The institute, in the 2018 edition of its report Economic Freedom of the World, placed Hong Kong first on the ranking of free economies, followed by Singapore and New Zealand. The United States was sixth, followed by Canada and Australia tied in 10th place. China was 108.

A total of 162 countries and territories were ranked this year, with the table based on official data from 2016, the latest available. The report aims to showcase the ability of individuals to make their own economic decisions by analysing regulation, freedom to trade internationally, legal systems and taxation, among other things.

“While Hong Kong is still the most economically free, there is a valid concern that interference from mainland China will ultimately lead to deterioration in Hong Kong’s top position, particularly in rule of law, which helps ensure equal freedom for all,” said Fred McMahon, the institute’s Dr Michael A. Walker Research Chair in Economic Freedom.

“Citizens in China continue to be far less free economically than citizens in virtually all jurisdictions and countries within the region,” McMahon said.

McMahon said the joint checkpoint arrangement, which allowed mainland Chinese officials to enforce national laws in part of the West Kowloon terminus for the high-speed rail, “is clearly a violation of the Basic Law”.

“The government statement about [the] Basic Law protecting the rule of law in Hong Kong is troublesome since many observers believe China continues to violate the Basic Law in a number of ways, the non-democratic structure of elections and attacks on the freedom of speech, particularly related to independence, and of course the train station,” he said.

McMahon added the ”bookseller case” in 2015 was “a wild and unapologetic attack on the rule of law by the mainland”, not just in Hong Kong but other countries such as Sweden.

He was referring to the five Hong Kong booksellers – all linked to the same Causeway Bay bookstore known for publishing banned books on China’s political elite – who mysteriously disappeared and later resurfaced in mainland China.

“How can the government say the Basic Law will protect the rule of law when the mainland violates it at will, ” he said.

“Chinese officials have repeatedly stated that the rule of law is subservient to the Communist Party both on the mainland and in Hong Kong, and this from mainland words and deeds includes the Basic Law.”

Last year’s report made a similarly ominous warning of Beijing’s perceived interference.

The institute rated Hong Kong 7.5 out of 10 for impartial courts in this year’s report, compared with 8.85 in a review of statistics from 2000. In freedom to trade internationally and regulation, it was ranked top.

The government’s statement insisted the court system in Hong Kong was as transparent as ever, and justice was impartial in the city.

“The rule of law, including judicial independence, is alive and well in Hong Kong. Judicial independence is pivotal to Hong Kong’s continuous success as the world’s freest economy. We have faith in the rule of law and judicial independence in Hong Kong, and will strive to enhance the proper understanding of the international community in this respect through different channels,” the statement said.

The report, released on Tuesday, was compiled in cooperation with independent research and education institutes in nearly 100 economies worldwide.