Bytedance/TikTok should be panicking; Two Sessions; Houses are for living in; Debt; Online nationalist frenzies

Summary of today’s Essential Eight:

1. The Two Sessions conclude - The NPC and the CPPCC meetings have concluded. The last day was a bit of a letdown without the Premier’s press conference. This year’s NPC was only seven days, shorter than usual, and perhaps another sign, along with the ending of the Premier’s press conference, of the NPC in the New Era.

2. Bytedance/TikTok should be panicking - The US House of Representatives is scheduled to vote on the “Protecting Americans from Foreign Adversary Controlled Applications Act” Wednesday. All indications are the the House will pass the bill. It is not yet clear how the Senate will deal with this bill, and anything they may do is unlikely is likely to move as quickly there as it has in the House, but given today’s Senate Intelligence Committee’s annual worldwide threats hearing, and the mention of TikTok in the unclassified version of the Office of the Director of National Intelligence annual threat assessment, the momentum continues to build to vote on something that would force Bytedance to either divest TikTok or see it shutdown in the US. If Bytedance decides to divest TikTok, shareholders would likely be treated more fairly than when Jack Ma and Joe Tsai expropriated Alipay from Softbank and Yahoo under the pretext that foreign investors could not hold stakes in companies with a PRC payment license. Unless Bytedance already knows Beijing will kill any possible divestment Bytedance should be starting a parallel process around divestment scenarios as 165 days is a very short window to execute a transaction of this size and complexity. Given the PRC Ministry of Commerce’s statement in 2023 during the last serious divestment frenzy that “China will firmly oppose it”, I will guess Bytedance knows a divestment is impossible, which is one of the reasons they keep telling people that “Congress is planning a total ban of TikTok.” Given that Bytedance/TikTok has lost the House, the focus of their efforts to kill the bill have to be on the Senate, the White House political operation and the Biden campaign. Axios reported tonight that “TikTok CEO Shou Zi Chew is expected to visit Capitol Hill this week as part of the company's full-court press.”

3. “Houses are for living in, not for speculating 房子是用来住的、不是用来炒” - So much for hopes that the absence of the line "houses are for living in, not for speculating 房子是用来住的、不是用来炒" from Li Qiang's government work report signaled that that the leadership was dropping this multi-year principle to try to goose real estate. Minister of Housing and Urban-Rural Development Ni Hong spoke with the press at the NPC and reiterated that houses are for living in, not for speculating. He also said that “for real estate companies that are severely insolvent and have lost operational capability, we should follow the principles of legalization and marketization, to bankrupt those that should be bankrupted and reorganize those that should be reorganized. For those who harm the interests of the masses, we will resolutely investigate and deal with them according to the law, making them pay the due price”. What will the due price be for Evergrande execs?