September 28, 2023
Hong Kong has ceded its long-held position as the world’s leader in economic freedom to Singapore, according to a recent global ranking published by the Canadian think tank, the Fraser Institute. This shift is attributed to growing concerns about Beijing’s interference in Hong Kong’s affairs and a declining confidence in the city’s rule of law, prompting the local government to dismiss these claims as baseless.
The Fraser Institute, headquartered in Vancouver, emphasized that Beijing’s crackdown on civil and political dissent within Hong Kong has had a detrimental impact on the city’s economic freedom. Fred McMahon, a resident fellow and research chair in economic freedom at the Fraser Institute, pointed out that this marks the first time Hong Kong has not secured the top position in the index since its inception, with expectations that its score may further deteriorate as the Chinese Communist Party continues to curb various forms of freedom.
In response, the Hong Kong government vehemently refuted the think tank’s assertions, labeling them as “factually wrong” and “totally groundless.” It stressed that it has consistently adhered to the principles of “one country, two systems,” “Hong Kong people administering Hong Kong,” and a high degree of autonomy, as outlined in the Basic Law, the city’s mini-constitution. According to the government, Hong Kong is transitioning from stability to prosperity.
The Fraser Institute’s annual Economic Freedom of the World report, released in 2023, saw Hong Kong fall from its historical top spot to second place, marking the first time this has occurred since the report’s inception in 1996. Singapore secured the leading position, narrowly surpassing Hong Kong by a mere 0.01 points out of the 165 jurisdictions included in the report. The report assesses factors such as regulations, international trade freedom, government size, legal systems, property rights, and monetary policies to gauge individuals’ freedom to make economic decisions. The 2023 report relied on data from 2021.
Hong Kong’s decline was attributed to a 0.25-point decrease in regulatory components and a 0.20-point decline in legal system and property rights components. The overall score for Hong Kong dropped to 8.55 out of 10, representing a 0.40-point decrease since 2019. In contrast, Singapore scored 8.56 to secure the top ranking. The report pointed to new barriers to entry, limitations on foreign labor employment, and increased business costs as reasons for the decrease in regulatory scores. Additionally, concerns were raised about military interference in the rule of law and diminishing confidence in the judicial system, which contributed to lower scores in the legal sector.
The Fraser Institute highlighted the interconnectedness of economic freedom with civil and political freedom, attributing Hong Kong’s recent downturn to Beijing’s crackdown on political and civil dissent. However, the institute did not provide specific evidence of “military interference in the rule of law” in Hong Kong but referenced the PRS Group, a geopolitical risk rating firm, for this assessment.
The Hong Kong government refuted claims of new entry barriers and limits on foreign labor employment as unfounded, emphasizing that labor policies remain unchanged. It also defended Hong Kong’s legal system and judicial independence, asserting that fundamental rights and freedoms, including equality before the law, are guaranteed by the Chinese Constitution and the Basic Law.
The 2023 report was criticized by the government for biased comments regarding the implementation of the national security law. Beijing imposed this legislation directly into Hong Kong’s mini-constitution in June 2020, bypassing the local legislature. The law criminalized subversion, secession, collusion with foreign forces, and terrorist acts, resulting in broad concerns about its impact on dissent. Supporters argue that it has restored stability and peace to the city.
In 2021, Hong Kong was removed from the economic freedom index by the Washington-based Heritage Foundation, after holding the top position for 25 consecutive years, citing Beijing’s ultimate control over Hong Kong’s economic policies. Switzerland secured the third position in the 2023 report, with the United States ranking fifth. Taiwan ranked 11th, Japan 20th, and China 111th in the same report.
Source: Hong Kong Free Press – by HANS TSE
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