The Chinese entrepreneur who challenged the state and was locked up

The neat high-rise buildings in the model town Sun Dawu built for his workers stand out among the farms and countryside of Hebei province about two hours’ drive from Beijing.

Sun, one of China’s most outspoken businessmen, had long sworn he would not chase profits at Dawu Agricultural Group, the company he founded in 1984 and built into one of the country’s biggest private agriculture businesses. Instead, he said he would deliver better incomes and a life of “serenity” for local farmers.

But Sun’s vision is in jeopardy after he was arrested last November following a dispute with the neighbouring state-owned farm that descended into violence. Authorities have frozen his company’s assets and government “work groups” — local Communist party officials — have occupied its offices. Sun’s trial is expected to start this month.

The party cadres claim they are ensuring the “stability” of the company and the town of about 20,000 residents. But some of Sun’s supporters and analysts believe the authorities may have a more sinister objective: to silence the outspoken entrepreneur as Beijing has extended its control over private enterprise and become increasingly intolerant of tycoons who challenge its authority.

Xi Jinping squeezes outspoken entrepreneurs

The town Sun built became an oasis of social welfare after the launch of market reforms in the 1990s, when government-run enterprises laid off workers and disbanded their own hospitals and schools.

As well as hen coops and pigsties, Sun built apartments and surrounded them with lily ponds, a sports stadium and a theatre, along with schools and a hospital stocked with free medicine for the settlement. “When patients enter, the hospital has total duty of care,” says a quote on a stone slab outside the building’s entrance.

Sun, 67, was arrested after his company called on the state-owned farm to give back land that had been appropriated in 1963. The local villagers say they handed over ownership of their farms to the state for free in return for support to cope with a famine. Dawu Group has collected petitions stamped with the red fingerprints of the octogenarians who claim the terms of the agreement were never met.

Sun was charged with a multitude of crimes, ranging from “picking quarrels” — an offence often levied at activists — to misuse of land rights. His sons, daughter-in-law, wife, group executives and the heads of the company’s subsidiaries were also arrested.

The Gaobeidian city courthouse where Sun’s case will be heard declined to comment.

A person with knowledge of the case said prosecutors were urging the defendants and their family members to fire their lawyers and hire legal representatives from Gaobeidian or allow the government to appoint them.

Sun has had numerous run-ins with officials since he started running his farm full-time in 1989 — sometimes after refusing to pay bribes — and had always escaped serious censure. He even won a seat in the Baoding city legislature.

Sun was arrested and convicted of “illegally receiving public funds” in 2003. But the four-year sentence he received was suspended after an outcry from a group of liberal lawyers and intellectuals that he befriended, including Liu Xiaobo, winner of the Nobel Peace Prize in 2010. Sun returned to work without serving any jail time.

Since Xi became China’s leader in 2012, however, many of Sun’s defenders have been silenced and his association with them has become a liability.

In 2015, a crackdown led to the detention of dozens of human rights lawyers, many of whom had defended Sun.

Liu died of liver cancer in 2017 while still in custody.

Xu Zhiyong, one of Sun’s lawyers in 2003 and a proponent of constitutional reforms, was arrested last year after criticising Beijing’s handling of the coronavirus outbreak.

“[Sun] is being made an example of,” said Minxin Pei, a political scientist at Claremont McKenna College in California. “Whether he is a tech entrepreneur or an agribusiness entrepreneur is irrelevant to the party if he is challenging its authority. They do not want to see any form of defiance.”

Others who have stood up to authorities have also been targeted. Jack Ma, founder of ecommerce group Alibaba and the country’s most prominent entrepreneur, has largely disappeared from public view since he criticised state-owned banks and regulators in a speech in October.

Ren Zhiqiang, a real estate tycoon, was sentenced to 18 years in prison on a range of corruption charges in September after he called Xi a “clown”.

Ren and Sun championed a style of independent leadership that the party was keen to discourage, said Pei. “The message these cases send to the broader private sector is: shut up, if you want to make money.”

Uncertainty in the town Sun built

Since Sun’s arrest, his town has been in limbo.

“This place used to be a real pit. Sun Dawu made it what it is today,” said one old woman.

“Bandits” is how another described the armed officers that took away Sun.

Since the arrival of the work groups to ostensibly oversee operations while Sun stands trial, the biggest complaint of employees and locals is uncertainty.

“We don’t know who’s in charge. We ordinary people aren’t allowed to know,” said a restaurant owner. “It’s been half a year and we don’t know anything about what happened, except ‘picking quarrels’.”

New investment has been frozen, and about 2,000 workers have been made redundant from construction sites to expand offices and housing in the town. Dawu Group’s general office estimates about 4,000 staff remain.

The job losses have hit the local economy, with several restaurants saying custom had declined by at least a third.

“Dawu used to employ all the able-bodied villagers in their fifties or sixties. Now they’re at home with nothing to do,” said one restaurateur, who recalled Sun dropping by to buy her salted donkey-meat buns, the local speciality, and how he disavowed luxury.

At Dawu Group’s subsidiaries, which include a construction company and a distillery for baijiu, a grain-based liquor, staff were reticent to talk. The secretaries in the general office disavowed any understanding of Sun’s case and deferred to government propaganda officials.

Because it was a “special period”, all interviews with Dawu Group staff had to be approved by the authorities, said one official.

Authorities in Xushui, the administrative area where Dawu Group is located, said the government had “maintained the normal production and operations of the business”.

Some locals faced a more urgent issue: recovering the funds they lent to Dawu Group. The company operated a 24-hour finance office where individuals could access their savings at any time before Sun was detained.

Dawu Group used a community financing model of grain and cash loans from villagers. It was this system that authorities questioned in 2003 when Sun was charged with “disrupting financial order” by borrowing about Rmb180m from local residents over a decade.

A sign on the finance office door now directs savings inquiries to the general office.

When a woman asked about withdrawing her savings for a house purchase, a secretary responded: “Sorry, we can’t, it’s frozen.”

A propaganda official added: “We’ll call you when it’s time.”

Additional reporting by Nian Liu in Xushui