Hong Kong dropped from Economic Freedom Index, Singapore retains world's freest economy title

HONG KONG: Hong Kong has been excluded from the Heritage Foundation’s Index of Economic Freedom because its economic policies are controlled from Beijing, the Washington-based think tank said, removing Hong Kong from a list it topped for 25 years up to 2019.

The title of the world’s freest economy for 2021 was retained by Singapore for the second year, the Heritage Foundation said, with Hong Kong’s investment freedom hurt by political and social unrest dating back to 2019.

In the 2021 index published on Thursday, the foundation said Hong Kong and Macau, both special administrative regions of China, were no longer included because even though citizens enjoy more economic freedom than the average resident of China, “developments in recent years have demonstrated unambiguously that those policies are ultimately controlled from Beijing”.

Developments in Hong Kong or Macau that are relevant to economic freedom would be considered in the context of China’s evaluation in the index, it added. China slipped to 107 from 103, among the list of 178 countries.

A spokesman for the Hong Kong government’s financial secretary expressed “deep disappointment” at the decision.

“The decision is neither warranted nor justified. It does not do justice to (Hong Kong),“ the spokesman said, adding that the claim that the city’s economic policies are controlled by Beijing is “ill-conceived and simply not true”.

He added that the assessment was “politically biased” and that Hong Kong’s core economic competitiveness, including free flow of capital, remains under the “one country, two systems” formula of governance put in place in 1997 when the city reverted from British to Chinese rule.

The US suspended Hong Kong’s preferential tariff rates for exports to the country and imposed sanctions on Hong Kong and Beijing officials last year in response to China’s imposition of a national security law on the former British colony, saying it undermined the city’s high autonomy.

Critics of the law say it is aimed at crushing dissent, while authorities in Beijing and Hong Kong say it was necessary to restore stability after anti-government and anti-China unrest.

Earlier this week, London-based non-governmental organisation Hong Kong Watch said in a report that “red capital” – money originating from mainland China – had fundamentally shaped Hong Kong’s politics, media and the city’s status as a business hub.

In 2019, 82% of IPOs in Hong Kong were by mainland companies, while in October 2020, mainland equities comprised 57.3% of the Hang Seng Index by weighting, the group said. – Reuters