Sometimes things don’t exactly work out as one envisioned, and in China that is most of the time. And while there is of course no shame in beating a hasty retreat, it’s not always an option.
Hanergy’s nearly 50% share price drop no doubt left all kinds of regret in its wake: Among those foolish enough to hold onto the stock, there was of course anguish over not having divested sooner; among those who short-sold the stock but gave up when it failed to deflate there was even more. But our highest compliments to those brave souls who held fast to their convictions and kept their short positions. We like nothing so much as benefiting off another party’s financial collapse–we are, after all, a media outfit.
And fellow solar panel-maker Yingli is likely wishing it hadn’t loaded up quite so much debt during its subsidized salad days, before a drastic mismatch in supply and demand brought on by slackened interest in markets like Europe upset the sector’s apple cart. This week it was busy attempting to reassure investors it could repay its debt on schedule after its shares fell nearly 45%. (A feat that in any other week might’ve grabbed more headlines, had Hanergy not done it one better.)
Between these two floundering firms we wouldn’t blame investors for seeking safer places to put their money. That cautious attitude is also prevalent amongst the apparatchiks at the transport ministry, who assumed they had a safe bet in routing the local bullet-train line through Deng Xiaoping’s home town. What with Xi Jinping’s positioning himself as Deng’s second coming, surely now was the time to play to the inner reformist in every patriotic cadre. Perhaps they should have also scheduled a stop in the nearby county of Linshui, where people were finally so fed up with being ignored in favor of the former Paramount Leader’s old home that it took security forces and cutting off the Internet to quiet down the riots that ensued.
But the biggest backstep came from Beijing this week when it told local governments they could re-open the debt spigots commonly referred to as local government financing vehicles. True, they didn’t quite take everything back–only existing projects were allowed to start selling debt through these platforms. But between the high-interest debt those projects had already incurred and the proclivity for backdoor financing among local officials, we daresay they might as well have reopened it for all of them.
Yes, dear readers, whether you’re an investor, business or political appointee it’s always tempting to try and wind back the clock. But if our quarter-century on this planet has taught us anything, it’s that you’re likely as not to hit trouble stepping back as leaping forward. Better just to stand still now and then.