Can China break Hong Kong?


 

Shenzhen, Guangdong Province, China China 2017, China Travel Guide, Asia Travel, Domestic Destinations, Shenzhen China, Modern City, Beautiful Places To Travel, Best Cities, Travel Bugs
Photo:Google      Shenzhen, Guangdong Province, China

Beijing will dilute Hong Kong with Shenzhen

By: Pete Sweeney/Reuters Breakingviews

 Anti-government protests in Hong Kong have weakened China’s gateway to international markets in the midst of a trade war. Past attempts to make neighboring Shenzhen a free-market alternative have been half-hearted. Unrest in the former British colony gives officials cause to try again.

Months of violent protests have laid bare President Xi Jinping’s failure to rally Hong Kongers around the flag: the pro-Beijing party lost control of 17 out of 18 councils in November district elections. Yet Xi still has to get along with the special administration region. A sharp crackdown will damage sentiment in the major hub for foreign trade and investment and the only exchange where local companies can raise hard currency.

Beijing is mulling plans to develop the protest-free gambling mecca of Macau into a financial center, Reuters reported in early December. But with mainland bourses derided as casinos, the territory would struggle to overcome reputational and structural challenges.

The better alternative is Shenzhen, a tech hub just across the line separating Hong Kong’s relatively open political system from the mainland; host to a $3.3 trillion stock exchange and an established institutional investor community. Officials have tried to make the city a hard currency financial center before, creating the Hong Kong dollar-denominated “B-share” board in 1992, then launching a zone to test further capital account opening in 2015. But policy dithering doomed both to moulder.

A serious effort to duplicate Hong Kong’s financial functions in Shenzhen would require radical change. To permit foreign capital to flow in and out without enabling speculation and arbitrage, the economic border separating the two cities would effectively have to move north to include some part of Shenzhen’s stock market, seaport and airport.

That would mean the city’s yuan supply would necessarily become convertible to foreign currencies, as in Hong Kong; initial public offerings could be denominated in yuan or Hong Kong dollars. Attracting multinationals would also require Beijing to selectively relax its visa and censorship regimes, plus roll out a hybrid legal system.

Such an agenda would be inconceivable, had not half-measures proven worthless. In China, political necessity is the mother of economic reform.

Published by CityFella

Big city fella, Born and Raised in the San Francisco Bay Area. Lived in New York (a part time New Yorker) for three years . I have lived in the Sacramento area since 1993. When I first moved here, I hated it. Initially found the city too conservative for my tastes. A great place to raise children however too few options for adults . The city has grown up, there is much to do here. The city suffers from low self esteem in my opinion, locals have few positive words to say about their hometown. visitors and transplants are amazed at what they find here. From, the grand old homes in Alkali Flats, and the huge trees in midtown, there are many surprises in Sacramento. Theater is alive is this area . And finally ,there is a nightlife... In.downtown midtown, for the young and not so young. My Criticism is with local government. There is a shortage of visionaries in city hall. Sacramento has long relied on the state, feds and real estate for revenue. Like many cities in America,Downtown Sacramento was the hub of activity in the area. as the population moved to the suburbs and retail followed. The city has spent millions to revive downtown. Today less than ten thousand people live downtown. No one at city hall could connect the dots. Population-Retail. Business says Sacramento is challenging and many corporations have chosen to set up operations outside the cities limits. There is vision in the burbs. Sacramento has bones, there are many good pieces here, leaders seem unable or unwilling to put those pieces together into. Rant aside, I love it here. From the trees to the rivers. But its the people here that move me. Sacramento is one of the most integrated cities in America. I find I'm welcome everywhere. The spices work in this city of nearly 500,000 and for the most part these spices blend well together. From Ukrainians to Hispanics and a sizable gay community, all the spices seem to work well here. I frequently travel and occasionally I will venture into a city with huge racial borders, where its unsafe to visit after certain hours. I haven't found it here. I cant imagine living in a community where there is one hue or one spice. I love the big trees, Temple Coffee House, the Alhambra Safeway, Zelda's Pizza, Bicyclist in Midtown, The Mother Lode Saloon, Crest Theater, and the Rivers. I could go on and I might. Sacramento is home.

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