Suddenly nowhere to be found: Why are billionaires disappearing in China?

In China, not only are dissidents suddenly disappearing from the scene, but billionaires too. In the opaque political system, the fate of the rich and powerful can quickly turn.

The arrests were ready for a movie: Five years ago, China's police arrested hedge fund billionaire Xu Xiang (nickname: Big Xu) while he was in the car on his way to see his grandmother. To do this, she closed one of the most important and spectacular bridges in the country for half an hour. But that was nothing against Xiao Jianhua's arrest. He was abducted from a luxury hotel in Hong Kong in 2017 – according to the images from a surveillance camera, he was sitting in a wheelchair with a blanket or sheet over his head. And that although the then 44-year-old billionaire had always been without a wheelchair until then.

We only heard from Xu again when he was later tried and convicted of stock market manipulation. Xiao has not reappeared yet. According to his company, he is in mainland China, where he works with the security authorities.

When there was no public sign of life for weeks from Jack Ma, the founder of the online giant Alibaba, it was reminiscent of other tycoons and celebrities who had also suddenly disappeared from the scene in the People's Republic. After about three months of absence, Ma could at least be seen again in a short video message in which he announced that he would concentrate more on his charitable activities. But where he is and why he has not been heard from him for so long, he did not say.

The billionaires who have disappeared – mostly only temporarily – not only have their wealth in common. They all got into trouble with the leadership of President Xi Jinping. For some of them it is still unclear what became of them. Most reappear, however. Some of them are brought to trial – mostly for corruption. Others return to their companies – but without saying a word publicly about why they were gone.

Focus on the financial sector

This was the case with Zhou Chengijan, for example. The founder of the fashion chain Metersbonwe could not be found and his company could no longer be reached by phone. According to the China Daily, he was arrested to help investigators investigate possible stock price manipulation. A short time later he returned. The company is now no longer run by him, but by his daughter.

The disappearance of Guo Guangchang, known as the "Warren Buffett of China" and one of the founders of the Fosun investment conglomerate, also drew attention. According to his company, he also helped the Chinese authorities investigate. The billionaire later reappeared and remained at the top of the company.

In all of this, the party leadership is concerned with asserting its absolute claim to power. After taking office in March 2013, President Xi announced that he would take action against corruption. Since then, the Communist Party's Central Disciplinary Commission has worked diligently. Tens of thousands of officials, state managers and officials were brought to justice.

Initially, the measures focused on China's state corporations, administrative chiefs and the army. Later on, the focus was on the financial sector – the arrests of "Big Xu" and Xiao belong in this context. The government's focus was primarily on conglomerates such as Xiaos Tomorrow Group, which was active in numerous business areas from banks to raw materials. Last summer, the authorities announced that Tomorrow would be "restructured", which would take control of nine subsidiaries. Apparently the opaque company network had grown so large that the government saw in it a threat to the financial stability of the People's Republic.

This also applies to Anbang, for example. The insurance giant went on a wild shopping spree abroad under its founder Wu Xiaohui, including $ 1.9 billion for the Waldorf Astoria Hotel in New York. But in 2017 things went steeply downhill for Wu. He was arrested, tried and sentenced to 18 years in prison for financial crimes. Last September it was announced that the company would be wound up and wound up.

Is Ma just taking cover?

Internet moguls like Ma are now also attacked when their companies pose a threat from the government's point of view – either to the stability of the financial sector or to the Communist Party's claim to power. The Alibaba founder combines both: With Ant, the financial arm of his online retailer Alibaba, he created the dominant payment service in China, which – largely unregulated – also offers loans via apps.

Ma publicly criticized his country's financial regulators in October. As a result, the authorities summoned him for an interview. A few days later, the regulators canceled Ant's IPO at short notice – it should have been the largest IPO in the world. Then China's market regulator opened an investigation into possible "monopoly practices" against Alibaba, and Ma was no longer seen in public.

Most China experts believe that Ma is in the custody of security authorities is unlikely. They suspect that instead he was strongly advised by the government to withdraw completely for a time. Here, too, the message is: Nobody should challenge the Communist Party – and anyone who does that can be held accountable.

There is also another development that is a problem not for the tycoons but for the party as well. For a long time, entrepreneurs like Ma were seen as a symbol of China's rapid economic rise. Their billions of dollars were seen there not only as an expression of China's economic potential, but also as a promise that every Chinese could get rich too. Ma was celebrated like a rock star in China.

Significant inequality

But times have changed. The super-rich are extremely unpopular with many Chinese. This may also be due to the fact that the state media report more critically about them. More importantly, gigantic wealth lies in a few hands, while large parts of the population are still poor. According to the New York Times, China has more billionaires than the US. At the same time, 600 million Chinese earn the equivalent of just $ 150 a month – or less.

With this in mind, President Xi makes it clear what he expects from the wealthy entrepreneurs in his country: Shortly after the Ant initial public offering was canceled, he went to an exhibition dedicated to Zhang Jian. The industrialist, who died in 1926, is considered exemplary – state propaganda portrays him as an ardent patriot and benefactor who built schools, streets, orphanages, hospitals and libraries in his hometown.

Xi presented Zhang as a shining example. What he did not mention: Zhang was not really successful. After his company narrowly missed bankruptcy in 1922 and a web of opaque payments and credits had come to light, a consortium of banks removed him from the top of the company. Shortly afterwards he died.