News Analysis
A tidal wave of migrations has surged out of China over the last month. Shaken so violently by the recent execution of fellow tycoon, Zeng Chengjie, president of the Sanguan Real Estate Development Group in Hunan Province on July 12, followed by the arrest of a business investor, successful businessmen are taking their capital and leaving China.
Zeng was given the death penalty on “suspicion of illegal financing” by the Supreme Court. Wang Shaoguang, an attorney from the Sheng Ting law firm in Beijing, said that Zeng neither squandered financed money nor transferred assets. Actually, investors trusted Zeng and demanded his acquittal.
“Sentencing Zeng Chengjie to death was actually a plot conducted by the local government out of greed—they framed Zeng,” Wang announced in an urgent statement on the Internet on July 13.
Wang told Voice of America: “Zeng Chengjie’s property was seized by the government, then they convicted him of bankruptcy and gave him the death penalty. If we do not vindicate Zeng Chengjie today, other private entrepreneurs will soon face the same fate as Zeng.”
Investor Arrested
While the mainland business world was still in astonishment over the execution, Dinghui Investment founder Wang Gongquan was arrested for “disturbing the peace” by Beijing police on Sept. 13, causing further outrage.
In a post on the Weibo blog account of “Caixin” magazine on Oct. 13, Wang was lauded as more than just a successful businessman, saying Wang valued his role as a citizen highly. The article describes Wang’s efforts in assisting petitioners to visit Beijing “black jails,” participating in human rights activities, such as speaking out against forced demolitions and the Qian Yungui incident, the protestor who got crushed under a truck at a government land takeover.
In order to urge the release of Wang, scholar Chen Ziming, professor Cui Weiping, writer Xuecun, and entrepreneur Liu Suli, among others, issued a joint statement saying, “No matter what criminal charges that the authorities attempt to impose on Wang Gongquan, the world’s people all know it is political persecution. Ruling the nation like this, the country will not be stable. When exerting rule by force, one will certainly be judged by history.”
The Tidal Wave Trigger
Professor Chen Wei from the Department of Political Science at the People’s University of China wrote on Weibo: “When an authoritarian regime is going to collapse, while trying to save itself, it always arrests people. But when a person is seized, ten others will stand up. In the end, catching more and more people will cause its defense system to be worn out.
“Transformation is always like this, it’s very natural. When imprisonment becomes glorious, the regime crisis will become an authentic crisis. Then, those who are released from jail will become the political candidates of the future.”
But apparently those who can get out with their money aren’t waiting around to see it.
Money Disappearing
A report by Radio Free Asia said that these recent cases have destroyed any hope that mainland entrepreneurs had in the party. If the death of Zeng sounded the alarm, then the arrest of Wang marks the beginning of the mass migration of Chinese entrepreneurs.
According to a report by the Chinese language version of the Financial Times (FT), mainland China is currently undergoing the third round of mass immigration. 27 percent of businesses owners with over 100 million Yuan ($16.4 million USD) in assets have migrated overseas, 47 percent are considering making the move. 60 percent of those with 10 million Yuan ($1.64 million USD) in assets have already left.
So what will the consequence of this mass migration and capital loss be? Chinese economic writer Niu Dao wrote an article on his blog titled, “The Capital Flight is More Terrifying Than the 383” on Oct. 30 stating that the “383 strategic plans” the CCP is discussing to solve the housing bubble problem are now insignificant. This major capital leak from China will deliver a critical blow to the housing bubble.
Niu believes the CCP needs to decide whether to shield itself by protecting the exchange rate, or to protect the Chinese entrepreneurs who invested in the real estate. To Niu it’s very clear that the regime will protect itself. If the regime chooses to save the house prices by printing more money, doing so will add to the huge housing bubble and could lead to a massive decline in the exchange rate between the yuan and the U.S. dollar, which would be very dangerous.
Read the original article in Chinese.
