Must-Read: Minxin Pei: Xi Jinping’s war on the ‘financial crocodiles’ gathers pace

Must-Read: Minxin Pei: Xi Jinping’s war on the ‘financial crocodiles’ gathers pace: “Beijing will pass off a politically motivated purge as tough regulatory enforcement… https://www.ft.com/content/19810ea2-5814-11e7-80b6-9bfa4c1f83d2

…Making an example of China’s wealthiest tycoons can… rein in overly aggressive business practices endangering the stability in China’s overleveraged and under-regulated financial sector. But the political benefits… are likely to be even more significant. A large number of these tycoons had made their immense fortune before Mr Xi’s ascent to the top in late 2012…. For example, Wu Xiaohui, Anbang’s chairman who has recently been detained, is married to a granddaughter of Deng Xiaoping…. Connections, once priceless assets, have become dangerous political liabilities now that the same officials have either retired or fallen victim to Mr Xi’s anti-corruption campaign. By cleaning out China’s financial system, Beijing is able not only to restore some semblance of order in this vital sector, but also to get rid of tycoons with dubious political loyalties. Carrying out such a purge is relatively easy. Since many Chinese tycoons depend on state-owned banks for funding, the simplest way of pushing them under is to order the banks to cut off credit….

This crackdown will be discriminating. A large number of Chinese tycoons will be sitting ducks because of their enormous wealth and questionable political allegiances. Others will be left alone or forced to prove their loyalty. When it is over, we should expect a complete re-ordering of China’s economic oligarchy. The move against Anbang, Dalian Wanda and others is only the opening shot in this campaign…