26 October 2016
From “a model for all Chinese” to “an untrustworthy profiteer” in the official discourse, Li Ka-shing has had a taste of Beijing's capriciousness. Photo: AFP
From “a model for all Chinese” to “an untrustworthy profiteer” in the official discourse, Li Ka-shing has had a taste of Beijing's capriciousness. Photo: AFP

When a tycoon is upended by politics

A series of scathing rebukes to Li Ka-shing by Chinese state media has raised eyebrows overseas.

One example is a report by Business Insider at the end of last month titled “China just publicly shamed the richest man in Hong Kong”. 

Liaowang Institution (瞭望智庫), a Xinhua-backed think tank, fired the first salvo against Li for unwinding some of his assets on the mainland, in an article headlined “Don’t let Li Ka-shing run away (別讓李嘉誠跑了)”.

Before long came an editorial in the paramount party mouthpiece, People’s Daily, saying Li could go if he wished, but “China’s concessions, opening up policies and its market are the foundations of his success”.

Later, well-known mainland financial commentator Wu Xiaobo (吳曉波) raised the temperature of the rhetoric, in a column on the website of Beijing-friendly Phoenix Television saying Li is now a “pitfall” and his public image has soured from “an inspirational embodiment of business acumen and shrewdness” to “a treacherous, immoral profiteer”.

The censure to which Li has been subjected is largely unfounded.

One plain truth is that, in a capitalist economy, the ultimate goal of any businessman is no more than, within legal boundaries, to maximize his profit and that of his shareholders — which is a far cry from how state-owned enterprises are supposed to operate in alignment with national policies.

Given this dichotomy between the two types of businesses, it is not hard to understand their different strategies — whether to leave, to stay, to reinvest or the opposite in the face of a changing economic climate.

Roughly, there are three types of arguments put forward by the mainland media: Li’s pullback is “immoral”, he is “unwise”, or the Chinese economy “no longer needs him”.

Labeling Li’s mainland business overhaul as “immoral” is the most capricious one, and the accusation makes no sense.

The prevailing logic is that Li raked in hefty profits from the mainland’s property market and port business, and, China was his savior, allowing him to get through the 1997-98 Asian financial crisis unscathed to become Hong Kong’s richest man, which he has been ever since.

Wu said in his article that throughout Li’s China adventures, he was also politically shrewd in “forming alliances with rising political powers” and “pandering to those in high places to get tremendous commercial interests in return”.

Well, that is the common modus operandi of almost all successful businessmen everywhere.

The fact is that most of Li’s landmark investments on the mainland were made in the early 1990s, when the Chinese economy was stuck in a US-led embargo in the wake of the Tiananmen massacre.

Li’s China forays back then were symbolic and pioneered the wave of foreign direct investment that subsequently gained momentum.

His role in this regard cannot be overstated.

That said, Li and other investors’ early investments in China had little to do with patriotism, as much of the capital they bet was “other people’s money” — funds raised mostly via the stock market.

By the same token, Li’s decision this time to shed his China assets has nothing to do with morality.

In the same editorial, the People’s Daily stressed that today’s China “enjoys fair and clear politics, transparent and upright legal enforcement, as well as an open and free market”, so the country boasts “a solid base to allow unrestricted capital flows even though the economy is experiencing a mild slowdown”.

It said that “those opting for a way out like Li will surely lose opportunities to ride on China’s sustained growth”.

Even if they have no tangible assets in China, it does not mean overseas investors cannot tap China’s growth — one way is through the stock market — let alone resourceful and nimble tycoons like Li.

Li is very Chinese — he doesn’t even have an English name.

With a broad vision and a remarkably globalized portfolio that spans a wide spectrum of industries, he is perhaps the only ethnic Chinese business guru genuinely admired and welcomed in many parts of the world.

In the past, whenever the top Chinese leader visited Hong Kong, Li would always be among the very few invited for one-on-one talks or dinners.

From “a model for all Chinese” to “an untrustworthy profiteer” in the official discourse — why has Beijing had such a drastic, callous shift in its attitude toward Li in just a few years?

The answer: at certain sensitive junctures, Li has become less docile in Beijing’s eyes and has to pay for it.

The universal wisdom of the business community anywhere is always to be on good terms with the government, and thus, once there is a vital political issue, local tycoons will automatically side with Beijing.

We saw this throughout the consultation on the 2017 election reform.

Li and other business leaders were summoned to Beijing and met President Xi Jinping after the Chinese legislature handed down its retrogressive ruling last year.

On several occasions after the trip, Li flagged his support for Beijing’s election reform proposal.

The reason Li has nonetheless been “publicly shamed” might be that, for one thing, his pullback and sale of mainland properties starting when Xi took office were equivalent to a vote of non-confidence.

For another, when Beijing mandated that Leung Chun-ying must be made Hong Kong’s top leader in the 2012 election, Li’s steadfast support of Henry Tang Ying-yen may also have been seen as an open revolt.

In the event, given all the lack of ability and moral blemishes Leung has displayed over the years since, Li’s insistence on Tang is evidence of his foresight.

All this shows how horrendous politics can be.

In my column, I have mentioned exiled Russian oligarch Mikhail Khodorkovsky several times.

He is a vivid example of perhaps everything a businessman should never do.

Khodorkovsky, a key stakeholder in energy conglomerate Yukos and a Communist leader turned billionaire, once tried to back an ally in the Russian presidential election but ended up being jailed by President Vladimir Putin on tax fraud charges.

In democratic societies, billionaires can run for the top post themselves, like what Donald Trump is doing right now in the United States, or donate to parties and politicians to exert their influence on national policies.

Sadly this can never be the case under an authoritarian regime, where all the wealth, as the official logic goes, is bestowed and permitted by the magnanimity of the top ruler.

Businessmen, no matter how rich they are, are menial and can only raise paeans to the authorities.

Once they want to have a say in politics, Khodorkovsky’s fate will soon be theirs.

This article appeared in the Hong Kong Economic Journal on Sept. 24.

Translation by Frank Chen

[Chinese version 中文版]

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Li has been an honored guest of many top Chinese leaders over the years, including President Xi Jinping. Photo: CCTV

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