A Chinese Billionaire
Several mysteries surrounded the career of Rong Yiren. One was how he could have been vice-chairman of the 5th National Committee of the Chinese People’s Political Consultative Conference and of the standing committee of the 6th and 7th National People’s Congress, as well as vice-president of the People’s Republic, without ever (to anyone’s certain knowledge) joining the Communist Party. Another was how, despite ceding many of his family’s business holdings after the 1949 revolution, and losing the rest during the Cultural Revolution of 1966–76, he emerged within a decade as one of the 50 most charismatic businessmen in the world, by Fortune’s reckoning, and by 1999, by Forbes’, as China’s richest.
The answer to both these mysteries is that he played a very clever and very Chinese game. First, when most of his family, including his brothers, fled from China to Taiwan or the United States after 1949, Mr Rong stayed. He had 24 flour mills to run, besides dyeing, printing and textile factories, employing in all some 80,000 people; his family’s business empire, started in 1902, had been among the biggest in the country.
The decision not to flee was brave, and made him nervous: he was “like an ant on a hot pan”, he said later, but stayed calm in front of the workforce. He also presented himself, from the first, as one of those “national” or “patriotic” capitalists who had remained not to enrich himself, but to help China and its poverty. His dogged conviction that his country would eventually find capitalism necessary was to be proved right in spades.
Mr Rong’s communism was subtle. He supported the Communists, he admitted, with only “one hand” at first. But when he realised that this would not do, he raised two, with implicit conditions. If he gave the party what it wanted, he would try to make sure the favour was returned. After 1956, when he handed over large stakes in his family’s businesses to the government, he was given 30m Yuan (\12$m) in compensation, as well as the posts of vice-mayor of Shanghai and, in 1959, viceminister for the textile industry.
Having gained political ties from canny surrenders, Mr Rong made sure he used them. Guanxi, or personal connections, the grease of all commerce and politics in China, helped him to survive the Cultural Revolution, more or less. Though his companies were confiscated, his mansions ransacked, and he himself reduced to menial work, top members of the party shielded him from further terrors.
In 1978, all the years of careful positioning bore fruit. Deng Xiaoping decided that China would experiment with capitalism, opening windows to the world, and brought in Mr Rong to find “boldly creative” ways of doing so. He could have picked no better one: urbane, beautifully turned out, educated under the British system at St John’s University in Shanghai, a man impeccably loyal to China and to Deng, but also a raging capitalist to his very marrow.
Mr Rong, now in his dream job, did not have to look far to find versions of capitalism he liked. In 1979, at the party’s behest, he founded CITIC, ostensibly as the investment arm of the Chinese state but also, in effect, his own company. From its very beginnings it was in clover, a statelicensed predator in a land empty of private rivals. Telecoms, utilities and highways were swept up. When Deng in the 1980s set up the Special Economic Zones in southern China, where capitalist forays were permitted, CITIC was first there to exploit the property boom. Mr Rong, roving extensively, found foreign concerns for China to invest in, and foreign investors were in turn lured back to China. Mr Rong’s conglomerate soon boasted global assets of more than 51 billion Yuan and 200 affiliated enterprises, including airlines, Hong Kong banks, timber operations and Australian aluminium smelting.
To what extent public assets leached into private income was something the Chinese government could never quite find out. Certainly it had no system of rules to stop it. Once the dragon of capitalism, even in the safe and suave form of Mr Rong, was let in through the door, government and markets mingled.
The Economist