A loyal Chinese capitalist has turned against the country’s Covid-19 policy. Buyout baron Shan Weijian, ordinarily a public supporter of President Xi Jinping’s tough policies, broke ranks over draconian lockdowns. In a private meeting, he painted a dire picture of economic and political instability in ways that may jeopardise the initial public offering of his private equity firm, PAG. Making an example of him could backfire, though.
Omicron-variant containment measures in cosmopolitan Shanghai have rattled the country’s elite . The griping is getting louder. Wang Sicong, son of billionaire Wang Jianlin, had his Weibo account shut down after he questioned the government’s endorsement of traditional medicines to treat the virus.
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| Visitors stand near exhibits of rice paddy fields and a screen showing an image of Chinese President Xi Jinping at the Museum of the Communist Party of China in Beijing, China November 11, 2021. |
Wang is just a rich kid, but Shan is a symbol of China’s reform success. Caught up in Mao’s Cultural Revolution, he was sent to farm China’s Gobi Desert, but managed to make his way to the United States, studying under now-U.S. Treasury Secretary Janet Yellen and landing jobs at the World Bank and JPMorgan. PAG manages some $50 billion and has invested in a slew of successful companies.
Shan also publicly backed China’s crackdowns in Hong Kong and Xinjiang. So when a trained economist like him says that “popular discontent in China is at the highest point in the past 30 years,” as the Financial Times reported, and warns of an economic crash, Chinese people inclined to discount foreign critics might take him more seriously.
In a podcast with Breakingviews in 2019, Shan warned about Chinese hubris. Scepticism of Beijing’s triumphal narrative is evident in financial markets. The country reported rosy first-quarter growth statistics, but the benchmark CSI300 index is down 20% this year and foreign funds are fleeing yuan assets. As lockdowns upend supply chains and suppress consumption, the government is falling back on debt-fueled infrastructure stimulus.
Shan may suffer the same fate as Alibaba (9988.HK) founder Jack Ma did with his financial technology outfit Ant after speaking out: a derailed IPO and endless regulatory headaches. Shan’s implicit political critique will be hard for Beijing to ignore even if his analysis is as hard to dispute as his patriotism. Yet his sentiments are also shared throughout the financial community that China needs to reassure. Beijing may be inclined to listen to him.
Readmore:https://www.reuters.com/breakingviews/chinese-buyout-barons-dissent-challenges-beijing-2022-04-29/
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