Power Cut Why China Is Reining In Its Tech Billionaires

Getting rich was once seen as glorious, but Beijing is now squeezing its plutocrats in a quest for 'common prosperity'

- Vincent Ni

In a Politburo group study session on 23 November 2015, China’s president, Xi Jinping, recommended the book Capital in the Twenty-First Century by the French economist Thomas Piketty. “The rich data he used demonstrated that … unrestrained capitalism accelerates wealth inequality … [His] conclusion is worth us pondering on.”

Back then, Piketty’s work on inequality was reported all over the world and sparked soul-searching among financial elites. Some were surprised that Xi was paying attention, too.

Since his ascent to power in 2012, Xi has discussed the issue of inequality on several occasions. Early this year, he told his provincial ministerial-level cadres that achieving common prosperity was “not just an economic issue, but a significant political one that matters to the party’s basis to rule”.

In the four decades since Xi’s predecessor Deng Xiaoping enabled economic liberalisation, booms in manufacturing and technology have allowed a select few in China to amass vast fortunes. But the tables are turning. Since February, close to $1tn has been wiped off the value of Chinese companies. The Nasdaq Golden Dragon index, which tracks the largest of about 250 Chinese firms listed in New York, was down more than 50% from its February peak last week.

Investors fear a standoff between regulators on both sides of the Pacific could lead to the delisting of Chinese stocks from US markets.

Is Xi simply redressing the balance between corporations and citizens, or is he set on bringing China’s private sector back under state control?