With China recently launching a crackdown on big technology companies, an Australian-based journalist has said that Beijing's action to restrict "excessively high" incomes and coerce the wealthy to "donate" their wealth for the common good, will impact entrepreneurial activity, wealth creation and productivity in critical sectors.
In an opinion piece in The Age, Stephen Bartholomeusz, co-founder and associate editor of the Business Spectator website, said the crackdown on China's big technology companies earlier this year is morphing into a far more substantial shift in China's economic model.
"From the late 1970s China has pursued Deng Xiaoping's roadmap to achieving Mao Zedong's goal of "common prosperity," or an egalitarian socialist economy. Deng had a trickle-down view of how that goal could be achieved," he writes.
China's entrepreneurs, particularly its tech titans, have been put on notice since Alibaba co-founder and former CEO Jack Ma ran afoul of the country's leadership late last year and the government unleashed a torrent of regulatory actions and directives aimed at containing their growing might.
Moreover, continuous messaging from state media since Chinese President Xi Jinping visited a museum in late 2020 signalled that China's billionaires should fall into line.
Bartholomeusz asserts that Jack Ma's public display of hubris, independence and disdain for the authorities didn't go down well.
"It is unclear what the spark was for this year's frenzy of actions to rein in the big tech companies and the billionaires who created them, although the start of the rolling assault came after Alibaba's Jack Ma made some derisive public comments about China's financial system, its regulation and the big state-owned banks within it last year," the journalist noted.
He says that the planned $US37 billion ($51.3 billion) float of his Ant Group was called off two days before its launch, the previously very visible Ma disappeared from public view and has rarely been sighted since and the Chinese authorities began a series of quite dramatic changes to the regulation of the big tech companies.
"The risk for China, of course, is that restricting 'excessively high' incomes, coercing the wealthy to donate their wealth for the common good and enmeshing their most successful entrepreneurial companies in regulatory nets could impact entrepreneurial activity, wealth creation and productivity in sectors that are critical to China's ambition of dominating this century's key technologies," he concludes.
( With inputs from ANI )
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