China’s recent clampdown on Bitcoin and technology companies is linked to a planned bailout of development giant Evergrande, according to a China-based market analyst.
Weston Nakamura, who is Exchange Manager for Real Vision, says he has an “out-of-the-box consipiracy theory” that China’s President Xi Jinping is targeting big tech and the fintech elite to win populist support before using tax payers’ money to save Evergrande from collapse.
“He knows that some time in the near future, he’s going to have to bail out Evergrande … and when you do that … that’s when pitchforks come out, and this is something that Xi Jinping cannot have,” Mr Nakamura told the Real Vision podcast.
“You cannot have 1.3 billion overworked and underpaid Chinese citizens all of a sudden get this sentiment of let’s burn the house down, which is what Brexit was (and) which is what Trump was.
“So what he’s trying to do, I think, is flatten out the wealth, close the inequality gap, and he’s doing that to … front run populism.
“(Then) when he has to do this big disgusting bailout of what was once the richest person in China, the CEO of Evergrande … he won’t have pitch forks coming after him.”
China is yet to confirm whether it will bailout Evergrande, amid rising concern its spiralling debts could cause an economic catastrophe in the Asian nation and beyond.
Last week, Asia Markets spoke to a source close to China’s Government who said the Chinese Communist Party was finalising a deal to see the company broken up into three separate entities and and effectively transformed into a state-owned enterprise.
Mr Nakamura also believes China will eventually intervene to minimise the impact on the nation’s economy.
“China Evergrande will get bailed out and the more it gets rescued, the worse they will have to come down (on other sectors) just for the optics,” he said.
“Xi Jinping cannot have populism in that country and so this is what he’s doing.”
China has introduced tough regulations on Chinese tech companies in recent months that have wiped significant value from stocks including Alibaba, Didi and Tencent.
Only this week, the Government also declared trading Bitcoin and other cryptocurrencies a criminal activity.