China’s first quarter GDP soared 18.3%, a momentum that is unparalleled in the world. Even compared to China itself, that’s the strongest economic performance in 30 years. The growth in exports over the same period was even more impressive, at 49%! Water or not, both clearly “benefited” from the epidemic: domestic masks, protective clothing and other anti-epidemic materials almost monopolized the international market, while European and American home work to fight the epidemic, computers and related products thirsty market. In addition, at the beginning of the outbreak years ago, China’s economy was hit hard and the base was lowered; once the normalcy was gradually restored, the two contrasts were particularly marked by the performance of the green. Does that mean China’s economy is not doing well but doing well? It doesn’t seem like it.
New debt hemorrhaging old debt Central enterprises also suspended
In the announcement of a booming macroeconomic data, a thunderstorm broke out on the ground, Huarong assets bond default suspicion, dragging almost all Chinese bonds. Huarong is the first of the four major asset management companies owned by China’s Ministry of Finance – the other three are Great Wall, Dongfang and Cinda. It has issued RMB224.5 billion in bonds domestically and US$23.3 billion abroad; it has substantial control over 353 enterprises. It is really unbelievable that such a super central enterprise could not submit its annual financial report on time and was ordered by the Hong Kong Stock Exchange to suspend its trading. What is going on?
The previous day, Lai Xiaomin, the head of Huarong, was sentenced to death for not only womanizing, but also embezzling tens of billions of RMB. Huarong’s troubles are certainly not just about being worn to the bottom of the barrel. Some analysts believe that Huarong keeps issuing debts at home and abroad, that seems like playing a Ponzi Scheme where new debts hem in and out of old ones. Six teapots five lids, and the new money dried up out of the hem, and eventually led to the explosion of the pot. If Huarong-like super central enterprises are still such a mess, how can we imagine the situation of other central enterprises, state-owned enterprises and even private enterprises? In the future, investors can be less wary of Chinese companies issuing and borrowing debt?
Equally intriguing is Yiwu, Zhejiang Province, China’s first small commodity export base of the “frozen card incident. Yiwu has more than 50,000 export merchants, of which 90% of the bank accounts were frozen, so that the liquidity can not be in trouble, greatly impacting the export business. Yiwu public security for merchants to stand up, the unprecedented letter to sister public security organs around the country, requesting assistance to unfreeze accounts, in order to relieve the plight of merchants. It seems that the “frozen card” is not limited to Yiwu, from Nanjing, Guangzhou to Foshan have merchant accounts in the same predicament.
The crux of the “frozen card incident” is the national public security crackdown on underground money-making activities. Yiwu merchants export goods, customers pay through the underground money changers, which pay through the exporter’s bank account in yuan. This method not only eliminates the red tape of foreign exchange control, faster than the bank payment for goods, and the withdrawal fee is only one tenth of the bank. However, in addition to the exporters, criminal groups also use the underground money to remit stolen black money out of the country. The public security case, regardless of the three seven twenty-one, once the exporter is suspected of having deposits of unknown origin will freeze their accounts, so that no way to pay suppliers, wages, dragging down exports. The public security nationwide “freeze card”, how big the blow, how serious the killing power, no need to say more.
No autonomy in childbirth population is now a fault line
Compared to Alibaba, Yiwu merchants face the trouble is straight to a small witch. Whether it was Jack Ma’s offensive words that offended the country’s leadership, or Alibaba fruit is to “choose one” of the strong means of monopolizing the market, in short, the first private enterprise in China was fined RMB 18.2 billion. What is really appalling is not the astronomical fine, but the eight words that Alibaba spat out after being fined: “Sincerely accept and resolutely obey”. These eight words tell the whole story of the embarrassing situation of all Chinese people today. But will the nation’s resolute obedience to the wise leadership of the Party Central Committee be able to run at the speed of high-speed rail to a rich and strong tomorrow?
There seems to be difficulties, and they are not small. Statistics show that China’s population will decline during the 14th Five-Year Plan from 2021 to 2025. The main consequence will be a rapidly aging population such that the economy does not move forward. Dong Yuhua, dean of population development research in Guangdong, blames this on fertility policy – the one-child policy in the past was so aggressive that there was a population discontinuity, and the current fertility liberalization policy is indecisive: “Let’s liberalize the third child this year, and then let’s liberalize the fourth child next year… … is to directly implement independent reproduction, the faster the liberalization, the better.” But “independent reproduction” and Shangan can “resolutely obey” it?
Even if everything is resolutely and absolutely obey the Party Central Committee, Huarong’s trouble can show that the Party Central Committee simply can not take into account so much. No matter how wise, the Party Central Committee and can appreciate the national fight against the black even trapped Yiwu in a difficult situation? The population decline is not just a policy failure, but also proof that a high degree of centralization will not end well.
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