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This file photo taken on January 21, 2020 shows a man using his phone as he stands on a viewing point popular with tourists that faces the skyline (back) of Hong Kong island. Photo: AFP
Opinion
Editorial
by SCMP Editorial
Editorial
by SCMP Editorial

The rule of law is what sets Hong Kong apart for investors

  • The Fraser Institute says its ranking of Hong Kong as the world’s freest economy is being undermined by interference from China
  • It is a reminder that an independent judiciary is a central plank of the perception of a level playing field for investment
SCMP Editorial
SCMP Editorial
Why you can trust SCMP

Hong Kong is used to sitting atop surveys and indices of economic freedom and the like. At the same time, after recent social unrest and controversy over the introduction of a national security law, it would be unrealistic not to be prepared for the city to be knocked off its perch sooner or later. It still comes as a wake-up call for us to be put on notice that this could happen as early as next year.

The warning comes from the Canada-based Fraser Institute, which has just ranked Hong Kong the word’s freest economy for the 30th year running, ahead of Singapore. But scores for the city’s legal system slumped to a 20-year low, and judicial independence was ranked at its lowest in 16 years. Both are central pillars of economic freedom ratings. Fred McMahon, the institute’s Michael A Walker Research Chair in Economic Freedom, also claimed China’s influence would also have a negative impact on the city’s future position. There is a two-year lag in the institute’s annual report, which is based on 2018 data. McMahon claims interference from China in 2019 and this year undermines Hong Kong’s rule of law.

The government, while welcoming top ranking, dismissed fears for the rule of law, expressing regret the institute based anticipation of lower future ratings for this criteria on “biased comments”.

The survey also assessed regulation, freedom to trade internationally, size of the government, property rights, government spending and taxation. Trade freedom is also a sensitive criteria for Hong Kong, given the impact of American trade sanctions on China and talk of decoupling of the United States and Chinese economies.

Amid these uncertainties, the question is whether Hong Kong can still maintain a friendly business environment for investors, including those from the mainland. Western investors may have concerns about the national security law, but there are those who see it as a stabiliser. The city cannot just rely on BeiJing’s support as a financial centre and gateway to the mainland. Hongkongers must strive to maintain the city’s competitive edge through enterprise, adaptation and innovation.  

The latest report is a reminder that ultimately what sets Hong Kong apart for investors is the rule of law under an independent judiciary, a central plank of the perception of a level playing field.

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