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Crafty_Dog

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DougMacG

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Re: China, Xi Jinping vs Jack Ma, Financial Times
« Reply #754 on: January 13, 2021, 05:44:21 AM »
What is the role of private commerce and investment in a totalitarian country, when THIS happens?

https://www.ft.com/content/751c2500-f50d-47c9-8f04-a28ad62285fd?63bac0e6-3d28-36b1-7417-423982f60790

Financial Times

Jack Ma vs Xi Jinping: the future of private business in China
The crackdown on Alibaba and Ant Group amounts to an unprecedented squeeze on a ubiquitous ecommerce empire
© FT montage; AFP/Getty Images | Jack Ma has not been seen in public since October

Four years ago, when Ant Group’s premier money market fund was racing to a peak of more than $260bn worth of assets under management, many of China’s state-owned banks and their regulators started to get agitated. In a series of calls and meetings with Jack Ma, Ant’s founder, bank executives and regulatory officials demanded that its Yu’E Bao fund be reined in.

“Yu’E Bao was pulling a lot of money from the banks,” says one person familiar with the discussions. “The banks were worried about the impact on liquidity and wanted Ant to take measures to minimise the impact. The conversations were pretty tense.”

In the end, Mr Ma had to back down and Yu’E Bao imposed caps on how much people could deposit. Between March and December of 2018, its funds under management fell by a third to $168bn and stood at $183bn last September.

The showdown would prove to be a prelude to the much bigger confrontation that now pits the Chinese Communist party and President Xi Jinping against not just Ant but also Alibaba, the ecommerce group founded by Mr Ma.

The stand-off, which has sparked rampant speculation about Mr Ma’s whereabouts, could become a defining moment for the future of private business in Mr Xi’s China.

On December 24, China’s market regulator announced it was launching an antitrust probe into Alibaba and sent investigators to its headquarters in the eastern Chinese city of Hangzhou, Mr Ma’s hometown. The announcement came just two weeks after the party’s politburo said it would target monopoly businesses to prevent the “disorderly expansion of capital”.

Jack Ma holds the gavel at the New York Stock Exchange in 2014. Mr Ma has not been seen in public since October last year © New York Times/Redux/eyevine

The move on Alibaba also came two months after financial regulators dramatically cancelled Ant’s planned $37bn initial public offering, which would have been the world’s largest.

Taken together, the measures amount to an unprecedented squeeze on a business empire whose ubiquitous services are central to the functioning of China’s pioneering online economy. Ant says Alipay, its payment app, is regularly used by 700m people — half of China’s total population — and 80m merchants, processing payments worth Rmb118tn ($18.2tn) in the group’s last financial year.

Alibaba’s shares have fallen by almost 30 per cent since the regulatory showdown began in late October, putting a big dent in the net worth of Mr Ma, who has not been seen in public since then. Over the same period his fortune has declined from $62bn to $49bn, according to Bloomberg data. The Hurun China Rich List estimated that Mr Ma had been the country’s richest man as recently as October 20 but would now rank fourth, his top slot taken by a bottled water tycoon, Zhong Shanshan.

The results of the showdown will say a lot about the sort of economy that China is developing. If Ant and Alibaba are crippled by regulators — or its founder is personally targeted by investigators — it will go down as a landmark moment in the party’s fickle relationship with China’s private sector even though Mr Ma is, ironically, a party member himself.

Since Deng Xiaoping launched the “reform and opening” era 40 years ago, the party has become ever more dependent on private sector companies for economic growth, job creation and tax revenues. But the party’s fixation with control, especially since Mr Xi came to power almost a decade ago, also triggers periodic crackdowns on the sector and prominent entrepreneurs.

Yet there is another potential outcome that would indicate a less fraught relationship between the party-state and business. The investigations into Ant and Alibaba could lead to the sort of settlements that are not dissimilar to those pursued in the US and EU against large finance and technology groups. That would leave Mr Ma’s two flagship companies humbled but still formidable and highly profitable national champions. Even then, a strong political message would have been sent.

“Chinese internet magnates can still enjoy thriving businesses and enormous fortunes if they are able to convince the top leadership of their loyalty,” says Chen Long at Plenum, a Beijing-based consultancy. “The top leadership wants to ensure that neither Ma nor anyone else ever crosses the red line of trying to exert personal influence over government policies again — at least not publicly. The government will support them on the condition that they serve the national interest first.”

Fintech revolution
Mr Ma has not appeared in public since October 24, when he gave a high-profile speech critical of the same state-owned banks he clashed with over Yu’E Bao’s rapid growth, as well as regulators who he said often sacrifice innovation on the altar of stability. According to people involved in the listing, the speech angered Mr Xi, who made the final decision to halt the Ant IPO.

A woman views a QR Code at an Ant Group stall in Shanghai. The move against Alibaba came two months after Chinese financial regulators cancelled Ant’s planned $37bn flotation © Feature China/Barcroft Media/Getty

Jack Ma with the winners of his 'Africa’s Business Heroes' TV competition in 2019. The usually high-profile Mr Ma missed the November final of last year's contest © africabusinessheroes.org
“To innovate without taking risks is to strangle innovation,” Mr Ma said. “There is no such thing as riskless innovation in the world. Very often, an attempt to minimise risk to zero is the biggest risk itself.”

He was speaking at the same forum where Wang Qishan, Mr Xi’s powerful vice-president and former anti-corruption tsar, had earlier emphasised the paramount importance of financial system stability. “Efforts should be made to prevent and lower financial risks . . . security always ranks first,” Mr Wang said. “While new financial technologies have improved efficiency and brought convenience, financial risks have been heightened.”

In an unprecedented public rebuke of Ant two months later, on December 26 China’s central bank criticised Ant for being too cavalier about financial risk and taking advantage of regulatory loopholes. But as frustrated as regulators are with Ant, they cannot ignore the beneficial effects of the financial revolution it has led in China.

“Ant Group,” People’s Bank of China vice-governor Pan Gongsheng admitted in his otherwise critical comments, “has played an innovative role in developing financial technology and improving the efficiency and inclusiveness of financial services”. The central bank, he added in a nod to jittery entrepreneurs, was also “unshakeable” in its commitment to “protect property rights and promote entrepreneurship”.

Mr Ma has long enjoyed support from officials in a range of State Council ministries, as well as the lead financial regulators, who appreciate the contributions of Ant, Alibaba and their rivals, all of whom have transformed China’s economy and made its online services sector a global leader. When his status as a party member was first confirmed only two years ago, it was in the context of an award he was receiving from the party’s Central Committee for “making China a leading player in the international ecommerce industry, internet finance and cloud computing”.

Alibaba and Ant’s ecommerce and online payment services were even more critical at the height of China’s successful battle to contain coronavirus, providing essential services to the hundreds of millions of people caught in draconian lockdowns.

“There are different lines of thought within the regulators,” Mr Chen says. “Until Jack Ma’s speech the pro-growth people had the upper hand. But Xi thought the speech was too much and a second [risk-averse] group took the lead. If his speech hadn’t happened, everything would have been fine.”

Disappearing acts are unusual for Mr Ma, who also missed the November finale of his African reality TV show — Africa’s Business Heroes. He routinely gives flamboyant musical performances at Alibaba events and hobnobs with heads of state and government leaders.

People’s Bank of China vice-governor Pan Gongsheng tried to calm jittery entrepreneurs when he said the central bank was 'unshakeable' in its commitment to 'protect property rights and promote entrepreneurship' © VCG/Getty

China's president Xi Jinping with other world leaders at the G20 summit in Hangzhou in 2016. Mr Xi was said to be irked that some guests sought meetings with Jack Ma during the event © Sergei Guneyev/TASS/Getty
As China’s most successful private entrepreneur, Mr Ma enjoys unique status in China — and overseas. His fluent English has made him a huge celebrity on the international conference circuit, with a star quality unmatched by any of his private or state-sector peers.

When Mr Xi hosted the G20 leaders summit in Hangzhou in 2016, some of his guests also visited Mr Ma — something that irked the Chinese president, according to one diplomat involved and other people familiar with the matter. Mr Ma’s VIP callers included Indonesian president Joko Widodo, Canadian prime minister Justin Trudeau and the then Italian premier, Matteo Renzi. Foreign leaders were offered limited time slots and the Chinese foreign ministry was mostly cut out of the process.

Over the past week rumours about Mr Ma’s whereabouts have abounded on China’s carefully monitored social media channels, while domestic media outlets have received strict instructions from censors about the stories they can and cannot run on Ant and Alibaba’s regulatory troubles.

Many of Mr Ma’s friends and colleagues strongly dispute suggestions that he is personally in any sort of legal jeopardy, let alone on the run. “He is in China and not travelling because of Covid, not anything else. He’s lying low,” says one friend of Mr Ma.

Another friend who communicates with Mr Ma regularly adds: “Everyone is asking me if he’s in danger, but he’s doing fine. He responds [to messages and calls] quickly and seems like he’s in good spirits. Discussions with regulators are still very much in process so he just has to stay quiet until they are resolved.”

Leadership missteps
Friends add that while Mr Ma may now regret the consequences of his October 24 speech, he meant what he said and still believes passionately in what he sees as Ant’s mission to transform the provision of financial services in the world’s second-largest economy.

Yu’E Bao, which translates as “account balance treasure”, was started in 2013 and allowed anyone in China, from restaurant staff to the urban yuppies they serve, to deposit as little as Rmb1 ($0.15) in a money-market fund and earn more interest than they could in a Chinese savings deposit account. Just four years later it became the world’s largest money market fund, surpassing JPMorgan’s US government money market fund.

The fund’s success was a dramatic demonstration of Ant’s potential. But it was also a threat to one of China’s most powerful vested interest groups — state banks and the officials who regulate them. The central bank was also concerned. In its annual financial stability report published in late 2018, the PBoC said it would “strengthen regulation of systematically important money market funds”, without mentioning Yu’E Bao by name.

A screen at a shopping event in Hangzhou shows Alibaba's number of delivery orders last year. The company's shares have fallen by almost 30% since the regulatory showdown against it began in late October © Wang Gang/China News Service/Getty
“When a taxi driver can deposit one renminbi in a money-market fund and get interest, that’s a big breakthrough,” says a former Alibaba executive. “Jack feels what Ant is doing is good for society.”

Mr Ma’s companies have rebounded strongly from regulatory disputes before, although Ant and Alibaba never faced scrutiny as intense as they now do. Ant’s run-in with banks and regulators over Yu’E Bao, for example, did little to hinder its overall business or influence.

Ant’s credit business grew so large that it now facilitates about one-tenth of all of China’s non-mortgage consumer loans.

The group also aligned its interests with those of powerful investors. Ant’s first fundraising in 2015 brought in a slew of well-connected shareholders, all of whom were set to be rewarded handsomely in the IPO. The Chinese government’s social security fund and a group of state-owned insurers held stakes in Ant valued at, respectively, Rmb48bn and Rmb45bn at the IPO price.

Shares belonging to an investment vehicle put together by Boyu Capital, whose executives have included the grandson of former Chinese president Jiang Zemin, were valued at Rmb15bn. Even China Central Television, the country’s state broadcaster, held Ant shares worth Rmb3bn.

“Financial regulators have been very concerned about Ant’s growing power and ability to push back against any attempts to bring it under control,” says one Chinese government adviser. “Previous attempts to bring Ant under more control were not really working because it was so big and so powerful. There is now clearly a very dramatic shift.”

Jack Ma in 2018 at a ceremony in Beijing to mark the 40th anniversary of China's opening up. Mr Ma fell foul of the authorities after giving a speech in which he was critical of state-owned banks and regulators in October last year © Mark Schiefelbein/AP
Bill Deng, a former Ant executive and co-founder of XTransfer, a cross-border payments platform, says Mr Ma may have become too confident.

“For a long time, regulators let Ant expand and I think [management] became a bit too complacent,” he says. “If there are hundreds of people praising you, you can get overly optimistic. Financial deleveraging policies have been a trend for several years now and the government is extremely careful when it comes to finance.”

Healthy growth
The cancellation of Ant’s IPO triggered a cascade of official and state media criticism of the fintech group. Regulators have also made clear they want the group to shift many of its businesses — including payments, lending, insurance and wealth management — into a new, more tightly regulated holding vehicle. This will increase Ant’s capital requirements and lower its valuation.

Authorities see the holding company model as a way to rein in large financial conglomerates while increasing their transparency. They also want Ant to share its vast trove of consumer data with the central bank — something it has refused to do before.

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China plots ‘rectification’ drive to bring Jack Ma’s Ant Group to heel
Having to wait for a smaller return than they almost locked in a few months ago will be disappointing for Ant’s investors, but there are worse alternatives. “The Chinese government does not want to kill Ant, but to make sure it grows in a healthy way,” says Mr Deng. “Ant can surpass its current obstacles. If they have patience, they will be able to rise again.”

As for the antitrust investigation into Alibaba, a manageable outcome for the group would include an end to exclusivity arrangements that restrict merchants from selling on rival platforms. Alibaba could also potentially face a large fine — the maximum allowed would be 10 per cent of its previous year’s revenues — if it is deemed to have violated China’s anti-monopoly law.

“Debates about exclusivity have been going on for years, it’s a competitive market,” says the former Alibaba executive. “I don’t think Alibaba is going to get broken up. It’s just that the methods by which they fight for the market are going to be more regulated.”
« Last Edit: January 13, 2021, 06:15:54 AM by DougMacG »



Crafty_Dog

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D1: Chinese Demographics
« Reply #757 on: February 09, 2021, 12:32:18 PM »
China’s population problem. The number of newborns formally registered in China’s household registration system, known as hukou, fell around 15 percent in 2020, from 11.79 million in 2019. The damage to China’s demographic outlook done by tight population controls has been immense – and it may take several generations for the country to recover.

DougMacG

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Re: D1: Chinese Demographics
« Reply #758 on: February 09, 2021, 04:18:54 PM »
China’s population problem. The number of newborns formally registered in China’s household registration system, known as hukou, fell around 15 percent in 2020, from 11.79 million in 2019. The damage to China’s demographic outlook done by tight population controls has been immense – and it may take several generations for the country to recover.

It looks to me like the death rate projections are headed to 20 million per year, nearly twice the birth rate reported above.
https://www.macrotrends.net/countries/CHN/china/death-rate
https://www.worldometers.info/world-population/china-population/

That's plenty of people but countries with aging and declining populations take on demographic problems like finding workers and supporting their retirees. 

G M

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Moutai
« Reply #759 on: February 09, 2021, 10:26:14 PM »
https://video.sina.cn/finance/2021-02-08/detail-ikftssap4844421.d.html?p&p

https://www.zerohedge.com/markets/us-has-fang-china-has-booze-company

I learned about Moutai many years ago during Spring Festival. My wife's (wife now, we weren't married back then) extended family tried the Chinese drinking game on me (Ritual toasts and doing Moutai shots, you keep drinking, they switch out). I drank them under the table and staggered back to my hotel room chanting "USA! USA!"

Crafty_Dog

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China's Potemkin Village
« Reply #760 on: April 09, 2021, 07:26:57 PM »


Crafty_Dog

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China's financial brinksmanship
« Reply #762 on: April 26, 2021, 06:39:48 AM »
April 26, 2021
View On Website
Open as PDF

    
China’s Financial Brinksmanship
Beijing is embarking on its biggest game of market meltdown chicken to date.
By: Phillip Orchard

It’s becoming something of a semi-annual tradition in China: A major bank or company misses an earnings report or bond repayment, or finds some other way to hint that it may be in dire need of a bailout. Regulators remain conspicuously silent as panic ripples through the Chinese financial system, so much of which runs on widespread assumptions that the state, obsessed as it is with stability, will rescue just about any ailing institution to make sure it contains the spread.
Regulators let market anxieties mount seemingly to the breaking point, the implied message to investors being: “The days of risk-free, state-guaranteed financial returns are over. Do your own due diligence before blindly throwing money around and making this our problem, please.” Eventually, they issue a bland, technocratic statement, and everything calms down as the state starts brokering some sort of solution behind the scenes. Often someone goes to jail, or worse.

There have been several variations of this story in China in recent years, particularly since 2013, when Beijing first began tepidly addressing the moral hazard endemic to its $54 trillion financial industry. And it's basically what's been happening over the past month with China Huarong Asset Management Co., a massive, debt-plagued state-owned financial asset management company whose former chairman was executed in January on corruption charges. Huarong missed an earnings report at the end of March, sending bond markets into a tizzy amid rumors that it was headed for a painful restructuring, at best. But several things about Huarong – chief among them, the fact that the company was originally set up by the Ministry of Finance to metabolize other banks' toxic assets – make it Beijing's biggest, most complicated, most fraught game of market meltdown chicken to date.

What Makes Chinese Finance Unique

The Chinese government wants many conflicting things. It wants economic dynamism, which requires support for entrepreneurship and innovation, free flows of information, an impartial judiciary and at times a light regulatory touch – all operating in a financial system that allocates capital efficiently and prices risk accurately. It also wants control and stability, which means preventing market forces from creating surges of unemployment and social unrest. It also means restricting capital flows in and out of the country to head off a meltdown. It means preventing the accumulation of wealth by China's business titans from leading to the accumulation of political power. It means relying heavily on a sclerotic, incestuous network of state-owned enterprises and state banks to soak up excess employment and channel capital to party priorities.

Every government navigates these sorts of contradictory desires to some extent. The difference in China is the government's extreme intolerance for instability of any sort – even forms that, over the longer term, improve the system overall. So it props up inefficient companies, preserves or even bolsters the state sector, cracks down on information flows, suppresses protests and inserts party committees into private sector conglomerates. Beijing tries where possible to have the best of both worlds. But when forced to choose between dynamism and control, Beijing almost always opts for the latter.

There are many costs to this approach, especially when it comes to financial risk. For example, the domination of the financial system by state banks, which have heavy incentives to prioritize lending to state-owned enterprises and firms with hard assets available for collateral, forces others to rely on alternative, often less transparent or less-easily regulated sources of funding. Capital controls limit access to foreign financing. Perhaps most problematic, though, it generates widespread moral hazard. Put simply, because of Beijing’s existential fear of unemployment and social unrest, lenders and investors understandably just assume that the state will more often than not come to the rescue if things go sideways and pose any degree of systemic risk. Such assumptions are particularly common in the state sector, but increasingly they've extended into any part of the investment landscape. This was illustrated in 2018-19 with the rise of unregulated peer-to-peer lending platforms. Many borrowers defaulted, leading to protests by lenders who expected Beijing to make them whole despite the government never making implicit promises to do so.

The risks of moral hazard contributing to a broad financial crisis have increased as debt levels across the Chinese economy have soared since 2008 – and as it’s become more and more difficult for the Chinese economy to simply grow its way out of its debt problems. No country in history has amassed so much debt so quickly as China has without succumbing to a financial meltdown, according to the World Bank. Predictably, the sense of urgency in Beijing to address moral hazard has surged as well.

The most ruthless way to do so, of course, is to simply let people get burned a few times – to let poorly run banks or firms go bust and to let investors and lenders lose their shirts. But China can't tolerate the costs of such an approach, given just how central implicit state guarantees are to the entire Chinese financial system. To avoid triggering an uncontainable market panic – or simply to avoid inadvertently creating a credit crunch that grinds economic growth to a halt – Beijing has had to move at a seemingly glacial pace and find ways to instill market discipline over time.

Addressing Moral Hazard Head-On

China has been attacking the problem from several angles. On one level, it's been trying to make moral hazard matter less by pushing through an ambitious slate of reforms aimed at whipping banks and state-owned enterprises into shape before they reach a breaking point. It's also installed a much more muscular regulatory apparatus, pairing it with anti-graft authorities tasked with punishing wayward officials and tycoons and hammering local and provincial governments and banks to clean up their books and eschew “shadow lending” practices. What the system lacks in market incentives to act prudently, Beijing has been able to offset somewhat by the fear of President Xi Jinping.

But there's been no avoiding the need to address moral hazard head-on. Its first attempt, made in 2013, went extremely poorly. After a technical default between two small banks sent interbank lending rates soaring, Beijing initially refused to inject liquidity into the market. Within days, interbank lending ground to a halt, sparking a liquidity crisis that began to spread into the rest of the economy. It was the closest China has come to having its own Lehman Brothers moment. Beijing capitulated by the end of the month, intervening more forcefully to keep interbank lending rates stable.

The episode effectively deepened the problem of moral hazard for the next few years. But a string of near-failures by small banks in 2019 forced Beijing to try again. This time, it was more successful. In each case, the government ultimately intervened, but for the first time, it forced at least some bondholders to take losses, while the banks themselves were forced to restructure in painful ways that put them on more solid footing going forward. The move didn't spark a broader meltdown. Emboldened, Beijing then allowed a string of defaults among SOEs last fall totaling some $12.2 billion worth of local bonds. The share of onshore payment failures rose to 57 percent compared to 8.5. percent the previous year, according to Fitch.

Even so, Huarong is different. For one, it's bigger than any of the previous cases. In terms of asset size, the two main banks rescued in 2019 are half that of Huarong. For another, much more of its debt (an estimated $22 billion or more) is held in offshore dollar bonds, which makes the problem more difficult and expensive for the government to manage.

Most important, Huarong was set up in 1999 as one of four “distressed asset managers” with the specific task of metabolizing other banks' bad debts. These “bad banks” were largely considered successful in helping China avoid the fates suffered by South Korea and several other emerging markets in Southeast Asia following the 1997 Asian Financial Crisis. And Huarong's problems seem to stem primarily from its expansion over the past decade or so into other financial services, including shadow banking. It's unlikely, in other words, that its problems indicate that the Chinese system is so overwhelmed with toxic assets that even the bad banks can no longer cope. Still, perception matters more than reality in financial crises. If enough people believe that Huarong's problems reveal widespread systemic fragility – and a rise in speculation about problems some of the other distressed asset managers suggests such perceptions may be taking root – then things could get ugly fast.

There's another critical difference, though, that suggests Beijing is acting with a renewed sense of confidence in its ability to avoid triggering a panic: the fact that Huarong is owned directly by the Finance Ministry. This matters because, in previous cases, there were questions about how much regulators were caught unaware of the banks' problems, a factor that fueled potentially destabilizing speculation that authorities really had no idea how deep and wide the problems in the banking system truly were. Given its ownership, and given the fact that Huarong has been under close scrutiny for some time (its chairman came under investigation for corruption charges in 2018 and was executed in January), it's highly unlikely that its debt problems caught anyone off guard. And given its systemic importance, along with the fact that Beijing will have zero tolerance for any kind of financial chaos ahead of the 100th anniversary of the founding of the Chinese Communist Party this summer, there's little reason to think Beijing would even allow Huarong's problems to be made public, much less concerns to proliferate about Huarong going belly up, if it didn't think it was useful to do so.

By letting Huarong twist in the wind for a few months while saying just enough reassuring things (and leaking plans for a potential restructuring) to mitigate panic, Beijing is likely just taking its next step forward in its long, calculated fight against what it sees as an existential problem. That's the charitable view, at least. The other possibility – that Beijing is at once overmatched and overconfident and heading for an inevitable financial reckoning – may be unlikely, but staggering in consequence should it come to pass.

G M

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Re: China's financial brinksmanship
« Reply #763 on: April 26, 2021, 01:49:14 PM »
A desperate China is a very dangerous China.


April 26, 2021
View On Website
Open as PDF

    
China’s Financial Brinksmanship
Beijing is embarking on its biggest game of market meltdown chicken to date.
By: Phillip Orchard

It’s becoming something of a semi-annual tradition in China: A major bank or company misses an earnings report or bond repayment, or finds some other way to hint that it may be in dire need of a bailout. Regulators remain conspicuously silent as panic ripples through the Chinese financial system, so much of which runs on widespread assumptions that the state, obsessed as it is with stability, will rescue just about any ailing institution to make sure it contains the spread.
Regulators let market anxieties mount seemingly to the breaking point, the implied message to investors being: “The days of risk-free, state-guaranteed financial returns are over. Do your own due diligence before blindly throwing money around and making this our problem, please.” Eventually, they issue a bland, technocratic statement, and everything calms down as the state starts brokering some sort of solution behind the scenes. Often someone goes to jail, or worse.

There have been several variations of this story in China in recent years, particularly since 2013, when Beijing first began tepidly addressing the moral hazard endemic to its $54 trillion financial industry. And it's basically what's been happening over the past month with China Huarong Asset Management Co., a massive, debt-plagued state-owned financial asset management company whose former chairman was executed in January on corruption charges. Huarong missed an earnings report at the end of March, sending bond markets into a tizzy amid rumors that it was headed for a painful restructuring, at best. But several things about Huarong – chief among them, the fact that the company was originally set up by the Ministry of Finance to metabolize other banks' toxic assets – make it Beijing's biggest, most complicated, most fraught game of market meltdown chicken to date.

What Makes Chinese Finance Unique

The Chinese government wants many conflicting things. It wants economic dynamism, which requires support for entrepreneurship and innovation, free flows of information, an impartial judiciary and at times a light regulatory touch – all operating in a financial system that allocates capital efficiently and prices risk accurately. It also wants control and stability, which means preventing market forces from creating surges of unemployment and social unrest. It also means restricting capital flows in and out of the country to head off a meltdown. It means preventing the accumulation of wealth by China's business titans from leading to the accumulation of political power. It means relying heavily on a sclerotic, incestuous network of state-owned enterprises and state banks to soak up excess employment and channel capital to party priorities.

Every government navigates these sorts of contradictory desires to some extent. The difference in China is the government's extreme intolerance for instability of any sort – even forms that, over the longer term, improve the system overall. So it props up inefficient companies, preserves or even bolsters the state sector, cracks down on information flows, suppresses protests and inserts party committees into private sector conglomerates. Beijing tries where possible to have the best of both worlds. But when forced to choose between dynamism and control, Beijing almost always opts for the latter.

There are many costs to this approach, especially when it comes to financial risk. For example, the domination of the financial system by state banks, which have heavy incentives to prioritize lending to state-owned enterprises and firms with hard assets available for collateral, forces others to rely on alternative, often less transparent or less-easily regulated sources of funding. Capital controls limit access to foreign financing. Perhaps most problematic, though, it generates widespread moral hazard. Put simply, because of Beijing’s existential fear of unemployment and social unrest, lenders and investors understandably just assume that the state will more often than not come to the rescue if things go sideways and pose any degree of systemic risk. Such assumptions are particularly common in the state sector, but increasingly they've extended into any part of the investment landscape. This was illustrated in 2018-19 with the rise of unregulated peer-to-peer lending platforms. Many borrowers defaulted, leading to protests by lenders who expected Beijing to make them whole despite the government never making implicit promises to do so.

The risks of moral hazard contributing to a broad financial crisis have increased as debt levels across the Chinese economy have soared since 2008 – and as it’s become more and more difficult for the Chinese economy to simply grow its way out of its debt problems. No country in history has amassed so much debt so quickly as China has without succumbing to a financial meltdown, according to the World Bank. Predictably, the sense of urgency in Beijing to address moral hazard has surged as well.

The most ruthless way to do so, of course, is to simply let people get burned a few times – to let poorly run banks or firms go bust and to let investors and lenders lose their shirts. But China can't tolerate the costs of such an approach, given just how central implicit state guarantees are to the entire Chinese financial system. To avoid triggering an uncontainable market panic – or simply to avoid inadvertently creating a credit crunch that grinds economic growth to a halt – Beijing has had to move at a seemingly glacial pace and find ways to instill market discipline over time.

Addressing Moral Hazard Head-On

China has been attacking the problem from several angles. On one level, it's been trying to make moral hazard matter less by pushing through an ambitious slate of reforms aimed at whipping banks and state-owned enterprises into shape before they reach a breaking point. It's also installed a much more muscular regulatory apparatus, pairing it with anti-graft authorities tasked with punishing wayward officials and tycoons and hammering local and provincial governments and banks to clean up their books and eschew “shadow lending” practices. What the system lacks in market incentives to act prudently, Beijing has been able to offset somewhat by the fear of President Xi Jinping.

But there's been no avoiding the need to address moral hazard head-on. Its first attempt, made in 2013, went extremely poorly. After a technical default between two small banks sent interbank lending rates soaring, Beijing initially refused to inject liquidity into the market. Within days, interbank lending ground to a halt, sparking a liquidity crisis that began to spread into the rest of the economy. It was the closest China has come to having its own Lehman Brothers moment. Beijing capitulated by the end of the month, intervening more forcefully to keep interbank lending rates stable.

The episode effectively deepened the problem of moral hazard for the next few years. But a string of near-failures by small banks in 2019 forced Beijing to try again. This time, it was more successful. In each case, the government ultimately intervened, but for the first time, it forced at least some bondholders to take losses, while the banks themselves were forced to restructure in painful ways that put them on more solid footing going forward. The move didn't spark a broader meltdown. Emboldened, Beijing then allowed a string of defaults among SOEs last fall totaling some $12.2 billion worth of local bonds. The share of onshore payment failures rose to 57 percent compared to 8.5. percent the previous year, according to Fitch.

Even so, Huarong is different. For one, it's bigger than any of the previous cases. In terms of asset size, the two main banks rescued in 2019 are half that of Huarong. For another, much more of its debt (an estimated $22 billion or more) is held in offshore dollar bonds, which makes the problem more difficult and expensive for the government to manage.

Most important, Huarong was set up in 1999 as one of four “distressed asset managers” with the specific task of metabolizing other banks' bad debts. These “bad banks” were largely considered successful in helping China avoid the fates suffered by South Korea and several other emerging markets in Southeast Asia following the 1997 Asian Financial Crisis. And Huarong's problems seem to stem primarily from its expansion over the past decade or so into other financial services, including shadow banking. It's unlikely, in other words, that its problems indicate that the Chinese system is so overwhelmed with toxic assets that even the bad banks can no longer cope. Still, perception matters more than reality in financial crises. If enough people believe that Huarong's problems reveal widespread systemic fragility – and a rise in speculation about problems some of the other distressed asset managers suggests such perceptions may be taking root – then things could get ugly fast.

There's another critical difference, though, that suggests Beijing is acting with a renewed sense of confidence in its ability to avoid triggering a panic: the fact that Huarong is owned directly by the Finance Ministry. This matters because, in previous cases, there were questions about how much regulators were caught unaware of the banks' problems, a factor that fueled potentially destabilizing speculation that authorities really had no idea how deep and wide the problems in the banking system truly were. Given its ownership, and given the fact that Huarong has been under close scrutiny for some time (its chairman came under investigation for corruption charges in 2018 and was executed in January), it's highly unlikely that its debt problems caught anyone off guard. And given its systemic importance, along with the fact that Beijing will have zero tolerance for any kind of financial chaos ahead of the 100th anniversary of the founding of the Chinese Communist Party this summer, there's little reason to think Beijing would even allow Huarong's problems to be made public, much less concerns to proliferate about Huarong going belly up, if it didn't think it was useful to do so.

By letting Huarong twist in the wind for a few months while saying just enough reassuring things (and leaking plans for a potential restructuring) to mitigate panic, Beijing is likely just taking its next step forward in its long, calculated fight against what it sees as an existential problem. That's the charitable view, at least. The other possibility – that Beijing is at once overmatched and overconfident and heading for an inevitable financial reckoning – may be unlikely, but staggering in consequence should it come to pass.

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China new App for snitches
« Reply #764 on: April 28, 2021, 05:43:51 AM »
https://www.americanthinker.com/blog/2021/04/ccp_launches_new_app_to_restrict_free_speech.html

China is trying to catch up with the US thwarting anti regime free thought and speech. We should be attacking this repression of a God given right instead of leading on it.
« Last Edit: April 28, 2021, 06:58:26 AM by Crafty_Dog »

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WSJ: Hong Kong
« Reply #765 on: May 18, 2021, 02:43:58 AM »



The powers that be in Hong Kong keep assuring the world that nothing has changed regarding its status as a financial center since the Chinese Communist Party imposed its national security law. Tell that to Jimmy Lai, the imprisoned media owner whose assets have now been frozen by the Hong Kong police.

The Hong Kong Security Bureau alerted Mr. Lai on Friday that his personal bank accounts and his 71% share in Next Digital, the company that publishes Apple Daily, have been frozen. The South China Morning Post says the value of the frozen assets is about $64.3 million. This is the first time we know of that the national security law has been invoked to deprive an owner of his equity in a publicly traded company in Hong Kong.

Hong Kong apologists will say that Mr. Lai is a special case because his media properties support economic and political freedom. Apple Daily continues to criticize the government even with Mr. Lai in jail. He is currently serving a 14-month sentence for his role in unapproved protests. He faces another trial in the coming months on three counts of violating national security laws that are a pretext to make the 72-year-old publisher an example of what happens if you challenge the Party.


But if the authorities can strip Mr. Lai of his assets based on a non-judicial order, then no private contract is safe. The asset seizure seems wholly arbitrary. Any shareholder in any Hong Kong-based company who offends Beijing on political grounds is vulnerable. Will the Hong Kong Stock Exchange file even a peep of protest?


The seizure won’t help Hong Kong’s eroding status as a global financial center. The political risk is high for a CEO or board of directors to float shares on the Hong Kong exchange, especially when alternatives are available. The decline of the once great entrepôt of economic freedom continues at an accelerating pace.


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Re: China Concentration Camps
« Reply #766 on: May 23, 2021, 06:13:39 AM »
https://www.dailymail.co.uk/news/article-9573113/Survivor-Chinas-modern-day-concentration-camps-reveals-horrors-walls.html

If we are not going in with our military to set these people free, the least we could do is boycott the Olympics in protest.

Why does China get a pass from the American and European Left?

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Re: China Concentration Camps
« Reply #767 on: May 23, 2021, 12:30:13 PM »
https://www.dailymail.co.uk/news/article-9573113/Survivor-Chinas-modern-day-concentration-camps-reveals-horrors-walls.html

If we are not going in with our military to set these people free, the least we could do is boycott the Olympics in protest.

Why does China get a pass from the American and European Left?

Because they have been bought off by the PRC (the big guy gets 10%), and they admire the totalitarianism.

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Re: China Concentration Camps
« Reply #768 on: May 23, 2021, 01:14:27 PM »
quote author=G M
Because they have been bought off by the PRC (the big guy gets 10%), and they admire the totalitarianism.

   - Yes but they read polls and need 70 or 80 million people in support to stay in power.

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Re: China Concentration Camps
« Reply #769 on: May 23, 2021, 01:20:27 PM »
quote author=G M
Because they have been bought off by the PRC (the big guy gets 10%), and they admire the totalitarianism.

   - Yes but they read polls and need 70 or 80 million people in support to stay in power.

They do?

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WSJ: Repression in HK
« Reply #770 on: May 30, 2021, 08:09:49 AM »
China wants to silence Hong Kongers even as it persecutes them. A court judgment released Friday shows that a judge penalized former pro-democracy lawmaker and journalist Claudia Mo for speaking to Western journalists, including our own Jillian Melchior.


Police arrested Ms. Mo, along with nearly the entire opposition movement, in January. She and 46 others are charged with conspiracy to commit subversion under the national security law for organizing or participating in an informal pro-democracy primary election last July. Judge Esther Toh denied Ms. Mo bail in April, and the world learned why on Friday.

The national security law prohibits “collusion” with vaguely defined foreign forces and states that defendants may not receive bail “unless the judge has sufficient grounds” to believe that they “will not continue to commit acts endangering national security.” As a reason to keep Ms. Mo behind bars, prosecutor Maggie Yang described Ms. Mo’s WhatsApp correspondence with these pages, the New York Times, Bloomberg and the BBC.

In a court filing explaining her denial of bail, Judge Toh quotes from an Oct. 1, 2020, conversation Ms. Mo had with Ms. Melchior about 12 Hong Kongers who were captured after they tried to escape to Taiwan by boat.


Ms. Mo told Ms. Melchior: “The detention and treatment of the 12 Hong Kong protesters serve as the ultimate warning and threat to Hongkongers about what one can face if you’re caught. The new security law and the spate of arrests have worked as a scare tactic, probably fairly successfully—at sending a persistent political chill around the city.” Every word of that is true, and it was hardly a secret.

As a lawmaker, Ms. Mo fought for the liberties that China guaranteed to Hong Kong in its 1984 treaty with Britain. Her Legislative Council office sat across from the Hong Kong garrison of the Chinese People’s Liberation Army, and she decorated her windows with pro-democracy posters. Under the national security law, Ms. Mo now faces up to life in prison.

The Communist Party fears Ms. Mo because in the November 2019 district council elections, Hong Kong’s pro-democracy camp won in a landslide. Hong Kong’s government then used Covid as an excuse to cancel elections for the Legislative Council.

Judge Toh wrote in Friday’s filing that “it is submitted” by the Hong Kong government “that had the Election not been postponed,” then the opposition’s “conspiracy would have been carried out to fruition.” Get it: A free election is a conspiracy in Hong Kong. This is a tacit admission that if Hong Kongers could freely choose their representatives, they’d elect lawmakers like Ms. Mo. Instead, the Communist Party is locking away the opposition and denying bail for the crime of messaging with the press. Live and work in Hong Kong at your peril.

As we’ve said before, jailed publisher Jimmy Lai and Hong Kong’s other brave democrats deserve the Nobel Peace Prize.

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China Lied, People Died, Planet-Wide
« Reply #771 on: June 01, 2021, 05:55:54 PM »
https://strategypage.com/on_point/2021052694935.aspx

China's Bio-Economic War on the World Has Begun to Backfire
by Austin Bay
May 26, 2021

"I hoped that wealth would create a Chinese middle class that demanded freedom and moderation and peace.

Wrong. Chinese economic prowess merely fed its communist totalitarian war machine."
...

"The historical background supports the global significance of this week's sobering news: the likelihood that the COVID-19 virus (the Communist Chinese Party virus is another name) escaped by accident or on purpose from a Chinese laboratory in the city of Wuhan and infected the entire planet.

The Wall Street Journal has published an in-depth analysis of the evidence.

In February 2020, Senator Tom Cotton, R-Ark., suggested the virus may have escaped a research lab in Wuhan. The major mainstream media narrative: Cotton was damned, snarked and ridiculed, from The New York Times to CNN to Xinhua (the Chinese "official" news agency).

Xinhua spews propaganda. You trust The New York Times and CNN? Perhaps it's time you woke. (Does woke satirize antifa and BLM lingo? You decide.)

Even Dr. Tony Fauci says that the possibility that the COVID-19 escaped from a lab in Wuhan "certainly exists" and he's "totally in favor of a full investigation of whether that could have happened."

In spring 2020, Fauci and his bureaucrat cadre (which includes the mainstream media dolts) dissed Cotton.

Fauci et al owe Cotton an apology.

China lied about the origins of the virus, and people died, planet-wide. Bumper sticker: China lied, people died, planet-wide.

In 2020, I wrote a column arguing that China's dictatorship hid critical information about the virus, for fear of being exposed as incompetent. Realizing the pandemic's threat, Beijing's communist thugs in charge apparently decided to export it to the rest of the world so China would not suffer alone.

That's an act of war on the world.

China's communist dictators decided to wage bioeconomic warfare on the world."

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China's bioeconomic war on the world
« Reply #772 on: June 01, 2021, 06:06:40 PM »
"China's communist dictators decided to wage bioeconomic warfare on the world."


They had key allies in place here.

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Re: China
« Reply #773 on: June 02, 2021, 06:11:52 AM »
This thread is for internal Chinese matters, not China vs the world or America.




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GPF: The Trouble with China's Tech Titans
« Reply #776 on: July 19, 2021, 06:15:13 AM »
second post

July 19, 2021
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The Trouble With China’s Tech Titans
Beijing is throwing down the gauntlet before they get too powerful to manage.
By: Phillip Orchard

When Jack Ma got slapped down by the Communist Party of China late last year, the natural assumption was that his biggest sin was having the gall to question President Xi Jinping. After all, the Alibaba founder had lashed out about overzealous Chinese regulators – publicly, inside China no less – comparing them to pawnbrokers. Considering the urgency and political fragility of Xi's ambitious reform agenda, it’s little surprise that flouting Beijing's wisdom and authority by a celebrity billionaire was deemed out of bounds. So Ma paid the price: His fintech giant Ant Group's impending $37 billion initial public offering was scrapped, knocking Ma himself down the rankings of China’s richest men, and the company was ordered to restructure. Authorities launched an antitrust probe into Alibaba eventually resulting in record penalties. And Ma spent months out of the public spotlight; per state media, the “vampire” businessman was too busy learning to “embrace supervision.”

But since then, Beijing's crackdown on Chinese tech giants has expanded dramatically, targeting even firms whose founders have smartly avoided the temptation to poke the dragon. What's clear is Beijing doesn't just fear the wealth and potential for influence of its increasingly rich tycoon class; it fears the very empires they’ve built. This is partly because they're playing increasingly indispensable roles in Chinese society, meeting needs the Communist Party can’t, thus making them more difficult to bring to heel. It's also because the sources of their commercial power are often the same as those the party has traditionally relied on for its own preeminence and survival.

Why China Fears Them

Beijing's move against Ant Group appears to have worked. Almost immediately, other major players in the fintech space, including Ant Group's main rivals like Tencent, quickly got in line, announcing plans to undergo their own restructurings and accede to Beijing’s demands on things like stricter financial regulation and oversight of data flows. Several firms reportedly shelved IPO plans.

Authorities then moved onto other Chinese tech behemoths that have been gobbling up market share across the digital economy. It would be like Washington throwing down the gauntlet against Amazon, Google, Facebook, Uber, PayPal and Netflix and a couple dozen other dot coms all at once. Over the past month, it has turned its attention to companies newly listed on U.S. stock markets. The most high-profile of these was DiDi, a ride-hailing platform that apparently ignored "advice" from regulators to postpone its June 30 IPO on the New York Stock Exchange until Beijing's security concerns about the company's mapping system were resolved. Several DiDi-owned apps were removed from Chinese phones, and Beijing launched a sprawling security probe into the firm involving agencies – such as the feared Ministry of State Security – that traditionally haven't played a major role in Beijing's reform drives. Beijing also passed a major new data security law that gives the country’s main cybersecurity agency sweeping new powers over the tech sector, including the ability to block overseas listings.
Altogether, the moves have wiped out nearly $850 billion in market value for Chinese tech firms since February.

Largest Internet Companies
(click to enlarge)

The scope of the campaign underscores just how many potential emerging threats the CPC believes it’s trying to head off. Holding onto power, governing 1.4 billion people, and sustaining China's ascendency requires, in the CPC's view, several things that Chinese tech giants theoretically could undermine. For example, it needs control over information – that is, the ability to drive national narratives, stamp out dissent and signal clear directives to the vast machinery of the Chinese state. It needs the ability to act decisively and aggressively against financial risk. It needs the ability to overwhelm security threats before they take root. It needs to prevent the proliferation of competing centers of power – from allowing its tycoons to turn their wealth into excess political influence and returning China to the exceedingly factionalized environment that existed before Xi’s takeover. And it needs unquestioned recognition of the CPC's primacy and indispensability in the project of national rejuvenation.

Consider all the ways in which Tencent, perhaps China's most important company, alone could be problematic in this regard. The company’s sprawling empire includes some of China's biggest chat, payments, gaming, fintech, health care, real estate and e-commerce platforms. Tencent also happens to be one of China's biggest investors, both at home and abroad. Its founder, Pony Ma (no relation to Jack), is believed to be the second-richest man in China.

And this means Tencent has incredible, if largely theoretical, sway over how Chinese citizens communicate, over how and what news is disseminated, over how the party and state are portrayed in movies and music, and so on. Since its financial services platforms have been effectively operating as lightly regulated banks, it has the potential to disrupt Chinese financial stability. Its monopolistic practices threaten to stifle innovation and entrepreneurship, hindering China's modernization and sowing grievance among Chinese consumers. It also means Tencent is mining bottomless oceans of data about Chinese citizens – data that Beijing wants to harness for its own social control, to keep out of the hands’ of its foreign adversaries, and to keep tech firms from abusing or leveraging against the party. It's not hard to see how Pony Ma could decide to start exploring just how much his wealth and globe-spanning investments could be used to distort Chinese policies, both foreign and domestic, around his personal interests.

And Tencent is just one company. Jack Ma's empire is still roughly as large. JD.com, Baidu, Weibo, Meituan, Suning, NetEase, ByteDance and others all live more or less in the same stratosphere. All are growing by leaps and bounds, all are sucking up data at a staggering scale, and all are constantly pushing into new areas, particularly artificial intelligence.

Why China Needs Them

In some ways, though, this is what Beijing wants. Rebalancing the Chinese economy from exports to services and domestic consumption has long been the ideal but often elusive goal for Chinese policymakers. To the extent that China can progress toward this goal, these companies will surely lead the way. They expand the reach of Beijing's propagandists and give homegrown entertainment industries a leg up over potentially problematic foreign ones. They facilitate state surveillance. They ease China's own dependence on foreign technologies. Their financial services arms help offset endemic structural flaws in the Chinese banking system that traditionally struggles to get liquidity to small, private businesses. They shore up Hong Kong’s role as a global financial center. They pioneer all sorts of data-driven technologies that will define the next generation of warfare. They deepen the sense among Chinese citizens that China, under the CPC's guidance, has rapidly emerged as an advanced, innovative power with homegrown technologies competing against the West’s finest.

They can be valuable for Beijing's foreign policy objectives, too, by, say, deepening economic dependencies on China and/or mining for political clout in foreign capitals. Tencent, for example, has invested more than $50 billion in some of America’s most promising tech firms, including Snap, Spotify, Shopify, Stripe, Tesla and Zoom. China’s tech firms can help Beijing shape narratives about the country abroad. The more WeChat users there are in, say, Indonesia, the more power Beijing ostensibly would have to censor stories about Chinese activities around Indonesia's Natuna Islands in the South China Sea. In general, the more data from Chinese tech abroad flows back to the mainland, the more Beijing can probe for strategically or economically valuable insights. (See, for example, the face-palming problems the U.S. military ran into with fitness apps.)

Of course, this works only if these companies comply with Beijing's wishes – demands on censorship, data-sharing, financial oversight and so forth. And more often than not, what Beijing wants is less than ideal for these companies' bottom lines. Huawei, Tencent, Bytedance (owner of TikTok) and others have already lost access to foreign markets over suspicions of Beijing.

This underscores why Beijing is acting with such urgency to lay down new rules for the sector today. Chinese tech giants are only going to get bigger and more vital as the digital economy steadily expands – as control of data becomes ever-more crucial in the balance of power both at home and abroad. The CPC can't live with the threats they embody, but it can’t survive without the services they provide. Beijing, then, is trying to have the best of both worlds by doubling down first and foremost on its own control. It's making it clear that it can't and won't sacrifice its primacy for the sake of economic vitality or technological innovation or anything else – and that Chinese tech titans are welcome to lead the country into the future so long as they do it on Beijing's terms.


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Re: China
« Reply #778 on: September 14, 2021, 06:46:18 PM »

September 14, 2021
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Daily Memo: China's Recovery, No Chips and Surprise Trips
Beijing expects the chip shortage to linger for a long time.
By: Geopolitical Futures

China’s economy sputters. A data dump coming Wednesday is expected to show slumps in several Chinese economic indicators in August, including industrial production and consumption. September isn't looking much better. There's a new outbreak of the delta variant in at least two cities, leading to sharp new curbs on travel. And the country is still trying to get some of its biggest ports back up and running following COVID-19 lockdowns and, more recently, closures related to typhoons. Perhaps most concerning, China's latest financial stress test – involving indebted property giant Evergrande – appears to be reaching an inflection point.

Out of chips. China, like everyone else, is also stressing about the enduring crunch in chip production. The Ministry of Industry and Information Technology said Monday that it expects the squeeze to remain severe for a long time to come. This comes as Toyota, one of the few automakers that seemed to anticipate the rapid rebound in consumer demand, is now slashing its production plans due to the crunch.

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GPF: China's grid problems
« Reply #779 on: September 29, 2021, 01:08:53 PM »
By: Geopolitical Futures

China’s grid. China's electricity crunch seems to be getting worse. Rolling blackouts have reportedly begun in several major cities, including Beijing and Shanghai. The cuts are mostly policy-driven; provincial authorities are cutting usage to comply with annual consumption caps and carbon targets set by the central government. So in theory, if things get really bad, authorities can simply ease off. But it also appears to be at least partly driven by supply, with natural gas and coal prices soaring and with China's thermal coal reserves dropping to near record lows. There are also reports of unstable water supplies. The cuts are reportedly hammering small and large manufacturing businesses alike.

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Mass blackouts in China
« Reply #780 on: October 01, 2021, 08:44:19 AM »

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Re: China's RE bubble popping?
« Reply #782 on: October 09, 2021, 07:25:24 AM »

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Re: China
« Reply #783 on: October 09, 2021, 08:35:49 AM »
Or it could trigger a flood of money returning to the dollar.

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Re: China
« Reply #784 on: October 09, 2021, 09:05:57 AM »
Or it could trigger a flood of money returning to the dollar.

Not now. Only a utter moron trusts the USG these days.

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GPF: Evergrande
« Reply #785 on: October 11, 2021, 04:20:06 AM »
October 11, 2021
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Why Evergrande Is Going to Plan
Beijing saw the crisis coming and acted accordingly.
By: Phillip Orchard
The saga of debt-ridden Chinese property giant Evergrande, which has been rattling markets at home and abroad, isn’t going away anytime soon. After missing a series of bond interest and loan repayments in recent weeks, the sprawling conglomerate is facing a slew of additional deadlines in the months ahead, including $150 million in offshore payment obligations next week alone. All told, its total outstanding liabilities are estimated to be north of $300 billion, roughly 2 percent of Chinese gross domestic product. And so far, it’s done little more than the bare minimum to reassure lenders and bondholders that repayment will be forthcoming, opting instead to stay mostly silent as deadlines pass by.

It’s a huge deal for China, given Beijing’s all-consuming fear of a true financial crisis and the property markets’ role in just about every dimension of the Chinese economic system. Evergrande alone is believed to owe money to around 170 Chinese banks, another 120 or so financial services firms, plus about $20 billion to offshore investors. And it’s not even the only property developer threatening China's financial stability. Another, albeit much smaller cash-strapped property developer missed $315 million in repayments last week, for example, just weeks after claiming it was flush with cash. The credit ratings of dozens of Chinese firms were downgraded over the past couple of months.

But despite suggestions to the contrary, this isn’t China’s “Lehman Brothers” moment – a reference to the 2008 collapse of the Wall Street giant that kicked off the broader meltdown. Beijing hasn’t been blindsided by the fragility of the property sector; it has been moving intentionally to bring the crisis to a head. The risk, in other words, is not getting caught flat-footed but putting too much faith in the government’s ability to engineer an orderly correction and put the Chinese system on more sustainable long-term footing.

Not Really Lehman

In many ways, Evergrande embodies the Chinese business model of old. It benefitted from close ties to Communist Party of China elites that put it in position to ride the country’s decadeslong property boom. (Its founder, Hui Ka Yan, was once Asia’s richest man.) It racked up extraordinary debt to finance its breakneck growth, with thousands of projects across hundreds of Chinese cities. (The nature of the property development business, where companies have to pay a lot to build things and then wait a while for revenues to start flowing in, makes even healthy companies prone to cashflow crunches.) Like many of China’s biggest companies, Evergrande eventually expanded into sectors that had little to do with its original core business, including electric vehicles, wealth management, health care, and food and drink manufacturing. It bought a professional soccer club, splurged on player salaries, and renamed the club after itself.

Evergrande had good reason to believe that if it came to it, Beijing would step in with a helping hand. After all, the CPC, which fears financial instability like the Song dynasty feared the Mongols, had almost always rescued companies whose troubles could lead to mass layoffs or a cascading financial crisis. The CPC’s overriding desire for stability and control inevitably meant using a sclerotic, incestuous network of state-owned enterprises and state banks to prop up inefficient firms and stave off a reckoning. Becoming “too big to fail” was a feature, not a bug, in the eyes of most Chinese conglomerates.

But under President Xi Jinping, who in 2016 declared financial risk a priority on par with national security, the CPC has made clear that China is under new management, one that spurns Deng Xiaoping’s “everybody get rich” ethos, which became dominant in the 1990s.

And it’s easy to see why he would. The concentration of wealth in the hands of relatively few individuals naturally gives Beijing major political concerns. Moreover, no country in history has amassed so much debt so quickly as China has without succumbing to a financial meltdown, according to the World Bank. So long as China’s economy was galloping ahead at double-digit growth, with the corporate sector awash in easy profits to paper over inefficiencies and an immature system for pricing risk, the chances of an uncontrollable financial crisis were low. But as the Chinese growth model shifted from one driven by exports and land liberalization to investment, and as gross domestic product growth entered into a long if gradual slowdown, the margin for error began to narrow considerably.

As a result, since 2017, Xi’s administration has attempted to implement a suite of ambitious “de-risking” reforms. These include overhauling the regulatory apparatus, sending anti-corruption authorities after wayward officials and tycoons, and hammering local and provincial governments and banks to clean up their books and eschew “shadow lending” practices. Xi’s administration has also been gradually intensifying pressure on debt-fueled Chinese conglomerates known as “gray rhinos” and other similarly over-leveraged firms to sell off newly acquired overseas assets and scale down their financial services offerings. Over the past year, it has shifted focus to the tech sector, whose control of data and information and moves into financial services, among other issues, was generating serious alarm in Beijing.

Perhaps the biggest issue, though, has been Beijing’s war on moral hazard. Simply put, Beijing concluded that the widespread belief it would come to the rescue was fueling all sorts of risky lending and investment activity, stressing the ability of the state to manage the system and making a potential financial crisis more explosive if and when it ever came. So over the past few years, regulators have been engaged in a high-stakes game of trying to familiarize investors, lenders and companies with the concept of accountability. It let a handful of smaller banks and financial services firms fail outright and forced others into painful restructurings or mergers. Last year, it shocked everyone by doing the same even with some state-owned institutions, a sector previously thought untouchable given how much governments rely on state banks and state-owned enterprises to soak up excess employment and channel funding to party priorities.

A Different Animal

Evergrande, though, is a whole different animal, partly because of its sheer size. The pain of a disorderly collapse would be widespread and immense.

The impact would be enormous also because of the outsize importance of the property sector, both economically and politically. Land liberalization has been central to China’s breakneck growth since the 1980s. Last year, the sector accounted for around 29 percent of China’s economic output. Land sales are vital to how provincial and local governments raise revenue. The sector is critical to China’s urbanization goals and thus to its broader goal of rebalancing the economy away from exports and investment and more toward consumption, services and advanced manufacturing. Land as collateral is, therefore, fundamental to Chinese credit and banking systems. Property is where most Chinese households sink the bulk of their savings. Owning property is considered necessary for the marital prospects of your average Chinese bachelor. Already, the Evergrande crisis has sparked sporadic protests among folks who, for example, made upfront payments for homes that now may never get built.

Naturally, the many convoluted ways housing in the U.S. sparked the actual Lehman moment in 2008 spooked the Chinese leadership, as did the relentless building, speculation and securitization of property that resulted from the unfathomable amounts of stimulus Beijing unleashed in response. So, for years now, it’s been desperately searching for ways to tamp down on excesses in the sector and prevent overheating without inadvertently pricking the bubble and sparking a panicked overcorrection. This culminated in the August 2020 introduction of Beijing’s “three red lines”: tight thresholds for developers’ liability-to-asset, net debt-to-equity, and cash-to-short-term debt ratios. Failure to comply by 2023 supposedly will mean loss of access to new bank loans.

Evergrande’s debt problems were known long before the policy was introduced. And Beijing has shown no signs of backing off the new policy as its negative repercussions take root. Just the opposite, in fact. So it presumably wasn’t caught off guard by the various problems resulting from massive companies like Evergrande rushing to reorganize themselves on the fly – nor from the panic among lenders, investors and home-buyers as they came to realize they were paying for more than they knew.

Instead, Beijing appears to believe that the seemingly endless series of other crises it has weathered over the past few years has validated its approach to defusing them. It believes that by acting aggressively against financial risk before a real reckoning arrives – and by giving itself the regulatory and political muscle to force through painful changes and control the potential fallout – it doesn’t have to be as scared of triggering an uncontainable overcorrection as it was in the past. Indeed, in the case of the property sector, it appears even to be comfortable with accelerating the arrival of a potential crisis and responding nimbly enough to keep it from sparking an economy-wide conflagration. More specifically, by drawing out Evergrande’s collapse, it thinks it can slowly let the company, investors, lenders and buyers down easy, fence in potential contagion, give everyone time to adjust to the new reality, and keep panic under control.

It may be right. Or the scale of the potential crisis may overwhelm its best-laid plans. But then, it’s the scale that leaves it little choice but to stay the course.

Crafty_Dog

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Serious Read: The triumph and terror of Wang Huning
« Reply #786 on: October 14, 2021, 03:12:33 AM »
PALLADIUM
GOVERNANCE FUTURISM

N. S. LYONS OCTOBER 11, 2021  ARTICLES
The Triumph and Terror of Wang Huning

 Official White House Photo/Wang Huning observes as Chinese President Hu Jintao speaks with U.S. President Barack Obama, Toronto

One day in August 2021, Zhao Wei disappeared. For one of China’s best-known actresses to physically vanish from public view would have been enough to cause a stir on its own. But Zhao’s disappearing act was far more thorough: overnight, she was erased from the internet. Her Weibo social media page, with its 86 million followers, went offline, as did fan sites dedicated to her. Searches for her many films and television shows returned no results on streaming sites. Zhao’s name was scrubbed from the credits of projects she had appeared in or directed, replaced with a blank space. Online discussions uttering her name were censored. Suddenly, little trace remained that the 45-year-old celebrity had ever existed.

She wasn’t alone. Other Chinese entertainers also began to vanish as Chinese government regulators announced a “heightened crackdown” intended to dispense with “vulgar internet celebrities” promoting lascivious lifestyles and to “resolve the problem of chaos” created by online fandom culture. Those imitating the effeminate or androgynous aesthetics of Korean boyband stars—colorfully referred to as “xiao xian rou,” or “little fresh meat”—were next to go, with the government vowing to “resolutely put an end to sissy men” appearing on the screens of China’s impressionable youth.

Zhao and her unfortunate compatriots in the entertainment industry were caught up in something far larger than themselves: a sudden wave of new government policies that are currently upending Chinese life in what state media has characterized as a “profound transformation” of the country. Officially referred to as Chinese President Xi Jinping’s “Common Prosperity” campaign, this transformation is proceeding along two parallel lines: a vast regulatory crackdown roiling the private sector economy and a broader moralistic effort to reengineer Chinese culture from the top down.

But why is this “profound transformation” happening? And why now? Most analysis has focused on one man: Xi and his seemingly endless personal obsession with political control. The overlooked answer, however, is that this is indeed the culmination of decades of thinking and planning by a very powerful man—but that man is not Xi Jinping.

The Grey Eminence
Wang Huning much prefers the shadows to the limelight. An insomniac and workaholic, former friends and colleagues describe the bespectacled, soft-spoken political theorist as introverted and obsessively discreet. It took former Chinese leader Jiang Zemin’s repeated entreaties to convince the brilliant then-young academic—who spoke wistfully of following the traditional path of a Confucian scholar, aloof from politics—to give up academia in the early 1990s and join the Chinese Communist Party regime instead. When he finally did so, Wang cut off nearly all contact with his former connections, stopped publishing and speaking publicly, and implemented a strict policy of never speaking to foreigners at all. Behind this veil of carefully cultivated opacity, it’s unsurprising that so few people in the West know of Wang, let alone know him personally.

Yet Wang Huning is arguably the single most influential “public intellectual” alive today.

A member of the CCP’s seven-man Politburo Standing Committee, he is China’s top ideological theorist, quietly credited as being the “ideas man” behind each of Xi’s signature political concepts, including the “China Dream,” the anti-corruption campaign, the Belt and Road Initiative, a more assertive foreign policy, and even “Xi Jinping Thought.” Scrutinize any photograph of Xi on an important trip or at a key meeting and one is likely to spot Wang there in the background, never far from the leader’s side.

Wang has thus earned comparisons to famous figures of Chinese history like Zhuge Liang and Han Fei (historians dub the latter “China’s Machiavelli”) who similarly served behind the throne as powerful strategic advisers and consiglieres—a position referred to in Chinese literature as dishi: “Emperor’s Teacher.” Such a figure is just as readily recognizable in the West as an éminence grise (“grey eminence”), in the tradition of Tremblay, Talleyrand, Metternich, Kissinger, or Vladimir Putin adviser Vladislav Surkov.

But what is singularly remarkable about Wang is that he’s managed to serve in this role of court philosopher to not just one, but all three of China’s previous top leaders, including as the pen behind Jiang Zemin’s signature “Three Represents” policy and Hu Jintao’s “Harmonious Society.”

In the brutally cutthroat world of CCP factional politics, this is an unprecedented feat. Wang was recruited into the party by Jiang’s “Shanghai Gang,” a rival faction that Xi worked to ruthlessly purge after coming to power in 2012; many prominent members, like former security chief Zhou Yongkang and former vice security minister Sun Lijun, have ended up in prison. Meanwhile, Hu Jintao’s Communist Youth League Faction has also been heavily marginalized as Xi’s faction has consolidated control. Yet Wang Huning remains. More than any other, it is this fact that reveals the depth of his impeccable political cunning.

And the fingerprints of China’s Grey Eminence on the Common Prosperity campaign are unmistakable. While it’s hard to be certain what Wang really believes today inside his black box, he was once an immensely prolific author, publishing nearly 20 books along with numerous essays. And the obvious continuity between the thought in those works and what’s happening in China today says something fascinating about how Beijing has come to perceive the world through the eyes of Wang Huning.

Cultural Competence
While other Chinese teenagers spent the tumultuous years of the Cultural Revolution (1966-76) “sent down to the countryside” to dig ditches and work on farms, Wang Huning studied French at an elite foreign-language training school near his hometown of Shanghai, spending his days reading banned foreign literary classics secured for him by his teachers. Born in 1955 to a revolutionary family from Shandong, he was a sickly, bookish youth; this, along with his family’s connections, seems to have secured him a pass from hard labor.

When China’s shuttered universities reopened in 1978, following the commencement of “reform and opening” by Mao’s successor Deng Xiaoping, Wang was among the first to take the restored national university entrance exam, competing with millions for a chance to return to higher learning. He passed so spectacularly that Shanghai’s Fudan University, one of China’s top institutions, admitted him into its prestigious international politics master’s program despite having never completed a bachelor’s degree.

The thesis work he completed at Fudan, which would become his first book, traced the development of the Western concept of national sovereignty from antiquity to the present day—including from Gilgamesh through Socrates, Aristotle, Augustine, Machiavelli, Hobbes, Rousseau, Montesquieu, Hegel, and Marx—and contrasted it with Chinese conceptions of the idea. The work would become the foundation for many of his future theories of the nation-state and international relations.

But Wang was also beginning to pick up the strands of what would become another core thread of his life’s work: the necessary centrality of culture, tradition, and value structures to political stability.

Wang elaborated on these ideas in a 1988 essay, “The Structure of China’s Changing Political Culture,” which would become one of his most cited works. In it, he argued that the CCP must urgently consider how society’s “software” (culture, values, attitudes) shapes political destiny as much as its “hardware” (economics, systems, institutions). While seemingly a straightforward idea, this was notably a daring break from the materialism of orthodox Marxism.

Examining China in the midst of Deng’s rapid opening to the world, Wang perceived a country “in a state of transformation” from “an economy of production to an economy of consumption,” while evolving “from a spiritually oriented culture to a materially oriented culture,” and “from a collectivist culture to an individualistic culture.”

Meanwhile, he believed that the modernization of “Socialism with Chinese characteristics” was effectively leaving China without any real cultural direction at all. “There are no core values in China’s most recent structure,” he warned. This could serve only to dissolve societal and political cohesion.

That, he said, was untenable. Warning that “the components of the political culture shaped by the Cultural Revolution came to be divorced from the source that gave birth to this culture, as well as from social demands, social values, and social relations”—and thus “the results of the adoption of Marxism were not always positive”—he argued that, “Since 1949, we have criticized the core values of the classical and modern structures, but have not paid enough attention to shaping our own core values.” Therefore: “we must create core values.” Ideally, he concluded, “We must combine the flexibility of [China’s] traditional values with the modern spirit [both Western and Marxist].”

But at this point, like many during those heady years of reform and opening, he remained hopeful that liberalism could play a positive role in China, writing that his recommendations could allow “the components of the modern structure that embody the spirit of modern democracy and humanism [to] find the support they need to take root and grow.”

That would soon change.

A Dark Vision
Also in 1988, Wang—having risen with unprecedented speed to become Fudan’s youngest full professor at age 30—won a coveted scholarship (facilitated by the American Political Science Association) to spend six months in the United States as a visiting scholar. Profoundly curious about America, Wang took full advantage, wandering about the country like a sort of latter-day Chinese Alexis de Tocqueville, visiting more than 30 cities and nearly 20 universities.

What he found deeply disturbed him, permanently shifting his view of the West and the consequences of its ideas.

Wang recorded his observations in a memoir that would become his most famous work: the 1991 book America Against America. In it, he marvels at homeless encampments in the streets of Washington DC, out-of-control drug crime in poor black neighborhoods in New York and San Francisco, and corporations that seemed to have fused themselves to and taken over responsibilities of government. Eventually, he concludes that America faces an “unstoppable undercurrent of crisis” produced by its societal contradictions, including between rich and poor, white and black, democratic and oligarchic power, egalitarianism and class privilege, individual rights and collective responsibilities, cultural traditions and the solvent of liquid modernity.

But while Americans can, he says, perceive that they are faced with “intricate social and cultural problems,” they “tend to think of them as scientific and technological problems” to be solved separately. This gets them nowhere, he argues, because their problems are in fact all inextricably interlinked and have the same root cause: a radical, nihilistic individualism at the heart of modern American liberalism.

“The real cell of society in the United States is the individual,” he finds. This is so because the cell most foundational (per Aristotle) to society, “the family, has disintegrated.” Meanwhile, in the American system, “everything has a dual nature, and the glamour of high commodification abounds. Human flesh, sex, knowledge, politics, power, and law can all become the target of commodification.” This “commodification, in many ways, corrupts society and leads to a number of serious social problems.” In the end, “the American economic system has created human loneliness” as its foremost product, along with spectacular inequality. As a result, “nihilism has become the American way, which is a fatal shock to cultural development and the American spirit.”

Moreover, he says that the “American spirit is facing serious challenges” from new ideational competitors. Reflecting on the universities he visited and quoting approvingly from Allan Bloom’s The Closing of the American Mind, he notes a growing tension between Enlightenment liberal rationalism and a “younger generation [that] is ignorant of traditional Western values” and actively rejects its cultural inheritance. “If the value system collapses,” he wonders, “how can the social system be sustained?”

Ultimately, he argues, when faced with critical social issues like drug addiction, America’s atomized, deracinated, and dispirited society has found itself with “an insurmountable problem” because it no longer has any coherent conceptual grounds from which to mount any resistance.

Once idealistic about America, at the start of 1989 the young Wang returned to China and, promoted to Dean of Fudan’s International Politics Department, became a leading opponent of liberalization.

He began to argue that China had to resist global liberal influence and become a culturally unified and self-confident nation governed by a strong, centralized party-state. He would develop these ideas into what has become known as China’s “Neo-Authoritarian” movement—though Wang never used the term, identifying himself with China’s “Neo-Conservatives.” This reflected his desire to blend Marxist socialism with traditional Chinese Confucian values and Legalist political thought, maximalist Western ideas of state sovereignty and power, and nationalism in order to synthesize a new basis for long-term stability and growth immune to Western liberalism.

“He was most concerned with the question of how to manage China,” one former Fudan student recalls. “He was suggesting that a strong, centralized state is necessary to hold this society together. He spent every night in his office and didn’t do anything else.”

Wang’s timing couldn’t have been more auspicious. Only months after his return, China’s own emerging contradictions exploded into view in the form of student protests in Tiananmen Square. After PLA tanks crushed the dreams of liberal democracy sprouting in China, CCP leadership began searching desperately for a new political model on which to secure the regime. They soon turned to Wang Huning.

When Wang won national acclaim by leading a university debate team to victory in an international competition in Singapore in 1993, he caught the attention of Jiang Zemin, who had become party leader after Tiananmen. Wang, having defeated National Taiwan University by arguing that human nature is inherently evil, foreshadowed that, “While Western modern civilization can bring material prosperity, it doesn’t necessarily lead to improvement in character.” Jiang plucked him from the university and, at the age of 40, he was granted a leadership position in the CCP’s secretive Central Policy Research Office, putting him on an inside track into the highest echelons of power.

Wang Huning’s Nightmare
From the smug point of view of millions who now inhabit the Chinese internet, Wang’s dark vision of American dissolution was nothing less than prophetic. When they look to the U.S., they no longer see a beacon of liberal democracy standing as an admired symbol of a better future. That was the impression of those who created the famous “Goddess of Democracy,” with her paper-mâché torch held aloft before the Gate of Heavenly Peace.

Instead, they see Wang’s America: deindustrialization, rural decay, over-financialization, out of control asset prices, and the emergence of a self-perpetuating rentier elite; powerful tech monopolies able to crush any upstart competitors operating effectively beyond the scope of government; immense economic inequality, chronic unemployment, addiction, homelessness, and crime; cultural chaos, historical nihilism, family breakdown, and plunging fertility rates; societal despair, spiritual malaise, social isolation, and skyrocketing rates of mental health issues; a loss of national unity and purpose in the face of decadence and barely concealed self-loathing; vast internal divisions, racial tensions, riots, political violence, and a country that increasingly seems close to coming apart.

As a tumultuous 2020 roiled American politics, Chinese people began turning to Wang’s America Against America for answers. And when a mob stormed the U.S. Capitol building on January 6, 2021, the book flew off the shelves. Out-of-print copies began selling for as much as $2,500 on Chinese e-commerce sites.

But Wang is unlikely to be savoring the acclaim, because his worst fear has become reality: the “unstoppable undercurrent of crisis” he identified in America seems to have successfully jumped the Pacific. Despite all his and Xi’s success in draconian suppression of political liberalism, many of the same problems Wang observed in America have nonetheless emerged to ravage China over the last decade as the country progressively embraced a more neoliberal capitalist economic model.

“Socialism with Chinese Characteristics” has rapidly transformed China into one of the most economically unequal societies on earth. It now boasts a Gini Coefficient of, officially, around 0.47, worse than the U.S.’s 0.41. The wealthiest 1% of the population now holds around 31% of the country’s wealth (not far behind the 35% in the U.S.). But most people in China remain relatively poor: some 600 million still subsist on a monthly income of less than 1,000 yuan ($155) a month.

Meanwhile, Chinese tech giants have established monopoly positions even more robust than their U.S. counterparts, often with market shares nearing 90%. Corporate employment frequently features an exhausting “996” (9am to 9pm, 6 days a week) schedule. Others labor among struggling legions trapped by up-front debts in the vast system of modern-day indentured servitude that is the Chinese “gig economy.” Up to 400 million Chinese are forecast to enjoy the liberation of such “self-employment” by 2036, according to Alibaba.

The job market for China’s ever-expanding pool of university graduates is so competitive that “graduation equals unemployment” is a societal meme (the two words share a common Chinese character). And as young people have flocked to urban metropoles to search for employment, rural regions have been drained and left to decay, while centuries of communal extended family life have been upended in a generation, leaving the elderly to rely on the state for marginal care. In the cities, young people have been priced out of the property market by a red-hot asset bubble.

Meanwhile, contrary to trite Western assumptions of an inherently communal Chinese culture, the sense of atomization and low social trust in China has become so acute that it’s led to periodic bouts of anguished societal soul-searching after oddly regular instances in which injured individuals have been left to die on the street by passers-by habitually distrustful of being scammed.

Feeling alone and unable to get ahead in a ruthlessly consumerist society, Chinese youth increasingly describe existing in a state of nihilistic despair encapsulated by the online slang term neijuan (“involution”), which describes a “turning inward” by individuals and society due to a prevalent sense of being stuck in a draining rat race where everyone inevitably loses. This despair has manifested itself in a movement known as tangping, or “lying flat,” in which people attempt to escape that rat race by doing the absolute bare minimum amount of work required to live, becoming modern ascetics.

In this environment, China’s fertility rate has collapsed to 1.3 children per woman as of 2020—below Japan and above only South Korea as the lowest in the world—plunging its economic future into crisis. Ending family size limits and government attempts to persuade families to have more children have been met with incredulity and ridicule by Chinese young people as being “totally out of touch” with economic and social reality. “Do they not yet know that most young people are exhausted just supporting themselves?” asked one typically viral post on social media. It’s true that, given China’s cut-throat education system, raising even one child costs a huge sum: estimates range between $30,000 (about seven times the annual salary of the average citizen) and $115,000, depending on location.

But even those Chinese youth who could afford to have kids have found they enjoy a new lifestyle: the coveted DINK (“Double Income, No Kids”) life, in which well-educated young couples (married or not) spend all that extra cash on themselves. As one thoroughly liberated 27-year-old man with a vasectomy once explained to The New York Times: “For our generation, children aren’t a necessity…Now we can live without any burdens. So why not invest our spiritual and economic resources on our own lives?”

So while Americans have today given up the old dream of liberalizing China, they should maybe look a little closer. It’s true that China never remotely liberalized—if you consider liberalism to be all about democratic elections, a free press, and respect for human rights. But many political thinkers would argue there is more to a comprehensive definition of modern liberalism than that. Instead, they would identify liberalism’s essential telos as being the liberation of the individual from all limiting ties of place, tradition, religion, associations, and relationships, along with all the material limits of nature, in pursuit of the radical autonomy of the modern “consumer.”

From this perspective, China has been thoroughly liberalized, and the picture of what’s happening to Chinese society begins to look far more like Wang’s nightmare of a liberal culture consumed by nihilistic individualism and commodification.

The Grand Experiment
It is in this context that Wang Huning appears to have won a long-running debate within the Chinese system about what’s now required for the People’s Republic of China to endure. The era of tolerance for unfettered economic and cultural liberalism in China is over.

According to a leaked account by one of his old friends, Xi has found himself, like Wang, “repulsed by the all-encompassing commercialization of Chinese society, with its attendant nouveaux riches, official corruption, loss of values, dignity, and self-respect, and such ‘moral evils’ as drugs and prostitution.” Wang has now seemingly convinced Xi that they have no choice but to take drastic action to head off existential threats to social order being generated by Western-style economic and cultural liberal-capitalism—threats nearly identical to those that scourge the U.S.

This intervention has taken the form of the Common Prosperity campaign, with Xi declaring in January that “We absolutely must not allow the gap between rich and poor to get wider,” and warning that “achieving common prosperity is not only an economic issue, but also a major political issue related to the party’s governing foundations.”

This is why anti-monopoly investigations have hit China’s top technology firms with billions of dollars in fines and forced restructurings and strict new data rules have curtailed China’s internet and social media companies. It’s why record-breaking IPOs have been put on hold and corporations ordered to improve labor conditions, with “996” overtime requirements made illegal and pay raised for gig workers. It’s why the government killed off the private tutoring sector overnight and capped property rental price increases. It’s why the government has announced “excessively high incomes” are to be “adjusted.”

And it’s why celebrities like Zhao Wei have been disappearing, why Chinese minors have been banned from playing the “spiritual opium” of video games for more than three hours per week, why LGBT groups have been scrubbed from the internet, and why abortion restrictions have been significantly tightened. As one nationalist article promoted across state media explained, if the liberal West’s “tittytainment strategy” is allowed to succeed in causing China’s “young generation lose their toughness and virility then we will fall…just like the Soviet Union did.” The purpose of Xi’s “profound transformation” is to ensure that “the cultural market will no longer be a paradise for sissy stars, and news and public opinion will no longer be in a position of worshipping Western culture.”

In the end, the campaign represents Wang Huning’s triumph and his terror. It’s thirty years of his thought on culture made manifest in policy.

On one hand, it is worth viewing honestly the level of economic, technological, cultural, and political upheaval the West is currently experiencing and considering whether he may have accurately diagnosed a common undercurrent spreading through our globalized world. On the other, the odds that his gambit to engineer new societal values can succeed seems doubtful, considering the many failures of history’s other would-be “engineers of the soul.”

The best simple proxy to measure this effort in coming years is likely to be demographics. For reasons not entirely clear, many countries around the world now face the same challenge: fertility rates that have fallen below the replacement rate as they’ve developed into advanced economies. This has occurred across a diverse array of political systems, and shows little sign of moderating. Besides immigration, a wide range of policies have now been tried in attempts to raise birth rates, from increased public funding of childcare services to “pro-natal” tax credits for families with children. None have been consistently successful, sparking anguished debate in some quarters on whether losing the will to survive and reproduce is simply a fundamental factor of modernity. But if any country can succeed in reversing this trend, no matter the brute-force effort required, it is likely to be China.

Either way, our world is witnessing a grand experiment that’s now underway: China and the West, facing very similar societal problems, have now, thanks to Wang Huning, embarked on radically different approaches to addressing them. And with China increasingly challenging the United States for a position of global geopolitical and ideological leadership, the conclusion of this experiment could very well shape the global future of governance for the century ahead.

N.S. Lyons is an analyst and writer living and working in Washington, D.C. He is the author of The Upheaval.

https://palladiummag.com/2021/10/11/the-triumph-and-terror-of-wang-huning/?fbclid=IwAR1iwDnyb_g1xTXaApS48kHrPNVA4i5ic9KXIVOFonN_BjaN9aLofhzatQc

Crafty_Dog

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GPF
« Reply #787 on: October 19, 2021, 12:19:37 AM »
Chinese crises. China’s twin property and energy crises aren’t easing yet. Home sales in September slumped a whopping 17 percent year over year in September, though this is a modest improvement over the nearly 20 percent drop posted in August. Meanwhile, unusually early freezes in parts of China are pushing energy demand even higher. Industry leaders claim coal shortages will begin to ease in the coming month or so. Both issues appear to have contributed to the slowdown in Chinese economic output, with gross domestic product growth slowing to 4.9 percent in the third quarter, down from a brisk 7.9 percent in the second quarter. One silver lining for China: The global spike in energy prices is leading to a windfall for Chinese diesel and gasoline exports.

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Re: China bubble economy
« Reply #788 on: October 24, 2021, 06:58:40 PM »
Because of paywall I may never know what this says but Nobel Laureate Paul Krugman is usually a pretty good contrary indicator.

https://www.nytimes.com/2021/10/22/opinion/china-bubble-economy.html