| The power Xi Jinping's government wields over China's economy and markets is immense, especially when compared with how much influence authorities in the West have at their disposal. But as a recent plunge in the Chinese currency has shown, nothing is absolute. With the yuan's exchange rate to the US dollar falling this week to the lowest level since 2008, the Chinese central bank stepped forward late Wednesday to tell people to stop betting on further depreciation. The People's Bank of China has "plenty of experience" fending off external shocks and effectively guiding market expectations, it warned, adding that speculators will "definitely" lose money. It worked, for a while at least. When trading opened Thursday morning, the yuan strengthen for the first time nine days, but by Friday, the depreciation had resumed.  RMB banknotes Traders are increasingly betting that Chinese policymakers will be powerless to stop the slide. As long as the Federal Reserve continues pushing up US interest rates to fight inflation and China keeps rates low to shore up an economy battered by Covid lockdowns and a distressed property market, the yuan will weaken. To be fair, no major currency has gained against the greenback in the past six months. The yuan has struggled just like everyone else, even if China's government is more powerful than most. Meanwhile, Wall Street firms are reassessing the risks of doing business in Greater China in the unlikely event that the mainland invades Taiwan the way Russia did with Ukraine. Societe Generale, JPMorgan and UBS have asked their staff to review contingency plans in the past few months. Insurers have hiked prices for political risk policies linked to China. Although the chances of it happening are still seen as remote, any exit would represent a dramatic U-turn for global banks, which have poured billions into China over the years. Hong Kong is finally open — sort of. For the first time in more than two years, people flying into Hong Kong no longer have to lock themselves themselves in a hotel for days upon arrival, nor do they need to fear being thrown into spartan isolation camps if they test positive for Covid. They still won't be able to dine at restaurants for three days but no more quarantine!  Travelers in the departure hall at Hong Kong International Airport Word of the rule changes, which went into effect Monday, sent airfares surging, particularly for outbound flights, as legions of people in Hong Kong booked their first overseas trips in years. Predictably, businesses in the city welcomed the move but called for more easing as soon as the new rules were announced. Hong Kong's health chief said the government will stick with its push to reopen to the world unless a dangerous new virus variant emerges, stressing the financial hub has an obligation to protect mainland China from major Covid outbreaks. But will Hong Kong ever regain its former glory as Asia's premier base for bankers? A big test will come in November, when the city's central bank will host a major conference where the likes of David Solomon at Goldman Sachs and Jonathan Gray at Blackstone are scheduled to fly in and speak. Elsewhere, Macau plans to welcome back tour groups from mainland China and Taiwan is considering scrapping its quarantine requirements for arrivals. That would leave mainland China as the last Covid Zero holdout, possibly until next spring. Finally, a few other stories that caught our attention: NOTE: Next China will be off next week because of the weeklong National Day holidays. We'll be back the following week. | 
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