Hong Kong has been ranked the world’s freest economy by an American think tank for the 25th consecutive year, but the researchers also said the judiciary had become less effective.
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The Heritage Foundation, a conservative research and educational institution based in Washington, placed mainland China at 100th in its study of 180 countries.
Singapore, often seen as Hong Kong’s prime competitor, came second again this year but closed the gap with the leader.
The foundation’s latest results were published on Friday and awarded Hong Kong a score of 90.2 out of 100.
The rankings are compiled based on 12 factors covering law, governance, market openness and regulations.
“Hong Kong’s overall score is unchanged from 2018, with increases in its scores for trade freedom, monetary freedom, and government integrity,” a report on the study read.
However, the foundation also highlighted what it called a decline in judicial effectiveness brought about by China’s central government issuing an interpretation of the Basic Law, the city’s mini-constitution, which the researchers said had limited the power of Hong Kong’s top court.
The score awarded in this category was 75.3, down from 84.3 last year.
“The judiciary is independent, but Beijing reserves the right to make final interpretations ... effectively limiting the power of Hong Kong’s Court of Final Appeal,” the report read.
The researchers also took note of a ban placed last year on the pro-independence Hong Kong National Party, saying the move raised concerns about freedom of speech and association.
Ronny Tong Ka-wah, a senior counsel and member of the Executive Council that advises Hong Kong’s leader on policy, said the foundation could have misunderstood the “one country, two systems” formula under which China has managed Hong Kong since 1997.
“They have to understand that Hong Kong is not an independent country,” Tong said. Local courts therefore did not have the power to interpret the Basic Law. That said, Tong stressed that the courts were independent in settling local affairs.
Civic Party leader Alvin Yeung Ngok-kiu, a pro-democracy lawmaker, said it was obvious that foreign institutions were expressing concern over the rule of law.
“It sends a very strong signal to the government that we should not take this ranking for granted,” Yeung said.
Should Hong Kong fail to retain the confidence of foreign investors, he said countries such as Singapore could surpass the city in the future.
The Lion City’s score increased from 88.8 last year to 89.4.
The researchers said the city state had a “remarkably open and corruption-free business environment”, as well as prudent monetary and fiscal policies.
They also described Singapore’s legal framework as transparent, but questioned the independence of the courts.
“The government’s overwhelmingly successful track record in court cases raises questions about judicial independence,” the report read.
Mainland China meanwhile was classified as a “mostly unfree” economy. The country scored 58.4 – slightly less than the world average of 60.8.
The financial sector and other industries were dominated by “non-transparent state-owned enterprises”, the foundation said. Corruption remained endemic and reforms to increase transparency in governance had been rejected.
Hong Kong finance minister Paul Chan Mo-po said the latest rankings reaffirmed the government’s efforts to follow free market principles.
“The government will continue to uphold Hong Kong’s fine tradition of the rule of law, maintain a simple and low-tax system, improve government efficiency, safeguard the open and free trade regime, and build a level playing field for all,” Chan said.