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Curiously, in cyberpunk media this sort of mega-slum is often portrayed as an excess of capitalist urbanization, whereas in historical reality it was an exclave of "communist" China inserted into "capitalist" British Hong Kong, wherein the "capitalist" authorities had no jurisdiction.
Funny, that.
What the fuck are you talking about? In actual reality it was a product of capitalism. Specifically British imperialist capitalism in China. It took until the mid 80’s (40 years after the Communists came to power) for the British to allow China to have control over the area and it was turned in to a park less than a decade later, clearly indicating that the Communists were in no way interested in continuing the existence of the dystopian walled city.
Sorry, are you saying the British Hong Kong authorities had any jurisdiction there?
It's more accurate to say that the British prevented either themselves (through inaction) or China (by treaty/law) from having any practical control. If you'd bother to read the wiki article OP linked you'd know. China should have had jurisdication, but Britain techincally had (imperialist) jurisdication. The result was a no-man's until Britain finally gave up.
The KMT repeatedly sent requests to reclaim the entire region but Imperial Britain pretty much refused (they proposed a ton of alternative solutions) and didn't govern it either. So yes, it's Imperial Britain's fault. Since the day Britain agreed to transfer the territory to the CCP there was a declared intent to demolish the place.
The Chinese government never actually had any authority there. It was completely within Hong Kong, and the British didn't let them go there.