Xi Jinping needs to bring Jack Ma back into the fold

China’s tech moguls have been walking on eggshells. Jack Ma, founder of Alibaba Group Holding Ltd. and the nation’s most prominent entrepreneur, disappeared from public view after delivering a speech on China’s state-dominated banking sector just over two years ago. His blunt criticism infuriated President Xi Jinping.
The fallout has been severe. Beijing abruptly pulled the $35 billion IPO of Ma’s fintech giant Ant Group days after that infamous speech; Alibaba was slapped with a record $2.8 billion anti-trust fine the next spring; and Ma’s investment firm is struggling to raise money because investors are afraid of potential political risks from backing him.
As such, at this week’s World Internet Conference, an annual event organized by Beijing to promote its vision of Internet governance, tech moguls will put their best faces forward. Last year, senior executives from Alibaba to Xiaomi Corp. pledged support for Xi’s “common prosperity” drive, vowing to boost small businesses on their platforms. No one wants to deliver another unscripted talk that can offend senior government officials.
But it is also good optics for Beijing to extend an olive branch to the tech industry. Two years of regulatory crackdown, endless Covid-Zero lockdowns, as well as confusing party slogans, have sapped China’s entrepreneurial spirit, just when Xi needs it the most.
China now has a human capital crisis. While Xi took pains to explain that common prosperity is not egalitarianism and that the government wanted a bigger economic pie for everyone, many are not buying this narrative. Aspiring entrepreneurs see the slogan as an excuse to take away their wealth as soon as their startups become successful. After all, the common prosperity drive was elevated amid tech crackdowns last year.
As an integral part of his new economic development model, Xi is keen to attract and foster scientists and engineers who can help the nation’s advance in industrial technologies. But the Biden administration is equally eager to halt China’s progress, recently deciding to restrict “US persons” from supporting the development or production of chips at some Chinese firms.
This has put quite a few semiconductor company founders — dubbed “sea turtles” as they returned to the mainland after many years of studying and working abroad — in an impossible spot: give up their Chinese startups or their US permanent residency. At a time when China seems to want people to achieve great deeds but accept peanut payouts, will they take the risk and abandon their return tickets to America?
Already, we see the animal spirit leaving China’s youth. Late last year, amid the tech crackdown, more than 2.1 million registered for the national civil service exam, competing for just over 31,000 jobs. That is about one-third increase from a year earlier. This year’s figure will likely be higher, as fresh college graduates seek the relative comfort and security of government positions.
This is why it is so important that Beijing starts to celebrate self-made billionaires again. It is Xi’s last chance to show his appreciation for entrepreneurship and signal that successful businessmen won’t be taken for granted and thrown under the bus once they help China reach its strategic goals.
Consumer tech, for one, has done tremendous good for society. Alibaba’s escrow payment system taught the Chinese to trust online transactions.

—Bloomberg