Date
23 March 2017
Although the world's second largest economy, China only ranks No. 78 in terms of GDP per capita. Photo: Reuters
Although the world's second largest economy, China only ranks No. 78 in terms of GDP per capita. Photo: Reuters

Why China lags far behind Hong Kong in economic freedom

Hong Kong has kept its status as “the freest economy in the world” for the 23rd consecutive year in the annual ranking by the Washington, D.C.-based Heritage Foundation, while Taiwan is ranked No. 11 and mainland China took the 111th place.

Beijing’s mouthpieces didn’t immediately refute the rankings, but the People’s Daily ran an article shortly afterwards arguing that “China remains the world’s investment hotspot”.

In recent years, the Chinese officialdom, along with the country’s ultra-left faction, has often bragged about China’s status as the world’s second largest economy.

According to them, the sheer size of the country’s economy serves as a cast-iron proof that the Communist Party has succeeded in restoring China’s greatness, a phenomenal achievement that is unparalleled in the modern history of the country.

At the same time, Beijing has been deliberately downplaying the importance of GDP per capita or GDP at purchasing power parity (PPP), an internationally recognized measure of a country’s true economic prosperity and the actual standard of living of its people.

That is probably because there is nothing much for Beijing to brag about when it comes to GDP per capita, as China was ranked just 78th (US$7,990) in the world in 2015 in terms of PPP, whereas Hong Kong and Taiwan were ranked 18th (US$42,000) and 38th (US$22,000) respectively.

As a matter of fact, the economic size of a country is not necessarily in direct proportion to its actual degree of economic development and how civilized it is.

Even though China is now the world’s second largest economy, it doesn’t necessarily mean it has already qualified as a developed and civilized country.

As far as the world index of economic freedom is concerned, those economic entities with the highest rankings are mostly western developed countries such as Switzerland, Canada, Britain, Luxembourg, the Netherlands, the United States and Germany.

The exceptions are Hong Kong, Singapore, Estonia, the United Arab Emirates and Chile, all of which are ranked within the top 10.

All these economic entities (with the exception of Estonia and Chile) have a PPP of at least US$37,000, compared with just US$7,990 for China.

Moreover, all these economies share two things in common: their tertiary industries, almost without exception, account for 65 percent or more of their GDP, while their urbanization rate all exceeds 70 percent.

By comparison, China’s service industry only accounts for 54 percent of its GDP while its urbanization rate is only slightly over 51 percent.

Apart from GDP per capita, there are other internationally recognized indices that are usually employed to measure a country’s social development, its degree of civil rights and how civilized it is.

These are the Index of Freedom published by the US organization Freedom House, Corruption Perceptions Index published by Transparency International in Germany, Index of Democracy released by The Economist in Britain, World Press Freedom Index released by Reporters Sans Frontières, and Rule of Law Index published by the Global Justice Program at Yale University, among other indices.

In a nutshell, among all the political entities dominated by ethnic Chinese, Hong Kong, Taiwan and Singapore are all ranked much higher than mainland China in these indices.

And these results are anything but coincidental. Hong Kong, Taiwan and Singapore score higher in these indices because these three places all embrace clean government, judicial independence, the rule of law, procedural justice, free market economy, press freedom and civil rights of their citizens, the universal elements that are key to a truly developed and civilized society.

On the other hand, China is still governed by a one-party dictatorship that has absolutely no respect for human rights, the rule of law and procedural justice.

This indicates that no matter how large the country’s economy is, it still has a very long way to go before it can truly qualify as a developed and civilized country.

This article appeared in the Hong Kong Economic Journal on Feb. 22

Translation by Alan Lee

[Chinese version 中文版]

– Contact us at english@hkej.com

RT/CG

HKEJ columnist

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