HK leads economic freedom
By Emily Smith for CNN
(CNN) -- As Hong Kong's government grapples with criticism of its proposed national security laws and what critics contend is an erosion of free speech, there is better news on the economic and business front for this city of 7 million people.
For the ninth consecutive year, Hong Kong has been named as having the world's freest economy, ahead of Singapore, New Zealand and Luxembourg. North Korea was listed as the country with the least free economy.
The ranking came from the 2003 Index of Economic Freedom, compiled by the U.S.-based Heritage Foundation.
The foundation's ranking of economies is based on 10 factors which include trade policy, the fiscal burden of government, government intervention in the economy, monetary policy, capital flow and foreign investment, banking and finance, wages and prices, property rights, regulation and black market activity.
Other Asian rankings include Taiwan at 27th, Japan 35th, South Korea 52nd and mainland China at 127th. Hong Kong and China signed a landmark free trade agreement last month.
Studies show that greater economic freedom usually reduces poverty and delivers better economic outcomes.
But since its reversion to Chinese rule in 1997, Hong Kong has experienced an economic slump – firstly from the 1997-98 Asian crisis and more recently from the impact of falling property prices and the outbreak of the flu-like illness known as SARS.
SARS has drastically affected Hong Kong's economy, particularly in tourism-related industries. Latest government statistics show that Hong Kong's unemployment rate between March and May reached a high of 8.3 percent, with SARS largely to blame.
Free trade agreement
Hong Kong signed a free trade agreement with China on June 29 that it hopes will boost the economy. From January 1 next year, companies in Hong Kong and mainland China will be able to trade numerous goods without tariffs being imposed.
However the timing of the agreement was seen by some critics as an attempt to divert the focus from Hong Kong's proposed new anti-subversion laws.
While Hong Kong's economy is the freest in the world, the government, led by Chief Executive Tung Chee-hwa, is under intense scrutiny over its plans to introduce new national security legislation.
Under the proposed legislation, anyone found guilty of acts of treason, sedition, secession or subversion against mainland China could be jailed for life.
There are concerns that the new legislation will lead to repression of basic civil liberties such as freedom of speech, and that the greater political freedom Hong Kong civilians enjoy compared to their mainland China counterparts will be reduced.
Last week half a million people protested in the streets of Hong Kong, and on Saturday the government succumbed to public pressure, making changes to the proposed legislation.
These changes include abandoning a condition that would prohibit groups in Hong Kong if they were outlawed in mainland China. Tung Chee-hwa also withdrew a stipulation that would give police sweeping search powers.
After an emergency meeting on Sunday evening, Tung's government announced that it would delay the vote for the bill, after initially refusing to budge from its July 9 timing. (Shock reversal for HK vote)
Opponents had argued that the government was trying to rush the vote. The government's reason for pushing it back was that it would now have time to explain the proposed bill.
Christine Loh, CEO of Civic Exchange, told CNN that the decision would immediately "defuse the opposition (to the bill)."
Loh said the issue has led to the people of Hong Kong losing trust in the government and has also highlighted what she said was the government's incompetence.
Hong Kong officials insist its citizens' freedom will not be compromised. Tung said in a statement last week that his government would "listen more extensively and strive to strengthen communication with the public."
Tung remains confident that the bill will eventually be passed.