 2013.

Macao has quickened its pace of economic transformation after achieving phenomenal growth. This was powered by gaming and tourism. It has increased investment in hi-tech industries in the newly-designated Hengqin Development Zone on the island of that name off the coast of the neighboring mainland city of Zhuhai. The MSAR is also looking at developing energy resources and the petro-chemical industry. It plans to turn Macao into an oil and gas transshipment hub. It has been reported that the MSAR intends to develop its financial sector in the next phase of economic transformation.

Benefiting from the "One Country, Two Systems" policy like Macao, Hong Kong has not been doing as well in terms of economic growth since the handover. It is now declining in importance while several other major cities in the Pearl River Delta region are surging ahead. The central government has always introduced preferential policies for Hong Kong in the past 17 years and let it enjoy the most of investment opportunities since the mainland's liberalization began in 1978. But Hong Kong's economy has not lived up to people's expectations. One has to ask "Why"?

The first cause of Hong Kong's problems is the political reforms instigated by Chris Patten, the last British colonial governor. This was in violation of the agreement between China and Britain to maintain the status quo in the years after the signing of the Sino-Britain Joint Declaration (December 1984) up to the handover on July 1, 1997. These reforms gave Hong Kong limited democracy but also harmed the city's stability and prosperity. They deepened political rivalries and precipitated social conflict. They have been causing problems for Hong Kong ever since.

Patten's undiplomatic behavior, as he prepared to leave the territory in 1997, also left a lasting legacy of political discord and social unrest in the city. The divisive nature of British rule was, of course, also evident in other former British colonies. A case in point is India, which suffered terrible social and religious upheaval after Britain left in 1947.

Another cause of Hong Kong's problems today is the socio-political elites in the city that were nurtured by the former colonial government. This was done to maintain Britain's influence in Hong Kong after the handover. These British and United States-educated political operators have caused considerable unrest over the past 17 years. This culminated in the recent illegal "Occupy Central" campaign, in addition to the frequent blocking of government bills in the Legislative Council. Consequently, this year Hong Kong had to endure violent street politics aimed at undermining the rule of law and the legitimacy of the SAR government. The people behind these destructive acts aim to sabotage the central government's sovereign rule over Hong Kong. This is in defiance of the nation's constitution and Hong Kong's Basic Law. They will keep trying to do this for as long as they can.

Xi told Hong Kong's Chief Executive Leung Chun-ying in Macao last Friday that Hong Kong's constitutional development must always match the city's real conditions. It must also be in accordance with the "One Country, Two Systems" principle and the Basic Law. The president also expressed the hope that the HKSAR government will manage constitutional reform in strict accordance to the law.

Smooth economic development is impossible without socio-political stability. These conditions are also imperative for the continued improvement of people's livelihoods. Macao has set an excellent example for Hong Kong in this regard. The biggest challenge for Hong Kong now is to complete the next stage of constitutional reform according to the Basic Law and relevant decisions of the National People's Congress Standing Committee. There will be even more setbacks to development if the opposition camp succeeds in blocking the Hong Kong government's constitutional reform plans.

The author is a veteran journalist based in Hong Kong.

(HK Edition 12/25/2014 page1)