We’re at Peak Panda

Big Lychee》

The South China Morning Post describes Hong Kong uber-tycoon Li Ka-shing’s strategic shiftfrom Greater China property to international utilities and infrastructure. Li’s model – make big easy profits in Hong Kong and Mainland real estate and buy revenue-generating assets in the West – goes back years. But as the SCMP notes, even Cheung Kong’s property arm is moving out of property.

A Bloomberg story provides some context about China’s rise topping out. Even the Communist Party’s most loyal admirers must concede that the huge gains of the last few decades have run their course. The leadership is now trying to keep growth going artificially through a credit binge while it figures out a way to move on to a higher-productivity economy without relaxing Communist Party control over markets, or pretty much anything.

The accepted wisdom is that the CCP keeps itself in charge by delivering economic growth. According to this rosy view, Xi Jinping’s Clampdown on Everything and Everyone – now approaching its fifth anniversary – is calculated, prudent preparation for the next bout of liberalization.

Some, perhaps including Hong Kong’s nimbler ‘instant-noodle patriot’ tycoons, might have a more cynical interpretation. That is that the CCP will in fact sacrifice economic growth to keep itself in charge – if that’s what it takes. The clampdown is to avoid economic (social/political/all-the-same-thing) liberalization.

Look at it this way: why are Chinese elites and the upper-middle class moving their assets offshore, sending their kids to overseas universities and acquiring foreign passports?

The stock answer is that they are concerned about air pollution, tainted food and overpriced housing, which makes it sound like a passing lifestyle trend. But it looks more like a long-term hedge against permanently worse conditions at home – relative economic stagnation, an unpredictable government, possible foreign adventurism, looming demographic horrors. (On the subject of ditching the old country: at this stage in its rise to global might, the US was processing millions of migrants at Ellis Island. Huddled masses yearning to breathe free are still giving China a miss.)

Oddest thing of all, China’s elites are moving their wealth and families to decaying English-speaking sunset-empires whose degenerate liberal democratic capitalist model is dragging them into the quagmires of Trump and Brexit.

Meanwhile, the Hong Kong government announces the latest instalment of your endless Belt and Road Opportunities.