Hong Kong has lost the "freest economy" title it held for 25 years in a row to Singapore as political turmoil and increasing integration with mainland China weakened economic freedom in the territory, a conservative Washington-based think-tank said Tuesday.

Hong Kong fell from the top spot among 180 economies surveyed by the Heritage Foundation in the 2020 Index of Economic Freedom, losing 1.1 point to score 89.1 on a 100-point scale, while Singapore clinched first place with 89.4 points, the same as last year.

"The ongoing political and social turmoil has begun to erode (Hong Kong's) reputation as one of the best locations from which to do business, dampening investment inflows," the report said.

A now-withdrawn China extradition bill sparked months of social unrest, further hampering the already battered local economy that has been suffering from the fallout of the China-U.S. trade war, while the independence of Hong Kong's judicial system was also "seriously imperiled."

"The massive demonstrations that ensued have been followed by months of political unrest and violence that have impeded economic activity and heightened fears of mainland interference," it said.

( Police officers remain on alert against demonstrators in Hong Kong on Dec. 9, 2019.)

"Intensifying uncertainties related to security issues have undermined an otherwise favorable investment climate."

The foundation saw the territory's growing affiliation with mainland China in terms of trade, tourism and financial links as a liability in Hong Kong's traditionally open and market-driven economy, saying, "Risks to Hong Kong's economic freedom have grown correspondingly."

The government responded by saying that it is "naturally disappointed" about the drop.

"While the local social unrest and turbulence in the past year, and how these were perceived overseas, might have affected Hong Kong's score in the investment environment, we must stress that Hong Kong's institutional strengths are unscathed and our underlying fundamentals remain strong," a government spokesman said in a statement, rejecting the idea that integration with China will erode Hong Kong's freedoms.

Singapore has excelled in all 12 index categories by which economic freedom is measured, but "ongoing restrictions on civil liberties, while not directly affecting the country's score, may have an indirect impact on economic freedom and remain a concern," the report said.

New Zealand ranked third, followed by Australia, Switzerland, Ireland, the United Kingdom, Denmark, Canada and Estonia among the top 10 freest economies, while Taiwan dropped one rank to 11th and Japan retained the 30th spot.

China ranked 103rd and North Korea was at the bottom at 180th.


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