Index of Economic Freedom 2021: Hong Kong drops the list for the first time

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On Wednesday, the Heritage Foundation, a conservative Washington think tank, revealed its annual ranking freest economies in the world, leaving the former British colony off the list.

The organization said it included the city, as well as Macau – another Chinese-controlled special administrative region – as part of China, following a change in methodology that means the index will only rank “independent countries where governments exercise sovereign control over economic policies.”

“There is no doubt that Hong Kong and Macao, as special administrative regions, benefit from economic policies which, in many ways, offer their citizens more economic freedom than that enjoyed by the average Chinese citizen, but developments recent years have demonstrated unambiguously that these policies are ultimately controlled from Beijing “, researchers from the foundation noted in a report.
Before last year, Hong Kong had topped the list for more than a quarter of a century since its creation. But it was dethroned by Singapore in 2020, “primarily due to a drop in the freedom to invest score for Hong Kong,” according to the Heritage Foundation.

Singapore remains the top-rated economy on the list this year, followed by New Zealand, Australia, Switzerland and Ireland. China is in the bottom half, in 107th place out of 184 countries.

The top five countries “achieved very high economic freedom scores of 80 or more,” the foundation’s researchers wrote. The score is rated by several criteria, including the degree of market openness in each territory, the effectiveness of regulators in encouraging freedom of business and labor, and the rigor with which the rule of law protects property rights.

Paul Chan, Hong Kong’s top financial official, lambasted the Heritage Foundation for excluding the city from the index on Thursday.

“I do not agree that our economic policy has been taken over by the central government,” he said. noted during a webinar hosted by the South China Morning Post. “It seems to me that when they came to this decision, it must have been obscured by their ideological inclination and political bias.”

A spokesperson for the Hong Kong government said in a statement that excluding the territory from the classification was “neither justified nor justified.” Hong Kong is a member of the World Trade Organization, the spokesperson noted, and concludes trade, tax and investment agreements as an individual economy.

“Hong Kong is and always will be an open, secure, dynamic and pluralistic international financial and trade center, supported by economic freedom, the rule of law and judicial independence,” the spokesperson added.

Two pedestrians using umbrellas on the Tsim Sha Tsui waterfront in Kowloon after Typhoon Higos swept through Hong Kong on the night of August 19, 2020.
Hong Kong has long been seen as a vital business hub connecting East and West. Even after the city was transferred from Britain to China in 1997, it retained for decades its image as an international gateway to the continent, aided by Beijing’s commitment to maintain its semi-autonomous status. .
Since 2019, however, experts have warned that its unique differences could be at risk as Chinese authorities seek to take a firmer hand in Hong Kong affairs. It was then that huge protests erupted in the city against a divisive extradition bill, which ultimately turned into a movement calling for full democracy. The unrest sparked by the protests at the time forced stores to close, disrupted some public transportation and hampered the city’s economic growth.
Hong Kong faced yet another test last summer as China passed a sweeping national security measure for the city. The law prohibited sedition, secession, and subversion against Beijing and allowed Chinese state security to operate in the territory.
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The move raised questions about whether the city’s reputation – and its ability to attract business – would be eroded. However, senior local officials argued that it was helping the city restore calm and order.

Tensions between pro-democracy activists and the authorities persist. Earlier this week, hundreds of protesters risked arrest for protesting in a Hong Kong court as 47 pro-democracy activists accused of subversion under the National Security Act emerged.
There are also signs that the city’s role in international finance is changing. Over the past year, Hong Kong has become a popular place for Chinese tech companies to list their shares, especially as tensions remain over which Chinese companies do public transactions in the United States.

– Eric Cheung and CNN staff contributed to this report.


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