There are signs that the so-called “historic mission” of China’s private enterprises is nearly over, and it’s time to “run.”
The wealthy Chinese and the “run philosophy”
Recently, a post on Zhihu, a Chinese question-and-answer website similar to Quora, explaining the term “the run philosophy” has attracted over 9 million views. According to Yahoo Finance, this term is used by Chinese internet users to describe the mass flow of people seeking to move out of the country. In addition, the Council on Foreign Relations (CFR) Think tank reported that by March, searches on WeChat—the most popular messaging and social media application in China—for “how to move to Canada” rocketed 3,000%.
“I can’t change or condemn the current situation in China,” Jiangsu-based model Clara Xie, 25, told the New York Times in May. “And if you can’t change it, all you can do is run.”
Beijing’s harsh Zero-Covid policy that aims to eradicate the virus at all costs has seriously damaged businesses and disturbed people’s daily lives. Full or partial blockades in major cities around the country have squeezed access to food and health care services and created hunger and anger among citizens. As a result, China’s “second quarter GDP growth was the worst outcome since the start of the pandemic,” Tommy Wu, lead economist at Oxford Economics, told the BBC. China’s GDP expanded only by 0.4% in the April-June quarter, with nearly half a million Chinese companies already shut down in the first quarter.
Facing a prolonged “Zero-Covid” future, the wealthy Chinese plan their escape. According to a new report by Henley and Partners, an investment migration consultancy, around 10,000 Chinese billionaires with high net worth are seeking to leave their country this year, taking a total wealth of $48 billion. Hong Kong is also expected to witness the departure of 3,000 millionaires, possibly due to recent social unrest.
Wealthy Chinese “believe there are plenty of opportunities to make a fortune in China, but they are not sure whether it is safe for them to park money there,” said Iris Xu, the founder of Jenga, an accounting and corporate services firm. Xu told CNBC that the number of inquiries Jenga received about setting up a family office in Singapore has doubled over the last year. Singapore proved to be an attractive destination thanks to its large Mandarin Chinese-speaking community and an exemption from wealth tax.
When the red dragon takes off its mask
Indeed, Beijing’s zero-tolerant Covid policy is not the only contributor to the mass emigration and wealth outflow. Last year’s sudden crackdown on private enterprises and emphasis on “common prosperity” are listed, among other reasons.
“Common prosperity is not new,” said Joyce Chang, managing director and chair of global research at JPMorgan, at a recent Center for Strategic and International Studies webinar. “It is an essential part of socialism, and it has been around since 1949, taking different iterations under different leaders.”
Chang said it began with Mao, who focused on eradicating the private and individual economy, followed by Deng Xiaoping, who opened up China globally in the 1980s to cope with poverty.
In its race for growth to sustain the rule of the communist regime, Deng Xiaoping declared that China would “let some people get rich first.” Xi Jinping spelled out his “common prosperity” vision at a meeting with the Central Committee for Financial and Economic Affairs in August 2021. Since then, Chinese entrepreneurs have been busily setting aside special funds for the common prosperity program, lending financial support to the leadership’s top concerns, including education, health care, and poverty alleviation.
Although various communist party organs have clarified that China’s approach to “common prosperity” is not a Robin Hood-style redistribution, instead emphasizing that charitable donations would be voluntary. However, many entrepreneurs told SCMP that they felt pressure to donate and fall in line with the national goal.
“Donations are made first and foremost for their self-preservation. What and how the donations are used are secondary to the donors,” said Steve Tsang, director of the SOAS University of London’s China Institute.
According to Financial Times, in the autumn of 2018, an article by a Beijing banker caused great consternation in the whole Chinese business community. Its author announced that the historic mission of private enterprise was nearly finished and that communist ideology would no longer support its further expansion. The article became so well known that the Chinese Communist Party (CCP) spoke out to reduce anxiety. Then, in November 2020, Ant Group’s initial public offering was suspended at the last minute after the intervention by Chinese authorities. Finally, in July 2021, distinguished entrepreneur Sun Dawu was sentenced to 18 years in jail on charges ranging from illegal fundraising to “provoking trouble.” These two remarkable incidents are part of a broader picture of the Chinese regime’s crackdown on private enterprises.
Sun Dawu was chairman of Dawu Group, which has more than 9,000 employees, $312 million in fixed assets, and an annual output valued at more than $467 million. But on April 15, 2022, Dawu Group was auctioned to “Baoding Ruixi Technology Co. Ltd.” by the Gaobeidian City Court at a low price of $102 million.
Even more strange is that Baoding Ruixi Technology Co. Ltd. was established on April 12, 2022, just three days before the auction. The company is widely believed to be an official “white glove.”
So, what are the real reasons Sun Dawu was arrested and his assets plundered? It may be because the tycoon was seen as an outspoken critic of the Chinese leadership.
For example, in May 2020, he expressed admiration for human rights lawyer Xu Zhiyong and others online, saying that they had given victims a glimpse of light, maintained a little confidence in the law, and lit up their hope of survival. However, lawyer Xu was arrested and jailed in February 2020 after publishing an open letter calling for President Xi Jinping to step down.
As SCMP reported, Tang Dajie, a researcher at the China Enterprise Institute, a Beijing-based think tank, said Sun’s sentencing showed the limits of free speech in China today.
“There was some space for public discussion [in 2003] when Sun first faced trial but was given a relatively light sentence after many economists and intellectuals spoke out for him,” he said. “This time, very few parties were able to make those same voices and exert the same pressure [on the authorities].”
On April 15, 2021, in testimony before the U.S.-China Economic and Security Review Commission Hearing, Miles Yu, the former China policy adviser to former Secretary of State Mike Pompeo, revealed that in the past 15 years alone, at least 27 Chinese billionaires have been arrested, with charges ranging “from the bizarre to the absurd.”
The case of Sun Dawu in particular and the large-scale crackdown on private businesses, in general, remind us of a declaration by Karl Marx, the “ancestor” of the CCP: “The theory of the Communists may be summed up in the single sentence: Abolition of private property.”
According to Dr. Wang Youqun, who once worked as an aide and copywriter for Wei Jianxing, a CCP Politburo Standing Committee member from 1997 to 2002, the CCP has never truly protected private property. Karl Marx’s theory that the CCP worships is considered the theory of the proletariat—a class without property that wants to seize power. But what if it has no money? From the history of the CCP, the practice can be summed up in one word—”robbing.”
There was a horrifying story during the Five Anti Campaign launched by the Chinese Communist Party in January 1952, which targeted capitalists’ property. As stated in the book Nine Commentaries:
“Chen Yi, the mayor of Shanghai at that time, was debriefed on his sofa with a cup of tea in hand every night. He would ask leisurely, ‘How many paratroopers are there today?’ meaning, ‘How many businessmen jumped out of high buildings to commit suicide?’.”
No capitalists could avoid the Five Anti Campaign. They were obliged to pay taxes that, according to the communist regime, had been “evaded” as early as the Guangxu Period (1875–1908) in the Qing Dynasty (1644–1911) when the Shanghai commercial market was initially settled. Even with all their fortunes, the capitalists could not manage to pay such “taxes.”
“They had no other choice but to end their lives, but they didn’t dare to jump into the Huangpu River. If their bodies could not be found, the CCP would accuse them of fleeing to Hong Kong, and their family members would still be held responsible for the taxes. The capitalists instead jumped from tall buildings, leaving a corpse so that the CCP could see proof of their death. It was said that people didn’t dare to walk next to tall buildings in Shanghai at that time for fear of being crushed by people jumping from above.”
An unstoppable wave
Chinese authorities have imposed formidable barriers to prevent a mass exodus of people and money, reported Finance Yahoo. Citing the need to constrain the virus, China’s immigration department announced in May that it would strictly “restrict the nonessential exit activities of Chinese citizens.” The authorities also enforce tough rules concerning transferring money out of China. For example, citizens cannot exchange more than $50,000 worth of Chinese yuan into foreign currencies annually.
Yet, the outflow of people and money seems to be an unstoppable wave. According to one Bloomberg report, migration consultants and lawyers said their inquiries from people looking to relocate surged three to fivefold in the last few months, with popular destinations including Australia, the U.S., the U.K., and Canada.
Such a moving spirit is not only limited to locational change but may refer to a will to denounce the communist dictatorship.
According to the Global Center for Quitting the Chinese Communist Party, on August 3, the number of Chinese who cut their ties to the CCP and its affiliated organizations exceeded 400 million. In addition, about 50,000 to 70,000 requests for quitting the CCP occur daily.
Chen Quanhong, a businessman from Shandong Province, officially declared his withdrawal from the CCP. He told The Epoch Times, “In China, I was no different from a worm trampled upon by the authoritarian power, not daring to stir a bit. Only when I came to America did I begin to feel like a person, because finally there’s no fear from the Communist Party.”