It has all the makings of a John le Carre thriller: a Chinese billionaire snatched from a luxury Hong Kong hotel amid a swirl of international intrigue, shadowy financial dealings and politicians and tycoons alike ducking for cover.

When the Xiao Jianhua story comes to the big screen, film studios can sprinkle in copious amounts of sex appeal and star power. First, there’s Xiao’s all-female bodyguard team, up to eight weaponized women per shift. Then there’s the Robert De Niro wrinkle. Xiao and the Hollywood legend are among those involved in a citizenship-by-investment scheme run by Caribbean islands of Antigua and Barbuda. Not a bad place to be exiled!

But the Chinese media is obsessing over the wrong plot here. Much of the focus is on moguls in harm’s way amid President Xi Jinping’s anti-graft crackdown — how they could suddenly be behind bars when political winds change. The real issue is how Chinese billionaires, 594 and counting, are impeding Xi’s efforts to right China’s unbalanced economy.

According to the Hurun Report, China in 2016 surpassed the U.S. in the ultra-rich category by at least 59 billionaires — Dalian Wanda’s Wang Jianlin and Alibaba’s Jack Ma topping the list. What’s more, China’s billionaires now outnumber U.S. Congress members. An odd comparison, you might say. Just as 535 voting members of Congress decide on structural change in America, China’s richest 594 people have wildly disproportionate influence over what changes in the No. 2 economy. Or, more to the point, what doesn’t.

When Western investors think of Chinese tycoons, it’s often technology gurus that crowd the mind: Ma’s spectacular rise from English teacher to e-commerce titan; Tencent founder Pony Ma, whose WeChat app is the envy of Facebook and Twitter ; Baidu’s Robin Li, co-founder of China’s answer to Google; or Xiaomi’s Lei Jun, whose smartphones have Apple and Samsung looking over their shoulders. The real money, though, is in the public sector. Most billionaires got super rich the old fashioned way: political connections, monopolies and sharing the wealth with their Communist Party benefactors.

In March 2016, as the National People’s Congress began its annual meeting, 114 members were on Hurun’s list of ultra-rich Chinese. That compared to 75 in 2012, when Xi was beginning to grab the reigns. It’s impossible to miss the irony of this embarrassment of riches in a nation supposedly wedded to Communist doctrine.

This patronage feedback loop is a huge and savvy roadblock for Xi’s efforts to reduce the dominance of state-owned enterprises. Xi wants to recalibrate growth engines from manufacturing to services as a means of curbing pollution and boosting wages. It’s slow-going because of powerful vested interests. The reason the most potent Chinese leader in decades can’t easily change the nation’s economic model: there’s too much money in the current one for party bigwigs.

It’s anyone’s guess where Xiao, who was abducted around Jan. 27, ran afoul of Xi’s inner circle. The 45 year-old was a student leader at the time of 1989 Tiananmen Square protests. His connections stem from a clique surrounding Jiang Zemin’s rise to president in the 1990s. His own ascent from villager to insider to investor is all too common in modern-day Beijing. The tentacles of his Tomorrow Group now reach into banking, real estate, coal mines, insurance and rare-earth minerals.

Le Carre-like intrigue abounds. Some of it relates to worries about Beijing meddling in Hong Kong affairs. The city’s 7.2 million people are still reeling from the 2015 abduction of bookseller Lee Bo. Some surrounds talk of Xi sending a blunt message that tycoons can run, but not hide. Press reports suggest Xiao is being questioned in connection with Shanghai’s 2015 stock-market crash, arguably Xi’s most embarrassing moment as leader.

The real intrigue should concern China’s billionaire paradox. Reducing corruption is vital both to spreading the benefits of 7 percent growth and increasing the role of services. Yet Xi’s anti-graft push often seems more arbitrary than systematic. In 2016, for example, mainland courts prosecuted about 20 percent fewer cases where officials were expelled from Xi’s party and served up for formal charges. True, the number of cadres disciplined in-party rose almost a quarter to 415,000. Those at the very top of the Beijing food chain, not so much.

Xi must get the big money out of politics. The more cash party leaders amass, the less willing they’ll be to retool the economy. As overseas bank accounts swell, political will to disrupt the status quo at home evaporates. The desire for epochal change is no match for the financial windfalls party loyalists are amassing in a system that puts opacity over accountability. Xi has the power to change China’s narrative from conspiracy to success. He can start by putting the masses before the billionaires.

William Pesek is executive editor of Barron’s Asia and writes on Asian issues. www.barronsasia.com

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