Jailed Billionaires Show New Face of China as Markets Unravel

Bloomberg writes about jailed tycoon Huang Guangyu, of Gome Electronics, who is being investigated for share manipulation, and the fate of China’s wealthiest as the economic crisis hits:

During China’s 30-year boom, foreign investors bet heavily on the so-called red capitalists: emerging billionaires who symbolized the nation’s new wealth.

As of Feb. 23, Chinese stocks listed in Hong Kong had plunged more than 60 percent from their peak in October 2007 compared with a 50 percent fall in the Standard & Poor’s 500 Index. Some of the companies that have crashed the hardest are those built by billionaire highfliers such as Huang, whose 34 percent stake in Gome is now worth less than one fourth of the $2.8 billion it was valued at on Sept. 1.

Even in the good times, China’s new rich thrived only at the whim of an autocratic and still nominally communist regime. Now, collapsing global demand for its exports has plunged the world’s fastest-growing major economy into crisis, causing thousands of factory closings.

[…] Only corruption continues to flourish — at a cost of $86 billion a year, according to the Washington-based Carnegie Endowment for International Peace.

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