Tag Archives: Communism

Mass Protests in China as Bank Runs Continue

July 12, 2022 tremendousblog 2 Comments

Major news out of China as over 1,000 protestors in Zhengzhou demanded their savings back:

This is huge. Don't know how this will end. Henan bank is NOT the only one that is having problems with liquidity. All four Chinese banks are having the same issue. Some depositors found they can save and can NOT withdraw money with their bank cards. #bankrun #China #CCP pic.twitter.com/5WYYgpmIWP
— Jennifer Zeng 曾錚 (@jenniferatntd) July 10, 2022

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There are runs on several Chinese banks. The depositors, desperate not to lose their life’s savings, are taking great risk to speak out.

From the Indian Express:

In a rare large protest in China, over one thousand angry bank depositors, who have been protesting for access to their frozen funds, faced off with the police in Henan province leading to a violent clampdown Sunday.
Depositors of four rural banks in this central province have not been able to withdraw their funds since April. Sporadic protests have been going on since May.

Many smaller Chinese banks promised high interest rates to attract deposits. They advertised those rates on platforms run by Chinese tech giants like Baidu and JD.

Now, these small banks are finding themselves unable to pay those high rates. Worse yet, some banks have been infiltrated by criminals who are siphoning money out:

In the present case it is being alleged that these banks attracted deposits by offering attractive terms and high interest rates. A report in the South China Morning Post in May said that while Bank of China offers 2.75% a year interest on five-year deposits, the found banks in question were giving around 4.5% a year on their deposit products through third-party platforms.
Also, a statement by the Henan police on July 10 said that a criminal group had gradually taken control of several rural banks and was moving out funds.

Behind the peril facing Chinese banks is a weak economy. Intense COVID lockdowns this year have hammered economic activity.

An overheated property market is also crumbling. This has triggered defaults at major property developers, including Evergrande.

Something interesting happens when people see depositors struggling to get their money out. They start wondering about their own bank.

This is how a contagion could spread through the Chinese banking system. Cue It’s a Wonderful Life, without the happy ending.

The Chinese government’s violent repression of small savers in Zhengzhou may be just the beginning.

China is in a sensitive period. The 20th Party Congress, enormously important to the Communist elite, happens in November.

At that meeting, Xi hopes to secure a third term in office and effectively become leader for life. He and his underlings are likely to repress any “disturbance” during this time.

Already, China’s massive surveillance apparatus is being turned on these small savers.

Zhengzhou protesters have had their “health codes” turned off. Without the green QR code on their phones, they can go nowhere and do nothing.

The health code system was created to stem COVID. Predictably, it’s now being turned against dissidents.

I’m not a particularly religious man, but this Orwellian act reminded me of a passage from the Bible:

It forced all the people, small and great, rich and poor, free and slave, to be given a stamped image on their right hands or their foreheads,
so that no one could buy or sell except one who had the stamped image of the beast’s name or the number that stood for its name.
Revelation 13:16-17

I hope these decent, hardworking people will get their life’s savings back. I also hope we always resist this type of tyranny here at home.

What do you think is next in China? Leave a comment at the bottom and let me know.

Citadel Loans Supported Chinese Surveillance

April 7, 2022 tremendousblog Leave a comment

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Citadel made a major loan to a Chinese surveillance company in 2006. This shadowy company, which doesn’t even appear to have a website, has sold surveillance equipment to China’s Communist government.

From a new report from Crain’s Chicago Business:

…in 2006, Citadel loaned $110 million to China Security & Surveillance Technology. The company used the funds to acquire “10 of the 50 biggest surveillance companies in China.” That has opened it to charges that it “provid(ed) much of the surveillance infrastructure for the ruling Chinese Communist Party, including technology used to alert police of possible unsanctioned protests and internet cafes to track down democracy advocates and dissidents.”

Citadel CEO Ken Griffin doesn’t seem to find the loan problematic, according to a statement he released:

“In 2006, China Security & Surveillance Technology—a company listed on the New York Stock Exchange—was raising further capital to pursue growth opportunities. CS&ST was hoping to be selected as a key partner in providing security capabilities for the 2008 Beijing Summer Olympics and the 2010 Shanghai World’s Fair to ensure those events would be safe for everyone.

So what does this company do? It appears to have gone private since Citadel’s loan, but here’s how the company described itself in an SEC annual report it filed while a public company:

We are primarily engaged, through our indirect Chinese subsidiaries, in the manufacturing, distributing, installing and servicing of surveillance and safety products, systems and services, and developing surveillance and safety related software primarily for governmental entities and their affiliates, non-profit organizations, and commercial entities in China.

In other words, the company sells surveillance gear to the Chinese government, among others. Citadel’s involvement with this business is concerning, given China’s oppressive surveillance of its population.

Ethnic and religious minorities such as Uyghur Muslims are particularly hard hit. From The Guardian:

The US has accused China of committing genocide and crimes against humanity for running a mass detention, repression and sterilization campaign against Uyghurs and other mostly Muslim ethnic minorities. Countless reports have detailed detainees enduring torture, coerced abortions as well as re-education in what former secretary of state Mike Pompeo described as the “forced assimilation and eventual erasure” of Uyghurs by the Chinese government.

The surveillance system propped up by these often global companies serves to facilitate that genocide, argues Dolkun Isaa, president of the World Uyghur Congress advocacy group.

“The goal of these surveillance tactics is not only to instill fear in Uyghurs’ minds that every aspect of their behavior is monitored, but most importantly to single out Uyghurs for detention in the internment camp system,” Isaa said.

Griffin may be right that China Security & Surveillance Technology bid on an Olympic contract. But it appears that he and his company didn’t ask any questions about what else the company does.

Citadel’s “make money now, ask questions later” attitude has also made it a target of a federal investigation here in the US.

I only hope someone holds this company accountable.

More on markets:

Citadel Under Federal Investigation

Mass Firings at Citadel Right Before Federal Probe

NYSE Investigating Shopify Stock Plunge; Citadel Involved

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Photo: Citadel LLC CEO Kenneth Griffin

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China’s Real Goal in Tech Crackdown: A Regimented, Obedient Society

August 31, 2021 tremendousblog 1 Comment

China’s government has just launched the latest salvo against its own technology industry:

China on Monday issued strict new measures aimed at curbing what authorities describe as youth videogame addiction, which they blame for a host of societal ills, including distracting young people from school and family responsibilities.
The new regulation, unveiled by the National Press and Publication Administration, will ban minors, defined as those under 18 years of age, from playing online videogames entirely between Monday and Thursday. On the other three days of the week, and on public holidays, they will be only permitted to play between 8 p.m. and 9 p.m.

This is likely to have a substantial effect on major Chinese tech companies like Tencent and NetEase, leaders in videogames. The new regulation is the latest development in a crackdown on companies in ride sharing, food delivery, educational tech, and more.

I see two major issues with this crackdown:

Economy

If you can have your business regulated out of existence at any time, you might not start one. And if you do, it will be a lot harder to attract investors.

Tech companies rely on venture capital to grow. That funding is already beginning to dry up. No wonder the number of Chinese companies reaching $1 billion valuation (“unicorns”) is falling off a cliff:

I invest in American startups regularly. There is zero possibility I’d invest in a Chinese one. The odds of the government one day deciding your industry is bad for “social stability” are just too high.

Without capital, Chinese tech companies will wither.

Society

Imagine the U.S. government telling you, “Sorry Timmy, you can only play video games from 8 to 9pm on weekends. Oh, 7 is better for you? Well too bad.”

In the context of a free society, this is unthinkable. In China, the government is taking on the role of a parent. It’s another step to totalitarianism, where the government controls all aspects of life.

And China’s crackdown goes way beyond tech:

Zhao Wei, one of China’s most prominent actresses, saw her presence mostly scrubbed from the country’s internet overnight. Her fan page on Weibo, China’s heavily censored version of Twitter, was shut down. Movies and television shows she starred in — some going as far back as two decades ago — were taken off streaming platforms, with her name also removed from the cast lists.
On Chinese social media, some comments said the crackdown was reminiscent of the Cultural Revolution, a decade of political and social turmoil between 1966 and 1976 during which arts and culture were restricted to promoting party propaganda.
It was not immediately clear why Zhao was targeted.

The message from Xi Jinping is clear: he wants the people quiet and obedient. Anyone who stands out for any reason, be it an actress or a tech tycoon like Jack Ma, will be dealt with.

If you’re in China now, I urge you to emigrate. This will not end well.

How to Get Internet to Cuba

July 20, 2021 tremendousblog 1 Comment

Amid deepening poverty, escalating COVID cases and a lack of vaccines, Cubans are doing something very brave: protesting against the Communist dictatorship in the largest demonstrations in six decades.

I can’t even imagine how afraid they must be, but they’re out there. And activists need to be able to coordinate with each other. The Cuban government knows this, so they’ve taken a cue from dictatorships in Iran, Myanmar and elsewhere: restricting the internet.

Cuba’s government has disrupted access to WhatsApp, Facebook, Instagram, Telegram and YouTube, per London-based watchdog NetBlocks. These disruptions have gone on for over a week so far and show no signs of ending.

As an American with a love of freedom and a background in tech, I thought I’d research some options for our Cuban friends:

Alternative social platforms: Twitter is not yet blocked, although it could be at any time. Less used video platforms like Vimeo or Dailymotion are also available.
Privacy tools: VPN’s continue to work, as does Signal, the encrypted messaging app used by Edward Snowden. This could be a superb WhatsApp alternative. Tor is a great option for browsing. It’s available for desktop or mobile in a convenient browser form. It routes data through many servers, making your traffic untraceable. Unlike most VPN’s, Signal and Tor are free. I use them myself.
Satellites: Not viable. These need ground infrastructure that Cuba doesn’t have and their government won’t allow.
Balloons: Much discussed and a great potential solution, but I fear the implementation will take too long to be of use to Cubans. These balloons exist today, cost in the tens of thousands (chump change to the US government), and float in international airspace. They could be positioned over international waters as well.

Cuba would be taking an extreme step to shoot them down, if they could even accomplish it. And in any case, we could always launch many, many more.

If anyone knows of any good charities working on these issues, please leave a comment at the bottom of the page. I’d be happy to contribute to any good effort in this area.

Patria y vida, amigos!

China Is Crushing One of Its Most Innovative Companies

July 16, 2021 tremendousblog Leave a comment

Didi Chuxing, or “Honk Honk Taxi”, was one of the greatest success stories of Chinese tech. Founded in 2012, it broke out just months later by providing rides during a heavy Beijing snowstorm. A regular taxi was impossible to get, but Didi came through.

After that, the company was on the fast track. It raised over $23 billion in funding from major venture firms like Softbank and beat Uber to dominate the Chinese market. So when the time came to go public this summer, markets had every reason to cheer.

Just sixteen days later, things look a lot different. Here’s what Didi’s stock has done:

Investors are down 15% in just two weeks, a disappointing debut. Meanwhile, Didi’s offices are flooded with Chinese state security agents:

China sent regulators including state security and police officials to Didi Global Inc.’s ride-hailing business on Friday as part of a cybersecurity investigation, the latest development in a regulatory saga that has gripped China’s tech industry.
Regulators from government units including the Ministry of Public Security, the Ministry of State Security, the Cyberspace Administration of China, the Ministry of Transport and Ministry of Natural Resources will be stationed at Didi starting Friday for the investigation, the cyberspace administration said in an online statement.
Potential outcomes include financial penalties, suspensions of business licenses and criminal charges.

Imagine if, shortly after its IPO, FBI and CIA agents raided Uber headquarters. This is exactly what’s happening to Didi.

Didi may not have adequately disclosed the concerns the Chinese government had about its security practices. That, and substantial investor losses, set the stage for a tsunami of shareholder lawsuits. Indeed, a class action suit has already been filed against Didi.

I see Didi being increasingly distracted by heavy pressure from the authoritarian Chinese government along with cascading lawsuits in the US. Even if the company survives, they’re distracted and ripe for disruption.

There is no evidence Didi has actually done anything improper with user data. But the Chinese government doesn’t like any information passing outside its borders, and companies are required to make disclosures to IPO in the US, so Didi is now under fire from a powerful and dictatorial government.

Another company had its IPO on the same day as Didi: SentinelOne, a California-based cybersecurity startup. Here’s how they’ve done since:

Up 4% with no regulatory problems: a situation Didi can only dream of.

If one Chinese company after another comes under the Communist thumb, and investors suffer as a result, why wouldn’t the venture funding go to the SentinelOnes rather than the Didis? Even in today’s hot market, there are always more startups than there is funding. Chinese companies, with their unique regulatory risks, are likely to be the last in line.

China has generated amazing innovation, but those days may be coming to an end.

Have a good weekend everyone!

How China’s Tech Industry Dies

July 13, 2021 tremendousblog 3 Comments

The Chinese Communist Party has launched a severe crackdown on the technology industry:

Didi Chuxing, the Chinese equivalent of Uber, had its app removed from all Chinese app stores shortly after its US IPO
ByteDance, parent company of TikTok, shelved its IPO plans under regulatory pressure. Its CEO has resigned.
Over 30 tech companies have been hauled in for meetings with regulators
Ant Group, a financial company founded by Jack Ma that would’ve been among the largest IPOs in history, had its IPO in China cancelled after Ma criticized authorities

This crackdown makes it nearly impossible for Chinese companies to list their shares in the US, removing one of the main ways that venture capitalists cash out. This will cause venture firms to shy away from investing in Chinese companies.

Why does this matter? Let’s take a look at how venture funding works:

1) Company makes product
2) Company pitches investors
3) Investors give company money
4) Company uses money to hire engineers and make a better product, and…
5) Acquire users through ads and/or building their sales team. Next…
6) With more users and revenue, company comes back to VC’s to raise more money at a higher valuation. Then, they do more of 4-5
7) After repeated rounds of VC funding, the company either gets acquired or goes public. VCs cash out.

But Chinese companies cannot go public in the US for the forseeable future, and even a listing in China may not be possible, as Ant Group proved. And if the Chinese authorities think a US listing brings security risks, surely the acquisition of a Chinese tech firm by a US company would be even riskier and thus also off limits.

What does that leave in terms of exits? Acquisition by a Chinese tech company, which means a lot fewer and smaller potential acquirers. The only other option is an IPO in China, providing the company doesn’t offend anyone. But the Chinese stock market is just 1/4th the size of the US one, so the payoff may be much smaller.

No exit means no investment. For VC firms, the exit is the entire point!

Unlike in China, firms in the US and elsewhere will be able to choose whatever exit is the most lucrative. That means they’ll be able to raise venture capital much more easily. That money will let them hire the best engineers, build the best products, and acquire tons of customers, leaving Chinese firms in the dust.

A couple of years ago, I thought the Chinese technology industry might overtake the US. I don’t think that anymore. With the government’s hand ever heavier, I see Chinese technology falling further and further behind.

The Chinese people have proven they have the skills to compete. But will their government let them?

China Is Killing its Tech Industry

July 5, 2021 tremendousblog 1 Comment

Major news over the holiday weekend as the Chinese government required all app stores in China to remove the Didi Chuxing app. Didi is the Chinese equivalent to Uber, and dominates shared rides in the country, along with a major presence abroad:

China has ordered app-store operators to remove the app of Didi from their stores, the latest as tension escalates between the nation’s largest ride-hailing giant and local regulators. The app has disappeared from several stores including Apple’s App Store in China, TechCrunch can confirm.
The nation’s cyberspace administration, which unveiled the order on Sunday, said Didi was illegally collecting users’ personal data.

Existing users can continue the use the app for now, but new signups are blocked. This comes just days after Didi raised billions in an IPO in New York, perhaps angering the Chinese government.

The claim of data violations seems specious. Didi’s CEO, Li Min, denies that any data is handled improperly or passed to the US.

This is part of a broader crackdown on China’s technology industry:

Alibaba Group fined $2.8 billion shortly after CEO Jack Ma criticizes the Communist Party
Fintech giant Ant Group, also founded by Jack Ma, has IPO cancelled
Bitcoin miners forced to shut down and are racing to move their servers elsewhere, including the US, as the Chinese government prepares to launch its own competing digital currency
A Chinese billionaire, many of whom are in the technology industry, dies every 40 days on average, often in suspicious “accidents” and “suicides.” Some are simply executed.

What is this doing to China’s technology industry? The damage is reflected in a massive decline in the number of “unicorns,” or startups reaching $1 billion valuation, in China. Meanwhile, the number of unicorns in the US is skyrocketing and the tech industry as a whole is hotter than ever.

China’s overall economy has also trended sharply downwards in recent years:

The Communist Party doesn’t want any competing power centers, and the Chinese tech industry, with its wealth and control of information, is perhaps the biggest alternative power center left.

But the industry needs freedom to experiment and exchange ideas, and a stable climate without the constant threat of fines, shutdowns and imprisonment. Entrepreneurs can find that here in the US, along with abundant funding. And I think you’ll see more and more of them making that jump.

From Anticommunist to Navy SEAL: “I Owe Everything to America”

April 16, 2021 tremendousblog 1 Comment

“I owe everything to America.”

That’s Thomas ‘Drago’ Dzieran, who left Communist Poland in the 1980’s for freedom in America and became a Navy SEAL. His path to the teams is singular.

Drago began to oppose Communism at an early age. He refused to learn Russian in school and was promptly hauled to the principal’s office. The principal explained to him that if he refused again, he could be taken from his family and sent to a foster home.

This did not stop Drago from questioning the Communist system. He listened secretly listened to the BBC on the radio, a highly illegal act. There he learned that the Communist government was killing people in Poland. He covered himself in blankets to dampen the sound as he listened, but his mother scolded him to use even more blankets and pillows lest a neighbor hear. If anyone heard, she could go to prison.

But Drago didn’t need a radio broadcast to tell him things in Poland weren’t right:

“I was always cold in Poland because we didn’t have good clothes.”

Privation was the norm, and he often went to school hungry. He took to assaulting the children of high party members, who were well fed. If you want to eat tomorrow, bring two sandwiches, he told them.

As a young man, Drago found himself in a Polish prison for printing anti-Communist leaflets. When released, he emigrated to the United States, and found himself resettled in Memphis, Tennessee by a refugee program.

The luxury of America amazed him. He had never seen air conditioning before, and found himself particularly mesmerized by American grocery stores. The cereal aisle had so many choices, and the packages were so attractive, he decided to try one. And another, and another. Soon, his cart was full of 50 boxes of cereal! But he couldn’t stop his curiosity:

“I didn’t even know what a cereal was.”

After a stint as an auto mechanic, Drago was looking for a way to serve his adopted home. He settled on being a Navy SEAL, but at 32, he was at least 4-5 years beyond the typical age limit. No matter. He powered through the qualification tests and insisted on being allowed into BUD/S. Drago later distinguished himself as a SEAL during the Iraq war.

Drago’s commitment to freedom continues today, as the founder of a censorship-free social network called Connectzing.

What really struck me in this interview was Drago’s perseverance, along with the stark differences between the United States and where he comes from. On living conditions in Poland under Communism:

“I would trade my life in Poland for prison here.”

After all, they get food and medical attention! That’s better than he got much of his life.

Drago says he owes everything to America, and that’s equally true for those of us who are native born. Let’s seize the opportunity, remembering these words:

“This is America. You can be whatever you’re able to be.”

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Will A Massive Uprising in North Korea Mean the End of Kim Jong-un?

March 10, 2021 tremendousblog Leave a comment

North Korean defector and Youtuber Yeonmi Park is reporting a massive uprising in Musan, North Korea. The uprising began when police cracked down on a market selling Chinese products, which is illegal in North Korea despite them being the only goods available.

Farmers took their farm implements and attacked the police. The backdrop for this is an increasingly hungry population with little to lose. Indeed, the situation is so dire that even Russian diplomats are fleeing the country by railroad handcart, appalled at the lack of basic food and goods.

I haven’t been able to find independent corroboration of this uprising, and Park is unclear on what her sources are, but I assume she is still in contact with people inside North Korea.

Her discussion of the uprising begins here.

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