China’s corruption fight tested by senior leader’s family wealth

Posted on July 22, 2012


“Corruption is a common enemy for all,” China’s official Xinhua news agency thundered back in April, in an editorial praising the Communist Party leadership  for ousting one-time rising star Bo Xilai. “If the issue is left unattended, a country may implode, its ruling power will collapse, and its society left in chaos.”

So what does Xinhua write now that Bloomberg has reported  that the extended family of Xi Jinping, the man set to take over as general-secretary of the Communist Party this fall, is worth hundreds of millions of dollars? The spectacular revelations could hardly come at a more sensitive time. Not only is Mr. Xi positioned to also take over as President of the People’s Republic and Chairman of its Central Military Commission in the coming months, the senior leadership knows well that mounting anger over official corruption is perhaps the single biggest challenge facing the country’s one-party political system.

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Thus the purge of Mr. Bo – which was motivated by several factors, not least of which his open desire for power – was portrayed to the public as proof of the Communist Party’ s commitment to fighting graft. In the wake of the Bloomberg report, the other eight men who sit with Mr. Xi on the all-powerful Standing Committee of the Politburo now appear to have two choices: they can either launch an investigation into whether there is any conflict of interest in how Mr. Xi’s family acquired its wealth – a move that would almost certainly end his political career and turn the carefully planned power shuffle on its head – or they can pretend not to have seen the report and put Xinhua’s dire warning to the test.

But while the revelation that Mr. Xi’s family might make money every time the Chinese government tightens supply of rare earths metals (to choose one disclosure in the exhaustive Bloomberg report) would seem to merit further examination, the Standing Committee of the Politburo is almost certain to turn a blind eye. The reason: nearly all the top leadership of the Communist Party have wildly successful relatives, while the senior officials themselves are paid – on paper – tiny salaries.

President Hu Jintao, for instance, received just $11,000 a year while his son, Hu Haifeng, surely earned far more as president and then party secretary of a state-owned firm granted a near-monopoly of the lucrative airport screening market. Premier Wen Jiabao’s wife is believed to control the country’s precious gems market. Their predecessors, Jiang Zemin and Li Peng, had similarly affluent relatives. This, apparently, is what the Communist Party calls “socialism with Chinese characteristics.”

What is different about the news that Mr. Xi’s extended family is worth upwards of $700-million (most of it in the name of his older sister and her husband and daughter) is that it comes just before his planned ascension to power, and at a time of heighted sensitivity over official corruption. Mr. Bo’s wife, Gu Kailai, reportedly killed a British businessman after he threatened to expose the family’s efforts to move its wealth outside of China. Ms. Gu’s sisters held most of the family’s known wealth, which has been estimated at $136-million.

The Bloomberg report begins with a quote from Mr. Xi himself, in his current post as vice-president: “Rein in your spouses, children, relatives, friends and staff, and vow not to use power for personal gain,” he warned officials back in 2004. In a speech this March, he said some people were joining the Communist Party because they saw it as a ticket to wealth. “It is more difficult, yet more vital than ever to keep the party pure,” he said.

Predictably, was blocked inside China almost as soon as the story was posted. Some Chinese netizens – using virtual private networks and other tactics – were able to get around the so-called “Great Firewall.” “Shocking news on Bloomberg’s main page!!!!!!” one Shanghai-based netizen posted on the popular Sina Weibo social networking site. But such comments were quickly erased.

Can the Communist Party of China still promote a man who campaigned against corruption while his family accumulated hundreds of millions of dollars?

Probably. There’s likely too much at stake to alter the long-planned transition of power at this late hour. The party’s leaders proved long ago that they put “stability” ahead of all other principles.

“I don’t see this report affecting succession plans,” said Charles Burton, a Brock University expert on Chinese politics. Part of the problem, he said, is there is likely no one in the leadership group who is any cleaner than Mr. Xi.

Globe & Mail

Posted in: Corruption