Hong Kong has regained its position as the world’s freest economy, narrowly surpassing Singapore, according to the Fraser Institute’s latest Economic Freedom of the World report.
The report, which ranks economies based on various factors such as regulation, freedom to trade internationally, and the size of government, awarded Hong Kong a score of 8.58, edging out Singapore’s 8.55.
This return to the top follows a data revision that shows Hong Kong never truly lost its position, despite last year’s initial findings.
These results come amid Hong Kong’s efforts to solidify its status as a global financial centre after recent challenges.
Economic freedom rankings show global decline
The Fraser Institute’s report for 2022, which covers 165 economies worldwide, revealed a concerning trend of declining economic freedom globally. This marks the third consecutive year of this downward trajectory after more than a decade of steady improvement.
While Hong Kong, Singapore, and Switzerland lead the rankings, Venezuela remains at the bottom with a score of just 3.02. New Zealand and the US round out the top five, demonstrating the broad spectrum of economic policies across the globe.
China’s influence on Hong Kong’s freedom under scrutiny
Despite Hong Kong’s top ranking, the Fraser Institute cautioned that its economic freedom score has been steadily falling for years.
The report highlighted concerns over increasing interference from China, particularly in areas such as the judiciary and rule of law, which could erode the city’s long-standing reputation as a bastion of free-market principles.
The warning follows the imposition of Hong Kong’s national security law, enacted in 2020, which has raised questions about the territory’s future autonomy.
A boost for Hong Kong’s financial centre ambitions
These positive rankings come just weeks after Hong Kong reclaimed its title as Asia’s top financial hub, surpassing Singapore once again.
For John Lee, the city’s leader, this represents a significant win as he attempts to reposition Hong Kong on the global stage following challenges brought on by the Covid-19 pandemic, the national security law, and political unrest.
The Fraser Institute’s findings suggest that while the city remains a global economic powerhouse, maintaining this position in the future may require addressing concerns over Beijing’s growing influence.
Global economic freedom under pressure
The Fraser Institute’s 2022 report also shows a broader decline in global economic freedom, with many countries seeing drops in their scores due to increased government interventions during the pandemic.
The continued slide in economic freedom highlights the need for countries to reassess their policies and consider the long-term implications of increased regulation and government control on their economies.
Hong Kong government defends rule of law
In response to the Fraser Institute’s report, the Hong Kong government welcomed the results and reaffirmed its commitment to the rule of law and economic freedoms. Officials pointed to recent policy changes aimed at enhancing the business environment and boosting international trade.
Nevertheless, observers remain cautious about the long-term impact of Beijing’s influence on the city’s economic independence.
As global economic freedom faces continued pressures, Hong Kong’s resilience will be tested in the coming years.
The city’s ability to maintain its top spot in future rankings will depend on how well it can navigate both internal and external challenges, including growing political ties with China and ongoing global economic uncertainties.
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