It was the kind of brazen PR stunt that Jack Ma might have dreamed up.
But this wasn’t the flamboyant Chinese billionaire who disappeared from public view eight months ago. It was Mark Zuckerberg, bobbing up and down on a hydrofoil surfboard, clutching an American flag and exuding all the confidence of a man worth $130 billion.
The contrast between the social media mogul’s July 4th Instagram video and the day’s big event in China could hardly have been starker. Regulators in Beijing had just hours earlier banned Didi Global Inc.’s ride-hailing service from app stores, delivering their latest hammer blow to an entrepreneurial elite that once seemed destined to challenge Zuckerberg and his U.S. peers at the top of the world’s wealth rankings.
The age of unfettered gains for China’s ultra-rich now appears to be coming to an abrupt end.
Even as the world’s 10 wealthiest people added $209 billion to their net worth in the first half of 2021, China’s richest tycoons in the Bloomberg Billionaires Index saw their combined fortunes shrink by $16 billion. Shares of their flagship companies sank by an average 13% during the period, the first time in at least six years they’ve recorded declines when the broader Chinese equity market was rising. Didi’s stock has plunged 14% since its June 30 debut on the New York Stock Exchange, slashing the wealth of the company’s co-founders by almost $800 million.
Behind the losses is a crackdown that has only intensified since November, when Ma’s Ant Group Co. was forced to pull its blockbuster initial public offering at the last minute. Policy makers are tightening regulations on some of the most important facets of Asia’s largest economy, from financial services to internet platforms and the data that underpins most big businesses in modern China. In the latest salvo, regulators unveiled new draft rules on Saturday that would require nearly all domestic companies to undergo a cybersecurity review before listing in a foreign country.
Beijing’s motivations for the crackdown are varied. They include concerns about anticompetitive behavior in the tech industry, risks to financial stability from lightly regulated lending platforms and the rapid proliferation of sensitive personal information in the hands of large corporations.
But another undercurrent running through many of the government’s latest initiatives is a not-so-secret desire to rein in the power of China’s tycoons, some of whom have amassed an enormous amount of influence over the $14 trillion economy. As one government official familiar with the leadership’s thinking described it, Beijing wants to prevent its billionaires from becoming a force as strong as the family-run chaebol that dominate South Korea’s economy and many aspects of its politics.
Adding to Beijing’s resolve is the Chinese public’s growing concern over rising inequality. At a major speech on his economic plans in October, President Xi Jinping acknowledged that the country’s development was “unbalanced” and said “common prosperity” should be the ultimate goal.
The upshot is a new era for the country’s billionaires and the investors who back them. Gone are the days when tycoons like Ma could confidently bend the rules to supercharge their companies’ growth and challenge entrenched interests like state-owned banks. Outsized public personas -- long seen as an asset for tech-company founders -- now look like a liability. The new playbook for China’s ultra-rich calls for more deference to the Communist Party, more charitable donations and more focus on the wellbeing of rank-and-file employees, even if it hurts the bottom line.