Commentary: Amid S billion money laundering probe, a look at how dirty money is washed through online gambling

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MIXERS AND TUMBLERS

To make matters worse, the rise of “mixers” and “tumblers” – terms used to describe paid service platforms that exist to obfuscate the source of cryptocurrencies – add a layer of complexity when attempting to trace the origins of funds.

Think of “mixers” and “tumblers” as washing machines for dirty money. Put in dirty money, run a washing cycle, and out comes clean money.  One prominent example of what “mixers” and “tumblers” could be is an online gambling website.

There are two common modus operandi adopted by money launderers.

First, criminals in Country A gather cryptocurrencies through online scams, extortions, and malware. For example, criminals use victims’ credit cards to buy bitcoins without going through  banks’ two-factor authentication safety measure. The criminals then use the illicit cryptocurrencies to purchase credits from an online gambling platform.

Criminals in Country A play a few rounds online to create legitimate-looking gambling records, then withdraw the credits and convert them into cash in Country B. This method meets with little to no pushback from online gambling sites with weak anti-money laundering (AML) compliance and supervision.

In the second more complex method, criminals operate in close coordination. This entails criminals selecting an online gambling platform, for example online poker, that accepts multiple players.

Criminals in Country A play against their affiliates in Country B and lose deliberately. Country B affiliates then withdraw the winnings and convert them into cash. To succeed, criminals must avoid detection by both the online platform’s AML and anti-fraud systems, as well as other non-affiliated players in the game.

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Malaysia’s domestic banks have limited exposure to Country Garden: Central bank

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SINGAPORE: Malaysia’s central bank said on Monday (Aug 28) that banks incorporated in the Southeast Asian nation faced limited financial stability risk arising from exposure to China’s largest property developer, Country Garden. Such banks’ exposure to Country Garden Real Estate (CGRE), the developer’s wholly-owned subsidiary in Malaysia, amounted to lessContinue Reading

China in crisis waits for clarity from the US

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The Chinese Communist Party rules and holds power based on three legs. The first leg is, of course, self-interest, the preservation of its own naked power. 

The second leg is the ideal and ideological content of the period and of the party, that is, Marxism and its revision of Marxism. The third leg is critical and affects the other two legs: the practical-utilitarian leg moves the party in different directions at different times.

In 1942, Mao Zedong, at the famous Yan’an conference, managed to make it a pillar of party politics. Through this, he managed to sideline and eventually oust the pro-Soviet faction through which Moscow hoped to control the Chinese Communist Party fully.

The principle is exemplified in the four-character shishi qiushi, seeking truth from facts. This is an essential tenet of the party, so much so that the theoretical journal of the party is called Qiushi, “seeking truth.”

Of course, seeking the truth is not in isolation. It has to deal with two other elements: self-preservation and ideological principles. Mao himself put aside seeking truth in the late ’50s and ’60s when his officials blindsided him.

He didn’t believe his loyal lieutenants when he failed to acknowledge the failure of the Great Leap Forward and during the Cultural Revolution. Then, seeking the truth was, for all practical purposes, put out the window because purely ideological pulls and Mao’s self-preservation drove the country.

However, seeking the truth was the fundamental principle that moved the party to recognize the failures of the Cultural Revolution under Mao’s rule and try out the path of Reform and Opening Up.

Thus, this element has become the central pillar of the party in the past 40 years. One aspect of that pillar is that the party must seek the truth to make China powerful and strong; therefore we shouldn’t be blinded by ideology and self-interest.

In this sense, it is crucial how the party reflects and thinks about the world and the successes and failures of other countries, first and foremost, of course, the United States, the present “hegemon” and the standard bearer of modernization and progress.

It is the framework within which the present reflections on China’s national troubles and international situation move.

Performers dance during a show as part of the celebration of the 100th anniversary of the founding of the Communist Party of China, at the Bird’s Nest stadium in Beijing on June 28, 2021. Photo: Asia Times Files / AFP / Noel Celis

China is now mired in enormous economic problems. Real estate, the main driver of growth over the past 25 years, is stuck. Banks are loaded with immense defaulting loans by real estate developers, some of which will never be repaid. The rest of the loans are mostly bound to infrastructure, with a meager and very long-term yield.

The Chinese banking system could be on the verge of virtual bankruptcy if it were not shielded by a not fully convertible currency, making capital flight impossible with massive foreign reserves to withstand possible financial turbulence.

Moreover, there are other long- and short-term concerns. Ten years of anti-corruption policies have sapped enthusiasm and activities from entrepreneurs who drove most of the growth. 

Now, they don’t know what to do – they don’t feel their assets are safe. They used to live and act in symbiosis with their political mentors but now this mentorship is gone. But there is also no new way of development, so they are dragging their feet.

The middle class also sees that real estate is sagging. They have cold feet because most of their savings are stuck in purchasing their apartments. And real estate is not appreciating but depreciating. 

Therefore, they don’t consume or spend, making the economic situation worse. Young people don’t know what to do; they are hoping for futures in the cities, but the big cities are too big and cannot grow any bigger. 

Still, these young people don’t want to go to the provinces, to the countryside – so what can they do? During most of Deng Xiaoping’s reforms, the officials were entrepreneurs in their own right, making money for themselves and the country. Now, they are confined to rigidly sanctioned roles and are not highly active.

The real estate sector should be reconsidered, and the whole growth model for China should be based on internal private consumption.

But once the process is started, it will take years to come to fruition. 

Many people will need to be convinced of the shift. The possible keystone in these reforms will be to ensure that the individual rights of entrepreneurs will be protected against infringements by the party and the state. 

China will also maybe need political reform. The crux would be to put the party under the law and the law above the party. That will be challenging: It would change the nature of China but it would boost credibility domestically and externally.

An old crisis

This crisis was long seen coming. A 2007 essay [1] detailed the necessity of expanding the social welfare system to free personal resources for consumption. 

This welfare should be funded by a new taxation system that entailed democratization. The failure to achieve it would bring a crisis around the year 2022, the essay argued. It was well before Xi Jinping came to power. The party didn’t act then, feeling smug and sure about the future, and now President Xi has to pick up the pieces.

The situation has degenerated, and intervening could be extraordinarily delicate and dangerous; thus the party may ask whether this change is worth the risk. That is, is it worth putting at stake the self-interest of the party?

This is not a selfish and narrow-minded question because the party does not see a brilliant picture of the United States. Democracy seems to be growingly tainted by elite groups who manage to drive the consensus of the people through social media and artificial intelligence. 

They see the United States as politically and socially highly divided, with a right wing that follows some meaningless slogans. Meanwhile, an awkward, extreme ideology besets the left wing.

While Chinese schools teach Latin and Greek classics and Western philosophy, American universities not only do not study Chinese philosophy or classics, they don’t even learn their Western classics. It is a deep, long-term issue that, if not addressed, will worsen things.

Moreover, they see in the short term a lack of American leadership. President Joe Biden appears physically unfit. On the one hand, there is Donald Trump, whose speeches are now becoming illogical. They are spouting insults at enemies, but they make little sense. 

Trump went as far as to openly call on the possibility of civil war, assassination attempts and vote-rigging for the next elections. He almost called on the American people to appoint him by acclamation, forfeiting altogether the theater of the vote.

On the other hand, it seems unlikely that Biden will manage to pull off a second presidential campaign, let alone a second term. The possibility of Trump becoming president and reshaping the whole set of presidential powers is also a sign of a deep crisis. And there is no third party.

Donald Trump supporters clash with police during a riot at the US Capitol on January 6, 2021. Photo: Asia Times Files / AFP / Alex Edelman

In this situation, why would practical, pragmatic China change? What example should it follow? America doesn’t look like the knight in shining armor.

The American example, which at the beginning of the period of reforms and opening up was extremely important in leading the country in its changes, has become now almost impossible to follow. Many people are growing skeptical about the feasibility of America itself and the applicability of the American system to China.

Europe is not faring any better; it is extremely divided, and no country shows clear leadership. Germany is in crisis while France is moving back and forth, with Emmanuel Macron possibly being ousted at the next presidential election. Nobody knows who will be the next president, maybe Marine Le Pen. But what kind of leadership will she exercise over Europe?

Japan and South Korea are interesting but certainly not an example China feels it can follow for many complicated reasons.

Taking time

In this situation, facing these tough and challenging choices, China may choose to kick the can down the road for at least a few months, hoping for some stop-gap measures that could revive the economy and keep it afloat for the time being—at least until the US presidential elections next year.

It is unclear, however, whether China has enough time to afford putting off essential reforms. The depth of the crisis of the internal consumption of real estate could create a landslide, driving international investors out of the Chinese market.

China does not have a fully convertible currency, therefore there cannot be enough capital flight that could crash the market, society and thus politics. It also has vast reserves of over US$3 trillion that could withstand assaults on its financial system.

Still, the situation could get wobbly because there is no clear indication of new massive moves in the economy, and as with Covid, panic could start to spread all of a sudden without warning.

Beijing is walking a tightrope, uncertain about what to do, but not for ideological problems alone. It would like to be cautious and decide what to do only after the United States decides on its next president when it becomes clear who to talk to.

Another element would be that, in the meantime, because American divisions are so profound, nobody rules out the possibility of uprisings and domestic fights that could flare up during the elections, maybe challenging the results, as Trump himself has indicated.

America already had a civil war and now the differences are not as dramatic as 160 years ago. Still, divisions are not to be trifled with because the US has never been so crucial for the international balance of power.

That said, US divisions could create an opening for China. If the United States were to fall apart and somehow derail from its political path, then Chinese priorities would immediately change because there would no longer be a necessity to move ahead fast with the dramatic reforms it needs.

It would be a convenient and economical solution, shishi qiushi. This could be the reasoning in Beijing.

China could pace itself and wait out the American crisis. A third possibility is that the combination of tensions between the United States and China could bring the world to the brink of war or actually lead countries to war. This is a remote possibility so far, but it is real.

In the meantime, Beijing is pacing itself. It has started a debt restructuring process, converting local short-term liabilities into long-term bonds to sell to depositors. That will not solve the problem entirely, but it could bring oxygen back to the country. It is pushing prominent entrepreneurs to be more proactive – we shall see if these measures are effective in a few months.

Beijing is also on the diplomatic offensive, talking to everybody. It brokered peace between Iran and Saudi Arabia and offered a new framework to Central Asia Republics. It is pushing BRICS to become a political alliance and dump the dollar in exchange for something else. Many of these actions may be hard to implement.

BRICS won’t replace the US over night. Image: Screengrab / Twitter

Despite all the hype, replacing the US dollar and the present financial system is hard to do because it would exchange an existing faulty open market with putative arbitrary decisions by some governments. It’s all very uncertain.

Still, this flurry of actions could wade China through these difficult moments and get it to face the new US president at the end of next year. The problem is that it is not a long-term strategy; they are ideas to bide time. 

During the first Cold War, the USSR offered a complete counter system to oppose “evil” capitalism. Choosing the USSR was not choosing Moscow, but picking a possible ideal and systemic alternative to malfunctioning, unfixable capitalism.

Now, China isn’t offering a comprehensive alternative to capitalism; it proposes a geopolitical substitute to America’s malfunctioning leading role. It argues that China or Russia could be a better economic partner than the United States. 

Maybe so, but it’s not a paramount proposal like the Soviet one. And if China were to offer a comprehensive counterproposal, it would run into a whole array of new troubles.

Nevertheless, if practical party leaders don’t see a clear way forward if America is mired in unprecedented problems, they will likely stick to making day-to-day decisions. All of this and the ongoing war in Ukraine mean that the next year or so could become highly volatile.

[1] See “China’s Inevitables: Death, Taxes—and Democracy” in my China: In the Name of Law (2016).

This essay first appeared on Settimana News and is republished with permission. The original article can be read here.

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CBDCs are the future of global money

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NEW YORK – A top motivation for central banks to issue digital currencies, the Atlantic Council reports, is “promoting financial inclusion by providing easy and safer access to money for unbanked and underbanked populations.”

Only 6% of people in high-income OECD countries are unbanked, compared with nearly half in the Global South, according to the World Bank. The United States has nearly 30 bank branches per 100,000 population, compared with four in least developed countries.

Mobile broadband and inexpensive smartphones can provide the poorest countries with quick access to financial services at a fraction of the cost of brick-and-mortar banking. Billions of people now on the margin of the world market can gain access to payment services and micro-credit, promoting local entrepreneurship.

Now in beta-testing in China and at the development stage in the rest of the world, central bank digital currencies (CBDCs) could promote the adoption of local currencies as an alternative to the leading international currencies.

The US dollar’s share in world central bank reserves fell to 58% in 2022 from a high point of 71% in 2000, and the BRICS countries as well as members of the Association of Southeast Asian Nations (ASEAN) are eager to promote their units as alternatives.

Cross-border transactions will be the focus of a new global body, the Central Bank Digital Currency Collaboration Organization (CBDCCO), that will begin operations in January 2024.

Sponsored by the Nobel Sustainability Trust in Zurich (unrelated to the funder of Nobel Prizes), CBDCCO draws on experts from the International Monetary Fund, the Bank for International Settlements (BIS), the International Telecommunication Union (ITU), and other global organizations. It is a successor to the Focus Group on Digital Fiat Currency founded under the auspices of the ITU, directed by former Stanford Professor David Wen.

The chair of the new international body will be Chinese-American entrepreneur Bruno Wu. Previously Wu received the Nobel Sustainability Trust’s first medal for Outstanding Contributions in Sustainability. He is a shareholder of the parent company of Asia Times.

The new Nobel-backed organization is unique in focusing on cross-border transactions, with experts drawn from the US Federal Reserve System, the Bank of Japan, the BRICS New Development Bank, the IMF and the Bill and Melinda Gates Foundation.

By incorporating large numbers of now unbanked individuals into the financial system, CBDCs can create broad demand for local currencies while restricting the use of cash for illegitimate purposes, stabilizing the value of local currencies and making it easier for central banks in developing countries to manage the money supply.

The dependence of poor countries on large amounts of unsupervised cash is a significant source of instability for local currencies.

The main beneficiary of the circulation of large amounts of cash in the world financial system has been the United States. About US$1 trillion, or nearly half of all US currency in circulation, is held overseas, including by individuals who want to evade scrutiny by financial regulators and law enforcement. Foreign ownership of US cash constitutes “an interest-free loan of $1.03 trillion each year,” according to a St Louis Federal Reserve study.

With 260 million users, China’s pilot project for CBDCs is the most advanced among the 11 countries that now offer government-backed digital currencies. Up to 20 more countries will begin pilot projects for digital currencies in 2023, including the European Union. Australia, Russia and Thailand already are in pilot testing; Brazil and India expect to launch pilot projects next year. China’s CBDC project is strictly limited to onshore payments.

With the world’s largest digital payment system, China has been a natural leader in CBDCs. Alipay, a division of Alibaba, is the world’s largest digital payment service with more than 1.3 billion users, followed by WeChat Pay (900 million) and Apple Pay (507 million). Google Pay and PayPal are slightly behind Apple Pay in user count. Alipay’s annual $7 trillion in transactions dwarfs Apple Pay’s $6 trillion.

With Alipay, the world’s largest digital payment system, China has been a natural leader in central bank digital currencies. Photo: Citcon

Despite its comparative advantages in the cash-based economy, the United States has good reason to move ahead with its own CBDC. “The absence of US leadership and standards setting can have geopolitical consequences, especially if China and other countries maintain their first-mover advantage in the development of CBDCs,” the Atlantic Council warns.

Although the US and China are in conflict over numerous issues, cooperation on CBDCs – as reflected in strong American participation in the new CBDCCO – might be an area for collaboration.

US officials have so far downplayed the possibility that CBDCs might lead to less use of the dollar as a reserve instrument. “What is it about a CBDC that would make a non-US company, engaging in international financial transactions, more or less likely to use the dollar?,” Federal Reserve Governor Christopher Waller asked rhetorically in an October 22, 2022, speech.

There is nothing inherent in a digital currency that makes it more attractive for large companies than a conventional checking account at a bank, Waller concluded.

The combination of mobile broadband (of which China is the world’s leading provider), smartphone-based payment and credit systems and CBDCs, however, could have an important if gradual impact on the adoption of local currencies. But that can only happen if new financial technologies foster prosperity in poor countries.

Hypothetically, Malaysians might be able to make payments in Thai baht through CBDCs, as they already can through reciprocal arrangements through credit card issuers. Africans might be able to make payments in RMB if CBDCs are adopted across borders.

That by itself doesn’t threaten the dollar’s reserve status, but it may broaden the use of local currencies whose international role presently is negligible.

Follow David P Goldman on X, formerly known as Twitter, at @davidpgoldman

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PBOC’s poker face keeps nervous markets guessing

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At some point, investors might conclude that Chinese authorities are simply toying with global markets.

On Monday (August 21), People’s Bank of China Governor Pan Gongsheng knew full well that punters everywhere were braced for major easing. A bold step seemed warranted as the property slump deepens, consumer spending craters, credit growth tumbles and deflation takes hold.

Yet Pan surprised markets with more restraint. Though the PBOC trimmed its one-year lending rate, it left the more consequential five-year rate unchanged.

Such disappointments — and a widening gulf between market expectations and Beijing’s actions — are becoming a common theme. It speaks to a balancing act that President Xi Jinping seems determined to pull off.

The strategy: tightly targeted efforts to relieve tension in credit markets while avoiding stimulus explosions like those in 2009 and 2015. The response to both episodes led to new asset bubbles and boom-bust cycles.

Strategist Masayuki Kichikawa at Sumitomo Mitsui DS Asset Management speaks for many in concluding Xi’s government is too “concerned about downward pressure on the yuan” to greenlight a fresh stimulus boom.

The risk, of course, is that the “disappointing” size of Monday’s loan prime rate cut “wouldn’t help with building confidence” as Chinese authorities endeavor to stabilize sliding gross domestic product (GDP), says economist Maggie Wei at Goldman Sachs.

This abstemiousness, Wei worries, “can even backfire if market participants interpret these easing measures as policymakers’ unwillingness to deliver even moderate policy stimulus.”

Yet it’s a risk that Xi, Pan and Premier Li Qiang seem willing to take as the world’s top central bankers head to Jackson Hole, Wyoming for this week’s annual US Federal Reserve retreat.

Though nominally a Fed-centric exercise, the symposium in the Grand Teton mountains often serves as a brainstorming session in times of turmoil. This was the case in the late 1990s as Asia’s financial crisis and a Russian default shook the world.

It was true in 2008 and 2009 as the “Lehman shock” shook markets and in 2015 when China’s last displayed signs of financial stress panicked Wall Street. Jackson Hole served as a chance for leaders at the Fed, European Central Bank, Bank of Japan and others to spitball on ways to address Covid-19 fallout.

This weekend, chatter about the contours of the Fed’s inflation fight may be drowned out by China’s cracks. Deepening troubles in the world’s second-biggest economy are the last thing officials from Washington to Seoul need right now.

Xi, Pan and Li are grappling with much more than a Covid reopening that’s been more of a small pop than a boom. Global uncertainty is reducing demand for Chinese goods at the same time domestic fissures like record youth unemployment are complicating efforts to revive slumping property markets.

China’s Country Garden is the latest property developer that can’t pay its debts. Image: Screengrab / CNN

Fears that property giant Country Garden might default has global punters fretting about contagion risks in China. It’s the first time since 2021, when major developer China Evergrande Group missed bond payments, that global elites came to fear China’s frailty more than its strength.

Odds are such risks will have the PBOC lowering the one-year loan prime rate (LPR) again — on top of Monday’s cut to 3.45% from 3.55%. “We are penciling in a 10 basis-point cut in one-year LPR and 20 basis-point cut in five-year LPR to further shore up the property sector,” argue Citigroup analysts.

Carlos Casanova, economist at Union Bancaire Privée, adds that “looking forward, we expect that the PBOC will also follow through with additional 50 to 75 basis points in reserve-requirement ratio cuts and balance sheet expansion to mitigate risks in key sectors, such as local government financing vehicle (LGFV) debt and regional housing markets.”

Pawel Borowski, analyst at Fitch Ratings, says that “China’s macroeconomic activity indicators have deteriorated sharply in recent months, following a strong rebound earlier this year after Covid-19 pandemic restrictions were abandoned. Renewed deep falls in property starts and sales have led the downturn, but retail sales and consumer confidence have also weakened.”

Economists at JPMorgan write that “second-hand home prices remained low, with consistent declines both month-on-month and year-on-year across all tiers of the city. This further narrowed the price gap with new home prices. If second-hand house prices fall below new house prices, this could be a game-changer in that new house prices and second-hand house prices could become mutually reinforcing, helping to materialize the risk of Japanification.”

Caveats abound, of course. As Asia Times’ David Goldman observes, comparisons to 2015, when plunging Shanghai stocks spooked the globe, are belied by financial trends on the ground.

Despite extreme stress in mainland property, rates for five-year credit protection on the Chinese sovereign debt aren’t skyrocketing. Though the yuan is weakening – it’s down 5.6% this year – the trend is less remarkable than the yen’s decline.

All this could change, of course, if global investors decide that the PBOC under Pan – who only started the job on July 25 – is asleep at the wheel. That alone could accelerate the yuan’s decline, putting property developers with high ratios of dollar-denominated debt in harm’s way.

An even weaker yuan might put Beijing on Washington’s radar for currency manipulation, just as the 2024 election cycle heats up. It also could imperil Xi’s long-term vision for increasing the yuan’s role in global trade and finance.

It hardly helps that these fissures exist in a “world where America is determined to contain China’s rise but is no longer assured of its success,” says Diana Choyleva, chief economist at Enodo Economics. “A world where other countries and international businesses do not want to choose sides but will have to.”

But Xi’s balancing act is a tantalizing one. At the moment, Xi is resisting bailing out developers and other key sectors as China did in 2009 and 2015. Instead, his economic team is staying focused on Beijing’s bigger plans to squeeze extreme leverage out of the system and for China to grow better, not just faster.

It’s a risky approach, particularly as the PBOC attempts to wean the economy off Japan-like ultra-easy monetary policies.

“Protecting banks’ net interest margins is the main motivation behind the smaller-than-expected cuts to LPR in our view,” Goldman’s Wei says. “Having said that, confidence remains key to an economic recovery, and the disappointing cut to LPR would not help with building confidence.”

China’s PBOC hasn’t eased rates as much as markets anticipated in the face of rising economic and financial troubles. Photo: Facebook

What would build trust is for Xi and Li to make clear and tangible progress in recalibrating growth engines, incentivizing private-sector investment, increasing innovation and productivity and creating broader social safety nets. Instilling confidence that this is indeed happening is key to offsetting efforts to choke off property speculation and related lending.

At the moment, China confronts an “expectations recession,” as Bert Hofman, former China country director at the World Bank, told Bloomberg. “Once everybody believes that growth will be slower going forward, this will be self-fulfilling.”

Hence the intensifying chatter about Japanification risks for China. As former US Treasury Secretary Lawrence Summers writes in the Washington Post: “There can now be little doubt that just as the conventional wisdom way overstated the economic prospects of Russia in 1960 and Japan in 1990, so have China’s prospects been greatly exaggerated in this decade.”

Yet missing from such takes from the West is the other half of Xi’s calculation. Along with squeezing out speculation and leverage, Team Xi is working to prepare the ground for more efficient and productive investment.

For years now, the World Bank, International Monetary Fund and US Treasury – including during Summers’ day – implored Beijing to improve the quality of economic growth. That means disincentivizing prefectural leaders from engaging in an infrastructure arms race.

Since the Lehman Brothers crisis, metropolises around the most populous nation raced to build skyscrapers, six-lane highways, international airports and hotels, white-elephant stadiums, sprawling shopping districts, amusement parks and vied for museum projects from the likes of Guggenheim to impart a “Bilbao effect” in the Chinese hinterland.

After the 2008-2009 subprime crisis, this strategy shifted into overdrive. At the time, Xi’s predecessor Hu Jintao relied on local government public works projects as a key engine to avoid the worst of the global financial crisis. The same with Xi’s men when financial turmoil hit Shanghai in 2015.

Xi’s remedy to the challenges of 2023 stands in sharp contrast. Rather than take a throwing-the-kitchen-sink approach to this year’s turmoil, Beijing is prioritizing reform over indiscriminate stimulus. A same-old-same-old approach might just reward bad behavior, enabling a new wave of re-leveraging that leads to bigger and more numerous boom-bust cycles.

The good news is that thought leaders like economist and former politician Jiang Xiaojuan are intensifying the argument that the key is bolder efforts to build a more vibrant private sector.

Jiang, who’s with the University of Chinese Academy of Social Sciences, argues that private entrepreneurship, not the state sector, must be China’s future. Not the newest idea, but her gravitas carries weight in policymaking circles.

As William Hurst, a China development expert at the University of Cambridge, puts it: “Massive new spending and/or lending now would make those asset price bubbles even worse. It would continue to crowd out consumption and more productive investments. And it would make it more difficult and costly down the road – maybe even prohibitively so – to do this again.”

Ultimately, Hurst adds, “inflection points and critical junctures can only be clearly spotted in hindsight. But what we’re seeing in China is not the start of something new and probably not the very end of an unwinding of export-led growth that began 15 years ago.”

“We’ll likely see serious debate – or at least evidence that it’s happening behind the scenes – and possibly a meaningful shift in at least short-term economic policy in China over the coming days and weeks. But any really big macro-level change will be slower in coming and harder to see in real-time.”

Economist Michael Pettis, a Carnegie Endowment senior fellow, observes that the “costs of maintaining high GDP growth rates have become so obvious in recent years, not least in the extent of the debt burden they have created, that it’s no longer possible to ignore the extent and severity of the underlying imbalances.”

But, Pettis explains, “while most analysts now recognize that China must urgently raise the role of consumption in generating demand, and an increasing number recognize the institutional constraints in doing so, the real shocking imbalance” is “China’s extraordinarily high investment share of GDP – now 44% of GDP.”

Pettis says “there is no remotely comparable historical precedent. Among other things, this means that China can deliver high GDP ‘growth’ only as long as it maintains impossibly high investment rates.”

All the more reason for Xi and Li to push ahead with policies to reduce the amplitude of bullish-to-bearish financial swings. It’s a pivot for which the Jackson Hole set has urged for years.

Chinese President Xi Jinping and Premier Li Qiang in a file photo. Image: NTV / Screengrab

The PBOC focusing more on the big picture than achieving this year’s 5% growth rate – and showing a poker face in global markets – speaks volumes about how China is prioritizing building economic capacity at home.

The same goes for China’s outlier status in Jackson Hole. Unlike the PBOC, Fitch analyst Borowski notes, major central banks have continued hiking rates.

The Fed raised its benchmark to 5.5% in July, while the ECB raised its key refinancing operations rate to 4.25%. The Bank of England recently raised rates to 5.25%.

The PBOC is going the other way, though not nearly as fast or as drastically as the doctrinarians in Wyoming this weekend might have expected. But then, Team Xi seems to be making confounding the conventional wisdom on China’s economy its brand – and not a moment too soon.

Follow William Pesek on X, formerly known as Twitter, at @WilliamPesek

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Former Ninja Van deliveryman tricked customers into paying him money for parcels, gets jail

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SINGAPORE: Even though he no longer worked for Ninja Van, a former deliveryman logged into the courier firm’s database using his old details to retrieve customer information.

He then tricked customers into transferring him money via PayNow, using ruses like telling them that they need to make certain payments before he could deliver their parcels.

He even wrapped some of his own personal items and delivered them to a customer, demanding a fee for the rejection of the parcel when she said the items were incorrect.

Muhammad Syafiq Jasni, 28, was sentenced to 14 weeks’ jail on Tuesday (Aug 22) for his crimes. He pleaded guilty to three charges of cheating and accessing a computer system to commit cheating, with another seven charges taken into consideration.

The court heard that Syafiq first misappropriated S$1,184.60 that he had collected from customers while he was delivering parcels in April 2020 as an employee of Parcelogix.

He used the money to pay off debts he owed to loan sharks, banks and friends. He had borrowed money from them for his personal expenses, court documents stated.

Syafiq’s family made full restitution on his behalf, and he was given a 12-month conditional warning in May 2020.

However, Syafiq was undeterred. 

In August 2020, he approached a 39-year-old woman he knew from his previous job with Ninja Van, as he had made deliveries to her house.

He lied to the woman that he had an outstanding bank loan of S$5,000 and needed money for his personal expenses as he did not have enough money in his bank account.

He told the woman that he would first transfer money from his bank account to hers, and she could then transfer the same amount to his PayLah account.

He lied to her that he did not know how to transfer money from his bank account to his PayLah account.

Syafiq showed the woman notifications stating that he had transferred money to her bank account, but did not show her the follow-up notifications that the transactions were rejected, since he did not have enough money in his account.

In this manner, he tricked the woman into transferring a total of S$2,300 to him between Aug 18 and Aug 20 in 2020.

USED OLD LOGIN TO ACCESS NINJA VAN DATABASE

Syafiq then expanded his cheating methods by logging into the Ninja Van database using the login identification and password details previously given to him when he was a deliveryman for the firm.

He obtained the delivery order details of a 29-year-old woman, whose order was to be paid using cash on delivery.

He then sent WhatsApp messages to her, saying he was the assigned deliveryman for her parcels. He sent her a copy of her invoice, causing her to believe him.

He asked her to transfer him S$320 in total for the delivery of the two parcels via PayNow, which she did.

The next day, Syafiq wrapped some of his personal items and delivered them to the woman. However, after he left, the woman realised that the items were incorrect.

She said she wanted a refund and got her boyfriend to liaise with Syafiq. Syafiq deceived the man into believing that there was a S$100 fee for the rejection of a delivered parcel.

He told the man that he would split the rejection fee equally with him, and the man sent him S$50 via PayNow. Syafiq then said he would return to collect the parcel, but he did not.

The woman later realised she had been cheated and lodged a police report.

Syafiq again accessed the Ninja Van database on Aug 27, 2020 and retrieved the delivery order details of a 50-year-old customer, who was to pay cash on delivery.

He did the same to this customer, sending her messages and claiming to be her deliveryman. He asked her to transfer him S$518 for parcel delivery, but the woman refused to give the full amount.

She said she would transfer only S$118 first and give the rest after receiving her parcel, and did so.

However, the woman later realised she had been cheated when she received a parcel delivery message from Ninja Van.

On Aug 29, 2020, Syafiq happened to go to the workplace of the 29-year-old victim for a massage.

The woman recognised Syafiq and noted down his particulars. She sent the information to the police, which led to the police identifying the man.

Syafiq has since made restitution to all the victims. The total amount involved across all charges was S$4,070.60.

The prosecutor called for a jail term ranging from two months and two weeks to three months and four weeks.

She said Syafiq had a “deliberate and sustained course of conduct”, with multiple victims involved and offences that were difficult to detect.

He also acted with a “high level of premeditation”, misusing his previous account even though he was no longer a deliveryman with Ninja Van.

The court allowed Syafiq to defer his jail term to September.

CNA has contacted Ninja Van for more information.

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