George Soros: Chinese investors face a brutal awakening under Xi

chinese president Xi Jinping clashed with economic reality. Its heavy hand in private industry weighs heavily on the economy. Real estate is the most vulnerable sector, in particular housing: over the past two decades, China experiments with the UN boom coming to an end. Evergrande, the world’s largest real estate company, is in debt and threatened with bankruptcy, which could lead to a crash.

The underlying cause is that Chinese birth rate is below what statistics show. The officially reported figure greatly exaggerates the population. Xi inherited this demographic, but his attempts to change it only made matters worse.

One of the reasons why middle-class families only have one child because they want him to have a good future. Therefore, a large education industry dominated by Chinese companies and supported by US investors. These for-profit businesses were recently banned in China, which has become an important part of the liquidation of shares of Chinese companies listed in New York.

The heavy hand of the Chinese government is real. Although it has gone unnoticed by the financial market, the Chinese government quietly took a share and a seat on the board in April. ByteDance, duea from TikTok. The move gives Beijing a seat on a three-person board and direct access to the inner workings of a company that is one of the world’s largest data collectors. The market is aware that the Chinese government is investing in Alibaba and its subsidiaries.

Xi doesn’t understand how the market works. As a result, inventory clearance was allowed to go far. It has started to hurt China’s goals in the world. Aware of this, Chinese financial authorities have started to appease financial investors and the markets reacted with a powerful rally. But it’s a hoax. Xi sees all Chinese companies as instruments of a one-party state. Investors who buy the rally face a rude awakening. This includes not only investors who are aware of what they are doing, but also larger groups of people who are exposed through pension funds and other retirement savings.

Pension fund managers allocate their assets in a way that is closely aligned with the benchmarks against which their performance is measured. Almost all say they take environmental, social and corporate governance (ESG) standards into account in their investment decisions.

The MSCI All Country World Index (ACWI) is the most closely followed benchmark for those defining global income assets. An estimate of $ 5,000 billion replicating the index. A multiple of this amount is actively managed, but it also closely tracks the MSCI index.

In MSCI’s ACWI ESG Leader Index, Alibaba and Tencent are two of the top 10 contributors. In BlackRock’s ESG Emerging Markets Exchange Traded Fund, Chinese companies account for one-third of total investments. These indices have effectively “forced” hundreds of billions of dollars owned by US investors into Chinese companies. whose corporate governance does not meet the required standards – power and responsibility are now exercised by a man who is not subject to any international authority.

US Congress must approve a bipartisan bill explicitly require asset managers to invest only in companies with governance structures that are transparent and aligned with stakeholders. Obviously, these laws should apply the performance regarding pensions and other retirement funds.

If Congress adopts these measures, give Sec the tools it needs for protect american investors, including those who don’t know they have Chinese stocks. It would also serve the interests of the United States and the international community of democracies.

SEC Director Gary Gensler has repeatedly warned the public about the risks of investing in China. But foreign investors investing in China find it difficult to understand these risks. They have seen China face many difficulties and always come out of it successfully. Corn Xi’s China is not the one they know. You launch an updated version of the game Mao Zedong. No investor has the experience of this China since the investment market did not exist at the time of Mao. by AH the hard awakening who awaits them.