Hong Kong Again Named World’s Freest Economy
On Thursday, September 8, 2022, the Hong Kong Special Administrative Region government welcomed the Fraser Institute’s designation of the territory as the world’s freest economy, as revealed in the Economic Freedom of the World 2022 Annual Report. The Fraser Institute, a Canadian public‑policy research organisation, produces this respected yearly publication that measures economic freedom across nations and territories. The 2022 edition evaluates five components: size of government, legal system and property rights, sound money, freedom to trade internationally, and regulation.
Hong Kong secured the top rank in the “Freedom to Trade Internationally” and “Regulation” categories, and placed highly in the remaining three areas. An HKSAR government spokesman said, “We have been striving to improve the business environment and enhance market efficiency and support.
Thereby allowing the economy to display flexibility and resilience and use the advantages of the free market.” He added, “Our commitment to maintaining an efficient, free, open, and fair business environment is once again affirmed.” The report’s indicators include regulation, freedom to trade internationally, size of government, a sound legal system and property rights, and government spending and taxation. Hong Kong’s strong showing reflects its long‑standing practice of limited government intervention in the economy, bolstered by its common law framework, independent judiciary, and low tax regime, which together attract investors and entrepreneurs worldwide.
The spokesman also noted, “With the implementation of the National Security Law, stability and security have been swiftly and effectively restored in the society of Hong Kong, and the prestigious business environment has returned.” Critics, however, warn that the law could erode the territory’s autonomy and freedoms, potentially affecting its economic freedom over time. Since the law took effect in June 2020, Hong Kong’s asset and wealth‑management sector reached HK$35.5 trillion (US$4.52 trillion) by the end of 2021, a rise of more than twenty percent compared with the end of 2019.
Banking‑system deposits exceeded HK$15 trillion in July 2022, representing an increase of 8.5 percent over the level recorded before the National Security Law was introduced. These figures suggest that, despite the COVID‑19 pandemic and the security legislation, Hong Kong’s economy has remained resilient. The long‑term influence of the law on the territory’s financial standing and its reputation as a global hub is still uncertain.
Fred McMahon, a researcher at the Fraser Institute, observed, “Hong Kong’s economic freedom is a key factor in its success as a global financial center. However, the implementation of the National Security Law has raised concerns about the potential erosion of Hong Kong’s autonomy and freedoms.” The Global Financial Centres Index released in March 2022 reconfirmed Hong Kong’s position as a leading financial centre, ranking first in Asia and third worldwide.
This outcome underscores the city’s sophisticated financial system, favourable business climate, and strategic location as a gateway to mainland China.
