Three consecutive championships! Hong Kong has once again taken the top spot globally.
With a score of 8.53, Hong Kong ranks first globally. On October 6, Canada's Fraser Institute released the *Economic Freedom of the World 2026 Annual Report*, where Hong Kong topped the list among 165 economies worldwide for the third consecutive year. Switzerland scored 8.45, rising to the second place; Singapore scored 8.43, dropping to the third.
The gap is tiny, but the gold content of this ranking is high. This report is released against the backdrop of a world where economic freedom is under overall pressure, exemplified by rising trade protectionism, expanding industrial subsidies, tightening technology regulations, and politically divided supply chains.
Most economies are raising market access thresholds, while Hong Kong continues to keep its doors wide open.
So what exactly does the assessment of the world's freest economy measure? What enables Hong Kong to claim the top spot for three consecutive years? Hong Kong's predictable institutional environment is the most critical factor here. Low tariffs are only the entry point, while the common law system, free flow of capital, currency stability, arbitration capacity, and the channel connecting the Chinese mainland and the rest of the world are what long-term capital truly values.
What Does the Freest Economy Assessment Evaluate?
The Fraser Institute's assessment covers five major categories: freedom to trade internationally, regulation, monetary policy and market stability, legal system and property rights protection, and size of government. Its core measurement is how much friction government, legal, monetary and trade rules bring to market transactions. The simpler, more stable and more predictable the rules are, the higher the economic freedom score will be.
Hong Kong's score structure in 2026 is quite illustrative: it scores 9.66 in freedom to trade internationally, ranking first globally; 8.61 in regulation, ranking second globally; over 9.5 in monetary policy and market stability, ranking eighth globally; 7.56 in legal system and property rights protection, ranking 24th globally; 7.3 in size of government, ranking 51st globally. With a total score of 8.53, its leading position is supported by the three pillars of trade, regulation and currency.
Hong Kong's strengths are highly concentrated, and its weaknesses are also very clear.
In terms of strengths, the 9.66 score in freedom to trade internationally reflects that Hong Kong, as a separate customs territory, implements a zero-tariff free port policy. There are no quotas or tariffs, and the flow of capital and goods is highly efficient.
At a time when global trade protectionism is on the rise, this advantage has not been weakened, but has become more valuable due to its scarcity.
The 8.61 score in regulation shows that Hong Kong has little intervention in enterprise operation, its credit market, labor market and commercial operation are flexible, and enterprises can allocate resources quickly.
The score of over 9.5 in monetary policy and market stability shows that the linked exchange rate system operates stably, and the official foreign exchange reserve assets reach 431.9 billion US dollars, providing strong backing for currency stability.
For international investors, a predictable monetary environment is more important than short-term high returns.
In terms of weaknesses, the 51st ranking in size of government indicates that the Hong Kong government's expenditure in social security, public services and other fields is relatively limited. The 24th ranking in legal system and property rights protection is still at a high level, but there is a gap compared with the top-tier performance in trade freedom and regulation. These two shortcomings deserve serious attention.
The small size of government is related to the institutional arrangement under the "One Country, Two Systems" framework: national security public goods such as national defense and diplomacy are borne by the central government, and Hong Kong does not need to maintain huge military expenditure, so it can maintain a simple low-tax system and a small government size.
The 24th ranking in legal system and property rights protection reminds Hong Kong that the credibility of common law and judicial efficiency are still the key to long-term competition.
Capital can accept changes in tax rates, but it can hardly tolerate ambiguous rules.
The Fraser Report also provides a macro data: economies ranking in the top 25% by economic freedom had a per capita GDP of about 65,596 US dollars in 2024, nearly 7 times that of economies in the bottom 25%, which shows that institutional quality is highly correlated with prosperity.
However, economic freedom cannot automatically solve all problems. Hong Kong's real GDP in the second quarter of 2026 increased by 4.3% year on year, by 5.9% in the first quarter, and by 5.1% in the first half of the year, marking the strongest semi-annual performance in the past five years. Goods exports rose by 28.9% in the second quarter, private investment recorded double-digit growth for three consecutive quarters, reaching 19.4% in the second quarter. Private consumption only increased by 2.8%. The growth is strong, but different industries have different perceptions of it.
The core of the freest economy assessment is the rule cost and expectation cost. The clearer the rules are, the bolder enterprises are to invest; the more stable the expectation is, the longer capital is willing to stay. Hong Kong still leads most economies in the world in these two indicators.
Why Does Hong Kong Take the First Place?
One of Hong Kong's advantages is its zero-tariff free port status.
As a separate customs territory, Hong Kong levies no tariffs and pursues a free trade policy. Almost no administrative barriers are faced when global goods enter and exit Hong Kong.
Its tax system is also extremely simple: only profits tax, property tax and salaries tax are levied, and there is no capital gains tax, dividend tax or estate duty. The actual tax burden of enterprises is far lower than that of the vast majority of developed economies. The combination of zero tariff and simple low tax makes Hong Kong one of the preferred locations for global enterprises to set up regional headquarters and trade transit stations.
But this is only the entry point. Hong Kong's real hidden advantage is a set of institutional combinations.
First, the common law system and independent judicature.
Hong Kong implements the common law system, and the judicial organ exercises judicial power independently. The Basic Law authorizes Hong Kong to continue to use its own currency, maintain the status of a free port, implement a free trade policy, and protect the freedom of capital flow and entry and exit.
For international investors, common law means predictable contract enforcement, reliable property rights protection and fair commercial dispute resolution. Representatives of chambers of commerce in the Middle East have shown strong interest in taking Hong Kong as a place for mediation and arbitration, and representatives of Central Asian countries hope to learn from Hong Kong's experience to develop an international financial center based on common law. This shows that Hong Kong's arbitration power and legal reputation are becoming high-end service exports.
Second, free flow of production factors. The four major production factors in Hong Kong, namely capital, goods, talents and information, flow almost without barriers. The Hong Kong dollar can be freely converted, there are no controls on capital entry and exit, information flows freely, and the bilingual (Chinese and English) language environment enables international enterprises to operate seamlessly. The less the government intervenes in the market, the higher the efficiency of production factor allocation. This is the internal logic behind the high score in the regulation dimension.
Third, linked exchange rate and financial stability. Hong Kong ranks eighth globally in the score of monetary policy and market stability. The linked exchange rate system operates stably, and with sound financial supervision, it provides a highly predictable monetary environment for global investors. The official foreign exchange reserve assets reach 431.9 billion US dollars, providing a solid backing for currency stability.
Capital chases returns and also fears risks. A financial center with stable currency and free entry and exit of capital naturally attracts long-term capital.
Fourth, the channel connecting the Chinese mainland and the rest of the world: Hong Kong is backed by the motherland and connected to the world.
Mainland enterprises go global through Hong Kong, and overseas enterprises enter the mainland market through Hong Kong. In 2025, there were more than 11,000 companies with parent companies located overseas and the mainland based in Hong Kong, up 11% from 2024 and hitting a record high. As of June 2026, the number of registered non-Hong Kong companies reached 16,000, a new high. The Office for Attracting Strategic Enterprises has successfully attracted more than 120 key enterprises to settle in Hong Kong in total. From the end of 2022 to August 2026, various talent admission schemes have received more than 670,000 applications, approved more than 470,000 applications, and more than 310,000 people have come to Hong Kong.
Enterprises and talents vote with their feet, which mutually confirms the Fraser Institute's scoring results.
I summarize Hong Kong's core advantages as "four rights": the right of exit, the right of conversion, the right of arbitration, and the right of connection.
The right of exit refers to the freedom of capital entry and exit and the free flow of capital. The right of conversion refers to the free convertibility of the Hong Kong dollar, allowing assets to be freely switched between US dollars, RMB, Hong Kong dollars, stocks, bonds, insurance and family offices. The right of arbitration refers to the mature common law system and international arbitration and mediation services. The right of connection means that Hong Kong connects the Chinese mainland and the rest of the world, acting as a "super connector" and "super value adder". The combination of these four rights constitutes the real asset of Hong Kong's free economy.
Moreover, Hong Kong's institutional design has a unique structure: the state provides security public goods, and Hong Kong provides market interfaces.
State security affairs such as national defense and diplomacy are borne by the central government, while Hong Kong maintains a highly autonomous tax, currency, legal and tariff system. A division of labor between security and freedom is formed here: security brings a sense of ease, ease fosters confidence, and confidence gathers capital. Hong Kong has topped the ranking for three consecutive years relying on this two-tier institutional structure. Freedom is the result of institutional design, and also the result of long-term trust.
The More the World Builds Walls, the More Valuable Hong Kong Becomes?
In 2026, the world is witnessing rising trade protectionism, regionalized supply chains, and politicized technology regulation. Many economies are raising tariffs, offering subsidies, setting up barriers and scrutinizing investment.
The Fraser Report points out that the regulatory measures, trade barriers, government expenditure expansion and monetary easing implemented by various countries during the pandemic have led to a continuous decline in global economic freedom. Up to now, the overall global economic freedom is still lower than the pre-pandemic level.
Against this backdrop, Hong Kong's zero-tariff free port has transformed from an ordinary advantage into a scarce asset. It is no accident that Hong Kong scores 9.66 in "freedom to trade internationally" and ranks first globally.
The more people build walls, the more people need to open doors. As a separate customs territory, Hong Kong levies no tariffs, has no quotas, and allows efficient and free entry and exit of capital and goods.
Hong Kong has become an institutional conversion hub for the global economy, but it cannot only engage in traditional entrepôt trade. The function of Hong Kong's entrepôt hub will be impacted as geopolitical risks rise and technology export controls tighten.
Therefore, Hong Kong is diversifying its connection targets.
Paul Chan Mo-po mentioned after the Annual Meeting of the Asian Infrastructure Investment Bank that the cooperation between the Middle East, Central Asia, the Global South and Hong Kong is evolving from the two-way flow of capital and personnel to the sharing of experience in innovation and technology, industry and institutional building.
Economies in the Middle East have actively promoted economic diversification in recent years, with key investment themes including infrastructure, artificial intelligence and digitalization, healthcare, industrial automation and robotics, new consumption patterns, renewable energy and new materials.
These directions coincide with Hong Kong's innovation and technology development strategies.
Over the past year, the participation of Middle East capital in Hong Kong's IPO market has increased significantly. Local family businesses have expanded their investment portfolios to technology, logistics and capital markets. Representatives of Central Asian countries hope to learn from Hong Kong's experience to develop an international financial center based on common law, and representatives of chambers of commerce in the Middle East have shown strong interest in taking Hong Kong as a place for mediation and arbitration.
A prominent phenomenon of Hong Kong's economy in 2026 is strong foreign trade, strong investment and moderate consumption.
The real GDP in the second quarter increased by 4.3% year on year, and by 5.1% in the first half of the year. Goods exports rose by 28.9% in the second quarter, and private investment increased by 19.4% in the second quarter. Private consumption only increased by 2.8%. Why are the perceptions of different industries so different?
Because the AI boom is reshaping Hong Kong's role in the industrial chain. As a trade hub for technology products, one third of the mainland's integrated circuit exports are transshipped through Hong Kong, and AI-related products account for about 70% of Hong Kong's total commodity exports.
The export value in the first quarter increased by 41.5%, and further rose to 63.7% in the second quarter. The capital market is also active. From December 2025 to May 2026, technology and AI-related companies raised a total of HK$979 billion through IPOs in Hong Kong, accounting for 55% of the total IPO financing in the same period.
In the first nine months of 2026, the average daily turnover of the Hong Kong stock market reached HK$2729 billion, up 6.4% year on year. 116 enterprises were listed in Hong Kong, raising more than HK$3880 billion, more than doubling year on year and exceeding the total amount of the whole of last year.
These data show that the function of Hong Kong as a free economy is being upgraded.
In the past, Hong Kong was mainly a goods transit hub. Now, it has become a transit hub for capital, technology, data, standards and risk management.
AI enterprises need international financing, intellectual property transactions, cross-border data flow, dispute arbitration and talent flow. Hong Kong's common law system, free convertibility, low tax system and the advantage of connecting the mainland just form an institutional suite for the AI industry.
Middle East capital no longer only buys assets, but also pursues projects, industries, institutional experience and reliable partners. Hong Kong can provide the combination of "finance + real economy + institution", and its cooperation with the Middle East and the Global South is also deepening and delivering tangible results.
From large asset management institutions planning to set up offices in Hong Kong, to the development of cross-listed exchange-traded products for the two markets, to the fields of energy storage, data centers, e-commerce logistics and aviation, all are specific cases of aligning finance with the real economy and expanding international cooperation.
In an era when global economic freedom is under overall pressure, Hong Kong's "freedom" is a scarce institutional asset.
It attracts capital with opportunities, retains capital with predictable rules, and makes capital feel at ease with security guarantees.
After the Five-Year Plan
What Will Hong Kong's Freedom Be Upgraded to?
On September 16, 2026, the *First Five-Year Plan for the Economic and Social Development of the Hong Kong Special Administrative Region (2026-2030)* was officially released.
This is the first five-year plan covering all economic and social fields formulated by Hong Kong since its return to the motherland, and it is also the first time for Hong Kong to align its development with the national five-year plan and systematically plan for its development in the next five years at the beginning year of the national "15th Five-Year Plan".
The plan is about 60,000 words long, with 105 indicators, including 22 main indicators, 57 special column work indicators and 26 chapter work indicators.
For capital, the greatest value of the plan is to reduce uncertainty.
The market fluctuates and the economy has cycles, which are all risks familiar to investors. What really makes long-term capital hesitate is unclear development direction, ambiguous policies and unstable expectations.
The five-year plan clearly proposes that in the next five years, Hong Kong will consolidate and enhance its status as an international financial, shipping and trade center and an international aviation hub, accelerate the construction of an international innovation and technology center, build a highland for gathering international high-end talents, and further give play to its unique advantages of connecting the mainland and the rest of the world.
The plan emphasizes an evidence-based approach, taking both planning and implementation into account to ensure practical results. The clearer the direction is, the more stable the expectation is; the more stable the expectation is, the easier it is for long-term capital to make judgments. However, if industrial policies are overly administrative, the regulation score may decline; if welfare expenditure expands too fast, the size of government score may face pressure.
The real test for Hong Kong in the next five years is to find a new balance between plan guidance and market-driven development.
The government takes charge of public goods, safety nets and long-term infrastructure, while the market is responsible for resource allocation, innovation and pricing. The five-year plan can become the construction blueprint for "Freedom