At the annual meeting of the National People’s Congress that begins Saturday, one group clearly stands out – the 114 of the nearly 3,000 delegates of the National People’s Congress (NPC) that are on the Hurun list of richest Chinese. China’s richest people account for close to 4% of the members of the body that officially acts as China’s national legislature. This high level of representation is at least somewhat ironic in a nation that still follows Communist doctrine.
But in a departure from the past, China’s most successful — and obviously well connected — private entrepreneurs aren’t just there for the prestige or to show off. They want to influence policymaking.
As things stand, for the first time in the history of the People’s Republic, private entrepreneurs are actively involved in the preparation of a five-year plan. That is a remarkable vote of confidence by the country’s leadership in the importance of the private sector — and at the same time an important admission on the part of the government. The basic message is this: We need you because you have a head start!
This is an important development, even though Xi Jinping’s core focus in his reform policies clearly rests on strengthening increasingly feeble state owned enterprises, giving them preferred access to capital and urging them to undertake mega-mergers.
However, the privately owned companies operating in China’s advanced services and technology sectors realize that their hand has been strengthened greatly. They know that they are China’s main engines of growth in a period of economic transition, which gives them considerable power.
Consider the case of the founder of the IT company Tencent, Pony Ma, who has an estimated fortune of $18.8 billion. Ahead of last year’s annual meeting of the National People’s Congress, the 44-year-old wrote an open letter demanding a national strategy for China to advance the digitization of the economy. A few days later, Prime Minister Li Keqiang, as part of his report on the government’s plans and activities, announced the launch of an “Internet Plus” strategy.
Insiders immediately realized who had coined that term. It was none other than Pony Ma, who had started to use that phrase beginning in 2013, based on the concepts developed by his company’s own research institute. Even though Ma is not a member of the CPC, the “paternity” of the “Internet Plus” is undeniable. Officially, of course, his company denied any involvement in the government report.
When the National People’s Congress will pass the new five-year plan in the upcoming session, it will likely also feature the recommendations of Jack Ma’s private think tank, Ali Research, to promote Big Data as an important source of economic growth. Jack Ma, 52, is the second richest Chinese and head of the Internet company Alibaba (BABA). As is the case with Tencent, he established a private think tank, in 2007, to develop relevant policy recommendations.
While both of these think tanks were primarily established to deal with issues of Internet governance and legislation on issues of the Internet, their activities also much include broader matters of economic and industrial policy. Other entrepreneurs have been following in the two Mas footsteps. Lei Jun, the 46-year-old founder of Xiaomi, the successful smartphone maker, recently advocated for a revision of China’s Company Law.
Meanwhile, the 47-year-old multi-billionaire Robin Li turn, CEO of Baidu, the web services company, is suggesting the creation of a national platform for artificial intelligence research to the National People’s Congress. And Fosun, the largest privately owned conglomerate and investment company in China, presented a national development strategy for healthcare in advance of this year’s NPC session.
To date, Chinese private entrepreneurs are not an autonomously organized group that challenges the primacy of China’s Communist Party. But they are nevertheless gaining considerable influence. Their technological know-how is very much in demand, as are their state-of-the-art business models and strategies. This provides them with a lot of clout vis-à-vis the government and Communist Party policymakers in general. Not least for that reason, the number of private research institutes has continued to rise ever since Xi Jinping took office. Although these new outfits have less direct access to decision makers than pro-government think tanks, they are much better equipped financially and also better connected globally.
Reflecting the top entrepreneurs’ rise in the Chinese political landscape, President Xi Jinping increasingly takes them along on his trips abroad, both to showcase their (and hence China’s) success and to provide these private entrepreneurs with more global growth opportunities.
Xi is keenly aware that these top companies’ and entrepreneurs’ continued success at home and abroad will be a critical factor in determining whether or not the economic transformation strategy which the leadership has launched will succeed.
Many IT entrepreneurs also appreciate their government’s political support for global expansion. The Communist Party “China Dream” evidently also includes more internationally successful company modeled after Alibaba.
How far will this process of mutual enchantment between the CPC leadership and the Internet entrepreneurs go? Alibaba founder Jack Ma probably put it best, when he said at the World Economic Forum in Davos in 2015: “We want to enchant the government, but we don’t want to marry it.”
Matthias Stepan is head of Chinese Domestic Politics Program at the Mercator Institute for China Studies (MERICS) in Berlin, Germany. Lea Shih is a research associate at MERICS.