Hong Kong Again World's Freest Economy - But Lead Slipping

By Patrick Goodenough | July 7, 2008 | 8:12 PM EDT

Pacific Rim Bureau (CNSNews.com) - A global economic study has placed Hong Kong at the top of its annual list of the world's freest economies for the ninth consecutive year. At the same time, the study warns that increased government intervention and any erosion of civil freedoms in the Chinese territory could threaten Hong Kong's position.

Hong Kong's closest rival for the top spot among 156 countries, Singapore, dropped in this year's Index of Economic Freedom, published Tuesday by the Washington-based Heritage Foundation.

The Index rates 10 broad factors of economic freedom, including government intervention in the economy, trade policy, foreign investment and property rights. A high score of 5.0 indicates the least free economy, and a low of 1.0 the most free economy.

Hong Kong scored 1.45 - sufficient to place it at the head of the list, but a drop from 1.35 last year.

The Foundation attributed the drop mostly to an increase in the Hong Kong government's intervention in the economy, one of the 10 factors measured.

The Index shows that government intervention in Hong Kong's economy is steadily increasing.

Between 1995 and 1999, Hong Kong got the best possible score for the "government intervention" factor - one out of a possible five, judged as "very low."

In 2000 and 2001 that score shifted to two ('low"), and in this year's index it moved to three ("moderate") - a score shared by such countries as China, Laos and Zimbabwe.

The government has come under fire for intervening in the financial and housing markets.

A government spokesman questioned the Index assessment regarding intervention. "Government does have an important role to play to enable the market to work better and the economy to further flourish,"' he said.

"This role complements, not displaces, private-sector initiative so that the growth potential could be best pursued. We disagree that such a role constitutes adverse intervention in the economy."

Making up the top five on this year's Index are Luxembourg, New Zealand and Ireland. The United State shares joint sixth place with Estonia and Denmark.

The bottom five are Libya, Laos, Zimbabwe, Cuba and - at the very bottom with a score of 5.0 - North Korea.

Sudan, Iraq, the Democratic Republic of Congo, Burundi and Angola were removed from the list altogether as they failed to provide useable statistics.

The Foundation noted in its report that countries with the highest levels of economic freedom continue to enjoy the highest living standards.

They also "enjoy higher rates of long-term economic growth and prosper more than those with less economic freedom."

Security legislation

Apart from factors like government intervention and public spending - currently at 23 percent of GDP - Hong Kong's long-standing pre-eminent position in the Index may also be under threat due to planned security legislation some critics fear will stifle free speech.

The former British colony reverted to Chinese rule in 1997 under a "one country, two systems" agreement that promised its seven million people considerable autonomy and the right to enjoy their capitalist way of life for 50 years.

Under Article 23 of its Basic Law, the Hong Kong government is obliged to amend its laws to ban subversion, treason, sedition and secession against Beijing.

Edwin Feulner, president of the Heritage Foundation, said at a press conference in the city that Hong Kong's future rating could suffer if implementation of the legislation negatively affected the free flow of economic information.

Responding to the comments, Hong Kong security secretary Regina Ip said she could see no particular aspect of the proposed amendments that could impinge on the freedom of information.

"I don't think there are really valid grounds for concern," she said. "These are very generalized expressions of worry which is understandable but people have not been able to pinpoint specific aspects of our package which truly affect freedom of information."

The government spokesman also challenged the Heritage view.

"Our commitment to the rule of law and freedom of expression will never waver," he said, calling them "the pillars of our society."

Under the proposals now under consideration, anyone convicted of treason, secession, sedition or subversion could face life imprisonment while those found guilty of inciting violence or publishing seditious material would be jailed for seven years.

The proposed legal changes also aim to prevent the theft of state secrets and to prohibit foreign political organizations from carrying out political activities in the territory.

The authorities will have the power to proscribe organizations, and human rights campaigners fear pro-democracy groups or groups like the Falun Gong - banned in China - could be targeted in Hong Kong too.

A statement by Ip's Security Bureau said it had the obligation to make the amendments and it was now time to do so.

It countered the view that Hong Kong was simply importing repressive laws from the mainland, saying the proposals were formulated by the Hong Kong authorities on their own, in accordance with the "one country, two systems" principle.

Human rights would be protected, the Bureau stressed.

"The rights and freedoms currently enjoyed by the people of Hong Kong will in no way be undermined."

It also rejected the view that crimes like "subversion" or "secession" were political offenses aimed at suppressing freedoms of thought or speech.

The Hong Kong government is currently carrying out a three-month public consultation exercise.

See earlier story:
Hong Kong Freedoms In Spotlight Ahead Of Takeover Anniversary (June 28, 2002)

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Patrick Goodenough
Patrick Goodenough
Spencer Journalism Fellow