Hong Kong excluded from Index of Economic Freedom, Singapore climbs as top

Hong Kong was excluded for the first time by an influential index that ranks the freedom of the world’s economies while the city’s official and scholar said the move was based on “political bias” and would not affect the economic development of Hong Kong.

Hong Kong and Macau were removed from The Heritage Foundation's 2021 Index of Economic Freedom released on Thursday. Before that, the city was ranked as the world’s freest economies for 25 years straight before 2020 when it was taken over by Singapore, which also topped the list this year.

"Developments in Hong Kong and Macau in recent years have demonstrated unambiguously that the policies are ultimately controlled from Beijing,” said Heritage Foundation in its report. The Washington-based research and educational institution said classifying Hong Kong and Macau economies under China was a reflection of Beijing’s “ultimate control” over the cities.

Financial Secretary Paul Chan Mo-po said the move made by The Heritage Foundation was unjustified. During a webinar organised by the South China Morning Post, Mr Chan said, “It seems to me when they arrived at that decision, it must have been clouded by their ideological inclination and political bias.” 

A Hong Kong Government spokesperson said Heritage Foundation’s ranking is ill-conceived in the press release yesterday. "We take strong exception to the Foundation's claim that Hong Kong's economic policies are 'ultimately controlled from Beijing,” Hong Kong government spokesperson added in the press release.

The Heritage Foundation’s ranking cannot be valid, because it was evaluated from a different perspective, it should not be generalised as a whole, said Dr Chong Tai-Leung, the director of Economics and Executive Director of Lau Chor Tak Institute of Global Economics and Finance of the Chinese University of Hong Kong.

The Fraser Institute of Canada ranked Hong Kong as the world’s freest economy last September, and Hong Kong remains in the top position since 2004. However, it also said, “The apparent increased insecurity of property rights and the weakening of the rule of law caused by the interventions of the China government during 2019 and 2020 will likely have a negative impact on Hong Kong’s score.” 

Dr Chong said the Hong Kong economy will continue to grow and those indexes would not affect Hong Kong’s economic future. “Hong Kong has been backed up by China, more capital flows into Hong Kong,” he said. Also, he believed Singapore's economic future might be less competitive than Hong Kong going forward. Dr Chong said China can offer a great amount of capital to Hong Kong for its economic development which Singapore does not.