Chinese billionaires are becoming more worried with fear that the corrupt Communist Party is putting hands into their pockets for cash.
On September 10, clearly under pressure from the central government, Alibaba founder Jack Ma announced to step down in a year and hand over the key to his business. This is a symbolic event that private businesses in China are going into a “cold winter” in the coming years.
According to the Wall Street Journal, Billionaire Jack Ma surrendered control of the legal entities that hold Alibaba Group Holding Ltd.’s business licenses in China nearly two months before announcing his plans to retire, regulatory filings show.
Ahead of this, the death of Xu Ming, founder of the conglomerate Dalian Shide Group, the death of Hong Kong billionaire Liu Xiyong and the death of HNA Chairman Wang Jian has showed signs of the tyranny and cruelty of the CCP with its relentless “rule of law”.
People also see the manoeuvre of “black hands” by the CCP and its involvement in the abduction of billionaire Xiao Jianhua from Hong Kong Four Seasons Hotel, imprisonment of Wu Xiaohui, former chairman of Anbang Group, and the sex harassment accusation in the US against JD chairman Liu Qiangdong.
Most recently, China’s most famous movie star Fan Bingbing was penalized with a fine of around 883 million yuan (US$129m).
All these have sent a clear message to other billionaires in the country that, at times of difficulties and severe challenges, the CCP is determined to “cut leeks” and “shear wool of sheep”.
For 40 years, China’s private sector has made an important contribution to economic growth. The sector now contributes more than 60 percent of China’s GDP growth and brings in over half of China’s fiscal revenue, according to Gao Yunlong, head of the All-China Federation of Industry and Commerce yesterday.
Meanwhile, more than 60 percent of China’s fixed-asset investment and outbound investment has been made by private investors. The private economy is also playing a stronger role in China’s job creation and innovation drive by providing over 80 percent of jobs and contributing more than 70 percent of technological innovation and new products in the country, according to Gao.
Of its top private enterprises, China’s telecom manufacturer Huawei Technologies now ranks NO.1 among the country’s private enterprise with 521.57 billion yuan ($79 billion) in revenue in 2016, and Suning Holdings Group and Shandong Weiqiao Pioneering Group rank second and third respectively.
Since 1978, China has legalized private ownership in enterprises, but strong pressures remain and restrain its expansion for 40 years. The fundamental principles of communism still resist the dignity of individuals and private ownership of property rights.
At a forum last month, Wu Jinglian, one of China’s most prominent pro-market economists, expressed his worry that China may be stepping back from the free-market, pro-business policies that transformed it into the world’s No. 2 economy.
Some economists argue that China’s present private enterprise is still in its infancy, its average capital and production scale is relatively small and its output value still accounts for a very low percentage of the total economy.
However, certain factors connected with the development of private enterprises, such as the participation of some members of the CCP, its recognition and its potential contribution to the solution of current economic problems, have significant implications for China’s politics, ideology and economy.
One online essayist even argued that China’s private sector had “completed its historic mission” of assisting the leap forward of state-owned enterprises and should now be phased out.
Last month, Qiu Xiaoping, a vice minister of human resources and social security, demanded “democratic management” of private enterprises, arguing that they should be jointly run by business owners and their employees.
Already some struggling entrepreneurs are doing what was once considered unthinkable: selling out to the state. So far this year, 46 private companies have agreed to sell shares to state-controlled firms, with more than half selling controlling stakes, according to the Shanghai Securities News, an official government newspaper.
Chinese state-owned enterprises have nationalised at least 10 privately owned groups this year, prompting warnings that the trend of nationalization poses risks to economic vitality, according to Financial Times yesterday.
Apparently to counter difficulties as a result of the escalating trade war, President Xi Jinping has arranged a tour to the farms and factories in the north eastern three provinces last week.
“The party’s policies are beneficial to the development of private enterprise,” Xi said after the tour, pledging to improve the business environment for them.
As the Chinese are still enjoying a long weekend holiday, we are open to a broader picture when exiled billionaire Miles Kwok revealed yesterday that the US government is considering sanctions against the families of former President Jiang Zemin, vice-chairman Wang Qishan, and former premier Zhu Rongji, by taking legal actions to confiscate their wealth hidden in the United States.
If that is to be the case, the world audience shall applaud to see a real good drama to be on show in the international political and financial arena.
By Cloudy Seagail