As the world awaits the final vote count for the American
election, I’ve heard a few people say that they hope that Donald Trump prevails
for one very simple reason. He appears to be the only President who has stood
up to China. Mr. Trump, to his credit, has openly spoken with the president of
the other China (Taiwan – or the China with democracy and an open market but a
lot less people) and has bolstered ties with the only other Asian nation that
can match China in terms of population – India.
While the American election has caught the world headlines
because it determines the holder of the most powerful office in the most
powerful country, the real issue for China’s leaders is closer to home.
American Presidents as is well known are limited to two four-year terms. If Mr.
Trump wins, it’s a case of waiting another four years. If it’s Mr. Biden, it’s
a case of working around another possible eight years.
Furthermore, while Mr. Trump has started a “trade war,” with
China, he has been useful to them. His divisive rhetoric in domestic American politics,
allows the communist party in Beijing to paint itself as a calmer, more stable
force to China’s domestic audience.
So, while the story on the US election is grabbing the headlines,
the more important story is in fact domestic. It concerns the suspension of the
Initial Public Offering (IPO)of Ant Financial, which is controlled by Jack Ma,
China’s most prominent tycoon out of China. The official reason for suspending
what would have been the world’s largest IPO from the Shanghai and Hong Kong
stock exchanges was because the regulators had “concerns” about the stability
of the market. This sudden suspension of the US$37 billion sent Alibaba shares tumbling
along with Mr. Ma’s fortune. More details can be found at:
https://www.ft.com/content/c1ee03d4-f22e-4514-af46-2f8423a6842e
The reasons for the suspension of the IPO look political.
Call it a case of the Communist Party acting to remind Mr. Ma, that despite his
international profile and vast wealth, who was boss. Whatever one might think
of Mr. Ma, this move does not speak well of the Communist Party and China’s
ambitions to replace the USA as the world power.
Mr. Ma, is in many ways, the ideal face of modern China.
With a net worth of around US$53 billion, Mr. Ma is the richest person of
Chinese descent, surpassing the former title holder, Hong Kong’s Li Ka Shing by
some US$20 odd billion. Mr. Ma’s life story reads like a Silicon Valley
entrepreneur rather than a traditional Chinese businessman, both in Mainland China
and in the Chinese diaspora in Southeast Asia. Unlike the tycoons in capitalist
Hong Kong, he’s more than a high-end property trader and unlike the tycoons in
Southeast Asia, he didn’t make his fortune in commodities through an alliance
with the local officials. Mr. Ma is from relatively humble beginnings, taught
himself English and used new technologies to make life better for the Chinese
consumer.
More importantly, the key difference between Mr. Ma and the
average Chinese tycoon (both in China and beyond) is that he’s got an
international savvy. Unlike traditional Chinese tycoons who loath publicity, particularly
from the Western media, Mr. Ma revels in it. He’s actually confident when
communicating in English. He’s also politically savvy. When Donald Trump was elected
in 2016 on platform of bashing China for not allowing American business to
compete on an equal footing, Mr. Ma went all the way to Trump Towers to offer ways
in which American SME’s could use Alibaba to sell to China.
© South China Morning Post.
Mr. Ma is the hero that China needs. Here is a home-grown
entrepreneur, from relatively modest beginnings who built a great fortune by using
innovation. What’s there not to like for a country that has global aspirations.
Unfortunately, the very things that make Mr. Ma so vital to
a modern China and by extension a rising Asia, are the very things that piss off
authoritarian leaders who depend on a population believing that they need authoritarian
leadership to survive.
Mr. Ma is by no means a rebel. He joined the Communist Party
and has never done anything to suggests that China should be governed by anyone
other than the Communist Party. However, he’s known to be an open proponent of
the free market system, something which may not always go down well in a communist
society.
To be fair to China’s Communist Party, they have not done
what Mohammad Bin Salman in Saudi Arabia did. Mr. Ma has not had to spend a day
in any form of prison and been forced to sign over his property.
However, while this move might seem gentle and semi-legal on
the scale of things, this is something that should not happen in a place that
has aspirations of prosperity as it sends out a worrying message, particularly
to the people like Mr. Ma who create wealth. The message is simple, no matter
how much you create, you are still at the mercy of the government machinery.
China has risen by soaking up foreign investment. However, this
latest move is a subtle reminder to the foreign investment community that the
Chinese government can screw with them whenever it feels like it. Hence,
foreign investment should be careful about investment in China and getting greedy
at the prospect of the billion-person market.
More importantly, this message to aspiring entrepreneurs.
That message is that no matter how much you create for the good of the nation,
you will still be at the mercy of the communist party.
The story on Ant’s IPO should worry China’s business
community far more than the results of the US Presidential election. China’s
communist party can and may undo the years of prosperity of the last two
decades if they believe that they need to increate their grip on power.
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