By Scott Cendrowski
February 6, 2017

Ten days ago, Chinese authorities took a Chinese investor estimated to be worth $6 billion from his apartment in Hong Kong’s Four Seasons Hotel and moved him across the border to mainland China, according to multiple reports. For almost a week, during China’s weeklong holiday celebrating the Lunar New Year, no news followed. It now appears, as watchers have speculated, that the investor—Xiao Jianhua—was caught up in China President Xi Jinping’s anti-corruption campaign, possibly related to China’s stock market plunge in 2015.

Xiao was a politically connected businessman, loyal to the Communist Party since the Tiananmen Square killings (in the U.S., his disappearance would be like police whisking away a major hedge fund trader such as Steve Cohen or David Tepper). He became a billionaire several times over running Tomorrow Group, according to researcher Hurun, investing in China insurer Ping An, raw materials companies in China’s north, and several other industries.

In a statement late last week, his company said there was nothing to worry about. “Production and operations of Tomorrow Holding Ltd and its related companies are all normal,” it read.

That statement did not seem to convince investors. As of Monday, Xiao still hadn’t reappeared, and shares of the companies he controls plunged. According to an interview he gave in 2013, he owns large stakes in Xishui Strong Year Co Ltd Inner Mongolia, a cement maker, whose stock is down 14% since Friday. Baotou Tomorrow Technology, a producer of raw materials, is down 10%. Baotou Huazi Industry, a commodities manufacturer, is down 13%.

Xiao’s disappearance reflects poorly on Hong Kong’s autonomy, as its arrangement with China was that no Chinese authorities would operate in the city. Nor do such episodes move China closer to Xi’s goal of governance under the rule of law, instead adding a further layer of unpredictability. Over the past couple years, other billionaires have gone missing in China under Xi’s campaign to root out corruption. But the disappearances don’t always imply guilt, as it didn’t when “China’s Warren Buffett” vanished before reappearing in late 2015.

But for all its unknowns, Xiao’s does send one clear message: Those businesspeople who fled to Hong Kong to avoid unpredictable Chinese law enforcement must realize they don’t have the protection they once thought.

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