Economic Situation in China

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Three years ago, Guo Junwen was thrown in prison by Chinese officials for what they called illegal land use. Hailing from Southwestern China, his business was eventually seized by the government. As a result, his successful career in property development came crushing. Today, he has been released from prison and still maintains that he was innocent. He says that the Chinese police are denying him his money although he is entitled to it under the Chinese law. While speaking in a telephone interview, Mr. Gouo said that the police told him that there was nothing they could do. At the same time, they told him that they have no fight against him. He further said that the police told him that orders came from above. The country’s relationship with private entrepreneurs has been strained since 1949 when the Communist Party seized power. However, the party decided to invite the entrepreneurs back to its ranks at the beginning of the new millennium having understood their role in innovation and power growth. However, it has emerged that the current government has resumed its authority on these businesses that are owned privately. For instance, President XI Jinping has requested businesspeople to ensure that they are loyal to the ruling party.

At the same time, he has called on the need for strengthening the state-owned firms. Clear restrictions have been established by the current regime which has also requested private entrepreneurs to buy stakes in the government-controlled companies. At the same time, it has emerged that technology companies in the country are being forced to give board seats and stakes to the Chinese government. Qiming Venture Partners founder Gary Rieschel says that the Chinese government is becoming worried by the power that companies in the country can amass. This is a company that invests in Chinese ventures and is currently based in Seattle, Washington. He compared Alibaba and Tencent to Facebook, Google, and Amazon to understand the control that tech companies can acquire. At the same time, the Chinese central government has said that it’s aware of the uneasiness surrounding the private sector. Mr. Guo said that the Chinese government said that it would protect his rights. While the policy by the central government remains positive, Mr. Guo laments that the problem is with enforcement. For instance, he says that it has become very easy in the country for private companies to acquire loans.

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