Since Xu Jiayin’s arrest was reported late last week, Chinese media has been awash with news about the Evergrande founder’s spectacular fall from grace, as well as scandalous details of his formerly extravagant lifestyle. Denounced as a “public enemy,” the property tycoon is being made a scapegoat, analysts say, in an attempt to defuse or distract from growing tensions fueled by the crisis.
On Oct. 1, not long after Mr. Xu’s arrest was reported, an article circulated in Chinese media outlets, enumerating “Xu Jiayin’s three sins:” against the country, the real estate industry, and the people.
The article, and subsequent media coverage, seemed intent on distancing Mr. Xu from the Chinese Communist Pary (CCP) alleging that he has left several trillion in debt and millions of sets of unfinished houses with the government—which critics say has failed to deal with the aftermath—and ruined the real estate industry, to the detriment of countless homebuyers.
Mr. Xu “almost triggered China’s version of the Lehman crisis,” said an article on Chinese news portal Tencent, calling him “a tumor of the times” to be “tried by history.”
An industry peer, Huang Hongsheng, founder of leading tech company Skyworth, blasted Mr. Xu in a video on Oct. 2 as an enemy of the Chinese people, saying that Mr. Xu was “using U.S. law to protect his bankruptcy and turning Chinese assets into his personal assets in the U.S.” and that he is cooperating with “hostile forces,” which is “a big mistake.”
This kind of public opinion campaign is, to a large extent, a diversion tactic as CCP authorities try to avoid public anger being directed at the regime amidst the real estate crisis. Xu Jiayin (also named Hui Ka Yan) is a suitable scapegoat for the CCP, China affairs observers suggest.
Su Zi-yun, Director of National Defense Resources and Industry Research at Taiwan’s Institute for National Defense and Security, calls the escalating public din the CCP’s “usual trick” to put all the blame on a scapegoat.
The CCP is trying to avoid social unrest. Shareholders who have lost all their money and the unhappy owners of unfinished buildings are seen as “destabilizing factors” that could threaten communist rule, Mr. Su told The Epoch Times on Oct. 5.
Real Estate Crisis Leads to Suicides, Protests
The real estate crisis has triggered the anger of millions of homeowners, and protests have broken out in many places in China.
Wang Wei (a pseudonym) from Shandong, a coastal province in eastern China, told The Epoch Times that in 2019 he spent 2.73 million yuan (about $390,000) on a 100-square-meter house from Evergrande in the province’s seaport city of Rizhao. The house was for his father. He has not yet told his father the house has been left unfinished, for fear that the elderly man will not be able to handle the blow.
After seeing the news of Mr. Xu’s arrest, Mr. Wang rushed to Rizhao. He found the construction site sealed off with iron fences, and security forces placed on 24-hour guard at the site.
At the scene was an angry crowd of people from all over the country, shouting slogans and holding banners. Some women broke into the building, intending to protest by jumping to their deaths. “The scene was chaotic,” he recounted.
Mr. Wang said that authorities fear that homeowners will “make trouble,” looting or destroying Evergrande’s failed developments.
Some homeowners went to the local bank to lodge loan claims, but were informed that the bank staff could not help them, said Mr. Wang. He said he is fortunate that he bought the home outright, so at least he does not have a loan problem. “Otherwise, I would jump to death” in despair, he said.
According to media estimates, the number of Evergrande’s unfinished buildings in China has reached 1.62 million units and involves 6 million owners.
The real estate crash stems from the CCP’s land and finance policies and the regime’s self-interest, analysts say. For decades, both central and local authorities have extracted private wealth through real estate developers by imposing high land prices and high taxes.
In return, private enterprises such as Evergrande, with the support and backing of authorities at all levels of the CCP, were able to borrow astronomical amounts for investment and expansion.
He Owed Everything to the CCP
On multiple public occasions, Mr. Xu claimed that “everything in Evergrande was given by the party.” In other words, he owed everything to the CCP.According to the book “Red Roulette,” authored by British businessman Desmond Shum, Evergrande is also backed by the family of one of China’s top leaders, Jia Qinglin. Mr. Jia was a member of the Central Committee, the CCP’s top decision-making body.
It was no coincidence that in August 2002, Evergrande set an example for other private enterprises in Guangzhou, setting up 35 party committees, 18 party head branches, and 1,023 party sub-branches within the Evergrande group, which ultimately managed over 10,000 party members. After all, Mr. Xu owed everything to the party.
However, now that the real estate industry, and Mr. Xu, have fallen, his “dirty laundry”—the seamy secrets of his formerly luxurious lifestyle—are being aired to the public.
Chinese media has been buzzing lately with stories about Mr. Xu’s Evergrande Song and Dance Troop. Founded in 2010, the performing group featured hundreds of attractive dancers. Its annual budget was enormous, with wages alone costing about 100 million yuan ($13.7 million) annually. Salacious rumors allege that the troupe’s duties went far beyond dancing; the performers were said to offer private services to Evergrande’s executives or CCP officials.
Just over two years ago, Mr. Xu was invited to Tiananmen Square Tower to celebrate the 100th anniversary of CCP’s founding. He is the only business tycoon to receive such an “honor.” However, the “white glove,” so loyal to the party, has now been turned into an “enemy,” at the CCP’s directive, Mr. Su said.
China’s government is embroiled in an internal and external quagmire, Mr. Su said. Thus, like a cornered animal, it is liable to attack anyone, if need be.
