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.
Hong Kong’s financial secretary, Paul Chan, in an online conference, disputed the foundation’s view that Beijing is in charge of the former British colony’s economic policies, according to local public broadcaster RTHK.
He called the assessment unjustified and “clouded by political bias”.
“When they arrived at that decision, they must have been clouded by their ideological inclination and political bias,” Chan said.
He added that Hong Kong’s core economic competitiveness, including free flow of capital, information and goods, 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 U.S. 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.