Tora! Tora! Tora!

 Disclaimers: Hong Kong resident visitors are advised to read this Declaration prior to further reading of this post. Continuous browsing means the visitor's confirmation of his/her compliance to the Declaration.

======================================================================

Appologize for my lousy gag again. This post has nothing to do with the famous movie about the Japan's attack on Pearl Harbour, nor anything about that piece of history in WII. The title just borrows the analogy of the code which Caption Fuchida used to kick off the bombing at the Harbour to signalize something very important is under way and people must be very cautious about, just like an airstrike is coming soon.

When Xi, the top boss of the CCP, PLA and State, of China first laid the term "common prosperity" in a CCP's meeting in the middle of last month, such speech sparkled big chaos in the business circle in China as well as the investing world. Xi's speech brings out the concept of "the third distribution of wealth" meaning the riches donate their wealth under their will to help the poors contrary to the "first distribution" through wages or dividends payout by corporations while the "second distribution" is achieved by social welfare system via taxation.

Frankly speaking donation is nothing new and should not deserve so much attention in the democratic countries. People, be s/he rich or not, donate or do not donate as well as the donation amount is done according to their own will. Donation is solely a personal and private act despite our society usually admire those who do so but no criticism to those who don't though. While some donors did it in high profile some just made big donation anonymous and despite the formers asked for fame but the latters are truly out of kindness. People are just acting according to their own will.

Unlike what we do in the free world, despite the CCP just made appeal to the riches on the donation/aids, such appeal is heavy-weighted, especially that came from the nation's top boss who is in high power now and where the norm "florish if obidient, perish otherwise" prevails. New rich corporations like Tencent and Alibaba... etc react promptly by making funds in billions of U.S. dollors to answer to this "appeal". They know the name of the game is survival in the place where the Party has the utmost leadership on everything, a characteristic of China's socialism.

Since the open-door policy raised by Deng Xiaoping by the 80s', China has been a magnet of investment. Foreign corporations capitalized on her low costs in running businesses at the beginning to set up manufacturing facilities as well as the exploration on the huge market when the Nation is getting rich in the latter stage. While some pioneers got their fingers burnt, many made good profit out of this country. Hence foreign investors seems either have ignored or forgotten China is still a Communist Party run country where "happy hours" is only something Cinderella. Afterall, the clock is bounded to strike to twelve.

Indeed Common Prosperity is one the central themes of Communism which advocates Common Ownership across Means of Production including assets and of course, wealth. Common Prosperity is only the means but not the end towards the "great ideal". 

As China adopted open-door policy, the western world concerted alongside to embrace her into their system by allowing her into the WTO as well as many international organizations hoping to induce her to join their "club". China thus prospers under the explosive trade volume with the West and became the second largest economy after the U.S. but despite bagging the jackpot, she is still committed and determined on the ideology and institution of her own. China remains a communism country.

Alongside with the advocate of common prosperity, China has recently launched quite some regulation on a few industries like the private tuition, e-game, ride-hailing, food delivery and movie artist ...etc., addressing to different concerns like the data safety, education focus as well as parents' financial burden, mental healthyness of youths and children and corrupted entertaining sector...All in all, China wants to pursuit a path different from the western world to differentiate herself as a China-charactistic socialism country.

With this ambition in mind, more regulation on many other industries and sectors are expected in the pipeline. The business landscape in China perhaps will see a totally different scenario from the past in the years to come. Maybe this is the time to farewell to the "good old time" in investing in China. On the other hand, the most horroble thing in investing in China is that the once successful strategy and experience could become a poison overnightly as long as the top boss in Beijing changes his mind. Perhaps no one could imagine that economic moat, big is beautiful, high profit...which were valued in the past now became a sin. Many stock commentators blah blah on the analysis in China stocks based on fundamentals or financials but what all these commentators fail to foresee is policy risk.

Tora! Tora! Tora! A storm is coming.