China wants the world to believe in its economic firepower. But here is the real deal- China’s economy isn’t growing, so the Chinese government is mostly relying on lies, scams and cover-ups to create the illusion of a strong Chinese economy. Take, for instance, China’s biggest gold scam in human history in the month of June this year. Four months hence, China has successfully buried reports of the gigantic scam.
It can also be no coincidence that China covered up a gold scam, involving jewellery giant Kingold Jewelry Inc, at a time when the Xi Jinping administration has also been trying to nurture the myth of a dramatic, post-pandemic Chinese economic recovery. It was only after burying the June gold scam under the carpet that China came out with unrealistic growth figures of 4.9 per cent.
In the month of June, it was found that Kingold Jewelry Inc, China’s largest privately-owned gold processing and jewellery company took, a loan of more than 20 billion Yuan, that is, 2.8 billion dollars with pure gold as collateral. However, the 83 tons of gold that the company claimed as pure gold is in fact gilded copper. This was equivalent to 22 per cent of China’s annual gold production or 4.2 per cent of China’s gold reserves as of 2019.
The scam was grotesquely high on magnitude. The losses were supposed to be huge for China. In the short-term, China was supposed to lose face for lying about its gold deposits to the entire world. In the long run, China was supposed to face a major banking crisis.
The Kingold episode should have been China’s Lehman Brothers moment. Just like the collapse of Lehman Brothers due to housing price crash led to the 2008 financial crisis in the US, the inability of companies like Kingold to pay back should have caused an acute financial crisis- this time in China.
The Kingold episode was too big an event to simply vanish from global media coverage within a few months. The Wuhan-headquartered Kingold Jewelry Inc. is no ordinary company. It is reportedly led by Jia Zhihong, a veteran of the People’s Liberation Army, which is the armed wing of the Chinese Communist Party. An ex-PLA leading a company with 83 tons of fake gold deposits was too big an embarrassment for the Xi Jinping administration.
Outside China, the June gold scam was triggering a chain reaction. The US itself was getting inclined towards cracking the whip on Chinese companies over the sheer lack of transparency manifested by companies like Kingold Jewelry Inc. As such the Kingold episode must have made Xi Jinping very desperate.
However, just when it seemed that the Kingold episode would spill the beans on China’s economic mess, the news magically disappeared from global media. Some of the last reports about the gold scam came out in early and mid-August. First, China went into damage control and empowered its own 160 million investors to bring class-action lawsuits in the future, after the Kingold episode. China was trying to show that it cared for its investors.
However, China’s desperate damage control bid did not achieve much success. In mid-August, it was reported that Kingold Jewelry Inc., was delisting from the Nasdaq stock exchange. Kingold shares themselves suffered a sharp plunge, and China was fast turning out to be the real victim. But after this report, we don’t find much coverage about the shocking Chinese gold scam in June. China has managed to mysteriously disappear what should have been one of the most important news this year.
What happened to Kingold Jewelry Inc.? How does Xi Jinping propose to pull the Chinese economy out of the huge credibility deficit that it suffers? And how will the Chinese government pull its economy out of the mess triggered by the world’s biggest gold scam? These questions were never answered, and in fact, never asked.
Another question that the sudden disappearance of the Chinese fake gold reports raises if it was a deliberate cover-up? The news was too big to be ignored- the Kingold episode was China’s Lehman Brothers moment. Then why did the global media stay silent? Why did it not ask questions of China? And was China able to curry favour with global opinion-makers and get them to stay silent?
The world deserves to know what happened to the scam. The world has every right to know about how China might have exonerated the scamsters involved, apart from leaving the victims to fend for themselves. China cannot simply bury the biggest gold scam in human history and force the world to believe its fake narrative of a near-magical economic recovery.
