|
Ma Out — Jack Ma, long a target of regulatory scrutiny in China, has announced that he will cede control of Ant Group.
The Chinese billionaire, one of the PRC’s most prominent entrepreneurs, is finally hanging it up. The move has allegedly been long considered as something of a release valve for pressures put on the business by the Chinese authorities.
The verbiage in the news about the change of control is that regulators didn’t “demand it,” but they do bless the transfer of control of one of China’s biggest companies.
In 2020, Ma actually was widely reported as missing; his usual public persona was noticeably absent for months, most likely out of fears about retribution for public comments made about the good ol’ boys club in Chinese Finance. There were even fears amongst journalists that Ma was silenced by the Chinese government—as in, permanently silenced.
At times, China is a hard business partner. Businesses that once relied heavily on Chinese exports to supply their operations are now struggling to import the right mix of goods and raw materials to meet demand.
The Zero C19 policy has left millions of workers stuck at home, slowing down the Chinese economy to a state that hasn’t been seen in decades. Unemployment in the PRC is high, the housing market is in crisis mode, and the Chinese consumer is sitting on their yuan due to fears of the next lockdown or financial instability in the country.
An overreliance on China has proven to be a thorn in the side of the US economy as the economy reopened after the pandemic.
Additionally, America’s reliance on rare earth metals and certain products amounts to a national security challenge, particularly with China’s tendency to surveil, steal, and meddle through intelligence and corporate espionage operations.
Enter the CHIPS Act. This quarter trillion dollar behemoth of a bill proves what the bicameral branch of our government thinks about China.
The latest version of the bill aims to jumpstart spending on R&D to close some of the gaps in technology areas in which the Chinese have a head start. It also proposes almost $55Bn of direct stimulus to construct and expand semiconductor facilities.
To put things in perspective: software and microchips are everywhere, so I do recognize the value in bringing chip production on shore. Similar to domestic energy issues, semiconductor security is national security.
Even your toaster these days has a computer inside of it, and the logic for that computer runs using software on a chip on a teeny, tiny board that today was probably made overseas.
Now scale up and away from toasters, and think about the chips required to run or build cars, airplanes, power plants, water treatment facilities, defense systems, etc., etc., the list goes on. There are brand new cars sitting in parking lots right now waiting for chips from overseas.
If the relationships with foreign trade partners really sour, imagine the economic slowdown and security crisis that would ensue if we can’t source chips to toast our bread or shoot air-to-air missiles.
This is probably an oversimplification. We will see how this complexity unfolds.
|
Totam amet excepturi quia odio officiis et non. Culpa non distinctio pariatur esse odio cumque aut. Enim illum sequi sint commodi ab laborum cupiditate quis. Fugiat ex quia repudiandae odio itaque ducimus.
Laudantium itaque et blanditiis et. Illo modi fugit cumque est maxime. Consectetur provident voluptatem corporis eum veniam explicabo debitis adipisci. Omnis et est explicabo accusamus explicabo necessitatibus.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...