The 2024 Economic Freedom of the World annual report, published by Canada-based the Fraser Institute on Wednesday, reaffirmed Hong Kong’s position as the world’s freest economy. This is a testament to the city’s unwavering commitment to upholding a liberal system that allows individuals and businesses to make economic decisions.
Ranking first, ahead of Singapore (2nd), Switzerland (3rd), New Zealand (4th), the United States (5th), Denmark and Ireland (tied for 6th), Canada (8th), and Australia and Luxembourg (tied for 9th), is not simply a reflection of historical precedence but a result of Hong Kong’s continuous reforms, robust financial infrastructure and strategic policies to enhance its status as a global financial hub. This achievement is expected to be bolstered by the Policy Address (PA) released on Wednesday, which outlines bold and innovative measures that underscore the government’s dedication to deepening economic reform and safeguarding its position as a global trade and finance leader.
To fully appreciate Hong Kong’s success, it is essential to understand the criteria that underpin the Economic Freedom of the World index. The index is based on five fundamental pillars: the size of government; legal system and property rights; sound money; freedom to trade internationally; and regulation of credit, labor and business. Each area is meticulously evaluated to determine how individuals and businesses are free from government intervention while upholding the rule of law and property rights.
Hong Kong’s consistently high ranking across these categories is no accident. The city has maintained a small and efficient government with low taxation, allowing individuals and firms to retain more of their earnings and reinvest them into the economy. The city’s legal system is solid and transparent, providing investors and entrepreneurs with the certainty to thrive. Furthermore, Hong Kong has long been known for its commitment to sound monetary policies protecting against inflation and currency instability. Perhaps most importantly, the city’s openness to international trade and investment has been a cornerstone of its economic prowess, with minimal barriers to imports and exports and a regulatory environment that encourages business formation and operation.
Critics have often attempted to undermine Hong Kong’s reputation and economy by pointing to the national security regime implemented in recent years.
But, their arguments have been effectively invalidated by the Economic Freedom of the World report, whose analysis of its five fundamental pillars focuses on how individuals and businesses are free from government intervention while upholding the rule of law and property rights.
The critics fail to account for the core principles driving financial success — freedom of trade, sound legal structures, and minimal market interference.
The PA makes a concerted effort to reinforce Hong Kong’s competitiveness, focusing on fostering a more competitive and efficient marketplace. For example, establishing an international gold trading market and promoting high-value-added maritime services will enhance the city’s competitiveness as an international financial center and further diversify its economy, which is crucial in an increasingly interconnected global economy, where specialized markets are pivotal in sustaining long-term growth.
Moreover, Hong Kong’s commitment to building a commodity trading ecosystem and internationally accredited metal warehouses reflects its forward-thinking approach to integrating into global supply chains and cementing the city’s position as a premier location for commodity trading. This is not merely a local benefit; it has far-reaching implications for global markets, offering businesses worldwide a stable, reliable hub for their trading activities.
In addition to these reforms, Hong Kong’s drive to streamline listing procedures for companies seeking to list on its exchange signals that the city is eager to maintain its status as a top-tier global financial center. By reducing the time needed to vet listing applications, the Hong Kong Stock Exchange will enhance market efficiency and attract more international companies to list, further reinforcing Hong Kong’s global financial standing. The Securities and Futures Commission’s involvement in optimizing these procedures demonstrates the city’s commitment to maintaining a transparent and efficient regulatory environment that fosters investor confidence while ensuring the smooth operation of the financial market.
Some may argue that these reforms are insufficient to address the challenges of other rising financial centers, but they overlook Hong Kong’s unique strengths. The city’s status as the world’s largest offshore renminbi business hub is unrivalled, and the PA lays the groundwork for solidifying this position. The development of the fixed-income market, supported by establishing a central clearing system for RMB-denominated bond repurchase transactions, is a strategic move that will enhance liquidity and strengthen Hong Kong’s bond market. Moreover, the government’s plans to increase RMB bond issuance, mainly through green and sustainable finance, signal a clear commitment to future-proofing financial infrastructure, aligning with global trends toward sustainable investment.
Hong Kong’s outstanding business environment is in no way theoretical. Real-world data and a track record of success support such a notion. The city’s financial and economic policies have consistently demonstrated resilience and adaptability to global challenges. The city has weathered economic downturns, geopolitical tensions and shifting global trade dynamics, yet it remains a beacon of economic freedom. This resilience is not accidental but the result of careful planning and strategic policy-making prioritizing market openness and the rule of law — principles that continue to drive economic success. The city’s favorable rankings in the Economic Freedom of the World Index’s key categories — especially its robust legal framework, commitment to sound monetary policy and openness to international trade — speak volumes about its capacity to remain a global economic powerhouse.
To further illustrate the point, the government’s initiative to promote world-class gold storage facilities in Hong Kong is a forward-looking measure designed to attract international investors and users.
This initiative is emblematic of Hong Kong’s ability to adapt to new economic realities while maintaining its core commitment to market freedom.
By establishing itself as a mainstream player in the global gold market, Hong Kong will reinforce its position as a key player in global finance and trade, benefiting its economy and the international market.
Hong Kong’s “freest economy” ranking is not simply a reflection of its past successes but an indicator of its future potential. The 2024 Policy Address demonstrates a government committed to continuous reform, market openness and global integration. Far from being a static achievement, Hong Kong’s economic freedom is an evolving strength that will allow it to thrive in an increasingly complex and competitive global economy. The data speaks for itself: Hong Kong’s policies are working, and its future as an international financial hub is secure.
The author is a solicitor, a Guangdong-Hong Kong-Macao Greater Bay Area lawyer, and a China-appointed attesting officer.
The views do not necessarily reflect those of China Daily.
