Hong Kong is world's freest economy yet again, but not for long, group behind rankings warns

The Canada-based Fraser Institute has warned that Hong Kong’s decades-long reign as the world’s freest economy may be coming to an end.
PHOTO: South China Morning Post

Hong Kong has been crowned the world’s freest economy yet again by the Canada-based Fraser Institute, but the organisation’s latest report has also warned that Beijing’s heavy hand will drag the city down in future rankings – an assertion local officials were quick to deny.

The research body’s Economic Freedom of the World (EFW) report, published on Tuesday (Sept 14), relied on data collected in 2019. But the central government’s interventions more recently were likely to have a negative impact on Hong Kong’s score going forward, the authors found, especially with regards to the city’s legal system.

Hong Kong has taken the top spot in the rankings every year since the report was first launched in 1996, with the city earning a rating of 8.91 out of 10 in the latest edition to edge out regional rival Singapore, with 8.81. Coming in third was New Zealand, with a score of 8.56.

The United States clocked in at sixth this year, with Canada ranked 14th, Japan 18th and mainland China 116th. Bringing up the rear in 165th place was Venezuela, with a score of 2.83.

Tuesday’s report acknowledged that Hong Kong had been at the top of the heap for decades, but noted that its rating this time around did not reflect the impacts of the social unrest of 2019, or the national security law imposed by Beijing the following year.

“Even so, we are perhaps just beginning to see the effect of policy changes in Hong Kong as the result of the 1997 establishment of Hong Kong as a Special Administrative Region within China. In this year’s report, Hong Kong’s overall EFW rating fell by over one-tenth of a point to 8.91 in 2019 from 9.03 in 2018,” the report read.

In two of the five areas of assessment – “regulation of credit” and “labour and business” – Hong Kong was ranked No 1 this year. But in the “legal system and property rights” category, Hong Kong came in 20th.

“Our expectation is that the ratings for Hong Kong both overall and especially in [the legal category] will see a further degradation once more complete data are integrated,” the report said.

The institute cited the Beijing-imposed national security law as one reason for its less than optimistic projection.
PHOTO: South China Morning Post

In response, the Hong Kong government welcomed the rankings as an unequivocal affirmation of the city’s commitment to building a free economy with a level playing field.

The report’s other conclusions, however, were “unfair”, and the city’s legal system remained “as robust as ever” under the “one country, two systems” governing principle, a spokesman said.

“The enactment of the national security law is for safeguarding national security, which is the legitimate right and duty of every state,” the spokesman added. “There is no question of law-abiding persons inadvertently violating the law.”

The spokesman said the city would continue to foster “a favourable business environment”.

This article was first published in South China Morning Post.