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China’s Disappearing Billionaires – IMPRI Impact and Policy Research Institute

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China’s Disappearing Billionaires - IMPRI Impact and Policy Research Institute

Srikanth Kondapalli

The sudden vanishing of Bao Fan, the head of China Renaissance Holdings, whose clients include ride-hailing Didi Chuxing and food-delivery app Meituan, has once again stirred the hornet’s nest in China. While such disappearances are not strange in authoritarian China, the frequency of such incidents at a time when President Xi Jinping is tightening political control, amidst China’s economic troubles, is revealing.

Unlike many others among Chinese elites today, Bao Fan is not a ‘princeling’, nor was he born with a silver spoon. He rose through the ranks at Fudan University, Morgan Stanley, Credit Suisse, etc., before founding China Renaissance. He was the force behind nearly a thousand notable corporate deals and raising funding for Chinese companies and listing them abroad.

While the Chinese State utilised trillions of dollars in foreign investments for infrastructure, manufacturing, etc., a band of self-made entrepreneurs have provided a new path of exploring lucrative portfolio investments.

However, the catch for the Communist Party is that while many of these entrepreneurs are themselves party members, they nevertheless detest the party apparatchiks. The Communist Party under Xi increasingly sensed loss of control over big businesses, blaming it on the reform and opening-up policies under previous leaders like Jiang Zemin and Hu Jintao.

The result has been a severe clampdown on any dissent, not just from political dissidents like Xu Zhangrun, the law professor at Tsinghua University, but also from big business. The arrested political dissidents are subjected to ‘political education’ campaigns; the entrepreneurs who have strayed are imperiled by loss of business, decline in stock market value, and even public humiliation and arrest. Some big businesses were forced into making contributions of large sums to Communist Party initiatives such as the recently raised ‘Common Prosperity’ fund.

Ren Zhiqiang, a billionaire real estate tycoon, “disappeared” in March 2020 and was later sent to jail for a 18-year term in September 2020 for his article criticizing Xi Jinping’s disastrous Covid policies and alluding to the “emperor’s new clothes”. The official claim was that he was arrested for alleged embezzlement. Xi has reversed his Covid policies since (in November 2022) but Ren remains in prison.

Xiao Jianhua, a billionaire Chinese-Canadian who managed the assets of the descendants of Chinese leaders, was kidnapped from Hong Kong in 2017 and jailed on corruption charges.

In August 2022, he was sentenced to 13 years in prison, apart from a $8 billion fine. Other tycoons who went “missing” include Zhou Chengjian, who marketed famous fashion brands like Metersbonwe. Guo Guangcheng of Fosun Company went missing but resurfaced. When his company’s shares fell, it exerted pressure on the country’s financial stability. Yim Fung of Guotai Junan International Holdings, too, went missing, albeit for a brief period. Xu Ming of Dalian Shide Group – at one time the sixth richest person in China – was not so lucky. Arrested for his close association with Xi’s rival Bo Xilai, he died in prison. His proximity to former Premier Wen Jiabao’s family did not help.

The most widely reported case of these vanishing tycoons was that of Ma Yun — known to the world as Jack Ma of Alibaba — who “disappeared” in late 2020 after he made critical comments on how China’s banking system is unsuitable for the new economy.

He was the richest person in China before he went into hiding. His proposed mega-IPO for the Ant fintech group was stopped. Despite having made a nearly $10 billion contribution to the ‘Common Prosperity’ fund, he has not been seen in China since February 2021. His whereabouts are not clear even today, but sightings of the man have been reported in Japan, Thailand, etc; the latest being in Australia.

Many of these mostly self-made tycoons were relatively young by Chinese standards, in their fifties. Most of them had risen through sheer hard work part of the way, before building crucial political connections, some even becoming legislators.

With restrictions in place even in Hong Kong now, following imposition of the national security law there, and three years of stifling Covid lockdowns on the mainland, many Chinese billionaires have moved away from China. Singapore has emerged as a favourite destination, given its services sector as well as its rule of law.

Xi Jinping’s war on China’s billionaires is telling on the country’s economy, entrepreneurship, innovation drive and financial market stability. In addition to the raging real estate crisis, Xi’s efforts to bring big business under the control of his faction is fraught with danger for the world’s second largest economy.

The article was first published by the Deccan Heralds as Disappearing Billionaires February 25, 2023.

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