All posts by anthony@greaterbayinsight.com

Try harder, Xi tells Hong Kong govt

It is becoming clearer that something has shifted in Beijing’s approach to governing Hong Kong. We pointed out the beginnings of this shift last week, after CE Carrie Lam’s visit to Shanghai and Beijing, where she met President Xi Jinping and her direct report, Vice Premier Han Zheng. She came back more confident, less inclined to give middle-ground statements on the protests. We speculated that it was because the central government had reached a new consensus on Hong Kong, and a change of direction was needed: restrained passive-aggressive interventionism was out; active, overt policy guidance was in.

However, until late yesterday, it hadn’t seemed like the new approach was being timed on a stopwatch. The central government was upping the pressure to introduce national-security legislation, but no deadline had been hinted at.

Then President Xi Jinping interrupted a busy schedule on his overseas trip to comment on the situation in Hong Kong. He reiterated that he wants to see the Hong Kong government and police do whatever is necessary to put an end to the protests. It was no longer just the Hong Kong government’s most important task; it was now its most “urgent,” too.

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Guangzhou, Foshan to build ‘trillion-plus’ zone

Guangzhou and Foshan are planning to jointly develop a new Greater Bay Area “hub” centered on the Guangzhou South Railway Station. The aim of the project is to create a cluster of new strategic industries, with input from Hong Kong and Macau, which will be valued at more than RMB 1 trillion.

The announcement of the project, which is grandly titled “South Station Area”, was made late last week but took a few days to be picked up by local media. Here are the basic facts:

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In Hong Kong, end slips further out of sight

We ended our weekend analysis of the situation in Hong Kong by urging readers to remain calm and look ahead to see how a change of approach by Beijing might play out in the coming weeks and months. We didn’t have to wait long to see this advice put sorely to the test. It would have taken a deeply rooted stoicism to remain calm in the midst of Hong Kong’s newsflow today. Another shooting by police, a man set on fire, university campuses in chaos, and teargas and stormtroopers in Central: such scenes were surely enough to have sent anyone running for the exits. SCMP has it all.

We never said that Hong Kong’s situation was likely to get better anytime soon. On the contrary, it has seemed evident for some time that what is playing out now is still the prelude to a long, drawn-out conflict that will get significantly worse before it gets better. It would be right and proper to hope for peace to prevail as soon as possible, but it would be wise to plan for worse to come.

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New direction set for Hong Kong

It is fitting that Fintech Week took place at the same time as Carrie Lam’s duty visit to Beijing last week. The three-day event, held at the AsiaWorld Expo Center, provided a reminder of Hong Kong’s enduring value for the Greater Bay Area. As the city’s tourism industry withers after 15-plus years of rich yields, Hong Kong needs a new Chinese export to sell. Financial technology is one of the most promising, and Fintech Week was done well. Its success supported the Chief Executive’s declaration, at the end of her Beijing trip, that Hong Kong’s role within the GBA was “completely unchanged”.

She is right. Selling Chinese goods and services to the world has always been Hong Kong’s strength. From textiles, to toys, to computers, and, yes, to the spending power of mainland tourists, Hong Kong has, to date, been the best place to get a deal done. Until China completely liberalizes the Renminbi, it will remain so. This is a major reason why the Greater Bay Area masterplan was drawn up in 2017 and launched in February of this year: the region needs Hong Kong to put its companies on the world stage. International marketing is Hong Kong’s forté.

Until Lam’s trip to Beijing this week, it had appeared that Hong Kong was playing another, unspoken role within the Greater Bay Area (and the country): as a salon for debating ideas about the future, and as a laboratory for testing their applications. This premise was established by the late Deng Xiaoping in his prescient 1984 agreement with the late Margaret Thatcher, which laid the foundation for the “One Country, Two Systems” principle that underpins the Basic Law. He clearly wanted to see what China could learn from a melting pot of East and West on its doorstep.

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Visitors get a taste of Chinese online payments

Fintech Week is proving to be a global PR bonanza for Hong Kong. Local media have been buzzing for the past two days about Alipay’s decision to open its payment platform inside the Chinese mainland to foreigners, the announcement of which was clearly timed to coincide with the Hong Kong event. And Mu Changchun, the central bank’s whizzkid overseeing the imminent launch of the digital Renminbi, kept the momentum going yesterday by suggesting foreigners could use it, too.

As reported by SCMP, Mu said the central bank is working to separate the virtual currency from the banking system. “Actually it could be decoupled from traditional bank accounts,” he said during an event at Fintech Week, which is being held at the AsiaWorld-Expo. “Thus, those who don’t have bank accounts in China can still open a digital wallet and enjoy mobile payment services in China.”

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Canton Fair down in numbers, up in spirits

The country’s biggest trade fair wrapped up this week with disappointing numbers but buoyant hopes for an upturn, according to local media. This was for two reasons: the US-China trade talks appeared to be edging toward an agreement that could see tariffs start to be lifted; and there had been a surge in orders from Asean countries, i.e., the Belt and Road Initiative appears to be working.

Nothing could dampen the mood of the fair’s irrepressible spokesperson, Xu Bing, deputy director of the China Foreign Trade Centre, who pointed out that although orders were down 1.9% in comparison to last year’s Fall session, they were up from the Spring session held earlier this year: RMB 207.09 billion vs RMB 199.5 billion.

Moreover, although attendance of 186,000 was the lowest since 2017, the 2% decline was less than the 3.9% year-over-year drop at the Spring session.

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Top Shenzhen official busted for graft

Shenzhen has announced the fall from grace of a senior official: Li Longwen, former deputy director of the city’s Port Authority, has been dismissed from public office and expelled from the Party.

The announcement came after an investigation by the city’s Commission for Disciplinary Inspection, the anti-graft agency, which found that Li had “lost his faith” and was “not loyal to the Party”. Moreover, he had compounded his errors of judgment by confronting and challenging the investigation, according to the local media report.

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Jiangmen beckons with easier housing rules

At least 30 cities across the country have recently loosened their restrictions on non-official residents buying into the local property market. Jiangmen is among them, according to local media.

As Bloomberg reports, the slowest economic growth in 30 years is prompting some city governments to loosen up and allow people living in their jurisdictions without a local residency permit (a hukou) to buy a home.

Jiangmen, the city on the far western side of the Greater Bay, next door to Zhuhai and Zhongshan, has gone a couple of steps further. According to the city’s Housing and Construction Bureau, it wants to support “all kinds of innovative entrepreneurs to live and work in Jiangmen, attract business and investment, and integrate into the Greater Bay Area”.

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Guangzhou names top 50 ‘Cultural Companies’

Guangzhou has big plans for its cultural industries, judging by a two-month-long festival that launched this week at the city’s Grand Theater.

The opening event of the 2019 Canton Cultural Industry Fair saw a flurry of deal-signing, as these events usually do, with 17 major project agreements inked. The biggest of these was between the Huadu District government and the Lixin Group, to create a Greater Bay “cultural tourism hub” centered on the Guangzhou North Railway Station. It is worth RMB 15 billion, with the first phase set to build a film and television center, an e-sports arena, and various tourism-related services.

Grabbing attention was the release of a list of the city’s top 50 “Cultural Enterprises”. (See full list below.)

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Shenzhen sees sharp slowdown in Q3

Something is going on in Shenzhen. The city has not yet released any reports on its economic performance in the first three quarters, yet provincial data show that the city’s GDP growth dropped sharply in Q3.

Private commentators have been reporting the provincial data today, many with alarmist analysis. This is rightly so: the 6.6% growth number recorded by Shenzhen for the first three quarters of this year follows 7.4% reported for the first six months. If accurate, that is an unprecedented quarterly slowdown.

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