The US-based Heritage Foundation has rated Hong Kong as the world’s freest economy for the 24th straight year, but has warned of political interference from Beijing in recent years.

Hong Kong scored 90.2 out of 100 – an increase of 0.4 points compared to last year. Singapore came second out of the 180 regions included in the study.

Out of 12 indicators, Hong Kong scored over 90 points in eight of them, including full marks for fiscal health – the city sits on more than HK$1 trillion in fiscal reserves. There were improvements in government integrity, business freedom, and monetary freedom, but a decline in property rights.

Carrie Lam Heritage Foundation
Chief Executive Carrie Lam receives a copy of the Heritage Foundation’s 2018 Index of Economic Freedom Report from its Founder Dr Edwin Feulner. Photo: GovHK.

“A high-quality legal framework provides effective protection of property rights and strongly supports the rule of law,” the foundation said.

“There is little tolerance for corruption, and a high degree of transparency enhances government integrity. Regulatory efficiency and openness to global commerce undergird a vibrant entrepreneurial climate. Hong Kong’s economic linkage with the mainland is most evident in the finance and trading sectors.”

‘Strained’ autonomy

“The ‘one country, two systems’… policy has been strained by PRC political interference in recent years, but Hong Kong’s open and market-driven economy continues to flourish, increasingly integrated with the mainland through trade, tourism, and financial links. Hong Kong’s reliance on foreign trade and investment leaves it vulnerable to global financial-market volatility or a slowdown in the global economy.”

The foundation said although the corruption rate is low, it is perceived as rising.

“The judiciary is independent, but Beijing reserves the right to make final constitutional interpretations, effectively limiting the power of Hong Kong’s Court of Final Appeal,” it said. Beijing has issued five interpretations of the Basic Law, including a controversial one in 2016 that demanded lawmakers take their oaths solemnly and accurately.

Court of Final Appeal
Court of Final Appeal. File photo: In-Media.

Financial Secretary Paul Chan welcomed the ranking: “The free market principles have long been the cornerstones of Hong Kong’s economic prosperity and international competitiveness. I am glad that Hong Kong has been ranked the world’s freest economy for 24 consecutive years. Our steadfast commitment in upholding the free market principles in Hong Kong is again affirmed internationally.”

“The Government will strive to uphold Hong Kong’s strengths, including the rule of law and judicial independence, a simple and low tax system, an open and free trade regime, a level-playing field for all businesses and an efficient public sector.”

Kris Cheng is a Hong Kong journalist with an interest in local politics. His work has been featured in Washington Post, Public Radio International, Hong Kong Economic Times and others. He has a BSSc in Sociology from the Chinese University of Hong Kong. Kris is HKFP's Editorial Director.