China’s economy is not good
So the Chinese Communist Party is fixing it
By scamming investors
Welcome to China Uncensored, I’m Chris Chappell.
Remember all those headlines about how China was cracking down on its tech sector
And then all those headlines that, after two years, the crackdown was finally over?
Well it seems that both are now true. Simultaneously. I’m going to call this paradox
Xi’s cat. Only instead of a cat… it’s an entire
industry. And there’s no way that cat is getting out of the box alive.
Because the Chinese Communist Party still wants to control big tech. It’s just pulling different
strings behind the scenes to do it. China’s new way of controlling its
biggest companies is through something called “golden shares.”
Golden shares are a small government stake in each company, usually around 1%. These
shares “tend to give the government board seats, voting power and sway over business decisions.”
And by sway, I mean it’s kind of hard to disagree with someone in your boardroom when they have the
power to make you disappear. Forget a stake in the company, they have a stake in your life.
So instead of regulators slapping companies with billions of dollars in fines
resulting in billions more being wiped off these companies’ market value,
the Chinese regime traded the visibility of crackdowns for an appearance of stability.
That’s because China’s economy is not doing well right now. And the Chinese
Communist Party needs these tech companies to stabilize so that more suckers—sorry,
investors—put their money into these companies, and the Chinese economy.
And guess, what? It’s working!
Because these investors have shorter memories than actual goldfish.
But the Chinese Communist Party also isn’t interested in giving up control.
So they’re using golden shares as a way to manage Chinese companies
The idea is that “With a [government] minder on the board, companies won’t have much room to
make any mistakes that could anger Beijing.” Yeah, no kidding. Not sure if it’ll help or
hurt productivity when your supervisor is carrying a black bag and zip ties.
To any entrepreneur, the idea of having a government minder might sound terrible. But
in China, where regulators punish companies for things they did years ago, some are
actually calling this a security blanket. “It might be to the advantage of companies like
Alibaba and like Tencent that they have somebody in the room who can stop them and say ‘uh,
lets not go there.’” Only in China.
Now this may seem like a new way of doing business,
but the government actually rolled out the idea *10 years* ago.
“Chinese leader Xi Jinping included the idea of small government holdings in private companies
in a reform agenda issued in 2013 with the express purpose of reducing the state’s role
in the economy. The idea back then for golden shares . . . was to have the state give up its
majority ownership in media and other firms to private investors without fully losing control”.
Yes, because if there’s one thing communists can’t stand, it’s not having control.
Of course, there’s another advantage to golden shares: by giving up their majority ownership
to private investors but keeping these golden shares, the Chinese Communist Party can keep
their control over these companies, without having to use government money to support them.
So private suckers—sorry, investors—can pay for the companies while the Communist
Party still maintains control. It’s win-win! For the Party.
The reason you may have seen headlines about golden shares recently is because back in January,
the government acquired golden shares in two Alibaba units.
At the same time, the government was reportedly discussing a golden shares
arrangement with Tencent, which is a giant tech company that owns a lot of things,
but most important, the everything-all-in-one app: WeChat.“Think of it as a Facebook, meets Whatsapp,
meets Venmo, and Candy Crush, and Tinder and Amazon, and there’s still other functions,
like booking a doctor’s appointment, or finding out how densely crowded a location is.”
Now WeChat is already heavily censored, but when you’re the Chinese Communist Party,
there’s no such thing as too much control.
After the break, I’ll tell you about China’s other disturbing golden shares arrangements.
Welcome back. So the Chinese regime has
been controlling companies by taking a small but very influential stake in companies—usually around
1%—which are called “golden shares.” Or as they’re officially called, “special management shares”.
Now I know what you’re thinking—doesn’t practically every Chinese company already
have a Communist Party branch in it? Yes, that’s true. But like I’ve said already,
if you’re the Chinese Communist Party, you can never have enough control.
The CCP looks at control the way Italian chefs look at garlic.
They want it in everything. Even ice cream. Back in 2021, the government took golden shares
in ByteDance, which is the owner of Tiktok. and a year before that, it did the same with
a local subsidiary of Weibo, China’s version of Twitter.
So to all you Elon Musk haters out there, just know there could be worse owners of a
social media company. Much worse.At least liking Elon’s dumb jokes isn’t mandatory.
There are two things that the Communist Party can’t stand about China’s big tech
giants. Their power and their wealth. The reason free enterprise is such a
threat to communism is because it offers competition to the government, and if there’s
one thing communists hate, it’s competition. And yes, narrowing it down to just *one* thing
they hate was difficult, because if there’s one thing communists love… it’s hating things.
After Xi Jinping came to power, he changed the country’s constitution to make it clear who was
in charge. The Chinese Communist Party was the one and only political party that could rule China.
You know. A democracy.
And in terms of which was more powerful, the Communist Party or the government,
Xi summed it up like this: “Government, military,
society and academics are like the north, the south, the east and the west. But at the
center is the party. The party leads them all.” That’s the most aggressive compass I’ve ever seen.
So when China’s tech companies came along and started producing products that are essentially
running everybody’s life, there was no way the Party was going to sit back and watch.
First it started with the internet. China rolled out the Great Firewall
to police the internet in 2000. Then, as big data became bigger and bigger,
China made laws that forced companies to hand over user data to the authorities.
When tech companies got too big and powerful, China passed anti-trust laws to reel them in.
Like I said, China loooooves its garlic.
It also passed new laws on data security and privacy,
which might sound nice at first—look, China’s standing up for the little guys for once!
No. Unfortunately this is about making sure that foreign governments or companies don’t
have too much Chinese user data. Because the only one that’s allowed to weaponize Chinese
user data is the Chinese Communist Party. Data privacy was the reason Didi, one of
China's biggest ride-hailing apps, was pulled from app stores after a $4.4 billion IPO in the US.
Officially it was because Didi “illegally collected and used users’ personal information.”
The CCP using that as their excuse would be like Captain Crunch accusing another
cereal of scratching the roof of people’s mouths. That’s like their whole thing!
But as one state-run Global Times editorial put it “The state will
never allow tech giants to collect more detailed personal information
in their mega-databases than the state has of the Chinese people.”
So yeah, China’s data laws aren’t about protecting Chinese consumers. They’re
about making sure companies don’t become more powerful than the state.
I also mentioned earlier how the Communist Party can’t stand tech companies getting so rich.
It’s not just about big companies like Tencent, Alibaba or ByteDance.
The tech sector is responsible for making a lot of other sectors rich as well.
This has resulted in a giant wealth gap between the richest and the poorest—
which is not the kind of “moderately prosperous society” that Xi Jinping wants China to have.
“What we now face is a contradiction between imbalanced and inadequate development and
people’s ever growing needs for a better life.” But instead of going the traditional Communist
route of stealing from the rich, he’s twisting their arms instead.
China’s tech giants have been giving away money like crazy—but not because they believe in good
corporate citizenship. No, they were trying to avoid the wrath of Beijing.
Companies are a lot more charitable when their supervisors
are carrying a black bag and zip ties. And I’m not even joking about this.
The Communist Party also went after tech guru and billionaire
Jack Ma. Ma founded fintech company Ant Group and ecommerce giant Alibaba,
and was one of the country’s most high-profile and richest entrepreneurs.
After he criticized Chinese regulators, he disappeared for a few months,
Do you know how insane that is? That’d be like if the US government made Mark Zuckerberg disappear.
The only reason Mark Zuckerberg disappears is because he needs to get his battery replaced.
Ma’s disappearance resulted in a planned IPO for Ant Group blowing up at the last minute.
One that was supposed the biggest in the world. And now Ant Group has been re-organized and Jack
Ma has stepped down from leadership. But like I said earlier, the Chinese
regime desperately needs the tech sector to fuel the economy, which is a big reason
analysts think the crackdowns are over. But that doesn’t mean doing business in
China is going to get any easier. Because once the Communist Party gets
more power, it usually doesn’t give it up. And that means golden handcuffs—I mean golden
shares. So China’s tech crackdown has ended, but at the same time, it’s just getting started.
It’s quite the paradox. And now, as a thank you to all my wonderful
fans who support China Uncensored through the crowdfunding website Patreon or the exclusive
social media platform Locals, I’ll answer one of their questions. Today’s question comes from:
Bruce Johnson on Patreon, who asks: Hey Chris, I just watched a video on another
channel pushing a narrative that China's inevitable collapse will cause the US to
go down with it, due to how closely tied we are. What is your opinion on this?
Well Bruce, my opinion on this is that the Chinese Communist Party absolutely loves this narrative.
They want the world to believe that everything would end if the Communist Party collapsed,
which is why we should all help them stay in power, right?
That’s exactly the kind of thinking that leads to the terrible China
policy America had for years. The one I talked about in this recent video.
First of all, I want to say that the CCP’s collapse is not the same as China’s collapse.
Someday the CCP will fall. But China and the Chinese people will still be there.
You know, the same Chinese people who are calling for the CCP to step down.
As for bringing the US down, that’s why I’ve been saying we need to decouple
from the Chinese Communist Party now. Because the countries that
are completely dependent on the CCP will be screwed when it does collapse.
Plus, there’s the whole benefit of no longer financially supporting all of the CCP’s genocide.
And finally, guess what? *Supporting* the CCP all these years has been bringing the
US down. It’s killed American jobs, hollowed out American manufacturing,
and is even killing American people through things like the fentanyl crisis.
The Chinese Communist Party does all this because it sees the US as a threat and an enemy. And
America needs to stop helping the CCP stay in power by pouring more and more money into it.
If I keep screaming this into the void, someday the void will listen, right?
Thanks for your question and your support, Bruce.
And thank you for watching. Once again, if you want to join the China Uncensored 50 Cent Army,
head over to patreon.com/chinauncensored. All it takes is a dollar per episode to
keep China Uncensored going. If you want to support the show,
but can’t afford a dollar an episode, you can also set a monthly limit.
Once again I’m Chris Chappell. See you next time.