If Huarong goes bankrupt, who will Xi Jinping hold accountable? (Picture from: Adobe Stock)
[See China June 18, 2021](See a comprehensive report by Chinese reporter Li Zhengxin) China’s largest “bad bank”HuarongThe asset has been suspended for 50 consecutive days, kicking MSCI out of the index.Former Chairman of HuarongLai XiaominWas executed for bribery and other crimes, but left a huge amountdebt, If bankruptcy would orderXi JinpingThe authorities’ accountability to relevant persons.
Up to now, China’s largest “bad debt bank” Huarong has been suspended for more than 50 consecutive days. According to MSCI (Ming Sheng) rules, companies that have been suspended for more than 50 days will be kicked out of the index. Therefore, MSCI plans to remove Huarong, which is in debt distress, from the stock index from June 22.
MSCI is an American index compiling company, headquartered in New York, and has offices in Geneva, Switzerland and Singapore, responsible for global business operations and setting up regional representative offices in London, UK, Tokyo, Hong Kong, China, and San Francisco, USA. MSCI is a provider of equity, fixed assets, hedge funds, and stock market indexes, and it has compiled a variety of indexes. The MSCI Index (MSCI Index) is the benchmark index most commonly used by global portfolio managers.
At the end of March, Huarong failed to disclose its annual report, and its shares have been suspended since April 1. FTSE Russell has removed Huarong from emerging markets and other indexes on June 4. Other indexes are also considering whether to retain Huarong. Huarong will reach the upper limit of Dow Jones’s suspension period in July; according to the Hang Seng Index Company’s rules, after three months of suspension without disclosing performance, the stock will be removed from the relevant index as soon as possible.
As for the future trends of China Huarong, it is reported that the company is negotiating with the state-owned China Guoxin Holdings Co., Ltd. (hereinafter referred to as Guoxin Holdings) on the sale of its Huarong Securities. Not only that, Huarong Trust, another subsidiary of China Huarong, is currently in contact with the buyer, but because the buyer is confidential information, it is not known who it is.
As the capital market continues to ferment and express concerns about China Huarong’s debt risks, news reports that China’s financial regulatory authorities are focusing on resolving Huarong’s short-term liquidity risks. The financial supervision department has coordinated a number of banks to require that Huarong-related loans not be drawn, and they are ready to support them.
Loan drawing is the behavior of banks giving loans to enterprises. Before the repayment period stipulated in the agreement, the bank believes that there is a problem with the enterprise’s operations and needs to withdraw the loan in advance.
In 1999, the State Council of China approved the establishment of four national financial asset management companies, namely Cinda, Huarong, Great Wall, and Dongfang, to dispose of the non-performing loans of the four state-owned commercial banks of China Construction Bank, Industrial and Commercial Bank of China, Agricultural Bank of China, and Bank of China.
There is a popular saying in China’s financial industry: insurance companies are running to make money, securities companies are sitting and making money, and banks are making money lying down. However, the most profitable financial institution is neither a bank nor an insurance company or a securities company, but a “bad bank” that specializes in handling bad assets.
People familiar with the matter revealed that Huarong had a radical style before, including LeTV, Shenwu Environmental Protection, and Baoqianli, which were listed on the A-share market. They all used equity pledges to obtain huge amounts of funds from Huarong. Now the risks will be exposed.
Good assets mixed with non-performing assets sold at low prices are already an open secret in China’s financial industry. PricewaterhouseCoopers believes that there is a lack of a supervisory mechanism in the circulation of non-performing assets in China, which requires follow-up by the supervisory system.
Ren Zhongdao, a researcher at Tianjun Political and Economic Think Tank, said that as one of China’s four largest asset management companies, if Huarong goes bankrupt, the negative impact will be too great. Therefore, the Ministry of Finance of China will carefully handle the debt crisis of Huarong. If you do not want Huarong to go bankrupt, the Beijing authorities will pass the risk to the Chinese people, perhaps securitize the assets, and convert the debts into equity and then be listed for trading. If he decides to let Huarong go bankrupt, Xi Jinping will settle accounts with Jiang Zemin’s confidant Zeng Qinghong.
Regarding Lai Xiaomin’s patrons in the CCP’s officialdom, it is reported that Zeng Qinghong and Wu Xiaohui. Because they are all from Jiangxi, and Lai Xiaomin also likes to interact with two kinds of people most, namely Jiangxi Lao Biao and the second generation of red, and the second generation of officials. Because these two kinds of people make him feel safe, it is equivalent to having the most reliable insurance.
In 2012, Huarong sold 70% of its equity in Zhizhuo International Holdings, two pieces of land in the Shenzhen factory and its company building to two buyers, the largest of which was Shenzhen Fantasia, a subsidiary of Fantasia Group. The founder of the “Fantasia Group” is Zeng Qinghong’s niece Zeng Baobao, who is the daughter of Zeng Qinghong’s brother Zeng Qinghuai.
According to Hong Kong media reports, Lai Xiaomin is a frontline figure of the Zeng Qinghong faction in mainland China and Hong Kong’s business community, and he has given huge amounts of benefits to the Zeng Qinghong family and the Jiang Zemin family. Lai Xiaomin was also revealed to have close ties with Zeng Qinghong’s cronies and Guo Shengkun, secretary of the Political and Legal Committee.
On January 5, 2021, Tianjin No. 2 Intermediate Court publicly pronounced that Lai Xiaomin was guilty of bribery, corruption and bigamy. Among them, he was sentenced to death for taking bribes, deprived of political rights for life, and all personal property confiscated; and 11 years in prison for corruption. Imprisonment, confiscation of personal property of RMB 2 million; bigamy was sentenced to 1 year imprisonment, combined with the above penalties, and finally executed, deprived of political rights for life, and confiscated all personal property.
Editor in charge: Xin He Source: Look at China
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