Roving Periscope: China trying to prevent its own entrepreneurs from fleeing!

Virendra Pandit

New Delhi: While China is trying to re-attract foreign capital and laid out a red carpet to American investors like Bill Gates and Elon Musk, it is also making efforts to prevent the departure of its own entrepreneurs who have thrown in the towel because of multiple reasons, the media reported.

Regarding profitability, combined profits for Chinese private businesses shrank 22.5 percent in the first four months of 2023, panicking entrepreneurs and forcing them to plan migration to other countries.

Besides, the Xi Jinping regime’s latest diktat to private entrepreneurs to share their profits for “common prosperity” is like Mao Zedong’s “collective ownership.” This is killing innovation and entrepreneurship as it no longer stimulates creativity or patriotism.

Amid an economy faltering on all fronts and the US stripping it of a “developing country” status to clip its wings, Beijing is trying to put up a brave face and has warmly welcomed visiting foreign entrepreneurs and investors. Through people like Elon Musk and Bill Gates, it is trying to tell the world that China is back in business and any attempt to decouple from China is “doomed to fail”.

The US-led West is progressing with a ‘decoupling’ of their economy and technology from China, which has also panicked Chinese entrepreneurs.

The high-profile reception Beijing accorded to leading investors is understandable as it has to push back on decoupling, or “de-risking”, campaigns designed by the West to tame China.

While foreign investors have shown some interest, life for China’s own private entrepreneurs remains miserable. Some are hiding, others are fleeing, and some others are witnessing the unraveling of their business empires, the media reported.

Despite repeated reassurances from authorities that the private economy is an important part of the national economy, and that it will receive equal treatment alongside state-owned enterprises, the reality is harsh for China’s capitalists.

Official data shows that the private sector is bearing the brunt of China’s economic slowdown, and in turn, lackluster confidence from private firms is undermining growth prospects. Fixed-asset investments by the private sector, a measure of business confidence, fell 0.1 percent in the first five months of 2023 from a year ago when many parts of the country were under draconian Covid-19 controls. That is, the business confidence of China’s own entrepreneurs remains shaky.

By comparison, investments from the state sector increased 8.4 percent, while investments by foreign businesses in China increased by 5.2 percent. In terms of profitability, combined profits for Chinese private companies shrank 22.5 percent in the first four months, a steeper drop than the state sector.

Behind these figures is a worrying trend in the world’s second-largest economy. The country’s most enterprising and ambitious group of people, who once braved “thousands of hardships and bitterness” to start their companies, have begun to throw in the towel.

The ‘animal spirit’ that once underpinned a vibrant economy is dying out. In affluent places like Zhejiang or Guangdong, it is not uncommon to see first-generation business founders who have accumulated enough wealth try to persuade their children to find low-paying, stable jobs in the government, or even to migrate to other countries.

For them, the growing difficulty of running a private business is one thing, but the more important factor is that it is no longer considered even ‘glorious’ to get rich in China. In fact, it is dangerous to be rich, and being too rich can be a curse. Online verbal abuse against some Chinese entrepreneurs has become so rampant that China’s cyberspace administration had to set specific rules to restrict attacks on the country’s business leaders. In China’s tech sector, a by-product of Beijing’s regulatory campaigns has been to hush the country’s entrepreneurs.

The harsh treatment Beijing meted out to Alibaba founder Jack in October 2021 was the turning point for China’s homegrown billionaires to plan their exodus step by step. Others are only following them.