Hong Kong reclaimed its title as the world’s freest economy, rising one spot from last year to edge out Singapore, according to the Canadian think tank Fraser Institute’s Economic Freedom of the World 2024 Annual Report released on Wednesday.

Hong Kong topped 165 economies in “freedom to trade internationally” and “regulation”, while its ranking in “sound money” climbed to third place globally. The city remained at 21st in “legal system and property rights”.

Chief Executive John Lee Ka-chiu said in a radio show on Thursday morning that the latest ranking underscores the effectiveness of related policies, enabling the market to develop freely under sensible regulation.

“For long, Hong Kong has fully leveraged the advantages of a free market, and maintained a free, open, effective and fair business environment. The ranking fully reflects the international recognition of these advantages,” a spokesperson for the Hong Kong Special Administrative Region government said in a statement.

“Hong Kong’s free market and premier business environment are attributable to our distinctive institutional strengths of the ‘one country, two systems’ arrangement,” the spokesperson added.

The city enjoys a common law system, an independent judiciary, and free flow of capital, goods, talent, and information. With a simple tax regime and low tax rates, Hong Kong is business-friendly, characterized by transparent and efficient markets, and regulations aligned with global standards.

More than 9,000 overseas and Chinese mainland firms are now based in Hong Kong, and the city is wooing more international businesses and professionals.

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Since late 2022, more than 100 high-profile tech companies from around the globe have decided to establish or expand their businesses in Hong Kong, which will invest over HK$50 billion ($6.43 billion) in the city and create 15,000 jobs.

In the first nine months of this year, InvestHK — a government department responsible for attracting direct investment from outside of Hong Kong — has facilitated the establishment or expansion of 470 mainland and foreign companies in the city, a 57 percent increase year-on-year.

On the talent front, from the end of 2022 to September this year, over 380,000 applications were received under various talent schemes, with nearly 240,000 approvals. About 160,000 applicants have moved to Hong Kong.

Looking ahead, the spokesperson said, Hong Kong will continue to “maintain and improve” its free and open business environment, serving as “a two-way springboard” for bringing in international firms and helping mainland enterprises expand globally.

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In addition, numerous surveys indicate that foreign firms generally have confidence in Hong Kong’s rule of law, as the HKSAR government protects the rights and freedoms of Hong Kong residents in strict accordance with the Constitution and the Basic Law, and the interests of enterprises and investors are also well-protected by law, the spokesperson emphasized.

“The Hong Kong government hopes that future assessments in Economic Freedom of the World can fully reflect the relevant facts,” the spokesperson said.

In the latest report, Switzerland, New Zealand, and the United States secured the third, fourth, and fifth positions, respectively.

“Despite a lot of negative media news flow, Hong Kong remains very much a free economy with a strong legal framework and financial system, and it was interesting to see that last year’s result was also revised to show Hong Kong had actually maintained the top spot in 2023 as well in retrospect,” said Lynn Song Lin, Hong Kong-based chief economist for Greater China at European bank ING.

“While we should not take Hong Kong’s key strengths in regulation, freedom to trade internationally and sound money for granted, there is no reason why these areas of strength should not continue into the foreseeable future,” he noted.

Though the “Hong Kong versus Singapore” storyline makes for a nice topic for debate, Song believes there’s plenty of room for both to thrive in their respective areas of strength.

Contact the writer at: irisli@chinadailyhk.com

Luo Weiteng contributed to this story.