Local entrepreneurs are pulling out of the public domain as the authorities step up pressure on the rich. This change occurs as President Xi Jinping is promoting his “common prosperity” initiative to reduce wealth disparity and share profits. This phenomenon is well illustrated by recent events.
Last month, Colin Huang, the founder of PDD, became the richest man in China, but his wealth shrank by USD 14 billion this month due to a poor profit outlook that dragged down PDD’s share price. This decline knocked him off the billionaire list, a place now taken by Nongfu Spring’s Shanshan Zhong, who also saw her company’s prospects deteriorate soon after.
The high rate of churn among the richest people has made many people on Weibo, China’s Twitter-like platform, wonder if the tycoons are deliberately lowering the value of their shares to escape the attention of the authorities. Experts believe that in the present environment, no one would like to become the richest man in China because this would attract the attention of the government that seeks to reign in the super-rich.
Xi’s government has been very clear in its direction that it wants not only economic development but also social development. ”Common prosperity” is the policy of reducing the income gap and is manifested in various crackdowns of the regulation across sectors, especially in the technology and private education sectors. This campaign fits into Xi’s larger plan to centralise power and to avoid the rich from buying their way into political positions.
In doing so, it continues to be important for the Chinese wealthy entrepreneurs to do so cautiously given these dynamics. The focus on societal impact and the possibility of higher taxation may only add to these considerations. In this new era, the best course of action for those at the top of China’s economic pyramid may well be to lie low.
