Next China: A ray of hope in Hong Kong

It was possible this week for the keenly-trained eye to see a tiny ray of hope that the tensions boiling over in Hong Kong might be soothed a little. Make no mistake, the glimmer was small and the tensions are still smoking hot. Protesters were out in large numbers again this past weekend and there were no signs of any let up in the rhetoric from Beijing. But there wasn't violence, not on the scale that's been seen on news broadcasts sent around the world this summer. That's something. And there was an olive branch from Chief Executive Carrie Lam. She offered to set up a dialogue, to investigate complaints against the police and to conduct a wide-ranging study into the demonstrations. While the details are scarce, it was an attempt to engage and a softening of Lam's stance. The protesters, not surprisingly, were skeptical. Some wondered if it wasn't a publicity stunt while others slammed the idea of dialogue as a waste of time. There's also the question of whether the protesters will deal with Lam, given that one of their key demands is her resignation. There are plenty of reasons to think her offer won't go very far. The diffuse nature of the protest leadership will make it hard to negotiate and Lam's need to avoid looking like she's giving in to violence will make any deal difficult. But why not hope? Missing Staffer Making any reconciliation a bit more complicated this week was the revelation that a staff member from the British consulate in Hong Kong had been detained by police in mainland China. The family of Simon Cheng, who is employed by the consulate but not a full-fledged diplomat, reported him missing after he didn't return from an Aug. 8 trip to Shenzhen. Chinese officials later confirmed he was in custody. China's Global Times newspaper, known for its more nationalistic views, then followed by reporting that Cheng had been detained for visiting a prostitute. That was somewhat deflating for activists who'd seized on Cheng's case as an example of why China's opaque justice system had fueled the protests against Hong Kong's proposed bill allowing extraditions to China. Home Prices Another of the issues fueling Hong Kong's unrest is the property market. It is the world's least-affordable and a sharp illustration of how wide the gulf is between the city's haves and have-nots. What's exacerbated the angst even further is that the market is largely controlled by a few family-owned conglomerates, which have leveraged their money and connections to also expand into telecommunications, logistics and retailing. Taking on some of Hong Kong's wealthy property tycoons is one thing Carrie Lam could potentially do to appease the protesters. Chosen One Meanwhile, the trade war continues to bubble along. The latest developments were somewhat optimistic. Washington extended exemptions for U.S. rural carriers so that they can continue using Huawei gear for an additional 90 days. White House economic director Larry Kudlow said there'd been "positive" talks between working-level American and Chinese teams, which would hopefully lead to higher level meetings in the U.S. soon. And President Donald Trump continued express confidence that a deal would get done, even calling himself the "chosen one" to confront Beijing over trade. Wall Street Business goes on though, even with all the uncertainties around trade and the protests in Hong Kong. Goldman Sachs this week asked for Chinese regulatory approval to take a majority stake in its local investment banking venture. Morgan Stanley and JPMorgan have made similar moves to expand their presence in China. BlackRock's Larry Fink was in Beijing earlier this month to explore options for his firm. The recent uptick in activity comes after Chinese leaders pushed forward plans to open the country's financial system to foreign companies. While American tariffs have pushed some industries out of China, it seems Wall Street still sees plenty of opportunity. What We're Reading And finally, a few other things that caught our eye: Huawei's founder talks about his company's "live or die moment." Take an insider's look at what's happening in Hong Kong. Beijing wants online gambling in the Philippines stopped.  Here's what China's new interest rate regime means for the economy. Still bad. That's the latest takeaway from the Bloomberg Trade Tracker. FOLLOW US SEND TO A FRIEND You received this message because you are subscribed to Bloomberg's Next China newsletter. Unsubscribe | Bloomberg.com | Contact Us Bloomberg L.P. 731 Lexington, New York, NY, 10022