The Chinese Communist Party expects this year’s economic growth to reach around 5 percent. But to hit that mark, China needs foreign investment. That begs the question: why are Beijing officials seemingly encouraging just the opposite—making moves that scare off overseas businesses?
Jon Pelson, author of ‘Wireless Wars,’ says it’s related to how Chinese leaders can’t be fired—or voted out.
“When you can’t be fired, it’s kind of hard to expect them to behave in a way that’s sensitive to market needs and investor needs. ”
Pelson also points out that the money leaving China through legal avenues is only one part of the big picture. Large sums are also exiting the country through money laundering.
He outlines one such scenario.
“But one of the more intriguing methods I heard about is the casino technique, where you go into Macau, you lose a million dollars gambling, you show up in Vancouver, or some Western casino, you make a million dollars in gambling, and with the right connections between those casinos, you’ve laundered your money out of the country.”
The full scale of China’s black market remains unknown.