Hong Kong, January 4:

Hong Kong was today named the world’s freest economy by a US think tank for the 12th consecutive year, but warned it must protect the rule of law in the territory. The Heritage Foundation gave the accolade to the low-tax Chinese city of 6.8 million ahead of Singapore and Ireland, which claimed second and third places respectively. The annual index of economic freedom put out by the Washington-based think tank noted that Hong Kong’s score had improved this year because of a decrease in government spending.

However, the foundation warned that government intervention, higher taxes and a retreat from the rule of law could threaten Hong Kong’s ranking in future years. The remarks about rule of law were an apparent reference to the political turmoil in Hong Kong, which saw election reforms defeated by legislators in December who demanded a timetable for democracy.

Hong Kong was nevertheless praised by the foundation for having a free port with no barriers to trade, high levels of transparency and uniformly applied business regulations.

The territory’s financial secretary Henry Tang said of the award, “The government is firmly committed to maintaining Hong Kong as a free market economy that accords maximum scope to the private sector.” The study by the foundation covered 157 economies worldwide and measured how well they score on a list of 50 independent variables grouped into 10 broad factors of economic freedom.