Hong Kong has just received more good news regarding its economy: The city is back to No 1 in a global ranking on economic freedom.

The 2024 Economic Freedom of the World report, compiled by the Fraser Institute, a public policy research organization headquartered in Vancouver, Canada, ranked Hong Kong No 1 out of 165 jurisdictions based on five areas of assessment. Hong Kong achieved a score of 8.58, followed by Singapore with 8.55. Switzerland was ranked third with a score of 8.43, followed by New Zealand and the United States, with 8.39 and 8.09, respectively.

The report examined regulation, openness to international trade, the size of the government, the legal system and property rights, and the stability of the currency. The report also considered the freedom of people to make economic decisions in their countries or cities, with the 2024 ranking based on statistics from 2022.

Hong Kong lost the top spot for the first time last year, but it has recovered very quickly.

Among the five areas of assessment, Hong Kong ranked first in “freedom to trade internationally” and “regulation” in the 2024 report. It placed third globally for “sound money”, 21st for “legal system and property rights” and 45th in “size of government”.

This follows more good economic news received by Hong Kong lately, such as the city ranking third globally in the Global Financial Centres Index (GFCI) 36 Report published by Z/Yen from the United Kingdom and the China Development Institute from Shenzhen in late September, moving up one place from the March issue of the index this year. Hong Kong also ranked first in the Asia-Pacific region. The overall rating increased by eight points, the largest improvement among the top five financial centers. The GFCI Report has been released in March and September every year since 2007. In GFCI 36, 121 financial centers were assessed, and Hong Kong ranked third globally with an overall rating of 749.

Furthermore, a pilot Business Ready 2024 Report published by the World Bank Group has named Hong Kong one of the best-performing economies in “business environment” out of the 50 economies it surveyed worldwide. The report gauges the business and investment climate from 10 topics with three pillars under each topic.

Hong Kong ranks fifth in the pillar of “operational efficiency” with a score of 78.52 points out of 100. Among the 10 topics, Hong Kong scored 90.77 for “international trade”, 85.49 for “business entry”, and 77.71 for “utility services”.

What’s more, the Global Innovation Index (GII) 2024, published last September by the World Intellectual Property Organization, ranked Hong Kong 18th among the 133 economies surveyed, in a similar position to last year (just one position down compared to GII 2023). Also, Hong Kong ranked 17th among the 51 high-income group economies, and 5th among the 17 economies in Southeast Asia, East Asia, and Oceania. Overall, the ranking is quite similar to last year: four indicators have improved in the short-term and four indicators have worsened. Moreover, and this is important to note, the GII has ranked the Shenzhen-Hong Kong-Guangzhou science and technology cluster second globally for five consecutive years, which is a huge achievement.

This also follows the 2024 Policy Address (PA), in which Hong Kong’s Chief Executive John Lee Ka-chiu focused on the city’s ongoing economic transformation.

Some of the measures regarding innovation announced in the PA were to increase investment for the research and innovation and technology (I&T) industries by setting up a HK$10 billion ($1.28 billion) I&T Industry-Oriented Fund to form a fund-of-funds to channel more market capital to invest in specific emerging and future industries of strategic importance as well as optimizing the Innovation and Technology Venture Fund by redeploying HK$1.5 billion to set up joint funds to invest in startups of strategic industries, among others.

In addition to this, the PA also zeroed-in on fintech, indicating that the Hong Kong Special Administrative Region government will continue to promote the development of innovative financial services including central bank digital currencies (CBDCs), mobile payment, virtual banks, virtual insurance and virtual asset transactions.

The Financial Services and the Treasury Bureau is due to issue a policy statement in the near future, setting out its policy stance regarding the application of AI in the financial market. Other measures in the PA include promoting the use of CBDCs for cross-boundary payments, promoting real-world asset tokenization, and developing a digital money ecosystem and promoting the development of a digital securities market.

Indeed, Hong Kong and the rest of the Guangdong-Hong Kong-Macao Greater Bay Area are increasing their role as fintech hubs. The Fintech 2025 blueprint aims at pivoting the HKSAR toward a friendlier regulatory regime for digital assets, proving that the city is positioning itself to become a virtual assets center/crypto hub.

This approach is also consistent with the Hong Kong Monetary Authority’s Fintech 2025 strategy, which was unveiled in 2021 and aimed to encourage the financial sector to adopt fintech comprehensively by 2025, and in the words of HKMA chief Eddie Yue Wai-man, “promote the provision of fair and efficient financial services” for the benefit of Hong Kong’s residents and its economy.

In addition, Fintech 2025 is aligned with the nation’s 14th Five-Year Plan (2021-25) and the Long-Range Objectives through 2035, which recognized Hong Kong’s economic potential at the national level.

In many ways, Hong Kong looks as good as it looked in 1997, or even better.

To sum up, Hong Kong is constantly showing that it has the potential not only to maintain its role as one of the world’s most important financial centers but to enhance it, thanks to its expertise in finance and related industries, as well as tapping into newer industries like Web3. All this is taking place in the midst of Hong Kong’s involvement in the GBA and other relevant projects.  

The long-term development of Hong Kong within the GBA blueprint as well as within the national development strategy requires a multifaceted approach. Moreover, Hong Kong ranking No.1 again as the world’s most free economy, as well as all the positive news from all the other rankings, show that Hong Kong is thriving and far from “over”.

The author is a fintech adviser, researcher and former business analyst for a Hong Kong publicly listed company.

The views do not necessarily reflect those of China Daily.