Hong Kong has been feeling unloved by admirers who long cherished it for a simple virtue. While governments the world over toyed with grand schemes of state planning, Hong Kong's credo of economic freedom set it apart. Doubts about the SAR's commitment to that heritage has come from many quarters. The Heritage Foundation is not among them and Chief Executive Tung Chee-hwa yesterday lapped up its praise. The right-wing Washington think-tank reaffirmed the SAR's No 1 spot in its annual economic freedom index. Its findings follow the World Economic Forum-Harvard Business School downgrade, which last month put Hong Kong at a miserable 13th place in its competitiveness survey. Hong Kong places a disturbing significance on such polls and there is a certain silliness when officials dismiss the unfavourable findings and lap up the plaudits. Global surveys, by definition, offer but a snapshot of an economy, and cross-border comparisons are fraught with problems. For anyone who deals regularly with the SAR, the Heritage Foundation's findings come as no surprise. Despite its post-1997 problems, Hong Kong is the same efficient and market-oriented commercial hub it always was. Institutions are robust, transparency is high and markets are relatively free. This is not to say improvements are not sorely needed (which country can say that?) but it is a sensible starting point. If overseas chief executives, academics and journalists use the findings, then so much the better. The danger comes when officials pick and choose from such surveys seeking justification for policies that are past their sell-by date. The Heritage Foundation lauds Hong Kong without making serious mention of its domestic cartels, skewed land policy and far-from-small government. Are we to conclude that such deficiencies are not inhibiting economic performance? After all, Harvard academics who produced the World Economic Forum report argued Hong Kong was critically failing in hi-tech industries and the move to higher value businesses. Perhaps the point to take from both reports is that critical outside observers judge Hong Kong's core institutions and commitment to market principles to be strong. Whatever the ranking criteria of individual think tanks, such defining principles lie at the core of economic success the world over. This matters, because big issues are being fought over by those who would increase government economic planning and others who advocate the laissez faire credo. Understanding the core principles that made us strong means it less likely that flavour-of-the-month policies will be pushed through by vested interests and quack advisers. Any recession-bound economy is subject to bad commentary and self doubt. That has reached silly proportions, with Shanghai fever taking hold. Hong Kong should accept the Heritage Foundation plaudits with good grace, but perhaps a touch of 'we knew so' arrogance would not go amiss.
