• Amiel Pion

China undermines economic freedom in Hong Kong, says the Fraser Institute


According to the Fraser Institute's annual Economic Freedom of the World report, China's heavy hand and intrusive foreign policy threaten Hong Kong's top ranking as the most economically-free jurisdiction globally. The report measures economic freedom—individuals' ability to make their own financial decisions—by analyzing 162 countries and territories' policies and institutions. Indicators include regulation, freedom to trade internationally, government size, property rights, government spending, and taxation. The 2020 report is based on data from 2018, the latest year of comparable statistics.



Fred McMahon, the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute, states, "Interference from China, including the violent crackdown on pro-democracy protests, severely undermines Hong Kong's rule of law, which helps ensure equal freedom for all." He adds that a two-year data lag for the annual report will facilitate a decline in Hong Kong's score for future years.



Hong Kong, who has topped the EFW index for all the years data exists, saw proposals in 2019 to extradite certain legal cases to mainland China and a new security law imposed in 2020 by the Chinese government that threatens life imprisonment. Protests and sometimes brutal suppression often followed in their aftermath, representing a significant shift on policy in the Special Administrative Region. Between 1997 and 2018, there was no evidence of substantial policy changes in Hong Kong, despite ongoing pressures to exert more control by the central government. According to the Fraser Institute, there were no significant tax and spending policy changes, monetary stability, or regulatory policy during that time. Notably, Hong Kong observed its highest rating (8.94) out of ten since the financial crisis of 2008.



Area 2 (Legal System and Property Rights) of the report, which measures persons and their private property's protection, is the probable culprit for Hong Kong's eventual decline, says McMahon in a recent publication. As of 2018, their ranking in Area 2 is 14th globally at 7.49. On the topic of Military Interference in rule of law and politics, Hong Kong witnessed its lowest score ever recorded (5.00) in 2000, attributed to the first time Hong Kong had any autonomy measure. Over the subsequent five years, revolutionary protests occurred in defiance of Article 23, a controversial new anti-subversion law that sought to curtail protests and freedom of speech to contain revolutionary sentiment. China says the legislation, shelved indefinitely in 2003, would provide stability to the Special Administrative Region. Arguably, similar legislation resurfaced in 2020.



The weakening rule of law and increased insecurity of property rights, caused by CCP interventions in 2019 and 2020, will undoubtedly wreak havoc on Hong Kong's economic freedom, a concept derived from self-ownership and the right to choose how to spend their time and allocate their talents. In the same press release from the Fraser Institute, McMahon indicates that "Where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier and healthier lives."



The cornerstones of economic freedom, forming the basis of the EFW index, are personal choice, voluntary exchange, open markets, and clearly defined property rights. The former was infringed upon by the central government in Beijing, who placed limits on protest and freedom of speech through coercion and violence. However, not included in the EFW index is the 'right' to another's time, talents, and resources or demanding things. Having options imposed on a citizenry through violence, theft, and fraud constitutes an authoritarian push over an otherwise prosperous and mostly free citizenry.


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