Xi begs China’s billionaires to save the economy
At the height of his powers, Jack Ma was the epitome of China’s new billionaire class.
Confident, flush with cash and at ease in front of a crowd, he once impersonated Michael Jackson in a flashy dance performance for thousands of his employees.
The tycoon, a former English teacher who built the $230bn (£187bn) e-commerce titan Alibaba from the ground up, is so influential at home that families keep pictures of him adorned with his catchphrases.
Abroad, his celebrity won him audiences with Barack Obama, Donald Trump, David Cameron, Emmanuel Macron and a host of other foreign dignitaries, leading some to regard him as the de facto ambassador for Chinese business.
Yet as the billionaire’s fame grew, so did his boldness. When he publicly grumbled about stifling regulation in October 2020, president Xi Jinping’s government swiftly made clear it would not tolerate criticism, crushing Ma’s hopes to float his payments business Ant Financial and forcing him into obscurity.
Since then, little has been seen of the billionaire – besides the odd pictures of him in Japan, Australia and Thailand.
But on Monday, the billionaire unexpectedly popped up in his homeland for the first time in a year, making a low-key appearance at a school near Alibaba’s headquarters in Hangzhou.
The backdrop was a more humble one than he is used to. But experts say it may signal Beijing is bringing China’s entrepreneurial class back from the cold, as Xi scrambles to salvage an economy ravaged by his "zero Covid" policies and save face domestically.
“There has been a tactical move by Xi, post-Covid, to ease pressure on the economy, because things are in a really bad shape,” says Professor Steve Tsang, director of the SOAS China Institute.
“What you have to understand about Xi is he is as ideological as you can get when he can get his way. But when he scents danger, he is a pragmatic realist.
“When the economy is in serious trouble, then his hold on power is potentially being undermined. And he knows that he still needs the likes of Jack Ma and Alibaba.”
Ma’s reemergence coincides with a visit to China by Tim Cook, the chief executive of iPhone maker Apple, and a host of other American business chiefs, including Qualcomm boss Cristiano Amon, Pfizer boss Albert Bourla and billionaire hedge fund tycoon Ray Dalio. They are attending a three-day business forum that has been called “China’s Davos”.
In a less-than-subtle tweet, the Chinese embassy in Paris contrasted a photo of Shou Zi Chew, the boss of Beijing-based social media app TikTok, facing a barrage of photographers in Washington last week, next to one of Cook posing with adoring fans in one of Apple’s Chinese stores.
“How are CEOs treated in China and the US?” the embassy’s tweet asked.
The dubious comparison is unlikely to fool anyone, given Beijing’s years-long campaign to clip the wings of entrepreneurs like Ma at home.
Yet it is also a telling one, at a time when the communist government’s heavy-handed crackdown on the tech sector has deterred investment and sent shares plummeting.
After three years of Xi’s disastrous “zero Covid” lockdowns, and amid ongoing trade tensions with the US, the result has been low business confidence and a recovery that looks shaky.
For the first time in about 25 years, China is no longer a top three investment priority for the majority of US firms, according to the local American Chamber of Commerce. Official Chinese statistics show factory profits in the first two months of 2023 were down by 23pc compared to a year earlier.
That has left Chinese officials scrambling to change the narrative and lure reluctant wealth creators back to the table. The government has begged Ma to return home in recent months and trumpet government policies, according to Bloomberg.
His continued decision to remain abroad was seen to be hurting business confidence – and was a clear sign of scepticism that Xi has really changed his position.
When Ma eventually reappeared on Monday, having jetted back to China via Hong Kong last week, it immediately sent Alibaba shares 4pc higher. One market commentator suggested it would “boost sentiment of the broader internet industry”.
"That means the new top leadership has indeed been re-examining the position and the importance of the platform companies in China's economic development,” Zhang Zihua, chief investment officer at Beijing Yunyi Asset Management, told Reuters.
Others are not so optimistic, noting that actions speak louder than words. At the moment, Beijing is yet to take any substantive actions to reverse the tech crackdown.
But in the wake of the pandemic, and with exports falling due to global economic turbulence, Beijing needs to turbocharge growth and cannot do so without the private sector, which generates roughly 60pc of GDP. This year the central government is targeting growth of 5pc.
“The message from the top leadership is that domestic demand expansion is priority number one,” says Duncan Wrigley, chief China economist at Pantheon Economics.
“Local governments stepped on the gas a bit at the start of the year. And Beijing is hoping that private enterprises, including the tech sector, will be encouraged enough to step up investment, because overall it is still very weak.”
Li Qiang, China’s new premier and a close ally of Xi, is leading the charm offensive. On Monday he told Cook and other business leaders that his country’s opening up would continue, “no matter how the international situation changes”.
But George Magnus, an economist and research associate at Oxford University’s China Centre, says this rhetoric conceals a rigid approach toward private enterprise.
“They want private firms to make money and they want them to produce, to provide jobs, but they have to do what the party tells them to do and behave the way the party expects them to behave,” Magnus adds.
“The irony, of course, is that productivity comes, first and foremost, from private firms, because they're more dynamic and more profitable than state firms. But if you’re not prepared to accept the kinds of freedoms that entrepreneurs cherish and want, you probably won't get the best out of them.”
Prof Tsang, at SOAS, says that even if Ma makes a comeback, he is unlikely to be allowed the same level of celebrity as before under Xi.
“It’s interesting to see what happens to somebody like Jack Ma, because he is genuinely somebody who was able to break the mould in China, and create something that, before, hardly anybody in China or outside of China thought the Chinese were able to do,” Tsang adds.
“How Jack Ma, and others like him, have been forced to trim their sails tells us a lot about the trajectory of China's development.
“He probably won't be flamboyant in the way that he was before, because he has been taught a lesson: You don't outshine the boss.”