Where’s China going?

The news in the Chinese and mainstream Western media does not abound on the discreet movement taking shape in China in recent years. The increasingly tight public control over large private companies in China, even nationalizations, and the forced and gradual distancing of certain big bosses from corporate control. Is Jack Ma, the founder of Alibaba, an example? Wealthy entrepreneurs have no interest in debating the state’s grip on their group publicly. You have to get the freer Chinese media information outside China, sort it out, and cross-check it with what you can glean on the ground through personal contacts.

Nationalization

Researcher Mary-Françoise Renard, in a December 2019 article, notes that “For several months now, we have also been witnessing a “nationalization” of many private companies that are partly bought by public firms, notably to benefit from the advantages of the latter, the distinction between private and public sometimes being unclear. “This groundswell reminds some people of the 1950s when the bad capitalists saw their companies’ nationalisation. In the beginning, the campaign was called “公私合营 Public-private partnership.” The private party, which saw its assets taken away, did not see the operation as a partnership!

The Princelings and the major groups

Journalist Wang Jian, like several Chinese intellectuals based abroad, considers the fate of Jack Ma, the founder of Alibaba, typical of the life of a great entrepreneur in China. Power and interest groups formed by the “Red Princes Party” and various sometimes enemy clans get their hands on key groups. Many business leaders try to have as little contact with the government to avoid complications, but they have no choice. Ma said about ten years ago that he loved the government, but that he did not want to marry it.

Voluntary retirement?

The New York Times announced on 7 September 2018, that Jack Ma, born in 1964, who is not an older man will retire in 2019. The next day, the Alibaba Group bought the South China Morning Post, an English-language newspaper in Hong Kong. On 10 September, the dynamic Jack Ma announced in a public letter that he would retire a year later. He has just announced the Ant Group’s IPO, the very lucrative financial and technology services branch. The flagship company with Ali Pay carries out 55% of online financial transactions in China; the application claims 1.3 billion users worldwide. The entity is valued at 200 billion dollars. According to journalist Wang Jian, Ant’s retirement and IPO are part of a negotiation with high-ranking figures representing various political and economic interest groups. The latter provided political protection for Ma. Disputes arose following various operations by Ma to protect himself so that his retirement was requested. He reportedly complied in exchange for listing the financial part of the Alibaba entity on the stock exchange. Although the businessman personally holds only 0.53% of the capital, he has more than 50% of the voting rights through the shareholder companies.

private company 私企 国企entreprise public company in China

The French researcher recalls that the public sector owns 85% of the banking sector, most transport networks, telecommunications, services related to education, science and technology, and all public media. In Beijing, an expression that was in vogue in the 1950s is now starting to circulate again: “The State is moving forward, the private sector is moving backwards, 国进民退.” The most critical ones evoke a return to communism, the moderates to state control overall strategic and lucrative activities.

Main sources:
Wang Jian’s video
Article by Mary-Françoise Renard in Alternatives Economiques

23 juillet 2020

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