The Business Times

China’s business elite sees the country that let them thrive slipping away

Published Mon, Nov 7, 2022 · 11:13 PM

FOR decades, China’s business class had an unspoken contract with the Communist Party: Let us make money and we’ll turn a blind eye to how you use your power.

Like most Chinese people, they bought into the party’s argument that its one-party rule provides more efficient governance.

Now, the tacit agreement that entrepreneurs had come to count on is dissolving in front of their eyes. China’s leader, Xi Jinping, used an important Communist Party congress last month to establish near-absolute power and make it clear that security would trump the economy as the nation’s priority.

“My last lingering hope was dashed,” said the founder of an asset management firm in the southern city of Shenzhen who contacted me hours after the congress ended.

“Totally finished, completely lost control and absolutely terrifying,” a tech entrepreneur in Beijing texted me after seeing the party’s new leadership lineup, which is packed with Xi’s acolytes.

Like many Chinese, they fully expected Xi to secure a third term, breaking a norm followed since the 1980s. Still, they held onto the hope that his dominance would be tempered by other power factions within the party. Xi’s sweeping victory, by pushing out perceived moderates in favour of loyalists, made it clear that it would be a one-man rule system that could last for decades.


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China’s last leader as powerful as Xi, 69, was Mao Zedong, who led the country into the Great Famine and the Cultural Revolution that resulted in tens of millions of deaths, social chaos and economic destruction.

Last month’s party congress jolted the Chinese business world with uncertainty. It was seen publicly in the immediate market response: China’s stocks plunged and its currency, the yuan, fell in value. I am hearing it in the voices and messages of the many businesspeople I have spoken to in recent weeks who repeatedly call their reaction a “political depression.”

They are not displaying their anxiety in public, unlike a young demonstrator I wrote about in my last column. All the businesspeople I interviewed for this article requested anonymity for fear of punishment by authorities. But they are expressing dissent in their own way, pledging to withhold further investment in China or even contemplating leaving their country for another that would exchange a passport for their wealth.

The party, under Xi, has taken control of nearly every aspect of society, costing Chinese people agency over their destinies. Members of the business class, especially those working at the top of the technology sector who operated with relatively few restrictions until a few years ago, have taken it especially hard.

These tech entrepreneurs mostly grew up “in the age of ‘economism,’ when money making, economic principles and economic rationality trumped everything else,” said Minxin Pei, professor of government at Claremont McKenna College in California. “Now they see the regime puts politics in command,” he said. “For them, this is incomprehensible.”

In the past decade, Xi’s economic thinking can be summed up like this: bigger roles for the state, and smaller roles for the market. He left the private sector largely alone in his first term, when he was busy consolidating his power within the party and the military. In his second term, which began in 2017, Xi kept private enterprises on a much tighter leash. The government cracked down on businesses, sending some of the country’s most successful business people into early retirement or self-imposed exile. China’s harsh “zero-Covid” policy has left the economy in the worst shape in decades.

To Chinese in the business elite, who grew accustomed to the privilege and attention their success brought, the Big Boss, as many of them refer to Xi, doesn’t care about the economy or people like them. In his opening address at the party congress, Xi mentioned “security” 52 times, “Marxism” 15 times and “markets” three times.

“There’s no question about the shift both in political rhetoric and in action and in also the appointment of the team,” said Pei, who said he believes that Xi’s leadership lineup shows that he does not value expertise in managing a market-oriented economy. “He values people who can implement his policy regardless of the economic consequences.”

That makes the business community anxious. Under Xi, the ability of China’s bureaucracy to dictate to the public has increased while its ability to govern has decreased, Guoguang Wu, an adviser to former Premier Zhao Ziyang in the 1980s, told me on my Chinese language podcast.

“When the ability to govern decreases, even in the absence of any particular policy from the top, the ineptitude, brutality, and ignorance of lower-level officials will brew disasters for the common people they rule over,” said Wu, who is a senior research scholar at the Stanford Center on China’s Economy and Institutions.

Many businesspeople have lost a lot of money under “zero-Covid,” which has shuttered cities and locked millions of people in their homes for weeks at a time as the government seeks to eliminate the coronavirus.

“Under the leadership of this dictator, our great country is falling into an abyss,” said a hardware tech executive in Shenzhen. “But you can’t do anything about it. It pains and depresses me.”

Despite many conversations over the years, we never talked about politics. I was surprised when he called after the party congress to talk about his “political depression.” He said he used to be very nationalistic, believing that the Chinese were among the smartest and the most hardworking people in the world. Now, he and many of his friends spend most of their time hiking, golfing and drinking. “We’re too depressed to work,” he said.

Until a year ago, his startup was doing so well that he was planning to take it public. Then he lost a big chunk of his revenues and his new hires sat idly with nothing to do when cities were locked down under the “zero-Covid” rules. He said now he has no choice but to lay off more than 100 people, sell his business and move his family to North America.

“Since the dark night has descended,” he said, “I’ll deal with it the dark night way.”

The tech entrepreneur from Beijing who texted me after the party congress recounted a chilling experience. In May, when there were rumours that Beijing could be locked down, he felt he could not tell his employees to leave work early and stock up on groceries. He was worried that he could be reported for spreading rumours – something that had got people detained by police. He told them only that they should feel free to leave early if they had things to take care of.

This successful business person is now applying to emigrate to a European country and the United States.

Just like many ordinary Chinese people, the executives I spoke to said they were horrified by the video of Hu Jintao, Xi’s predecessor as China’s top leader, being abruptly led out of the closing ceremony of the party congress. They did not accept the official government explanation that Hu had to leave early because of health issues

If Xi could remove his predecessor like that, several of them said, he could do anything to anyone.

A well-connected investor in Beijing said that his friends who are entrepreneurs now realised they could no longer remain indifferent to politics. At social gatherings, they have started discussing which countries to seek passports from, and how to move their assets offshore. At social gatherings, hosts are asking friends to surrender their phones to be kept in a separate place for fear of surveillance.

After the party congress, most people in the investor’s circle expect that they will be forced to pay more in taxes or be expected to donate more money to universities and other state-backed charities. They are not planning to make any big investments.

“We’re all anxious,” he said. “We’re at a loss of what to do at this historical crossroad.”NYTimes



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