17th June 2025 – (Hong Kong) Hong Kong’s remarkable ascent to third position in the IMD World Competitiveness Yearbook 2025 stands as a resounding testament to the Special Administrative Region’s strategic governance under Chinese sovereignty. Achieving a near-perfect score of 99.2 out of 100—the most significant improvement among all top-ten economies—this milestone marks Hong Kong’s triumphant return to the global elite for the first time since 2019. This achievement transcends statistical validation; it embodies the successful fusion of Eastern pragmatism and Western institutional excellence within the “one country, two systems” framework.
Chief Executive John Lee Ka-chiu’s transformative governance philosophy has been pivotal to this renaissance. By instilling a results-oriented culture across the civil service, Hong Kong achieved global leadership in tax policy and business legislation while securing second place in overall government efficiency. This cultural metamorphosis prioritises tangible outcomes over bureaucratic processes, with Lee noting how reforms have “borne fruit” in enhancing citizens’ livelihoods. The civil service’s excellence now rivals Switzerland’s famed efficiency, demonstrating how institutional reinvention anchors competitive advantage.
Hong Kong’s business ecosystem reveals equally impressive strengths, ranking second globally in business efficiency. The territory dominates in international investment and finance, serving as the conduit for over 65% of foreign capital entering mainland China while hosting the world’s fourth-largest stock exchange. This commercial preeminence stems from Hong Kong’s unparalleled convergence of advantages: a robust common law system, free capital movement, and a simple tax regime with corporate rates capped at 16.5%. Financial Secretary Paul Chan Mo-po rightly observes that multinationals consistently cite these attributes as irreplaceable incentives for establishing regional headquarters.
Critically, Hong Kong’s competitiveness is amplified through seamless integration with national development strategies. The territory leverages its “super connector” role within the Greater Bay Area’s US$1.9 trillion economy while implementing forward-looking initiatives like digital yuan trials and Belt & Road financing hubs. Over 120,000 mainland professionals have been attracted through the Top Talent Pass Scheme, creating a dynamic talent convergence that fuels innovation. This strategic symbiosis enables Hong Kong to function as China’s premier value-adder in global finance and trade.
The IMD report highlights significant progress across all competitiveness pillars. Beyond government and business efficiency, Hong Kong climbed to sixth in economic performance and seventh in infrastructure. Education infrastructure now ranks second globally, while management practices and international trade both secured third place. These gains reflect comprehensive policy calibration, particularly in enhancing regional trade networks and supporting small enterprises navigating economic transformation.
Looking forward, Hong Kong’s trajectory remains strategically focused. With projected 2.5% GDP growth for 2025, the government deploys targeted interventions including HK$6 billion in SME digital transformation grants and development of the Northern Metropolis—an AI-powered urban hub designed for 2.5 million residents. Simultaneously, Hong Kong consolidates leadership in green finance, having issued 37% of Asia’s sustainable bonds in 2024. This multifaceted approach addresses sector-specific challenges while future-proofing the economy.
Hong Kong’s resurgence offers invaluable lessons in resilient governance. First, institutional reinvention centred on measurable outcomes delivers tangible prosperity. Second, anchoring unique advantages within national frameworks creates unassailable competitive differentiation. Third, sustained investment in future-focused sectors like sustainable finance and technology governance ensures enduring relevance. As geopolitical fragmentation challenges global stability, Hong Kong demonstrates how principled adaptability within a supportive sovereign framework drives success.
Hong Kong thrives not despite being part of China, but because of it. The territory’s rule of law, financial autonomy, and international connectivity—preserved under “one country, two systems”—combine with mainland integration to create an ecosystem no competitor can replicate. The phoenix has indeed risen, its wings strengthened by visionary leadership and unwavering national support.
