Evergrande and China’s controlled rosy picture hanging by a thread

China’s economy is heavily skewed towards property development and the policy derives from party factional wars to control wealth, power and influence. Evergrande is part of this vicious cycle. This resulted in property value accounting for 71.35% of household wealth (Li & Fan, 2020). Similarly, this out of proportion asset balance is reflected in the Chinese political system disproportionate logic of a balance of power. It is important to understand the complication of this economic model so one is not fooled by the rosy pictures when China’s economy is portrayed.

In China, the first step for large enterprise is obtaining planning permission for more land than required for office space. Land will be acquired with the concept to build ‘communal district’– often named’生活區’. Firstly, we have to understand China’s ‘private enterprises’ are deeply related to political factions within the Chinese Communist Party. Second, each faction needs to generate vast wealth to maintain their influence. On top of this, groups within each faction require their own paid workforce to maintain their position or to degrade their political partner’s standings in their faction. This is where land development plays a great part in maintaining Xi’s faction system. Evergrande with the backing of Wang Qishan, is a major player used to being in alignment with President Xi’s priorities. It should not surprise that therefore its fortune significantly expanded in the last decade. More importantly, recently there is more evidence of a feud between Xi and Wang coinciding with trouble at Evergrande Group and Hainan Group; all connected to Wang. Meanwhile, Bloomberg investigations find Mr. Xi’s family property portfolio is worth a billion dollars.

Property value may well have generated wealth for citizens but hidden agenda to achieve stabilising power of each CCP political factions is the intention.

Larry Ngan’s review (pg 19-24) of Vince Cable’s new book The Chinese Conundrum,  showed a deep understanding of the Chinese economic-political relationship that Anglophones may easily miss out. Also, he pointed out a number of errors the book has made. Ultimately, he further explains how such misinterpretations can falsify data which may lead to one believing that there is no opportunity to leverage against China. The misunderstandings can promote the notion that Communist China is too dominating in world affairs and thus liberal democracy should partner closely with China in the hope things will work out for everyone.

One should ask, with such a dysfunctional governing system, why should we accept the Chinese leadership is the party for us to work with in hope of prosperity and stability? One does not have to look too far to hear the voices of Chinese student activists from TianAnMen, and the resounding demand from the people of Hong Kong who filled the streets that they have told you it is not the solution.  

* Nicholas Chan is a member of Sevenoaks, Dartford and Gravesend Liberal Democrats who migrated from Hong Kong under the British Nationality (Hong Kong) Selection Scheme the Liberal Democrats campaigned for after 1989. He writes on human rights issue in Hong Kong and China while preparing for solicitor qualification.

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