Why China is Buying Gold: What Are They Up To

Ken McElroy Show

Ken McElroy and guests discuss China's growing gold purchases and the underlying motivations of the Chinese Communist Party, highlighting ho

Key takeaways

• China's economic growth is driven by conditional entrepreneurship—individuals can build wealth as long as they avoid challenging party interests.
• The Chinese government exerts control over businesses through the National Intelligence Law, requiring cooperation with state security and forbidding disclosure of such cooperation.

Main topics

• China's economic model under the CCP
• Intellectual property theft and corporate takeovers in China

Notable quotes

"To be rich is glorious." – Deng Xiaoping's economic maxim that enabled limited entrepreneurship under strict political control.

"You can be entrepreneurial, but it's highly conditional."

Conclusion

China's strategic accumulation of gold reflects deep-seated economic insecurity and distrust in

Transcript preview

Speaker 3 (0:00) Welcome to the Limitless Podcast stage. I'm up here with Ken McElroy and Jan Jekielek, and he is the senior editor at the Epoch Times. He's also the author of Killed to Order, which we are going to get into in a bit. So welcome, Jan. Speaker 2 (0:17) It's so good to be here with you guys. Yeah. Thanks for flying all the way out here. By the way, we love the Epoch Times. Like, we've done a lot of stuff with them. And they're such a leading organization for news. Speaker 1 (0:31) Well, and you guys really help people build their income, right? And that's also very important to us for our subscribers. Yeah, Speaker 2 (0:40) so let's, you want to start off talking about the book? Speaker 3 (0:42) Well, no, actually, I don't want to start off talking about the book, Ken. But what I do want to start off talking about is China. Because we're all, you know, China is becoming a bigger and bigger part of our market. And we don't really understand the Chinese Communist Party. And that is what Jan has really dug into, you know, throughout his book and just in general throughout his career. So let's just start with this question. Jan, what do you think fundamentally that Americans don't understand about the CCP? Speaker 1 (1:14) Wow, there's a great many things. But Deng Xiaoping, back in the day, he became the dictator, the paramount leader of China. And he realized that they were going to collapse economically. Right. So this new maxim got pushed out into society. To be rich is glorious. To be glorious. OK, so now it said, look, and by the way, Chinese, this is a stereotype, but it's really true. I work with a lot of Chinese. Unbelievably entrepreneurial. So basically it said, you know what? This whole private property thing, we got rid of it. Well, actually, it's OK. In a small scale, as long as you don't go against the party to do well for yourself, to start making money, to build a business, and we're not going to take it from you. Because think about the incentive structures, right? Before, you want to build a business, but the moment you have anything of value, someone comes and takes it with the barrel of a gun, as Mouth famously said, right? But now you say, no, no, no, you get to keep what you build. People were thrilled so that you see this huge kind of surge in growth, right? However, the deal was like this. Don't touch politics. Don't touch anything the Chinese Communist Party is interested in. If you get big enough, accept the communist cadre who's really in charge, who really has the bottom line to say what happens in that company. Right. But, you know, and that actually saved China, that regime from collapse because they're economically, you know, the the the labor theory of value was discredited. What, like 150 years ago. Right. So there's no there's no economic. reasonable economic theory for communism. If the regime doesn't have a priority of something, it doesn't care. Like, for example, if you have a stand on the street and you're selling some kind of great food that people love, so you get these big lineups coming and everything, probably you're OK as long as there isn't like a leader, someone in the regime, in the local government that says, hey, I want to control that. Because the moment that interest of the regime, whatever scale, national, local, in between, whenever that interest comes in, now you're no longer your own person. And of course, all the time you have to grease the right palms to make sure that cart doesn't get taken away, that your permit suddenly, oh, you don't have a permit, sir. Right? Yeah. So the answer is you can be entrepreneurial, but it's highly conditional. Well, Speaker 2 (3:38) I know several entrepreneurs from the U.S. that have gone to China. and started a business or maybe maybe they were making part of their business and then all of a sudden the piracy they they end up just knocking them off creating a whole you know i've even heard even they've even had a whole apple store completely looking like an apple store and i i can't this is back when steve jobs was still around he he went over there he's like we don't have an apple store in china but there was one and every single product was knocked off and so You know, it's interesting. We haven't been able to kind of penetrate that market at all. Well, Speaker 3 (4:18) Ken, hold on. Aren't all of your books written in Chinese as well? Speaker 2 (4:21) They are. Well, yeah, we don't have a Chinese publisher, but my Speaker 1 (4:25) books are all in Chinese. Well, but here's the thing, because Chinese, this is the crazy thing, right? Like Chinese are unbelievably entrepreneurial people. It's just it's a cultural feature. As much as the Communist Party tried to rip out the tradition out of that Chinese culture, they could not rip out the entrepreneurship sort of impulse from the Chinese. And let me talk about this Apple store for a moment. This is a huge problem for Apple, right? This Apple store. Why? Because there's very high level officials that were involved in that Apple store. So what are you going to do? You're going to you're saying, hey, this is hey, guys, you have all these fake products. And are you using our logo? And that's crazy. So what do you do? Well, you can actually do nothing because one, the magistrate works on behalf of the regime and, you know, plays poker with those high level officials. Right. So you're not you can't there's no rule of law, actually. Right. So you don't really have recourse. Or what you have