The Chinese “reform era” may be over. From Gordon Chang at gatestoneinstitute.org:
- VIEs, as they are known, evade Chinese law, which prohibits foreign ownership of Chinese tech companies. Through a series of intricate contractual arrangements, however, these structures effectively give foreigners the economic benefits of ownership.
- People believe that if Beijing were to publicly declare a VIE illegal—in other words, expropriate foreign ownership—it would be like setting off a nuclear weapon, shutting off new Chinese companies from foreign equity markets. Therefore, they believe it could not happen. The last-minute cancellation of the Ant Group IPO in Hong Kong and Shanghai last November, however, shows that Xi Jinping is willing to go to great lengths to protect his system.
- China’s brand of communism, many forget, is inherently hostile to the private sector in general and foreigners in particular. The so-called “reform era”—the three decades following 1978 when Chinese leaders liberalized the Chinese economy and financial system and opened it to the world—is now over….
- Xi Jinping believes there is already too much foreign influence in Chinese society, meaning that he would like to limit to the greatest extent possible offshore ownership of China’s enterprises. He will, I think, step up a long-running campaign to harass foreign businesses and begin to force offshore investors out of his country. The questionable VIE structure gives Xi the perfect excuse to now expropriate foreign ownership of his country’s successful tech businesses.
- China’s ruler, foreign investors often forget, is willful and will do what he wants. “What Xi Jinping says, Xi Jinping does,” Bartiromo correctly pointed out. “And that’s what the law is.”
 China’s President Xi Jinping believes there is already too much foreign influence in Chinese society, meaning that he would like to limit to the greatest extent possible offshore ownership of China’s enterprises. China’s ruler, foreign investors often forget, is willful and will do what he wants. He will likely step up a long-running campaign to harass foreign businesses and begin to force offshore investors out of his country. Pictured: Xi (center) at the military parade for the 70th anniversary of the establishment of the People’s Republic of China, on October 01, 2019 in Beijing. (Photo by Andrea Verdelli/Getty Images) |
“What do investors need to understand, for those investors that are thinking maybe I want to dip my toe in investing in Chinese companies?” asked Maria Bartiromo on July 14, during her Fox Business show, “Mornings with Maria.”
China, which shares a tiny 47-mile-long border with Afghanistan, has long coveted developing closer ties with Kabul, not least because of the large, untapped reserves of mineral wealth that Afghanistan possesses. Pictured: China’s Foreign Minister Wang Yi (left), Pakistan’s Foreign Minister Shah Mahmood Qureshi (center) and Afghanistan’s then Foreign Minister Salahuddin Rabbani at the China-Afghanistan-Pakistan Trilateral Foreign Ministers Dialogue in Islamabad, on September 7, 2019. (Photo credit by AFP via Getty Images)
