Via Elite Trader:

A banner depicting Xi Jinping near the Forbidden City in Beijing, on May 21.
Photographer: Qilai Shen/Bloomberg

On the first day of China’s biggest political event of the year, Xi Jinping sent a clear message to Donald Trump: We’re going to do what we want in Hong Kong, and we’re not scared of the consequences.

China confirmed on Friday that it would effectively bypass the city’s legislature to implement national security laws, which have long been resisted by residents who fear they will erode freedoms of speech, assembly and the press. The announcement, which came on the same day China refrained from setting an economic growth target for the first time in decades, triggered immediate calls for fresh protests and sent the MSCI Hong Kong index to its worst loss since 2008.

For Xi, the move allows Beijing to reassert dominance over a piece of Chinese territory where his government was rendered impotent during sometimes-violent protests last year. Facing rising unemployment in the mainland due to the Covid-19 outbreak and the potential for a big loss in Hong Kong legislative elections set for September, the Communist Party decided it had more to gain by acting decisively to stem any potential threats.

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