The Reasons Why Being A Chinese Billionaire Isn’t As Great As You Think!

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In most parts of the world, getting your name onto a rich list of a prominent publication is a desirable outcome of having made a hell of a lot of money. That’s not really how it works in China though, where this type of list is often referred to as a “sha zhu bang” which translates to “kill pigs list.”

Over the last decade and a half, China has produced more overall wealth than any other country in the world and the number of billionaires there has jumped from a measly 15 to a whopping 250 in just a 6-year time frame!

But according to an Atlantic article, life isn’t necessarily so great for China’s billionaires, as for many, the time they spent on such a rich list is often short-lived and according to one study as many of 17% of them end up in court or prison! Prison isn’t even the worst thing that can happen, some of these affluent folk can even end up getting executed!

In 1999 British businessman Rupert Hoogewerf introduced the first China Rich List as part of the Hurun Report – a magazine about wealth and the wealthy in China. Hoogewerf defends the list from accusations that it unwittingly targets China’s privileged – arguing that very few have run afoul of the law, but the latest Hurun Rich List seems to tell a different story.

As well as the legal problems that can arise, those on the Rich List have a different problem altogether – they seem to be getting poorer. Apparently just under 50% of the 1,000 richest people in the country have seen their wealth shrivel.

The Wall Street Journal’s John Bussey sees this as a direct consequence of their appearance on such a Rich List, he said:

“Very soon after [China’s wealthiest] make the list and get publicity, their share prices begin to decline. The companies themselves are more subject to government cutting off subsidies to them, and the individuals who lead them are more subject to investigation.”

Some argue that this dramatic rise and fall from wealth could be down to the type of business environment where personal connections and favors hold great power. Referred to as “guanxi” in Chinese, it means that many of the biggest tycoons in China have gotten where they are with little regard for rules and regulations. This type of cutthroat environment however, can work both ways…You can fall from grace just as easily as you soared up to it!

For example, Xu Ming, a billionaire who was once the 8th richest citizen in China, is currently detained and under investigation because of his connection to fallen Chongqing Mayor, Bo Xilai!
Several others on the Rich List are also facing charges of economic crimes, are in detention or have already been sentenced to serious jail time!

Despite the fact that arrests and investigation of this nature might suggest that China is beginning to take corruption seriously and doing something to combat it, several experts have noted that identifying who will face indictment is still a primarily arbitrary process.

Ruchir Sharma, head of emerging markets at Morgan Stanley Investment Management, is one industry expert who believes that the reason so many Chinese billionaires find themselves in trouble with the law is because of the government’s political and economic incentive to closely examine its wealthiest citizens and try to keep control of their earnings. He said;

“If a country is generating too many billionaires relative to the size of its economy, this concentration of wealth can lead to stagnation. Take China…turnover among its top billionaires is high, and few have ever amassed a fortune of more than $10 billion; indeed there is reason to believe Beijing is enforcing an unwritten rule that caps total wealth.”

Trying to cap wealth in this manner might seem like a good idea to some people, (especially if it was amassed illegally) however it does lead to another problem. This cap threat has caused many of the wealthy to try and disguise their fortunes and bury them underground. Indeed, the National Economic Research Institute estimated that China’s gray economy is worth as much as $1.47 trillion and is growing rapidly. This of course has a huge impact on inequality and at the moment less than 1% of the population is in control of approximately 70% of the country’s wealth.

About Sheniz Raif

I am, and think I have always been, a writer. I’ve been scribbling stories since I was old enough to hold a pen and thoroughly enjoy using my words to make people laugh or inspire them. I love going to gigs and am a professional groupie for a couple of awesome bands. I am an avid fan of socializing, football, film, and refusing to grow up! I’m also a proud member of the BODO UK team!