Hong Kong tops economic freedom rating


Hong Kong continues to have the greatest economic freedom in the world, a new survey says

CALGARY, Canada (CNN) -- Hong Kong continues to have the greatest economic freedom in the world, according to an annual study released to coincide with the Group of Eight meeting in Canada.

The report, the sixth compiled by Canada's Fraser Institute and other think tanks around the world, says Hong Kong retains its No. 1 status with a rating of 8.8 out of 10, closely followed by Singapore on 8.6.

The United States ranks third with 8.5, followed by the U.K. on 8.4 points. They are followed by New Zealand, Switzerland and Ireland.

Hong Kong's high rating comes as the one-time British colony prepares to mark five years next week since its reversion to Chinese rule on July 1, 1997, when it became a Special Administrative Region of China.

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Photo gallery: 1997-2002 through the lens

Timeline: Five years under Chinese rule

IN-DEPTH

One Country Two Systems: 5 Years On

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Five years after its handover to China, fears over Hong Kong's political fate have given way to concerns about its economic viability. CNN's Lisa Barron reports.

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CNN's Lisa Barron looks at the relationship between Hong Kong and mainland China visitors.

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Under the terms of the "one country two systems" agreement between China and the U.K., Hong Kong is to retain its distinctive characteristics and special status for 50 years (Fifth Anniversary Story).

Constant speculation

But there is constant speculation and discussion in Hong Kong that its freedoms are gradually being eroded and that it may eventually lose its status as a global financial center to the fast growing Chinese city of Shanghai.

However, analysts say that this is unlikely until after China's financial system is fully liberalized and its currency, the yuan, is freely traded.

Economic growth and development is a key focus of the annual meeting of leaders from the Group of Eight advanced nations in Canada, starting Wednesday (Full Story).

Among other Asia-Pacific economies cited in the annual Economic Freedom study, Australia ranks 8th with 8.0 points. Japan came in at No. 24, South Korea tied with France and five other nations at No. 38, India was No. 73 and China ranked 101st.

The 2002 Economic Freedom report ranks 123 nations on 37 variables. These are based on personal choice, voluntary exchange, freedom to compete, and protection of personal rights and property.

Rule of law

The Fraser Institute says this requires the rule of law, property rights, limited government intervention, freedom to trade and sound money.

Nobel Laureate in economic sciences Milton Friedman, who helped launch the report in Calgary, Canada on Tuesday, said that if the Group of Eight nations were serious about fighting global poverty and terrorism, they should focus on promoting economic freedom.

According to the Fraser Institute, studies show that greater economic freedom reduces poverty and delivers better economic outcomes.

It said that Africa's persistent poverty, for example, was not due to a lack of aid -- African nations are the largest aid recipients -- but to a lack of economic freedom.