After last week’s newsletter had been sent, more than one analyst came out to pronounce that Beijing’s decision to review Chinese companies’ IPOs on the New York Stock Exchange over cyber-security concerns was not about financial decoupling. Rather, it was a natural progression of China’s systematic tightening of controls over the rambunctious tech sector, they said.
Today, it emerged that Beijing plans to exempt companies wanting to list on the Hong Kong Stock Exchange (HKEX) from any such data-security reviews.
As had previously been argued, bureaucrats such as those at the Cyber Administration of China have been having a well-deserved run in the limelight recently. But make no mistake, their new-found powers are resting on their interests being aligned with loftier political goals, particularly those laid out by President Xi Jinping on July 1 speech atop Tiananmen Gate, which are aimed primarily at establishing China’s position in the world, primarily against the United States.
It would be hard to find a better example to illustrate this point than the decision to exclude HKEX from the CAC’s reach. Investors certainly got it, as 0388.hk surged soon after the news broke, closing the day up 3.27%. What other way is there to see it, other than Beijing would like to hasten the removal of its best companies from New York to Hong Kong by applying its rules differently against companies in the two jurisdictions?
Continue reading This isn’t decoupling?
Vickey Li is the
cofounder of OnePiece Work, a cross-border startup incubator from Silicon
Valley. It leases space, but also provides consulting services to small and
micro enterprises. Li views Shenzhen as a great place to start a business.
Vickey Li has had more than a taste
of both American and Chinese corporate cultures. Educated in the US for senior
high school and college, she returned to China after graduation to dive into Shanghai’s
competitive real estate industry. That lasted three years before Li returned to
the US to found her current company, OnePiece Work. Today she finds herself back
in China, setting up a new office in Shenzhen. We caught her story at a recent event
organized by Startup Grind Shenzhen.
Continue reading Building a Cross-Border Startup
Call this a “whatever it takes” moment for China in its struggle to deal with the economic fallout of the coronavirus outbreak: On Friday, the Politburo said it plans to roll out a series of measures, including increasing the fiscal deficit as a share of GDP, issuing special treasury bonds, and ramping up special bonds for local governments. As Caixin notes in its analysis, these special T-bonds were used previously to recapitalize the banks in 1998, and to set up the sovereign wealth fund in 2007, i.e., they were used at times of urgent need.
Continue reading Xi preps country for ‘new normal’
Caixin has a good story about the new draft antitrust law released last week in Beijing, which has much sharper teeth and is clearly aimed at the country’s digital conglomerates.
Carrying penalties of between 1% and 10% of a company’s previous year’s revenues, or as much as 50 million yuan for those not yet generating revenues, the new law carries a heavy stick.
Continue reading China’s new antitrust law a template for HK, Macau?
It’s hard to know what to make of the near-surreal news flowing through Hong Kong at the moment in relation to its economy. It’s as if there are people here, living in ivory towers, who cannot see what is happening on the streets and in the shopping malls while they issue policies and commentaries that have no bearing on reality.
The Hong Kong government has announced details of another round of relief measures, which include instalment plans for tax bills and direct subsidies for utilities, aimed at supporting those smaller companies whose businesses have been hit hardest by the protests. The message seems to be: don’t worry, we know times are hard, so take a bit longer to pay us what you owe, but we know you will get on your feet again, eventually, and in the meantime, don’t worry, we won’t shut off the lights and water.
Continue reading Wither Hong Kong’s economy?
It might have been expected for the National People’s Congress Standing Committee to proclaim that Hong Kong’s system of governance is based on an “executive-led” model. But to hear this argument coming from the Department of Justice is alarming.
The DOJ, which oversees prosecutions, has submitted an application to the Court of Appeal seeking to overturn the High Court’s decision that ruled the government’s face-mask ban unconstitutional. Apparently, it is on the grounds that the court doesn’t understand who is really the boss of this place.
Continue reading Hong Kong’s DOJ tries to pull a fast one
Hong Kong has nearly reached the end of its first week on a new political playing field and, so far, both social stability and the rule of law remain intact. Protests have not erupted into violence again. No intervention in Hong Kong’s security or political regime has come from Beijing, despite US President Donald Trump signing the Hong Kong Freedom and Democracy Act into law. And, perhaps most importantly, the National People’s Congress Standing Committee has not followed up on its threat to issue an interpretation of the Basic Law that would set aside the High Court’s ruling on the government’s face-mask ban.
That doesn’t mean it couldn’t still happen. As SCMP reports, an ominous column was penned by someone who is widely believed to be “in sync” with the senior leadership’s thinking, saying that Hong Kong is risking its autonomy by voting so brazenly against pro-Beijing election candidates. Ren Yi is his name, or “Chairman Rabbit”, and he is the grandson of a former powerful Guangdong party boss. He has a million followers of his online musings.
The central government, meanwhile, is clearly enraged by Trump’s decision to sign the Act, and could yet counter it by taking retaliatory action against American interests in Hong Kong and, possibly, Macau. Or it could somehow pressure lawmakers into pushing through Article 23 legislation that would likely curb freedoms, including freedom of speech. This seems almost inevitable if the Act’s passage is followed by a review of Hong Kong’s special trading status by the US government.
And the High Court’s decision to extend the suspension of its ruling on the face-mask ban could be seen as a way to keep the door open for the NPCSC to issue a ruling, within the next month, which would likely erode the foundations of the rule of law in Hong Kong.
But none of these worst-case scenarios has happened. Yet.
Continue reading Day 4 post-election, and Hong Kong is still here
Three days after Sunday’s District Council elections, the high has not yet worn off. Although street protests have started to pick up again, they remain relatively mild.
However, Hong Kong is no closer to understanding how the central government feels about the way its supposedly loyal candidates were routed. Analysts have weighed in on both sides of the border, and their conclusions mostly state the obvious: a major rethink is needed in how to manage Beijing’s relationship with Hong Kong.
Continue reading Hong Kong keeps pondering, wondering, what next?
Although Hong Kong’s freshly reinvigorated political opposition camp appears to be headed toward the same hole it has stepped in before, belligerently calling for the Chief Executive, Carrie Lam, to resign while repeating demands for universal suffrage ASAP, rather than knuckling down to find pragmatic ways to address the city’s governance challenges, and the government has responded in a typically wooden style, too, the outlook for this embattled city appears to be improving.
Continue reading In Hong Kong, it’s steady as she goes
After nearly half a year of angst, most of Hong Kong is smiling today. The violence has abated. The sun is shining, and the air is cool. Votes have been cast, in record numbers, and 80% of the seats in the District Councils will now be filled by people who are not deemed to be part of the pro-government camp.
It might sound like a cliché, but the people have spoken.
Continue reading Magnanimity needed in Hong Kong