• Thu
  • Dec 25, 2014
  • Updated: 12:04pm
Mr. Shangkong
PUBLISHED : Monday, 20 January, 2014, 12:15am
UPDATED : Monday, 20 January, 2014, 9:17am

Hong Kong's top ranking for economic freedom feels a good laugh

Doubts are growing over the city's competitive edge as a business hub in the wake of HKTV's licence saga and the debate over new property taxes


George Chen is the Financial Editor and Mr. Shangkong Columnist at the South China Morning Post. George has covered China's political and economic changes since 2002. George is the author of two books -- This is Hong Kong I Know (2014) and Foreign Banks in China (2011). George has been named a 2014 Yale World Fellow. More about George: www.mrshangkong.com

Did the Heritage Foundation ever send its experts into the streets of Hong Kong to meet ordinary people and ask them how free the city's economy has become in recent years?

The right-wing US think tank ranked Hong Kong the world's freest economy for the 20th consecutive year last week, but many expatriates and locals in the city are taking the survey result as a bit of a joke.

There are a tonne of examples we could use to tell the Heritage Foundation the real story of Hong Kong's so-called "free economy".

The government has tightened its control on many sectors, from the old-fashioned property business to broadcasting services in the digital era.

Chief Executive Leung Chun-ying's stance on Hong Kong Television Network's free-to-air licence saga is a sign of how things have changed in a society that had been proud of its economic freedom for years.

In Hong Kong, Leung effectively said, the Executive Council led by the chief executive has the ultimate say on a lot of things, and we don't need to explain everything in detail to you. In other words, listen to us rather than the public or market demand.

In the property business, the interests of developers, buyers and sellers have been significantly affected by the government's new tax policies.

At a recent business forum, Shan Weijian, a professor-turned-private-equity-tycoon, asked the government: "Regarding the new 'hot policy' on properties, does New York or London have such policies? New York and London are both financial centres [that need] to attract talent, too. Their attitude is very open."

The Executive Council led by the chief executive has the ultimate say on a lot of things

The "hot policy" mentioned by Shan, an influential businessman on Wall Street and the mainland, refers to the additional tax non-permanent residents of Hong Kong must pay when buying a property in the city. The measure is widely considered as a move by Leung to boost his popularity.

A few days after the Heritage Foundation released its global ranking, the Economist group's advisory service unit for senior corporate executives issued a warning on the outlook for Hong Kong's business. It said the city was "at serious risk of losing its position as a pivotal business centre in Asia".

Meanwhile, the mainland was becoming a standalone business region for many multinationals, the Economist survey found.

Yes, Hong Kong is still the regional headquarters of many Fortune 500 firms, but the growth trend looks weak.

Pressure and competition for Hong Kong is coming not just from the north. The Heritage Foundation noted the growing challenge from Singapore.

While Hong Kong's overall score in the ranking, 90.1, rose 0.8 point year on year, Singapore's added 1.4 points to 89.4. It seems only a matter of time before Singapore is the new king of the free market.

If the late economist Milton Friedman, who once praised Hong Kong as a model of a free economy, could revisit the city, would he be disappointed?

Or perhaps, as I hear more and more from friends around me, is Hong Kong just destined to see its fortunes wane?

George Chen is the Post's financial services editor. Mr. Shangkong appears every Monday in print and online. Follow @george_chen on Twitter or visit facebook.com/mrshangkong


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This article is now closed to comments

Hong Kong economy is a cartel monopoly runned by a few hundred people.
They (the local elite) want to keep their lifestyle, so no real competition allowed.
People need to seriously wake up in HongKong.
A Hong Konger
Even in the seventies, with swathes of government housing, the (Royal) HK Jockey club being the only legal venue for gambling, the plainly obvious economic and political double dealings with the mainland, the wholly artificial structure of a UK colony living next to a communist super state facilitating its re-exports and millions of refugees and migrants, and the constantly changing political landscape that required constant reinvention and growth, (the list goes on) Milton Friedman, the (then) radical neo-liberal demagogue proclaimed HK as a close to perfect example of the free market at work. Since then his self-serving understanding of hyper capitalism has become mainstream. His (and the Heritage Foundations') vision of capitalism which works to the advantage of the wealthy and where the poor & middle class survive on constant economic growth, regardless of the very real suffering they must endure (i.e. 1970s HK) or the large amount of government intervention, as long as it isn't welfare. US neo-liberalism is one that denies our basic human capacity of altruism and reduces us to self serving units, bent of maximising our own wealth, much like we were in the 70s. I'm please to say even the worst of us are changing this attitude as evidenced by the anti-poverty parts of CY Leung's policy address (regardless of his reasons) as we become a better society. I will be happy when the heritage foundation strips us of the dubious 'honour' that proclaims our inhumanity to each other.
Hong Kong economy is a cartel monopoly runner by a few hundred people.
They (the local elite) want to keep their lifestyle, so real competition allowed.
People need to seriously wake up in HongKong.


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