I was introduced to Hou Hsiao-Hsien by Flowers of Shanghai, an exquisite piece of work that spoke of a mature film maker, who had mastered his visual language. I imagine that it would be a similar experience to an introduction to Wong kar Wai or Almovodar with In the Mood for Love or All About My Mother, respectively being pieces where an good director became a great. You finish these types of films wondering where did he (the director) come from intellectually, and where is he going.
Hou's style is subtle, an excellent cinematographer and picture taker, like many of the Asian films (whether this is from a common thread or by accident I don't know). He is not as overtly stylish as Wong Kar-Wai, but the shots he takes and chooses (perhaps the better adjective) are beautiful.
A previous commentator called this style "cinematic masturbation", which I think is an adolescent argument. Just because the points don't hit you over the head doesn't mean they are not being made. This is a political film, dealing with a still sensitive topic. The director definitely cares about the audience. Like anything else, it's the little details that count.
One of those little details is an Ozu film being played on TV in one background shot. Hou has consciously acknowledged Ozu as an influence and his style shows it. The action, so to speak, takes place within the context of the everyday events. The points being made are observed by the routine actions, and unique touches within them.
The most solid point being the commonality of loss, and tragedy between two Taiwanese actresses of different generations. Both lose lovers, and sacrifice children to the events around them.
The other point is the simultaneous affluence and emptiness is modern day life. The actress in the older story is based on a real person, who joined the anti-Japanese resistance in China during WWII. After this, her husband is executed in an anti-communist crackdown in Taiwan. She is both pushed along by events, but shows a determination to live her life and make decisions, This is in contrast to the other story, that of the actress playing (there is a movie within a movie), who is looking back on a life with petty gangsters, drinking and drugs. In material goods she is richer than the older actress ever was, with her upper middle class life, yet poorer in far more many ways. Both are played by the same actress, who handles the two stories well.
In the Hou portfolio, I prefer this to Goodbye South Goodbye, which I felt got a little lost in fancy camera work, but I feel that this is close to Flowers of Shanghai.