James Packer moved his fortune from media to casinos when he judged that change would adversely affect the world of television. His Crown casino in Melbourne has been a great success and a new one will shortly emerge in Sydney, to join his other casino interests in Macao and in China. All this is suddenly at risk because of a mood change by China's leader, Xi Jinping.
For a Communist state, China has developed a very "capitalist " way of life. Corruption and cronyism have seen a rich elite emerge and until recently they showered their largess in the high roller rooms of gambling establishments - until Xi Jinping cracked the whip. High living is now taboo. The rich Chinese are very careful about how they spend their money.
It seems that further change is in the air. Without warning the Chinese police raided Crown establishments in China and eighteen employees are in custody, although no charges have been laid. That is an ominous sign in a place like China where policy seems to rest entirely on the whim of the one man at the top of the power pyramid.
Fear is contagious. Casinos are the haunts of the rich people of this world who like to show their wealth. If China cracks down on high living that sets the pace in other countries. The tax authorities take notice of who is spending - and where. It could be the death knell for casinos.
China is a complete enigma for all in the business world. There are few businesses in China which do not have at least some government input and many are completely government owned entities. What the Communist government tells them to do is exactly what happens. This is aptly illustrated by what is happening with world steel production.
During the Chinese construction boom steel was at a premium and Chinese steel mills opened new plants and extended existing ones. When the boom subsided, China was producing more than half the world steel - and they began dumping it overseas at less than the price of production. Because they were government owned and had no shareholders to satisfy selling at a loss was a mere matter of adjusting the figures on government ledgers.
The impact in the rest of the world was catastrophic. Centuries old steel millls in America, Britain, France and the rest of the world were forced out of business. Here in Australia our last remaining mill in Wollongong is barely hanging on with workers taking a pay cut and making economies.
Protests to China brought the promise of relief. China ordered its older and less efficient mills to merge with newer units and the world thought that this would result in old units being shut down - and steel production halved.
Not so. Not a single mill closed and what actually happened was the more modern plants transferred technology to the old clunkers to bring them up to speed. It seems that China has no intention of lowering steel production and it may be their intent to try and force their steel monopoly on the world by driving all others out of business.
Just as China's intentions in the South China sea are an enigma, so too are the trading intentions of the one man who holds the reigns of world trade.
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