Why Chinese tech billionaires are back in vogue

Pony Ma, the co-founder of Tencent, is once again China’s richest person, according to the latest Bloomberg Billionaires Index. His net worth of US$44 billion places him 27th globally.

Close behind him in the rankings are bottled water tycoon Zhong Shanshan, and Zhang Yiming, the main co-founder of tech giant ByteDance, which owns TikTok.

Only a few years ago, China’s ruling Communist Party launched a crackdown on billionaires and other business leaders. Some were publicly jailed. Others disappeared from public view.

Ma’s resurgence might seem like a positive signal of a more permissive period. But as we watch China’s private sector grow, we should remember it follows China’s unique playbook.

His wealth primarily comes from his stake in Shenzhen-based Tencent, which he co-founded in 1998. As China’s economy grew, it became a world-leading internet and tech company.

Messaging apps

It is well-known for QQ and WeChat, which quickly became two of the most popular instant messaging apps in the country, connecting more than a billion people.

Tencent is also the largest video game vendor in the world’s second-largest economy, with Honour of Kings and League of Legends.

Last month, it released Black Myth: Wukong, China’s first “AAA” video game. “AAA” has become a buzzword for a major, high-budget, standalone production.

The much-hyped launch triggered 10 million sales across platforms within three days of its release, becoming one of the nation’s most successful games of all time.

Based on a 16th-century Chinese novel entitled Journey to the West, it features various Chinese landscapes and aligns with Beijing’s bid to boost China’s cultural appeal.

State-owned media outlet Xinhua highly praised the game for “telling Chinese stories with world-class quality.” It offered a new way for global players to understand ‘Chinese culture’.

This official appraisal means a lot. In previous years, Tencent has had a challenging time coping with Beijing’s strict gaming regulations.

In 2021, China’s regulator announced policies to limit online gamers under the age of 18 to only one hour of play on Fridays, weekends, and holidays. This was a major blow to Tencent.

Last year, Beijing introduced more legislation aimed at further capping the amount of money and time that could be spent on video games. The announcement resulted in a 12.4% drop in Tencent’s share price. Still, the company promised to strictly implement the requirements.

Excessive intervention

In China, complying with state regulations is important. Another Chinese tech billionaire, Jack Ma, faced the consequences of publicly challenging them.

In 2020, he was poised to launch what was set to be the world’s largest initial public offering or IPO, raising about $35 billion for his financial tech giant, Ant Group.

But after he gave a speech in Shanghai criticizing Chinese financial regulators for outdated rules and excessive intervention, regulators halted the IPO.

Citing concerns about e-finance products encouraging unrestrained borrowing and investment, Beijing ultimately suspended the IPO in late 2020.

During the following years, Ant and its affiliate company Alibaba were slapped with billions in fines for alleged breaches of financial regulations. This phase marked a much stricter regulatory posture from China. The tech tycoons had to adapt to a new reality.

In 2021, Pony Ma publicly stressed the importance of tightly regulating internet businesses, including his own. He also proactively volunteered to meet with antitrust authorities.

Tencent then downsized by divesting stakes in various sectors after the government demanded a restructuring of its financial business.

China’s economy is a “socialist market economy,” a useful tool to achieve Communist Party objectives. The private sector still has a huge role to play. It is just that Beijing sees the market power of the rich as a potential threat to the Party’s authority.

During the past decades of reform and opening up, China has been committed to unleashing market forces, encouraging private sector development, and modernizing its financial institutions. The precondition is that the state should maintain the ultimate authority.

Private sector

Yet the economy has been sluggish post-Covid 19. The clampdown on the private sector has undermined investor confidence, which is crucial for restoring China’s economic vitality.

Last year, Beijing introduced a 31-point action plan in response, aiming to make the private economy “bigger, better and stronger.” Hours after its release, Pony Ma publicly praised the government’s move as “encouraging and inspiring.”

Could Spring now be coming for China’s private sector? Perhaps, but only on the Party’s terms. Remember, market development is always a means for the state to achieve its own ends. This will never be a story of the market growing while the state steps back.

Wenting He is a PhD candidate, International Relations, at Australian National University.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of China Factor.