HONG KONG (Reuters Breakingviews) – A loyal Chinese capitalist has turned against the country’s Covid-19 policies. Redemption baron Shan Weijian, usually a public supporter of President Xi Jinping’s tough policies, broke ranks in the face of the draconian lockdowns. In a private meeting, he painted a dire picture of economic and political instability in a way that could jeopardize the IPO of his private equity firm, PAG. Making an example of him, however, could backfire.
Lockdown measures at the Omicron variant in the cosmopolitan city of Shanghai have rattled the country’s elite. The growl grows louder. Wang Sicong, son of billionaire Wang Jianlin, had his Weibo account shut down after questioning the government’s approval of traditional drugs to treat the virus.
Wang is just a rich kid, but Shan is a symbol of the success of China’s reforms. Caught up in Mao’s Cultural Revolution, he was sent to farm China’s Gobi Desert, but managed to make it to the United States, studying under current US Treasury Secretary Janet Yellen and landing Bank jobs. worldwide and at JPMorgan. PAG manages some $50 billion and has invested in a number of successful companies.
Shan has also publicly supported China’s crackdown in Hong Kong and Xinjiang. So when a trained economist like himself declares that “popular discontent in China is at its highest level in 30 years”, as reported by the Financial Times, and warns of an economic crash, Chinese people are inclined ignoring foreign critics might take it more seriously.
In a podcast with Breakingviews in 2019, Shan warned against Chinese hubris. Skepticism of Beijing’s triumphant tale is evident in financial markets. The country released positive growth statistics in the first quarter, but the benchmark CSI300 index is down 20% this year and foreign funds are fleeing yuan assets. As shutdowns upend supply chains and suppress consumption, the government is falling back on debt-fueled infrastructure stimulus.
Shan could suffer the same fate as Alibaba founder Jack Ma did with his fintech company Ant after speaking out: a derailed IPO and endless regulatory headaches. Shan’s implicit political critique will be hard for Beijing to ignore even if his analysis is as hard to challenge as his patriotism. However, his feelings are also shared within the financial community that China must reassure. Beijing might be inclined to listen.
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– Shan Weijian, founder and chairman of private equity firm PAG, told a private meeting that China was going through a “deep economic crisis” comparable to the global financial crash, the Financial Times reported on April 28, citing a video shared with journalists. .
– “We believe that the Chinese economy is currently in the worst situation in 30 years,” he said. “Market sentiment toward Chinese stocks is also at a 30-year low. I also think popular discontent in China is at a 30-year high.”
– PAG submitted a prospectus for an initial public offering to the Hong Kong Stock Exchange on March 25. The 12-year-old company is looking to raise up to $2 billion at a valuation between $10 billion and $15 billion, according to market publication IFR.
(Editing by Jeffrey Goldfarb and Katrina Hamlin)
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