The stock prices of Chinese private companies listed in Hong Kong have plummeted amid the torrent of publicity generated by the ignominious fates recently befalling prominent Chinese businessmen Yang Bin (
But the matter doesn't end there. China Telecom, which had been preparing to get listed in Hong Kong, suddenly postponed its initial public offering (IPO) due to poor investor response.
The China Telecom group, which has monopolized China's long-distance fixed-line market for half a century, is an undiluted state-owned enterprise. In May, the company completed the process of splitting into two entities -- China Telecom and China Netcom. In the eyes of China's bureaucrats, competition between the two entities means that the transformation into a "market mechanism" is complete.
China Telecom prepared to get listed and to raise foreign funds in Hong Kong in October. It was the biggest fundraising event in Hong Kong this year, with a plan to raise up to HK$28.3 billion. But the IPO underwriters informed institutional investors on Oct. 30 that the IPO plan had been shelved because of poor demand. Such a sudden cancellation of an IPO is rare in Hong Kong. By the early morning of Oct. 31, only about 80 percent of China Telecom's internationally distributed shares had been sold. Some US$600 million worth of shares remained unsold. As a result, China Telecom's underwriters -- Morgan Stanley, Merrill Lynch and China International Capital Corp -- were unwilling to absorb the massive amount of unsold shares.
But news about China Telecom did not stop here. On Oct. 30, telecom companies from Hong Kong and Taiwan made surprise announcements that they were raising the fees for phone calls to China starting Nov.1 because China had raised the connection fees dramatically. Rates in Hong Kong rose almost four-fold, but that did not fully reflect the scale of China's price hikes. In Taipei, some reports said connecting fees to China had risen by a factor of seven and a half. Chinese immigrants in the faraway US were also affected, as new phone card businesses reported five-fold to ten-fold price hikes. The media have strongly condemned such price increases. Some people in Hong Kong have even proposed a boycott, but for most people, especially business people, there's not much they can do. How can they not make phone calls?
The price hikes were dramatic and immediate. Some telecom companies did not even have the time to work out the new fee rates. Why the surprise price hikes? Because China Telecom is a monopoly enjoying enormous profits. But this round of price hikes were a result of the company's poor IPO showing in Hong Kong, which prompted the decision-makers to raise prices to increase the company's profits and attract more investors. How could they have known that such "economic hegemonism" would cause resentment among investors and push down the prices of other telecom shares on the Hong Kong market for two days in a row.
Despite the rise in the US stock market, Hong Kong's Hang Seng index fell by almost 200 points on the first day and 33 points on the second. As Chinese companies characterized by unclear asset ownerships, messy operations, fraudulent accounting and sheer greed get listed in Hong Kong, they will only damage Hong Kong's status as a financial center. Hong Kong Chief Executive Tung Chee-hwa (
US Secretary of Commerce Don Evans announced on June 7 that the US recognized that Russia had made a full transition from a planned, controlled economy to a market economy. In late September, China demanded that the EU grant it the status of a full market economy under the WTO's non-discriminatory principles. But the faces of the bureaucrats at China Telecom tell us that China is still a long way from a market economy.
Paul Lin is a political commentator based in New York.
Translated by Francis Huang
Recently, China launched another diplomatic offensive against Taiwan, improperly linking its “one China principle” with UN General Assembly Resolution 2758 to constrain Taiwan’s diplomatic space. After Taiwan’s presidential election on Jan. 13, China persuaded Nauru to sever diplomatic ties with Taiwan. Nauru cited Resolution 2758 in its declaration of the diplomatic break. Subsequently, during the WHO Executive Board meeting that month, Beijing rallied countries including Venezuela, Zimbabwe, Belarus, Egypt, Nicaragua, Sri Lanka, Laos, Russia, Syria and Pakistan to reiterate the “one China principle” in their statements, and assert that “Resolution 2758 has settled the status of Taiwan” to hinder Taiwan’s
Singaporean Prime Minister Lee Hsien Loong’s (李顯龍) decision to step down after 19 years and hand power to his deputy, Lawrence Wong (黃循財), on May 15 was expected — though, perhaps, not so soon. Most political analysts had been eyeing an end-of-year handover, to ensure more time for Wong to study and shadow the role, ahead of general elections that must be called by November next year. Wong — who is currently both deputy prime minister and minister of finance — would need a combination of fresh ideas, wisdom and experience as he writes the nation’s next chapter. The world that
The past few months have seen tremendous strides in India’s journey to develop a vibrant semiconductor and electronics ecosystem. The nation’s established prowess in information technology (IT) has earned it much-needed revenue and prestige across the globe. Now, through the convergence of engineering talent, supportive government policies, an expanding market and technologically adaptive entrepreneurship, India is striving to become part of global electronics and semiconductor supply chains. Indian Prime Minister Narendra Modi’s Vision of “Make in India” and “Design in India” has been the guiding force behind the government’s incentive schemes that span skilling, design, fabrication, assembly, testing and packaging, and
Can US dialogue and cooperation with the communist dictatorship in Beijing help avert a Taiwan Strait crisis? Or is US President Joe Biden playing into Chinese President Xi Jinping’s (習近平) hands? With America preoccupied with the wars in Europe and the Middle East, Biden is seeking better relations with Xi’s regime. The goal is to responsibly manage US-China competition and prevent unintended conflict, thereby hoping to create greater space for the two countries to work together in areas where their interests align. The existing wars have already stretched US military resources thin, and the last thing Biden wants is yet another war.