China Preparing to Expropriate Foreign-Held Tech Shares - and - Is Western Europe Really Turning to the Right?

 

In this mailing: Gordon G. Chang: China Preparing to Expropriate Foreign-Held Tech Shares Daniel Pipes: Is Western Europe Really Turning to the Right? China Preparing to Expropriate Foreign-Held Tech Shares by Gordon G. Chang  •  July 19, 2021 at 5:00 am       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." The answer is that Beijing is on the road to expropriating the shares held by foreigners in China's tech companies. The complicated financial structures these companies have used to attract foreign investment are questionable under Chinese law and give Xi Jinping, the Chinese ruler, an excuse now to begin a confiscation campaign. We begin with Beijing's stunning regulatory attacks on DiDi Global. The company's shares started trading on June 30 on the Big Board, where it raised $4.4 billion in an initial public offering. Two days later, China's Cyberspace Administration halted downloads of DiDi Global's popular ride-hailing app, DiDi Chuxing. Continue Reading Article Is Western Europe Really Turning to the Right? by Daniel Pipes  •  July 19, 2021 at 4:00 am       A large-scale and widely-noted survey, "The Conversion of Europeans to the Values of the Right," suggests that Western Europe is trending conservative. But a close look at the survey data finds that not to be the case. In other words, the "values of the Right" mentioned in the Fondapol survey represent but an attenuated version of what a true conservative understands by the phrase. The survey focuses on economics, specifically on the extent and role of the state. It barely involves traditional values, education, individual responsibility, national independence, free markets, a single law for all, the nuclear family, criminal punishment, and freedom of speech and religion; much less do they include such culture-war topics as racism, affirmative action, income inequality, climate change, cancel culture, abortion, homosexual marriage, or trans-sexuality. It is only among the Western European political parties deemed "far-right" that one finds even a semblance of true conservatism, such as those above. These parties, however, are delegitimized and insulted, limiting their appeal while simultaneously attracting fringe elements to them. From this larger perspective, Western Europeans are not in the least turning to the "values of the right" but are ever-more distant from them. Fondapol has it exactly wrong: except in economics, the values of the Left are preponderant and growing, exactly as it seems to us on the outside. (Image source: iStock) A large-scale and widely-noted survey, "The Conversion of Europeans to the Values of the Right," suggests that Western Europe is trending conservative. But a close look at the survey data finds that not to be the case. La Fondation pour l'innovation politique (or the Fondapol Foundation), which calls itself a "liberal, progressive, and European think tank," surveyed 7,603 respondents in Great Britain, France, Germany and Italy between January 20 and February 10, 2021. In striking contrast to historic trends, it found the young to be more conservative than the old, suggesting a move toward conservativism. Continue Reading Article