The family company of Hong Kong’s richest man Li Ka-shing recently sold a large amount of European assets. His investments have always been an economic bellwether. At this time, the confrontation between the United States and China has intensified, Chinese stocks and the Chinese stock market have seen ups and downs, and international capital has begun to move away from China.
After 2013, Li Ka-shing withdrew from mainland China and Hong Kong in a big way, and turned his investment focus to the United Kingdom and Europe. But now, he and his billions have a new use-value for the CCP.
What some international investment experts are concerned about is the flow of capital after large sums of British and European assets are realized, and what will be Li Ka-shing’s next investment target. Mike Sun, a Chinese investment strategy expert based in the United States, is particularly concerned about this. He said: “Where does Li Ka-shing’s money go, it has the effect of bringing the wind direction.”
The CCP would prefer to see Li Ka-shing re-focus his investments on mainland China and try to exert influence through orienting public opinion. Some articles, asserting that Li Ka-shing will return to mainland China, recently began spreading in the CCP media. These articles also clearly point out that Li Ka-shing’s investment orientation is toward international capital.
International capital, mainly from the United States, has raised the CCP over the past few decades, and now the U.S. government is threatening to take that money back. For example, the risk of collective delisting of Chinese concept stocks listed in the United States is getting higher and higher. From the recent slump in Chinese concept stocks and China A shares, it can be seen that international capital is becoming more and more cautious about investing in China, and is even staying away.
The recent abnormally volatile stock market shows that international capital is selling both Hong Kong stocks and Chinese A shares, which has caused the broader market to plummet in a short period of time. “Due to rising geopolitical and macro risks, many global investors are reducing their exposure to China’s internet sector, leading to massive capital outflows,” JPMorgan said in a March 14 report.
Although Liu He, vice-premier of the Chinese Communist Party (CCP) in charge of finance, delivered a speech on stabilizing the stock market on March 16, and with the entry of bailout funds from state-owned enterprises, the stock markets in China and Hong Kong rebounded. But Mike Sun believes that against the backdrop of the confrontation between the United States and China and the withdrawal of international capital, the outlook for China’s stock market and economy is not optimistic.
Mike Sun said that the decoupling of the United States and China, led by the United States, is accelerating, and the CCP is also taking countermeasures. However, the delisting of Chinese stocks from the United States seems difficult to reverse.
The Epoch Times’s financial column “Financial Business World” stated on March 18 that the CCP’s alliance with Russia has given the United States an opportunity to deal with the CCP in the economic and financial markets. Now, the United States has already taken the first step in the operation of Chinese stocks, further weakening the strength of China’s capital market, and Hong Kong has thus become the main battlefield of this financial war. Some international capitals are avoiding Chinese stocks, not wanting to be involved in such political risks, and worrying that the CCP will encounter sanctions like Russia.
Now, more than ever, the CCP needs international capital to flow into China and Chinese concept stocks that make money for it internationally. At this time, Li Ka-shing’s value to the CCP is that he can drive international capital into the Chinese market; but up to now, Li has not expressed willingness to return to mainland China to invest.
Li Ka-shing once said, “I’m just a businessman.” Businessmen seek profits, but at present, in addition to the deterioration of the international environment, China’s internal economic prospects are equally pessimistic, and the Chinese government’s debt is high, which is not conducive to long-term investment.
According to data released by the Chinese Ministry of Finance, the CCP’s local government debt balance will be close to $5 trillion in 2021. While a report by Kaiyuan Securities shows that as of mid-2020, the CCP’s implicit local government debt alone will reach $7 trillion.
At the same time, in 2021, the local government of the CCP issued a total of more than $1 trillion in bonds, half of which will be used to repay old debts, indicating a vicious circle of “borrowing new to pay back old.” At present, the exploitation of large private enterprises in China is also related to this practice that the CCP uses to get a limited blood supplementation.
In the government work report of Chinese Premier Li Keqiang on March 5, stabilizing the economy is the focus in 2022, reflecting a strong desire for stability and huge downward pressure on the economy. The report also set an economic growth target of 5.5 percent this year, lower than the pandemic-hit 2021 and the lowest in recent decades.
The bleak economic outlook has weakened the CCP’s ruling foundation, and the CCP is eager to attract more international capital to infuse some blood. Li Ka-shing’s status in the Chinese-speaking world is similar to U.S. billionaire Warren Buffett’s.
