very serious. In many cases, local governments would only trust private enterprises that closely collaborated with state-owned firms or if these state-owned firms held a significant share in them. Many entrepreneurs had no other alternative but to follow this path. Government officials would play a leading role in investment firms, e.g. leading figures of the ‘State-owned Assets Supervision and Administration Commission’ (Guoziwei). The same interviewee emphasized, however, that these policies were not only a control instrument of the party state but also a measure to help major private enterprises improve their efficiency and their national and international competitiveness.71 In 2019, it was reported that private solar power and energy firms which faced a debt crisis in recent years were increasingly taken over by publicly subsidized state-owned companies (Chen and Kirton, 2019), for many entrepreneurs a further sign of the retreat of the private sector.72
In addition, promises by the leadership and reality frequently differ. Take, for instance, the case of entrepreneur Zhao Faqi who fought against the arbitrary cancellation of a government contract for coal exploration rights and therefore campaigned online and also turned to the courts for suing this government. Winning his case, celebrated as a hero among private entrepreneurs, and supported by many liberal economists and lawyers, he suddenly disappeared, probably after being arrested. Many entrepreneurs took this story as a litmus test for the legal system and the official claim that the Chinese leadership would support the private sector against predatory officials. The New York Times quoted Zhao a few weeks before his disappearance, saying that he faced a lot of risks and pressure because of this lawsuit, and that Chinese entrepreneurs would yearn for the rule of law to replace arbitrary power: ‘You can’t say someone is protected one day, and take away protection the next day.’73
A larger number of corporate scandals related to private enterprises in recent years have strongly affected trust in the party state’s private sector policies. Not a few entrepreneurs were held in criminal custody, some of them later released and rehabilitated due to wrongful verdicts. Such verdicts, an entrepreneur told us, might be motivated by increasing prejudices vis-á-vis private entrepreneurs, social discontent with the widening gap between rich and poor, and a sentiment in society that the wealth of most entrepreneurs originates from criminal behavior.74 Zhang Wenzhong, founder of the Wumart chain stores who had been held in prison for seven years due to a flawed prosecution and was released and rehabilitated in 2013 told the annual Yabuli China Entrepreneurs Forum in February 2018 that what had happened to him could happen to every entrepreneur in China at any time and that without the intervention of political leaders this unjust and mistaken judgement would have never been revoked. He urged that the legal rights of private entrepreneurs should be better protected.75 Cases such as Zhang’s have strongly undermined confidence in China’s private sector policies among private entrepreneurs. Many entrepreneurs do not buy recent official statements of the Chinese leadership in support of the private sector anymore, which have been made in relation to the China–US trade conflict or the overall importance of the private sector to stabilize and modernize the economy.76
Recently, Chen Tianyong, a (private) Chinese real estate developer in Shanghai, who left China in early 2019 and settled down in Malta, published an article on the social media explaining the reasons for his emigration. He argued that many entrepreneurs have lost confidence in China’s future, that the Chinese leadership has mismanaged the economy, and that the level of economic and political liberalization has decreased. He called upon his fellow entrepreneurs to leave China as soon as possible (Chen, 2019; Li Yuan, 2019). A recent survey by Hurun, a research institute located in Shanghai, seems to confirm Chen’s pessimism. According to this survey, only one-third of China’s rich people are very confident with regard to China’s economic prospects.77 If private entrepreneurs are indeed losing confidence in government policies, this will have negative effects on both private sector development and the strategic acting of private entrepreneurs.
The recent debate on private entrepreneurship in conjunction with the mixed signals sent by China’s leaders, who emphasize the importance of both the public and private sector while abstaining from clarifying their relationship in terms of consistent policy-making, has unsettled private entrepreneurs and may, over time, mean that the younger generation is far less willing to ‘jump into the sea’.78 The call of the party state for public–private mergers and for SOEs at all administrative levels to invest in private enterprises, combined with increasing debt ratios on the part of private companies facing discrimination within the current credit system (Wu and Fran, 2018), serves to reinforce the skepticism of many private entrepreneurs concerning their future in an evolving Chinese economy. Official encouragement of state enterprises to attract private investment is read by many as a state-sponsored takeover operation and not as a promise of new opportunities for gaining access to markets so far dominated by the state sector (Sun and Lin, 2018). The announcement of Alibaba’s charismatic Chairman Ma Yun in 2018 of withdrawing from his company and focusing on his charity foundation, and an increasing reideologization of state and society pushed by the current leadership have further fueled the concerns of private entrepreneurs that the political climate might gradually turn against them. Strategic action to defend their economic interests, the major topic of this book, might become more difficult in the coming years.
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