2020H2: Research on China

1. Chinese currency is a hot topic. It is due to mercantilist approach of artificial undervaluation to give its exports an unfair price advantage. It’s economy has been fueled by massive exports.
2. Chinese money comes in two flavors renminbi (RMB) and Yuan (CNY).
3. Beijing has aspiration for internationalization of its currency. CCP and national banks issue RMB and mange CNY through its rigid control. The usage of RMB for global trade expanded 40 fold since 2010.
4. The objective is RMB as the top-five international currencies in the world. While only limited internal transactions are denoted in RMB. Yuan is the unit of accounts.
5. China internal currency system is tied directly to printers and create lots of money. CCP controls banks and internal trades n finances including distribution of wealth and political rewards.
6. China’s external finance system is tied to dollar. That’s why all dollar flows into central bank emitted by local/regional banks after trades within few hours
7. The gap between internal system and external currency is becoming wider! It has now become a problem.
8. Hong Kong Dollar (HKD) is separate and becoming an issue. China wants to control it so it is doesn’t expose GDP and currency issues as a balancing force. Eventually, China want to kill HKD.
9. Ultimately all powers including economical ends at CCP. Jack Ma’s CPC affiliation wasn’t mentioned in Alibaba’s share flotation brochure in 2014.
10. ANT financials $1Trillion+ transactions is a big deal in digital economy and weakens China banks. CCP has been cracking down on such capital outflows. The govt officials and the People’s Bank of China and the Chinese central bank are severely criticizing the FinTechs for its problems.
11. China observers like Chen Pokong believe that Ma may have seen his fate coming and chosen to resign early to avoid it. Alibaba has also agreed to share information about its customers if the authorities come calling; following the “Chinese rules and laws”!
12. Theories says Jack Ma (wealth $42B) resigned/retired as chairman (54 years age) and signed to offer his shares in Ali Baba to unknown shareholders. The theories floated says how would have either ended up in jail (for economic crimes) or killed (like fell from wall by accident).
13. After Jack Ma exit, CCP tightens its grip on fellow bosses like Tencent’s Pony Ma and Robin Li, the CEO of Baidu. CCP has a history to rein in private firms and rich owners.
14. CCP mandates that all of the country’s publicly listed companies must set up Party organizations for its employees. These organizations are often set up in the workplace to monitor employees and ensure workplace decisions toe the Party line. Last year, Chinese state media estimated that roughly 70 percent of China’s 1.86 million private firms have set up Party organizations.
15. There’s view Ma or big entrepreneurs are a a threat because such tycoons popularity among the public outshone CCP and government officials in China. The biggest fear is public revolt!
16. Over last years, to avoid any revolt, cyberspace and social media is controlled! Plus AI is used in all public places and airports to tighten the control by the state.
17. China bans google, FB, IG and other social media but encourages business of its companies globally and enforces data access and youth data. Example TikTok.
18. CCP principles, work for party. Love party more than your father and mother. Give everything to party.
19. For CCP, China’s growth story, GDP and narrative of making China successful economically, superior and superpower is critical as it strengthens it and maintains its control.
20. The dominant features of Chinese politics in this decade have been the rise of Xi Jinping, autocracy and effort to re-engineer China’s economic model. CCP has yet to find a political model that can accommodate this new, educated urban majority’s aspirations for greater participation in government decision-making and inclusion in more ambitious role for China in global governance.

Conclusion: China now finds itself less confident internally and in a markedly less peaceful international environment than before. Foreign views of China have shifted too, and not favorable to Beijing. The CCP has lost reputation for superhuman competence in managing public health and economic affairs. China’s political system has become even less attractive than before. The biggest threat is that China may suffer economic collapse and political turmoil.

References

NYT Article:
“Especially for the big organizations that have influence on the market, they should set an example by following laws and regulations,” said Fan Shuangwen, assistant bureau chief of a department in charge of payments and clearing accounts, in the report. “Do not think that you are so big that you cannot fail, or that you are so big that you cannot be managed.”
It was seen as a warning to big shots in the industry such as Alibaba’s Alipay, a popular mobile payment platform.

VOA:
“charismatic founder have since steered away from the clutches of the Communist Party, which seemingly views large private companies as a threat.”

The State
It is believed that through his retirement, Ma has avoided being caught up in the Chinese government’s crackdown of big dealmakers in recent years, such as HNA Group’s Wang Jian, Anbang Insurance Group’s Wu Xiaohui, and movie star Fan Bingbing. The latter two “disappeared” for months at one point.

“He’s getting an airlift before the hammer falls because he clearly would have been the most high-profile scalp within the private sector,” said Howie, adding that Ma’s case also fires a warning shot across the bow of the country’s rich and famous.

The fact that some of the country’s tycoons, including Ma, have pledged to hand over control of their businesses to the Communist Party, if needed, epitomizes the lopsided relationship between the state and the private sector under the leadership of President Xi Jinping.

Shortly after Ma expressed his intention to step down, Alibaba’s online payment platform Alipay inked an agreement with state-owned UnionPay to cooperate on cardless and barcode payments — a development that led to much speculation that Alipay eventually would be nationalized.

“He is one of the most popular and iconic figures in China. Shall democratic and free elections be held, he would have won most votes across China if he’s up to,” Hu said.

It’s hard to imagine, therefore, that someone as hardworking, ambitious and successful as Ma would choose to step down at a young age of 55 if it weren’t for political pressure, according to Hu.

Lots of links and very disturbing material on internet plus deep research by think tanks and white papers.