The Chinese entrepreneur Jiang Pinchao believes that what the Communist Party has been doing all along is to seize others’ money when the time is right. He argues that the recent crackdown on so-called “illegal cross-border stock trading” by the Chinese Communist Party is actually driven by jealousy towards the profits earned by those securities companies, with the aim of lining their own pockets.
On May 22nd, the China Securities Regulatory Commission and other 8 departments jointly announced a comprehensive crackdown on the so-called “illegal cross-border operations” of overseas securities firms.
Shortly after, the Chinese short video social media platform “Douyin” complied with the official requirements of the Chinese Communist Party to “join the crackdown” and removed over 1,500 short video clips related to cross-border stock trading within the following two weeks.
According to a person in charge at Douyin, the platform explicitly prohibits content that “induces illegal cross-border investments,” including but not limited to guiding Chinese users on how to handle Hong Kong bank cards, open Hong Kong securities accounts, and obtain Hong Kong card services without meeting the eligibility criteria.
Douyin stated its intention to further strengthen content control on the platform and guide investors in “correctly viewing investment behaviors.”
American economist David Huang told Epoch Times that the ability of the middle class and ordinary people in China to engage in cross-border stock trading relies heavily on the plethora of instructional materials available on internet platforms. By seeking to “block and take down” this pathway, the Communist Party is essentially aiming to cut off information flow and forcibly raise the threshold for cross-border investments, causing most ordinary people to give up due to inability to find alternatives, thereby obediently entrusting their funds to be managed domestically.
Jiang Pinchao pointed out that the instructional videos essentially attract funds through teaching, which are then invested in cross-border projects, effectively transferring the money overseas.
As the CEO of an American real estate investment company, Jiang Pinchao believes that the CCP’s crackdown on cross-border stock trading will deprive individuals of a channel to transfer funds but will not change their desire to move their money abroad, citing the currently dire economic situation in China as a driving force for people seeking to escape.
Professor Xie Tian from the Darla Moore School of Business at the University of South Carolina remarked that the more the CCP tightens restrictions, the more valuable and scarce such videos may become. There will always be ways for people to bypass restrictions, either through circumventing firewalls or utilizing alternative channels to distribute such videos to those in need, ensuring that individuals will continue to learn how to invest abroad and funds will keep flowing overseas.
David Huang added that such restrictions will not prevent those who genuinely want to move their capital to do so. While public internet trading platforms may disappear, alternative methods will still exist, and underground money services may even thrive. Individuals could opt for acquiring permanent residency in small African countries, obtain foreign citizenship, and open accounts in Hong Kong, utilizing various means to achieve their goals.
Jiang Pinchao noted how his friends have utilized L-1 visas in the United States to establish multinational companies or seek investment opportunities overseas, enabling them to transfer funds abroad.
On the same day on May 22nd, the China Securities Regulatory Commission accused Singapore’s Tiger Securities, Hong Kong’s Futu Securities, and Hong Kong’s Changqiao Securities of conducting securities business in mainland China without permission, disrupting market order.
According to the Commission’s announcement, Futu Securities faces fines of up to 1.85 billion RMB, while Tiger Securities faces fines of 411 million RMB.
The China Securities Regulatory Commission announced a two-year plan to “completely eradicate” the so-called “illegal cross-border trading of securities” conducted by foreign securities firms.
According to Open Source Securities in China, the value of related accounts held by Chinese investors in foreign securities firms is approximately 54 billion US dollars.
Jiang Pinchao succinctly summarized, “China’s market is a very dangerous one.”
Reflecting on his past experience buying mainland Chinese stocks, he discovered that whenever he purchased, the market tended to drop, emphasizing the prevalence of pitfalls in the Chinese market.
Furthermore, Jiang Pinchao expressed that the policies of the Communist Party often involve seizing others’ money whenever opportunity strikes, exemplified by the current crackdown on securities firms as a reflection of such tendencies.
He warned that the Communist Party’s promises and policies ultimately work against investors’ interests, leading to substantial losses for them.
Jiang Pinchao emphasized the existence of numerous policy traps and pitfalls within the Chinese market, advising individuals to avoid entering the Chinese stock market. He himself has long since divested from the Chinese stock market.
According to Reuters on June 8th, following the China Securities Regulatory Commission’s announcement of measures against cross-border stock trading, many Chinese investors trading Hong Kong and US stocks through Hong Kong securities firms began to feel anxious, viewing the move as the CCP’s strict control over capital outflow.
In response to skepticism, the China Securities Regulatory Commission claimed that the crackdown aims to “purify” the Chinese market and “protect” investors, asserting that it will not affect overseas business operations of relevant securities firms, and the related accounts will not be forcibly closed, allowing investors to sell their assets. The Commission further stated that Chinese assets are “attractive” and welcome both domestic and foreign investment.
Jiang Pinchao sarcastically criticized their remarks, noting how the CCP tends to speak in contradictions and obfuscations, attempting to brainwash others. He highlighted the disconnect between their actions – which entail shutting down companies like Tiger, Futu, and Changqiao and confiscating their assets – and their claims of protecting investors’ assets, questioning the credibility of such assurances.
“Communist Party officials are proficient in doublespeak, trying to cloak their dubious actions with eloquent and grandiose statements,” Jiang Pinchao remarked.
David Huang shared similar sentiments, deeming the self-defense arguments from the China Securities Regulatory Commission as a form of “propaganda brainwashing” aimed at preventing market panic and avoiding a scenario of mass sell-offs that could destabilize Hong Kong and Chinese concept stocks.
He emphasized that capital is inclined to seek attractive destinations, suggesting that if China truly held such allure, funds would be flowing into the country rather than out of it.
Xie Tian pointed out that China’s deteriorating economy and financial markets are facing a collapse, prompting the outflow of capital. The CCP’s attempts to intercept these funds out of fear will only strengthen the phenomenon of capital flight, driving more funds to exit overseas rather than return to the domestic capital market.