Advertisement
Socialism is still failing in China, and its latest move may make Atlas shrug AP Photo/Andy Wong
Souvenir plates in a Beijing shop bear the images of Chinese President Xi Jinping, left, and late Chinese leader Mao Zedong.

In a move straight out of an Ayn Rand novel, China has begun pressuring healthy, privately-owned companies to bail out failing state-owned enterprises (SOEs).

They call it “mixed ownership reform,” but it’s more like a blood transfusion at gunpoint.

At the “suggestion” of President Xi Jinping and his Communist government, Chinese e-commerce giant Alibaba has been arm-twisted into investing $770 million into the struggling China Unicom, a state-run, multinational telecommunications company with its American headquarters in Fairfax County, Virginia.

RARE POV: Republicans are now more likely than Democrats to say the free market is bad for America

Alibaba’s investment, which according to Business Insider will buy them a 2.04-percent stake in Unicom, is only one among many dubiously consensual deals involving Unicom. According to Business Insider, Unicom will receive over $10 billion from a variety of private-sector companies and give up 35 percent of its shares.

This deal is massive, and it perfectly illustrates the rapid growth of forced bailouts in China. In June of this year, Reuters reported that China had completed 48 mixed ownership reform deals in 2017, raising a total of $1.62 billion. Those 48 deals combined were worth only one-sixth the size of the Unicom bailout, but were nine times the value of similar deals from the same period in 2016.

At first, I was cautiously optimistic, thinking that maybe the Communist Party was shooting itself in the foot by giving private businesses a foothold in state-run companies. Then I realized that it doesn’t matter who owns the shares. When the government can demand multibillion-dollar bailouts from privately-owned companies, there’s no real distinction between the private and public sectors and no economic freedom for anyone.

Advertisement

Ayn Rand asked her readers to imagine Atlas, the mythical giant who carries the world on his shoulders and her metaphor for free-market entrepreneurship and innovation, with “blood running down his chest, his knees buckling, his arms trembling but still trying to hold the world aloft” even though the harder he worked, “the heavier the world bore down upon his shoulders.”

RARE POV: Sorry Ted Cruz, Christianity and Ayn Rand are incompatible

Jack Ma, the CEO of Alibaba, is a real-life Atlas. His company, according to Forbes, reported a 53 percent increase in revenue between March of 2016 and March of 2017 while Unicom’s revenue has declined three years in a row. As a reward for building a successful company, he now finds himself being cannibalized by a failing SOE.

Advertisement

The Chinese Communist Party remains powerful, with the Heritage Foundation ranking the country’s economy as “mostly unfree” with “little momentum for reform,” but if the Party continues to pillage China’s most profitable private companies while relying on their continued success, the day may be coming when the Atlases of China will finally shrug.

Grayson Quay About the author:
Grayson Quay is a freelance writer whose work has been published by Watchdog.org, Townhall, the Washington Times, and the National Interest. He is a graduate of Grove City College, a former high school teacher, and a current M.A. student at Georgetown University. His interests center on political discourse, including issues of free speech, identity politics, pop culture, and online political discussion. He enjoys writing poetry, listening to NPR, and mixing up an icy cocktail of red wine and Sprite on a hot summer day. Follow him on Twitter @hemingquay
View More Articles

Stories You Might Like