“All industries, institutions and individuals are running short of cash,” said Zhang Kaixing, founder and chief executive of an online asset management company in Shenzhen called Jinfuzi, which means “golden ax.” Jinfuzi, which manages over $4.5 billion in assets, is the type of investor that technology funds court.
“Many investors in private equity and venture capital funds want to take their money back,” Mr. Zhang said.
Venture capital is a small part of the Chinese economy, which by most accounts is still growing at a quick pace compared with that of many other countries. But the industry’s fundraising problems may be a symptom of a widening malaise.
After many years of easy credit and go-go growth, China is struggling with weakened investment and household consumption and increasing corporate and local government defaults. It could present Xi Jinping with his most difficult problem since he became the country’s top leader in 2013. Will China’s 40 years of continuous economic expansion stop under his rule? If so, how will 1.4 billion Chinese react when they realize that the country’s upward trajectory is coming to an end?
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Many Chinese still believe that the central government has the capacity to keep the economy from sliding into a recession, just as it did during the Asian financial crisis in 1997 and the Great Recession in 2008. Beijing controls the banks, land, foreign exchange rates and the media, so it can mobilize and manipulate them when necessary.
“In China we believe in Keynesian economics,” said Mr. Zhang, the Jinfuzi chief executive, referring to the economic theory that favors a bigger role for government. “If what’s going on in China were happening in the U.S., it would have been called a recession. But in China, the government will step in to interfere in significant ways.”
Under President Xi, even economics has become a delicate topic. Many people in China are not willing to speak publicly because even economists aren’t allowed to make downward forecasts.