Hong Kong has lost its position as the world’s freest economy to Singapore, according to an index compiled by Montreal-based Fraser Institute, which attributed the fall largely to the erosion of impartiality in the Chinese city’s legal system and judiciary.

Hong Kong dominated the independent Canadian think tank’s “Economic Freedom of the World” report for over two decades, but in the 2023 edition released on Tuesday, the city’s overall score fell by 0.07 points. This was due to a decrease in judicial independence, impartial courts and legal integrity, and an increase in military interference based on the latest available data collected in 2021.

The loss of top position will likely bruise the ego of the Hong Kong government, which has liked to point to the city as the world’s freest economy.

“Hong Kong’s recent turn is an example of how economic freedom is intimately connected with civil and political freedom,” said Matthew Mitchell, senior fellow at the Fraser Institute.

“The Chinese government’s aim was to crack down on political and civil dissent,” he said. “These repressions, combined with the government’s efforts to control the private sector, inevitably led to diminished economic freedom. Hong Kong’s prosperity will likely suffer as a result.”

The think tank said it expects the city’s score to continue to drop because of the curtailment of freedoms. Singapore has benefited from expatriates and foreign businesses that have fled Hong Kong to set up shop in the Southeast Asian city state.

Switzerland, New Zealand and the U.S. followed Hong Kong in the latest report, which analyzed 165 jurisdictions.

Fraser Institute noted that the city’s ranking in the past did not reflect the ramifications of the sweeping national security law that curtails civil freedoms and leaves room for political opponents to be prosecuted.

Last year, it warned that interference from Chinese authorities would undermine the city’s rule of law.

The Hong Kong government disputed the claims in the report.

“The Fraser Institute’s claims that the Mainland imposed new and significant barriers to entry, limits on the employment of foreign labor, and increases in the costs of doing business in Hong Kong are factually wrong,” a Hong Kong government spokesperson said. “We totally disagree with such unfounded claims and express our disappointment.”

China’s ranking stayed the same at 111th.

Fraser Institute noted that the city’s ranking in the past did not reflect the ramifications of the sweeping national security law that curtails civil freedoms and leaves room for political opponents to be prosecuted.

Last year, it warned that interference from Chinese authorities would undermine the city’s rule of law.

The Hong Kong government disputed the claims in the report.

“The Fraser Institute’s claims that the Mainland imposed new and significant barriers to entry, limits on the employment of foreign labor, and increases in the costs of doing business in Hong Kong are factually wrong,” a Hong Kong government spokesperson said. “We totally disagree with such unfounded claims and express our disappointment.”