The disappearance of technology industry dealmaker Bao Fan last month has reignited interest in a recent Chinese phenomenon involving vanishing billionaires.
The founder 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.
Mr Bao’s case has followed a well-trodden path: he went missing for days before his company announced that he was “co-operating in an investigation being carried out by certain authorities in the People’s Republic of China”.
As has become customary, no word on which government agency is conducting the investigation, what it is about, or where Mr Bao is.
The mystery surrounding his disappearance follows the disappearance of a number of Chinese business leaders in recent years, including Alibaba CEO Jack Ma.
While missing billionaires receive far more attention, there have been a number of less publicised cases of Chinese citizens going missing after participating in, say, anti-government protests or human rights campaigns.
Mr. Bao’s disappearance has renewed speculation that this is one of the ways President Xi Jinping is tightening his grip on China’s economy.
It came in the run-up to the annual National People’s Congress (NPC), a rubber-stamp parliament, where plans for China’s financial regulatory system’s biggest overhaul in years were announced this week.
A new financial regulatory watchdog will be established to oversee the majority of financial sectors. Authorities stated that this would close current gaps caused by multiple agencies monitoring different aspects of China’s trillion-dollar financial services industry.
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The firm of a missing Chinese banker is assisting authorities.
Guo Guangchang, chairman of conglomerate Fosun International, which is best known in the West for owning English Premier League football club Wolverhampton Wanderers, became unreachable in 2015.
Mr Guo went missing in December of that year, and his company announced his reappearance by saying he had been assisting with investigations.
Xiao Jianhua, a Chinese-Canadian businessman, was kidnapped from a luxury hotel in Hong Kong two years later. He was one of China’s wealthiest people before being imprisoned for corruption last year.
Ren Zhiqiang, a billionaire real estate tycoon, vanished in March 2020 after calling Mr Xi a “clown” for his handling of the pandemic. Mr Ren was sentenced to 18 years in prison on corruption charges later that year, following a one-day trial.
Alibaba founder Jack Ma was the most well-known disappearing billionaire. After criticising the country’s financial regulators, China’s then-richest person vanished in late 2020.
The planned mega-listing of shares in financial technology behemoth Ant Group has been cancelled. Despite donating nearly $10 billion to the ‘Common Prosperity’ fund, he has not been seen in China in over two years. In addition, he has not been charged with any crimes.
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At the time of his disappearance, Jack Ma was China’s richest man, and he had criticised financial regulators.
Mr. Ma’s whereabouts are unknown, though he has been reported to have been seen in Japan, Thailand, and Australia in recent months.
The Chinese government insists that the actions taken against some of the country’s wealthiest individuals are entirely legal and has pledged to eradicate corruption. However, Beijing’s actions must be viewed in the context of decades of liberalisation in what is now the world’s second largest economy.
This deregulation aided in the formation of a swath of multi-billionaires with the potential to wield significant power.
According to some observers, the Chinese Communist Party wants that power back under Mr. Xi, and it is going about it in mysterious ways.
The theory goes as follows: Under the policies of Mr Xi’s predecessors, Jiang Zemin and Hu Jintao, big business, particularly the technology industry, saw its power grow.
Prior to that, Beijing had concentrated its efforts on traditional centres of power such as the military, heavy industry, and local governments.
While keeping a tight grip on these areas, Mr Xi has broadened his focus in order to gain control of even more of the economy. His Common Prosperity policy has resulted in significant crackdowns across the economy, with the technology sector receiving special scrutiny.
“Sometimes, these incidents are staged in order to send a broader message, particularly to a specific industry or interest group,” The Economist Intelligence Unit’s Nick Marro told the BBC.
“At the end of the day, it does reflect an attempt to centralise control and authority over a specific sector of the economy, which has been a key feature of Xi’s governance style over the last decade,” he added.
“Beijing remains focused on ensuring that big technology platforms and players do not develop their own brands and influence, making them difficult to control and more likely to go against Beijing’s preferences,” said Paul Triolo, head of China and technology policy at global advisory firm Albright Stonebridge Group.
The rule of law is also essential to common prosperity, and the rules must apply equally to rich and poor people.
Beijing maintains that the policy is aimed at closing the growing wealth gap, which many agree is a major issue that, if not addressed, could undermine the Communist Party’s position. The country is experiencing growing inequality, and Mr. Xi is said to be under pressure from ultra-leftists who want to return to socialist roots.
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The mystery surrounding the billionaires’ disappearances, as well as broader concerns about Beijing’s business approach, may have serious unintended consequences.
According to some China watchers, the government risks discouraging new business talent.
“The danger for Beijing in making tech billionaires targets is that it puts more pressure on technology entrepreneurs hoping to become the next Jack Ma,” Mr Triolo explained.
Mr. Xi appears to be aware of the risk of spooking business sentiment, and in a speech to NPC delegates this week, he emphasised China’s reliance on the private sector.
But he also called on private enterprises and entrepreneurs to “be rich and responsible, rich and righteous, and rich and loving”.
Aside from the establishment of a new financial watchdog, bankers were warned last month not to follow in the footsteps of their “hedonistic” Western counterparts.
Commentators see this as more proof that Mr. Xi has his sights set on the financial system.
“In recent months, we’ve seen hints of the Common Prosperity agenda bleed into financial services, particularly in terms of senior executive remuneration and bonus schemes, as well as pay gaps between management and junior staff,” Mr Marro said.
It remains to be seen whether Mr. Xi’s crackdown on billionaires will assist him in significantly tightening his grip on power.
Confidence in China’s financial markets, businesses, and, ultimately, the economy as a whole is at risk.