Hello, welcome to today’s “Financial Street”. Today, let’s first focus on the recent uproar about the telephone fraud in northern Myanmar.
Today’s Highlights: How can Myanmar’s telephone fraud bypass real-name registration for SIM cards? Caught in a financial crisis, the CCP sets its sights on people’s medical insurance money! Core CPI growth in the US slows better than expected, and the Federal Reserve will pause rate cuts! TikTok is about to be removed, with a large number of American users flocking to Xiaohongshu!
I won’t go into specific events as you might already be familiar with them. Amid increasing doubts about the rampant telephone fraud in northern Myanmar, one thing that has caught people’s attention is how these scammers in the fraud rings have a massive number of mainland Chinese phone numbers. How do they bypass real-name registration for SIM cards and bring these cards to Myanmar?
An operator told the media that the phone numbers used by scammers for fraud are not virtual but real, verified through real-name registration. Scammers obtain a large number of SIM cards through illegal channels, insert these SIM cards into professional devices, and then convert the signals of these SIM cards into virtual dialing signals through network signals. They can also control multiple phone numbers on one device, making it difficult to trace the specific users of fraudulent calls. This is an important method for scammers to evade the real-name registration certification of telecom operators.
The operator said that this technology is just part of the entire telecom fraud technology chain. The chain roughly works like this: someone activates the cards in mainland China, someone sends the cards abroad, and someone sets up professional equipment domestically to ensure scammers can smoothly use these SIM cards. The most crucial step is how they obtain these SIM cards under real-name registration control.
They usually use the following methods. Firstly, they target the elderly, with scammers impersonating communication company employees claiming to provide network upgrade services, then taking the opportunity to replace the elderly’s SIM cards with fakes. It is said that a fraud gang in a certain place in Shandong used this method to obtain more than 20 SIM cards from elderly people and provide these SIM cards to the fraud group.
Another method is colluding with internal employees of telecom companies to obtain SIM cards through fake identities and registrations.
In 2020, the Baoding police in Hebei Province cracked a major case of illegal purchase and sale of SIM cards, arresting 22 suspects, including 10 internal staff from China Mobile, China Telecom, and China Unicom.
Scammers also collude with internal staff, using methods such as so-called rural service delivery and gifting daily necessities to deceive people into transferring phone cards. These phone cards are used for telecommunications network fraud, causing substantial financial losses to victims.
In addition, according to recent media reports, all the fraud groups in northern Myanmar are set up by Chinese businessmen with connections to senior CCP officials. They can easily access a large number of legitimate SIM cards through high-level connections and engage in illegal activities such as human trafficking and fraud. The existence of these fraud rings is evidence of the CCP harming the Chinese people and the world.
Speaking of fraud, the biggest fraudster is actually the CCP. In recent years, billions of people on the mainland have participated in medical insurance, but medical insurance is becoming a treasury for the CCP to harvest from the people.
In recent years, due to the lack of money in local governments, various policies have been frequently introduced, setting up various obstacles and increasing the proportion of self-payment in medical insurance. The debates and protests arising from medical insurance have been increasing.
In 2020, the National Medical Insurance Administration of the CCP issued new opinions, stating that enterprise medical insurance payments will no longer enter personal accounts. Before the new regulations, around 30% of enterprise payments could be transferred to individual accounts.
Analysts believe that during the epidemic, the CCP’s “zero-clearance” policy depleted the social security funds in medical insurance, leading the authorities to target personal medical insurance accounts across the country. By 2022, the accumulated balance of individual medical insurance accounts in mainland China reached a staggering 1.3713 trillion yuan. Subsequently, various regions began to establish new regulations, reducing the proportion of funds transferred to individual accounts, causing strong public dissatisfaction.
In February 2023, retired residents in Wuhan gathered in front of the city government to protest the reduction of monthly medical subsidies from 260 yuan to 80 yuan. Retirees must achieve a threshold of 500 yuan for outpatient treatment expenses to be reimbursed, greatly increasing their out-of-pocket spending.
Currently, medical insurance in mainland China is deducted directly from salaries by enterprises, with additional payments made for medical insurance. If you leave your job, your medical insurance will be frozen starting from the second month after leaving.
In the United States, once you leave your job, you can apply for a health insurance plan called COBRA, which stands for the “Consolidated Omnibus Budget Reconciliation Act.” This federal law allows individuals who are unemployed or have left their job to retain their employer-sponsored health insurance for a period until they find a new job.
Another point of criticism about China’s medical insurance is the high self-payment proportion for the public and the significant lack of medical fairness.
A report in 2019 showed that initially, the self-payment ratio for medical care in China was as high as 60%, which has now reduced to around 29%. In comparison, Japan’s self-payment ratio is only 12.9%, while Germany and France have ratios of 12.7% and 9.8%, respectively.
Former Deputy Minister of Health, Yin Da’kui, revealed that in 2006, 80% of medical expenses funded by the CCP government were spent on government officials, totaling just 8.5 million people.
Apart from extracting funds from medical insurance, the CCP has also targeted hospitals. Recent reports have shown that hospitals across China have generally reduced salaries, with doctors’ incomes almost halving in economically-developed regions like Guangzhou and Shenzhen. Analysts believe that the real reason is not a lack of patients but a shortage of government funds, leading to fund withdrawals from hospitals.
The U.S. reported a PPI annual rate of 3.3% in December, lower than the expected 3.4%. PPI stands for Producer Price Index, and this number was the highest since February 2023.
The report indicated that since December last year, food prices in the U.S. have fallen by 0.1%, with vegetable prices dropping by nearly 15%. Additionally, cocoa and coffee prices have surged significantly. Prices of other commodities have also been rising overall. Energy prices have increased by 3.5%, and crude oil futures hit their highest point in five months on Monday. The unexpected cooling of PPI in December was due to the decrease in food costs, which will help alleviate concerns about high prices.
In recent weeks, with strong market demand and the background of an incoming Trump administration that will increase tariffs, investors have raised their expectations for inflation. The PPI value gives an initial insight into the potential direction of the CPI, the Consumer Price Index.
Economists are paying attention to this index for another reason, which is some of its components, particularly healthcare and financial services, which could influence the Federal Reserve’s judgment on inflation. Furthermore, with lower-than-expected PPI, it signals positively for the economy.
Following the release of the PPI data, the market has reinforced its judgment that the Federal Reserve will not cut interest rates again before the second half of this year. Given the strong performance of the job market and the slower rise in prices year-on-year, many Wall Street institutions believe that the Fed’s loose policy has ended. Goldman Sachs predicts two rate cuts in June and December this year, lower than the three cuts last year.
In recent years, Nvidia has rapidly risen to become the world’s second-largest super enterprise in terms of market value, thanks to its leading position in artificial intelligence and graphics processing, even surpassing Apple for a period. The latest data shows that 78% of Nvidia’s employees have become millionaires.
Since 2019, Nvidia’s stock price has skyrocketed by an astonishing 38 times, bringing enormous market value growth to the company and unprecedented wealth for its employees.
According to data provided by LinkedIn, 80% of Nvidia employees now have net assets exceeding one million US dollars, with half of the employees’ net assets reaching up to 25 million US dollars.
However, behind high incomes is the overwhelming pressure of work. Nvidia employees generally report working seven days a week, often working until 2 am, and frequently attending intense meetings and facing strict time management requirements. Many of these millionaire employees barely have time to spend with their families, with some even considering early retirement to mitigate the negative impacts of work.
Despite the immense pressure, Nvidia has maintained its position as the second-best workplace in Silicon Valley in 2024.
The US Bureau of Labor Statistics released the latest inflation data on Wednesday. In December last year, the Consumer Price Index (CPI) in the US increased by 2.9% year-on-year, a 0.4% increase from the previous month, meeting market expectations.
In December 2024, the US CPI increased by 2.9% year-on-year, slightly higher than the previous 2.7% figure, reaching a new high since July last year but aligning with market expectations.
After excluding the volatile food and energy prices, the core CPI increased by 3.2% annually, lower than the previous figure and market expectations of 3.3%, with a monthly increase of 0.2%, the first decrease in six months.
Following the new data release, US stock market futures rose, while government bond yields fell. Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, indicated that the new CPI data might soften the Federal Reserve’s monetary stance. Though it won’t change the expectation for a temporary halt to rate hikes, it should help suppress rumors about potential rate hikes.
Next Monday, on January 20, Trump will be inaugurated as President of the United States once again. Being a businessman, he has always advocated a “business-oriented” approach, which has further increased investment interest in the US from billionaires worldwide.
Wealthy businessman Hussain Sajwani from the UAE, a long-term business ally of Trump, recently announced plans to invest 20 billion US dollars to build data centers in the US over the next few years during his visit to Mar-a-Lago. He also plans to invest more in the US tech industry. These decisions are based on Trump’s consistent business-friendly approach.
Hussain Sajwani, a real estate tycoon from the UAE, stated: “I believe it is his (Trump’s) consistent business policies that have encouraged increased investment from businessmen. As you know, the US economy is enormous and filled with enormous opportunities, especially now with the development of artificial intelligence. I see significant opportunities in various aspects of artificial intelligence.”
Sajwani is currently one of the investors in xAI and SpaceX by Musk, and with Trump’s return to the White House, Sajwani plans to invest 20 billion US dollars over the next few years in eight states in the US to build large data centers.
Hussain Sajwani remarked: “We are paying attention to sunny areas and certain regions in the US because these states have sufficient power supply. Although many states have land, only a few have adequate power supply. Additionally, we will be looking for states more conducive to business development and strive to obtain approvals, including environmental approvals.”
Sajwani stated that Trump’s administration will further encourage foreign investment, intending to simplify processes to accelerate the approval process.
Commenting on Trump’s presidency, Sajwani noted: “He (Trump) hopes to encourage businesses to come to the US. We told him we wanted to invest in the US, we wanted to invest in data centers. We are already private equity investors and real estate investors, and he welcomed this idea.”
Sajwani’s company, DAMAC Properties in Dubai, is the only company in the Middle East to own a Trump-branded golf course and has been a long-term business partner of Trump. He anticipates that after Trump’s return, the oil-rich Gulf countries will invest more in the US.
Hussain Sajwani mentioned: “Under the leadership of the new government, we now feel that we want to focus on the US and develop the US market, which is a huge market.”
Not only billionaires from the Middle East but also large companies from Asian countries such as India and South Korea are eager to invest in the US.
South Korea’s large food chain, the SPC Group, announced on January 2 that it will invest 160 million US dollars to build a bakery in Texas and plans to increase the number of over 200 stores in North America to 1000 by 2030.
Meanwhile, the CJ Group in Korea was the first to announce investments totaling around 477 million US dollars in building North America’s largest Asian food factory in South Dakota, just weeks after Trump’s election victory.
The LS Cable & System, a cable manufacturer in South Korea, plans to invest around 676 billion won to build the largest submarine cable factory in the US in Virginia starting from April this year.
Additionally, Hyundai Steel Company from South Korea plans to invest hundreds of millions of dollars to build a steel plant in the US, while another company under the Hyundai Group, Hyundai Motor, aims to increase its annual car production at the factory in Georgia from the current 300,000 to 500,000 units.
Financial experts believe that the reason why South Korean businesses are rushing to invest in the US is due to the stagnation of domestic demand and unfavorable investment environments. With Trump’s return to the White House, South Korean companies see hope in investing in the US.
It’s tax season again in the US. Starting from January 27, the Internal Revenue Service (IRS) will begin accepting and processing tax returns for 2024. As millions of Americans prepare to file their taxes, what are the new developments and points to note this year?
For this year’s tax season, the IRS expects to receive over 140 million individual tax returns by the federal tax deadline on April 15. Tax experts remind taxpayers to prepare certain items before starting to fill out their tax returns.
TurboTax tax expert Lisa Greene-Lewis: “Collect your W-2 form, report your income on the 1099 form, and gather all receipts for deductible items.”
While the official tax deadline is in April, every year, millions of people fail to submit their taxes by this date. For instance, residents in disaster areas have their tax deadlines extended. The IRS has already announced an extension of the tax filing deadline to October 15 for victims in Southern California’s wildfires to submit their federal individual or business tax returns and pay taxes.
Also affected by hurricanes Helen and Milton, residents in Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee, and Virginia have their tax filing and payment deadlines extended to May 1.
TurboTax tax expert Lisa Greene-Lewis: “I just want to remind you that if you are affected by the disaster, you can claim losses in your 2024 tax returns.”
Furthermore, the US Internal Revenue Service will launch a pilot program for free electronic tax filing on the Direct File website, which has expanded from 12 states last year to 25 states this year, allowing more taxpayers in various regions to file taxes directly, accurately, and for free with the IRS.
In recent days, the hottest topic has been the sudden surge in popularity of the Chinese mobile app “Xiaohongshu” in the wake of TikTok’s impending ban. With a large number of American users flocking to Xiaohongshu just before the TikTok ban, the app suddenly topped the download charts in North America. Prior to this, Xiaohongshu had never operated internationally and had no download rankings to speak of.
So, starting yesterday, the homepage of Xiaohongshu looked like this –
Wow, it feels like the English corner in China from many years ago has finally come to Xiaohongshu!
Soon, several questions became the focus of people’s curiosity. Firstly, why Xiaohongshu?
Why didn’t American users choose something more similar to TikTok, like Douyin, or American apps like Instagram or Facebook, but opted for Xiaohongshu?
There are several main reasons: 1. Xiaohongshu is not geographically restrictive. Xiaohongshu initially targeted international student users to make it easier for users all over the world to use the app without isolating users from different countries.
2. While Douyin is more similar, it involves user registration thresholds, making it challenging for foreign users to register. To sign up, you need to create a Chinese Apple account, complete the registration, and then undergo real-name certification. However, real-name certification requires a Chinese ID card, which is quite a hassle!
3. Xiaohongshu is more of a visual and text-based application, with a community atmosphere and operation similar to Instagram, making it appealing to American customers.
Due to these reasons, Xiaohongshu suddenly became popular.
The second issue is the most critical. With the influx of American users, American values, lifestyles, and even various democratic expressions will flood Xiaohongshu. Doesn’t this make Xiaohongshu a platform for American propaganda against China? Xiaohongshu will face significant challenges in content review. How will Xiaohongshu handle this?
This problem will give the CCP a headache. On one hand, they hope that Xiaohongshu could capture this influx of traffic and possibly become a platform controlled by the CCP as TikTok’s replacement. Yet, on the other hand, they are deeply concerned about content censorship. The CCP cannot allow Chinese citizens to freely interact and communicate with Americans and Westerners on the internet, which would shake the foundations of CCP rule.
So, strict content reviews will be enforced. But Americans are not accustomed to this, being suspended, having their content taken down, being warned… except for being called in for tea, everything can happen. Americans do not buy into this system, being the most staunch advocates of freedom of speech. In the past few years, Facebook underwent a certain degree of content review due to political correctness and a far-left agenda, and look at how it was reproached by Americans! Once Trump came into office, Zuckerberg made an immediate right turn, not only worried about facing sanctions from the new government for past actions but also because Americans highly value freedom of speech protection. Zuckerberg also goes where public opinion goes.
American users, after using Xiaohongshu for a few days, will soon find that the platform’s content review is terrifying, leading many to leave just as quickly as they arrived. This wave of sudden popularity will disappear without a trace! Let’s see what happens next.
Returning to Xiaohongshu, the sudden influx of American users is not as rosy as it may seem. After all, Xiaohongshu’s overall strategy at the moment doesn’t have much international consideration, and the product technology is not fully prepared for globalization. For the top executives of Xiaohongshu, the troubles brought by the influx of American users are likely to be much more than the joy. Also, they will soon face pressure from Chinese official authorities. So, this wave of sudden popularity will bring Xiaohongshu nothing but audit risks.
In fact, TikTok’s problem is something all Chinese companies will have to face in the future. Under the increasing unified rejection of the CCP from free countries worldwide, the stealing and dishonest behaviors of Chinese enterprises will no longer be welcomed by free nations. Rigorous and even ridiculous content censorship, along with political correctness, will make such applications abhorred by everyone,