Today’s briefing:
— China’s tycoon fire-sale
— UK airbase suspects released
— Diplomatic experiences, ranked
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Your Insider’s briefing:
— China’s tycoon fire-sale
— UK airbase suspects released
— Diplomatic experiences, ranked
Good morning {{first_name | Intriguer}}. There’s a specific dialect of English spoken only within foreign-registered superyachts and Grand Cayman trophy homes.
I heard it myself while in the Caymans once, somehow ending up at a party hosted by a young post-exit founder at his silly abode featuring a private British pub, manicured cricket pitch, and water slide running direct from kitchen to infinity pool.
If you drop by you will inevitably hear — between sips of top-shelf tequila and the passing roar of a custom Range Rover — the local mantra: “Look, the Caymans isn’t about tax evasion. It’s about tax *neutrality*.” Right. And Ozempic isn’t about weight-loss; it’s about weight neutrality.
There might, however, be some Caymans panic right now, as a slew of China’s ultra-rich tycoons start panic-selling ahead of a big October deadline. Shall we look?
 | Managing Editor Jeremy Dicker |
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Number of the day
$20M
That’s the bounty Putin has now reportedly put on Robert ‘Magyar’ Brovdi, Ukraine’s drones chief. According to The Wall Street Journal, Brovdi’s unit comprises just 2.5% of Ukraine’s military but inflicts a third of all Russian casualties.
Tax to the max.
Founders selling stakes in their own business? Happens all the time. In fact, isn’t that almost the point? Everybody needs a new Gulfstream, right? Or a Cabo trophy home! Plus how else is Jeff supposed to pay for that wedding?
But when multiple big founders start liquidating their holdings at once? 🤔
Like, say, the founding family behind China’s hit Haidilao hotpot chain, which just sold $350M in shares, citing ✌️personal funding needs✌️? That’s a lot of noodles.
Or Peng Zhao, China’s online recruitment tycoon, selling $110M of his shares?
Then all the market jitters around China’s other founder-held firms like Li Ning’s Viva Goods (footwear and apparel), or Lin Bin’s Xiaomi (EVs), or Wang Yunan’s Guming (boba tea!)??? All reflecting a sense these guys might sell next.
So what — and we cannot stress this enough — is going on?
China’s ultra-rich are racing against a 22 October deadline to settle back taxes on their offshore trusts, long a popular loophole to defer taxes indefinitely.
But Beijing moved to close that loophole back in July, instead treating these trusts as look-throughs — ie, ignore the trust structure and tax the tycoon beneath. Try to say you’re now Singaporean instead? China’s new rules will still follow.
So tycoons have until 22 October to declare and settle all unpaid trust income back to 2023, penalty-free. Miss it, and you soon face surcharges and other penalties.
With Beijing now using AI and auto-data exchanges with 100 countries to find its tycoons abroad, all these big emergency fire-sales in China start to make sense.
Plus there’s a lot at stake: BCG’s consultants recently took time out from telling clients to increase revenues and cut costs to instead do some research suggesting more than half of China’s ultra-high-net-worth families use these trusts.
If ‘half’ sounds low, it’s because the other half often skips any formal trust wrapper and instead disguises wealth via massive insurance policies, or just jumps straight to Cayman shells. But even the trust-half might be hiding $1.2T, aka a Netherlands.
It’s not just offshore trusts now in Beijing’s tax crosshairs, btw. It’s also now…
Squeezing China’s VAT loopholes while standardising rates and terms
Ditching a 32-year-old tax exemption for certain expat bonuses, and
Cracking down on unlicensed cross-border trading (a key tax-evasion channel)
So… did China’s taxman just OD on Adderall?
Maybe, but there are five bigger drivers behind Beijing’s big new tax hunt:
First, it’s a way for China to plug its fiscal deficit: at the ~2021 peak, China’s local governments (~85% of public spending) relied on land-sales for ~half their revenue! But China’s ongoing property crash has shrunk that stream by ~65% — we’re talking ~$600B now missing each year. So taxing your tycoons is how you replace half a trillion dollars of lost property income without crashing basic public services.
Second, President Xi needs to fund his massive new $100B+ reallocation away from non-productive infrastructure to instead back new priorities like AI and chips.
Third, the taxman would also argue this is just righting a wrong: China’s tax-to-GDP ratio has long been almost ~half the OECD average.
Fourth, it also helps stem (though could also conceivably accelerate) China’s ~$900B+ in annual capital flight, forcing tycoons to instead deploy their cash back home in line with Xi’s vision. And speaking of Xi’s vision…
Fifth, this whole crackdown also aligns neatly with his ‘Common Prosperity’ banner (though no word yet on how much tax his own wealthy relatives might pay).
So even in China, dear Intriguer, Benjamin Franklin’s death and taxes edict still holds. It’s just that China’s taxman now packs AI algorithms and an exit ban.
Intrigue’s Take
The ripples, dear Intriguer, the ripples! There are so many to track, but here are five.
First…
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Intrigue’s Take
The ripples, dear Intriguer, the ripples! There are so many to track, but here are five.
First, forced block-sales of founder equity don’t just happen in a vacuum. Rather, they depress valuations, spook investors, and feed a toxic cycle of perceived volatility.
Second, where there’s a will, there’s a way, though each way always carries risk. The latest hot move involves big “in-kind” trades: you deposit RMB with an entity masquerading as a routine transaction, and then a $150M Bombardier jet or European logistics park magically gets transferred into your name.
Third, watch how this plays out for the havens: there’ll be a faint gurgling out of the Caymans and BVI, but there might also be plot-twists: Deutsche, for example, just notched up record mainland flows out to Hong Kong. The marketing brochure offers all kinds of explanations except the obvious one: maybe rattled liquidity is inching closer to the exit doors, which are still wider in Hong Kong than Shanghai.
This is getting philosophical and frankly speculative, but our fourth ripple ponders what higher taxes might eventually mean for China’s social contract: when you pay the bills by selling land rather than taxing your citizens, you can politely skirt around the whole “no taxation without representation” thing. But how much can you now squeeze your rich without them wanting a say in how it gets spent?
Then finally, these tax reforms actually feel like a stepping stone to fixing China’s big structural imbalances: you can’t shift to a consumer-led economy if your consumers are saving everything they earn. And you can’t get them to spend some savings without first providing a basic safety net to obviate all the saving. And yet you can’t provide a basic safety net without raising your ultra-low tax-to-GDP ratio.
But Xi has always warned that too much social spending breeds idleness (which can be true when done wrong ofc). So rather than correct the imbalance, Xi is arguably using this projected new tax windfall to make the imbalance worse, just this time via new semiconductor fabs rather than empty apartments.
So all this to say… hold onto your Gulfstreams, folks. It’s going to be a busy autumn for private bankers, corporate lawyers, and anyone holding a trust in the Caymans.
Sound even smarter:
Some China-watchers are warning an inheritance tax might also be on the cards, though no plans have been announced yet.
Today’s briefing is sponsored by The Chief of Staff Association
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Meanwhile, elsewhere…
🇬🇧 UNITED KINGDOM — Fairford fizzle?
President Trump has voiced surprise after British counter-terrorism police released on bail all five UK nationals arrested near the Fairford airbase over a suspected bomb plot. US Secretary of State Rubio has now gone a step further, insisting the “hands of a foreign actor” were involved, though forensic sweeps revealed no viable explosives inside their vans. (Guardian)
Comment: Trump’s surprise might just be a little pirouette after he publicly insisted the five young (masked) men were all on intel radars, but Rubio’s intervention is now sharper. And yet, British law allows cops to hold terror suspects for up to 14 days without charge, so releasing these guys after barely 24 hours suggests initial “bomb plot” fears collapsed pretty quickly upon interrogation. Maybe the reason they were only discovered last-minute is they were just local lads stealing petrol. Or if Rubio is right, they could’ve been local lads unwittingly (via encrypted apps) doing the bidding of Iran, akin to what its Revolutionary Guards attempted in Sydney back in 2024. But of course, Iran denies any role.
🇺🇸 UNITED STATES — Bonds, shaken.
US 10-year Treasury yields have blown past 5.2% to hit 19-year-highs, as investors price in a hawkish Fed, rising oil prices, and heavy debt issuance tied to record spending out of both DC and Silicon Valley. (BPM)
Comment: It’s an interrelated double-whammy for the tech giants: higher yields are a drag on today’s valuations, and another cost for the AI-buildout on which those valuations rely. For DC, meanwhile, that’s a 1.1 percentage point spike in a single year — a massive repricing for any sovereign bond, three quarters of which just hit in the last three months. That kind of volatility risks doing more damage than the rate itself, which is still okay by historic standards.
🇪🇬 EGYPT— Cold justice?
An Italian court has convicted three Egyptian security officials in absentia over the 2016 kidnapping of Italian postgrad Cambridge student Giulio Regeni, who’d been researching Egypt’s independent street vendor trade unions at the time — a sensitive topic in post-revolution Cairo. (New Arab)
Comment: Cairo has spent a decade stonewalling the investigation, ignoring 30+ diplomatic requests for suspect details while blaming a criminal gang (conveniently then killed in a police shootout). The whole case — including the later discovery of Giulio’s tortured body — has been another window into Egypt’s paranoid security apparatus and its ability to still operate with impunity.
🇺🇸 UNITED STATES — Anthropic’s trillion-dollar math.
Anthropic’s newly-leaked IPO prospectus suggests the AI pioneer is now projecting a $2T+ valuation, even with 2025 revenues of $4.6B and net losses of $42B (!) the same year. (Reuters)
Comment: Institutional investors are trading on three narratives to justify that kind of valuation. First, that $42B loss was mostly an accounting phantom related to financing instruments held by earlier investors — it’s not cash leaving the building. Second, the forward trajectory looks better, with an annualised run-rate now approaching $65B for 2026. And third, that $2T valuation eases to a less-crazy 10x price-to-sales multiple when you measure against projected 2028 revenues (though these are still big numbers). The other big number is 80 — that’s how many pages Anthropic dedicates to risk factors including the possibility of human extinction, more than the 48 pages on its actual business! Why? It’s partly butt-covering for Anthropic’s unusual safety-first mandate, but safety is also increasingly core to Anthropic’s differentiated pitch.
🇹🇭 THAILAND — Bangkok drift.
As Thailand’s capital cleans up after its worst flooding in 15 years, outrage is mounting after authorities arrested a wealthy 27-year-old for absolutely fanging down the city’s submerged streets on a jetski, sending wake crashing into local homes and storefronts. (Bangkok Post)
Comment: The whole stunt — posted online as “BKK DRIFT” — has really become a lightning rod for class anger: low-lying neighbourhoods plead for basic support, while wealthy influencers milk the disaster for likes.
🇲🇾 MALAYSIA — Myanmar repatriations.
Authorities have begun repatriating Myanmar nationals and presumed minority Rohingya to Myanmar, with PM Anwar Ibrahim even inviting the leader of the military junta they fled to help facilitate. (Independent)
Comment: This is a complete 180 for Anwar, long a harsh critic of Myanmar’s military dictatorship. The spark seems to have been populist backlash against Rohingya, initially welcomed in the spirit of Ummah (Muslim) solidarity.
🇻🇪 VENEZUELA — Drip-feed amnesty.
The interim government of Delcy Rodriguez has released another tranche of political prisoners following US-backed negotiations with the opposition. It comes after she used last week’s UN address to insist new elections will happen, though she remains conspicuously vague on timing. (BBC)
Comment: There’s been a steady drumbeat of prison vigils, street marches, and international lobbying in favour of political liberalisation. But absent an independent electoral commission and fixed ballot dates, these prisoner releases seem more like crowd control than real reform.
Extra Intrigue
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Meme of the day
Courtesy of our resident meme-lord, @DickerPicss
You might’ve seen the above Intrigue meme passed around the embassy group-chat this week. We stand by #15 (VIP visit cancelled) as an elite tier-one joy, and #8 (getting the wrong almonds for a VIP) can be a career-ending move. Plus yes, the best day of your diplomacy career is probably also your first (#16). But diplomats around the world quickly flooded our replies with some other classics, like…
Losing a minister: probably depends on the minister whether this is good or bad, but one G7 envoy reported somehow losing a minister during a high-stakes summit — said VIP was later discovered blissfully unattended three halls over, admiring the artwork
Losing a media van: another G20 staffer shared the blood-chilling panic of glancing in the rearview mid-motorcade only to realise they’d somehow lost the entire press van somewhere along a foreign highway
Accidentally hitting ‘reply all’ on a sensitive cable: that nightmarish gem was submitted by a G20 ambassador in Jakarta. And speaking of ambassadors…
The “helpful” ambassador, which involves your ambitious boss slapping their own name as an author on your brilliant cable, sweetly assuring you it’s “just to protect you from any HQ blowback”.
Any others we missed? Hit reply!
Today’s poll
Do you think capitals should tax offshore trusts?
Yesterday’s poll: What's your favourite airline?
🇸🇬 Singapore Airlines 🥇 (41%)
🇶🇦 Qatar Airways 🥈 (29%)
🇭🇰 Cathay Pacific 🥉 (19%)
✍️ Other (write in) (11%)
Your two cents:
🇸🇬 I.H: “Never forget the first R&R from first tour in Manila. Us and four kids all under age 7 on a dream trip to New Zealand, Sydney, and Singapore, and upgraded on Singapore Airlines for a song, where the attendants doted on them for every mile. The kids were forever spoiled on air travel.”
🇶🇦 M.M: “Q Suite is by far the best airline experience I’ve ever had.”
✍️ D.S: “Midwest Express used to have quality fresh cookies baked on board and all seats business class.”
Honourable mentions: British Airways, Air France, China Airlines, KLM, and Emirates.