The Hong Kong government has welcomed an annual report that ranked the city as the freest economy in the world based on data from 2019. But the authorities also refuted remarks that the implementation of the Beijing-imposed national security law may cause a “degradation” in its future ratings.

The government on Tuesday hailed the Economic Freedom of the World 2021 Annual Report by the Fraser Institute, saying it was an “unequivocal affirmation” of Hong Kong’s “steadfast commitment” in building a free economy.

Photo: GovHK.

Hong Kong scored an overall rating of 8.91 out of 10, coming in first, followed by Singapore and New Zealand. The index was based on statistics from two years ago, researchers said, as they reviewed the extent of government influence on individual economic freedom and the protection of people and their property. The Canada-based organisation also evaluated inflation volatility, the freedom to trade internationally, and the degree of government regulation.

Tuesday’s report stated that – while Hong Kong remained in the top position – the ratings did not fully reflect the 2019 protests, or the impact of the national security law enacted in June last year. Researchers said they may “just begin to see” the effect of policy changes in the city as a special administrative region. “[W]ith potential sentences of life imprisonment, and the accompanying arrests in its aftermath,” the document read.

‘Further degradation’ predicted

Analysts noted that Hong Kong’s 2019 overall rating dropped from 9.03 in 2018, and attributed it to a decline in its score in the “Legal System and Property Rights” area. They estimated that the city’s score will “see a further degradation” once they integrate more complete data into the global economic freedom index.

A banner inside the Hong Kong government headquarters promoting the national security law. Photo: GovHK.

“The apparent increased insecurity of property rights and the weakening of the rule of law caused by the interventions of the Chinese government during 2020 and 2021 will likely have a negative impact on Hong Kong’s score… going forward.”

In the same statement, the Hong Kong government criticised the Fraser Institute as giving “unfair comments” on the city’s rule of law and the security legislation. An official spokesperson said the legal system remains “as robust as ever,” while enacting a law to safeguard national security was said to be a “legitimate right and duty of every state.”

“We have been fully committed to upholding Hong Kong’s fine tradition of the rule of law and judicial independence,” the government said, adding it would continue to foster a “conductive environment” for businesses to thrive.

The government gave a similar response to the Fraser Institute’s report last year, welcoming its top rank while rejecting remarks that its ratings may be undermined by a “weakening rule of law.”

People in a shopping mall in Admiralty. Photo: GovHK.

The Fraser Institute was among a group of international think tanks from 35 countries that penned an open letter in July last year to condemn the passage of the security law, which targets secession, subversion, terrorist acts and collusion with foreign powers.

It has worked closely with the self-styled libertarian Lion Rock Institute in Hong Kong to promote economic freedom, while the Hong Kong Centre for Economic Research – affiliated with University of Hong Kong’s business school – was one of the co-publishers of the report.

Kelly Ho

Kelly Ho has an interest in local politics, education and sports. She formerly worked at South China Morning Post Young Post, where she specialised in reporting on issues related to Hong Kong youth. She has a bachelor's degree in Journalism from the University of Hong Kong, with a second major in Politics and Public Administration.