Editorial - October
Dazibao
More than a shift to the left, the latest measures to take control of the Chinese administration reflect the ongoing centralisation of power. The Communist Party has a strong hold on the whole of Chinese society, including its economic and financial aspects. So it should come as no surprise that the business community – in all strategic sectors and wherever private companies are relocated – is subject to “corrective” measures as soon as any stance or lack of cooperation shows the slightest divergence from or lack of support for the doctrine of President Xi Jinping.
« The number of billionaires in the People’s Republic of China should also not mask the stated desire for “common wealth”. Reformers tempted by emancipation are therefore marginalised, revolutionary voices which are too tepid are muted. »
In turn, the Chinese champions of the capital markets are subject to a “rectification” campaign, even if it means jeopardising their industrial survival or international competitive edge. The plans are bigger, more global. At a time when Chinese society appears to be one of the most unequal in the world, the Chinese President must urgently refocus China’s growth model on its domestic market. This market is based on the prosperity of a middle class which is exposed to the risks of a disorderly expansion of capitalism. This priority has been dented by the possible bankruptcy of the property developer Evergrande, with the collapse of its share price threatening thousands of individual investors, and, above all, the deposits paid on housing to be built, or the savings products managed by its financial subsidiary. This tension is exacerbated by the liquidity crisis that Evergrande could create by not paying back its banks. The group is the most indebted developer in the world with nearly 300 billion dollars in liabilities.
These liabilities are part of a worrying record of global public and private debt, which is expected to exceed $300,000 billion this year, i.e. nearly 350% of global GDP! The situation is far more alarming for the financial markets than the organisation of emerging countries, which are no longer inspired by our Western models.
Written by
Francis Jaisson,
Managing director, Head of Asset Management, Marketing, Trading and Research
October 22, 2021
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