““These protests are the largest existential threat to the Chinese Communist Party since the Tiananmen Massacre.””
Hayman Capital Management founder and outspoken China critic Kyle Bass appeared on CNBC’s “Squawk Box” Monday morning to weigh in on the protest movement sweeping across China.
Bass, who has long been critical of the Chinese Communist Party, has even at times allowed his hawkish views on the world’s second-largest economy to inform his trading (Bass has bet against the Hong Kong dollar peg, a trade recently embraced by Pershing Square’s Bill Ackman).
But on Monday, his focus was entirely geopolitical, as the hedge-fund manager warned that President Xi Jinping would likely pursue a heavy-handed response to crush the protest movement — which has been described as the largest protest movement to sweep the country since the 1989 Tiananmen Square massacre — rather than caving on the “zero COVID” policies that have reportedly helped to inspire the unrest.
See: It looks like China’s Xi ‘installed a war cabinet’ and removed the reformers, says Kyle Bass
Protests erupted over the weekend in Beijing, Shanghai and other cities around the country after a fire broke out Thursday in the city of Urumqi in the northwest, killing at least 10 people in an apartment building. It’s widely believed that China’s COVID-19 restrictions played a role in the deadly blaze.
A video of a protest in Shanghai that was verified by the Associated Press featured protesters chanting a slogan calling for President Xi to step down.
Bass said he expects the Chinese government to do whatever it takes to obfuscate reports about the protest movements. Already, China’s censors are scrambling to flood social media platforms with advertisements for escort services meant to distract from the situation.
“We’re not going to get official reports out of the Chinese Government. Social media is something the censors are having a difficult time with,” Bass said.
The CCP has many more tools to suppress protest movements in the modern day than it did 30 years ago, Bass added.
“I think they have so many more tools at their disposal today than they did in 1989. Just think about their social credit score…they can literally turn off your ability to spend. The way the apps work over there, they can restrict your ability to travel on a subway or a plane or even out of your house. They can eliminate your ability to buy things, they can starve you to death. They can do all kinds of things.”
“The better question is: will the people accept it? And what we’re seeing now is a groundswell over the ridiculousness of these COVID restrictions,” he said.
Bass also likened China’s lockdowns to placing its citizens in “internment camps.”
“Xi Jinping doesn’t have any great ‘outs’ here. He can have a Tiananmen-style crushing of the people…I’ve never seen Xi Jinping change course due to pressure. He has a Maoist-style of thought, and I think he is going to crack down on the people,” Bass said.
“Another thing that could happen is they could invade Taiwan and look for national unity through invasion and control of the airwaves.”
“We’re entering a new point of a great struggle between the Chinese leadership and the Chinese people.”
Investors were warily eyeing the situation in China on Monday. The unrest was widely blamed for weighing on U.S equities
and commodity prices like crude oil, as U.S.-traded West Texas Intermediate crude prices
erased their entire year-to-date gain.
Across Asia, equity indexes traded lower, with Hong Kong’s Hang Seng Index