Singapore has surpassed Hong Kong in a global ranking of economic freedom, marking the end of Hong Kong’s long-standing reign in this category.
A recent report by the Fraser Institute, a Canadian public policy think tank, attributes this shift to Beijing’s growing intervention in Hong Kong’s political and civil liberties, leading to decreased confidence in the city’s rule of law. In response, the Hong Kong government has vehemently dismissed these claims, asserting its commitment to “one country, two systems” and a high degree of autonomy. This article delves into the reasons behind this shift in rankings and the implications for both cities.
Singapore Claims the Top Spot
Singapore emerged as the new leader in the Fraser Institute’s annual Economic Freedom of the World report, outperforming Hong Kong for the first time since the study began in 1975. This report assesses various factors, including regulations, international trade freedom, government size, legal systems, property rights, and monetary policies, to gauge individuals’ economic decision-making freedom. The data used for the 2023 report reflects conditions in 2021, encompassing 165 jurisdictions worldwide.
Reasons Behind Hong Kong’s Decline
Hong Kong experienced a decline in multiple aspects of economic freedom, resulting in its fall to the second position. Notable factors contributing to this shift include:
Increased Regulation: Hong Kong saw a 0.25-point decrease in regulation components, driven by new barriers to entry, restrictions on foreign labor employment, and increased operational costs for businesses.
Erosion of Legal Systems: The city experienced a 0.20-point drop in legal system and property rights components. This decline was attributed to growing military interference in the rule of law, eroding trust in the judicial system, and diminishing confidence in the courts.
Beijing’s Influence on Economic Freedom
The Fraser Institute’s report highlights a fundamental connection between economic freedom and civil and political freedom. The Chinese government’s efforts to suppress political and civil dissent in Hong Kong, notably through the imposition of the national security law in June 2020, have inevitably resulted in diminished economic freedom. The law criminalized subversion, secession, collusion with foreign forces, and terrorist acts, granting police broad authority. While the authorities argue that it restored stability, critics express concerns about the implications for civil liberties.
Hong Kong’s Response and Dispute
The Hong Kong government strongly refutes the Fraser Institute’s claims, labeling them as “factually wrong” and “totally groundless.” Officials assert their commitment to the “one country, two systems” framework, emphasizing a high degree of autonomy, guaranteed fundamental rights, and independence in the legal system. The spokesperson further rebuts allegations of new barriers to entry and restrictions on foreign labor employment.
Implications for Hong Kong and the Region
This shift in economic freedom rankings holds significant implications for Hong Kong’s economic landscape and regional dynamics. Hong Kong’s decades-long dominance as a global financial hub may be impacted as businesses and investors consider the evolving political climate. The findings also raise concerns about the future trajectory of “one country, two systems” and its implications for civil liberties and autonomy in the region.
Singapore’s ascent to the top of the economic freedom rankings and Hong Kong’s decline underscore the far-reaching consequences of Beijing’s increasing intervention in the city’s affairs. The dispute between the Fraser Institute’s report and the Hong Kong government highlights the complex dynamics surrounding Hong Kong’s political and economic future, which continues to be a subject of international concern and scrutiny.