Analysis: The CCP pushes the regulatory storm to exert maximum pressure in secret | Xi Jinping | Sino-US decoupling | Double reduction policy

[Epoch Times News on August 1, 2021](Interviews by Epoch Times reporter Long Tengyun and Noah) From the censorship of Internet companies to the purge of private education, the CCP launchedRegulatory stormIs causing ripples around the world. In the context of increasingly fierce Sino-US confrontation, is the Xi regime’s self-harming reforms a faint move from internal and external difficulties, or a secret battle with other intentions? Different parties have different opinions.Some analysts believe that the CCP is acting secretlyExtreme pressure, Forcing the West to accept the rules and ideology of the Chinese Communist Party.

What the American media knows: The CCP teaches a scare lesson to Wall Street

“Wall Street Journal” published an editorial article on July 27 (Link) Said, “The CCP has taught Wall Street a lesson. The Communist Party’s control is always higher than the interests of investors.” The Wall Street Journal pointed out in the article that it severely restricts private education and training.Double reduction policy“To the purge of Internet companies like Didi and Ant, which have mastered the Chinese People’s Big Data, the CCP has its own reasons for implementing supervision, but the essence is “political control by the Communist Party.”

“Hua Ri” believes that the Xi authorities do not care whether foreign investors will be damaged by Beijing’s regulatory arbitrariness, and that such political repression is becoming the norm for foreign investors.

Another commentary on “Hua Ri” on July 29, “How China (The Communist Party) Played With American Investors” (Link) More directly, saying that the capitalism characteristic of the Chinese Communist Party has taught Wall Street a frightening lesson.

The article analyzes that the CCP uses foreign investors to play in the hands of stocks. It induces foreign countries to provide development funds for the most risky parts of the Chinese economy, but it does not let go of control of Chinese companies, especially because of foreign investment. The transparency brought has exposed the truth about the embarrassment of the Chinese economy.

The article concludes by pointing out that foreign investors are actually placing a bet on the limits of Xi’s perception of the role of foreign capital in the political goals of the CCP.

Analyze: learn or go secretlyExtreme pressure Forcing the international to accept the rules of the Chinese Communist Party

The latest view of “Hua Ri” that “the party’s control is above everything else” seems to have become the mainstream understanding of the CCP’s new regulation in the international community. The CCP did teach Wall Street a costly lesson.

The Nasdaq Golden Dragon China Index, which tracks 98 technology stocks, fell 20% in three days and lost US$500 billion in market value. The Heiyan Group (BlackRock Group), which has good relations with the Chinese Communist Party’s high-level officials, may have invested billions of dollars in private education Chinese companies such as New Oriental in the good future.

Hong Kong and China’s stock markets have also sufferedRegulatory stormHit hard. The latest performance is “Double reduction policy“Induced the decline of mainland A shares and Hong Kong stocks for several days. Among them, A shares evaporated 4 trillion yuan in two days, while the Hong Kong stock market value of Tencent, Meituan, Ali and Kuaishou lost a total of 2.21 trillion Hong Kong dollars in three days.

On the evening of July 28, Fang Xinghai, vice chairman of the China Securities Regulatory Commission, convened an emergency telephone conference of international banks to explain the recent rectification policies for the private education industry. Bloomberg reported that this was an attempt by the Chinese Communist Party to appease the market.

Why does the CCP do this? Epoch Times commentator Tang Ao believes that this may be the CCP’s explicit supervision of internal affairs and secretly exerting extreme pressure.

“The consequences of the launch of the suppression policy, including the sharp drop in the stock prices of Chinese companies, the panic of foreign investors, and the risk-averse reaction of foreign regulators, should be an obvious result for the Xi authorities, not a problem.” Tang Ao analyzed and said. , “So the real question is, why did Xi do this?”

He believes that “the party controls everything” has always been the ruling philosophy of the CCP, and it has never changed. Therefore, the purpose of the recent actions of the Xi authorities may not be limited to this.

“The authorities implementing these self-harming reforms will of course have specific policy goals, such as controlling big data or educating the people, brainwashing, etc., and there may also be internal factors that show a strong image to consolidate power.” Tang Ao analyzed and said. “But at the same time, it may also conceal an external strategy of extreme pressure, because these internal affairs will inevitably have an impact on foreign stakeholders. The Xi authorities may use this to force the international community, especially the United States, to accept the rules of the game set by the CCP.”

The so-called “extreme pressure” is a term used by the CCP to criticize the United States in the 2019 US-China trade war.

In the trade war, the US government used methods such as imposing tariffs to demand that the CCP stop unfair trade and steal technology, and follow international rules based on universal values. The CCP rejected the U.S. request, calling it a unilateral order made by the U.S., and denounced the U.S. action as “extreme pressure.”

Tang Ao said that, in fact, the CCP is a veteran of extreme pressure. It uses various methods such as internal affairs and diplomacy to force the other party to submit to the CCP’s political goals.

“The international community, especially Wall Street elites, have been placing bets on the CCP’s cognitive limits. The CCP is not the case. The Xi authorities may, in turn, try to force the international community to continuously break through their cognitive limits and accept the rules set by the CCP.”

One of the manifestations of this secret war is the confrontation between the CCP and the West in “data localization” in recent years.

The Chinese Communist Party passed a controversial Cybersecurity Law on November 7, 2016, which aroused concerns among foreign companies and human rights groups. (China Photos/Getty Images)

In November 2016, the CCP passed the Cyber ​​Security Law, which became effective in 2017. In 2017, the CCP passed and implemented the National Intelligence Law.

In June 2021, the CCP introduced the “Data Security Law” that will come into effect on September 1. This bill goes further than the previous two, and is the first Chinese Communist law to clarify long-arm jurisdiction.

One common point of these laws is that all companies in China, including foreign companies, must accept the CCP’s so-called national security and data security rules, which are simply “data localization.”

In mainland China, where there is no independent rule of law, “data localization” means handing over or opening up the data to the CCP.

On the eve of the CCP’s introduction of the “Cyber ​​Security Law” in 2016, 46 international corporate groups in China jointly protested that the “Cyber ​​Security Law” would infringe on the company’s business secrets and the privacy of employees and customers. Western governments have repeatedly protested to the CCP.Xi JinpingThe authorities did not give in.

So far, there has been no large-scale withdrawal of Western companies from the Chinese market due to “data localization”.

In fact, after Tesla announced on May 25 this year that it will establish a data center in China to localize data storage, BMW, Daimler (the parent company of Mercedes-Benz) and Ford are preparing or have established data centers in China to achieve data localization. change.

Apple also handed over China’s mainland data to Guizhou in the cloud, which is officially operated by the CCP. International Internet giants such as Microsoft and Amazon have established data centers in China a few years ago to comply with the Chinese Communist Party’s regulations.

Tang Ao analyzed that in the past 5 yearsXi JinpingThe authorities’ trial on “data localization” may give it a taste of the sweetness, “that is, using domestic legislation and policies to impose extreme pressure on domestic and foreign companies, constantly forcing foreign companies, foreign capital markets, and even foreign governments to break through the lower limit, and finally accept it. The rules and standards formulated by the CCP.”

The Follow-up of the CCP’s Supervision Storm: Zero Sum Game

Whether the latest reassurance of foreign capital by the Chinese Communist Party Securities Regulatory Commission will be effective is still inconclusive. But the SEC has responded.

The CCP halted Ant’s IPO last year, triggering a panic in the outside world about its arbitrary supervision. According to people familiar with the matter, the CCP ordered the Ant Group to surrender control of the data. (STR/AFP via Getty Images)

On July 30, SEC Chairman Gary Gensler (Gary Gensler) announced that Chinese companies must provide additional risk disclosure information for IPOs (initial public offerings), including the risk of the Chinese government interfering in their business. Gensler did not respond positively to the news about the suspension of Chinese companies’ IPOs. Earlier on the same day, Reuters had cited sources to disclose that the SEC had suspended Chinese companies’ IPO applications.

At the same time, senior U.S. Senators Marc Rubio and John Kennedy have been urging the SEC to strengthen its review of China’s stocks.

Tang Ao believes that despite the actions of the United States, the regulatory storm by the Xi authorities may not be the end of the game.

On July 30, Xi Jinping called for “improving the regulatory system for overseas listing of enterprises” and “improving supporting policies for childbirth, nurturing, education, etc.” at the Politburo meeting to deploy economic work in the second half of the year. Overseas listing supervision and education reform are the causes of the collapse of China’s concept stocks and the latest counterattack by the US SEC.

Tang Ao said that the relevant policy statement at the top economic meeting of the Communist Party of China should be Xi’s setting the tone for the recent regulatory storm. “The Xi authorities may think it is time to be tough. Especially after the epidemic, China’s official economic data ostensibly leads the world, while the U.S. economy is stuck in labor and supply chain bottlenecks.”

He compared last year’s and this year’s Politburo Economic Work Conference, “Last year’s draft of the meeting mentioned consumption three times, but did not mention supervision; this year’s draft did not mention consumption, but instead mentioned the “Belt and Road” that was muted last year. ; And raise the’overseas listing’ to the height of’risk in key areas’.” He believes that this reflects that Xi may now set strengthening supervision and external expansion as a higher priority than expanding consumption (domestic demand).

Will the CCP strictly “enforce” and implement these policies, and will it be possible to introduce more regulatory policies in the future?

He reasoned that this may depend on the West, mainly the response of the US government. “If it contains the hidden purpose of extreme pressure, and extreme pressure is actually a zero-sum game; then whoever fails to hold on and is broken through the limit will lose the game.” The zero-sum game is also called zero-sum game. Sum game is a concept of game theory. In short, one party gains and the other party must lose.

Tang Ao is cautiously optimistic about the United States. “This is not only because the Biden administration has not relaxed its vigilance against the CCP, and has responded more effectively; at the same time, it is also grateful for the political legacy left by the previous government, which is the various sanctions on the CCP and its officials and economic entities.”

He further analyzed that since democratic countries cannot play with laws and regulations like the CCP, they may have limited means to deal with extreme pressure.

“But the best defense is offense,” he believes, “under the existing legal framework, maintaining or strengthening the censorship and sanctions against the CCP may be the key to winning this game.”

“If the West takes tough countermeasures, such as strengthening tariff sanctions, strengthening audits of China’s concept stocks, implementing reciprocal policies, or sanctioning companies that assist the CCP in human rights violations, then the CCP’s maximum pressure will be undefeated. Those regulatory measures It may not be over.” He added, “Because China’s economy cannot afford to hurt, it is the Chinese Communist regime that is really weak and in urgent need of foreign blood transfusions. The regulatory storm thrown by the Chinese Communist Party and the extreme pressure on the economic battlefield is actually hurting. The enemy’s eight hundred self-harmed one thousand.”

The Xi authorities may pose a problem for the United States: Should Chinese companies that have been supervised be released?

On the contrary, the result may not be optimistic.

Tang Ao put forward a prediction, “A real problem may lie ahead: If Ant or Didi is released by the CCP after meeting the regulatory requirements of Xi’s data and national security, then should the gate of the US capital market still be open to them? open?”

He believes that the CCP’s regulatory requirements will most likely conflict with the transparency rules of the U.S. market, the interests of investors, and even U.S. national security.

“If Western governments react indifferently, then the business community is more likely to be succumbed or tamed, whether it is Chinese or foreign companies.” He analyzed, “Like precedents such as data localization, you can’t expect companies to fight against power. Capital. As long as it is profitable, extreme pressure may work, allowing the West to gradually accept the CCP’s rules, including the party’s ideology and values ​​such as party rule overriding everything and arbitrary policies and decrees.”

Tang Ao also cited a dangerous trend from the Xi authorities, “From last year’s ban on listing of ants to the purge of Didi this year, and recently, the entire private education industry was suddenly halted; in the past few years, laws such as national security and data security were only enforced to local data. At the level of transformation, Tencent, Alibaba, and Didi are rumored to have to hand over the data directly; it can be seen that the actions of the Xi authorities have become more and more radical.”

“If you read it from the perspective of extreme pressure, this trend may be that the authorities have increased the intensity of probing and began to use internal affairs to force the United States to react to the rules set by the Chinese Communist Party.”

In view of this, he believes that the possibility of economic decoupling between China and the United States is not too great. “Using internal affairs to secretly impose extreme pressure is a manifestation of the Xi administration’s sternness.” “As long as the U.S. is tough, the CCP will most likely back down.”

Editor in charge: Lin Yan#

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