As told in the article Agency theory and the role of audit published by the Institute of Chartered Accountants in England and Wales, an agency relationship arises when one or more principals (eg an owner) engage another person as their agent (or steward) to perform a service on their behalf. The principals bear the consequences of whatever the agent does in the scope of agency relationship if the principals don’t tell the third party to deny the agency relationship and corresponding rights. And the simplest agency model assumes that no agents are trustworthy and if an agent can make himself better off at the expense of a principal then he will.
– Chinese People Have Never Appointed the CCP as Their Agent
The Chinese Communist Party (CCP) has never been elected as an agent of Chinese people through transparent elections. However, the CCP claims it represents 1.4b Chinese. The CCP is untrustworthy and makes itself better off at the expense of Chinese. The CCP often promulgates that the principal Chinese will fall into chaos without it.
– Illegal Agents Numerate Heavy Commissions
It is very absurd. You owned a house valued at £1000,000. A real estate agent told you that he would act as your sales agent to sell your house and numerated his commission at 80% without getting your approval. He sold your house to his CEO overseas at £10,000 and charged commission at £8,000. The CEO sold the house immediately at £1000,000 subsequently and laundered the proceeds to bank accounts maintained in the USA, the UK and the EU with the help of bankers. As a result, you became much poorer, couldn’t afford proper education and could only get propaganda that without the agent it would become much worse and it was decided by history that this agent was your only option. Your appearance seen from outsiders was too bad , which would convince outsiders of the propaganda mentioned above. It also convinced outsiders that you, the agent and the market were unseparated. As far as China is concerned, you are the Chinese people, the agent is the CCP and China is the market.
– An Example of Heavy Agency Cost
Because of this terrible agency relationship, the CCP made great gains at the expense of Chinese people. According to the Agriculture Tax Ordinance (ATO) effective until 2006 published in 1958 by CCP, the agriculture tax(AT) was levied on assessed production quantities of normal years by applying average tax rate of 15.5% plus local rate of less than 9.5%, plus additional 10%-50% for individual peasants not member of people’s commune (PC). There was no personal allowance as set in UK Income Tax Act 2007 . What made matters worse was that the officers of PC joined by most peasants were responsible for preparing AT return in conformance with ATO. The PC officers and other officials of various CCP classes were only interested in selfish promotion and welfare arising from overstating production quantities and overcharging AT. It was said that there were only 115.1 thousand tons grains produced in Fengdu of Sichuan in 1959 in an article Failure of Indicator Management: Great Famine and CCP Fraudulence published by The Universities Service Centre for China Studies of The Chinese University of Hong Kong. It was overstated to 420 thousand tons, as a result of which, the AT was charged at 25% for about 105 thousand tons. Therefore, the agency cost was actually charged at 91.23% (105/115.1×100%=91.23%), as a result, there was a severe consequence of substantial starvation deaths of the people in Sichuan in the Great Famine. My grandfather died during this famine. I grew up in the countryside and also suffered a great blow, in the form of short height and thinness due to malnutrition in the growth period, from such heavy agency cost because heavy AT left little for parents to feed me.
In recent years, the CCP social insurance has become one of the heaviest costs of Chinese private businesses and workers. Similar to the AT, there is no personal allowance that is available in the UK National Insurance Contribution scheme and overcharge by applying overstated gross wages in the form of setting least contribution. If your gross wage each year is ¥40,000 and the minimum required fee is ¥3000 each month in Guangdong, the charge will be ¥36,000 each year. As we all know, social insurance expenditure is not transparent and the social insurance fund is now being invested in the A share market of China. The A share market has been used for laundering money and cheating fund into hands of CCP officials, which could explain why the gains from A shares trading have exempt from individual income tax since introduction of securities exchange in 1990. Therefore, the CCP social insurance charge is the agency cost charged by the CCP at 90% (36000/40000×100%=90%) in the case mentioned ab ove.
– Chinese People ≠ CCP ≠ China
On July 1 and July 24, 2020, some people, identified as the Whistleblower Movement participants, held protests outside the Chinese Embassy in Washington DC and Chinese Consulate in Houston respectively following the declaration of the establishment of the New Federal State of China on June 4 , 2020. They all deny the agency relationship between Chinese people and the CCP to the outsider world, and indicate that it’s reasonable to replace the CCP with the New Federal State of China (NFSC).
Many nations such as the USA have gradually become aware that the Chinese People are not equal to the CCP, and the CCP doesn’t represent China either. Take America as an example, it is said in the Communist China and the Free World’s Future speech made by US Secretary of State Michel Pompeo on July 23, 2020 that the USA opened arms to Chinese citizens, only to see the CCP exploit American free and open society. America gave the CCP special economic treatment, only to see the CCP insist on silence over its human rights abuses as the price of admission for Western companies entering China. America knows that the People’s Liberation Army is not a normal army, too. Its purpose is to uphold the absolute rule of the CCP elites and expand a Chinese empire, not to protect the Chinese people. Chinese people, too made in the image of God, are completely distinct from the CCP.
– Solution to Agency Problem in China
It is stated in The Declaration of NFSC that it will uphold rule of law, freedom, segregation of government branches and democracy. In the NFSC promoted by the Whistleblower Movement , Chinese people will appoint legal agent and numerate the agency cost at reasonable rate through transparent democratic and free election process. To deny the agency relationship between CCP and Chinese people, more Chinese people are requisitioned to join in the Whistleblower’s Movement.
Author: CPA Jim
The above content only represents the author’s personal opinion.