The Plight Of Wang Rui Qing

China’s fleeing CEOs – Wang Rui Qing. 20 May 2020, former Chinese People’s Political Consultative Conference CPPCC member Wang Rui Qing wrote an open letter which was widely circulated on social media in China. In the letter, Madam Wang exposed Xi Jinping’s administration’s mismanagement of the country. She urged all members of the People’s Congress to cosign her letter and impeach Xi Jinping. You may find a copy of her letter here.

In response, the Chinese authorities harassed her family members and froze her assets in China. To avoid implicating her family members, she announced that she was breaking ties with every one of them.

In better times, former educator Wang Rui Qing was the director of Qinghai Province’s East Lake Hotel. In 2019, she abandoned her motherland and moved to America. Following her departure, practically all entrepreneurs who responded to government initiatives to set up businesses in remote Qinghai during the 1990s also cashed out and departed. This was not the first time that Wang had voiced her objection to the current regime. Back in 2015, she had already written about discrimination and the lack of proper organisation and uniform standards within the legal system.

Madam Wang said that if she could start all over, she would never be a pioneer in a land that is still experimenting with capitalism; she would rather start something in a country where the rule of law exists. Only then will your efforts and investments be protected.

Completed in 2001, East Lake Hotel was the most luxurious hotel situated in the most strategic location in the city of Xining, a pioneering project by Sino-US joint venture company East Lake which was established since 1997. It was one of the major projects in remote Qinghai started in response to government initiatives to develop the remote province. But after barely one year in operation in 2002, the government suddenly came up with a new project, the Lanzhou-Qinghai highway which ran right in front of the hotel. The hotel was ordered to shut its doors for the duration of the construction. It took more than 3 years.

The company lost 80-90 million yuan. Interests alone came up yo 30 million. In 2007, Qinghai Bank sued East Lake for 36 million yuan. East Lake tried to argue that it was a previously unannounced government project that caused the hotel to shut for 3 years. The court ruled that inclusive of interest, principal and fine, East Lake must pay 56.31 million yuan.

Wang tried to negotiate with the bank to use some of their assets to cover their debt, but Qinghai Bank insisted on cash. East Lake appealed against the ruling. In 2009, the Qinghai High Court overruled the original verdict. The company heaved a sigh of relieve.

5 years later, Qinghai Bank lobbied the provincial governor to reopen the case in Beijing and sued East Lake for 110 million yuan. Wang expresses deep disappointment with China’s laws and the corruption of the legal system. She believes tha the highest court is also the least independent, every judge would use the power vested in him to rip people off. On the sidelines, Wang was unofficially informed that she only had to come up with a little cash for the right people and the case would be closed without so many hundreds of millions being paid out.

This case is typical. In order for private enterprises to thrive in China, the whole system has to be revamped. Private enterprises in China contribute 50% of total tax revenue in China, 60% of GDP, 70% of innovations, 80% of employment and 90% of all businesses. However, the feeling of insecurity constantly plagues the folks running private enterprises.

Back in 2018, Xi Jinping announced a slew of measures to facilitate private enterprises, but practically none of what has been announcement was ever put into practice. Wang can fully understand why business people would be keen on getting membership in the People’s Congress. It gives them some form of protection from arrest by public security.

Xi’s leadership turned the tide in favour of the State and against the people. In spite of all the assurances, owners of private enterprises are now in greater danger of being robbed of their fruits of a lifetime of labour. Even their personal safety may be in danger.

In 2018, an organisation called 公民力量 based in Washington formed a society called 中国民营企业家维权协会 to provide a support group for oppressed private enterprises in China. 公民力量 chairman Yang Jian Li observes that since Xi Jinping came to power, there was a marked increase in the number of migrating entrepreneurs from China. Yang asserts that communist ideology and capitalism are inherently incompatible. Any indication of strength on the part of private enterprises will make communist leaders nervous. Under the current system, there is nothing to stop them from confiscating all assets and businesses and putting the owners in jail. This has led to the recent waves of migration.

In 2019 alone, the US received 33,975 applications for investment visa from China – 87% of all applications worldwide for that visa. Madam Wang recalls that 20 years ago, friends and neighbours in China were full of hope and plans for the future, starting and running businesses in China. In recent years, that has died down. Not even 1% of the people around her were keen on any new business ventures. 90% of businesses are considering emigration.

Immigration lawyer Gao Guang Jun has handled many cases of Chinese businessmen migrating to the US. He keeps hearing stories from them about their compatriots being jailed or becoming bankrupt overnight. But not everyone is successful in fleeing. One way to protect oneself is to send money out of the country, but amounts that can be legally remitted are very limited. The same goes for those who carry cash out of the country. Another method is to go through underground remittance services in Hong Kong. Service charges can be as high as 20%. Why would businessmen pay so much to get their money out? It shows how insecure they feel. There’s one method and that is to set up an MNC. Even then, the authorities are aware of this loophole and restricted the amount that can be transferred. The most powerful and unrestricted way to send money out of the country is through government organisations within China. Through various government officials involved in overseas projects, an unlimited amount of money can be sent out of the country. Gao has heard some people who are willing to share 1/3 of the amount with the official helping them transfer the money overseas.

There is no way to accurately calculate the amount of money that private enterprises had sent out of the country, but over the last 9 years, private enterprises in China earned a total of about 17.68 trillion out of which 11 trillion had been withdrawn. Nearly 100% net profit has been withdrawn and not reinvested. This is not a healthy sign.

As time passes, it gets more and more difficult to leave China. For those remaining, Radio Free Asia’s stand is that the only viable option is to fight for political change. Personally, I feel that any form of struggle will be futile against an authoritarian regime that would not hesitate to use violence. In all likelihood, private enterprises will fade into oblivion, all businesses become state-owned and people work for the government.