Lukáš Kovanda: The new Mao is intensifying the oppression of those billionaires

Mainland Chinese stocks traded on the Hong Kong stock exchange fell 7.3 percent on Monday. This is the deepest fall of the relevant indicator – Hang Seng China Enterprise Index – since the global financial crisis of 2008. It also sharply weakened the main indicator of Hong Kong stock titles – Hang Seng – which lost 6.4 percent. Chinese stocks traded elsewhere in the world, such as in the US, are also weakening.

This is the Hang Seng China Enterprise Index’s worst response to the outcome of the Communist Party’s top congress, held once every five years, since 1994, when the index began to be compiled.

At the same time, the result would probably be even worse if China did not show a surprisingly solid figure for the growth of its economy in the third quarter. The Chinese economy grew by 3.9 percent year-on-year from July to September, while according to experts it should have been only 3.4 percent.

Despite a positive surprise from China’s real economy, mainland stocks traded in Hong Kong fell to their lowest level (for the entire period since 2001) against US stocks included in the flagship US Standard & Poor’s 500 index, according to Bloomberg data. At the end of 2001, China was admitted to the World Trade Organization, which is a major milestone in its economic and geopolitical rise in recent decades.

Investors are fleeing Hong Kong. Panic on the stock exchanges was caused by the Chinese communists


Shares in Hong Kong started the new week with a sharp decline after the Chinese Communist Party congress. The main Hang Seng index was down about seven percent before the end of trading. But shares in mainland China also suffered losses. The market is reacting with a sell-off to assumptions that incumbent President Xi Jinping and his new team will favor ideology over the economy in the coming term.

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The all-too-smooth progress of the top congress of the Chinese Communists, which ended at the weekend, is bad news for the markets. Stock markets were primarily driven down by technology stocks such as Alibaba. At the convention, current President Xi Jinping consolidated his power, and thus begins his third term in office in an unprecedented manner. He thus becomes the longest-ruling Chinese “helmsman” since Mao Zedong.

At the same time, he takes a strong stance towards technology companies in particular. Some believe he is doing so out of fear that tech tycoons such as Jack Ma will get in over his head. Others think so does not want to allow a narrow group of technology entrepreneurs to get too rich and top managers of their companies, which would further significantly open up the fortunes of Chinese society and thus contribute to its dangerous destabilization.

However, after the congress, President Xi will be surrounded not only by loyalists in the innermost leadership of the Politburo, the market by less inclined heads, but also supporters of a hard-line approach to the covid infection. Markets are also falling due to fears that the regime’s zero-tolerance policy will not mitigate covid.

Wind power plants (illustrative photo)

China is planning an offshore wind farm with more power than Norway’s


The city of Chaozhou in southeastern China plans to build an offshore wind farm with more power than all the power plants in Norway combined. Referring to the five-year plan of the city in Guangdong province, Bloomberg reported about it. Zhaozhou intends to start work on the project by 2025. The power of the wind farm, which will be located in the Taiwan Strait at a distance of 75 to 185 kilometers from the coast, will be 43.3 gigawatts according to the mentioned plan.

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According to official Chinese statistics, which must be taken with a grain of salt, Beijing’s tough approach to covid is effective. For example, in the United States, over a million people have succumbed to covid so far. Despite the fact that China has more than four times the population of the US, covid has so far claimed just over 5,000 lives there. At the same time, if the number of covid deaths in relation to the population were to correspond to the situation in the USA, there would have to be approximately 4.2 million of these deaths in China.

Proponents of zero tolerance for covid fear that easing restrictions could cause a noticeable increase in the number of deaths and also destabilize society. They prefer to choose the path of restrictions, which, of course, cause weaker economic growth, thereby limiting the profitability of companies traded on the stock exchanges of mainland China and Hong Kong.

Stock exchange, illustration photo

Investors have already written off Hong Kong. Shares there have fallen by a third since the beginning of the year


Hong Kong’s main stock index is at its lowest since the financial crisis in 2009. It has been falling steadily for nearly two years, and analysts say the attitude of Hong Kong’s new governor is to blame for its latest woes. According to them, in his speech on Wednesday, he did not outline any concrete plan to stop the growing influence of other financial centers in Asia, especially Singapore.

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