Zhou Xiaochuan, the head of China's central bank, has on various occasions reminded the financial sector about the importance of serving the real economy rather than becoming an isolated money churning machine pumping up a virtual economy.

Zhou's warning is of particular significance at a time when the government is stepping up financial reform, which could fundamentally change the ways banks have been doing business. The move, bold in concept and wide in scope, has understandably raised some concerns about the preparedness of the banking sector and the financial markets which have never been exposed to the, sometimes unforgiving, free market forces.

The outbreak of the financial crisis in the United States in 2008 demonstrated most forcefully the devastating effect of bankers' excesses, as they led to the unraveling of the virtual economy, or the bursting of the bubble, if you like, which, in turn, plunged the United States and European economies into a prolonged slump, which has come to be known as the "great recession".

As the US and various European economies are trying to pick up the pieces from the financial fallout, politicians and economists are beginning to trumpet the need to rebuild the real economy in which wealth is generated not by churning out money but rather by adding value to commodities that people need or want to buy. What they have also finally realized is the boom in the financial sector that eclipsed most other economic sectors was a major factor in contributing to the widening wealth gap. This has become a key political issue, as highlighted in a recent speech on poverty by US President Barack Obama.

The eloquence of Obama has resonated in the Hong Kong Special Administrative Region where the glaring income disparity between the small minority at the top and the rest of the population is a key source of public discontent, manifested in frequent street protests and deepening distrust of the government. The root of the problem is widely perceived to lie in the extremely lopsided economy that is almost entirely dependent on the financial and property sectors for growth.

Hong Kong may be the object of emulation for many aspiring international financial centers in this region, particularly Shanghai, but the boom in finance, fanned by the insatiable demand for capital by mainland enterprises, is not perceived to have brought prosperity to the majority of Hong Kong people.

Instead, the financial market bonanza, which has helped greatly push up property prices, is seen as a destroyer of the middle-class, who are forced to spend a bigger and bigger portion of their income to secure a roof over their heads. What's more, income earners, other than the few in finance or property, have seen their salaries and savings eroded by rising costs fuelled by escalating property prices.

The government is trying to solve the problem by proposing to increase the supply of affordable housing, rather than by any attempt to rebalance the economy. The question is affordable to whom.

The virtual economy of Hong Kong has generated mainly unskilled and low-paying jobs with little, or no, prospects of advancement in the service sector, including retail and catering. As such, it has stymied social mobility and crippled the trickle-down effect of economic gain.

A government survey has shown an astoundingly large number of working poor whose income falls below the arbitrary poverty line. Most of them won't be able to afford the government-built "affordable" housing which are selling for more than HK$5 million ($644,788) on average.

The Hong Kong financial sector doesn't have a domestic real economy to service. Until it does, there is little the government can do to address the widening wealth gap issue other than directly subside those at the bottom end of the economic and social scale.

Zhou's cautious words are timely. The modest steps in financial reform taken so far have brought little relief to the cash-starved private sector manufacturers, the backbone of the real economy, while banks, big and small, are exploiting the opportunity to frantically restructure their assets by issuing what they called wealth management products, which are nothing more than securitization of loans, good and bad, for sale to individual investors.

The author is a senior editor with China Daily. jamesleung@chinadaily.com.cn