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Gary Cheung

Jimmy Cheung

Nobel Prize-winning economist Milton Friedman, who once lauded Hong Kong as the perfect model of a free-market economy, said he was disappointed - though not surprised - to see the city had moved away from a laissez-faire economic policy.

The 94-year-old senior research fellow at the Hoover Institution also called it a 'mistake' for the Hong Kong government to shift from the policy of 'positive non-interventionism' to a policy of 'big market, small government'.

'Those four words are fine, but it all depends on what you fill them with.'

Dr Friedman was responding to questions from the South China Morning Post about Chief Executive Donald Tsang Yam-kuen's remarks on September 11, saying that 'positive non-interventionism' was no longer the blueprint for Hong Kong's economic policy.

In an article published on September 19, Mr Tsang expanded on his position, saying 'positive non-interventionism' had been ambiguous from the outset. He also cited different labels for the city's economic principles by various financial secretaries, stressing: 'But we have never deviated from our long-cherished, free-market philosophy.'

Dr Friedman noted there had been strong pressure in Hong Kong to move away from positive non-interventionism since China's resumption of sovereignty.

'Ever since Hong Kong shifted from being a colony of Britain to being a subsidiary of China there has been strong pressure for Hong Kong to move away from laissez-faire,' Dr Friedman said.

'It is not surprising, but it is disappointing, to see Hong Kong move in that direction. The future of both [mainland] China and Hong Kong depends on whether Chinese policies move towards Hong Kong's or vice versa.

'I believe it is a move in the wrong direction. Hong Kong flourished with a policy of nearly complete laissez-faire and that it seems to me is the appropriate policy not only for Hong Kong, but for all countries.'

The winner of the 1976 Nobel Prize for economic science famously said on a US television programme in 1990: 'If you want to see how the free market really works, Hong Kong is the place to go.

'The power of the free market has enabled the industrious people of Hong Kong to transform what was once a barren rock into one of the most thriving and successful places in Asia.'

A spokesman for the Chief Executive's Office said Mr Tsang had already set out his views on the issue in  the newspaper article last week. 'We have nothing further to add,' the spokesman said.



Keep the laissez-faire policy, economist Friedman urges