Foreign Digest Updates: China and Italy

China

            The Peking-approved government of the territory of Hong Kong announced that it was withdrawing a proposed law to extradite citizens of the city-state to mainland China, after three months of massive protests.  The law could have been used against dissidents.  Despite its promises when Hong Kong reverted from British rule in 1997, Communist China has been encroaching on the territory’s autonomy and freedom.

Italy

            The ruling anti-establishment populists and the main center-left party have reached an agreement on a program and list of ministers to form a government for the Republic of Italy, which both parties have approved.  The outgoing Prime Minister will present the list to the President tomorrow and be sworn in to head the new executive once the list is approved.  The Parliament would vote its confidence in the premier on Friday. 

            The government crisis was precipitated last month by the junior member of the ruling coalition, which had governed for 14 months.  The far-right Trumpist pro-Russian anti-migrant party sought to capitalize on polls suggesting it had a plurality of support, either by forcing a cabinet reshuffle or early elections in which it could have become the more dominant party, especially if it had run as a bloc with the center-right parties, as it did in the last parliamentary election and as it does in regional and municipal elections.  Instead, the far-right will be out of power because of the unexpected alliance of the two erstwhile foes, while Italy will move leftward and the center-right will remain marginalized. 

           The bond market reacted favorably to the end of the crisis, which should allow Italy to avoid a large sales tax increase and to pass a budget.