Image Source: Bloomberg
The disappearance of technology industry dealmaker Bao Fan last month has reignited interest in a recent Chinese pattern involving missing millionaires.
Bao Fan, creator of China Renaissance Holdings, whose clients have included internet behemoths Tencent, Alibaba, and Baidu, is regarded as a titan in the country’s technology sector.
The situation with Bao Fan followed a predictable pattern: he was absent for several days before his firm said he was helping authorities in the People’s Republic of China in an investigation.
As has been standard, there needs to be more information on which government agency is conducting the investigation, what it is about, or where Bao Fan is.
The mystery surrounding his disappearance follows the disappearance of several Chinese corporate heavyweights in recent years, including Alibaba CEO Jack Ma.
While missing billionaires receive far more attention, there have been several less-reported examples of Chinese people going missing after participating in, say, anti-government protests or human rights initiatives.
The abduction of Bao Fan has renewed speculation that this is President Xi Jinping’s way of tightening his grip on China’s economy.
That came in the run-up to the annual National People’s Congress (NPC). This week, proposals for China’s financial regulatory system’s greatest makeover in years were published in this rubber-stamp parliament.
A new financial regulatory authority will be established to regulate the majority of financial sectors. Officials stated this would plug loopholes produced by several entities overseeing different sectors of China’s trillion-dollar financial services business.
Bao Fan: One vanishing too many
Guo Guangchang, chairman of conglomerate Fosun International, most known in the West for owning the English Premier League team Wolverhampton Wanderers, became inaccessible in 2015.
Like Bao Fan, Mr. Guo went off the grid in December of that year, with his employer later reporting that he had been aiding with inquiries.
Two years later, Xiao Jianhua, a Chinese-Canadian businessman, was kidnapped from a fancy hotel in Hong Kong. He was one of China’s wealthiest men until being imprisoned for corruption last year.
Ren Zhiqiang, a millionaire real estate magnate, vanished in March 2020 after labeling Mr. Xi a “clown” for his management of the pandemic. After a one-day trial, Mr. Ren bagged 18 years on corruption charges later that year.
Like Bao Fan, Alibaba founder Jack Ma was the most well-known vanishing billionaire. After criticizing the country’s financial regulators, China’s then-richest individual vanished in late 2020.
The proposed mega-listing of shares in financial technology behemoth Ant Group has been canceled. However, despite donating nearly $10 billion (£8.4 billion) to the ‘Common Prosperity’ fund, he has sighted in China in two years. He has not been charged in court with any crimes either.
Mr. Ma’s whereabouts are unknown; however, he has recently been spotted in Japan, Thailand, and Australia.
The Chinese government says that the steps taken against some wealthiest individuals are entirely lawful and has committed to eradicating corruption. But, Beijing’s efforts come amid decades of liberalization in the world’s second-largest economy.
This deregulation aided in the formation of a swath of multi-billionaires with the ability to wield significant power.
According to some observers, the Communist Party wants that control back under Mr. Xi and is going at it in unexplained ways.
The theory goes as follows: Under the policies of Jiang Zemin and Hu Jintao, Mr. Xi’s predecessors, big enterprises, particularly the technology industry, saw their dominance grow.
Formerly, Beijing concentrated on traditional power centers such as the military, heavy industry, and local administrations.
Despite keeping a tight grip on these areas, Mr. Xi has broadened his focus to gain control of even more of the economy. His Shared Prosperity agenda has resulted in significant crackdowns across the economy, with the technology sector receiving special scrutiny.
The rule of law, which must apply equally to rich and poor, is also essential to Common Prosperity.
Beijing argues that the policy attempts to narrow the rising wealth disparity, which many say is a huge concern that, if not addressed, may threaten the Communist Party’s position. The country has seen growing inequality, and Mr. Xi is thought to be under pressure from ultra-leftists who want the party to return to its socialist foundations.
The mystery surrounding the billionaires’ disappearances and broader concerns about Beijing’s approach to business might have serious unintended effects.
According to some Chinese watchers, the government risks discouraging fresh business talent.
Mr. Xi appears to be mindful of the potential of spooking business sentiment, as he emphasized the importance of the private sector to China in an address to NPC delegates this week.
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He also urged private businesses and entrepreneurs to be wealthy, responsible, righteous, and loving.
In addition to launching a new financial watchdog, bankers were advised last month not to emulate their “hedonistic” Western counterparts.
Commentators see this as more proof that Mr. Xi has his sights set on the financial system.
It remains to be seen whether Mr. Xi’s assault on millionaires will help him dramatically tighten his hold on power.
Confidence in China’s financial markets, businesses, and, eventually, the economy as a whole is at stake.
