For the first Time, the Heritage Foundation has removed Hong Kong and Macau from its economic freedom ranking, arguing that in recent years Hong Kong and Macau’s economic policies are ultimately controlled by Beijing. Some analysts believe that the decision will not only lead to the withdrawal of more foreign investment, but also accelerate the economic integration of Hong Kong into mainland China. The Hong Kong government, on the other hand, believes that the foundation is biased in terms of ideology and politics.
Each year, the Heritage Foundation publishes an economic freedom index that rates economies on categories such as freedom of trade, property rights, judicial efficiency, and government integrity.
Hong Kong ranked second in global economic freedom last year, losing its position as the world’s freest economy for 25 consecutive years. In the past, the Heritage Foundation considered Hong Kong to be an ideal gateway to mainland China because of its independent judiciary, free press and deep financial markets, but this year it was not rated.
According to a report posted on the foundation’s Web site, this year’s index will only calculate economic freedom for independent economies with economic sovereignty. In the past, Hong Kong and Macau, as special administrative regions, did enjoy more economic freedom than residents of mainland China, but recent developments reflect that the policies are ultimately controlled by Beijing and that the economic freedom of Hong Kong and Macau may be incorporated into China in the future.
Scholars: Report brings Hong Kong’s reality to the world
The Heritage Foundation’s decision does not come as a surprise to Professor Eric Lo, a visiting professor in the Department of Finance and Economics at City University of Hong Kong.
The impact of the report alone should not be too great, because business people don’t just read a report and decide whether to come to Hong Kong or not, or whether to leave Hong Kong,” he said. It’s what really affects them that makes them decide. This report is just a more authoritative body to confirm the phenomenon and make it public.
As one of the world’s most prominent economic think tanks, the Heritage Foundation is known for its advocacy of a “highly liberalized market economy” that emphasizes the role of individual factors in spearheading economic innovation and social development, said the Financial Scholars commander.
From 2019 onward, the anti-China movement in Hong Kong has been severely repressed by the Chinese government, says the financial scholar commander. This repression has continued into the economic sphere, leading to the successive withdrawal of foreign investment from Hong Kong. Now the investment environment in Hong Kong has greatly deteriorated and economic freedom has seriously declined, and in fact the Heritage Foundation is simply reflecting the basic facts. The withdrawal of foreign capital has led to the entire investment environment in Hong Kong is now becoming a very awkward economic development environment for mainland Chinese enterprises to gradually fill the gap of foreign capital withdrawal.
Scholars: foreign capital does not leave again I’m afraid that the currency exchange is also a problem
The order estimates that the American Heritage Foundation’s decision will bring a vicious circle for foreign confidence.
Many investors just see their peers and business partners withdrawing from Hong Kong, said the director. If such a phenomenon rises to a theoretical level and becomes an evaluation of Hong Kong’s economic freedom as a whole, these investors will feel that they made the right decision to vote with their feet, and if they do not withdraw from Hong Kong, the entire investment environment will be no different from that of mainland China.
Freedom of entry and exit will become the biggest concern for people in Hong Kong
In fact, apart from the financial market, which is a source of concern for foreign investors, the freedom of entry and exit in Hong Kong has also become a focus of discussion recently. The Legislative Council, controlled by the pro-Beijing political group, is considering the Immigration (Amendment) Bill 2020, which will be passed in August. The amendments include the ability of the Secretary for Security to give the Director of Immigration and others the power to direct that no person may be carried by any means of transport. The Bar Association has earlier expressed dismay at the amendment, saying it would restrict anyone from leaving Hong Kong.
The Hong Kong government does not agree with the Heritage Foundation’s decision. Financial Secretary Paul Chan said Thursday he disagreed with the foundation’s claim that Hong Kong’s economic policies are controlled by the central government, arguing that the foundation is ideologically and politically biased.
He said the core competitiveness of Hong Kong’s economy under one country, two systems is reflected in the free flow of capital, talent and information, while the Hong Kong dollar is also linked to the U.S. dollar through the linked exchange rate, the rule of law and judicial independence.
As for this year’s economic freedom index, Singapore ranked first again with 89.7 points, the second and third were New Zealand and Australia, and China ranked 107th, the raters said China’s situation is “basically not free.