China’s government is making a high-profile effort to reassure private entrepreneurs of official support and protection, but the message comes at a time when tensions between the state and private entrepreneurs are running high.
China’s government has been making high-profile efforts to reassure private entrepreneurs of official support and protection, telling them they have a green light to start businesses, create jobs, and benefit society. However, this message is not new, and it points to a fundamental tension between the state and private entrepreneurs.
A private entrepreneur is an individual who starts and runs a business with their own resources, often relying on personal savings or investments.
Unlike publicly traded companies, private entrepreneurs retain ownership and control of the business.
They are responsible for making strategic decisions, managing finances, and driving growth.
Private entrepreneurs can operate in various sectors, from technology to retail, and may choose to remain private to maintain autonomy and flexibility.
The Return of Jack Ma: A Symbol of Rehabilitation
One of the most telling examples was the reappearance of Jack Ma, former CEO of Chinese e-commerce giant Alibaba. In 2020, Chinese regulatory authorities launched an anti-monopoly investigation into Alibaba and suspended the massive stock market listing of Ant Group, the company’s financial arm. This happened after Ma had made comments critical of China’s financial regulators.
Born in 1964 in Hangzhou, China, Jack Ma co-founded Alibaba Group in 1999.
Initially an online business-to-business platform, it grew into a global e-commerce empire.
Ma's entrepreneurial spirit and leadership skills led the company's initial public offering (IPO) in 2014, making him one of the richest people in the world.
He stepped down as executive chairman in 2013, but remains Alibaba's longest-serving leader.
Ma is also known for his philanthropic efforts, particularly through the Jack Ma Foundation, which focuses on education and entrepreneurship.
Ma moved to Japan, where he kept a low profile. But in February, he resurfaced at a high-profile meeting in Beijing, where China’s leader Xi Jinping hosted the nation’s top tech firm executives. ‘Those who get rich first should promote common prosperity,’ Xi told the CEOs. The general message and context were clear.
A Crackdown on Tycoons?
Analysts say the aims of the crackdown on tech firms and entrepreneurs appear to include breaking up monopolies, limiting income inequality, strengthening national security, and reminding executives who is boss. State media neither mentioned Ma’s name nor quoted any of his remarks back in February. And yet, just the image of Ma shaking hands with Xi Jinping at the Beijing meeting was enough to signal that Ma had been rehabilitated.
Regulators worldwide are increasing their oversight of tech companies, scrutinizing their business practices and data handling.
This trend is driven by concerns over antitrust issues, online safety, and the spread of misinformation.
Governments have launched investigations into major firms like Google, Amazon, Facebook, and Apple, examining their market dominance and potential monopolistic behaviors.
The European Union's General Data Protection Regulation (GDPR) has also raised the bar for data protection standards globally.
A Case of Wrongful Conviction
Besides Jack Ma, at least one other Chinese entrepreneur who fell afoul of the law hopes he’ll be rehabilitated too. Gu Chujun, then chairman and CEO of Greencool Technology Holdings Ltd., was born in a rural area of eastern China 66 years ago and rose to become one of China’s richest entrepreneurs around the turn of the century.
Gu was arrested in 2005 and convicted of embezzlement and fraud — charges he says were trumped up. He was sentenced to 10 years in jail but served only seven. In 2018, Xi Jinping met with business executives in a bid to reassure entrepreneurs of the government’s support and protection.
The following year, China’s Supreme Court cleared Gu of three out of four charges. But the court let stand one charge of misappropriation of funds, Gu says, so that law enforcement authorities wouldn’t be held accountable for wrongly prosecuting him.
A Tense Relationship
Huang Yasheng, an economist at MIT’s Sloan School of Management, notes that China has previously taken high-profile measures to reassure private entrepreneurs and boost the economy. As of the end of 2024, China had more than 55 million private enterprises. The private sector contributed more than half of the country’s tax revenue, 60% of national gross domestic product, and 80% of urban jobs.
However, Huang says that encouraging the private sector is not as easy today as it was in the past. ‘The situation today is entirely different.‘ Today, he notes, China has produced more than the world can consume, and the country is saddled with overcapacity and heavy debt.
And that situation is far less favorable now, he says, than the last time the government tried to reassure entrepreneurs in 2018. Whether Chinese entrepreneurs decide to start businesses or invest is not just about government policy. It’s also about the overall economic situation and whether people think they can make money.
A New Law?
China’s parliament considered a new law last month that would protect private businesses from officials who try to take their money. However, the law failed to pass this session of parliament.
Gu Chujun, who is suing local governments to get his assets back, notes that he refuses compensation worth $67,000 because it’s a tiny sum compared to his assets — which he wants back. For his company shares and 1,300 acres of land, Gu says he wants $6.8 billion.
Gu’s case is two decades old, and it remains uncertain that he will succeed.
