TheEconomistNovember 14th 2020 531A
t a summitwith China’s richest entre-
preneurs in late 2018 Xi Jinping sought
to allay concerns that the state had de-
clared war on the country’s private sector.
Although officials in Beijing had spent the
previous year bringing to heel unruly ty-
coons, China’s president insisted that ru-
mours of a forceful push for party influ-
ence in the private sector were untrue. He
exhorted the business leaders to “take a pill
of reassurance”.
The medicine has been hard to swallow.
Since then the Communist Party has
sought a more active hand in recruitment
and business decisions. And after sub-
duing a band of headstrong bosses at over-
extended financial conglomerates, the
state is now taking aim at China’s tech bil-
lionaires, making it clear that outspoken
critics will not be tolerated.
Mr Xi’s preoccupation has always been
maintaining China’s social and financial
stability. Keeping big business in check is
part of that plan. It should come as no sur-
prise that the state is now homing in on
tech, which has expanded rapidly (see
chart on next page). Six of China’s 20 most
valuable listed companies are tech firms
and with billions of users they touch the
lives and wallets of almost all citizens.
A reckoning for the sector began with
what looked like a shot across the bows of
China’s largest financial-technology
group. The suspension by regulators on
November 5th of Ant Financial’s $37bn ini-
tial public offering with less than 48 hours’
notice was at first interpreted merely as a
warning to its founder, Jack Ma, who had
previously criticised China’s state-ownedbanks. But on November 10th the publica-
tion of an extensive draft of new rules for
technology groups laid bare the state’s am-
bitions to bring to heel not just Ant, but the
whole of China’s tech industry.
Mr Xi’s relationship with China’s ty-
coons has always been troubled. When he
became president in 2013, he inherited a
corporate system replete with fraud,
patchy regulation and surging debt. After
the success of an anti-corruption cam-
paign that mostly targeted officials, Mr Xi
took aim at a group of businessmen who
were ploughing huge sums into risky over-
seas investments. Purchases included Sea-
World, an American amusement-park
group, and the Waldorf Astoria, a swish ho-
tel in New York. Officials argued that many
of these acquisitions were thinly disguised
means to divert capital out of China.
Many of the businessmen who once
fancied themselves as a Chinese Warren
Buffett are in prison or worse. Wu Xiaohui,
the chairman of Anbang, which bought the
Waldorf among other assets, was handed
an 18-year prison sentence in 2018 for fi-
nancial crimes. Ye Jianming, who attempt-
ed to buy a $9bn stake in Rosneft, a Russian
oil producer, was detained in early 2018.
His whereabouts is still unknown. Xiao
Jianhua, a broker for China’s political elite
who once controlled Baoshang Bank, was
kidnapped by Chinese agents from his flat
at the Four Seasons Hotel in Hong Kong in
2017 and is thought to be co-operating withChinese private enterprise
The intimidation game
HONG KONG
The humbling of Jack Ma wasn’t a one-off. Xi Jinping is determined to assert
more Communist Party authority over China’s glittering tech industry
Business
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