An in-depth analysis of China’s Belt and Road Initiative, the limitations of AIIB, the corruption of princeling enterprises, and the growing instability surrounding Wang Jianlin’s Dalian Wanda Group, revealing the structural fragility of Xi Jinping’s regime.

The Dalian Wanda Group, led by Wang Jianlin, one of China’s top three tycoons, is also entering a precarious phase.
2017-08-06.
The following is a continuation of a dialogue feature published in this month’s issue of WiLL, spanning fifteen pages in three-column format, and arguably representing the finest contemporary analysis and critique of China.
The Fate of the “Godfather.”
Fukushima.
China has issued green lights without regard for profitability whenever a project was deemed strategically necessary.
This approach has been the root cause of China’s abnormal accumulation of domestic debt, and it appears they intended to apply the same logic to the Belt and Road Initiative.
In essence, they sought to sustain the bubble and maintain short-term economic growth by expanding domestically bloated projects into surrounding regions.
They also aimed to create outlets for excess construction materials and absorb unemployment.
However, AIIB has already obtained triple-A ratings from Moody’s and Fitch.
This means it can no longer conduct sloppy screenings. Their expectations were thwarted.
Yaita.
It is barely functioning.
It is effectively dormant.
Fukushima.
In one sense, it is gratifying.
There was a long-held aspiration for Chinese nationals to lead international financial institutions.
But it has become a financial body ill-suited for raising funds for the Belt and Road Initiative.
Yaita.
One particularly risky Belt and Road project is the port of Hambantota in southern Sri Lanka.
It was built through excessive lending.
As a result, repayment became impossible.
Eventually, it was seized.
China ended up taking control of the port’s management rights.
A private financial institution would consider selling it quickly for profit, but China instead considers deploying naval vessels there.
This shift from economic transactions to other objectives creates serious security concerns.
Fukushima.
Indeed, the Belt and Road plan itself emerged from China’s hegemonic strategy.
While maritime dominance has long been seen as the key to global power, China also sought to secure land routes once again.
The United States remains the strongest maritime power.
Russia is a rival continental power, but at present maintains a close relationship with China.
Approaching Europe via land routes was seen as a way to counterbalance the maritime powers of Japan and the United States.
However, land infrastructure is costly, and railways and roads require extensive maintenance.
Ultimately, Belt and Road has progressed more smoothly along maritime routes.
These routes overlap with the “String of Pearls” strategy, making them easier to advance.
Yaita.
What is interesting is that these national projects are being executed by princeling-affiliated enterprises.
Large vested interests are deeply involved, and as the projects progressed as national strategies, they transformed into profit-making mechanisms for the privileged class.
They have gradually diverged from their original objectives.
Fukushima.
Xi Jinping dislikes these princeling enterprises and has intensified pressure on them.
Recently, Wu Xiaohui, CEO of Anbang Insurance Group, once considered untouchable under the protection of the Deng Xiaoping family, fell from power.
The Dalian Wanda Group, led by Wang Jianlin, is also facing uncertainty.
From the perspective of princeling and “red” enterprises, the Xi administration appears to be a destroyer of existing economic order and mechanisms.
Yaita.
It is said that when Xi Jinping lived in the United States in the 1970s, his favorite film was The Godfather.
It begins stylishly, but everyone meets a tragic end in the end.
Fukushima.
For example, Deng Xiaoping pursued reform and opening, which was inherited by Jiang Zemin and Hu Jintao, all aiming at economic development.
There was a shared direction and a visible storyline.
With Xi Jinping, however, it is unclear how China is supposed to land.
Yaita.
Xi Jinping has no ideology.
It feels as though he merely wants to assert authority.
Fukushima.
Some say Xi Jinping may become the third strongman after Mao Zedong and Deng Xiaoping, but if so, he could become the worst kind of dictator—one without ideology.
Yaita.
Are we heading back to the Mao era?
We must seriously consider how to engage with China.