The Chinese Marx (To read the original on The Chinese Marx website, click here)

Following the arrest of billionaire oligarch Xu Jiayin, the Chinese Communist Party regime has attempted to cover up his involvement in the Evergrande Group fraud case. However, this article will explore the connection between Zhu Rongji and Xu Jiayin. Zhu Rongji was Premier of China from 1998 to 2003, leading the country's reform and opening-up policy under General Secretary Jiang Zemin—a crucial period that paved the way for the rise of Xu Jiayin's Evergrande Group. Zhu Rongji's death a few days ago was presented by the CCP as the passing of a great man, deliberately downplaying the deep ties between Zhu Rongji and Xu Jiayin.

During the reform and opening-up period, Zhu Rongji pushed for reform of the fiscal and tax system, which centralized a large amount of financial power in the central government, resulting in huge fiscal deficits for local governments.

To raise funds for development, local governments turned to selling land use rights to property developers, thus laying the foundation for a "land finance" model that relies heavily on land sales.

Zhu Rongji's push for China's accession to the World Trade Organization (WTO) greatly boosted China's economic growth and urbanization, unleashing a huge demand for housing.

The combination of local governments' reliance on revenue from land sales and increased market demand has created an unprecedented space for aggressive growth in the real estate sector.

Xu Jiayin took advantage of the booming real estate market during this period, profiting from the rule that allowed agreements to be signed without paying the full price of the land upfront, acquiring land with extremely low initial payments and obtaining loans from financial institutions.

Evergrande expanded rapidly based on a cyclical model of "buying land with extremely low down payments, bank loans, recovering funds through pre-sale of off-plan properties and continuing to buy land", thus meeting the local government's demand for land supply.

Evergrande had a desperate need for long-term funds and began borrowing at high interest rates at any cost (including high-interest dollar bonds, high-interest employee loans, and illegal P2P self-financing).

Xu Jiayin blindly pursued expansion, manipulated financial statements, expanded its asset portfolios, and cultivated a political image, creating the illusion that it was "too big to fail," which allowed it to continue borrowing heavily and distributing high dividends.

The dependence of local governments on land sales, a legacy of Zhu Rongji's reforms, eventually led to a real estate crisis that severely stifled the real economy and accumulated enormous risks.

When China implemented strict regulations on the real estate sector and its financial chains, Evergrande's cash flow, maintained by taking out new loans to pay off old debts, instantly collapsed, triggering a severe debt crisis. This culminated in Evergrande's bankruptcy and Xu Jiayin's life sentence. Xu Jiayin's imprisonment symbolizes the decline of the regime and the rise of capitalist China. From The Marx China, we condemn the CCP regime's deception of the people and strive to build a truly socialist China, free from oligarchs and capitalists.