[Epoch Times September 25, 2021]Hello, everyone, I’m Tang Hao, how are you today?
Today’s focus: Meng Wanzhou was released in shock, why could he retreat in his entirety? The U.S. abandons extradition, the Tibetan strategic purpose? The Evergrande debt bomb is about to explode, and the Xu family is imprinted in prison?
Huawei’s vice chairman Meng Wanzhou reached a “delayed prosecution agreement” with the U.S. Department of Justice on September 24, regained his freedom, and is about to return to China? The Meng Wanzhou incident has been entangled for nearly three years. Why can Meng Wanzhou retreat with his whole body? Why did the US suddenly give up extradition?
The debt-laden Evergrande Group did not pay US$83.5 million in interest on overseas debts this week, and has officially fallen into a default crisis. Will Beijing rescue Evergrande? How to deal with this Evergrande storm? Will Xu Jiayin and other Evergrande executives be imprisoned? In this episode, I will discuss with you.
⊙Opening
The international community has been very lively in the past two days, and many important events have taken place. Today we want to focus on two topics with you:
Topic 1: What is the plan for the United States to abandon the extradition of Meng Wanzhou?
Topic 2: How does Beijing disarm the bomb when the alarm bell of Evergrande’s breach of contract sounded?
Okay, let’s look at the first topic first.
Topic 1: What is the plan for the United States to abandon the extradition of Meng Wanzhou?
Huawei Vice Chairman Meng Wanzhou was arrested at Vancouver Airport in Canada in December 2018. Because Huawei was suspected of violating the U.S. export ban on Iran by secretly reselling sensitive technology and products made in the U.S. to Iran, Meng Wanzhou was also charged by the U.S. with multiple crimes such as telecom fraud and wire fraud. The U.S. also approached the Canadian government, asked them to arrest Meng Wanzhou, and planned to extradite Meng Wanzhou to the United States for trial.
After nearly three years of entanglement, this extradition case finally made new progress. On September 24, Meng Wanzhou reached an agreement with the US Department of Justice. Meng Wanzhou admitted that she had falsified bank information and helped Huawei violate the US sanctions against Iran; however, Meng Wanzhou has been accused of bank fraud. Do not plead guilty.
In other words, Meng Wanzhou admitted to the fact that there was a suspected crime, but did not plead guilty, and then exchanged the US Department of Justice to “suspend the prosecution” of her. What does it mean? As long as Meng Wanzhou does not violate the specific conditions pointed out by the court before December 2022, then the United States will not prosecute Meng Wanzhou, and the United States will withdraw the charges against her, and Meng Wanzhou will be free as a result.
Many friends will find it very strange, why can they not plead guilty after confessing the facts of the crime, and the prosecution has been deferred by the Ministry of Justice? In fact, this involves the “prosecution-defense transaction” tradition of the American judicial system, that is, the transaction and settlement between the prosecution and the defense. As long as the prosecution and the defense can reach a settlement agreement, there is no need to enter the subsequent prosecution or trial procedures. Save resources and time for the prosecution and defense.
In the United States, there are many such examples. For example, three U.S. citizens who have served for U.S. intelligence agencies went abroad to help foreign governments as hackers after leaving their jobs. The U.S. Department of Justice originally wanted to prosecute them. Later, the U.S. Department of Justice announced a deferment with the three hackers a few days ago. Prosecution agreement, suspended the prosecution of them, but they have to pay a fine of 1.685 million US dollars.
The current settlement agreement between Meng Wanzhou and the U.S. Department of Justice is also a typical “prosecution and defense transaction.” Both parties take what they need. The U.S. obtained Meng Wanzhou’s admission of criminal facts, and therefore gave her a deferred prosecution. If she commits the crime again in the future, she will be formally prosecuted.
But Meng Wanzhou was also given the name of “not guilty” so that when she returned to China, she could say that she was not guilty and Huawei was not guilty. In this way, there will be a step down for both the prosecution and the defense. However, what is more surprising is that the U.S. Department of Justice did not impose a fine on Meng Wanzhou, nor does it have other strict conditions. In other words, it seems that the U.S. side has given up on the extradition of Meng Wanzhou.
Of course, as of this writing, we don’t know if there is any special deal or agreement behind the US and China. However, I think, at least from the current stage of observation, the United States may have several intentions for letting Meng Wanzhou go:
Intention 1: The U.S. prepares for war in good faith and does not seek a war against China
Although Biden has been in office until now, the military containment imposed on the CCP has been increasing. For example, the Australia-UK-U.S. alliance was recently organized to help Australia build a nuclear submarine fleet, and the United States, Japan, India, and Australia are also there. Washington hosted the first “Quadruple Security Dialogue” summit.
However, the US does not really want to launch a war against the CCP, not to “call for war,” but to “prepare for war” and “avoid war,” that is, to deter the CCP from starting a war.
Therefore, Biden also publicly stated at the UN General Assembly two days ago that the United States will not seek a “new cold war”, and of course it will not seek a real “hot war”. So this time, the US is like to extend the olive branch of peace to the CCP by returning Meng Wanzhou to tell the CCP that the US does not want to fight you, if the two sides can get along well.
Intention 2: Responding to the two lists and urging China to negotiate and cooperate with the US
If you still have the impression, when the US Deputy Secretary of State visited Tianjin at the end of July, China put forward “two lists” to the US, asking the US to correct the wrong actions in these lists, so that the US and China can improve their relations. One of the requirements is to withdraw the extradition of Meng Wanzhou.
Now, less than two months later, the US has really withdrawn the extradition of Meng Wanzhou. Of course, we can question whether the US has any secret transactions with the CCP? But from another perspective, the US may also deliberately make some concessions in order to prompt the CCP and the US to return to the negotiating table for negotiation.
Because the U.S. needs China’s cooperation on climate issues, and the CCP has not fulfilled its promises in the first phase of the U.S.-China trade agreement, and the purchase amount has only reached one-third, so should the trade agreement go on? These important issues require the United States and China to sit down and conduct sincere consultations.
However, this is not to say that the United States is “seeking” the CCP, but is testing and observing whether it can interact with the CCP through peaceful negotiations. If this is not possible, the U.S. may switch to other ways to deal with the CCP.
Intention 3: Solve the hostage problem and relieve Canadian pressure
After Meng Wanzhou was arrested by Canada, the CCP immediately arrested two Canadian citizens in China as hostages, arousing strong criticism from the international community, but this hostage crisis has also become a heavy burden for the Canadian government. Now that the US has released Meng Wanzhou, it may be possible to prompt the CCP to release two Canadian hostages and ease the pressure on the Canadian government.
In particular, Canadian Prime Minister Trudeau has just been re-elected in the general election. If the Canadian hostages can be released, it would be equivalent to a gift from the United States to Trudeau.
Well, because the current information is still very limited, we still don’t know the main motivation for the US side to abandon the extradition of Meng Wanzhou, but based on the current international situation, it is speculated that the US side should have several intentions:
Intention 1: The U.S. prepares for war in good faith with the CCP without seeking war
Intention 2: Responding to the two lists and urging China to negotiate and cooperate with the US
Intention 3: Solve the hostage problem and relieve Canadian pressure
Topic 2: How does Beijing disarm the bomb when the alarm bell of Evergrande’s breach of contract sounded?
Will Evergrande go bankrupt? Will it trigger a large-scale financial turmoil? It is currently the focus of eager attention throughout China and even the world. And will Beijing officials try to rescue Evergrande? Or do you want Evergrande to fall down? It’s still a bit confusing at the moment. However, what is certain is that Evergrande’s troubles are becoming more and more urgent, and this super “debt bomb” worth 2 trillion yuan is about to explode.
Because Evergrande originally had to pay the interest of an overseas US dollar bond on September 23, the amount was as high as 83.5 million US dollars, but in the end Evergrande did not pay the money. And to make matters worse, Evergrande will have to pay another $47.5 million in debt interest next week.
Now, Evergrande’s interest of more than 80 million yuan can no longer be paid. According to the contract, the next 30 days is a buffer period. If Evergrande still fails to repay the money after 30 days, it will become a debt default, that is When the debt is inverted, Evergrande will face more severe legal prosecution problems. Evergrande’s assets in Hong Kong and overseas may also be seized by creditors.
The official rescued or not rescued hasn’t revealed the trump card
However, should the CCP save Evergrande? The government hasn’t made a clear decision so far, but people continue to use the media to release news and guide the trend.
First of all, the British “Financial Times” quoted two Evergrande executives on September 20, saying that the CCP would arrange for local governments and large state-owned developers to take over Evergrande’s assets and businesses in various places. This is Evergrande’s statement. .
Then, on September 22, a financial news website called “Asian Market” quoted a source close to the Chinese government as saying that Beijing was preparing to arrange state-owned enterprises to take over Evergrande, split Evergrande into three entities, and then Evergrande Will transform into a state-owned enterprise. The report also said that Beijing will announce the news in the next few days.
However, on the 23rd the next day, the Wall Street Journal quoted a CCP official saying that Beijing had ordered the local government to prepare for the collapse of Evergrande, implying that Beijing did not want to save Evergrande and was prepared to let Evergrande go bankrupt. , And then intervene in the aftermath. Well, the statements in these reports are obviously contradictory. So, is Beijing really not planning to save Evergrande, and want Evergrande to go bankrupt?
We can think about this issue from the perspective of Xi Jinping:
First, Xi Jinping is promoting “common prosperity”, asking the rich and powerful of big companies to use money to help the poor and fulfill the social responsibilities of entrepreneurs, right? If at this time, Beijing makes a big move to save Evergrande and take up Evergrande’s debts, wouldn’t it be equivalent to telling people across the country that Evergrande’s high-debt, high-leverage, and high-turnover operating methods are all right? And instead of asking Evergrande to use the money to help the people “common prosperity”, but to use the people’s money to help Evergrande “common debt”, so that Beijing will face itself? Therefore, from this point of view, it is not appropriate for Beijing to rescue Evergrande.
Second, Evergrande boss Xu Jiayin is not only a member of the CPPCC Standing Committee, but also has long been related to Zeng Qinghong, a general of the Jiang Zemin Group. Xu Jiayin has close contacts with Zeng Qinghong’s younger brother and son. Therefore, Xu Jiayin’s political stance is biased towards the Jiang faction. The Jiang faction is the main opponent in the fight for power with Xi Jinping. From this point of view, Beijing actually does not want to save Evergrande.
However, thirdly, Xi Jinping will fight for re-election as the party leader at the 20th National Congress of the Communist Party of China at the end of next year. At this time, if Evergrande’s collapse and collapse will cause serious economic turmoil and unemployment, this will make Xi Jinping shameless and political achievements. The collapse may also affect his defense of the regime. From this point of view, Beijing has to save Evergrande.
Fourth, Evergrande has 1,300 real estate projects in 280 cities in China. Evergrande has 200,000 direct employees and 3.8 million employees in industries related to Evergrande. With such a huge scale, if Evergrande goes bankrupt, it will definitely It will cause a huge storm of unemployment, and hundreds of thousands or even millions of victims will take to the streets to fight. Mass incidents will occur in various parts of China. This will pose a political threat to the CCP. Therefore, from this point of view, Beijing is indispensable. Save Evergrande.
Also, fifth, Xi Jinping only recently announced at the Global Service Trade Summit that China should “persist in openness and cooperation, mutual benefit and win-win”, which shows that the CCP is eager to attract foreign capital to return to China and bolster the Chinese economy.
However, if Beijing allows Evergrande to go bankrupt now, then Evergrande borrowed about US$20 billion in foreign debt from overseas, it will be bankrupted, and foreign investors will suffer serious losses. At that time, how can foreign capital still have confidence in the CCP? How dare to invest a large sum of money in China? So from this point of view, Beijing has to save Evergrande.
Therefore, if we think about these issues from the perspective of Xi Jinping, we know that Evergrande is a gunpowder depot that is a headache for Beijing. Be active and save too much, otherwise it will be said that the party used the people’s money to help the enterprise jointly debt, or the party was kidnapped by the enterprise. Therefore, Beijing is actually in a dilemma and is very passive.
Perhaps because of this, the Beijing authorities have not publicly stated how they will deal with Evergrande, whether to save it or not. On the one hand, they have released the news that Evergrande is going to fail, and on the other hand, they have also done how to take over Evergrande. Prepare.
As disclosed in the Wall Street Journal, local governments and state-owned enterprises have received instructions that if Evergrande cannot manage its own affairs in an orderly manner, the government and state-owned enterprises will take over. As for what is “inability to manage one’s own affairs in an orderly manner”? Will Evergrande take over after bankruptcy, or just before the bankruptcy? It is not yet clear.
The local government is ready to take over
However, the local government has organized accountants and legal teams to inspect Evergrande’s financial status in various regions, and is preparing to take over Evergrande’s real estate projects in various regions; it has also set up law enforcement teams to monitor public anger and mass incidents.
Judging from these signs, we speculate that the CCP may intervene in Evergrande at the last minute before bankruptcy, take over Evergrande’s valuable site projects, and carry out debt restructuring at the same time, so that the site can continue to be completed and continue to sell houses to stabilize the majority. The buyers of houses and Evergrande’s upstream and downstream manufacturers avoid too much social turmoil.
After all, there are currently 1.2 million people who have bought a house in Evergrande but have not yet delivered it. They have spent a lifetime of savings and effort just to buy a house. If the money is lost and the house is gone, they may not hesitate to talk to Evergrande. Desperately, even with the government. In addition, the international community is very concerned about this matter, so the CCP has to find a way to save this face.
However, Evergrande’s wealth management products, Evergrande’s bank loans, and other borrowings are not necessarily guaranteed, because these debts are pure debts and cannot be converted into cash flow to support Evergrande’s survival, so the official may Maybe the bank will extend these debts and even continue to borrow to Evergrande.
In other words, the government may take over Evergrande’s real estate projects and land in the future, so that Evergrande’s real estate industry can continue to survive, but some banks and investors in wealth management products may be sacrificed.
However, if you are lucky, perhaps the official will force Evergrande’s senior executives to come up with a little money to compensate investors in wealth management products. For example, you bought Evergrande’s wealth of 1 million, and finally let you get back 100,000, and then the official will publicize it again. It is said that the party has helped the people get justice back. If there is no party, the people will not even have this compensation. Therefore, the people should thank the party and the party.
Function 1: Break up the big bullets and turn small bullets into pieces
From another perspective, the CCP’s method of requesting local governments to take over Evergrande Real Estate also has two effects: first, it breaks the big bomb of Evergrande into many small bombs, and allows local governments to take over. , To do a small-scale detonation, let the local governments spread the damage of the bomb, and avoid all detonation at one time, it is better to avoid causing serious damage to the whole country.
Role 2: The country advances and the people retreat to control the housing market
The second role is to control the real estate market. The government has eaten up these big enterprises like Evergrande and turned them into state-owned enterprises. From now on, they will directly obey the macro-control of the Party Central Committee. In this way, it can step by step to promote what Xi Jinping said, “Houses are for living, not for speculation.” Will have more power to dominate and supervise the housing market.
Will Xu Jiayin be imprisoned?HNA is an early warning
Well, seeing this, I believe there is another problem that many people are curious about, that is, Xu Jiayin, the boss of Evergrande. He left so many debts to the company, so that so many employees and creditors may suffer losses, but he himself has taken away 50 billion yuan in the name of dividends; and other senior executives of Evergrande have also got off the car ahead of time. Shouldn’t they not have to bear legal responsibility for returning the principal and interest?
This is difficult to say at present, after all, no one has accused Xu Jiayin of any crime. But one thing is very strange. On September 24, another large company HNA Group, which was taken over by the Chinese Communist government, issued an announcement saying that their chairman Chen Feng and CEO Tan Xiangdong had been taken coercive measures because of suspected crimes. To put it bluntly, it may have been arrested or restricted.
As you all know, HNA Group was originally a wealthy super enterprise with huge assets at home and abroad. However, due to poor management and huge debts, it declared bankruptcy in January this year, and was subsequently taken over by the Chinese Communist Party for reorganization. Now, just as the Evergrande incident was full of troubles, news of the arrest of the chairman and CEO of HNA suddenly came out. Is this a coincidence? Or was it arranged by the government intentionally?
In my opinion, this should be a media show specially arranged by the government to warn Xu Jiayin, Evergrande high-level officials, and the Red 2nd and 3rd generation dignitaries behind Evergrande, and warn them to cooperate with the reorganization of the Party Central Committee and cooperate with the official takeover. , Don’t want to bargain, and don’t want to take the opportunity to engage in large-scale social unrest, otherwise you will end up in prison.
Of course, the official did not make such a statement, but the official has already sent a working group two weeks ago to enter Evergrande to investigate Evergrande’s debt and financial situation. Will it also know whether Xu Jiayin and Evergrande’s senior executives, or What about the flow of money among Evergrande shareholders? Will you find a handle? definitely will.
Therefore, I think that the Beijing authorities and Evergrande are still in the final negotiations. If Evergrande cooperates, Xu Jiayin may be allowed to save his life and use a certain amount of money to appease the victims and spend money to eliminate disasters. But if Evergrande does not cooperate, it is very likely that Beijing will bring Evergrande down first, and then reorganize it urgently, and it is very likely that Xu Jiayin and other Evergrande high-level officials will be sent to prison in the name of suspected crime.
In a word, today’s HNA is likely to be tomorrow’s Evergrande.
Okay, let’s stop here today. Thank you for watching. We will meet again next time.
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Thousands of times in the red dust
Who am I when the curtain rises
Half dream and half awake
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Tang Hao*
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