Ruchir Sharma’s column – Today no one in China wants to be called the ‘richest’ | रुचिर शर्मा का कॉलम: आज चीन में कोई भी सबसे ‘अमीर’ नहीं कहलाना चाहता

Ruchir Sharma Global Investor and Author

Recently, Colin Huang, founder of e-commerce giant PDD, made headlines as usual when he became China’s richest person. But shortly afterward, PDD surprised investors with a lower profit forecast. Its shares fell drastically.

Huang suffered a loss of $14 billion overnight and the title of China’s biggest billionaire soon passed to Zhong Shanshan, founder of beverage giant Nongfu Spring. Not even 24 hours later, Nongfu Spring also issued an unexpectedly disappointing outlook, and Zhong was soon ousted from the rich list.

This led to a discussion on Chinese social media about whether corporate leaders were competitively devaluing their own stock prices to avoid an increased crackdown on the wealthy. This hostile stance towards the rich is at the heart of Xi Jinping’s common-prosperity campaign.

One Wall Street broker wrote, At a time when the Chinese regime is taking more and more socialist stances, it is not difficult to guess that no one in China wants to be called the richest person.

When Deng Xiaoping became China’s supreme leader in the late 1970s, he ended the old Maoist hostility toward wealth-creation. Becoming rich in their increasingly capitalist country was a wonderful thing. But just to be rich, not too rich.

China was accumulating far more wealth than other developing countries, yet its largest economies were modest compared to much smaller economies, including Nigeria and Mexico. Even during the boom of the 2000s, there was a limit: no one’s wealth could increase by more than $10 billion.

In the early 2010s, the net worth of at least two tycoons approached $10 billion, but they were jailed on corruption charges. This does not mean that the allegations were baseless, only that the choice of targets reflected a typical tendency of China’s leaders.

That trend flourished again under Jinping’s leadership. After coming to power in 2012, he launched a campaign against corruption that reached the elite class. The initial targets were often bigwigs in the public sector—bureaucrats and Communist Party leaders.

As China’s economy began to slow, the government seemed reluctant to threaten the private sector’s one goose that lays the golden eggs – its big tech firms. Over the years, many Chinese created a fortune worth more than $10 billion. The first three entrepreneurs to cross this line were tech-industry leaders and the most prominent name among them was Jack Ma.

This tolerance in China towards huge private wealth changed in 2020. China had added about 240 billionaires to its economy – twice as many as the US – but at the end of the same year Jack Ma made a statement that changed the picture.

Jack Ma questioned the Communist Party and warned that excessive regulation slows down technological innovation, and Chinese banks suffer from an extortionist mindset. The state immediately retaliated against Jack Ma.

Alibaba’s share price declined. He kept falling down the list of the rich and disappeared from the public scene. Early the next year, Xi launched his pro-prosperity campaign and targeted any company that dared to deviate from his egalitarian values.

Today in China it is considered dangerous to be rich. Due to the pressure, venture capital funds are drying up, driving youth away from lucrative professions like investment-banking. The number of millionaires leaving China is rising and reached 15,000 last year, more than any other country.

If you become the richest man in America, you start your own space program. The rich in India can spend millions of dollars on their children’s wedding. But China’s super-rich seem to be willing to lose their titles to get rid of the government. (These are the author’s own views)