In the past few years, the main target of the Chinese Communist Party’s anti-corruption efforts was officials within the system. However, as the political landscape increasingly shifts towards socialism, under the banner of “common prosperity,” wealthy individuals in China are becoming more and more precarious. Nobody wants to become the wealthiest person in China.
Recently, Ruchir Sharma, former executive at Morgan Stanley and chairman of Rockefeller International, and an economist, wrote in the Financial Times of the UK that the turnover rate of billionaires in China is very high, and nobody wants to become the richest person in China. Discussions among entrepreneurs on social media in China are focusing on suppressing stock prices to avoid being targeted by ongoing actions aimed at excessive wealth.
In August, the founder of e-commerce giant Pinduoduo, Huang Zheng, quickly rose to become the richest person in China, only to see a sharp decline in stock prices shortly after, with Zhong Shanshan taking the lead within 24 hours.
According to Mr. Liang, who has lived in Tokyo for many years, the fates of Jack Ma and Zhong Shanshan perfectly exemplify two political risks. Jack Ma stumbled by daring to challenge the party’s control over finance, which the Communist Party viewed as excessive, raising suspicions of private capitalists having political motives. On the other hand, Zhong Shanshan, a very low-profile individual who rarely gives interviews, fell victim to the nationalist wave and was overly interpreted and demonized, an undeserved disaster.
American economist Davy J. Wong explained that Beijing and the Communist Party believe in a form of social Darwinism akin to the Soviet management style. They fear that once capitalists amass substantial wealth, they will seek political power, posing a threat to the current regime’s security.
Under the guise of “common prosperity,” China’s private sector is diminishing, with individual wealth shrinking significantly over the past three years. The number of billionaires in China has decreased by 35%, while in other parts of the world, it has increased by 12%.
Conversely, there is growth in the state-owned sector. Since 2021, although the stock market has been declining, the share of state-owned enterprises in total market value has increased by over a third, reaching nearly 50%. China currently boasts the world’s only major stock market where state-owned enterprises and private sector companies have comparable valuations.
Mr. Liang emphasized that the Chinese Communist Party, having seized political power through violent revolution under leftist ideology, inherently clashes with the wealthy and capitalists. Their reform and opening up were born out of necessity because they could not resist the true social laws that necessitate the implementation of capitalism for prosperity. Consequently, capitalists and the wealthy are a natural byproduct.
He further stated that the totalitarian regime of the Chinese Communist Party relies on tens of millions who do not produce but need to be fed continuously to survive, akin to parasitic nutrition. Private enterprises serve as a form of sustenance, and though the regime hopes they don’t collapse, they cannot become powerful enough to challenge its position, ultimately leading to their demise.
As China’s economy continues to decline, a rare economic meeting was held on September 26, where it was acknowledged to “comprehensively and objectively assess the current economic situation and confront difficulties.” The next day, the director of the National Development and Reform Commission stated that private enterprises are part of the family and efforts will be made to help them weather the storm.
Rongwei Lai, the Executive Director of the Taiwan Inspiration Association (TIA), explained that when China’s economy is struggling, there is an emphasis on the creativity of the people and the inclusion of the private sector. However, as the private sector grows, suppression begins.
Lai noted that the Communist Party has long harbored resentment towards the bourgeoisie, with the core being the state-owned economy, using the private sector as a mere tool. Many of China’s recent market rescue actions prioritize state-owned enterprises, creating a mechanism where the private economy cannot compete with the state-owned sector.
He concluded by contrasting Taiwan’s economic development with the suppression of the private sector in China, emphasizing Taiwan’s emphasis on the growth of the private economy without hindrance, leading to the eventual efficiency and triumph of the private sector over the state-owned economy, compelling the latter to transform.
He further highlighted that the current Chinese regime is a party-state system where the entire society is controlled by the party. Economic management is centralized around the dictator’s personal and party interests, rather than market orientation or consideration for each family or business owner.
In a nuanced interpretation, Lai pointed out that while Deng Xiaoping emphasized a balance between the political left and economic right in the 1980s, the current leadership tends to lean more towards the political left, exhibiting distrust towards the market. Despite the urgent need to stimulate consumption, Chinese economic policies remain fixated on what they define as new qualitative productivity.
“With China’s economy in decline, regional governments clamoring for more funds, and the imperative to attract investments, it’s a contradictory situation where policies work against each other,” he noted.
Becoming the wealthiest figure in the United States might trigger one’s own space missions, or hosting billion-dollar weddings for children in India. However, in China, the super-rich are increasingly opting for a low-profile approach, going as far as shedding their billionaire titles.
Rich individuals in China are refraining from flaunting their wealth to avoid becoming the next target for scrutiny or disappearance.
Lai emphasized that a government that is not answerable to the people is akin to a legitimate mafia. Many wealthy individuals living in China fear that their hard-earned money could be arbitrarily expropriated by the government.
“If a wealthy person has any channels, relationships, or opportunities, they are quickly leaving China now, and this phenomenon is happening,” Lai underscored.
Mr. Liang stressed that the best course for Chinese private enterprises is to leave. Yet, many wealthy individuals have yet to realize this, believing there are still chances as policies fluctuate, with new stimulating measures emerging. However, he cautioned that even in these relatively stable times, risks persist, and in the grand scheme of history, they will ultimately become a source of sustenance for the Communist Party.
He continued by noting that some individuals have become aware of the risks due to the ruthless exercise of power by the party during the pandemic.
“I have observed that more wealthy individuals and entrepreneurs are coming to Tokyo. Previously, most who came to Japan were for work or study, but this current wave includes many keen on taking their wealth out of China,” Mr. Liang observed.
David Wong indicated that in the end, the majority in China will not be wealthy, nor will there be an excessively affluent class capable of challenging Beijing and the regime.
“The future undoubtedly holds more and more wealthy individuals concerned about safety, accountability, and potential flight, a scenario that is bound to occur,” Wong concluded.