I tend to disagree with you a lot, but the points you bring up here are (lamentably) very good.
> 1. HK was a middleman
Agreed. And as you say, that role is quickly fading.
> 2. HK failed to develop its industrial base.
Yes. There's always talk of making it a hub for [medicine/startups/arts/...], but efforts are half-hearted at best (compared to e.g. Singapore), and there's not much to show for it.
On the other hand, with the secular move from agriculture to manufacturing to service industries, this might not be that much of a problem - if HK maintained or developed its excellence in service industries (and the professions).
> 3. HK's retail sector
HK's retail sector lives of mainland tourists and the fact that there is no import taxes/duty and no VAT in HK (thus tons of mainlanders cross over for extended shopping sprees, supporting luxury shops that increasingly drive out shops catering to the local population, and driving up rents). It's huge in HK, but not sure that's necessarily a good thing. And, yeah, the innovation is basically that shopping malls have built-in terminals for buses to the border - wow.
Also, agreed, the chat/mobile payment system in China is very very innovative and impressive, probably way ahead of anywhere in the world.
> 4. HK's Infrastructure is no longer considered as good.
Well, by worldwide standards it's still excellent, it's just that China's infrastructure has caught up tremendously, and even overtaken it.
> 5. HK is losing its financial capital status fast.
Yes. That might not even be a bad thing. Problem is that it was one of the main drivers of HK prosperity, and I'm not sure there's a replacement in sight.
> All this come to a real question here: is HK declining or just returning to where it suppose to be?
Well. Decline seems inevitable, but implying that that's "where it is supposed to be" is a bit harsh. HK is a unique place with a unique history and people and unique achievements - it basically anticipated China's growth by a few decades.
And, of course, your "real question" reflects the Chinese perspective that naturally China sits on the top of the world, and the recent "century of humiliation" was just a temporary aberration.
I don't buy into this sort of historical determinism, and that idea of China's natural supremacy is as silly as US American exceptionalism or Hegel's notion that civilisation found its culmination in 19th century Germany.