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Chinese multi-millionaires are becoming more cautious

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Rupert Hoogewerf, also known by his Chinese name Hu Run, has been publishing an annual ranking of the wealthiest Chinese people for more than two decades.

However, this year, some of the world’s richest people expressed a desire not to be included on the list. The basis for this is the “general prosperity” that President Xi Jinping has declared.

Rupert Hoogewerf has recently observed a shift in mindset among China’s wealthy and super-wealthy. The explanation for this is a speech given by Xi Jinping in mid-August at a finance conference. In it, China’s president established “general prosperity” as a new national goal, stating that social equilibrium, income inequalities, more welfare, and charity are now the imperial imperatives.

Rupert Hoogewerf is arguably the only person in China who has his finger on the pulse of China’s wealthy and super-wealthy. He was born in Luxembourg and has been publishing a list of China’s wealthiest people every year since 1999. Only those with a minimum asset of 2 billion yuan (about $ 310 million) are included in the ranking, which is well recognized internationally.

Hoogewerf is sitting in his office in a nondescript tower in downtown Shanghai on a gloomy November afternoon, reading through seemingly endless Excel spreadsheets. There are people like Zhong Shanshan, the CEO and creator of the mineral water company Nongfu, and Zhang Yiming, the CEO and founder of the Beijing-based IT firm Bytedance. Zhang tripled his fortune to about $ 53 billion last year, according to Hoogewerf’s estimations, making him China’s second richest man. Only Zhong Shanshan stands in his way. In China, the mineral water king, as he is known, is worth $ 60 billion.

Hoogewerf received calls and emails

The development of the current list, which was released in early November, was, however, more challenging than in prior years. “The ‘general prosperity’ paradigm had the most impact on my list this year,” Hoogewerf explains. Some Chinese people objected to their names being mentioned. Hoogewerf received phone calls and emails from people he doesn’t want to talk about.

Prosperity and money have traditionally been prized in China, and are frequently displayed, unlike in India, for example. A pink Bentley with a – seemingly fake – gold bar under the windshield may easily be found in Beijing parking lots. Envy is alien to the majority of Chinese people. Rather, unlike in other countries, the rich and super-rich are respected in China, and many young people aspire to emulate them, for example by starting businesses.

Billionaires come up against donation pledges

However, since Xi’s motto of general prosperity was released, the country’s multimillionaires and billionaires have been under close scrutiny; the level of uncertainty is high. Jack Ma and Zhang Yiming, the founders of Bytedance’s Alibaba, have resigned from their top roles in the company, probably at the request of the government, and have mostly vanished from public view. Meanwhile, the government is debating a special tax for technological companies, after a number of billionaires and corporations made billions available for charitable reasons quickly after Xi’s speech in an act of anticipatory obedience.

In September, the e-commerce site Pinduoduo pledged to donate the equivalent of $ 1.5 billion to rural development. Tencent, the Chinese internet titan, said in April that it would set aside $ 7 billion for charitable causes. The group rapidly raised the sum in September, just after Xi’s keynote speech.

The social gap is huge

In China, there is a significant social division. The Gini coefficient in 2019 was 46.5, with a value of 0 indicating absolute equality and 100 indicating absolute inequality. For reference, the average Gini coefficient in the EU is 30.2. Inequality is “the Achilles’ heel of the Chinese system,” according to Branko Milanovic, a long-serving World Bank economist. Only the government that created it has the power to rein in the new oligarchy.

Hoogewerf completely agrees. “For many Chinese, housing, a decent education, and good health care have become unaffordable,” adds the Luxembourger. As a result, many young people are unable to have children, resulting in an aging society. Donations from the wealthy and ultra-wealthy would scarcely fix the situation, according to Hoogewerf. Rather, the size of the cake to be served must be increased, implying that China’s economy must continue to expand rapidly. However, without structural reforms like as an extension of the social security system, it is unlikely to succeed.

Hoogewerf’s Reichen Ranking is increasing longer and longer, despite the fact that he solely uses publicly available data such as annual reports. There are 2918 names on the current list of the wealthiest Chinese, up 520 from the previous year. Green technology, the semiconductor sector, and artificial intelligence are all experiencing rapid growth. Many entrepreneurs have become multimillionaires in a short period of time due to the quick growth of these industries. Zeng Yuqun, the third richest Chinese, is the CEO of CATL, an internationally successful battery cell developer.

Others, on the other hand, are feeling the government’s huge regulatory constraints on the tech industry. Pony Ma, the founder and CEO of Tencent, saw his net worth plummet by 19 percent. Jack Ma, the founder of Alibaba, and Wang Xing, the CEO of Meituan, the delivery service platform, were also significantly behind. Xu Jiayin, the founder of the plummeting real estate company Evergrande, had the worst crash. He was still in charge of Hoogewerf’s Reichen Report in 2017. It is currently ranked 70th in the world.

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