Economic systems

So far, Fitch is the only one of the “big three” credit rating agencies to release a statement raising the possibility of a review of the US sovereignty rating with negative implications. Financial commentator Tan Haojun says that the three agencies are giving the US a lot of leeway that would probably not be given to other countries, when they should be impartial and fair in giving a rating.

The assets of the top eight tycoons in the world have a combined worth of half the global population, says EAI academic Lance Gore, and the Chinese Communist Party faces a choice: Will China go down the old path of Western advanced capitalism, especially Anglo-American capitalism, and make the same mistakes as them? China has shown resolve in reforming its income distribution issues in various sectors including the entertainment industry. But it is not an easy path as vested interests may still interfere and the people can only rely on the self-purification of the Chinese Communist Party to uphold the regime’s people-centred nature.

While Marxism failed 30 years ago in the case of the Soviet Union, the Chinese Communist Party of today claims that it owes its success to the “theoretical advantage” of Marxism. However, rather than hanging on to ideological orthodoxy, a revolution of ideologies is needed to steer the building of an inclusive and harmonious society undergoing the fourth industrialisation. In the new paradigm, much thought will need to go into thinking through knotty issues such as the role of the market in socialism, the value of labour in a hi-tech economy and the role that entrepreneurs can play as builders of socialism.

What’s the difference between virtual currency, digital currency, cryptocurrency, and e-money? In part 1 of his article on China’s digital currency ambitions, James Pang traces the development phases of China’s central bank digital currency DCEP amid a growing global appetite for central bank digital currencies. He also guides us through the jargon of the digital currency world.

Academic Pei Sai Fan notes that China’s active promotion of the e-CNY has been closely linked to its ambitions of turning the RMB into a global trade and reserve currency. He says that the internationalisation of the RMB cannot be rushed. The more important thing for China to do now is to work on building its capabilities for crisis and risk management as well as gaining international support.

With the signing of the Regional Comprehensive Economic Partnership (RCEP) and China's Belt and Road Initiative, a growing number of Chinese businesses are setting up outfits in Singapore, creating more opportunities for financial services providers from China. Associate business editor Hu Yuanwen takes a look at Chinese banking and insurance companies moving into Singapore, and how Singapore's business environment is changing.

Associate business editor Pang Kia Nian takes a look at the increasing number of wealthy Chinese setting up single family offices (SFOs) — entities that manage assets for one family and is wholly owned or controlled by members of the same family — in Singapore. What makes Singapore an attractive place for high-net-worth individuals to park their offshore assets?

Amid punishments meted out to Chinese private enterprises such as Alibaba, President Xi Jinping’s recent visit to various private enterprises was seen as a way for the Chinese government to assure companies that the state would still be supporting them. However, the status of private enterprises has always been a little fuzzy in China. Companies feel that they are at a disadvantage when competing with state-owned enterprises and may be reined in when they grow too large. Zaobao associate editor Han Yong Hong looks for a way out.   

While the Chinese government has implemented cooling measures including reminding people that property is “not for speculation”, it seems that people are not taking it seriously and still believe that property is a guaranteed investment. Zaobao correspondent Chen Jing takes the temperature of the Chinese property market.