With such incidents, it is always difficult to say whether it is just an isolated case or part of a larger campaign, says China expert Jacob Gunther from the think tank Merics. The fact that a key person in an industry is arrested and is cooperating with the authorities could well be the prelude to a larger campaign.
It commemorates the disappearance of the Alibaba founder in 2020
Bao’s disappearance brings back memories of the crackdown on Alibaba founder Jack Ma in late 2020, one of the harbingers of the government’s crackdown on the booming internet economy. Shortly before his disappearance, Ma had publicly criticized the “pawn shop mentality” of the Chinese financial regulators.
The planned mega IPO of the Alibaba financial subsidiary Ant was then stopped by the authorities. A so-called “rectification campaign” in the technology sector followed, with high-profile victims such as Alibaba, Didi and Tencent.
What exactly could threaten the financial industry is unclear, emphasizes Merics expert Gunther. The reforms called for by head of state and party leader Xi Jinping, for example to curb speculation, have so far not been successful. However, Xi is very much focused on “stability and control”. The expert believes that the misconduct of financial managers outside the party’s sphere of influence is on his mind.
At the end of 2020, shortly before his disappearance at the time, the Alibaba founder publicly criticized the “pawn shop mentality” of the Chinese financial regulators.
(Photo: Xinhua/eyevine/laif)
Party organs keep pointing out undesirable developments in the industry. In mid-February, the authorities at the country’s largest real estate insurer, Peoples Insurance Company, removed the top party secretary. Luo Xi had previously been accused of practicing a personality cult.
At the same time, the state-controlled Bank of China announced that its chairman Liu Liange had resigned as the bank’s party representative.
Investors and private companies have recently begun to hope that the correction campaigns are over and that the focus is on the recovery of the Chinese economy. “The key is to boost confidence,” Xi said at the end of December at the Central Working Conference on Tech Sector Economic Affairs. However, Gunther emphasizes that this was also “aligned”.
However, he does not believe that a political campaign against the financial industry will have a negative impact on day-to-day business and the confidence of small and medium-sized companies in future economic development. But the state leadership would send a signal to the business elite.
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