Western Transparency Is Fueling Chinese Repression
The world’s major economies now automatically exchange financial information under an OECD initiative aimed at reducing tax avoidance. But well-meaning Western technocrats have unleashed a program that could have dire economic consequences in China, and perhaps elsewhere.
LONDON – Despite repeated government efforts to stimulate the Chinese economy, the country’s animal spirits remain depressed. And the unexpected reason for this may be the automatic exchange of financial information between the world’s major economies, which is allowing the Communist Party of China (CPC) to learn about the bank accounts that Chinese residents hold overseas.
This exposure has effectively transformed wealthy Chinese families’ financial lifeboats into torpedoes aimed back at them. Worse yet, President Xi Jinping’s anti-corruption forces can fire these weapons whenever they wish. The resulting anxiety is most likely contributing to China’s economic slowdown.
The sad irony is that the torpedoes were armed by the Paris-based OECD – the club of developed countries that see themselves as committed to democracy and a market economy. By introducing the Common Reporting Standard (CRS) as a way to reduce tax avoidance, well-meaning Western technocrats have unleashed a program with potentially dire long-term economic consequences for China, and for several other countries, too.