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Jan 1, 2006 2:42 pm


THE LESSON OF CHINA'S KHODORKOVSKY



His name is Feng Bingxian. He has never been as rich and he may never be as famous as his Russian counterpart (whose case is still creating big waves) but he is as brave and his trial is just beginning.

What did he do wrong? He took seriously the Chinese government's invitation to go prospect for oil. Once he found some, the government decided he may not keep it. They, like putting nationalized it or, more precisely, forced him to sell at a price they chose. He considered the compensation mere pittance and proceeded to commit the ultimate transgression. Feng refused to keep silent about the fact that he was wronged. Consequently, he is being put on trial for"disrupting social order." He son explains:

They accused my father and the other three defendants of 'disrupting social order', which is groundless, since we only gathered around 200 people to stand in front of the provincial government and ask them to negotiate. It was very ordered and did not cause any damage.

Amazingly, Feng's family looks forward to the trial. Like his Russian counterpart, he craves publicity. The Chinese are about to find out that entrepreneurs are a risk taking lot. They are even willing to risk the wrath of the various mafia-like bureaucrats, which run China. Sooner or later, such enterpreneurs will force the Communist leadership to make the choice they so carefully try to avoid, the one between prosperity and freedom .

In the meantime, anyone interested in investing in China should carefully follow his seminal trial. And so should Chinese returnees. They must continue to do what many are already doing, make sure they get va ery high return on their investment and stash much of it outside the country.

Keeping it where it is open to bureaucratic greed, infighting and whims are unsafe at any speed and the trial will reveal the exact speed. As Milton Friedman explained last night to Charlie Rose, foreigners are willing to accept lower returns from their American investments because they need a safe place to keep it.




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