What the Evergrande Founder’s Life Sentence Tells Us About Shenzhen and China
I will start by saying, this is a just sentence but with mixed feelings. The feelings are only mixed because the story started so well, it is amazing when someone who comes from rural China during those times, becomes a billionaire. It says a lot about the opportunity that China always provided and it sounds like Evergrande did well for so long, but at some point became overextended and reckless to say the least. Shenzhen was always one of the most progressive and open cities in China, so it’s no wonder Evergrande had been able to flourish and grow so large. This is where the story became unacceptable, because this lead to huge losses to actual people. The courts in China take the impact to people very seriously and do not allow this behaviour to go unchecked.
But for once, I can speak in practical terms about what’s morally right or wrong because normally in most systems and most countries, that doesn’t matter in terms of the law and sentencing. In the US, a black man got 4 life sentences (140 years in jail) for robbing McDonalds but name one CEO who has done worse things than Evergrande getting jail time like this? Clearly, the system in the US and similar systems around the world, is skewed against individual citizens regardless of the harm or morals. The only proof of this is the absence of this, there were many CEOs during the 2008 financial crisis that arguably did worse than the Evergrande CEO but they didn’t see jail time. How is it that in the US ,you can be jailed for 140 years for a $600 McDonalds robbery vs no jail time for stealing billions of dollars from individuals through irresponsible leveraging and may I add, those same perpetrators were rewarded with taxpayer money, while people lost their homes.
In the US this would not be considered a crime, the CEO would resign, take their nice severance package, stocks, options and other benefits and move on to the next project, while the company declares bankruptcy. In this scenario in the US the CEO would be the winner at the expense of citizens of the entire country.
What many don’t understand about China’s system is that there are checks and balances. Yes, you can attain wealth and be a billionaire and the government is not concerned with that. But it does become concerned through immoral activities that harm the public, then it will not be tolerated no matter how much money you have. This is of course in stark contrast to say North America or Europe where it’s the opposite. In China, no amount of lobbying or NGOs or foreign pressure has an impact on their institutions or policies, which remain focused on the end result for the people.
This is why I consider Shenzhen one of my second homes, it has a fair, predictable business environment and you are allowed to flourish. Wealth is not automatically treated there as a negative thing and the government does not move to create endless taxes or burdens on people’s livelihood.
What are your thoughts is it more fair that the Evergrande CEO got life, a black man gets 140 years in the US for $600 or worse financial crimes in the US receive 0 jail time. What system do you think is more fair?
