“Only Socialism Can Save China.” Lingling Wei Reports

LINGLING WEI, “THE WALL STREET JOURNAL”: Let’s recap just a little bit what’s happened in China over the past year. It all started in November, when President Xi Jinping personally intervened to stop this massive IPO by a very big private tech company called Ant Group. It is founded by China’s most famous tech billionaire, Jack Ma. And then, after that, ti just one action after another. You’re seeing Alibaba, basically China’s Amazon, getting hit by a record fine. And you are seeing the government launching a cybersecurity investigation into DiDi, a ride-hailing app, basically, also very popular in China. And in other sectors, as you mentioned, China also banned foreign textbooks and declared war on Hollywood style of fandom, celebrity fandom, even most recently even trying to restrict the time children play in terms of playing digital games. So we decided really to take a deeper look into what’s going on in China, where Xi Jinping is taking China. So, we went through basically piles of party journals and internal speeches by President Xi himself and interviewed people who are involved in policy-making. And our conclusion is, this is more than a regulatory crackdown. It is much ambitious. It’s a really a more ambitious plan to steer the overall Chinese economy into a new direction, basically, back on the road of socialism, and further away from Western-style capitalism.

BIANNA GOLODRYGA: Right. Common prosperity is how Xi Jinping refers to it. And it really is coming at the expense of private enterprise. And before we delve deeper into that, I do want to get you to talk about the latest headlines there, with one of their largest companies, a real estate development company, Evergrande, which is on the verge of collapse, a highly overleveraged company, that it appears that the government is not willing to step up and bail out. Many are referring it to China’s Lehman Brothers. Does this at all play into this shift we have seen from Xi Jinping, or is this just a one-off of a company that just was having bad business practices and should perhaps go under then because of that?

WEI: Yes, China Evergrande is a much complicated situation than meets the eye. It’s a heavily indebted private real estate developer. To be sure, the Chinese government under Xi Jinping has wanted to basically shake up the real estate sector for many years, reduce the economic — economy’s addiction to real estate.