Tech entrepreneurs replace real estate tycoons as political advisers in China’s push for IT edge
Almost every new face among the 2,158 delegates debuting as advisers in the Chinese People’s Political Consultative Conference hails from a technology firm
Technology entrepreneurs are having a stronger presence in China’s political scene like never before, underscoring the ambitious programme by the government of the world’s second-largest economy to gain an edge in every technological field from artificial intelligence to big data and robotics.
Almost every new face making their debut as advisers representing the business sector of the Chinese People’s Political Consultative Conference, as the 2,158-member advisory body in the bicameral legislature is called, hails from a technology company. They are supplanting property tycoons, senior cadres of state-owned industries and princelings - as the children of revolutionaries who helped the Communist Party gain power in 1949 are called.
“The move reflects the party’s commitment to economic transformation based on industrial upgrading and technological innovation,” said Sun Xin, lecturer in Chinese and East Asian business at the King’s College in London. “Traditional sectors such as real estate and energy are often deemed to be closely associated with corruption. With the party’s anti-corruption effort still running strong, there’s less enthusiasm about nominating new candidates from the related sectors.”
There’s Richard Liu Qiangdong, founder and chairman of one of China’s largest e-commerce operators JD.com, nominated for the first time to represent the industrial and commerce alliance. There’s also Ding Lei, founder and chairman of the country’s second-largest mobile game publisher NetEase, selected to represent the news and publishing industry. Zhou Hongyi, whose wealth just surged by an estimated US$12 billion after transferring the listing of his cybersecurity business Qihoo 360 from the New York exchange to Shanghai, is representing the Jiushan Society, one of China’s eight legally recognised political parties, dominated by the Communist Party.
Another new face is Neil Shen, one of the founding partners at Sequoia China, a venture capitalist whose early investments in such companies as Alibaba Group Holdings helped define the country’s boom in internet-related businesses. Pony Ma Huateng, founder and chairman of gaming and social network operator Tencent - with almost 1 billion users on his WeChat network and 200 million people playing his Honour of Kings mobile game - is a delegate representing Guangdong province in southern China.
Technology is already a major contributor to China’s economy, underscored by the dominance of internet-based businesses and online advertising. China accounts for US$1 out of every US$4 dollar generated globally across application stores, according to analytics company AppAnnie, with Chinese app users spending more than 200 billion hours in apps in the fourth quarter of 2017, more than 4.5 times more than the next largest market India, and way ahead of the US in third place.
“China is picking five to 10 private technology companies to make them national champions, while also giving them the roles that were formerly assigned to state companies, including the collection of information, big data sharing, and censorship,” said Shaun Rein, the managing director of Shanghai-based market intelligence company China Market Research and author of The War for China’s Wallet: Profiting from the New World Order.
More than 20 property tycoons have dropped out as delegates to China’s legislative and consultative conference this year.
Among them are Hu Baosen, chairman of construction firm Jianye Group, Longfor Properties’ chairman Wu Yajun, Yuexiu Group’s chairman Zhang Zhaoxing, New World Development’s chairman Henry Cheng Kar-shun, Shui On Group’s chairman Henry Lo Hong-sui, and Fosun Group’s chairman Guo Guangchang, whose conglomerate includes a property business.
Slashing the number of developers offers a clear signal of the government’s opposition to real estate speculation, and a nod to Chinese President Xi Jinping’s instruction last October for property to be “for living, not for speculation,” said Beijing-based independent economist Hu Xingdou.
“If more property tycoons arise, that means China’s economy is out of shape,” Hu said. “Fewer people will be willing to contribute to the real economy and national industries.The real estate sector is also a hotbed for corruption because it’s connected to hundreds of government approvals.”
Still, real estate tycoon Hui Ka Yan, or Xu Jiayin as the chairman of Guangzhou-based developer Evergrande Group is known in mainland China, managed to remain among delegates thronging the Chinese capital this weekend.
His Evergrande group has spent about 11 billion yuan (US$1.7 billion) in the past two years on poverty reduction in Bijie, a city in one of the country’s poorest provinces of Guizhou, with a pledge to help lift 1 million residents of the backwater above the poverty line.
For private technopreneurs, joining the elite political club is a sure way of getting on the fast track to self promotion, said Yu Jie, head of China foresight at LSE Ideas.
“Most private entrepreneurs have learnt that the party controls everything,” said Yu. “The party seeks to be more inclusive and to modernise itself with more forward-looking private and self-made entrepreneurs.”
However, the status of state-owned enterprises (SOEs) has not been completely eclipsed by private entrepreneurs or technopreneurs during the Two Sessions, as the legislative meetings are called, both Yu and Sun said.
“Most central SOE leaders are still members, or delegates that are to attend the Two Sessions, let alone the dozens who were elected as alternate members to the party’s Central Committee last year, which means the representation of the state sector relative to the private sector has not changed much,” Sun said.
Additional reporting by Amanda Lee and Sarah Dai in Beijing