China’s Fictitious Economy and Real Economy Are Seriously Out of Balance

China’s Fictitious Economy and Real Economy Are Seriously Out of Balance
A security guard wears a mask in front of the front gate of Shanghai Stock Exchange Building in Shanghai on Feb. 3, 2020. Yifan Ding/Getty Images
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Commentary
China’s economy has gone beyond a reasonable balance between a real economy and a fictitious economy. As Sinopec Chairman Fu Chengyu once said, China’s finance is not going toward a fictitious economy but becoming one. Consequently, it has greatly hindered the sustainable long-term development of China’s economy.

Selling 2 Real Estates to Secure a Public Shell Company

To discuss how China’s economy has gone from real to fictitious, let us first look at an example. In 2016, Beijing-listed company ST Ningtong B, which manufactures communication equipment, suffered losses for two consecutive years and faced the risk of delisting. The company reversed its losses by selling two properties it had owned in the Beijing school district at massive profits. Suddenly, comments such as “go for real estate, forget about starting a business, forget about getting listed, forget about the industry” went viral in the market.
Wang He
Wang He
Author
Wang He has master’s degrees in law and history, and has studied the international communist movement. He was a university lecturer and an executive of a large private firm in China. Wang now lives in North America and has published commentaries on China’s current affairs and politics since 2017.
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