China’s billionaires are mysteriously disappearing – 09/03/2023 – Market

The disappearance last month of Chinese businessman Bao Fan has reignited 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 was missing for days, until his company announced that it was “cooperating in an investigation carried out by certain authorities of 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 about or what Bao’s current whereabouts are.

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 a lot more attention, there have also been several less publicized cases of Chinese nationals missing after participating in, for example, anti-government protests or human rights campaigns.

Bao’s disappearance reinforces the thesis that this is one of the ways used by the leader Xi Jinping to guarantee his control over the Chinese economy.

This all came amid the announcement at the National People’s Congress (NPC) of plans for the biggest overhaul in recent years of China’s financial sector regulation system.

A new regulatory body will be created to oversee most financial sectors. Officials said that would close loopholes 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 conglomerate Fosun International, best known in the West for owning Wolverhampton Wanderers, the English Premier League football team.

Guo disappeared in December 2015. His company later announced that he was helping with investigations.

Two years later, Chinese-Canadian businessman Xiao Jianhua was arrested at 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 disappeared after calling Xi a “clown” for his handling of the Covid pandemic. That same 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 disappeared in late 2020 after criticizing the country’s financial regulators.

The plan to list the shares of its financial technology giant, Ant Group, was abandoned.

And despite donating nearly US$10 billion (R$51.3 billion) to the ‘Common Prosperity’ fund, he has not been seen in China for over two years. He has not been charged with any crime.

Ma’s whereabouts are still unclear, 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 country’s richest people are strictly legal and has vowed 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 Chinese Communist Party under Xi wants to regain that power. And this is being done amid much mystery.

Big business, especially the tech industry, saw their power grow under the policies of Xi’s predecessors in power — Jiang Zemin and Hu Jintao.

Prior to that, Beijing’s focus was on controlling traditional centers of power such as the military, manufacturing industry and local governments.

Analysts believe Xi has kept 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 technology industry was one of the hardest hit.

“Sometimes these incidents are orchestrated to send a broader 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 governance style over the past decade,” he added.

“Beijing remains focused on ensuring that large technology platforms and players do not 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 company. consultancy Albright Stonebridge Group.

It is fundamental to the policy of Common Prosperity that the same rules apply to both the rich and the poor.

Beijing maintains that the policy is aimed at narrowing the widening 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 ultra-leftists who want to return to the party’s socialist roots.

The mystery surrounding the billionaires’ disappearance and other broader concerns about how Beijing handles the business world could have important consequences.

Some analysts suggest the government risks discouraging new entrepreneurial talent.

“The danger for Beijing in targeting tech billionaires is putting more pressure on entrepreneurs hoping to become the next Jack Ma,” Triolo said.

Xi appears to be aware of the risk of scaring off businessmen. In a speech to congressional delegates this week, he emphasized the importance of the private sector to China.

But he also urged private companies and entrepreneurs to “be rich and responsible, rich and fair, 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 yet another sign that Xi is keeping an eye on the financial system.

“In recent months, we have seen hints of the Common Prosperity agenda seep into financial services, particularly with regard to pay and bonus schemes for senior executives, as well as the pay gap between management and junior staff,” says Marro.

It remains to be seen whether Xi’s crackdown on billionaires will help him significantly increase his power.

What is certainly at risk, however, is confidence in China’s financial markets and business and, ultimately, the economy as a whole.

This text was originally published here.