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Hong Kong still world's freest economy but at a cost

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November 2, 2000 

HONG KONG (AP) - Despite widespread social discontent and noisy criticisms at home and abroad, Hong Kong's embattled leaders have reason to pop the champagne cork.

The city was once again ranked as the world's freest economy for the seventh year running in a survey of 161 economies compiled by the Heritage Foundation and The Wall Street Journal, released Wednesday.

The thumbs-up came exactly a week after the European Parliament criticized the government as favoring big businesses and creating an anti-competitive business environment.

Hitting back at the allegations, Financial Secretary Donald Tsang said the survey is the "best response" to the European Parliament report.

Tsang told reporters the survey has proven that "our market is fair, just and free, and that anyone can come and compete here."

In response to accusations of favoritism toward tycoons made by the EU, Tsang said the government is not to be blamed for the laissez-faire environment that allows some companies to sail ahead of others.

"That is not caused by any particular policy, but the product or capability of the individual company," he said.

The celebrative mood isn't likely to be shared by the majority of the Hong Kong public. Many have been protesting that the benefits of economic growth haven't been trickling down to the average wage earner.

And Tsang's answer is unlikely to satisfy them.

While defending the government's efforts to help the poor, Tsang said, "Uneven distribution of wealth is a symbol of all capitalist societies - I don't think I can do very much about it."

The survey ranked Singapore and Ireland as the world's second and third freest economies.

New Zealand ranked fourth place, while Luxembourg and United States tied for fifth place. Australia ranked ninth in the list.

Asian economies displayed a "schizophrenic" pattern this year, said Edwin Feulner, president of the Heritage Foundation.

Four Asian countries topped the list, while six were rated the most "repressed" in terms of economic freedom.

They were Vietnam, Burma, former Soviet states Turkmenistan and Uzbekistan, Laos and North Korea.

The annual study ranks the freedom of national economies on the basis of several factors, such as trade, tax, government intervention and banking policy.

Hong Kong, which has been ranked as the freest economy every year since the foundation released its first survey in 1994, was marked down for increased government spending but was offset by a plus for declining inflation.

Japan, awakening from a near decade-long recession, advanced to 14th place from 19th last year, while South Korea jumped to 29th place from 33th place because of lowered inflation.

Meanwhile, Taiwan slipped to 20th place from 11th because of the government's intervention to prop up the currency and stock market. China fell to 114th place from 100th partly due to increased restrictions on banking and finance.

But China's trade score is expected to improve with its forthcoming entry to the World Trade Organization, said Feulner of the Heritage Foundation.