On the Handling of the Delong Faction, the Chinese Government Will Face a Major Test

[Girl Who Likes Mathematics] posted on 2004-07-27 21:59:26

Anyone with some understanding of China's economy and financial markets should be aware of the issues surrounding the Delong faction. Recently, Delong's Tang Wanli has returned to Beijing, reportedly having reached some kind of tacit understanding with the regulatory authorities. If this tacit understanding -- which constitutes Delong's last chance -- is ultimately finalized, it will set a precedent for the government bailing out private speculative capital, the implications of which will be profoundly far-reaching. On the handling of the Delong faction, the Chinese government will face a major test.

The Delong problem obviously did not come into existence only when its series of stocks collapsed. Its financial and political speculation dating back to before 1997 was long known to the market. Delong not only at one point controlled nearly 100 billion yuan in assets economically, but also reaped political returns. Yet Delong's manipulative methods were tacitly permitted by regulators all along -- the issues behind this are worth deep reflection.

Now that the mess has come to light, how those involved will wrap things up deserves even closer attention. Current indications suggest that it is very likely someone will use various high-sounding pretexts to muddle through. Should such a scenario become reality, the impact will be extremely pernicious. In light of this, this young lady calls out here: the Delong problem must be dug up from the roots, and absolutely no vested interests among those involved should be allowed to slip away.