By Lo Fung

There has been especially plentiful bad news in the past week. Some brought teeth-clenching rage, some brought heart-wrenching pain, and some brought ineffable grief. To begin with, the 47 among the 50-something people who were arrested for participating in the primaries were told to report to the police station last Sunday, and their personal freedom was immediately snatched; the four-day marathon bail hearing that followed turned into a “farce of society” that tortured the defendants and their families, not to mention the injection of the episode of “catch and release” which left only four out on bail. How has Hong Kong, once claimed to have the rule of law and respect for the rights and freedoms of citizens, fallen as such?

The Two Sessions between the National People’s Congress (NPC) and Chinese People’s Political Consultative Conference (CPPCC) were supposed to be about major national policy, yet it is the electoral system of little Hong Kong that has drawn the news’ attention. Government officials and state mouthpieces have not stopped criticizing the loopholes in Hong Kong’s electoral system that needs to be fixed to advance with the times, and stressed to implement the principle of “patriots ruling Hong Kong”. However, the proposal that was offered turned out to be a whole eradication of Hong Kong’s political development over the past 20 years since the Handover, and a harsh abolishment of the goal of gradual implementation of double universal suffrage as set out in the Basic Law, as if it had never existed. How is such a wanton violation of promises not to make people sad and angry?

Another terrible shock came from the Heritage Foundation, a world-renowned important think tank, that has ousted Hong Kong from its list of global economic freedom index and removed its ranking for the first time ever. For those who value the free market and personal freedom, this index is highly significant. Losing the ranking is not only heartbreaking but makes Hong Kong’s future worrying.

As a well-regarded think tank, the Heritage Foundation’s survey on the degree of freedom of the global economy is highly authoritative. It also represents the evaluation of the international community and business sectors on economic freedom in different regions of the world; in fact, those that have topped the list have always been developed economies, and the governments of Hong Kong, from the colonial British one to the SAR, have always taken pride in Hong Kong’s long-term position at the top of the list. Last year, when Hong Kong lost the top position in the Economic Freedom Index for the first time, Financial Secretary Paul Chan was disappointed, but still happy about the Heritage Foundation’s affirmation of Hong Kong’s economic freedom by ranking Hong Kong second-place.

Moreover, the Economic Freedom Index is not purely an issue of ranking. It also reflects whether Hong Kong can maintain its most important advantages and core values, and whether it can keep its century-old institutional capital. Without a free market system, without an invisible hand to effectively allocate and promote resources, and without room for enterprises and Hongkongers to freely maneuver, it would have been impossible for Hong Kong to have seized every opportunity to continuously advance its economy and become one of the most developed economies in the Asia-Pacific region. For Hong Kong to continue to occupy a seat in the global economy and to serve as an important bridge between the mainland and the world, this system has to be maintained and be recognized by the international community and major economies.

The Heritage Foundation, which has always been a strong advocate for Hong Kong’s free economic system, has been repeatedly questioning this “golden brand”. It was first downgraded last year, and this year, it has decidedly ousted this Pearl of the Orient from the list and given it no ranking. On the day of the announcement, Heritage Foundation founder Edwin Feulner specifically penned an article, Hong Kong is No Longer What it Was, in the Wall Street Journal to explain why Hong Kong was shown the red card and ousted. Feulner said that Hong Kong’s economic freedom and autonomy are gradually disappearing due to Beijing’s increasing control over Hong Kong. Therefore, the Foundation can no longer consider Hong Kong significantly different from other mainland Chinese cities, therefore the decision was made to kick Hong Kong off the list, and no longer give it its own ranking.

Some will perhaps argue that the Heritage Foundation is but one organization, which may not be able to influence that many international investors, and that its red card will not cause much damage to Hong Kong. The Heritage Foundation is indeed only one of the many think tanks, yet its influence among the American conservatives and Republicans is huge, and especially among the politicians, companies, and the media that support the free market system. This time, its negative feedback of Hong Kong’s economic freedom is bound to undermine the confidence of many companies and managers, and weaken Hong Kong’s image as the freest economy. If other think tanks follow up and make similar evaluations that Beijing has gradually assumed control of Hong Kong’s financial policies and free-market system, the damage will be even deeper and more far-reaching, to a point where recovery would be difficult.

Some perhaps say that even if China’s economic freedom ranking is low, its GDP growth rate is faster than that of Western developed countries, indicating that the rankings are not useful, and Hong Kong has nothing to worry about. This kind of thinking actually lacks an understanding of the economic system and substance of China and Hong Kong. China’s economy is large, complete with manufacturing, service industries, and high-tech sectors. In many respects, it has the ability to influence and even set market rules. Even with less sensitivity to market information, or even incorrect policies, there is still room for correction and maneuver. Hong Kong, however, is a small and open economy. It has always relied on every move of the global economy and followed along, hoping to seize opportunities or reverse predicaments. If market sensitivity and the ability to respond to economic changes are lost because of the shrinkage of economic freedom, Hong Kong will not only be “no longer what it was”, but her competitiveness will also decline enormously. Soon, she will soon become a burden to others.

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