The new crown epidemic has hit China’s economy hard and the private economy is in a depression. In addition, the recent price hike of commodities in China continues to rise, and the price hike of raw materials has triggered a wave of SME closures. However, as a private enterprise under the totalitarian system of the Chinese Communist Party, “it is hard to live, but also hard to die”.
Recently, a person with knowledge of the situation released a video revealing that 40 bosses in China were jailed last year for “false bankruptcy”. He said that it is relatively easy to register a business now, but it is particularly complicated to cancel it.
The source explained that if a business does not want to do it anymore and wants to cancel it, you do not know how complicated it is. You go to the industry and commerce (department) to apply, industry and commerce let you first go to the tax authorities to clear the books. You arrived at the tax authorities silly, the tax authorities asked questions you can not answer.
For example, he said, “If the company has been operating for more than 20 years and has 1 million pairs of shoes in stock, and the books show that you only sold 700,000 pairs, where did the 300,000 pairs of shoes go? You can’t say, you have to pay taxes on 300,000 pairs of shoes. Then do not pay it, not only have taxes and penalties late fees, or not give you video.”
In addition, “you buy that house, you bought it for $1 million at the time, now it’s assessed at $20 million, you have to cancel the company, you have to pay income tax on the difference of $19 million,” he said.
The source also mentioned the Chinese Communist Party’s business “guilt-by-association system”: “If you can’t write it off, can you suspend it? If you get revoked, all your shareholders will be blacklisted, and all kinds of negative news will come. For example, you a 5 million credit card, the company was suspended, the bank immediately to you down to 5,000. not only blacklisted, and even will be involved (sentenced), false bankruptcy crime, last year there are 40 bosses because of false bankruptcy crime in.”
Back in 2019, just as the trade war between China and the United States was escalating, a mysterious recording was circulated on the Internet in which a suspected high-level official predicted that the authorities might resume the planned economic system in the future, when all individual private assets would all be screwed up.
He said, I told many friends three years ago, you have to be ready to live a hard life, because to go to the planned economy, really towards the planned economy, individual businesses, private assets are all to be screwed up, the planned economy can not allow you to mess with things outside the plan, the Communist Party has taken all the financial way, you want to earn money is impossible.
The Chinese Communist Party pushes the “state into the people’s retreat” policy private enterprises face desperate times
Since the outbreak of the trade war between China and the United States, China’s economy has been on a downward spiral. In addition, the Chinese Communist Party authorities have been using wolf diplomacy externally to make things difficult for their trading partners and internally to suppress private enterprises, making China’s business environment increasingly worse.
According to Wind data, there are 164 A-share listed companies with a change of actual controller in 2019. Among these 164 listed companies, a total of 41 listed companies have changed their actual controllers from individuals to “state-owned enterprises” including the Communist Party’s State-owned Assets Supervision and Administration Commission, local State-owned Assets Supervision and Administration Commission and local governments.
The number of listed companies controlled by the “State-owned capital system” of the CPC continues to increase. This has aroused the market’s concern about the performance of enterprises after the state-owned system has taken over private enterprises and the “state into the people”.
In addition, according to official data, as of the end of April, China’s total number of small and micro enterprises exceeded 44 million, more than 95 million individual business households, the recent rise in the price of raw materials in China, small and micro enterprises, individual business households face difficulties in production and operation.
According to land media reports, the current round of China’s commodity price hikes have spread downstream, home appliances, construction machinery and other commodities generally increased prices, enterprises are caught in the “dilemma” of receiving orders.
Recently, “China Economic Weekly” interviewed a number of small and medium-sized electronics factories in Guangdong Province, under the dual pressure of rising production costs and insufficient profits on orders, these factories are facing a new round of reshuffling.
As a result of the industry profits downward, rising costs, foreign trade environment deterioration and the epidemic multiple impact, some companies to make the decision to stop operations. According to a former company employees, get the order profit is too low, and even “the more orders received the more loss” phenomenon, and finally had no choice but to stop work.