Saturday, February 28, 2009

Tycoons tumble as ailing China turns against capitalism

How the dream has gone sour for those who got rich on the back of political patronage - then lost it

THE richest man in China has ended up in police custody and other “red billionaires” have plunged into debt or political disgrace as the communist nation’s flirtation with capitalism turns sour.

Meanwhile, millions of ordinary Chinese have lost their shirts in the stock market after share prices collapsed, and at least 20m workers have lost their jobs due to the recession.

In this atmosphere, the plight of Huang Guangyu, 39, has won little public sympathy. He is still languishing in detention after three months, while investigators probe allegations of bribery and irregular share trading.

Huang was a peasant’s son who built up a successful electrical appliance chain until it had 800 stores and he had shares worth £2 billion.

On paper, he lived out the line that “to get rich is glorious”, a slogan that seduced foreign investors to pour billions into China, persuading themselves that it was not really a socialist dictatorship.

Business magazines wrote profiles lauding Huang as the paramount genius among China’s 391,000 dollar-millionaires. As usual in China, Huang’s ascent and his downfall seem to have coincided with influence wielded by powerful men inside the government bureaucracy.

“There’s a grey area between planned economy and market economy, in which government officials wield power and businessmen bribe them,” said Professor Liu Xue of Beijing University in the China Youth Daily.

Last November, Huang, his wife, and their chief financial officer disappeared into the grey zone that awaits those who lose their high-level protection – a world without lawyers, court hearings or constitutional rights. Huang’s net worth has crumbled. While he sits in detention, lawyers and accountants in Hong Kong try to save the company, whose shares remain.............

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