This month marks the 20th anniversary of its demolition.
Sounds to me like it did not work.
It worked fine for the lower class chinese refugees who moved there or lived there, although by most accounts it was somewhat like the City of Rapture from the first Bioshock, without the amazing bio-tech. Children were unlikely to be well educated by any modern measure, and by 12 most boys were running freelance jobs of their own; often specializing in providing their neighbors with drinking water, sewage handling, etc., as there was nearly no infrastructure other than the buildings themselves.
It didn't work for the British government, however, and the walled city did provide a safe haven for crime, both 'organized' and otherwise. The famous "Triads" were rooted in the walled city. And since the entire thing amounted to Hong Kong's version of a homeless squaters' tent city, the colonial government decided to tear it all down and run everyone off. It still took many years, because the residents were not the type to be run off easily, and the cops were afraid of going inside even in large groups; and with reason. Any kind of arrest that had to be performed inside the walled city was akin to ZeroDarkThirty in it's operation, and almost as risky for anyone who looked English or was wearing a badge.
EDIT: The closest modern example of the anarchist order of the Walled City would be the neighborhood of Ajegunle in Lagos, Nigeria. (
http://en.wikipedia.org/wiki/Ajegunle) The entire city of Lagos is an accident of history itself, and much of the city proper lacks "modern" infrastructure. (for which there is a particularly anarchist solution, with respect to drinkable water, known as "Pure Water" street sales. Both the government and environmentalists hate it. The government because it cannot be taxed and therefore undermines their own efforts at funding a municipal water distribution system, and the environmentalists because the empty bags are usually street litter afterwards)
Ajegunle itself is considered the 'darkest' and most crime ridden area of Lagos, and that is saying a lot. Still, many of the young poor have been able to create their own way in life as a direct result of the DIY spirit from Ajegunle. They tend not to have much respect for government regulations either, in part due to growing up in an area that is basicly ignored by government largesse. Some residents of this area are highlighted in the economics book,
The Stealth of Nations by Robert Neuwirth; which is something that likely could not have happened with residents of the Walled City since any old white guy walking around asking questions about how residents do business without governments is as likely to disappear as simply be ignored in teh Walled City.