Analysts believe the Beijing government is facing businessmen who could threaten its power in the country.
Last month’s disappearance of Chinese entrepreneur Bao Fan has rekindled interest in a recent phenomenon in the country: the disappearance of billionaires.
The founder of China Renaissance Holdings – with a client list that includes giants Tencent, Alibaba and Baidu – is seen as a tycoon in the country’s tech sector.
Bao’s case follows a familiar pattern: He disappeared for days, until his company announced it was “cooperating in an investigation conducted by certain authorities in the People’s Republic of China.”
As is also common, there is still no information on which government agency is conducting the investigation, what it is, or Bao’s current whereabouts.
The mystery surrounding his disappearance comes after several Chinese business leaders have disappeared in recent years, including Alibaba chief Jack Ma.
While missing billionaires tend to get much more attention, there have also been many less publicized cases of Chinese nationals going missing after participating in, for example, anti-government protests or human rights campaigns.
Bao’s disappearance reinforces the argument that this is one of President Xi Jinping’s ways of securing control over the Chinese economy.
All of this came amid the announcement to the National People’s Congress (NPC) of plans for the biggest overhaul of China’s financial sector regulatory system in recent years.
A new regulatory body will be created to oversee most financial sectors. Officials said this would fill gaps in the current system, in which multiple agencies, rather than a single body, monitor different aspects of the financial services industry.
In 2015 alone, at least five executives are unreachable, including Guo Guangchang, chairman of the Fosun International conglomerate, known in the West for being the owner of Wolverhampton Wanderers, the English Premier League football club.
Guo disappeared in December 2015. His company later announced it was helping with the investigation.
Two years later, Chinese-Canadian businessman Xiao Jianhua was arrested in a luxury hotel in Hong Kong. He was one of the richest people in China. Last year he was arrested for corruption.
In March 2020, real estate tycoon Ren Zhiqiang passed away after calling Xi a “clown” for his handling of the COVID pandemic. Later that year, in a one-day trial, Ren was sentenced to 18 years in prison for corruption.
The most prominent missing billionaire is Alibaba founder Jack Ma, who was the richest person in China. He passed away in late 2020 after criticizing the country’s financial regulators.
Plans to list the shares of its financial technology giant, Ant Group, have been abandoned.
And despite donating nearly $10 billion to the Common Prosperity fund, he hasn’t been seen in China for over two years. He has not been charged with any crime.
It is still unclear where Ma is, although there are reports that he has been seen in Japan, Thailand and Australia in recent months.
The Chinese government insists that actions taken against some of the richest people in the country are strictly legal and has promised to root out corruption. But Beijing’s actions also come against the backdrop of decades of liberalization in what is now the world’s second-largest economy.
China’s opening up spawned a caste of billionaires who, with their immense wealth, had the potential to wield considerable power in the country.
Now, according to analysts, the Communist Party of China under Xi wants to regain that power. And this is done amidst a lot of mystery.
Big business, especially the tech industry, has seen its power grow under the policies of Xi’s predecessors in power: Jiang Zemin and Hu Jintao.
Previously, Beijing’s focus was on controlling traditional power centers such as the military, manufacturing industry and local governments.
Analysts believe that Xi has maintained tight control over these areas and broadened his focus to other sectors. His Common Prosperity Policy triggered repression in various sectors of the economy. The tech industry has been one of the hardest hit.
“Sometimes these incidents are orchestrated to send a larger message, particularly to a specific industry or interest group,” Nick Marro, an analyst at the Economist Intelligence Unit, tells the BBC.
“Ultimately, this reflects an attempt to centralize control and authority over a certain part of the economy, which has been a key feature of Xi’s governing style over the past decade,” he added.
“Beijing remains focused on ensuring that big platforms and tech players don’t develop their own brands and influences that make them difficult to control and more likely to go against government preferences,” says Paul Triolo, head of technology policy at the technology consultancy firm. Albright Stonebridge Group.
It is fundamental to the common prosperity policy that the same rules apply to both the rich and the poor.
Beijing says the policy aims to narrow the growing wealth gap, which many believe is a major issue that could undermine the Communist Party’s position if not addressed.
Inequality is rising in China and Xi is believed to be under pressure from the far left who want to return to the party’s socialist roots.
The mystery surrounding the disappearance of the billionaires and other broader concerns about how Beijing runs the business world could have major consequences.
Some analysts suggest the government risks discouraging new entrepreneurial talent.
“Beijing’s danger in targeting tech billionaires is putting more pressure on entrepreneurs hoping to become the next Jack Ma,” Triolo said.
Xi seems to be aware of the risk of scaring businessmen. In a speech to congressional delegates this week, he stressed the importance of the private sector to China.
But he also urged private companies and entrepreneurs to “be rich and responsible, rich and just, rich and loving.”
In addition to the announcement of a new body to oversee the financial sector, bankers were also warned last month not to follow the lead of their “hedonistic” Western counterparts.
Analysts see this as another sign that Xi is keeping a close eye on the financial system.
“Over the past few months, we have seen traces of the Common Prosperity agenda seeping into financial services, particularly with regards to compensation and bonus systems for senior executives, as well as the pay gap between executives and junior staff,” Marro says.
Whether Xi’s crackdown on billionaires will help him significantly increase his power remains to be seen.
What is certainly at risk, however, is confidence in China’s financial markets and businesses, and ultimately the economy as a whole.
Source: Terra
Rose James is a Gossipify movie and series reviewer known for her in-depth analysis and unique perspective on the latest releases. With a background in film studies, she provides engaging and informative reviews, and keeps readers up to date with industry trends and emerging talents.
