IN CHINA, BILLIONAIRES RETURN TO FAVOR -- ON THE PARTY´S TERMS / GEOPOLITICAL FUTURES

In China, Billionaires Return to Favor – on the Party’s Terms

Facing U.S. pressure on its tech development, Beijing has turned back to private sector innovation.

By: Victoria Herczegh

Chinese President Xi Jinping has extended an olive branch to the country’s wealthiest private entrepreneurs after years of subjecting them to scrutiny and regulatory crackdowns. 

In a recent symposium, Xi reassured billionaire business leaders that Beijing is committed to supporting private enterprises. 

Since then, some previously sidelined figures – most notably Jack Ma of Alibaba – have resumed public appearances, speaking at conferences and universities about the importance of China’s high-tech modernization drive. 

Many of these events are now funded by the central government, a sharp contrast to recent years when top businesspeople were quietly warned to avoid the spotlight, or to publicly endorse the government’s "common prosperity" campaign if they did appear.

Now, not only are these entrepreneurs encouraged to speak publicly, but they are also being afforded new legal protections: China’s first law promoting private enterprise has just come into effect. 

This shift is intended to stimulate both technological innovation and domestic consumption. 

Still, within China’s socialist system, being a billionaire remains fraught with risk. 

Party priorities override all else, and even with new legal protections, China's billionaires must tread carefully. 

Xi’s change of stance is driven by urgent economic needs: revitalizing a slowing economy, boosting employment and building resilience against U.S. trade restrictions through technological self-reliance.

Rising Tide to Crackdown

It may seem surprising that a communist country such as China permits the rise of billionaires. 

Under Mao Zedong, the accumulation of vast wealth was incompatible with the prevailing ideology of class struggle and wealth equality. 

Deng Xiaoping, however, shifted the paradigm by introducing market reforms to revitalize China’s stagnating planned economy. 

He promoted slogans like "to get rich is glorious" and encouraged individual success as a means to national prosperity. 

But it wasn’t until the 2000s that China began producing U.S.-dollar billionaires in significant numbers. 

From 2000 to 2010, some 60 individuals reached that threshold. 

Under Xi, the goal of "common prosperity" resurfaced, emphasizing equitable wealth distribution and addressing the disparity between coastal regions and the poorer interior. 

Despite this, China’s billionaire class ballooned to about 400 by the end of the 2010s. 

By 2025, the Hurun Global Rich List recorded 823 Chinese billionaires – second only to the United States. 

(China actually briefly surpassed the U.S. last year.) 

This rise underscores China’s economic dynamism, but also poses a perceived threat to the Chinese Communist Party’s control.

Most of these billionaires built their wealth through private enterprises, an anomaly in a nominally communist state. 

Deng justified their existence by arguing that individual wealth would lift broader society through job creation and innovation. 

Today, private businesses account for more than 60 percent of gross domestic product, 80 percent of urban employment and more than 70 percent of technological innovation. 

While full communism – complete wealth equality – remains a distant goal, Xi aims to achieve "socialist modernization" by 2035, which includes narrowing income gaps. 

The 2020-22 crackdown on the super-rich, particularly in tech and finance, was part of this broader agenda. 

It was also a response to perceived political risks posed by influential business figures.

Jack Ma’s experience illustrates the hazards. 

In 2020, he publicly criticized China’s financial system during a speech in Shanghai. 

Days later, the IPO for Ma's Ant Group was halted, and Ma disappeared from the public eye. 

He reemerged in 2022, reportedly teaching in Tokyo. 

His downfall marked the start of a wider crackdown on high-tech sectors. 

Officially, this was about fairness and redistribution, but political control was a driving factor. 

COVID-19 accelerated the trend, highlighting the growing dependence on digital platforms. 

Another target was Colin Huang of online retailers Pinduoduo and Temu, who resisted aligning publicly with the common prosperity movement and was likely pressured to step down as chairman.

By 2022, the leadership began pivoting from crackdown to "normalization," softening oversight and offering support to private enterprises. 

This was driven by strategic needs – notably tech self-reliance in the face of U.S. restrictions – and the recognition that private firms are key to economic recovery and youth employment. 

Xi also acknowledged that wealth redistribution efforts had not meaningfully closed regional or class disparities. 

While the common prosperity narrative persists, economic growth has reemerged as a top priority.

Growth Over (Almost) Everything

Despite the softer approach, private investment and hiring remained weak into 2024. Business leaders remained cautious, maintaining a low profile. 

This changed when Xi held a widely publicized summit with top entrepreneurs, including Ma. 

The event signaled a sincere shift in tone. 

Facing U.S. pressure to restrict China’s tech development, Beijing has turned back to private sector innovation, especially in artificial intelligence, cloud computing and other advanced technologies. 

Compared to state-owned firms, private enterprises are more efficient and responsive to market dynamics. 

Recognizing this, Xi began to ease regulations and reengage with business leaders.

The most concrete sign of this shift is the new private enterprise law, effective as of May 20. 

It pledges to address systemic imbalances, promising equal treatment for private and state-owned firms, better market access and improved credit availability. 

It also targets "profit-driven enforcement" by local officials, who would illegally seize assets to fill gaps in the local budget. 

The central government plans to curb such practices through oversight teams and disciplinary measures. 

It will also increase fiscal transfers to struggling regions and reform tax distribution to reduce pressure on local governments. 

Although these steps have been promised before, this law offers detailed legal guarantees for the first time. 

The law also mandates that state entities treat private firms as equal legal entities, protecting them from arbitrary penalties and forced closures. 

Still, resistance from local governments burdened by debt is likely, setting up potential conflicts between central and regional authorities.

These developments suggest that the Chinese government now sees private enterprise as vital for economic recovery and innovation. 

The new law may also signal to foreign investors that China is open for business under more predictable conditions. 

Premier Li Qiang has repeatedly said China welcomes foreign firms and aims to offer attractive investment terms.

However, China has not fully returned to Deng’s ethos of celebrating wealth. 

The Chinese Communist Party wants to harness private-sector dynamism without relinquishing control. 

Billionaires now enjoy more public visibility, but their actions remain closely monitored. 

They are expected to support government initiatives and avoid flaunting their wealth. 

Those who cross the line may be ousted or see their firms restructured. 

Still, with Xi betting on the private sector, a sweeping new crackdown is unlikely. 

Entrepreneurs in sensitive sectors like tech, finance or media will face tighter scrutiny than those in less political industries. 

For instance, Zhong Shanshan, chairman of the bottled water company Nongfu Spring, has quietly become China’s richest man, with a net worth of $65.9 billion.

Xi’s approach echoes Deng’s in one key respect: Private wealth is tolerated – even encouraged – so long as it serves national goals like tech self-sufficiency and job creation. 

But China’s billionaires must remember that their wealth and status are contingent on political loyalty. 

The new protections are real but conditional. 

In Xi’s China, entrepreneurs can thrive – as long as they never challenge the party’s authority.