The New New World

China’s Entrepreneurs Are Wary of Its

Future
Behind the scenes, businesspeople worry that Beijing has become more interested in solidifying
its control over people’s lives than promoting economic growth.

Chen Tianyong left China for Malta in early January. For the entrepreneur class, he said, leaving
China is the best resistance to Communist rule.CreditGianni Cipriano for The New York Times
Image

Chen Tianyong left China for Malta in early January. For the entrepreneur class, he said, leaving
China is the best resistance to Communist rule.CreditCreditGianni Cipriano for The New York
Times

By Li Yuan

 Feb. 23, 2019

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  阅读简体中文版閱讀繁體中文版

Chen Tianyong, a Chinese real estate developer in Shanghai, boarded a flight to Malta last month
with no plans to return anytime soon.

After landing, Mr. Chen, a former judge and lawyer, shared on social media a 28-page article
explaining himself. “Why I Left China,” read the headline, “An Entrepreneur’s Farewell
Admonition.”

“China’s economy is like a giant ship heading to the precipice,” Mr. Chen wrote. “Without
fundamental changes, it’s inevitable that the ship will be wrecked and the passengers will die.”
“My friends,” he urged, “if you can leave, please make arrangements as early as possible.”

It is unclear how many people saw the article before it disappeared from China’s heavily
censored internet. But Mr. Chen said publicly what many businesspeople in China are saying
privately: China’s leadership has mismanaged the world’s second-largest economy, and China’s
entrepreneur class is losing confidence in the country’s future.

For more than a generation, China has been fueled by optimism that, despite its problems,
tomorrow will be better than today. Now, the prevailing view is best summed up by an online
meme made popular by Wang Xing, the founder and chief executive of Meituan Dianping, the
online delivery and takeout company. The year 2019, goes the meme, may be the worst year in
this decade, but it will be the best year in the next decade.

China’s economy is slowing, and the trade war with the United States has pinched growth. But
many entrepreneurs are more broadly worried that China won’t pursue the economic and
political liberalization it needs. On the contrary, since Xi Jinping took control of the Communist
Party in 2012, the party has increased its dominance in every aspect of Chinese society.

Few are predicting a crash, but worries over China’s long-term prospects are growing.
Pessimism is so high, in fact, that some businesspeople are comparing China’s potential future to
another country where the government seized control of the economy and didn’t ease up:
Venezuela.

Only one-third of China’s rich people say they are very confident in the country’s economic
prospects, according to a recent survey of 465 wealthy individuals by Hurun, a Shanghai-based
research firm. Two years ago, nearly two-thirds said they were very confident. Those who have
no confidence at all rose to 14 percent, more than double the level of 2018. Nearly half said they
were considering migrating to a foreign country or had already started the process.

“China is facing a lot of internal and external challenges now,” said Fred Hu, founder of the
investment firm Primavera Capital Group and former head of Goldman Sachs’s Greater China
business. “We need to realize that all of our achievements in the past 40 years were the results of
opening up and economic reform, not because of any unique China development model.”

Mr. Hu’s comments are diplomatic. In private, some businesspeople are talking in angrier and
more fearful ways. They asked for anonymity, of course. In today’s tightly controlled
environment in China, even the economy — once considered a safe subject — has become
dangerous to talk about.

“The most important cause of their pessimism is bad policy and bad leadership,” said Minxin
Pei, a professor at Claremont McKenna College in California who is in frequent contact with
business figures. “It’s clear to the private businesspeople that the moment the government
doesn’t need them, it’ll slaughter them like pigs. This is not a government that respects the law.
It can change on a dime.”
Many members of the business elite are unhappy that the leadership’s economic policies favor
state-owned enterprises even though the private sector drives growth. They are angry that the
party is trying to put a Mao-era ideological straitjacket on an economy driven by private
enterprises and young consumers. They are upset that the party eliminated term limits last year,
raising the prospect that Mr. Xi could become president for life.

Many businesspeople feel increasingly insecure, especially as some entrepreneurs are

“disappeared” by the government to assist in the anticorruption campaigns.

“In the eyes of some senior officials, even people like Jack Ma and Pony Ma are just small-time
businessmen,” Mr. Chen said in an interview, referring to the founders of Alibaba and Tencent,
two of China’s biggest private enterprises.

Mr. Xi appears to be aware of the unease. Beijing has postponed new rules that would raise
business taxes to pay for social benefits and has eased its monetary and fiscal policies.

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Mr. Chen said he had decided to move to Malta because it was warm, beautiful and a member of
the European Union, easing his travel within the bloc.CreditGianni Cipriano for The New York
Times
Image

Mr. Chen said he had decided to move to Malta because it was warm, beautiful and a member of
the European Union, easing his travel within the bloc.CreditGianni Cipriano for The New York
Times

Still, the party’s priorities appear to be elsewhere. In his December speech commemorating 40
years of China’s opening, Mr. Xi argued that his recipe of guided growth under strong
Communist Party control must not waver. In another important speech to the party’s top officials
last month, Mr. Xi identified seven major risks for national security, with politics and ideology
topping the list, and he called for tighter control of young people and the internet.

China’s power structure lacks a way to counterbalance this trend. A few young hedge fund
managers told me over dinner in Hong Kong that the trade war with President Trump could be a
blessing in disguise because it might force Beijing to undertake structural reforms to reach a
deal. Only Mr. Trump can save China, it is often said at private gatherings, only half-jokingly.

“The trade war is a bad thing to begin with,” said Mr. Hu of Primavera Capital. “But if the final
resolutions lead to renewed efforts by China to undertake broad structural reforms, it will be a
win-win situation for the U.S., China and the world.”

The relationship between the business elite and the party wasn’t always like this. Some
businesspeople cheered Mr. Xi when he came to power, his anticorruption crackdown signaling
to them that he was building a rules-based society. But disillusioned executives told me that
tighter government control means more bureaucrats have a say in business matters, and
corruption simply takes different forms.
Can it be stopped? Some businesspeople are pessimistic. Mr. Chen, the real estate developer,
says the solution is to leave.

It’s impossible to say how many people agree. Even those who have left China may still run
businesses there, making them reluctant to speak out. Plus, the country still has many optimists
who say this rough patch won’t last.

But many of China’s rich have been voting with their feet. The number of Chinese people
moving to the United States on investor visas has surged in recent years. Of the one million
foreign students in the United States, one-third are from China.

Now 53, Mr. Chen decided in early 2013 that he had better start looking at places outside
mainland China. The trigger was a widely circulated party directive that urged an offensive
against liberal political ideas and values. “It was a very terrifying signal,” he said.

He first secured permanent resident status in Hong Kong, a special administrative region of
China, but concerns about its autonomy have grown since Beijing responded fiercely to pro-
democracy protests there in 2014. He applied for the investor visa to the United States, but the
wait time was too long.

He then bought more than a dozen apartments in the Malaysian capital, Kuala Lumpur, and
urged his relatives and close friends to do the same. He called it his Noah’s Ark plan, to prepare
for the destructive flood that China might experience. But his Malaysia visa was valid for only
10 years.

Mr. Chen said he had finally settled on Malta because it was warm, beautiful and a member of
the European Union, which meant he would be able to travel to other countries in the bloc.

For the entrepreneur class, he said, leaving China is the best way to resist Communist rule. Once
people leave, they will manage to take at least some assets with them despite the strict capital
controls the government has imposed in recent years. They can come back when the
circumstances change, Mr. Chen said, much like many overseas Chinese did in the 1980s and
’90s.

Mr. Chen is learning English and exploring his interest in religion. He still has some businesses
in China but doesn’t need to tend to them in person. He said he had never really considered
changing his citizenship because life was tough for first-generation immigrants. He only wanted
to find a safe place for his family, he said, to protect against a worst-case scenario that he
believes will materialize unless there’s a miracle.

“I didn’t expect my article would be circulated so widely,” he said. “For the time being, it might
be best that I stay out of China.”