AMAC Exclusive – By Ben Solis
Just a few weeks after Chinese President Xi Jinping secured an unprecedented third term as the leader of the world’s largest communist country, he projected supreme confidence at the G20 conference in Indonesia. But as Xi insists that China is still a nation on the rise with a promising economic outlook, many of his top lieutenants are quietly moving their cash out of the country, signaling that there may be big trouble ahead.
To understand how the money trail reveals a great deal about the true state of affairs inside communist nations, it is helpful to look at the actions of Soviet elites or nomenklatura during the Cold War. John C. Whitehead, who served as Deputy Secretary of State for President Ronald Reagan, once remarked that the best way to tell what the nomenklatura really thought about the state of the regime was to look at the location of their wealth. If the Soviet banks transferred large sums of money to Western banks, it was a sign that the Soviet elite was, at a minimum, uncertain.
Until the mid-1980s, the U.S. Treasury was unable to block or sanction these wealth transfers. But by monitoring them, it provided a window into the true state of the Soviet economy and internal turbulence of the Politburo.
This same “follow the money” method today reveals that all may not be as well as Xi Jinping wants the rest of the world to believe inside China.
Following the pattern of the Soviet nomenklatura, Chinese elites have of late created joint ventures with foreign firms primarily to access Western financial institutions to park their cash – most of it acquired through bribery and embezzlement.
Notably, Xi Jinping’s consolidation of power last month corresponded with the largest transfer of wealth out of China since Xi first rose to power. Financial records indicate that a hefty $45.2 billion left China almost immediately after Xi was confirmed for his third term. Since June of this year, when Xi escalated his crackdown on dissent and began setting the stage for expanding his power, more than $101 billion in money assets has left China and been relocated to foreign banks.
This amount is comparable to the record outflows in 2016 amid widespread fears of a market crash. At that time, over-taxation and over-regulation turned out to be a death sentence for thousands of Chinese companies. Only firms with Western partnerships survived, backed by large budgets and security in Western markets.
It’s now clear that top officials within the Chinese Communist Party are convinced that Xi Jinping’s crackdown on capitalistic elements in China’s economy and his rapidly growing cult of personality portend an even more disastrous downturn.
When Xi first came to power, China was in the midst of implementing a number of reforms, including opening up to more cooperation with U.S. businesses. But for Xi and other hardline CCP leaders, the end goal of restoring China’s economy was always to strengthen the regime and implement an even more stringent version of state control.
Now, it appears that Xi may have developed an inflated sense of China’s economic strengths, even as he has begun cracking down on private businesses. During the COVID-19 pandemic, the Chinese government instituted more price controls, disrupting production in many industries. The CCP also took a more direct role in many companies and began installing party representatives on executive boards and sometimes in management roles.
Predictably, the Chinese economy has recovered far more slowly than the rest of the world after the pandemic, a fact that is evident even if the CCP inflates China’s economic numbers. Despite three rounds of stimulus money, Chinese housing prices continued to fall last month. New home prices fell 0.6 per cent in September from the previous month, extending the slide to a whole year. Developers are now in danger of not being able to finish the more than two million homes they have presold, threatening a broader collapse of the Chinese economy similar to what the United States experienced in 2008.
With a crashing real estate sector, employment prospects have also looked bleak, reaching their weakest level on record in the third quarter of the year, as the People’s Bank of China’s Employment Sentiment Index slipped to 35.4. That figure represents the lowest reading since the index began in 2010. China’s currency has also hit its weakest ever offshore trading level against the U.S. Dollar.
Chinese Communist Party dissidents who were interviewed for this column but who wish to remain unnamed are convinced that Xi Jinping wrongly estimates that “the East is rising and the West is declining.” As they explain, the fundamental problem is with China’s communist system itself, and the inherent flaws in the Marxist vision of a state-run economy.
When asked whether America’s founding principles, including the principle that government derives its just powers from the consent of the governed, make the United States forever stronger than the Chinese Communist Party, these dissidents replied “absolutely.” They emphasized their appreciation for what America truly is even though some lived in other countries.
One dissident specifically referred to President Trump’s 1776 Report and reflected that China’s fundamental weakness was that the communist system violated principles that recognize the worth, equality, potential, dignity, and glory of each and every man, woman, and child created in the image of God, and therefore a unified, healthy Chinese nation was a utopia.
Whether they share the more philosophic views of these dissidents or are only worried about factors impacting the economic bottom line, many top Chinese officials clearly recognize manifest shortcomings of the regime – even if Xi Jinping himself may not. While these officials can project confidence to the world, their secretive actions behind the scenes to move their money reveal that China may soon be heading for the same fate as every other communist country throughout history.
Ben Solis is the pen name of an international affairs journalist, historian, and researcher.
Virtually every socialist or communist regime has done the same practices described in this article. The top tier officials, including the head of the authoritarian government itself, have always done this to ensure that no matter what happens down the road, they will have a golden parachute with which to make a very soft and comfortable landing no matter what happens in their home country. It’s called diversification of risk for those unfamiliar with the financial term for what the author is describing in his article. Diversification of risk, across multiple geographic borders (countries), is just so much simpler to accomplish in today’s world for such members of authoritarian regimes. Thanks to the globalization of the world economy and the many people at the top in so many governments around the world willing to look the other way to these type of transactions.
Yes, President Trump was NOT shy about what such authoritarian regimes have been doing quite freely for decades. He understood the inherent risk associated with allowing members of authoritarian regimes or hostile foreign governments themselves from having a foothold in the American economy. Both from an economic and national security perspective.
China and the members of the CCP alone have been pretty much allowed to buy into many American companies, set up operations of Chinese companies solely owned by the CCP here, and buy up substantial land in the United States without any real scrutiny or resistance from U.S. administrations both before Trump’s term in offoce and now after Trump’s term in office. Trump alone pushed backed hard on all these practices for which the so-called Deep State, that includes LOTS of members of both political parties in this country who want to maintain “business as usual” was their top priority.
I fully expect that Waashington will, at best, simply give lip service to this issue until such time in the future that either President Trump returns as President or someone exactly like him, from outside the professional political class, becomes POTUS. I certainly don’t believe any Democrat in the White House would ever do anything of any real substance to address this issue. They are all both ideologically aligned with Marxism and are completely compromised by the CCP. The professional political class of both parties may talk about the issue, but they won’t do anything of substance about the issue. We need someone actually willing to DO the tough things that need to be done in the office of the Presidency, in order to change anything. Endless talk, hearings or debate is just effectively ignoring the issue and kicking the can further down the road on this matter.
Greed and fear has no borders when it comes to to the self-serving. The love of money appears to be a universal trait especially amongst leaders of any variety. Where exactly is your money safe?
Communism is death politics. It kills everything it touches. Karl Marx was a satanic reprobate. He was a lazy, parasite who did not take care for his family and lived off others, peddling his poison. All nations and individuals who follow his teachings and ideology are destroyed.
The problem has existed for so long that our government is complicit with this issue and has been the issue brought to light while Trump was president. President Trump IS A BUSINESS MAN. He is the reason the socialist and liberal left have fought against Trump the entire time he was in office. Hopefully now that the GOP has at least won the House, maybe the work that President Trump started to EXPOSE this ongoing issue will finally be completed. Of course the LIBERAL, SOCIALIST and PROGRESSIVE idiots in the House and Senate will do everything possible to stop the cash cow from being exposed. They don’t want to lose their money or power they wield over their constituents. They want to keep everyone below them just like the serfs and those that were enslaved by the kings and lords during the MEDIEVAL ERA of evolution.
Well said. If only the US Government hadn’t blocked us from putting our money in offshore accounts. We could protect our money.
Trump is not so good because he is a republican. The Republican Party gains it’s credibility because of this one honest man, that has the American people’s backs. He is the man that has brought the party so far. This is why the Washington Swamp, Democrats and Republicans don’t like this man. President Trump underestimated how much hatred the republicans had for him. He also didn’t realize how Deep the Deep State was. no one did. Only now that Joe Biden has made it clear by breaking the law, and the Constitution, and using the FBI and the DOJ to control his enemies do all of us know now how corrupt DC is. And still, 40% of republican voters didn’t bother to vote in this election.
And “Pedo Pete” Biden just got his marching orders from Xi.