The Washington PostDemocracy Dies in Darkness

Why are China’s tech leaders still disappearing if the crackdown is over?

Bao Fan, founder, chairman and CEO of China Renaissance Group, an investment bank, at a news conference in Hong Kong in 2018. (Bobby Yip/Reuters)

China’s legendary tech dealmaker Bao Fan hasn’t been seen for almost three weeks. Stock prices have plunged for his investment bank China Renaissance, once known for brokering the country’s biggest tech mergers, and all the company has said is that Bao is “assisting the government of the People’s Republic of China with an investigation.”

Another titan of China’s tech world, Alibaba founder Jack Ma, was spotted days ago in Melbourne, Australia. While keeping a low profile since regulators put the brakes on his planned record-breaking IPO after he criticized them publicly, Ma also has turned up in Spain and Japan.

Bao and Ma aren’t the only tech leaders in China who have vanished from public view seemingly at the peak of their influence.

Many of the country’s top business executives and influencers — bankers, property developers, movie stars like Fan Bingbing and e-commerce superseller Austin Li — have gone missing without explanation as their power and influence have grown. Some were later hit with fines and accused of offenses like tax evasion or fraud.

Once China’s darling, tech industry is burdened by covid and crackdowns

Despite President Xi Jinping’s stated goal to boost the economy after a stifling three years under the strict “zero-covid” policy, China’s tech entrepreneurs and business leaders continue to find themselves under the microscope.

Officials have said that the crackdown on the tech industry, which saw a flurry of regulations torpedo the influence of companies from gaming to online education, has ended.

But Bao’s disappearance — the latest evidence of the government’s willingness to rein in even the most powerful executives — has shaken investor confidence and undermined Beijing’s insistence that it supports the private sector.

Observers warn that Bao’s disappearance is a sign of the intensive reshuffling expected at China’s annual political meeting known as the Two Sessions set to begin on Saturday.

“Bao Fan is just the latest prominent victim of Xi’s assertion of totalitarian control through continuous purges,” said Feng Chongyi, associate professor of China studies at the University of Technology in Sydney.

The threat that they could be next is intended to ensure the business community is willing to comply with government directives, no matter the cost, Feng said. “Creating an atmosphere of walking on eggshells — that is a means of total control.”

Here is more about why China’s business and tech community is still uneasy.

Chinese leader Xi embarks on ‘intensive’ overhaul as he cements power

Why is Bao Fan missing?

Bao isn’t the only China Renaissance executive to vanish under mysterious circumstances.

The problems for China Renaissance started when the investment bank’s former president, Cong Lin, disappeared in September amid accusations that a China Renaissance subsidiary had violated securities laws, according to Chinese business publication Caixin. That investigation has now engulfed Bao too, reports Reuters.

China Renaissance has not publicly acknowledged Cong’s disappearance and did not respond to a request for comment before publication.

What do we know about Bao himself?

Bao founded China Renaissance in 2005 by betting on a new class of tech entrepreneurs in China — well before global investors were willing to take a chance on them.

After an early career with Morgan Stanley and Credit Suisse, Bao saw his influence through China Renaissance skyrocket along with the tech boom. He became a mainstay of the tech scene that grew up in Hangzhou, the storied playground of billion-dollar start-ups and venture investors that birthed giants like Alibaba.

Bao brokered the deals behind the country’s biggest firms, like the merger of restaurant review site Dianping and food delivery company Meituan. He reportedly sealed the companies’ merger by locking both sides in a Beijing hotel room for a day.

Bao defied the idea that China’s most powerful companies were only out to imitate their Western counterparts, insisting they were doing something new.

“Some people say that China Renaissance wants to be China’s Goldman Sachs,” Bao, whose net worth reportedly peaked at an estimated $1.7 billion, said in a 2016 interview with GQ China. “Is Baidu going to be the next Google today? No. Does Xiaomi want to be China’s Apple? No,” Bao told GQ. “A truly great company is defined by itself, not by others.”

Which other executives have disappeared?

Li Hejun became the richest person in China in 2015 after his solar cell firm Hanergy’s blockbuster Hong Kong IPO. But later that year, Hanergy’s shares took a record dive, and in 2019 it was delisted from the Hong Kong Stock Exchange.

In January, the company disclosed it had lost touch with Li. Local media later reported that Li had been since December assisting authorities with an investigation into one of the banks that had funded the IPO.

Mi Chunlei, president of Lanhai Medical Investment, made his fortune during Shanghai’s construction boom in the 1990s, married celebrity CCTV host Dong Qing, and by 2021 was estimated to be worth about $1.5 billion.

Last year Mi vanished for five months. Chinese media later attributed his disappearance to the investigation of a controversial trust fund.

Alibaba’s Jack Ma reemerges from three-month absence after clash with Beijing

The list goes on. Property developer Seazen said in February that it hadn’t been able to get in touch with co-president Qu Dejun since January. Car parts maker SG Automotive Group reported in September it had been unable to contact executive Zhang Xiugen for several weeks. In late 2021, property magnate Wang Chaoyong was out of touch with his private equity firm, Chinaequity Investment, for more than three weeks.

Even Guo Guangchang, once described as “China’s Warren Buffett” couldn’t escape the scrutiny.

Guo, once China’s richest person, founded one of the country’s biggest conglomerates, Fosun International. In 2015 Guo disappeared briefly, plunging Shanghai’s international business community into turmoil.

Investors still haven’t shaken off the shock. Although Guo showed up three days later at Fosun’s annual meeting without mentioning his absence, the firm’s stock has repeatedly slumped in the years since at the slightest rumor that he hasn’t been in touch.

Given this history, Jack Ma isn’t the only tech billionaire lying low outside of China. ByteDance founder Zhang Yiming, who holds a 98 percent stake in TikTok’s Chinese counterpart, Douyin, has been largely based in Singapore since handing the role of CEO of the world’s most valuable start-up to Shou Zi Chew.

What’s the outlook for China’s business sector?

Bao’s disappearance comes just as China’s annual parliamentary meeting is set to kick off.

Ahead of the meeting, Xi has signaled an intensive overhaul of the country’s financial regulatory system and there are also expectations of major industrial reforms.

The timing isn’t a coincidence, but a signal of the coming crackdown on the financial sector, Frank Tian Xie, ​​a professor at the Aiken School of Business at the University of South Carolina, told Radio Free Asia.

Xi is expected to announce China’s largest leadership change in over a decade as the country faces its slowest economic growth levels since the 1970s. Xi has said the changes are necessary to weather the “high winds and choppy waters” that China faces.

“Xi believes he has achieved absolute control over the military and the security apparatus,” said Feng Chongyi, an associate professor at the University of Technology in Sydney. “Now it is time to get the financial sector under complete control.”

Lyric Li in Seoul contributed to this report.