It was the news story of the day: Jack Ma is back in China. Images show the former Alibaba boss on the sun terrace of a school in Hangzhou. There, he spoke with the headmaster about the future direction of China’s education sector, according to Chinese media. Marcel Grzanna shows why the deeply fallen icon of the Chinese tech industry is now allowed to celebrate a comeback. The CCP needs domestic private companies.
But beware: Not every company boss can bet on such a celebrated return. Investment banker Bao Fan is currently painfully experiencing how quickly you can fall out of Xi Jinping’s favor.
Our second analysis also focuses on an appealing-sounding promise: In countries like Pakistan, where Western companies are reluctant to invest, China is stepping into the breach and providing much-needed aid. A new study by the Kiel Institute for the World Economy (IfW Kiel), the World Bank, AidData and the Harvard Kennedy School examined the economic sustainability of this promise. The result: China’s Silk Road is in trouble. Because an increasing number of debtors are unable to repay their Silk Road loans.
Finn Mayer-Kuckuk shows that China’s huge infrastructure initiative was not economically but politically motivated from the start. After all, whoever lends this much money seeks to buy influence and shape markets. And indeed: China’s prestige project is increasingly distorting the international financial structure. However, the consequences are not only felt along the Silk Road, but reach deep into the West.
The power of images has an almost exuberant significance in autocratic states. When a photo of Alibaba founder Jack Ma on the sun terrace of a school in Hangzhou went viral on Monday, optimistic interpretations immediately followed. The public return of the Alibaba founder to the People’s Republic was seen as a symbol that the authorities might, at last, somewhat ease their grip on the Chinese tech sector.
Ma reportedly spoke with the head of Yungu School about the future direction of China’s education sector, and discussed the growing importance of innovative technologies. The question was how humans could use artificial intelligence to solve problems instead of being controlled by the technologies of the future.
The fact that it is now Jack Ma, of all people, who has the opportunity to voice suggestions on this matter, which are likely to arouse interest far beyond the school campus, is seen on the one hand as a signal to international investors that their capital is well invested in Chinese tech companies. On the other hand, it is a signal to the Chinese private sector that the government needs and promotes their support.
The news agency Reuters reports that China’s new premier Li Qiang has been repeatedly asking the 58-year-old through intermediaries to return to public life since the end of last year. Li reportedly expressed hope that this would give private companies a new reason to believe in business freedom in the country.
That is why the location for the photo shoot was also of great symbolic significance. The Yungu School was founded six years ago by Alibaba under the motto “Act locally and think globally”. The institution sees itself as a “means to realize individualized education through advanced technology such as Big Data, cloud computing and Internet of Things (IoT)”.
In recent years, Alibaba and other tech companies were barely allowed to contribute to the public discourse, as this contradicted the state’s regulatory frenzy. Instead, the industry’s top executives have been forced to speak after the authorities. The approval was supposed to propagate unity between private companies and the Communist Party on China’s path to “common prosperity“. But international investors felt increasingly put off. Forecasts of the sector’s development seemed to depend less on the companies’ innovative strength and market acceptance than on the state’s regulatory frenzy.
Ma may have unintentionally been the catalyst for the crackdown. His overly brash behavior towards the CP served as the starting signal. Ma had portrayed the country’s regulators as backward, the state banks as old-fashioned, and the system as inflexible. On the surface, party leader Xi Jinping understood this crushing verdict as a threat to society’s return to socialist values. But probably also as a threat to the party’s grip on power.
Ma was absent from the public eye for months, gradually withdrew from all company positions, and finally announced that he wanted to devote more of his time to painting than to entrepreneurship in the future. Most recently, he even left China and did not return for about a year until the end of last week.
But because Ma is more than just a company founder, and is rather revered by Generation Y as a pop culture icon, the CP apparently also changed its mind.
However, the partial rehabilitation of the rebellious Ma could also be an indication of the true state of the Chinese economy. Zero-Covid has taken a toll on the country’s economy – probably more than government data and statistics suggest.
Yet there were already signs of relief last year, at least from the perspective of international investors. J.P. Morgan, for example, revised its rating of the stocks of industry giants such as Alibaba, Tencent, Meituan, NetEase and Pinduoduo upwards from “uninvestable” and predicted that the securities could achieve a higher total return than the average of the stocks in the analysts’ scope of coverage.
But free entrepreneurship will remain on the party’s leash – even with a Jack Ma on the stage. Party leader Xi will hardly deviate from his line. For years now, well-known company bosses or celebrities in China who accumulated a lot of influence and money have been disappearing time and again. Fosun founder Guo Guangchang, investment entrepreneur Xiao Jianhua, fashion billionaire Zhou Chengjian, real estate mogul Ren Zhiqiang, but also actress Fan Bingbing or genetic researcher He Jiankui all disappeared overnight, sometimes for months, supposedly to assist Chinese authorities in criminal investigations.
The latest case involves the investment banker Bao Fan. He has been in an undisclosed location for weeks. Bao’s company, China Renaissance Holdings, oversees, among others, the Chinese ride hailing service DiDi Chuxing and the delivery service Meituan – two heavyweights in China’s tech industry. This connection to the internet industry may be pure coincidence. But it is unlikely to boost confidence in China’s private sector. In this respect, Jack Ma’s return to China seems perfectly timed.
The Chinese government has to save more and more Silk Road partners from default. By the end of 2021, China will have disbursed 240 billion dollars in bailout loans to more than 20 countries. This is the finding of a new study by the Kiel Institute for the World Economy (IfW Kiel), the World Bank, AidData and the Harvard Kennedy School, which is available to China.Table in advance.
The numbers show: Instead of acknowledging the problems, China’s state banks prefer to grant fresh loans so that the debtors can officially repay the original loans. The study found that debt forgiveness is rare. The recipients of the loans include Argentina, Ecuador, Laos, Mongolia, Egypt, Pakistan, Suriname, Sri Lanka, Turkey, Ukraine, Venezuela and Belarus.
However, Beijing is only delaying the problems. Because, as is well known, a debt restructuring does not give the borrower more money. “If you are going to bail out a borrower that is in default or teetering on the edge of default, it’s important to have a clear understanding of whether you are trying to solve a short-term liquidity problem or a long-term solvency problem,” says study author Carmen Reinhart of the Harvard Kennedy School.
The Chinese government is pursuing debt restructuring of Silk Road partners for several reasons.
Anyone who needs to deal with a pile of bad loans is hesitant to lend even more money. This is also reflected in the Silk Road statistics. “Regular lending for new infrastructure and energy projects has been drastically reduced by Chinese banks as a result of the large bailout loans, raising questions about the future of the New Silk Road,” the study says.
If the Silk Road loans not only fail to yield a return, but also cost more and more money, China will probably not be able to sustain the BRI in the current format. Even the wealthy People’s Republic has no money to give away. The funding of the BRI is deliberately provided in the form of loans, not in the form of lenient gifts, otherwise, it would be difficult to communicate domestically. However, bank loans that are not even planned to be repaid are pointless and jeopardize the system.
But China’s conduct is increasingly having an international impact, far beyond the BRI. While it played hardly any role in the international credit landscape until 2012, China has now become one of the most important players. The Silk Road Initiative covers around 150 countries. China provides loans for bridges, roads, ports, power plants, power lines and the like. China’s foreign loans are estimated at more than 600 billion US dollars.
Those who lend this much money buy influence and shape the markets. But if the funds are not distributed based on criteria such as creditworthiness and prospects of success, they distort the financial structure. China’s actions “have implications for the global financial and monetary system, which we see becoming
more multipolar, less institutionalized, and less transparent,” says IfW economist Christoph Trebesch, a co-author of the study.
Such behavior by emerging powers, however, is neither new nor surprising. “We see clear historical parallels to when the US started its rise as a global financial power, from the 1930s onwards and especially after World War II,” added Christoph Trebesch.
The suspicion that the Silk Road will cost China a lot has been around since the inception of the project in 2013. However, the infrastructure initiative is mainly politically, not economically motivated. Even within China, there is repeated criticism of the billions in loans for uncertain recipients. Xi Jinping, however, has always had dissenting opinions suppressed.
Apple CEO Tim Cook met with Chinese Commerce Minister Wang Wentao on Monday. According to the Ministry of Commerce, the two exchanged views on the development of the company in China. They also discussed the stabilization of industrial and supply chains. China was willing to provide a good environment and services for foreign companies, including Apple, the minister said.
The meeting is significant in that Apple has recently been increasingly searching for alternative locations to China. For example, the US technology company is planning to manufacture its iPhone 14 in India. AirPods and Beats headphones are also to be produced in India in the future.
Wang also met the executives of several other international companies in recent days, such as Pfizer, BMW and Qualcomm. Cook visited Beijing over the weekend to attend the China Development Forum. rad
When Nicole Beste-Fopma traveled to China for the first time in 2019, she lost her heart as soon as she landed. That same year, she and her husband moved to Shanghai, and later on to Chinese-influenced Singapore. Beste-Fopma is an author and freelance journalist – a job that does not require a permanent residence.
Together with Alexandra Steffens-Klein, she wrote the book “111 Orte in Shanghai, die man gesehen haben” (“111 must-see places in Shanghai”) and managed LOB-Magazin, a work-life balance magazine, from Asia. “I think hardly anyone noticed that I lived abroad,” she recalls. “Except during video conferences in winter, when everyone sat there in thick jackets and I was in a summer dress.”
Beste-Fopma returned to Germany in the meantime, but her time in Shanghai and Singapore continues to shape her – and inspired her next book, “China: Dumme Fragen, einfach gestellt” (China: Stupid Questions, Simply Asked). “As Alexandra and I roamed Shanghai, questions kept popping up,” the author says, citing a few examples: “Why can Chinese people sleep anywhere? What does the pineapple have to do with the Chinese New Year? And why do most Chinese people not have gray hair?”
The two women started researching. “We soon couldn’t stop laughing and being amazed” – they didn’t want to keep the answers to themselves and wrote them down. The result will be published next fall.
As a mother of four children, whom she raised as a single parent for many years, Beste-Fopma had to balance her career and family early on. This has led to a vision that she is pursuing, among other things, with LOB magazine, which she founded herself: “I want everyone to be able to shape their lives the way they want to – without having to sacrifice potential careers to do so.” Beste-Fopma wants to discuss ideas for this together with other players as part of a new format, the “LOB VeinbarkeitsBarCamp” – certainly also with inspiration from the Far East.
Her time in China and Singapore showed Beste-Fopma how to live compatibility very differently than in Germany. “In Shanghai and Singapore, the children go to all-day schools. So the mothers and fathers have time for the job,” she explains. In addition, she says, family cohesion is very strong; in both countries, grandparents usually move in with the young family after the birth of their children to support them. “In China, the women retire five years before the men to take on this very task – taking care of the grandchildren.”
Although Beste-Fopma dislikes quoting Mao, she still did so during the interview: “Half of heaven is carried by women,” he once said. “I have the impression that in China it’s more natural for women to also work.” Svenja Napp
Not soccer, not tennis, but basketball is apparently the most popular sport in Taipan (Guizhou). On the weekend, the team from Tongren and Bijie played for 3rd place in the local village tournament on the town square. Thousands of spectators wanted to be there – if necessary with a long ladder and in spite of the pouring rain.
It was the news story of the day: Jack Ma is back in China. Images show the former Alibaba boss on the sun terrace of a school in Hangzhou. There, he spoke with the headmaster about the future direction of China’s education sector, according to Chinese media. Marcel Grzanna shows why the deeply fallen icon of the Chinese tech industry is now allowed to celebrate a comeback. The CCP needs domestic private companies.
But beware: Not every company boss can bet on such a celebrated return. Investment banker Bao Fan is currently painfully experiencing how quickly you can fall out of Xi Jinping’s favor.
Our second analysis also focuses on an appealing-sounding promise: In countries like Pakistan, where Western companies are reluctant to invest, China is stepping into the breach and providing much-needed aid. A new study by the Kiel Institute for the World Economy (IfW Kiel), the World Bank, AidData and the Harvard Kennedy School examined the economic sustainability of this promise. The result: China’s Silk Road is in trouble. Because an increasing number of debtors are unable to repay their Silk Road loans.
Finn Mayer-Kuckuk shows that China’s huge infrastructure initiative was not economically but politically motivated from the start. After all, whoever lends this much money seeks to buy influence and shape markets. And indeed: China’s prestige project is increasingly distorting the international financial structure. However, the consequences are not only felt along the Silk Road, but reach deep into the West.
The power of images has an almost exuberant significance in autocratic states. When a photo of Alibaba founder Jack Ma on the sun terrace of a school in Hangzhou went viral on Monday, optimistic interpretations immediately followed. The public return of the Alibaba founder to the People’s Republic was seen as a symbol that the authorities might, at last, somewhat ease their grip on the Chinese tech sector.
Ma reportedly spoke with the head of Yungu School about the future direction of China’s education sector, and discussed the growing importance of innovative technologies. The question was how humans could use artificial intelligence to solve problems instead of being controlled by the technologies of the future.
The fact that it is now Jack Ma, of all people, who has the opportunity to voice suggestions on this matter, which are likely to arouse interest far beyond the school campus, is seen on the one hand as a signal to international investors that their capital is well invested in Chinese tech companies. On the other hand, it is a signal to the Chinese private sector that the government needs and promotes their support.
The news agency Reuters reports that China’s new premier Li Qiang has been repeatedly asking the 58-year-old through intermediaries to return to public life since the end of last year. Li reportedly expressed hope that this would give private companies a new reason to believe in business freedom in the country.
That is why the location for the photo shoot was also of great symbolic significance. The Yungu School was founded six years ago by Alibaba under the motto “Act locally and think globally”. The institution sees itself as a “means to realize individualized education through advanced technology such as Big Data, cloud computing and Internet of Things (IoT)”.
In recent years, Alibaba and other tech companies were barely allowed to contribute to the public discourse, as this contradicted the state’s regulatory frenzy. Instead, the industry’s top executives have been forced to speak after the authorities. The approval was supposed to propagate unity between private companies and the Communist Party on China’s path to “common prosperity“. But international investors felt increasingly put off. Forecasts of the sector’s development seemed to depend less on the companies’ innovative strength and market acceptance than on the state’s regulatory frenzy.
Ma may have unintentionally been the catalyst for the crackdown. His overly brash behavior towards the CP served as the starting signal. Ma had portrayed the country’s regulators as backward, the state banks as old-fashioned, and the system as inflexible. On the surface, party leader Xi Jinping understood this crushing verdict as a threat to society’s return to socialist values. But probably also as a threat to the party’s grip on power.
Ma was absent from the public eye for months, gradually withdrew from all company positions, and finally announced that he wanted to devote more of his time to painting than to entrepreneurship in the future. Most recently, he even left China and did not return for about a year until the end of last week.
But because Ma is more than just a company founder, and is rather revered by Generation Y as a pop culture icon, the CP apparently also changed its mind.
However, the partial rehabilitation of the rebellious Ma could also be an indication of the true state of the Chinese economy. Zero-Covid has taken a toll on the country’s economy – probably more than government data and statistics suggest.
Yet there were already signs of relief last year, at least from the perspective of international investors. J.P. Morgan, for example, revised its rating of the stocks of industry giants such as Alibaba, Tencent, Meituan, NetEase and Pinduoduo upwards from “uninvestable” and predicted that the securities could achieve a higher total return than the average of the stocks in the analysts’ scope of coverage.
But free entrepreneurship will remain on the party’s leash – even with a Jack Ma on the stage. Party leader Xi will hardly deviate from his line. For years now, well-known company bosses or celebrities in China who accumulated a lot of influence and money have been disappearing time and again. Fosun founder Guo Guangchang, investment entrepreneur Xiao Jianhua, fashion billionaire Zhou Chengjian, real estate mogul Ren Zhiqiang, but also actress Fan Bingbing or genetic researcher He Jiankui all disappeared overnight, sometimes for months, supposedly to assist Chinese authorities in criminal investigations.
The latest case involves the investment banker Bao Fan. He has been in an undisclosed location for weeks. Bao’s company, China Renaissance Holdings, oversees, among others, the Chinese ride hailing service DiDi Chuxing and the delivery service Meituan – two heavyweights in China’s tech industry. This connection to the internet industry may be pure coincidence. But it is unlikely to boost confidence in China’s private sector. In this respect, Jack Ma’s return to China seems perfectly timed.
The Chinese government has to save more and more Silk Road partners from default. By the end of 2021, China will have disbursed 240 billion dollars in bailout loans to more than 20 countries. This is the finding of a new study by the Kiel Institute for the World Economy (IfW Kiel), the World Bank, AidData and the Harvard Kennedy School, which is available to China.Table in advance.
The numbers show: Instead of acknowledging the problems, China’s state banks prefer to grant fresh loans so that the debtors can officially repay the original loans. The study found that debt forgiveness is rare. The recipients of the loans include Argentina, Ecuador, Laos, Mongolia, Egypt, Pakistan, Suriname, Sri Lanka, Turkey, Ukraine, Venezuela and Belarus.
However, Beijing is only delaying the problems. Because, as is well known, a debt restructuring does not give the borrower more money. “If you are going to bail out a borrower that is in default or teetering on the edge of default, it’s important to have a clear understanding of whether you are trying to solve a short-term liquidity problem or a long-term solvency problem,” says study author Carmen Reinhart of the Harvard Kennedy School.
The Chinese government is pursuing debt restructuring of Silk Road partners for several reasons.
Anyone who needs to deal with a pile of bad loans is hesitant to lend even more money. This is also reflected in the Silk Road statistics. “Regular lending for new infrastructure and energy projects has been drastically reduced by Chinese banks as a result of the large bailout loans, raising questions about the future of the New Silk Road,” the study says.
If the Silk Road loans not only fail to yield a return, but also cost more and more money, China will probably not be able to sustain the BRI in the current format. Even the wealthy People’s Republic has no money to give away. The funding of the BRI is deliberately provided in the form of loans, not in the form of lenient gifts, otherwise, it would be difficult to communicate domestically. However, bank loans that are not even planned to be repaid are pointless and jeopardize the system.
But China’s conduct is increasingly having an international impact, far beyond the BRI. While it played hardly any role in the international credit landscape until 2012, China has now become one of the most important players. The Silk Road Initiative covers around 150 countries. China provides loans for bridges, roads, ports, power plants, power lines and the like. China’s foreign loans are estimated at more than 600 billion US dollars.
Those who lend this much money buy influence and shape the markets. But if the funds are not distributed based on criteria such as creditworthiness and prospects of success, they distort the financial structure. China’s actions “have implications for the global financial and monetary system, which we see becoming
more multipolar, less institutionalized, and less transparent,” says IfW economist Christoph Trebesch, a co-author of the study.
Such behavior by emerging powers, however, is neither new nor surprising. “We see clear historical parallels to when the US started its rise as a global financial power, from the 1930s onwards and especially after World War II,” added Christoph Trebesch.
The suspicion that the Silk Road will cost China a lot has been around since the inception of the project in 2013. However, the infrastructure initiative is mainly politically, not economically motivated. Even within China, there is repeated criticism of the billions in loans for uncertain recipients. Xi Jinping, however, has always had dissenting opinions suppressed.
Apple CEO Tim Cook met with Chinese Commerce Minister Wang Wentao on Monday. According to the Ministry of Commerce, the two exchanged views on the development of the company in China. They also discussed the stabilization of industrial and supply chains. China was willing to provide a good environment and services for foreign companies, including Apple, the minister said.
The meeting is significant in that Apple has recently been increasingly searching for alternative locations to China. For example, the US technology company is planning to manufacture its iPhone 14 in India. AirPods and Beats headphones are also to be produced in India in the future.
Wang also met the executives of several other international companies in recent days, such as Pfizer, BMW and Qualcomm. Cook visited Beijing over the weekend to attend the China Development Forum. rad
When Nicole Beste-Fopma traveled to China for the first time in 2019, she lost her heart as soon as she landed. That same year, she and her husband moved to Shanghai, and later on to Chinese-influenced Singapore. Beste-Fopma is an author and freelance journalist – a job that does not require a permanent residence.
Together with Alexandra Steffens-Klein, she wrote the book “111 Orte in Shanghai, die man gesehen haben” (“111 must-see places in Shanghai”) and managed LOB-Magazin, a work-life balance magazine, from Asia. “I think hardly anyone noticed that I lived abroad,” she recalls. “Except during video conferences in winter, when everyone sat there in thick jackets and I was in a summer dress.”
Beste-Fopma returned to Germany in the meantime, but her time in Shanghai and Singapore continues to shape her – and inspired her next book, “China: Dumme Fragen, einfach gestellt” (China: Stupid Questions, Simply Asked). “As Alexandra and I roamed Shanghai, questions kept popping up,” the author says, citing a few examples: “Why can Chinese people sleep anywhere? What does the pineapple have to do with the Chinese New Year? And why do most Chinese people not have gray hair?”
The two women started researching. “We soon couldn’t stop laughing and being amazed” – they didn’t want to keep the answers to themselves and wrote them down. The result will be published next fall.
As a mother of four children, whom she raised as a single parent for many years, Beste-Fopma had to balance her career and family early on. This has led to a vision that she is pursuing, among other things, with LOB magazine, which she founded herself: “I want everyone to be able to shape their lives the way they want to – without having to sacrifice potential careers to do so.” Beste-Fopma wants to discuss ideas for this together with other players as part of a new format, the “LOB VeinbarkeitsBarCamp” – certainly also with inspiration from the Far East.
Her time in China and Singapore showed Beste-Fopma how to live compatibility very differently than in Germany. “In Shanghai and Singapore, the children go to all-day schools. So the mothers and fathers have time for the job,” she explains. In addition, she says, family cohesion is very strong; in both countries, grandparents usually move in with the young family after the birth of their children to support them. “In China, the women retire five years before the men to take on this very task – taking care of the grandchildren.”
Although Beste-Fopma dislikes quoting Mao, she still did so during the interview: “Half of heaven is carried by women,” he once said. “I have the impression that in China it’s more natural for women to also work.” Svenja Napp
Not soccer, not tennis, but basketball is apparently the most popular sport in Taipan (Guizhou). On the weekend, the team from Tongren and Bijie played for 3rd place in the local village tournament on the town square. Thousands of spectators wanted to be there – if necessary with a long ladder and in spite of the pouring rain.
