The Chinese communist regime’s Ministry of National Security has issued a rare warning to punish those who speak negatively about the Chinese economy.
China observers believe this shows that the Chinese economy has reached a dangerous point, and that investors no longer have confidence in the ruling Chinese Communist Party (CCP). At the same time, capital flight is accelerating.
China’s Ministry of State Security posted an article on its official account on the Chinese social media platform WeChat on Nov. 2, pledging to “actively participate in protecting the country’s financial stability and closely monitor risks in the industry.” It warned that it is necessary to “clearly understand the many risks and challenges facing its financial security.”
The article said that there are four kinds of people: those who predict the “hollowing out” of the Chinese economy, those who have already taken action to withdraw funds from China, those who talk and promote the idea of moving capital out of China, and those who are draining the Chinese economy from within. These people and their actions have attempted to shake the international community’s confidence in investment in China and to trigger domestic financial turmoil in China. The article threatens to punish these “financial crimes” in accordance with the law.
The unusual statement about China’s economic problems from the CCP’s national security ministry attracted international attention.
U.S.-based current affairs commentator Tang Jingyuan said in his YouTube talk show on Nov. 4, “This is from Xi Jinping, it’s Xi’s direct order. The Ministry of National Security has never interfered with finance or the economy before, except for serious financial crimes. They are not in charge of the specific economic issues, such as investment withdrawals from China.”
Mr. Tang pointed out the dangerous trend set by the national security ministry’s statement: “Nobody else in the international community dares to let spies take charge of the economy. Spies managing a nation’s finances is an unprecedented change. It is a harbinger of spies governing the country in a comprehensive manner. Today, the Ministry of Security is to take over finance and outline the direction of development of the financial field. Will the next step be to let the spies point out the direction for education?” he asked.
CCP leader Xi Jinping said at the Central Financial Work Conference on Oct. 31 that preventing and resolving financial risks is the government’s “eternal theme” and vowed to strengthen supervision in all aspects.
Li Hengqing, an economist based in the United States, told The Epoch Times on Nov. 2 that none of Mr. Xi’s proposals, including those at the Central Financial Work Conference, can actually be expected to work. “The entire Chinese financial system is at risk, and the storm is coming, and it may collapse at any time. ”
New York-based senior current affairs commentator Li Linyi told The Epoch Times that the CCP’s financial sector faces multiple risks, such as debt risks and property market risks. “One is the risk of capital outflows, as evidenced by recent shrinking foreign exchange reserves.”
According to public data, China’s foreign exchange reserves continue to decline this year. In August, it fell again by US$44.2 billion, a decrease of 1.38 percent; in September, it dropped another US$45 billion, a decrease of 1.42 percent—the largest decline in seven months.
As of the end of September 2023, China’s foreign exchange reserves were US$3.1151 billion. China’s foreign exchange reserves are mainly U.S. dollar assets.
Mr. Tang said that Mr. Xi believes there are two root causes for the problems facing China’s economy: “One is the United States using ‘currency hegemony’ to suppress the Chinese economy, and the other is the four kinds of people inside China who ‘sabotage’ Chinese economy, and that’s why they need to be cracked down upon.”
Mr. Li said he believes the problems with China’s economy are actually because “the international community does not trust the CCP, and foreign businessmen are trying every means they can to withdraw their investments from China; while domestically, people who have some money—whether they are middle class or high-income and high-net-worth people—are trying to find ways to transfer money out of China as the RMB continues to depreciate.”
Meanwhile, the CCP’s Ministry of National Security came out to threaten those who predict a negative future for China’s economy and the hollowing out of capital.
Mr. Li believes the new policy shows that financial turmoil in China has already set in.
“Now, the CCP not only warns them but will also arrest those who talk about moving capital out or are already withdrawing from China. The money is theirs, so can’t they take it away with them? Now, it has become like this.
“This has indicated to the Chinese people and foreign investors that this government is not based on the rule of law, but is entirely governed by rulers with unconstrained power. Therefore, capital withdrawal from China is inevitable,” Mr. Li said.
Cheng Jing and Luo Ya contributed to this report.