Xu Jiayin: the tycoon behind Evergrande
Xu Jiayin became a wheeler-dealer in China’s muddled transition to capitalism and his connections helped him to enormous riches. Now, he seems to have run out of luck… and friends in high places.
In his heyday, Xu Jiayin was the poster boy of China’s “crazy rich” – the personification of the country’s uneasy transition to “freewheeling dealmaking” within an authoritarian system, says SupChina, a US-based news platform. In 2012, he rocked up to China’s annual legislative conference wearing a flashy gold-buckled Hermès belt – “the priciest belt for the largest Communist gathering in the world”. He soon acquired internet stardom and the catchy nickname “belt brother”.
The Evergrande founder currently has rather more to worry about than perfecting his “sartorial swagger”. Crippled by a record $300bn debt, China’s biggest property group is effectively bust and struggling to make interest payments. Evergrande may not be China’s “Lehman moment” as some in the market initially feared, but it’s “on a par with Enron”, says The Times – with profound implications for a country whose property sector accounts for 20%-25% of the economy.
If Xu and his peers owe their ascent to the Party, their downfall has its roots in a “u-turn”, says SupChina. The once cocksure “belt brother” (who has dropped a good $14bn personally in the past year) is now chief villain of President Xi Jinping’s “common prosperity” drive to crack down on tycoonery. A recent “purportedly leaked” document gave juicy details of Xu’s “hotel habits” – his insistence on having “a larger font on his toiletries, and only women in his proximity except for his own bodyguard and butler”. It’s the kind of character assault that “often precedes a fall from grace”.
Xu’s rags-to-riches story is “emblematic of China’s economic miracle in the last three decades”, says The Observer. Born into a poor family in China’s central Henan province in 1958, Xu’s mother died when he was one, and he was brought up by his grandparents. In a 2017 speech, he recalled “how he ate just sweet potato and steamed bread throughout his school years”, says the Daily Sabah, a Turkish daily. “The clothes I wore were all covered with piles of patches.” After leaving school in 1976, at the end of the decade-long Cultural Revolution, Xu “struggled to find work”, but eventually landed a place at the Wuhan Iron and Steel institution. He wound up becoming general manager.
Like many other middle managers of state-owned companies, Xu was inspired to drop “the iron rice bowl” (a stable job) and make a leap into entrepreneurship by the reforming president Deng Xiaoping. In the early 1990s, he quit his job and moved to Shenzhen, “trying his luck as a salesman in a steel conglomerate”, says SupChina. In 1996, he founded Evergrande, “riding the commercial real-estate wave from the very beginning”.
The go-go years
The company floated in Hong Kong in 2008, propelling Xu to the top pinnacle of China’s wealthy – at several points over the next decade “China’s richest man”. Puffed by leverage, and oiled by Xu’s matey relations with officials and politicians in the Party’s “Shanghai set”, Evergrande grew exponentially, eventually branching out as far afield as financial services, bottled water and football. At the height of the boom, the core property business was “taking deposits on homes that were little more than lines on an architect’s drawing board”, says The Times. Xu’s own expensive tastes extended to yachts, waterfront mansions in Sydney and the trophy acquisition of China’s largest football club, Guangzhou FC.
Whatever happens to Evergrande, Beijing has got dirt on Xu. He’s easily painted as the most excessive of “China’s robber barons” –those who took advantage of “the muddled transition to capitalism by means of guanxi (‘connections’), bribery and fraud”, says SupChina. Many of Evergrande’s 1,300 developments are now ghost towns. Xu’s own fate doesn’t look any more promising.