Even during a time of worldwide economic uncertainty, China’s billionaires have joined their American counterparts in boosting their fortunes and their wealth.
Despite a pandemic, billionaires around the world have seen their fortunes flourish in the last year.
Some of the world’s richest men have increased their wealth by billions of dollars during the pandemic, which stands in stark contrast to rising unemployment and financial insecurity around the world.
China’s billionaires have faced a similar story. Though the country dealt with the coronavirus pandemic swiftly, China was the epicenter of the first outbreak, with tens of millions of its citizens placed under stringent lockdowns at one stage.
Nonetheless, the fortunes of China’s billionaires have only increased in 2020. Over the last year, China has gained some 257 new billionaires, while the established megarich have seen their net worth rise substantially.
But the billionaires may have some reasons to be cautious. As Jack Ma, the founder of Ant Group and one of China’s richest men, found out, the government of Chinese President Xi Jinping has dealt swiftly with threats and critics among its billionaire class, even if this has meant toppling what would have been a record-breaking initial public offering (IPO) for Ant Group.
However, even during a time of worldwide economic uncertainty, China’s billionaires have joined their American counterparts in boosting their fortunes and their wealth.
Billionaire fortunes
The wealth of billionaires across the world has boomed even as the pandemic has created tough economic prospects for many working people.
Though employment in the United States remains down at least 10 million jobs since the beginning of the pandemic and signs are showing a slowdown in the economic recovery, billionaires have been much more fortunate.
A selection of some of America’s richest helps to put these fortunes into perspective. Between March and June 2020, Jeff Bezos, the founder of Amazon.com, Inc. and the world’s richest man, saw his wealth rise by an estimated US$48 billion. At the same time, Tesla, Inc. chief executive officer Elon Musk’s wealth increased by a significant US$17.2 billion.
In total, according to Business Insider, the wealth of America’s billionaires has increased by some US$637 billion during the pandemic so far.
But this is not solely an American phenomenon.
China’s richest figures have also profited greatly during the pandemic, especially given the ease with which China brought the pandemic under control compared to the US.
In particular, China’s tech billionaires have seen their wealth skyrocket during the pandemic, as China’s tech prowess continues its rapid growth despite significant pressure from US-led sanctions.
In 2020, China has minted around 257 new billionaires, bringing the country’s total to 878. This is roughly comparable to the nearly 800 billionaires that the US has, though given exchange rates between the US dollar and the Chinese yuan, the US likely has a larger share of billionaires.
The creation of new billionaires is intimately connected to the flood of IPOs in the country, especially tech industry IPOs. According to a report by Ernst & Young, some one-fifth of global public listings in the first nine months of 2020 took place on the Shanghai Stock Exchange in mainland China.
Some of these IPOs, such as the now doomed IPO of Jack Ma’s Ant Group, were slated to break IPO records and boost the company’s valuation by the tens of billions.
The biggest winners among China’s billionaire class includes Tencent Holdings Ltd. founder Pony Ma, whose wealth increased by some 50% to US$57.4 billion, and Wang Xing of food delivery service Meituan-Dianping, whose network quadrupled to some US$25 billion.
These billions alone, however, may not prove enough.
Consequences for comments
As Ant Group founder Jack Ma recently learned, a multibillion dollar net worth and a role in creating one of the world’s most valuable tech companies ultimately means little when faced with the consequences of comments critical of China’s government.
In an October speech in Shanghai, Ma criticized China’s financial regulators and banking sector, quipping that “we shouldn’t use the way to manage a train station to regulate an airport” and that “we cannot regulate the future with yesterday’s means.”
Only a few days after his comments, Ma was informed in a meeting with regulators that the long-awaited IPO of his Ant Group, parent of popular digital payments app Alipay, was off, after the company no longer met the regulatory requirements for its public listing.
In the immediate aftermath of Ant’s IPO collapse, nearly US$3 billion was immediately erased from Ma’s net worth, a strong sign of the consequences of criticism in China.
Ma’s critical comments in Shanghai likely toppled Ant’s chances of an IPO and served to illustrate that Xi’s China aims to maintain a close hold on its billionaire class, even as their fortunes have risen significantly in 2020.
According to Victor Shih, associate professor at UC San Diego and author of “Factions and Finance in China: Elite Conflict and Inflation,” the toppling of Ant Group’s IPO was a direct sign to Ma and other billionaires who step out of line that their wealth is “not a big deal for the CCP, which oversees the world’s second-largest economy.”
Xi’s government is also flexing its muscle against would-be critics by cracking down on the country’s fintech sector – of which Ma’s Ant Group is a part.
China’s fintech industry has long been under-regulated when compared with the mainstream banking sector, with the recent drafting of tough regulations aimed to bring the fintech economy in line with the “real” economy and reduce risk. It is also a flexing of the party’s muscle and a demonstration of its overall control.
Though China’s billionaires have enjoyed a boom in their wealth throughout 2020, Ma’s humbling by China’s government illustrates one crucial lesson for this class – their billions are only worth as much as the confidence invested in them by the Chinese Communist Party.
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