Watch Economic Observatory / China: A Return of the Cultural Revolution? Concerns: Luxury Watches Are the Enemy

With the 24th Winter Olympics in Beijing 2022 approaching in February next year, China is attracting global attention in all areas, from politics to the economy and military. At the same time, Hong Kong, once Asia's leading financial center and the largest market for Swiss luxury watches, is also drawing skeptical attention from business leaders around the world. The People's Republic of China, led by President Xi Jinping, appears to be at a major turning point. Leading economic journalist Tomoyuki Isoyama analyzes and considers China's current situation and outlook.

Is China experiencing a resurgence of the Cultural Revolution? Luxury watches are a concern, with luxury being the enemy.

China, which has grown into the world's largest luxury watch market, is experiencing a "major upheaval." Successful entrepreneurs who rose to become global billionaires are hiding out in fear of government oppression, and equally successful entertainers are being expelled by the authorities one after another due to scandals. The amount of time young people can spend playing games has been restricted, and studying the ideology of President Xi Jinping has become compulsory. Moves to control the ideology of scholars and other intellectuals are also intensifying. Furthermore, crackdowns on ethnic minorities are becoming even more severe. It feels as though the "Cultural Revolution," which lasted for 10 years from 1966, is being repeated.

Wealthy people targeted by Chinese authorities

　The Cultural Revolution was presented as a cultural reform movement under the catchphrase "criticize feudal and capitalist culture and create a new socialist culture," but in reality it was a political struggle by Mao Zedong to solidify his power base. There is a strong view that what is happening in China now is also being caused by an attempt to solidify President Xi Jinping's power base.

　East Asia watcher and journalist Kondo Daisuke describes the groups currently being targeted by the Chinese authorities as the "New Five Black Categories." The "Five Black Categories" refers to the "landlords," "rich peasants," "counter-revolutionaries," "subversive elements," and "rightists" who were targeted during the Cultural Revolution. Kondo uses this analogy to point out that the "wealthy," "intellectuals," "ethnic minorities," "young people," and "Shanghai and Cantonese people" are now becoming targets.

　A symbol of the wealthy is Jack Ma, the enormously wealthy founder of China's e-commerce giant Alibaba Group. In November 2020, the initial public offering of his subsidiary Ant Group was suddenly halted by authorities, and Ma subsequently disappeared for more than six months. It is said that this was due to critical comments he made about the authorities at a symposium.

Increasingly intense criticism of celebrities

　Even highly successful celebrities are being targeted. In 2018, national actress Fan Bingbing was fined 884 million yuan (approximately 146 billion yen) for tax evasion, and recently, the criticism of celebrities has intensified. In July 2021, Kris Wu, a former member of the South Korean idol group EXO and a Chinese star with Canadian citizenship who has 50 million followers on the Chinese social media platform Weibo, was arrested on suspicion of rape. A "storm of purges" is truly raging.

　During the Cultural Revolution, young people known as the "Red Guards" spearheaded the crackdown on the "Five Black Categories," but the re-education of "corrupt" young people has also become a major goal of President Xi Jinping. On August 30th, the State Press and Publication Administration, which oversees China's media and content industries, issued a notice establishing new regulations to prevent "online gaming addiction" among minors. Online games for minors under the age of 18 are now limited to weekends (Fridays, Saturdays, Sundays, and public holidays), and are limited to one hour between 8:8 PM and 9:1 PM. Chinese state media sharply criticized the move, calling games "an opium for the mind."

The world's largest market could disappear

　Regarding policies toward ethnic minorities, China has long been criticized internationally for its human rights oppression of the Uighurs. However, at a government conference on ethnic minority policies held at the end of August, President Xi Jinping stated, "We must guide each ethnic group to always put the interests of the 'Chinese nation' first," and "Chinese culture is the trunk, and the cultures of each ethnic group are the branches and leaves."

　Kondo's final point about "Shanghai and Cantonese" indicates continued attacks on the "Shanghai faction" that has opposed the Xi Jinping administration. The imposition of the "National Security Law" on Hong Kong has crushed the liberalization movement and virtually eliminated Hong Kong's autonomy. Hong Kong, which was once the world's largest consumer of luxury watches, has also fallen into rapid decline.

　The problem is that if this is a repeat of the Cultural Revolution, it is unclear whether China will remain a market for luxury watches. If "luxury is the enemy," the world's largest market could disappear overnight.

Tomoyuki Isoyama
Economic journalist and professor at Chiba University of Commerce. Born in Tokyo in 1962. Graduated from the School of Political Science and Economics at Waseda University. Served at the Nikkei Inc. as a securities reporter, deputy chief of the same department, Zurich bureau chief, Frankfurt bureau chief, and deputy editor-in-chief and editorial committee member for Nikkei Business. Left the company in 2011 to go independent. Covers a wide range of political, government, and business figures. His books include "The International Accounting Standards War: Final Chapter" and "The Secrets of Switzerland, the Brand Kingdom" (both published by Nikkei BP).
http://www.isoyamatomoyuki.com/