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Rather than following traditional regulatory methods of nationalizing Anbang or forcing its sale to another financial firm, Eurasia Group Asia Director Michael Hirson pointed out that Beijing chose to have a committee of regulators run Anbang for at least a year.
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"Given actions over the last year, Xi's top-down, highly political approach so far favors punishing executives for wrong-doing, but not the broader public for poor investment decisions."
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"Anbang was probably taken out in a really public manner to set an example for others to step back a little bit," said Adams Lee, an international trade lawyer at Harris Bricken. He's watching to see if this is an isolated case, or if another Chinese company gets hit in another two to three months.
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Hirson thinks HNA may be next.
The Chinese government's takeover of Waldorf Astoria owner Anbang Insurance reveals how President Xi Jinping's approach to cracking down on conglomerates minimizes losses for creditors and investors, according to Eurasia Group.
The consulting firm's Asia director Michael Hirson said in a Monday note that "the choices Beijing deferred are equally interesting — and instructive."
Rather than following traditional regulatory methods of nationalizing Anbang or forcing its sale to another financial firm, Hirson pointed out that Beijing chose to have a committee of regulators run Anbang for at least a year.
"By placing Anbang under receivership, China's regulators acted [in] a relatively transparent and investor-friendly way," Hirson said. "Given actions over the last year, Xi's top-down, highly political approach so far favors punishing executives for wrong-doing, but not the broader public for poor investment decisions."
In June, Anbang said its chairman, Wu Xiaohui, was no longer able to fulfill his duties. The China Insurance Regulatory Commission said in an online statement Friday that Wu has been charged with fundraising fraud and embezzlement.
"Anbang was probably taken out in a really public manner to set an example for others to step back a little bit," said Adams Lee, an international trade lawyer at Harris Bricken. He's watching to see if this is an isolated case, or if another Chinese company gets hit in another two to three months.
Chinese conglomerates such as Anbang, HNA and Dalian Wanda had been on an overseas spending spree in 2015 and 2016. They made a series of high-profile acquisitions in real estate and entertainment. But Beijing has stepped up its efforts to stem capital from fleeing the country, while Trump administration's tough rhetoric against China has increased the challenges on both sides.