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Scaramucci says China’s Didi crackdown an assault on capitalism, ‘form of political terrorism’

Scaramucci says China’s Didi crackdown an assault on capitalism, ‘form of political terrorism’

FINANCIAL NEWS

Scaramucci says China’s Didi crackdown an assault on capitalism, ‘form of political terrorism’

Hedge fund founder Anthony Scaramucci told CNBC on Wednesday that the Chinese government’s crackdown on Didi Global, just days after the ride-hailing giant went public in the U.S., is “a direct assault on global capitalism.””The bad news for the Chinese and the United States now is, if you’re a capital allocator in the United States, the risk premium just went up dramatically in China,” the founder and co-managing partner of SkyBridge said on “Squawk Box.”Scaramucci’s comments came one day after shares of Didi tanked more than 19% as Wall Street processed a series of regulatory investigations and restrictions facing the company. The stock was down another 4% Wednesday morning in premarket trading to below $12 per share as the company’s main app was removed from Tencent’s WeChat messaging service and Ant Group’s Alipay for new users. “Ultimately, if there were smart American business executives that were advising Chinese leadership, they would say, ‘This is a direct assault on global capitalism; it’s a form of political terrorism, and you’re hurting the country,'” Scaramucci said.On Friday, just two days after Didi began trading on the New York Stock Exchange, Chinese regulators announced a cybersecurity review of the ride-hailing firm and barred new users from signing up while the probe was conducted. That caused the stock to close down 5.3% Friday.Then on Sunday, according to Reuters, China’s cyber regulator said it told app stores to stop carrying Didi’s app entirely after it claimed to find the company had illegally collected users’ personal data. In response, Didi said it plans to make changes to comply with the country’s data rules.Those developments were followed by a report Monday in the Wall Street Journal, which said that weeks before Didi’s public listing was completed, Chinese regulators suggested to Didi that it push back its IPO plans and undertake a review of its security network.”The bottom line here is they did not want Didi to go IPO. The regulators asked for a delay. That is an absolute no-no in a place like China. The minute they disobeyed … then all of the repression of China comes to roost,” Scaramucci said.According to the Wall Street Journal report, government officials in China held reservations about Didi’s large amounts of user data ending up in foreign possession due to the company listing on a U.S. stock exchange, which carries greater disclosure requirements.”There’s an insecurity going on inside of China in terms of their ability to control information and the result of which is going to be very bad for companies,” Scaramucci said.U.S. corporations and investors have looked to China, which is home to the world’s second-largest economy, for opportunity despite the Chinese Communist Party’s sweeping influence over business affairs.However, Scaramucci — who briefly served as White House communications director in the Trump administration, which took a hawkish stance toward Beijing — said the Didi debacle will not stop companies and investors from avoiding China in a significant away.”The opportunity costs are a little bit too high for a hedge fund advisor like SkyBridge, but I do see other companies still foraying in China,” Scaramucci said. “But I’ve got to tell you, we’ve got to give a big pushback to what’s going on because it’s an assault on capitalism. It’s nationalism related to the central control of data and it’s sort of everything that disavows the spirit of what goes on in a capitalist society.”


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