CEO Daily: In Hong Kong, for Rulers and Rebels, It's All About Face

Our daily brief on must-read business news…and more. Is this email not displaying correctly? View it in your browser. follow Subscribe Send Tip October 5, 2019 Greetings from Hong Kong, where much of the city is in lock-down tonight in anticipation of renewed protest against a government ban on wearing masks in public. I ventured into town this afternoon to discover that a spooky quiet had descended over the normally buzzing districts of Central, Admiralty, Wanchai and Sheung Wan. Metro and rail systems were suspended. Shopping malls and supermarkets were shuttered. It took me several hours to find a working ATM. Hong Kong’s chief executive Carrie Lam announced the mask ban Friday, invoking a a colonial-era emergency ordinance first drafted in 1922. She said the measure would help to restore calm to a city wracked by four months of popular unrest. The edict seems to have had just the opposite effect. By Friday evening, demonstrations erupted in more than a dozen locations around the city. Protestors set fire to several subway stations, and attacked an off-duty police officer in the outlying district of Yuen Long after he allegedly shot and wounded a 14-year-old boy. (Police said the shot was meant to be fired into the air and the boy was not targeted.) Lam said the decision to outlaw masks was her own, and that in making it, she had not consulted with or been pressured by Beijing. But, as Fortune‘s Naomi Xu Elegant and Grady McGregor explained yesterday, her focus on masks goes to the core of the conflict between rulers and rebels in this city. For Hong Kong’s mainland overseers, masks are a maddening impediment to the use of facial recognition technology, a ubiquitous feature of everyday life in mainland cities and seen by authorities there as an indispensable tool for preserving law and order. For protestors, masks are a potent symbol of freedom, enabling Hong Kongers to preserve their civil liberties and fend off oppression by an Orwellian surveillance state. All of which puts Hong Kong at the vanguard of a brave new world in which politics, technology and economics collide. If police here can enforce the mask ban, they can use facial recognition technologies in new ways to crack down on dissent. But protesters are using encrypted platforms like Telegram to communicate and mobilize in new ways that defy police detection. It’s all happening live, in a world where everyone with a mobile phone is a journalist, capable of capturing events on video and uploading them to be viewed and shared in real time around globe. Meanwhile every twist and turn of the Hong Kong drama seems to provoke nerve spasms in Washington and on Wall Street. More China news below. •  Clay Chandler – Clay.Chandler@Fortune.com – @ClayChandler . . Innovation and Tech Top Gun. China celebrated 70 years of Communist Party rule on October 1 with a military parade that showcased a variety of cutting-edge military tech. On display was a stealth combat drone, which is thought to have a longer flight range than fighter jets; a hypersonic missile, which can evade current anti-missile systems; and an ICBM with an estimated range over 7,500 miles. Fortune No politics: just good times. Last week TikTok drew heat over media reports that it censors politically-sensitive topics, such as protests; this week, TikTok banned the placement of paid-for political ads, saying they don't fit in with the "light-hearted and irreverent feeling that makes [the app] such a fun place to spend time." The move has echoes of Twitter's decision to ban state-run media from purchasing promoted posts. TechCrunch Google it. Huawei launched its new flagship phone, the Mate 30, last week. It was the first Huawei phone to be delivered without Google services, after the U.S. company was prohibited from working with the Chinese phone maker. Before the launch, a Huawei executive said there would be a workaround that allowed users to download Google apps. Sure enough, a workaround existed: a third-party app called LZ Play allowed Mate 30 users to download Google services but the app was deleted after a researcher discovered LZ Play had access to undisclosed Huawei APIs. Huawei denies any involvement with LZ Play. Engadget Economy and Trade Who wants to investigate Biden? While facing impeachment proceedings over for asking Ukraine to investigate political rival Biden, President Trump went and asked China to investigate Biden, too. "Likewise, China should start an investigation into the Bidens. Because what happened in China is just about as bad as what happened with Ukraine," Trump told reporters, unprompted. Trump appeared to connect the issue to ongoing trade negotiations. A Chinese delegation is due in Washington next week. New York Times Turning off the tap. Chinese venture capital funding into the U.S. has fallen to its lowest level since 2015. In the first nine months of the year, Chinese VCs invested just $4 billion in U.S. companies, down from $7 billion in the same time frame last year and from $9 billion over the first nine months in 2017.  Chinese FDI in the U.S. fell too, slumping from $29 billion in 2017 to $5.4 billion last year. Financial Times Phone shutting down. Samsung has stopped all mobile phone production in China, ending what has been a slow exit from the manufacturing hub. Samsung cut production at a plant in Huizhou in June and closed another factory last year. The Korean manufacturer has been moving smart phone production to Vietnam and other low cot countries as China's minimum wage goes up and Samsung's share of the Chinese market went down. In the first quarter this year, Samsung phones occupied just 1% of the market. Reuters . Content From Deloitte Making Factories Smarter To ignite stalled labor productivity, manufacturers are pursuing smart factory initiatives, which utilize cutting edge, efficiency-boosting technology. Deloitte and the Manufacturers Alliance for Productivity and Innovation explore the benefits. Read more . In Case You Missed It Hong Kong's Richest Man Giving $127 Million to Help Local Businesses Survive Political Upheaval Bloomberg What We Know About Hunter Biden's Dealings in China WSJ The Tycoons Behind China's Gadget Factories Boom Prepare to Pivot Bloomberg Tesla's China production to start, eyes on mass production timing: sources Reuters Going Back to China in Search of My Daughter's Secret Past NYT Blocking research with China would 'hurt', Microsoft boss says BBC   . Politics and Policy Behind the mask. Hong Kong Chief Executive Carrie Lam enacted the colonial-era Emergency Regulations Ordinance (ERO) yesterday and used the emergency law to pass a bill that bans protesters from wearing masks. As protests in Hong Kong reached new levels of violence this past week, Lam said enforcing the ERO is the duty of a responsible government. Predictably, however, the bill instantly sparked more protests. Fortune This edition of CEO Daily was edited by Eamon Barrett. Find previous editions here, and sign up for other Fortune newsletters here. . Email Us Subscribe share: . This message has been sent to you because you are currently subscribed to CEO Daily. Unsubscribe Please read our Privacy Policy, or copy and paste this link into your browser: https://fortune.com/privacy/ FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice. 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