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HONG KONG: Imagine if Jeff Bezos or Bill Gates disappeared from public view and it was automatically assumed that they had been arrested on the orders of President Joe Biden and were being interrogated in a secret government jail.
That’s the situation in the world’s second-largest economy, where Jack Ma, the Bezos of China with more than $ 50 billion to his name, has appeared only once since October, in a short video that did little to quell the speculation that he was being kidnapped by the state.
Ma disappeared after Chinese authorities blocked the initial public offering of his fintech group Ant Financial, which would have been the largest listing in history.
The latest rumors suggest that he is playing golf on an island in the South China Sea and may still emerge with his wealth mostly intact.
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READ: Comment: Ant had great ambitions. Then the Chinese authorities intervened
A GROWING CONTRADICTION
But the brutal humiliation of China’s most famous businessman reveals the sharp and growing contradiction at the heart of the Chinese state.
On the one hand, President Xi Jinping has embarked on a grand project to achieve the “great rejuvenation” of the Chinese nation, which can only be achieved through rapid economic growth that is overwhelmingly dependent on private enterprise.
But at the same time, it has centralized political power, expanded the state sector and affirmed the right of the Communist Party to insert itself in all aspects of people’s lives and businesses.
“East, west, south, north and center, the party rules over all” is one of Xi’s favorite slogans. Although he constantly promotes the orthodoxy of Marxism and “socialism with Chinese characteristics,” the uncomfortable reality is that capitalists provide 80 percent of urban jobs and account for 60 percent of GDP.
FILE PHOTO: Pedestrians wearing masks walk near the Bund Financial Bull statue, following an outbreak of the novel coronavirus disease (COVID-19), at The Bund in Shanghai, China, March 18, 2020. (REUTERS / Aly Song)
As a billionaire and a member of the Communist Party, Ma personifies the contradiction inherent in China’s ruling ideology. His career until the end of last year was one of the best examples of corporate survival in a “Leninist market” system that eliminates alternative sources of power or authority.
As in Vladimir Putin’s Russia, Chinese oligarchs are quickly and ruthlessly treated at the first sign that they are not slavishly loyal.
READ: Comment: Why did China wait so long to crack down on Alibaba?
The rise and fall of MA
Until recently, Ma played the role of pet capitalist well. I first met him in 2005 at the signing ceremony for the partnership between Yahoo and Ma’s e-commerce company Alibaba.
At the time, Yahoo was in trouble in the US after delivering emails to Chinese authorities that led to long prison terms for journalists and human rights activists in the country.
When asked about this, Ma’s response was unequivocal: “Whatever [government officials] Say, we will. “
He later spoke approvingly of the party’s decision in 1989 to send tanks to crush the Tiananmen Square democracy movement. He told me in a separate interview that he would hand over his entire company to “the nation” at any time if the government asked.
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Like all China’s tech billionaires, Ma has played a crucial role in building a budding techno-totalitarianism. And like any rich person in China, he has scrupulously cultivated party officials and their families.
Big investors in Alibaba and Ant Financial include several “princelings,” including former Chinese President Jiang Zemin’s grandson.
An Ant Group logo is displayed at the headquarters of the company, an Alibaba subsidiary, in Hangzhou, Zhejiang province, China, on October 29, 2020 (Photo: REUTERS / Aly Song).
Some of Ma’s current problems could be due to the fact that these backers no longer have the political clout to protect him from a new generation of leaders with no vested interests in the world’s largest initial public offering.
But his biggest problem was the arrogance he buys for $ 50 billion and the visibility that comes with being China’s most flamboyant businessman.
READ: Comment: Thanks to China’s move on Ant, FinTech firms may soon look like banks
A SUBTLE AND DIFFICULT TARGET
This year marks the 100th anniversary of the founding of the Chinese Communist Party, and Xi is eager to increase his legitimacy with hymns to the country’s socialist pedigree.
That’s hard enough in a country where the richest 20 percent had an average disposable income 10.2 times that of the poorest fifth last year. In the supposedly heartless capitalist America, the multiple was about 8.4.
Despite Xi’s past flirtations with free-market thinking, most political signals suggest that he now believes in more Marxist and socialist goals, even if his overwhelming ideology remains ethnonationalism.
But his government knows that it cannot simply nationalize private enterprise as the party did after winning the revolution in 1949.
READ: Comment: China’s decision to halt Ant Group’s giant IPO has bigger implications
Today’s goal is more subtle and difficult. Xi wants to encourage private enterprise while asserting the Communist Party’s full control over the actions, incentives, and even thoughts of entrepreneurs.
In September, Beijing issued a series of guidelines directing private companies to establish Communist Party committees that should play a role in personnel appointments and other important decisions.
They specified that businessmen should be educated so that they “identify themselves politically, intellectually and emotionally” with the party.
FILE PHOTO: Chinese officials and delegates attend the opening session of the National People’s Congress (NPC) at the Great Hall of the People in Beijing, China, on May 22, 2020. (Reuters / Carlos García Rawlins)
The interference in the private sector, along with the humiliation of high-profile capitalists like Ma, is likely to increase in frequency and intensity.
The big question is what this means for foreign investors, particularly Wall Street banks and money managers currently piling up in China.
Can the icons of American capitalism like Goldman Sachs and BlackRock really align themselves “politically, intellectually and emotionally” with Xi? And how will the government of the United States consider the cells of the Communist Party in its management structures?
