GRAY RHINOS

In the West, we worry about so-called “black swans,” rare and unexpected events that can upset financial markets.

China, however, is more concerned about “gray rhinos” – large and visible problems in the economy that are ignored until they start moving fast.

The rhinos are a herd of Chinese tycoons who have used a combination of political connections and raw ambition to create sprawling global conglomerates.

Companies like Anbang Insurance Group have feasted on cheap debt provided by state banks, spending lavishly to build their empires.

Well, guess what, the Chinese government said today that it had seized control of Anbang Insurance Group, the troubled Chinese company that owns the Waldorf Astoria Hotel and other marquee properties around the world, and it had charged the company’s former chairman with economic crimes.

The move is Beijing’s biggest effort yet to rein in a new kind of globally ambitious Chinese company. Anbang and others have spent billions of dollars around the world buying up hotels and other high-profile properties.

The deals illustrates China’s growing economic might while feeding into concerns that rising debt levels could slow growth in the world’s second-largest economy, behind the United States.

These deals have also raised questions over who controls many of these companies and whether they have ties to China’s top leaders. Anbang in particular came under scrutiny in the United States and elsewhere for its opaque ownership structure and for the political ties of its former chairman, Wu Xiaohui.

Wu has also tried to extend his political ties into the United States. In November 2016, he met with Jared Kushner, the unsecured-clearance/top adviser of the then president-elect at the time, in a bid to buy a stake in a Manhattan office building owned by Kushner’s family company.

The deal was eventually abandoned after media coverage.

The takeover of Anbang will put the Waldorf Astoria, for decades a symbol of New York elegance, under the control of the Chinese government!!!!!!!!!!!!!!!!!!!!!

Would someone get me Charlie Chan on the phone…please.

Let me close with a simple question: What would have happened if Kushner and Anbang would have reached a deal, then the Chinese government would own part of Kushner’s properties, while the non-security cleared Kushner is serving in Trump’s administration.

As the great Chan was fond of saying, “It is difficult to pick up needle with boxing glove.”