Hong Kong has retained its ranking as the world's freest market but could see its lead diminish if the city's financial situation deteriorates further, according to a survey. The city headed the list of 155 countries and regions in the 2005 Index of Economic Freedom with a score of 1.35 out of 5 - the city's third-best score on the 11-year-old index. Hong Kong has topped the list every year since 1995. The degree of economic freedom increases as the score falls, with 'free' economies scoring between 1 and 1.99. The annual index ranks countries based on scores for 10 factors and is published by The Heritage Foundation and The Wall Street Journal. Financial Secretary Henry Tang Ying-yen was pleased by the news yesterday. 'We welcome this ranking. We have worked very hard for it,' Mr Tang said. 'I am pleased that the virtues we have been upholding to keep Hong Kong flourishing as a free-market economy have once again been reaffirmed by the international community.' Hong Kong's score worsened slightly from last year's 1.34, but Marc Miles, director of the foundation's Centre for International Trade and Economics in Washington, said, 'statistically, there is no change'. Although Hong Kong still has a sizeable lead over second-placed regional rival Singapore, Dr Miles warned that the rankings could be changed by unchecked government spending or improved policy implementation in other jurisdictions. China and Taiwan rose in the rankings. China jumped 16 places to number 112, a move foundation president Edwin Feulner described as 'encouraging'. China's score of 3.46 is better than last year's 3.64, but its economy is still described as 'mostly unfree'. The survey cited improvements in the country's trade policies and government spending. Taiwan, ranked 34th last year, rose to 27th. The US slipped out of the top 10 for the first time to No12.