http://www.theatlantic.com/international/archive/2013/01/why-do-chinese-billionaires-keep-ending-up-in-prison/272633/
As China's economy has grown, so has the number of wealthy Chinese. However, the top 1% has also suffered increased scrutiny, resulting in numerous investigations, arrests and imprisonments of China's richest citizens.
Is it more dangerous to be a billionaire in China than the United States? Statistics cited within this article would say yes.
Forbes Magazine and its Chinese equivalents post yearly lists of China's richest, the most famous being the Hurun Rich List. After the release of each list since 1999, many of the wealthy and their respective companies have experienced declining share prices and have received fewer government subsidies. Additionally, a large number of tycoons who were once mainstays on the list are now embroiled in corruption scandals and serving lengthy prison sentences.
The author of this article, Rebecca Chao, outlines two main reasons behind China's issue of disappearing billionaires:
-The first is that the nature of a booming, developing nation allows fortunes to be amassed quickly without much deference to the rule of law. When such a country continues to gets richer, the government is then compelled to enforce regulations more strictly and punish illegal business practices. Many of the wealthy Chinese billionaires first amassed their fortunes with the help of widespread corruption. Subsequently, that corruption is now being investigated with real consequences.
-The second reason is what Chao describes as the government interest of 'killing the chicken to scare the monkeys'--essentially sending a message to corrupt businessmen and officials. Moreover, Chao describes the interest of the Chinese government to condemn ostentatious displays of wealth when the vast majority of the country is still struggling to improve their meager economic lot.
Extreme income inequality, heavy Chinese emigration to Western nations, and the common practice of the wealthy hiding their fortunes through 'clever' accounting are all major problems for both the government and its citizens. At this point, many wealthy Chinese see reaching the Hurun Rich List as a curse very much worth avoiding.
Is this issue exclusive to command economies? Is this one unique advantage America has over China, a more equitable judicial system that checks government oversight and protects certain rights? How much of a role does China's 'command' economy play in the persecution of corrupt businessmen?
2 comments:
Its good to see that China is starting to enforce their rules and regulations. It makes me wonder how long the government knew about the rule breakers and just let them get away with it because of the massive gains to the Chinese economy during their phase of industrialization. But now that the richest Chinese are under a spotlight and there are complaints about the income inequality the government decided to crack down on some of the nation's richest. Also, it is interesting to find out how the recent crack down on the top 1% will affect the economic growth in China.
I suspect the only reason that the Chinese authorities are cracking down on the extremely rich is that they know the newly wealthy may eventually accumulate enough power to challenge the regime. The article alluded to this by suggesting that the regime wants to maintain social stability, which to me is code for "consolidate their power."
Post a Comment