China tames 'grey rhinos' after foreign shopping sprees

"Grey rhinos" have become a hunted species in China, where government regulators are clamping down on powerful private conglomerates amid fears they are racking up dangerous debt levels.
Coined by an American policy analyst, the rhino reference points to long-visible threats that can charge suddenly and wreak havoc, as opposed to unforeseen "black swans".
In China, it refers in particular to four huge companies with diverse global empires: HNA (aviation, tourism, finance), Fosun (tourism, entertainment), Wanda (real estate, cinema, amusement parks) and Anbang (insurance, luxury hotels).
These are the crown jewels of China's private sector but are now viewed as a threat to financial stability.

Their voracious acquisitions include Fosun's takeover of Club Med, HNA's stakes in Deutsche Bank and Hilton hotels, Anbang's purchase of New York's historic Waldorf Astoria, and Wanda's control of Hollywood studio Legendary Entertainment and 20 percent of the Atletico Madrid football club.
According to data provided to AFP by analytic firm Dealogic, they spent a combined $83.3 billion on overseas mergers and acquisitions since 2013.

China had long encouraged the buying frenzies but has reversed course, and it emerged in June that regulators were investigating potentially risky loans to these companies.
"It was absolutely predictable. The debt level was growing way too rapidly," Christopher Balding, an economics professor at Peking University, told AFP.

"We expected these problems to pop up even if we didn't know the specific companies they were going to pop up with."
He adds that the investments were "putting a lot of pressure on the currency," even if the debts remain difficult to evaluate.
Other analysts concur that the change of tack can be attributed to currency trends.
"When they were encouraging outward investment, the renminbi (yuan) was appreciating at that time," Anne Stevenson-Yang, the head of J Capital Research, told AFP.
"Now there is depreciation pressure, and that changes things."
As the pioneers of Chinese soft power overseas, HNA, Fosun, Wanda and Anbang were considered untouchable because of their political connections.

For example, Wanda CEO Wang Jianlin, one of the country's wealthiest men, is a past delegate to the Communist Party congress, China's most important political event, while Anbang president Wu Xiaohui married a granddaughter of former Chinese leader Deng Xiaoping.
But the winds have shifted. Authorities now appear to be concerned about the influence of these conglomerates, their mazes of subsidiaries and debt, and their capacity to trip up the Chinese economy.