x Abu Dhabi, UAESunday 23 July 2017

Booming Chinese economy creates 54 billionaires in a year

Some of China's total of 115 billionaires, second only to the US, more than just leading figures in the country's business world; they also have seats on the National People¿s Congress, giving rise to fears about political corruption.

New money: the booming Chinese economy created 54 new billionaires over the past year, according to figures released by Forbes magazine this week.
New money: the booming Chinese economy created 54 new billionaires over the past year, according to figures released by Forbes magazine this week.

BEIJING // It has been more than 30 years since the late Chinese leader Deng Xiaoping supposedly said "to get rich is glorious", and now more than ever China is showing it has taken this message to heart.

The dragon economy created 54 new billionaires over the past year, according to figures released by Forbes magazine this week, taking the country's total to 115, second only to the United States.

Some of those listed are more than just leading figures in the country's business world; they also have seats on the National People's Congress (NPC), the legislature sitting this week to map out policy directions.

According to figures released by the Shanghai-based Hurun Report, and reported by Bloomberg, the wealthiest 70 members of the nearly 3,000-strong NPC are together worth 493.1 billion yuan (Dh275.46bn), with China's richest man, the soft drinks magnate Zong Qinghao, among the ultra-wealthy to have secured an NPC post.

With inequality having increased in the past decade, the presence of such business giants as Mr Zong reflects "where honours now go in the socialist society", according to Joseph Cheng, a professor of political science at City University of Hong Kong.

"Before, honours went to model workers and model farmers; now they go to businessmen who do philanthropic work," he said.

Indeed many believe, Dr Cheng said, that places on top bodies such as the country's highest advisory body, the Chinese People's Political Consultative Conference (CPPCC), the national committee of which is also meeting this week, are informally up for sale to those who make generous contributions to high-profile projects such as the Olympics or Asian Games being held in the country.

Concerns have been raised in international media that China's monied elite influence, through their seats on legislative and advisory bodies, key welfare, income tax and property tax policies designed to redistribute wealth and cool a potentially overheating economy. Billionaires, the argument goes, are unlikely to support the redistributive tax regime others believe is necessary.

However, the degree of influence bodies such as the NPC and CPPCC have on actual policy-making is "quite small", according to Ding Xueliang, a professor and political analyst at the Hong Kong University of Science and Technology.

If the central leadership does not want to introduce tax reforms, they might use the NPC as "a front", Dr Ding said, giving the appearance their efforts were blocked by the legislative body.

However, with the NPC often regarded as a gathering that merely rubber stamps decisions, if "the government is really serious about such legislation, the NPC cannot make a big difference".

While being rich in modern China may not necessarily translate into having political power, at least on the national stage, it is widely believed that political power offers a fast-track to wealth.

The privileged family members, especially children, of some of China's leaders past and present are active in industries such as private capital, using their connections to aid foreign investors looking to cash in on the country's unprecedented double-digit economic growth.

Although many of their dealings remain out of the public eye, and China's internet "Great Firewall" suppresses those trying to find out more, "there is a lot of public resentment, even anger, on this", Dr Ding said.

"In the ordinary Chinese people's perceptions, the linkages between the politically powerful and the channels to make large and quick money appear to be too strong and too unfair," he said.

"That kind of anger, that kind of resentment in the recent 10 to 15 years is on the rise."

Given the often opaque dealings between officialdom and commerce in China, a country where even the central leadership publicly acknowledges corruption is an acute problem, "wealth is perceived as illegitimate", Dr Cheng said.

The belief, whether justified or not, is that many make their fortune through connections and privileges.

"You don't become rich [in China] like Bill Gates did," he said. "This is a serious long-term problem.

"At the moment this is OK, because the vast majority of Chinese people have seen a very significant [increase] in their own living standards in the past three decades.

"They are still optimistic about future improvements. They don't want major changes. They don't want chaos. They accept the status quo.

"But this is exactly why there are so many dissatisfactions and grievances beneath the impressive economic statistics."

At a speech to the NPC last weekend, the Chinese premier, Wen Jiabao, acknowledged there was "great resentment" over corruption, income disparities and other issues, and promised the authorities would try to tackle these over the next five years.

Recent attempts to encourage protests similar to those that have swept through much of the Middle East have petered out amid a huge security presence. Yet although most seem content for the moment to accept the status quo, albeit sometimes reluctantly given the allegations of corruption and nepotism and the spiralling wealth disparities, if the wheels come off China's economic juggernaut and improvements in living standards are threatened, this could change, Dr Cheng says.

"Then you may have very serious trouble," he said.

 

dbardsley@thenational.ae