M.P.O. The exhaustion of the Chinese Model

M.P.O. 

On China, the anti-corruption drive, and the latest developments.

The World was surprised by the sudden disappearance and the following reappearance of Mr Guo Guangchang the Chairman of Fosun, China’s self styled Warren Buffett.

Fosun has been on an acquisition spree abroad, and owns  quite a number of very well known companies in the West, and has substantial investments in Portugal.

The official explanation for the four days absence , and a face saving one, was ” four days out of sight while assisting a judicial investigation” (Financial Times).

Even if it is not uncommon in China for public and private officials to assist an investigation, no one is buying that version of the events.

Because Mr Guangchan was not charged of any wrongdoing, and Fosun said that the investigations had nothing to do with the Company.

This bizarre situation comes after Mr Guangchang having been advised, more than a year ago,  to get a second, and of different Country, passport.

But he said he did not need one because he had been “behaving well”…

A lot of private entrepreneurs have been “pested” by the various authorities since the Communist Party General Secretary Xi Jinping announced his anti-corruption campaign following the 18th National Congress which was held in November 2012.

And recently, in another article in this site, Mr Xu Ming, a former business ally of disgraced Chinese politician Bo Xilai has died in prison of illness, months before he was due to be released.

Probably he knew too much…

From The FT:

“The death of Xu Ming, founder of property conglomerate Dalian Shide Group, who testified against Bo’s wife Gu Kailai in 2013, is the second high-profile death in recent months of a person involved in the downfall of Bo and Gu, the biggest political scandal in China since the trial of the Gang of Four more than three decades ago.”

Then you have the military confrontation with the US, clearly provocative, the interference in Taiwan’s elections, with the “meeting of two gentlemen, the admission, (finally), that there is a serious pollution problem, the trial of lawyers including the famous and prominent Mr Pu Zhiqiang , the massive capital flight, the persecution of financial market players, blaming them because he market went down, etc, etc, etc.

The statement by Fosun saying that from now on , the Company was going to focus on China, clearly is in response to pressure by the authorities, that have been trying to control the massive capital flight.

And that have been pesting the companies that try to list abroad, because it is an obvious way to expatriate capital.

President Xi Jinping is a very astute person, and reportedly the most powerful Chinese leader since Mao Tse Tung.

Or even more powerful,some people say.

He knows that the growth model based on exports with  cheap labour and highly polluting factories is no more.

He also knows that the clean up is going to take decades.

He also knows that China , traditionally, has been a corrupt society, in part due to the very low wages.

He knows that his currency is devaluating and that he can do very little about it.

He wants to keep the power in the Communist Party.

And in consequence, and as usual in these kind of Countries (vidé Russia), he has to crackdown on anything that resembles power, and promote everything else that distracts the people’s attention from the fact that China is not growing what it used to in the past.

And that past growth was the people’s excuse to tolerate the system.

Which is under more and more scrutiny.

This is what all this is about, in my opinion.

Let’s hope it stays peaceful.

Francisco (Abouaf) de Curiel Marques Pereira