In a surprising turn of events, Pony Ma, co-founder of Tencent Holdings, has once again secured the title of China’s richest person, with a net worth now exceeding A$65 billion, placing him 27th globally according to the latest Bloomberg Billionaires Index. The resurgence of Ma’s fortune comes in the wake of several tumultuous years for China’s tech billionaires, many of whom faced regulatory crackdowns and public challenges by the Chinese Communist Party (CCP). Alongside Ma in the upper echelons of China’s wealth rankings are Zhong Shanshan, the bottled water magnate, and Zhang Yiming, co-founder of ByteDance, the tech behemoth behind TikTok.

The return of Pony Ma to the top of China’s wealth list may seem to signal a more permissive economic environment, but beneath the surface lies a unique and complex relationship between China’s private sector and the state. This dynamic interplay between market forces and government control has shaped China’s economic landscape, and it continues to define the trajectory of its billionaire entrepreneurs.

A Tech Empire Rooted in China’s Growth

Pony Ma’s rise to prominence can be traced back to Tencent’s founding in 1998. The company, headquartered in the southern tech hub of Shenzhen, capitalized on China’s rapid economic expansion and the increasing role of the internet in daily life. Tencent became a titan in the tech world, best known for its revolutionary products QQ and WeChat—two instant messaging platforms that boast over a billion users.

Tencent also dominates China’s gaming industry, a sector known for its outsized influence on global markets. With popular titles like Honour of Kings and League of Legends, Tencent became the largest video game vendor in China. The company’s gaming portfolio not only drove its revenue but also helped establish its dominance in the global gaming sector.

Most recently, Tencent achieved a new milestone with the release of Black Myth: Wukong, China’s first-ever “AAA” video game. Released in 2023, the game was a huge success, selling over 10 million copies within its first three days and earning critical acclaim both in China and abroad. Based on the classic 16th-century novel Journey to the West, the game showcases stunning Chinese landscapes and mythological figures, aligning perfectly with the government’s ambition to boost China’s cultural presence on the world stage.

China’s state-owned media, Xinhua, praised the game for “telling Chinese stories with world-class quality,” and hailed it as an important tool for promoting Chinese culture to global audiences. This endorsement carries significant weight in a country where private companies must navigate a tightrope between commercial success and political approval. Tencent’s ability to integrate cultural promotion into its business strategy reflects the delicate balance it maintains with Beijing’s agenda.

Challenge of State Regulation

While Tencent’s growth appears meteoric, it has not been without challenges. China’s gaming industry has been subject to some of the world’s strictest regulations, and Tencent has often found itself in the crosshairs of these policies. In August 2021, Chinese authorities implemented measures to limit online gaming for minors, restricting their playtime to just one hour on Fridays, weekends, and holidays. This regulation had a profound impact on Tencent, which derives a significant portion of its revenue from online gaming.

Tencent was further shaken in December 2023 when new policies aimed at curbing excessive gaming time and spending were announced. These measures triggered a 12.4% drop in Tencent’s share price, further underscoring the vulnerability of even the most powerful private companies to regulatory whims. However, in a display of compliance, Tencent swiftly pledged to follow the new rules, reinforcing the company’s understanding that in China, maintaining harmony with government policy is paramount.

Pony Ma’s cautious approach stands in stark contrast to the more outspoken behavior of other Chinese tech billionaires, most notably Jack Ma of Alibaba fame. Jack Ma’s public criticism of Chinese regulators during a 2020 speech in Shanghai led to a series of punitive actions from the government, including the halting of the highly anticipated A$50 billion IPO of Ant Group, Alibaba’s financial technology affiliate. Jack Ma’s fall from grace served as a warning to other business leaders that challenging the state’s authority carries severe consequences.

Fall of Jack Ma

Jack Ma’s dramatic fall from the pinnacle of China’s business elite encapsulates the precarious relationship between private wealth and state power in China. At the height of his influence, Jack Ma’s companies Alibaba and Ant Group were poised to reshape China’s financial landscape. Ant Group’s innovative e-finance products, including its wildly popular Alipay platform, had the potential to decentralize banking and credit services, putting more financial power into the hands of ordinary consumers.

However, Jack Ma’s 2020 speech, in which he criticized China’s financial regulators for stifling innovation with outdated policies, provoked a swift and decisive response. The Ant Group IPO was canceled, and the company was subjected to intense regulatory scrutiny. In the years that followed, both Ant Group and Alibaba were hit with billions of dollars in fines, and Jack Ma himself largely disappeared from public life, reemerging only occasionally in highly controlled appearances.

This crackdown on China’s tech giants represented a broader shift in the Chinese Communist Party’s approach to managing the private sector. As China’s economy slowed in the wake of the COVID-19 pandemic, the government became increasingly focused on reasserting control over industries that it viewed as critical to national security and social stability, including technology, finance, and real estate.

“Socialist Market Economy”

China’s unique economic model, often referred to as a “socialist market economy,” is built on the premise that market forces can be harnessed to achieve socialist objectives. In this system, private companies play an important role in driving innovation, creating jobs, and generating wealth, but they are ultimately subordinate to the state. The Chinese government views the market as a tool that can be wielded to achieve the broader goals of the Communist Party, and it remains vigilant in ensuring that private wealth does not accumulate to the point of challenging state authority.

This balancing act has been a defining feature of China’s economic development over the past few decades. The government has encouraged the rise of private entrepreneurs, allowing them to accumulate vast fortunes and drive the country’s rapid economic growth. However, Beijing has always retained the ultimate authority to regulate and, when necessary, rein in those who amass too much power or influence.

The regulatory crackdown on China’s tech billionaires was a reminder of this reality. While Pony Ma has managed to navigate these turbulent waters with relative ease, other business leaders have not been as fortunate. The government’s message is clear: private companies can thrive, but only within the boundaries set by the state.

Signs of a Thaw?

As China’s post-COVID economy continues to struggle with sluggish growth, the government has shown signs that it may be loosening its grip on the private sector in an effort to restore investor confidence and spur economic activity. In 2023, Beijing introduced a 31-point action plan aimed at strengthening the private economy, with a focus on making it “bigger, better, and stronger.” The plan was widely interpreted as a signal that the government recognizes the importance of the private sector in revitalizing China’s economy.

Pony Ma was quick to endorse the government’s initiative, describing it as “encouraging and inspiring.” His public support of the plan reflects the delicate dance that China’s billionaires must perform, balancing the need to align with government priorities while continuing to grow their businesses in a challenging regulatory environment.

However, it would be a mistake to interpret these recent developments as a sign that China is moving toward a more liberal market economy. As history has shown, the state’s role in managing the economy remains central, and any relaxation of control is likely to be temporary and conditional. The CCP’s overarching goal is to maintain social stability and political control, and the private sector will always be subordinate to these objectives.

It remains to be seen whether the recent thaw in the government’s stance toward the private sector will translate into sustained economic growth. While China’s private companies are critical to its economic success, they operate within a system that prioritizes the interests of the state above all else. For entrepreneurs like Pony Ma, the key to survival and continued success lies in their ability to navigate this complex and often contradictory landscape.

The resurgence of Pony Ma as China’s richest person is a reminder that, despite the regulatory challenges and political risks, there is still tremendous wealth to be made in China’s private sector. However, the future of that wealth—and the entrepreneurs who create it—will depend on their ability to operate within the confines of China’s unique economic model. As China continues to chart its own course in the global economy, the relationship between the state and the private sector will remain one of the most important dynamics shaping the country’s future.