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Mint
2 hours ago
- Automotive
- Mint
Elon Musk is running out of road in China
As Elon Musk confronts deepening business and political challenges in the U.S., he's also facing trouble in his other most important market: China. For a while, Tesla was the hottest car on Chinese roads, and Musk was the toast of Beijing. Government officials showered the company with incentives, part of a concerted strategy to turbocharge the Chinese EV industry by injecting Tesla know-how into the country and spurring competition. Tesla's sales took off. But the risk was always that Tesla would start falling behind the rivals it helped create. Now, that is exactly what's happening. Tesla's market share has shriveled as other Chinese automakers become more popular. Meanwhile, Musk's reputation as a partner for Beijing in Washington took a beating as his relationship with Donald Trump soured. Chinese consumers say Teslas increasingly feel tired and out of touch with local tastes. Top China-designed EVs nowadays come with features that aren't normally found in Teslas, such as multiple big screens to watch films and play games, refrigerators to keep drinks cold and in-car cameras for selfies. BYD, which makes both EVs and batteries; and battery giant Contemporary Amperex Technology, or CATL, recently said they each had developed new technologies that allow users to charge cars in just five minutes. Consumers walk by Tesla cars in a showroom at a Beijing shopping mall. Tesla's China staff have voiced concerns to headquarters about the company's aging products, but their warnings often drew sluggish responses, China-based employees said. The frustrations have built as Chinese salespeople feel more pressure to hit targets, without the sexiest cars to sell. Many Chinese consumers still appreciate Tesla's brand image as an EV pioneer. And the company retains support in Beijing. Chinese leaders see Tesla as a poster child of successful foreign investment and a useful ally in helping China build a green economy, centered on industries such as renewable energy, EVs and batteries. As trade tensions with the U.S. heated up this year, Chinese Premier Li Qiang made clear that Tesla's local operation wasn't to be targeted by any retaliatory measures, people familiar with the matter said. But Beijing hasn't given Tesla full regulatory approval for its so-called Full Self-Driving (Supervised) assisted-driving software, a technology central to Tesla's ambitions to dominate transportation in the future—and which Chinese companies are also racing to master. At the same time, the public breakup between Musk and Trump is limiting Musk's value to Beijing. In January, Chinese Vice President Han Zheng met Musk in Washington and told Musk that Beijing hoped he could play a 'constructive role" in U.S.-China relations, a person familiar with the exchange said. Musk wasn't receptive to China's overtures, however, people who consult with Chinese officials said. And because of the Musk-Trump feud, Beijing no longer views the Tesla chief executive as a geopolitical asset and will shy away from publicly courting him, the people said. 'Tesla remains important for China," said one of the people who consults with Chinese officials. 'But for authorities, helping domestic companies still matters more." For Musk, who has pledged to refocus on Tesla now that he is distancing himself from Washington, success in China is vital. It is Tesla's second-largest market by revenue after the U.S. and the carmaker's biggest production and export hub, making up around half of its global vehicle shipments and supplying components for its worldwide manufacturing. If anything, China's importance to Tesla is growing after its sales declined in the U.S. and Europe due to his earlier association with Trump. China is also a testing ground for technologies that Musk prioritizes, such as FSD and driverless taxis. Tesla has cut prices in China, along with other Chinese EV makers, and aims to launch a new Model Y SUV variant in 2026, which it hopes could help boost sales there. Yet Musk has appeared uninterested in making too many concessions to the market, instead relying on Tesla's reputation for quality and technology to remain a leading player in China. Tesla didn't respond to requests for comment. The company said in April in its earnings presentation about China that while conventional wisdom is that competition will be bad for Tesla, the company believes it would accelerate EV adoption and help Tesla's sales in the long-term. Many experts believe the road ahead for Tesla in China will remain bumpy. American companies have a long history of thriving temporarily in China before falling behind, once local competitors scale up and government officials tilt the playing field in favor of domestic champions. In the early 2000s, Motorola was turfed out by Chinese companies supported by government policies that pressured the American company to share technology and adopt battery standards developed by Huawei Technologies. Apple was China's No. 1 smartphone maker in 2023, but now ranks third behind Huawei and another Chinese brand, which have popular features at lower prices. Apple's slide has been compounded by Chinese restrictions on the use of its devices by government officials and stimulus policies that favor Chinese domestic manufacturers. 'You never want to bet against Elon Musk and the resilience of Tesla," said Michael Dunne, a former General Motors executive who now runs an automotive consulting firm. Still, he says Musk likely knows there is a shelf life to many global companies operating in China, and is looking at investments in places such as India in case China becomes more difficult. Musk 'is probably closer to sunset than sun up in his business in China," Dunne said. Tesla's most immediate challenge in China is its shrinking market share, even as the country's EV market has mushroomed. In May, Tesla sold slightly fewer than 40,000 cars in China, down 30% from the same month a year earlier, while the overall market for new-energy vehicles—a category that includes full EVs and plug-in hybrids—rose 28%. Tesla's market share in the category was down to 4% in May from 11% in early 2021, according to China Passenger Car Association data. BYD, a key competitor, holds around 29% of the EV and plug-in market. Smartphone maker Xiaomi, which only started selling EVs a year ago, has about 3%. Car buyers interviewed by the Journal said Teslas don't seem as leading-edge as before, while government restrictions on Tesla further curbed their popularity. Qian Yang, 34, says he used to have a Tesla Model 3 which he enjoyed driving on weekends until his employer, a state-owned company, last year told him not to park the car in the company compound due to security concerns. China started limiting use of Tesla cars by government and military staff in 2021, citing concerns that data the cars gather could lead to national-security leaks, though some areas have eased the restrictions after Tesla built a local data center to address the concerns. Qian sold his Tesla and paid $34,000 for an SU7 electric sedan from Xiaomi. Now he's a fan of his Xiaomi car, which includes Xiao Ai, a voice assistant that can perform tasks such as opening vehicle doors and connect with other Xiaomi devices. 'You know that feeling when you're leaving work, and you can just tell Xiao Ai in the car to remotely turn on the air conditioning in your room? That's pure bliss," said Qian. 'Teslas are almost like iPhones now. They're getting uninspired and stale, and don't have revolutionary features anymore." Tesla salespeople in China say extra features diminish battery range and impede acceleration, and are encouraging buyers to focus on Tesla's safety record. But they also complain privately about the difficulty of meeting rising internal pressure to hit sales targets. One Beijing salesman said his sales target has recently been raised to selling at least one car a day from typically four cars a week. Many colleagues have been working 12 hours daily in recent months, compared with 10 hours previously, the person said. In a report submitted to headquarters in early 2021, Tesla's China team noted that local consumers were keen to have their cars connect seamlessly with their smartphones and include more entertainment applications. U.S.-based Tesla officials replied that such features weren't a priority, people familiar with the matter said. Tesla's China strategy team raised the issue again in 2023 and 2024, and again felt brushed off, one of the people said. Tesla did start providing some popular Chinese apps to local drivers starting in 2023, such as the streaming service Mango TV. Still, Tesla drivers can access fewer apps than users of Chinese cars. After initially pledging to design a new car a few years ago that local consumers would recognize as more distinctly Chinese, Tesla shelved that plan, people familiar with the matter said, as other priorities took precedence. Instead, Musk pivoted to a strategy of designing a more affordable model which would remove or downgrade features from existing models to save costs and make these cars easier to mass-produce on existing manufacturing lines. Some employees and analysts are skeptical about this strategy, which includes the new Model Y variant Tesla plans. They fear that stripped-down models will easily be outmatched by local rivals if they aren't priced significantly lower. Tesla's Model Y SUV, its bestselling model in China, starts at about $36,700. Meanwhile, the Sealion 07, a rival BYD electric SUV, starts at around $26,400. Tesla's inability to fully roll out its FSD driver-assistance service is adding to its problems. Unlike older software that preprograms rules about most situations a car might encounter, Tesla's current FSD is built on an AI-driven system that learns how to drive from millions of video clips taken from actual road experience. The system, mainly trained with U.S. data, is considered a technology leader, and has been widely available in the U.S. since early 2024. FSD can help drivers park the car and navigate urban streets as well as highways. Currently, drivers must still pay attention while sitting behind the wheel and be prepared to take over at any time. Musk has wanted to launch FSD in China not just to lift sales there, but also because China's EV market generates copious data that can improve FSD's capabilities, thereby cementing Tesla's global leadership. A Tesla Model 3 travels the streets of Shanghai earlier this year. In April of 2024, Musk flew to Beijing and met personally with Premier Li, winning a tentative nod to move ahead with FSD in China. But he underestimated the roadblocks posed by Chinese regulations, which require car companies to train their systems with local driving data to prove their vehicles can safely handle domestic traffic conditions. Under Chinese law, companies are restricted from sending such data overseas for security reasons—a problem for Tesla, since its FSD training has been in the U.S. Tesla initially offered to redact video from Chinese roads to hide sensitive information. But the sheer volume of data Tesla sought to transfer far surpassed officials' comfort levels, people familiar with the matter said. As a Plan B, Tesla considered expanding its FSD training inside China. To do so, however, its China operations need access to the most advanced semiconductors, which have been blocked by U.S. export controls. After nearly nine months of back-and-forth, talks hit a dead end. While Tesla spins its wheels, local competitors have introduced sophisticated driving-assistance technology, often at lower prices. Users report that XPeng's flagship package, XNGP, has similar functionality to Tesla's. BYD has a system named 'Eyes of God," after a deity in Chinese mythology with three eyes, which the company says can cruise on city roads with minimal human intervention. Chinese companies are also moving ahead with robotaxi services that use self-driving technologies, including thousands of robotaxis operated by Baidu and Pony AI. Tesla, which launched its robotaxi in Austin in June, has no robotaxis on Chinese roads. Frustrated by the delays, Tesla in February started releasing some features—such as city navigation—that are part of its U.S. FSD package through over-the-air updates, making use of an ambiguity in China's rules, people familiar with the matter said. At the time, carmakers in China needed to seek official approval before releasing major updates to drivers; for smaller updates, they typically only had to notify authorities. Tesla's move upset some officials, the people said, prompting regulators to clarify that carmakers must secure approval before issuing any driver-assistance updates. Tesla halted the updates. But later in March, to help maintain customer interest and collect feedback, it said it would offer a one-month program for drivers to try some FSD features free. Regulators again told Tesla to stop, saying it shouldn't use drivers as guinea pigs. Chinese authorities further tightened oversight across the entire sector, after a crash involving Xiaomi's driver-assistance technology in late March. Tesla's struggles in China today contrast with the prepandemic years, when Chinese leaders appeared willing to do anything to court Musk. Their hope was that Tesla's expansion in China would propel underachieving local automakers and help build out the country's EV market. Chinese officials likened it to lobbing a predatory catfish into a pond full of sluggish fish. China provided Musk and Tesla with cheap land, low-interest loans and tax incentives. In 2018, Tesla announced plans to build its first overseas car factory in Shanghai, becoming the first foreign automaker Beijing allowed to produce cars in China without a local partner. Tesla's sales in China surged, as did its exports from Shanghai to other markets. Tesla's presence also paid off for Beijing, igniting consumer interest in domestically made EVs and accelerating development of China's EV supply chain. Soon, some Chinese automakers were adopting Tesla technologies such as 'gigacasting," which employs high-pressure aluminum die-casting to create a car's frame, combining hundreds of manufacturing steps into one to save costs and time. Xiaomi was among those that followed suit. In April 2023, Chinese automakers' progress stunned attendees at an annual auto show in Shanghai. During the pandemic, Western auto executives had limited access to the country. But now, they found an utterly changed streetscape, with EVs everywhere and cars that were far more advanced than anticipated. Although Musk came to China to leverage its low costs and enormous market, he wasn't prepared for China's response, said Bill Russo, chief executive of Automobility, a Shanghai-based strategy firm. 'What he didn't bargain for is that Chinese companies would do that, too, and they would probably do it even better than you can," he said. 'He made the same mistake that every foreign automaker made—to underestimate China's ability to out-innovate you." A big risk for Musk now is that the same pattern will play out in other businesses Tesla is banking on for future growth. In late March, Tesla began shipping 'Megapack" batteries, which provide grid-scale energy storage, from a newly built Shanghai factory to its first overseas market, Australia. It's a business Beijing wants to grow and which multiple companies, including CATL, are moving into. Musk also wants Tesla to dominate humanoid robots, a business he says could someday generate revenues north of $10 trillion. Tesla's plans currently call for producing thousands of Optimus humanoid robots in the U.S., a goal that relies on Chinese suppliers for components including planetary roller screws for robot joints and motors for robot hands, people familiar with the matter said. Engineers from Chinese suppliers have worked overtime with Optimus engineers to complete designs. The suppliers' efficiencies have enabled Tesla to cut costs for some components so dramatically that the company didn't bother suspending shipments even after Washington imposed hefty tariffs on Chinese imports, the people said. Visitors look at Tesla's humanoid robot Optimus at its exhibition booth during the World Artificial Intelligence Conference in Shanghai last July. Now, China has its own batch of robotic startups, such as Unitree and Agibot, gearing up to compete with American companies. As Chinese suppliers work with Tesla, it could speed up that process. 'Once you secure contracts with Tesla, domestic robotics companies will be much more willing to collaborate with you," said Chen Feng, a marketing manager at an Optimus supplier. 'Tesla can play catfish again." During a recent call with analysts, Musk said he believed his Optimus was No. 1 in the sector. But he worried China would eventually dominate the field. 'I'm a little concerned that on the leaderboard, ranks two through 10 will be Chinese companies," Musk said. Grace Zhu contributed to this article. Write to Raffaele Huang at Lingling Wei at and Yoko Kubota at
Nikkei Asia
7 days ago
- Automotive
- Nikkei Asia
Indonesia breaks ground on $5.9 bn CATL-backed battery venture
Indonesian President Prabowo Subianto, center, launches the construction of an electric vehicle battery cell factory in West Java on June 30. The facility is part of a $5.9 billion investment in the nation's battery ecosystem by China's CATL and its partners. (Indonesia's presidential office) REZHA HADYAN and ISMI DAMAYANTI KARAWANG, Indonesia -- Indonesian President Prabowo Subianto on Sunday led the groundbreaking ceremony for a $5.9 billion project to build an electric vehicle battery plant and other facilities backed by China's Contemporary Amperex Technology (CATL), as the Southeast Asian nation accelerates its drive to become a regional tech hub. Prabowo inaugurated the project in the West Java town of Karawang, where Chinese-Indonesian consortium Contemporary Amperex Technology Indonesia Battery (CATIB) is building a factory that will churn out lithium-ion batteries at a starting annual capacity of 6.9 gigawatt hours.
Nikkei Asia
30-06-2025
- Automotive
- Nikkei Asia
Indonesia breaks ground on $5.9bn CATL-backed battery venture
Indonesian President Prabowo Subianto, center, launches the construction of an electric vehicle battery cell factory in West Java on June 30. The facility is part of a $5.9 billion investment in the nation's battery ecosystem by China's CATL and its partners. (Indonesia's presidential office) REZHA HADYAN and ISMI DAMAYANTI KARAWANG, Indonesia -- Indonesian President Prabowo Subianto on Sunday led the groundbreaking ceremony on a $5.9 billion project to build an electric vehicle battery plant and other facilities backed by China's Contemporary Amperex Technology (CATL), as the Southeast Asian nation accelerates its drive to become a regional tech hub. Prabowo inaugurated the project in the West Java town of Karawang, where Chinese-Indonesian consortium Contemporary Amperex Technology Indonesia Battery (CATIB) is building a factory that will churn out lithium-ion batteries at a starting annual capacity of 6.9 gigawatt hours.
Straits Times
19-06-2025
- Business
- Straits Times
What China's listing frenzy in Hong Kong means for investors
Listing in Hong Kong means Chinese companies can enjoy the best of both worlds: access to global funds as well as attracting domestic investors. PHOTO: AFP – Chinese companies are lining up in droves to list on the Hong Kong stock exchange, sparking a frenzy in a market that has been forsaken by investors and companies for many years. In May, the world's largest battery maker, Contemporary Amperex Technology, debuted on the Hong Kong Stock Exchange with a HK$41 billion (S$6.7 billion) listing that has been the biggest deal of its kind so far in 2025. It is paving the way for the likes of luxury carmaker Seres, energy drink heavyweight Eastroc Beverage, robotics firm Estun Automation and other Chinese companies to list in Hong Kong in 2025. There are at least 150 so-called AH listed companies – firms that have listings in both mainland China and in Hong Kong – the latest being soya sauce giant Foshan Haitian Flavouring & Food, which began trading in the city on June 19. These companies, most of which are so far state-owned, are poised to increasingly shape Hong Kong's stock market as they keep listing their shares in the city. Here is what you need to know. Why do Chinese companies want to list in Hong Kong? Listing in Hong Kong means Chinese companies can enjoy the best of both worlds: access to global funds as well as attracting domestic investors. Companies can list elsewhere, like in the US, to tap global funds, but the majority of China's 210 million retail traders are deterred by the inconvenient time difference and Beijing's capital controls. Chinese residents are limited in how much money they can convert into foreign currency, with an exchange quota of US$50,000 (S$64,381) per year. But mainland investors with more than 500,000 yuan (S$89,490) in their stock accounts can access companies on Hong Kong's Hang Seng Composite Index – and others – by using a two-way market access programme, known as the Stock Connect, without personal quota restrictions. For many of these companies, getting proceeds in the form of the Hong Kong dollar – which is more fungible than the Chinese renminbi – can facilitate global expansion plans. Beijing has called for leading companies to go global amid cutthroat competition at home and as trade tensions raise the need for companies to diversify their manufacturing locations. Are there disadvantages? The potential downside for these companies is that Hong Kong is more exposed than mainland stock exchanges to geopolitical headwinds and is more vulnerable to a sudden or broad sell-off by global investors. It is much easier to short a stock in Hong Kong compared with the mainland, where such trades have dried up, and the absence of a known stabilisation fund means that index-level panic selling can get much uglier. The vast majority of companies that already have a listing in the mainland trade at a discount in Hong Kong. It is partly because of a difference in taxes for mainland investors, which discourages them from buying more Hong Kong-listed stocks once they rise beyond a certain level relative to its mainland-listed peer. However, that is increasingly shifting. They could also be valued less by foreign investors who might be more cautious about geopolitical risks, regulatory changes or the Chinese economy. Take state-owned enterprise CNOOC, one of China's largest oil-and-gas producers. Its Hong Kong shares trade at a discount of nearly 40 per cent relative to its mainland stock, likely because of concerns about geopolitical risks, as the company was blacklisted by the US in 2021. Why is there interest in Hong Kong now? There is no one reason that points to why this is happening now but, rather, a confluence of factors. Firstly, in September 2024, the Chinese government made a policy pivot supporting financial markets as part of its prioritisation of economic growth. The biggest surprise move then was the introduction of a pair of monetary tools that made it easier for stakeholders and institutions to borrow funds cheaply to buy stocks. Beijing has also vowed to cut red tape to allow more Chinese firms to list in Hong Kong – especially industry leaders. Then there was the so-called Deepseek moment earlier in 2025. Advances in the Chinese company's artificial intelligence capabilities demonstrated the nation's strides in the field despite Washington's tech curbs. This boosted the investment case for Chinese assets, especially as investors increasingly looked to diversify out of the US. Chinese companies are hoping to capitalise on this interest. Meanwhile, Hong Kong has revised its listings rules. It has lowered earnings requirements for specialist tech firms, paving the way for some listings in growth sectors. The fact that mainland stock exchanges have kept tight reins on initial public offerings to stabilise the market has further tilted things in Hong Kong's favour. A string of stellar debuts by some popular firms that have captivated China's younger consumers – Mao Geping Cosmetics, for instance – has others hoping to replicate those successes. Unprecedented buying of Hong Kong stocks by investors in the mainland over the past year amid expectations that the renminbi would weaken, coupled with dip buying, has also enhanced liquidity in Hong Kong. How are companies going about it? Some companies like Bloks are choosing to first list in Hong Kong rather than getting on the long IPO wait line – sometimes as long as three years – in the mainland. Others, like pig breeder Muyuan Foods, are seeking additional funds from a new larger pool of investors in Hong Kong after years of inactive fundraising in Shanghai or Shenzhen. Then there are some taking the route of beverage maker Mixue, which scrapped plans altogether for a China listing after the regulatory tightening of IPOs over the past year. There are also signs that some Chinese companies, amid concerns around US President Donald Trump's erratic foreign policies – including chatter that Chinese firms will be delisted from Wall Street – may be opting to list in Hong Kong instead of the US or other global markets. Fast fashion retailer Shein is the most prominent example. The company is said to be considering switching its IPO to Hong Kong instead of London. What does it mean for the Hong Kong market? An influx of Chinese firms will make Hong Kong more of an extension of China's mainland market. These listings are expected to reshape the financial hub with a greater weighting in consumer, tech and industrials – a shift from banks and developers – to reflect Beijing's 'new productive forces', the government's relatively new economic model that prioritizes innovation and high-tech growth. Chinese firms now account for 70 per cent of the weighting in the Hang Seng Index, up 10 percentage points from 2021. The proportion of trading done by mainland investors is also picking up, averaging around 45 per cent daily in 2025. Right now, high-tech sectors are in Beijing's good graces, but it could be a risk for Hong Kong over the long term, rendering a heavier portion of index members susceptible to China's policy whims. The inundation of big names like CATL is expected to also boost liquidity in the city, in turn lifting valuations of existing stocks. Daily turnover, the value of shares trading hands, hit a record high in 2025, and the average in May was roughly double that of a year ago. What does it mean for investors? Global investors will be able to gain easier access to some of the most interesting Chinese names that they may have missed out on previously. That could have been due to investor mandates, or in the case of passive funds, could have been due to the disproportionately small weighting of China A shares (stocks that trade on the mainland) in the MSCI Asia Pacific Index, which most regional funds track. For stock pickers without China share restrictions, the lack of convenience might have been an impediment. Buying Chinese shares via trading links requires the use of a Hong Kong broker and a custody account. What is more, A shares on growth boards like ChiNext can be accessed only by institutional investors. As a requirement of the Chinese government, once the total foreign ownership of a single stock reaches 28 per cent, the exchange blocks all non-Chinese buying until the percentage slips below a threshold of 26 per cent. These obstacles do not exist for H shares. Mainland investors buying Hong Kong shares are also subject to a 20 per cent dividend tax. In the case of so-called red chip stocks, the levy is 28 per cent. Tax on mainland-traded shares, by comparison, is waived after a yearlong holding period, or halved if investors refrain from trading for one month. Are there risks for investors? Exposure to companies tied to China's tech push could also be a risk for investors who are not familiar with the intricacies of Chinese policymaking. Usually, hints of a crackdown or indications of support from the government are subtle and come before they get on global investors' radars. Fund flows are also a two-way street for these listed companies. Global money can exit a market much faster than it might enter one, as the past years have demonstrated. It took just four months for overseas investors to shed 200 billion yuan of Chinese stocks in 2023, but much longer to buy the same amount. Hong Kong is also a much more volatile market with no trading limits, unlike Shanghai and Shenzhen, which typically cap moves at 20 per cent daily, and allow same day trading which makes it easier to speculate on short term moves. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
The Star
07-06-2025
- Business
- The Star
Hong Kong's still ‘over' but Stephen Roach says city a surprise trade war winner
American economist Stephen Roach has said that Hong Kong has benefited from the US-China trade war despite last year having declared the city to be 'over', even as he claimed that other aspects of the financial hub had worsened. The former Morgan Stanley Asia chairman sparked debate last year after he penned an opinion piece which argued, in part, that Hong Kong would be caught in the 'crossfire' of the worsening US-China rivalry. 'The word caught is the word that, if I had to write the piece again, I would probably change, because I think, ironically, Hong Kong has benefited from the crossfire between the US and China,' he told the Post in a recent interview. Despite worsening ties between the two superpowers since US President Donald Trump began levying his so-called reciprocal tariffs on China and the rest of the world, Hong Kong's stock market has seen solid gains. The benchmark Hang Seng Index is up by around 50 per cent since Roach made his original claim, while Hong Kong has rocketed to the top of the global fundraising table following a string of high-profile initial public offerings last month, including from mainland Chinese battery maker Contemporary Amperex Technology. Roach, who is now a faculty member at Yale University, said the 'sell America' trade had become a 'global mantra' and Hong Kong was a beneficiary. But asked whether he felt his initial assessment of the city being 'over' was premature, he noted he would say the same again. 'No economy or city state is over ... but this image of a dynamic, powerful system as part of the 'one country, two systems' model, I think that's just as close to being over today as it was when I originally wrote the piece,' he said, referring to the city's governing principle. 'The governance story is still, I think, very much working against this notion of Hong Kong as a free, independent, autonomous city state. If anything, it's gotten worse.' Roach added that the strong performance of the city's stock market had 'instilled sort of a new swagger in Hong Kong bordering on denial'. He said there were 'questions that could be raised' about the city's independent rule of law, pointing to the departure of foreign non-permanent judges. He also raised concerns about the fast-tracking of the domestic national security law last year and what he described as continuing efforts to 'quash dissent'. While the Hong Kong government had 'risen to the challenge' to demonstrate to the world that the city should be considered 'special', American investors in particular had developed an 'unwillingness' to distinguish it from the rest of China, he said. 'Where I've come out, reluctantly, is that as great a city as Hong Kong is, it's just another big Chinese city,' he said. 'I think it's increasingly a one country, one system model with a solid financial capital raising infrastructure embedded in Hong Kong.' Executive Council convenor Regina Ip Lau Suk-yee, who previously hit back at Roach over his 'Hong Kong is over' remarks, maintained that the American economist did not understand the city. She said the 'pessimistic views' Roach expressed last year 'were primarily based on the Hong Kong stock market's poor performance'. 'He overlooked China's strength in technological innovations and Hong Kong's unique advantages based on its separate systems. We are the only part of China that can invest, manage and provide trading platforms for digital assets.' She cited the city's recently passed law on stablecoins, which she said would help Hong Kong be the country's 'testing ground' for cryptocurrencies. Stablecoins are a type of cryptocurrency token that maintain a fixed value by being pegged to a reference asset, typically fiat currencies such as the US dollar. The law, which was passed last month and is set to take effect later this year, establishes a regulatory regime for stablecoins, paving the way for issuers to obtain licences and sell the digital assets to the public. 'Despite ongoing US-China tensions, Hong Kong will continue to have an important role to play in building bridges between China and the West,' Ip said. - SOUTH CHINA MORNING POST
