We have documented that political transition set out by the Sino-British Joint Declaration in September 1984 has compelled the Hong Kong press to undergo decisive, yet uneven, editorial paradigm shifts. This article, as a sequel, examines the structural interaction between Xinhua (New China) News Agency, China's command post in Hong Kong, and the ideologically-polarized Chinese-language press. Specifically, we seek to focus our analysis on aspects of Xinhua's co-optation and press accommodation. As a new power centre, Xinhua tries to incorporate the press into the changing political order with offers of benefits, resources and status. In turn, the press organization makes institutional policy – ranging from investment strategies to the internal routine of news work – to adapt itself to, and maximize its position in, a rapidly changing socio-economic context.