The Latest Target In China's Crackdown On Entrepreneurs Is An Outspoken Billionaire

BAODING, HEBEI, CHINA — Billionaire Sun Dawu built an agriculture empire just outside Beijing. To accommodate approximately 9,000 employees and their families, he created a self-contained company town replete with free hospitals, schools and a sports stadium, all named after himself.

Now his conglomerate, the Dawu Agricultural and Animal Husbandry Group, is slipping out of his control, as he faces trial next week over what appear to be politically motivated charges.

In late April, local authorities arrested Sun and 20 employees — many of them his own family members — after a minor property dispute turned violent. They already had been in detention for half a year over a common administrative issue, for which Sun now faces eight criminal charges, including illegal mining and "seeking quarrels and provoking trouble." He denies them all.

Over the years, the 67-year-old farmer turned tycoon has defiantly befriended and supported Chinese political dissidents. Now he may become one himself.

His businesses are temporarily in government hands.

"Every [Dawu] subsidiary has a different local government team that has taken over management," an employee at the company's main office just outside the city of Baoding told NPR in November. The employee declined to be named because they were not authorized to talk publicly.

Sun's arrest and the seizure of his businesses are the latest in a string of crackdowns against private firms. His case is being closely watched in China's commercial and legal circles as a test for how far legal protections extend in commercial disputes — in this case, over land rights.

"The Dawu Group has yet to move out of the danger zone," Wu Danhong, a Beijing-based corporate lawyer and legal commentator, wrote on WeChat, the Chinese social media platform. "There is the continued likelihood of increasing Sun's criminal charges to include 'gang-like activity,' because only with this charge can the state confiscate all of his assets." A three-year campaign to eliminate organized crime has already imprisoned tens of thousands of smaller entrepreneurs and their alleged political allies.

Over the last four years, Beijing has been reining in some of the country's biggest private companies for being too powerful or their leaders being outspoken about state policy. Since 2018, authorities have jailed the executive of a major insurance firm, executed the former head of a powerful financial management company and forced several real estate conglomerates to sell off flashy foreign assets and pay down debts.

"Political power ultimately controls the economy," says Cai Xia, a former professor at the country's top Communist Party academy who now lives in exile in the United States. "If Chinese entrepreneurs want to succeed, they have to depend on the system built by the [Chinese Communist Party]."

More recently, property tycoon and prominent government critic Ren Zhiqiang was given an 18-year prison sentence on corruption charges in September. Two months later, financial regulators canceled financial technology company Ant Group's much-anticipated public offering.

Last month, authorities slapped a record fine on Ant Group's sister company, the e-commerce juggernaut Alibaba. Three weeks later, regulators also called in 13 internet companies, demanding tighter financial management.

Sun, a self-fashioned agrarian utopian with a deep commitment to social justice, appears to be one of the latest targets. In 1984, he founded the Dawu Group from his hometown in rural Hebei province, selling animal feed and fertilizers and using the revenues to fund his particular vision of rural development.

"It is hard to uniformly redistribute the wealth of the society/But it is possible to make equal commoners and aristocrats," Sun wrote in a poem engraved on a stone slab near his company headquarters.

In Chinese media interviews, Sun has frequently quoted Plato's concept of the philosopher king: a benevolent autocrat who lives a simple life and rules his subjects with kindness. He often hosted prominent human rights lawyers and financed their legal costs when they came under political fire, including for Xu Zhiyong, a proponent of constitutional law reform who was arrested again last February after months on the run.

Top political leaders in Beijing have sought Sun out for more than a decade, asking his advice on raising rural incomes. Sun, who continued working as a farmer even while running a major company, advocated for lower agricultural taxes and easier access to credit. He opposed mass urbanization and supported grassroots efforts by farmers to improve their villages.

"The essential problem in rural China is the restriction and deprivation of peasant labor by power and capital," Sun said in a 2007 speech to students at Beijing's prestigious Peking University.

As his business grew in the 2000s, Sun built his company town to reflect his political principles. There, employees enjoy subsidized or free access to amenities including a theater, hot springs and a water park. Money is rarely exchanged; employees and their families are issued company cards that come pre-loaded with credit and give them access to free healthcare and schooling.

"They really treat workers well here. If you work hard, you are rewarded here. The profits are reinvested back into us," says Pei Xinguang, a security guard for Dawu Primary School.

But as Dawu Group expanded, Sun ran into legal problems because of China's complex zoning laws, which heavily restrict rural land from being bought, sold or used for commercial purposes.

"Some of the land use processes were not done completely satisfactorily," concedes Yang Bin, a defense lawyer retained by the Sun family. Such land use issues are relatively common paperwork issues in China, usually resolved through administrative means or punished with fines.

Sun routinely sought legal advice from corporate and public-interest law firms on how to compete with state-owned companies, including whether he could sue the ministry of agriculture over bureaucratic disputes.

Sun asked "how privately run businesses could protect their rights, including land-use rights, in disputes," says Zhao Guang, a partner at Beijing's Youbang Law Firm who first met Sun nearly two years ago at a conference Sun convened. "Some of the concerns Sun brought up then have come true now."

Sun's detention last November stemmed from a disagreement over how much land the Dawu Group and a nearby village leased to a state-owned farm. In August, Sun and about 30 employees allegedly assembled a mob to fend off encroachment by the farm, leading to a state investigation and eventually his arrest. Village authorities declined to comment when NPR visited in November, as the case is still being litigated.

Sun is no stranger to trouble. In 2003, he was a given a four-year suspended sentence for illegal fundraising, after he and his employees raised nearly $2 million for company investments without central bank approval.

Now, his largesse to his employees may now be construed by authorities as buying influence. Over the years, he often rallied employees during his efforts to push back against burdensome state regulators — actions that prosecutors could now paint as organizing political dissent.

"This is a simple administrative law case, but it has become politicized and distorted," says Yang, his lawyer.

Officials at China's justice ministry have already called in Yang and two other seasoned public interest lawyers Sun has hired for his defense, she says, warning them not to discuss the case publicly — a sign of the political sensitivity surrounding his charges.

Sun's decades-old billion-dollar empire is now in the hands of a local court. County-level judicial officials said they had needed less than 10 days to sift through 348 volumes of evidence and legal arguments prepared by Sun's defense team.

"Now I have a heavy heart," Sun wrote in a letter to his employees last month, "as the next thing to do is to ... go through the judicial process, to fight for the rights of my family."

Amy Cheng contributed research from Baoding, China.

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