As China squeezes its private sector, will more Chinese business tycoons quit?

NEW DELHI: Recently, when Zhang Yiming, the co-founder of ByteDance - the parent company of popular internet video brand TikTok announced that he will step down by the end of year, it no longer came as a shock. In fact, it simply sealed the apprehension of many entrepreneurs and the private sector in general, that it had fallen under the red hammer of the Chinese Communist Party (CCP).

Analysts India Narrative spoke to, said that the serial targeting of the Chinese tycoons could be just the beginning. "There may be many more — some that will hit headlines and some which may not," one of them said, adding that it is an all-important message from the Chinese government to the country's private businesses that they were being watched.

Zhang of Bytdance attributed his resignation to his personality traits, rather than blaming the authorities. "The truth is, I lack some of the skills that make an ideal manager. I'm more interested in analyzing organizational and market principles, and leveraging these theories to further reduce management work, rather than actually managing people. Similarly, I'm not very social, preferring solitary activities like being online, reading, listening to music and daydreaming about what may be possible," Zhang said in a statement.

A series of resignations of top bosses of Chinese tech companies has taken place since business tycoon and co-founder of Alibaba Group went underground last October. The clamp down on Ma and his companies shocked not just China's private sector but sent jitters the world over. The Chinese government appears to be on a path to stifle the curated private sector it had built.

"Ma's success story actually was a success story of China and how things in the country were changing from what they were decades ago..This incident however has shaken that ground and is also a sort of warning," the analyst said. Earlier, Colin Zheng Huang, the founder and former CEO of e-commerce platform Pinduoduo, stepped down to pursue research in food and life sciences.

In December, Wall Street Journal in an article said that Chinese President Xi Jinping, long distrustful of the private sector, is moving assertively to bring it to heel, notwithstanding an exceptionally vibrant role of the private sector in creating the maximum number of jobs.

"The problem with China is somewhat self-created. The private sector has been contributing to the Chinese economy while creating jobs but now it does not know how to handle its own private sector," Subhomoy Bhattacharjee, Senior Adjunct Fellow at RIS (Research and Information System for Developing Countries) told India Narrative.

While clamping down on "free-spirited" private entrepreneurs, the CCP appears to be engaged in its unique hybrid-model of the so-called private enterprise, which, at a strategic level is steered by the Party.

Unsurprisingly, The Wall Street article pointed out that the government has started "installing more Communist Party officials inside private firms, starving some of credit and demanding executives tailor their businesses to achieve state goals.

A Bloomberg report noted that "Xi's administration has tightened control over the hoard of information produced by the nation's tech companies as part of broader efforts to position China as a leader in big data." Not just that, Beijing has been pouring money into data centres and other digital infrastructure to make electronic information a national economic driver and help shore up the Communist Party's legitimacy, it said. (IANS)

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