21 October 2016
Li Ka-shing has sold a large office tower in Shanghai (right) and is rumored to be unwinding his property assets in Beijing (left) to marshal his capital to Europe. Photos: Sina, Baycrest, Bloomberg
Li Ka-shing has sold a large office tower in Shanghai (right) and is rumored to be unwinding his property assets in Beijing (left) to marshal his capital to Europe. Photos: Sina, Baycrest, Bloomberg

Beijing emerges badly from its censure of tycoon

You can’t ignore Li Ka-shing’s influence in China, just as you can’t escape his business empire’s almost ubiquitous presence here in Hong Kong.

Many landmarks on the mainland showcase the tycoon’s businesses. Li owns Beijing’s Oriental Plaza (東方廣場), an 800,000-square-meter flagship property that sits along the Chang’an Avenue and is just a few hundred meters away from Tiananmen Square and Zhongnanhai.

Among his many property assets in Shanghai is a sleek 35-storey office tower named Oriental Financial Center (東方匯經中心), located in the very heart of the city’s bustling Lujiazui central business district.

News about Li’s sale of the property made headlines two years ago, which was a prelude to his move to overhaul and shed his portfolio in China.

Now his latest property on sale is the Century Link Mall (世紀匯) and an adjacent office tower, currently under construction in Lujiazui, worth a combined 20 billion yuan (US$3.13 billion).

Rumor has it that Li is also considering unwinding assets in Beijing, including the Oriental Plaza.

Many marvel at his foresight to brace for a downturn at a time when the mainland economy was still humming. 

But, obviously, Beijing is very much bothered by his pullback.

The first official response was made at the start of the year by Global Times, a sister publication of the Communist Party mouthpiece People’s Daily.

It noted in an editorial that compared to the size of the Chinese economy, Li’s investment on the mainland is “a drop in the bucket”.

That rhetoric didn’t cause too many ripples half a year ago, as back then many, including Beijing itself, remained upbeat about the economy despite emerging signs of slackening growth. They viewed Li’s move as a standalone case.

However, the speed and scale of China’s slowdown, worse than expected, apparently made officials a bit testier, especially when they realized that capital, either foreign or domestic, is seeking a way out.

JPMorgan Chase estimated in July that China has lost all of its net foreign direct investment since 2011, US$520 billion in total, with the aggregate capital outflow in the past five quarters.

Understandably, some senior cadres in Zhongnanhai were very concerned. They needed to single out someone to vent their spleen.

A string of hawkish commentators made the opening salvos. Earlier this month, the Liaowang Institution (瞭望智庫), a Xinhua-backed think tank, carried on its website a 5,000-character article with a headline “Don’t let Li Ka-shing run away (別讓李嘉誠跑了)”.

Interestingly, its writer is said to be with the State-owned Assets Supervision and Administration Commission and was a former senior researcher at the Cheung Kong Graduate School of Business, which was established with major donations from Li’s eponymous charitable entity, the Li Ka Shing Foundation.

The article basically asks the question: How could Li fly the coop while the Chinese economy is facing some challenges, considering all the goodwill and concessions he has received from mainland authorities over the decades?

It views the tycoon’s move as “immoral at such a sensitive juncture”.

Meanwhile, the article has been shared numerous times by other media outlets and on social platforms with netizens joining in the chorus of condemnation of the tycoon’s move. And censors apparently had been told not to touch them.

As some observers believe, Xinhua wouldn’t have dared run the article without a nod from the top propaganda officials.

The article has gone so far as to suggest that Li’s lucrative property business in China is “not purely a commercial success” as making it in the nation’s realty sector “needs a blessing” from those in high places, so investors “cannot just leave whenever they like”.

Had it not been for Beijing’s support, the article goes on, Li wouldn’t have been able to make his many achievements today and thus such a pullback can be “an act of ingratitude”.

Security Times, also under the People’s Daily umbrella, notes that Li has cashed out 73.8 billion yuan worth of assets since 2014 and such an estimate is “on the conservative side”.

Famed China studies scholar Hu Xingdou (胡星斗) told Voice of America that some senior officials were trying to label Li’s business decisions as “treasonous”.

Such thinking, reminiscent of the Cultural Revolution, is now spreading within the ruling party.

But the fact is Li has been piling up investments in more transparent markets with level playing fields like western European nations. So it is simply ridiculous for the column writer to insinuate that Li has been colluding with government officials to make money.

The only outcome of such a capricious, unfounded rebuke is that the confidence of foreign investors and overseas Chinese is further weakened: when even Li can be subjected to such a harsh media siege, who else in the business community will feel safe and be allowed to leave unscathed?

It took Beijing weeks to realize that it had carried the demolition job against Li a bit too far.

Then, People’s Daily, Beijing Youth Daily and China Business News, among other official publications, all came out with editorials calling on everyone not to interpret Li’s moves from a judgmental, political point of view. Apparently, they have been told to downplay the issue. 

People’s Daily says capital flow should not be obstructed and one needs to view the issue from a broader, more confident perspective.

It goes on to say that “Li and other investors will come back as long as China still presents opportunities”.

So far those words are the most benign about Li from the party mouthpieces.

Xinhua has changed its tone as well, saying Li’s European forays are conducive to Beijing’s “one belt, one road” strategy.

Local commentator Johnny Lau Yui-siu urges Beijing to learn its lessons from the harsh way it handled the matter.

He noted that Li, whose assets have been diversified and spread across the globe, won’t be affected much, but other investors, already dreadful of China’s elusive, unpredictable political environment, may now be thinking twice about entering or expanding in the market.

That certainly is not good news for Beijing.

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EJ Insight writer

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