In Asia, we started Wednesday wondering "Where's Jack?" and are ending the day saying "Goodbye Jiang."
The initial focus of the day was on Alibaba Group Holding ( (BABA) and HK:9988) figurehead Jack Ma, who reportedly has spent the last half-year living in Tokyo and journeying around Japan as well as the United States and Israel. Ma, who normally loves the limelight, has avoided attention for the last two years, so it is significant that China's most-famous entrepreneur has become an economic exile. More on Ma later ...
It was late-breaking news after the end of Asian trading that former Chinese President Jiang Zemin has died in Shanghai at the age of 96. It was Jiang, a surprisingly charismatic Chinese leader who sometimes would banter off the cuff in English, who spearheaded China's economic opening to the world.
Under Jiang's watch, China joined the World Trade Organization in 2001, making a series of not-always-kept promises to open industry to international players. During his 10 years as president through 2003, he also oversaw the 1997 handover of Hong Kong from Britain back to China, witnessed China's only participation at the soccer World Cup during the 2002 event in Japan and Korea, and celebrated the selection of Beijing as host city of the 2008 Summer Olympics.
It seems naïve now, but there was plenty of optimism outside China that the country's integration into global supply chains inevitably would lead to a social and political opening of the country, too. Current Chinese President Xi Jinping has spent the better part of his 10 years at the helm walking those advances back, expanding the Chinese state's methods of censorship, surveillance and oppression and wrestling ultimate authority back from the private sector and into Communist hands. Xi has instead championed "common prosperity" and a staunchly Marxist/Maoist approach to a command economy.
Jiang's death at such an advanced age is hardly surprising. He has looked increasingly frail during increasingly infrequent public appearances and did not appear at all at the once-in-five-years National Congress last month. The cause is "leukemia and multiple organ failure," according to the announcement from the central Chinese leadership. The statement expresses "profound grief to the whole Party, the entire military and the Chinese people of all ethnic groups" after all medical treatments failed for "our beloved Comrade Jiang Zemin."
Jiang's death, and a celebration of his life, surely will be seized upon by the Chinese Communist Party as a means of shifting the focus away from demonstrations against the party's harsh anti-Covid policies. I explained on Monday that protests occasionally have taken on a surprisingly vocal anti-government tinge. Still, it will be an uncomfortable shift for Xi. Jiang, a former mayor and Communist Party head of Shanghai, headed the "Shanghai clique" or "Jiang faction" within the party, one of the few counterbalances to Xi's almost total stranglehold on power.
While Jiang, who served two terms as Chinese leader, was absent from the October meeting that saw Xi elected to an unprecedented third term as general secretary of the Communist Party, it was significant that Jiang's successor Hu Jintao was forcibly removed from the meeting, as I outlined in greater detail last month. In the official account, it was to the benefit of Hu's health. But with Jiang unable to attend, it literally left Xi with no elder statesmen in attendance who could outrank or challenge him.
Economic change agent
An unheralded Jiang became general secretary unexpectedly in June 1989 as a compromise choice after the Tiananmen Square massacre, then became Chinese president in 1993. He advanced the process of economic opening initiated by Jiang's predecessor as Chinese leader, Deng Xiaoping. After Deng championed "socialism with Chinese characteristics," Jiang coined the concept of the "socialist market economy" as he took control. Jiang pushed China from a centrally planned economy fixated on stodgy five-year plans to a market economy guided by Communist Party technocrats. As he prepared to leave office, he delivered his theory of the "Three Represents" as his contribution to the pantheon of Chinese Communist Party thinking, a theory that was written into the party's constitution in 2002.
To be honest, I tried and failed to understand what the "Three Represents" represents, just as I've struggled to understand the underpinnings of "Xi Jinping Thought." Jiang was trying to explain how the party and the people should interact. The Chinese Communist Party must represent three things: China's advances in production; China's advances in culture; and the fundamental interests of the majority of the people.
There's no doubt that in practice China under Jiang became more market-driven. Chinese GDP tripled while he was president, to US$1.7 trillion, with growth at 10% when he stepped down. He may have helped lay the foundation for the sharp escalation in the size of the economy after that - China's GDP stands at US$17.7 trillion as of last year. It has gone from seventh in the world just above Canada when Jiang took the reins to second and 77% the size of the U.S. economy.
We'll hear more about Jiang's legacy in the days ahead. Above all, he'll be remembered for his quirky smirk and large glasses, and as the only Chinese leader known to be able to converse, even chit-chat, in English. When I attended the APEC summit in Shanghai in 2001, he gave an address where he asked for the audience's patience as he spoke for a while in Shanghainese, the local dialect. On other occasions, he broke into song, revealing a fondness for Hollywood movies and the Elvis tune "Love Me Tender."
It's hard to imagine President Xi joshing with a U.S. leader, as Jiang did with then-president Bill Clinton. Bizarrely, there have been rumors of Jiang's death since as far back as 2011. The era he represents certainly passed long before his now-confirmed demise.
And then there's Ma...
We had been gripped before word of Jiang's death broke with a report, initially in the Financial Times, that Jack Ma has been based in the Japanese capital for almost six months. Ma, who we hear has been traveling to onsen hot springs and mountain resorts in his spare time, clearly feels more at home based in Tokyo. In Japan, the Alibaba co-founder has close access to his friend, SoftBank Group (T:9984 and (SFTBY) ) founder Masayoshi Son, an early backer of Alibaba, but is also beyond the immediate reach of a Beijing administration that has taken a decidedly anti-business bent.
Jack Ma has been persona non grata ever since he drew the ire of China's top leaders with an October 2020 speech at a financial conference in Shanghai. In that address, he criticized the Chinese financial system as possessing a "pawnshop mentality" while financial regulators and the leadership of the big state-owned banks were in attendance. That led to Chinese President Xi Jinping personally intervening to prevent the pre-approved listing of the Alibaba fintech spinoff Ant Group two days before what would have been the world's biggest-ever public stock offering.
Ma had already stepped down from official executive roles at Alibaba and dropped off the radar after that. It initially seemed that Xi and financial regulators were specifically angered by Ma. Communist officials occasionally had to debrief the Alibaba exec after he traveled to events such as the World Economic Forum in Davos, where he would hobnob with heads of state. But the attack on Ma and Alibaba progressed throughout 2021, and it gradually became clear that Big Tech and the "disorderly expansion of capital" in the private sector were all in Xi's firing line. Ma was only the very prominent start.
Ma vanished for three months after the Ant listing debacle, popping up only in January 2021 at a rural school in China, when no pupils were present. He was spotted from time to time in Hong Kong, where he has a home, and then on his first overseas excursion, taking his first trip aboard his mega-yacht Zen in Spain and playing golf while on an environment-focused "agriculture and technology study tour."
Ma has kept a low profile living with his family in Tokyo, frequenting private members' clubs in the ritzy districts of Ginza and Marunouchi, according to the Financial Times, which is now owned by Nikkei Inc. Ma has taken his personal chef and security detail to Tokyo, the report states, citing unidentified sources familiar with Ma's movements. The report says he has been mixing business with pleasure, has made regular visits to the United States, and has become an enthusiastic collector of modern art.
The Ant Group listing may now come full circle. The People's Bank of China is readying to fine Ant more than US$1 billion, Reuters reported last week, which could help end its two-year regulatory overhaul. That could help it progress to licensing as a financial holding company and potentially to revisit a public stock offering.
Alibaba itself was hit in April 2021 with a record US$2.8 billion fine, as I outlined then. The fine, calculated as 4% of Alibaba's business in China, led to a jump in Alibaba shares as it ended the state's investigation into monopolistic and anticompetitive behavior. Entrepreneurs, though, still aren't sure China under Xi is ready to welcome them back into the fold. They're certainly not the heroes of the "China dream" that they became in a very different era under Jiang.
