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from Ian Bremmer:

Chinese leader’s reforms are bad news for Hong Kong

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In 1997, Britain returned Hong Kong to China after some 150 years of colonial rule. In exchange, China agreed to a set of principles: Hong Kong would maintain its capitalist system for half a century, by which point its chief executive and members of the legislature would be elected by universal suffrage. As the thinking went, “one country, two systems” would suffice in the interim; Hong Kong and the Mainland would surely converge on democracy in the half-century to come.

Not so fast. Recently, Beijing has been systematically moving in the other direction. The decision on August 31 to rule out democratic elections for Hong Kong in 2017 was just the latest example. Chinese leader Xi Jinping’s transformational reform agenda is driving this shift—and it does not bode well for Hong Kong.

Xi’s reform agenda has two parts: the first is economic liberalization. The Chinese leadership recognizes that it cannot rely on state-driven investment and cheap labor to provide growth indefinitely. Xi wants to make China’s economy more sophisticated and competitive. He is overhauling inefficient state-owned enterprises and focusing on changes in the financial sector in particular. It’s a top priority of the new leadership, and a requirement for a sustainable and dynamic Chinese economy going forward.

But a prosperous economy is simply a means to an end-goal. Xi is opening up the economy because, above all else, he wants to ensure the long-term survival and stability of the Communist Party leadership. He thinks economic reforms are a good bet despite the risks they will usher in. Over time, reform will require an enormous transfer of wealth from large domestic companies to demanding citizens and it will threaten the vested interests of many powerful elites who have prospered off the status quo. It will inject necessary competition into the economy, which could put jobs, companies, and sectors at risk.

from Breakingviews:

Democracy snub leaves Hong Kong only bad choices

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Hong Kong’s narrowing options over future leadership elections could have broad repercussions. Voters in the former colony face only bad choices after Beijing proposed a tightly controlled system for choosing its chief executive. The decision escalates the risk of a showdown with protestors. It also suggests China’s leaders care ever less about the rest of the world’s opinion.

from Breakingviews:

Alibaba deal spree turns from romance to thriller

By John Foley 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Alibaba’s investment story has turned from romance to thriller. Its Hong Kong movie-making affiliate has uncovered “possibly non-compliant” accounting just four months after the Chinese e-commerce giant bought a 60 percent stake. It’s not clear whether Alibaba’s controls were flawed – but it certainly raises questions about the value of the company’s recent investment binge.

from Breakingviews:

Asia’s solid exterior hides internal weakness

By Andy Mukherjee 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Asian economies are becoming more resilient externally, but sputtering economic growth is weakening them from within.

from Breakingviews:

WH Group’s revived IPO shows one lesson learnt

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

WH Group’s revived initial public offering shows it has learnt at least one lesson. After an attempt to sell shares two months ago ended in disaster, the Chinese pork producer has returned, cheaper and with fewer banks working on the deal. But it’s not clear why it is rushing back to market at all.

from Breakingviews:

Hong Kong democracy debate puts business on spot

By Peter Thal Larsen 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Hong Kong’s democracy debate has put Western businesses on the spot. Hundreds of thousands of citizens are engaged in a public showdown over a new system for conducting elections in the former UK colony. The standoff has prompted questions about Hong Kong’s future as an efficient and well-ordered financial centre. But warnings of potential disruption miss the point.

from Breakingviews:

Private equity’s bad habit: Asian minority stakes

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Private equity firms have developed a bad habit in Asia. They are investing record amounts in minority stakes in listed companies. Investors dislike such deals because they can buy the shares themselves. History also suggests that giving up control is fraught with risks.

from Breakingviews:

China’s Hong Kong experiment faces biggest trial

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China’s experiment with Hong Kong is facing its biggest trial. The former British colony has mostly thrived in the 17 years since it was handed back to the People’s Republic. But a planned “Occupy Central” democracy protest is about to test Hong Kong’s openness – and China’s patience.

from Photographers' Blog:

The bun myth

Cheung Chau, Hong Kong
By Bobby Yip

A baker poses with a bun with the Chinese characters "Ping An", meaning peaceful and safe, inside a bakery at Hong Kong's Cheung Chau island April 30, 2014, six days before the Bun Festival. Each bun is sold for HK$8 (US$1.02). The annual festival celebrates the islanders' deliverance from famine many centuries ago and is meant to placate ghosts and restless spirits.  REUTERS/Bobby Yip

Cheung Chau, or “Long Island”, with a population of around 30,000, is famous not only for its seafood and snacks, and as a small resort for local tourists, but most of all for its buns.

A couple walks along a beach at Hong Kong's Cheung Chau, or "Long Island", where the annual Bun Festival is held, April 28, 2014. REUTERS/Bobby Yip

The Bun Festival is the annual highlight of this former fishing village. Tens of thousands of visitors flock to attend the ritual, jamming the narrow streets of this quiet island.

from Breakingviews:

WH Group flop shows pitfalls of crowded IPOs

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

WH Group’s flop shows the pitfalls of overcrowded initial public offerings. The Chinese pork producer hired a record 29 banks but still failed to sell its $1.3 billion listing to investors. That undermines the standard wisdom that more advisers mean less risk for issuers. For banks, it’s a reminder that they can share embarrassment as well as sought-after league table credit.

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