The China Hustle

Fifty minutes into "The China Hustle," Chinese national Kun Huang - who spent two years in a Chinese prison for helping uncover the corruption that's at the heart of this terrifying new documentary - reflects on whether it was worth it: "Good will ultimately triumph over evil." It's a rare statement of optimism in the middle of a film that pulls few punches regarding its dark message: Free-market capitalism is a double-edged sword that rewards both the person who works hard and the person who's willing to scam and screw others in order to amass a fortune.

Director Jed Rothstein (who previously directed the 2010 Oscar-nominated short "Killing in the Name") takes on the capitalist system and shines a light on a huge cast of "bad actors." They range from politicians to banks to individual traders, some willfully ignorant about the corruption they are facilitating while others are aggressively taking advantage of a flawed system and ignorant investors.

In an effort to regain some of the ground investors lost during the 2008 financial crisis, U.S. banks and investment companies began exploiting a loophole that allowed Chinese companies (traditionally barred from U.S. investment) to engage in a "reverse merger" where they buy the name and NYSE registration of a defunct American company. Because these are mergers, they aren't subject to the same scrutiny in the U.S. under Chinese law, defrauding non-Chinese citizens is not a crime, so these companies were able to massively over-report their value and assets with no regulations in place to stop them.

The "story" of the film centers on Dan David, who opens the movie by saying, "There are no good guys in this story, including me." And though David has a conscience and is trying to bring attention to the fraud, he also began short selling the stocks as he published reports on how overvalued they were and profited from them when they tanked.

Ultimately David (and the film) acknowledges that there will always be people eager to prey on those who have a little in order to take it from them. Only one Chinese businessman has gone to jail despite billions in wealth being transferred from the average investor to the banks (in fees), corporate executives (in bonuses) and Chinese billionaires. Most of the villains of the movie will walk away rich, free, and ready to start another scam.

One of the central themes of the movie is that capitalism needs a strong central government willing to regulate the financial sector to protect the individual. In Rothstein's opinion the U.S. government has failed miserably, and he doesn't believe it will get better. At the end of the film, Jack Ma (CEO of Alibaba) is meeting with Donald Trump as we learn that Trump has appointed a colleague of Ma's to oversee the SEC investigation into Alibaba's accounting practices. There are no good guys in this movie.