China’s recent and rather dramatic market volatility incited stock market plunges and greater uncertainty across the globe.
Equally concerning is that amid this stock market panic, prominent billionaires and senior executives from over 34 Chinese companies have been disappearing without a trace.
For example, billionaire Zhou Chengjian, the Chairman of Metersbonwe, one of China's leading clothing companies, vanished on January 7.
Metersbonwe said in a statement on Thursday that it would be suspending its shares on the Shenzhen Stock Exchange and that they were unaware of Chengjian’s whereabouts.
Ten days later, he returned to work along with Tu Ke, the Company's Board Secretary.
Just a few weeks prior to Chengjian’s disappearance, Chang Xiaobing, the CEO of the state-owned telecoms giant China Telecom, resigned and then went missing.
Back in November, Yim Fung, chairman and CEO of Guotai Junan International Holdings went missing, sending the company’s stock down 12 per cent.
Also in November, Chen Jun and Yan Jianlin, two senior executives of Citic Securities vanished without a trace.
So what is happening to these billionaires and business leaders and why should Australia be concerned?
Firstly, most of the disappearance cases appear to be linked to an official crackdown on financial corruption which was instigated in mid-2015 after China’s stock market crash – despite China’s growing economy, corruption continues to have a corrosive effect on the country’s economy.
However only a small number of those that have disappeared have officially been announced as being in government custody, suggesting it’s likely that others have fled or are in hiding in order to avoid being questioned and potentially jailed.
Alternatively, it is possible that the government have been going about investigating these cases in a more arbitrary way and instead have been secretly arresting these people.
Some even suggest that it is unclear if the corruption investigations are effectively ‘witch hunts’ designed to place blame for the declining economy, or if it is a legitimate effort to keep these millionaires and executives accountable for their actions.
Either way, the decision to investigate financial corruption at this level is representative of how Chinese law and government is so far behind other developed countries.
In fact, a recent survey by the World Justice Project rates China 76 out of 99 countries in its annual Rule of Law Index.
The assessment looks at factors such as the independence of the courts, sanctity of contracts, enforcement of intellectual property protections, and access to and effectiveness of legal remedies.
So for those contemplating doing business in China – such as one of its largest trading partners, Australia – this continues to be a significant issue.
China's economy will soon be the largest in the world and is already the world’s largest manufacturing center and consumer market.
These should be heady days for Chinese leaders but yet they still continue to cling to an outdated political model, which is neither wise, nor sustainable.