Hong Kong, once one of the freest jurisdictions in the world, with a rule of law that protected freedom of speech and assembly as fundamental human rights, is now under the direct hand of Beijing after the passage of the National Security Law (NSL) in July 2020. One of the victims of that law is Jimmy Lai, founder of Next magazine and Apple Daily, two of Hong Kong’s most popular and free-market publications.

His strong criticism of the NSL, and his support of mass protests against it, led to the shutdown of both publications and Lai’s imprisonment for “subversion.” By speaking out against the Chinese Communist Party (CCP) and its cronies in Hong Kong and defending the rule of law and freedom, Lai now faces the possibility of life in prison. Like many others before him, he is a prisoner of the state.

In honor of his valiant effort to uphold the principles that made Hong Kong a bastion of freedom and his courage in standing up to Beijing’s suppression of liberal principles in Hong Kong, the Cato Institute awarded him this year’s Milton Friedman Prize for Advancing Liberty. Sebastian Lai accepted the award on his father’s behalf.

Jimmy Lai, like other prisoners of the state, understands the key role a free market in ideas plays for both economic and personal freedom. In a recent documentary produced by the Acton Institute, he stated: “Information is choice and choice freedom.” When the free flow of information is crushed by the state, there can be no criticism of current institutions and leaders: wrong ideas persist and good ideas are suppressed. Consequently, both economic development and personal freedom suffer (see Zhang 2015).

Peter Bauer (1957: 113), the first recipient of the Friedman Prize in 2002, held that “the principal objective and criterion of economic development” is to widen “the range of effective alternatives open to people.” Restricting the flow of information and free speech limits the range of choices open to people, impedes the market discovery process, and weakens the moral fabric of society.

China’s Attack on the Free Flow of Information

When Deng Xiaoping began to open China to the outside world in 1978, there was both an economic liberalization and an opening of the market for ideas. However, preserving the CCP’s monopoly on power has always come first. Although freedom of speech is now embedded in the PRC’s Constitution (Art. 35), the state has the upper hand, as expressed in Art. 51: “Citizens of the People’s Republic of China, in exercising their freedoms and rights, may not infringe upon the interests of the State.” Those interests are wide-ranging and offer no guarantee of free speech or other fundamental human rights.

The Tiananmen crackdown in 1989 stalled liberalization until Deng’s Southern Tour in 1992. One of the many casualties of that crackdown was Zhao Ziyang, then Party General Secretary and a firm proponent of liberalization. When he spoke out in favor of a peaceful settlement with the protesters, he was purged from his position and put under house arrest for the remainder of his life.

Although Zhao’s voice was silenced, his posthumous book, Prisoner of the State: The Secret Journal of Premier Zhao Ziyang (2009) became a New York Times bestseller. In that book, he argued that, if China wants to fully develop, it must move toward a parliamentary democracy with a genuine rule of law and a free press (pp. 270–71).

Another enemy of the Chinese state was Liu Xiaobo, one of the drafters of Charter 08. He was charged with “speech crimes” for “inciting subversion of state power” and imprisoned. In 2010, he was awarded the Nobel Peace Prize for his strong support of democracy and human rights—especially free speech. The empty chair at the Nobel ceremony symbolized the struggle for truth against power.

In a statement released on December 23, 2009, Liu wrote: “Freedom of expression is the foundation of human rights, the source of humanity, and the mother of truth. To strangle freedom of speech is to trample on human rights, stifle humanity, and suppress truth.” Jimmy Lai would undoubtedly agree

Since Xi Jinping took over in 2012 as General Secretary of the CCP, there has been a carefully managed campaign to squash dissent within the Party and establish Xi as the paramount leader. Now the most powerful leader since Mao Zedong, Xi has silenced all critics, including those in Hong Kong.

In January 2017, the cyber police in Beijing shut down the website of China’s leading private, market-liberal, think tank—the Unirule Institute of Economics—as well as the personal websites of its scholars. The director of Unirule, Sheng Hong, in a memorandum dated January 24, 2017, pointed to the hypocrisy of Xi Jinping, who paid lip service to free trade in his remarks at The World Economic Forum, while cracking down on free speech at home. According to Hong, “As ideas are more valuable than commodities, anyone who truly defend[s] the freedom of trade will defend freedom of expression” (quoted from a personal copy of the memorandum). The Unirule Institute was permanently banned in August 2019, and the voice of its co-founder, Mao Yushi, who received the Friedman Prize in 2012, has been silenced.

Today, access to economic and financial data is being restricted in the name of national security, making it difficult for foreign firms and scholars to gather information necessary to conduct business in China and to understand policy changes (see Wei, Kubota, and Strumpf 2023). Without a free market for ideas and access to relevant databases, it will be difficult to make informed decisions and develop China’s financial markets.

China’s Future Development

In 2015, Zhang Weiying, a pioneer in China’s transition from plan to market, predicted: “The future of China’s reform will depend on the kind of ideas and leadership the new leaders, particularly General Secretary Xi Jinping, have. To succeed in a peaceful transition to a liberal society, China must get rid of the wrong ideas” (Zhang 2015: 13). The most serious wrong idea is that economic and social harmony come from top-down planning—not from the spontaneous order of free markets and free people bounded by a rule of law that protects persons and property.

Continuous improvement in people’s lives comes from taking advantage of new opportunities to exchange goods and ideas. In that endeavor, there must be competition in all markets, including the market for ideas. China’s one-party system and the lack of free speech are impediments to future development. That is why Ronald Coase and Ning Wang have emphasized that, “when the market for goods and the market for ideas are together in full swing, each supporting, augmenting, and strengthening the other, human creativity and happiness stand the best chance to prevail” (Coase and Wang 2012: 207).

Globalization and trade liberalization help bolster the free market for ideas and widen the range of choices open to people, thus increasing the wealth of nations. Crude nationalism and protectionism do the opposite. Politicizing trade and blocking the free flow of information risks losing the gains from globalization and marketization that have benefited both China and its trading partners.

Conclusion

Hong Kong’s turn from the principles that made it a great society—namely, the rule of law, nonintervention, and a free market for ideas—has made successful entrepreneurs and advocates of freedom like Jimmy Lai enemies of the state. By silencing critics—under the guise of national security—both Hong Kong and China have sacrificed liberty in the name of “stability.” Reversing that trend is the biggest challenge they face in achieving social and economic harmony.