Judging from the patriotic floral arrangements sprawling over city squares, preparations for the 100th birthday of China’s Communist Party are over the top. Most of the population of 1.4 billion are focused on the big fireworks displays and extravagant parades. But investors, financial bloggers and speculators have specific sightings in mind: The Chinese billionaires who desperately want to be seen at the right flag-waving ceremonies. Who’s there — and who’s not — could spark market pyrotechnics.
An invitation to Beijing’s big parties is a tremendous privilege and a sign of official favor. Baidu Inc.’s Robin Li has been invited three times to China’s Independence Day celebrations. Also prominent among the chief executives and tycoons at the parades is Dong Mingzhu of Gree Electric Appliances Inc. of Zhuhai, a prominent female entrepreneur.
The 70th anniversary of the People’s Republic on Oct. 1, 2019 saw Lei Jun, chairman of the $90 billion smartphone and smart home appliances maker Xiaomi Corp., riding high amid flower-waving marchers. On Weibo, a popular microblog service, Lei said how proud and excited he was to be parading through Tiananman Square and seen by the motherland and the people.
The government had good reasons to put Baidu’s Li and Xiaomi’s Lei in starring roles. Li was a “sea turtle,” a term used for returning emigres from Silicon Valley who were propelling China’s technological advance. Lei built affordable high-end smartphones for emerging markets, the kind of enterprise that is at the heart of President Xi Jinping’s Belt and Road Initiative.
Then there was real estate tycoon Hui Ka Yan, founder of China Evergrande Group. At the 2019 celebration, he posed for photos at the Tiananmen Square gate tower — the primary viewing stand for the elite of the elite. Pictures of his attendance were featured online. And Evergrande published one in the “Milestones” section of its 2019 annual report. Hui looked so young for a 60-year-old — as well as rich, powerful and handsome. Indeed, the prestige and apparent clout attested by Hui’s prominent placement in Tiananmen may have helped Evergrande’s troubled dollar bonds recover in late 2019. What more could a billionaire ask for?
Maybe the same seat in this week’s party?
Hui could use some fresh sign of favor. This year, he was asked to cut back on debt after Evergrande, the nation’s most indebted real estate developer, crossed all of Beijing’s “three red lines” —borrowing limits formulated in August 2020. Regulators are reportedly looking into Evergrande’s related-party transactions with mid-sized Shengjing Bank Co., which counts Evergrande as its largest shareholder. Hui has made no public comments on the issue.
This year, there’s real financial incentive for billionaires to jostle for invitations to the party’s big party. It’s not just to buttress their vanity. You may be incredibly wealthy but, these days, even a billionaire has to be seen on the good side of the government in order to prosper. Just look at the saga of Jack Ma, founder of Alibaba Group Holding Ltd., who has barely been seen since the end of 2020, when his Ant Group ran afoul of government regulators. More recently, the government summoned Wang Xing, founder of China’s third-largest tech firm Meituan, and warned him to keep a low profile. The food delivery mogul posted an ancient poem online in May, which was seen by many as veiled criticism of the government’s anti-trust laws.
Right now, Beijing is wary of big developers because they’ve loaded up on so much debt that they helped turn China into one of the world’s most leveraged nations. Last October, when Xi came down to Shenzhen to celebrate the city’s 40th anniversary as a special economic zone, not a single developer made the government’s list of the 40 most valuable persons contributing to the city’s rise. Meanwhile, the government is wary of Big Tech too, concerned that companies have used market privilege to choke competition and innovation. Other tech giants, from Tencent Holdings Ltd. to ByteDance Ltd., were also asked to curb excesses in Beijing’s anti-trust review.
Might a good seat at the Communist Party’s big party signal a change in official policy? Might an absence from the parades mean worse is yet to come for the billionaires in the crosshairs? Could a return to Tiananmen Square revive Evergrande’s dollar bonds?
Hui was - and still is - China’s most charitable man; in other words, a generous patriot. China’s bloggers speculate that his munificence may have won him the 2019 invitation to the Tiananmen grandstand. But that was two years ago. Philanthropy alone may no longer cut it if you want to be on the A-list. What will? A lot of paranoid investors will be watching this week’s celebration to parse who’s in and who’s out — and the new party favorites.
Bloomberg
