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Opinion Chinese business & finance
It’s no longer glorious to get rich in China — it’s dangerous
Why no one wants to be the nation’s top tycoon any more
Last month, Colin Huang, founder of ecommerce powerhouse PDD, attracted the usual headlines when he rose to become China’s richest man. But shortly after, PDD surprised investors with a downbeat profit forecast. Its stock plummeted. Huang lost $14bn overnight, and ceded the top spot to Zhong Shanshan, founder of beverage giant Nongfu Spring. Within 24 hours, Nongfu Spring issued its own unexpectedly depressing outlook, and Zhong, too, soon slipped from first place on the rich lists.
On Chinese social media, chatter broke out about whether corporate leaders might be competitively devaluing their own stock prices to avoid the widening crackdown on excessive wealth, which is a centrepiece of leader Xi Jinping’s “common prosperity” campaign. It is not implausible to conclude, wrote one Wall Street broker, that “nobody wants to be the richest man in China” at a time when its government is turning more assertively socialist.
Whatever the true motive for these profit warnings, the way they were spun on Chinese social media reflects a real change in the national zeitgeist. When Deng Xiaoping became paramount leader in the late 1970s, he defanged the old Maoist hostility to wealth creation. To get rich would be “glorious” in his increasingly capitalist nation.
But there was a catch. It was glorious to get rich — just not too rich. China was generating far more wealth than other developing countries, yet its largest individual fortunes remained modest compared with those in much smaller economies, including Nigeria and Mexico. Even during the roaring boom of the 2000s, an unwritten cap seemed to remain: no single fortune would rise much higher than $10bn. China’s billionaire list was also unusual for the high rate of churn in its top ranks.
By the early 2010s, at least two tycoons had seen their net worth approach that decabillion-dollar barrier, only to land in jail on corruption charges instead. That is not to say the charges were baseless, only that the choice of targets did appear to reflect a lingering, levelling tendency among China’s leaders.
That instinct flowered anew under Xi. Coming to power in 2012, he launched a campaign against corruption that reached deep into the elite. The early targets were often public sector bigwigs — bureaucrats, Communist party princelings. With China’s economy slowing, the regime seemed reluctant to scare the one private-sector goose still laying golden eggs: big tech companies. Over the years, many Chinese would build fortunes bigger than $10bn. The first three to breach that threshold, and keep rising, were tech industry founders led by Jack Ma of Alibaba.
This quiet tolerance would turn in 2020, during the stimulus-driven market boom. China added nearly 240 billionaires — twice as many as the US — but late that same year Ma made a speech that helped bring this party to a halt. In a guarded but unmistakable critique, Ma questioned the direction of Communist party rule, warning that overregulation threatened to slow tech innovation, and that Chinese banks suffered from “pawnshop thinking”.
State retaliation was swift. Alibaba’s share price collapsed. Ma tumbled down the rich lists and dropped out of public view. Early the next year, Xi launched his common prosperity campaign and the crackdown spread to any company deemed out of step with its egalitarian values.
In this new era, it’s dangerous to get too rich. Stories abound of the state launching investigations against this business figure or that financier. The pressure is drying up venture capital funds, scaring the young away from lucrative professions such as investment banking. The number of millionaires leaving China has been rising and peaked last year at 15,000 — dwarfing the exodus from any other nation.
The private sector is in retreat. Since 2021, the stock market has been sliding, but state companies have grown their share of total market cap by more than a third to nearly 50 per cent. China now has the world’s only major stock market in which state-owned companies are valued on par with those in the private sector. Individual fortunes have shrunk dramatically over the past three years; the number of billionaires has fallen 35 per cent in China, even as it rose 12 per cent in the rest of the world.
China’s super-rich increasingly choose to lie low. Become the richest tycoon in the US and you might launch your own space programme. In India, you might throw gazillion-dollar weddings for your children. In China, you might look for a way to lose your new title — and the target on your back.
Sounds like the lesson here is to solve the wealth concentration problem by instituting very high tax rates for very high income earners, instead of letting them get too rich and then jailing them afterwards.
That is not the lesson. The difference between China and capitalist states is not simply that China taxes the rich more; it goes much deeper. The difference is that in China, the state reflects the will of the working class, whereas in capitalist states it reflects the will of the capitalist class. The Marxist Theory of the State: An Introduction
I understand the whole “China is theoretically Marxist” thing, but since we’re talking about Chinese billionaires, clearly something hasn’t gone quite to plan!
Also, I was really more interested in implying a comparison to America and how it should handle the same sort of problem under a capitalist framework rather than trying to give China advice, but re-reading my comment I think I left that connection too obscure.
I’m not sure that’s true, or if it did, only slightly. China Has Billionaires
The New Deal and its neoliberal rollback shows that it can have some limited, temporary effect, but only to save capitalism from itself in a crisis, like the Great Depression.
That is a very long article. Do you or @Edie@lemmy.ml have a TL;DR for the part specifically about why a state that reflects the will of the working class would accept the existence of billionaires?
It’s not easy to tl;dr. But one way, without explaining any Marxist theory, is that the working class’ material conditions have been improving throughout the last several decades despite the creation of a capitalist class. People are less pissed off when their lives are improving.
China has been using this constrained capitalism; which leverages foreign capital, technology and knowledge; to leapfrog from an illiterate, agrarian, feudal stage.
In terms of theory, it goes all the way back to Marx and Engels. Here is a bevy of quotes.
Just read it man…
Read it in multiple few minutes long sessions across a day or two if it’s too long. Shouldn’t take more than an hour in total.
No, everything has gone exactly to plan!
https://redsails.org/china-has-billionaires/
This is pretty typical self-justifying bullshit. They’re justifying pre-held beliefs (china is good; china has billionaires; therefore billionaires must be good) rather than actually considering the claim based on the merits. (is it actually a good thing that china has billionaires, and what does that say about socialism/marxism as practiced in china)
You can believe that people have different needs and that we don’t all need to be absolutely 1:1 equal in terms of our material possessions etc. and that having some goal to work towards is beneficial to society (ambition) without having billionaires.
This essay is like trying to justify genocide by pointing out that sometimes, for the benefit of society, the death of an individual is preferable to the suffering of many. The issue with billionaires isn’t one of inequality in the micro - it’s the magnitude of that inequality, and the power it brings, which is the issue.
Wonder how this relates to Marxism . . .
– some guy, I guess
I don’t personally agree with it, but I was willing to consider the notion on its own merits rather than in contrast with ideology - but even when I do, I find it a wholly unsatisfactory justification
My point was that the point of view you were contrasting with in the part I quoted represent the beliefs of no Marxist project, and the difference in needs and consumption are a basic element of Marxist theory. I was saying nothing at all about the article or the question of China’s ideology (I personally view them as revisionist, so I have no place in Dengists arguing with liberals).
I’ve re-read this comment and your previous comment multiple times and I’m not really clear on what you mean.
My point is that the essay’s argument is weak because it completely ignores scale and proportionality. It uses the language of marxism to justify capitalism.
I see where you’re coming from. Having read the article, it feels a little self congratulatory, especially since we can only guess as to the motives of the party members and the state in general. There are interesting perspectives in the article which do point to a general trend towards the “belittling of Capital” and improving the general quality of the workers (*who fall in line with the state [*separate topic]).
I’m trying to avoid words like Marxism/Socialism since I’m still learning and it’s hard to label without full knowledge. I am making a critical assumption that in a global marketplace, where there are monetary and non-monetary transaction costs and discrepancies over value, there will always be billionaires. A metric of “time to billionaire status” is probably better than “number of billionaires” to compare how Marxist/Capitalist the environment is. From the articles it seems that China would have a longer “time to billionaire” than a regular capitalist country. And there is a ceiling to that growth.
In a billionaire corporation, would you rather the workers be on a higher level of Mazlows hierarchy than one where the workers never get to see the fruits of their labor? Yes the exploitation of any worker is bad but at least from the articles perspective, the average Chinese worker has access to some level of housing and bullet trains and food etc. I presume that’s what you meant by the “inequality in the micro” but please correct me if I’m wrong. The inequality suffered by a Chinese worker vs an American or Indian worker (or any other country where Capital has power over policy) is different. I have absolutely no data to back that claim but at least in principle, the worker in a less Capitalist environment is a little less exploited.
For the “inequality of the macro”, the Chinese state is trying to be the only Power in town and making sure that Capital (and by proxy the billionaire corporations), does not control the government. When it tries e.g. Alibaba, examples are made. If billionaires are legit terrified of showing off wealth and are slaves to the party, that at least offers a ceiling to growth of the corporation, and by proxy a ceiling to the exploitation.
As I understood from the article was that the Chinese state has a slightly higher incentive to look after worker and make sure they’re relatively happy since they’re not “corrupted” by corporate interests/billionaires. They have shown some examples in the past to either infiltrate the corporation or keep the bourgeoisie in line. Of course I’m critical of the positive ratings and examples they are stating since it’s hard to separate the noise from false/true signals. Happy to hear critique!
(Stating my position just in case: I’m terrified of one party wielding that much power over people and opinions. I value freedom over security past the line drawn by my potentially uninformed perceptions of China. Happy to update my beliefs based on data)
Thanks for the well-considered and thoughtful response - I appreciate it.
Just to clarify, I’m not trying to make some typical liberal argument that China is evil or anything like that - I’m very far left and I’m not here just criticising China just because that’s what the mainstream media has told me to do. I just think it does leftists like myself no favours to pretend that China is perfect and that we shouldn’t criticise it - and the essay linked above, in my opinion, seems to be a bit of a reflexive defense of China, rather than actually considering the criticism - to me it seems they are choosing arguments to support their position rather than letting the facts and their beliefs lead them to a conclusion.
I don’t think we have to accept that any amount of imbalanced transactions of value necessarily guarantee that billionaires are inevitable - plenty of systems exist where there are “winners and losers” but the system itself reaches an equilibrium state. There are so many solutions which could be implemented to prevent billionaires from existing, and I would say that billionaires can only ever exist when there is a fundamental flaw in the society which produces them. It should be impossible to so thoroughly capture and centralise wealth and power to a point where an individual can have that much.
My pleasure!
Ah yeah the article is somewhat circular referencing when it comes to evidence provided that having x amount of billionaires is fine and sign of a lovely healthy and beautiful society (as long as they align with party interests). It’s interesting how there’s an implicit assumption in China that there are things like reputation and power which can’t be bought by money. But yes, I see where you’re coming from.
I’m still trying to chew on your second point. It’s gotten me questioning some assumptions. Billionaires feel like an inevitable emergent property of a market mostly because there are at least 1 billion people in the world who have different estimates of “value”. I’m imagining an “ethical” billionaire who got rich creating some video game in his spare time charging folks a low $5. Would you say there’s a flaw in the society for creating such a billionaire? Maybe it’s on the backs of exploitative low cost chip manufacturers who make computers or some energy provider… or is it that the market will balance since competition will cut into the profits of the first developer which then should, in an ideal world, would curb the growth of the billionaire. If I’m reading you right, you’re claiming that there’s a threshold after which there’s implied “corruption” or collision to allow for unchecked growth?
In China’s case (at least from the article in this thread, not OP), it seems they ‘cautiously allowed’ the formation of billionaires back on the day to ‘supercharge’ the economy with that extra profit incentive. It’s what that money can buy is the big question and in which China claims to have a limit.
Thanks for engaging :)
The Chinese state like all states reflects purely the will of the state.
For example, I don’t think slaughtering protesters at Tiananmen Square was reflecting the will of the working class.
What it was reflecting was the will of the state to preserve its own power.
States don’t just run themselves; the class that in is control drives the agenda.
Literally no one died in Tiananmen Square itself, the people who did die (outside of the square) were not “massacred,” and many of them were unarmed police and military. The whole event was not what we were told.
You argue both that there was no massacre and that violent force against the protesters was justified if it did happen.
Seems like one is meant to excuse the other if disproven.
But I shall play the smallest violin for those poor unarmed tanks killed by violent protesters and their terrifying grocery bags.
He is plainly saying that the violence that happened was not a massacre.
It’s wild that you do the tank man meme after you get linked footage showing that tank man a) did not get run over and b) was blocking tanks from leaving the square.
But davel wasn’t talking about that conflict when he was talking about state actors being slaughtered, he was talking about unarmed soldiers being burned to death by petrol bombs and then having their corpses strung up for display as the first shots fired in the conflict between the violent insurrectionists hiding among the protestors and the military.
At no point did I say the tank man was run over.
I’m not sure many people even claim he was.
You insinuated that there was violence between the two. Like, if I talk about “the poor IDF soldier who was terrorized by children with stones” everyone knows that the irony behind the statement is that the IDF soldier inflicted incomparable violence on the children in that situation. What is not suggested by your remark is that the tanks behaved appropriately by stopping and not threatening the man.
You’re just being obtuse in the fashion of a vulgar debatebro.
I said nothing of the sort.
You didn’t look at the photos of the beaten soldiers or their charred, hanged bodies. You didn’t read about the self-proclaimed desire for extreme violence by some of the protest leaders, nor of the CIA’s involvement.
Your second point literally says exactly that. You’re inching as close to justification as you can while maintaining plausible deniability.
Echos the exact same mentality of holocaust denial claims that the Jews were both a dangerous evil and simultaneously treated with utmost dignity.
I’m still doing no such thing, while you, by comparing this to the holocaust, are perpetuating the myth that all of the protesters and all of the rioters were innocent bystanders who were mowed down indiscriminately.
Yeah, a myth according to which source again?
Instead of engaging with sources, you’re trying to pigeonhole this into a ridiculous Holocaust comparison like every atrocity propagandist does.
There were four broad categories of people: The PLA, violent insurgents, civilian protestors (who were there for many different reasons), and also uninvolved bystanders (it’s still the capitol of the country after all). There were something like 300 deaths in the area, consisting of members of each of these groups, though I don’t know the relative numbers offhand.
No one is denying that civilians died. No one is arguing that those civilians should have died. This is very clear and you’re the one being slippery by hinting vaguely at “inching closer” and “plausible deniability” and so on. It’s shameful behavior.
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Actually I think the CCP views them as a political threat. They probably already get enough since they technically jointly own businesses and can just take assets at any time.
Probably let them become successful and then follow up with a threat to make sure they don’t become a problem while vaguely pointing at Jack Ma
Yes. When the CPC introduced a limited amount of capitalism, it did it with full knowledge of the threat it posed. That’s why it has—to paraphrase Grover Norquist—kept capitalism shrunk down to the size where it can drown it in the bathtub.
The Chinese state controls its sovereign fiat money. It can print as much money as it wants to. It can simply buy private Chinese companies outright, and eventually will, because they created this limited capitalism as merely a means to an end: communism.
I mean, they’re not wrong about that. I sure wish the Democrats had the same awareness. (The Republicans do have such awareness, and are actively allying with them.)
Still, in both long-term (wealth inequality leading to political instability) and acute (billionaires becoming a political threat directly) terms, I continue to think that nipping the problem in the bud by making exponentially harder to accumulate wealth beyond 8, 9, 10… digits via very-progressive taxation is a much better idea than trying to manage and contain billionaires afterwards.
The Democrats know, they just don’t give a shit, and their alliance just leans more towards the international bourgeoisie than Republicans, who favor the national bourgeoisie. They would only be a “threat” if they represented a distinct force that would overtake them, which would imply Democrats are on a different side. Whose side could the Democrats possibly be on except the American and to some extent international bourgeoisie? They certainly are not on the side of the people, and you need only look at voting discourse for a fraction of an instant to see that the Dems don’t give a shit about popular sentiments and are happy to tell their otherwise-supporters who want the genocide in Gaza to end that they are Iranian assets or otherwise “Pro-terrorist”.