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The Red Princelings Of China – Analysis

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By R. S. Kalha

The purge of the Chinese Communist Party politbureau member and party secretary of Chongqing, Bo Xilai, has had one very important side-effect. It has given people world-wide a peep into the life styles of China’s ruling elite and their progeny. The spotlight focused on the Bo family and its affairs has also shown just how lavish the life-styles are of the ruling elite and how extensive their financial holdings and investments are both in China and abroad. It only illustrates the fact that in China corruption is fairly rampant and nepotism widely practised. Promoting one’s children seems to be a part of filial duty. In 2005, ‘princelings’ occupied three out of the 25 seats on the politbureau, but in a reshuffle in 2007 the ‘princeling’ seats went up from three to seven! Much of the data now emanating from China, of assets both financial and otherwise, of the privileged members of the CCP would suggest that the shenanigans of the ruling elite in India by comparison are rather modest. As with most other parameters, China seems to be far ahead of India in this dynamic also. Dynastic succession, feathering one’s nest and nepotism seems to be a pan-Asian malady and not confined to the sub-continent alone.

China
China

Take the revelations regarding the ‘princeling’ Bo Xilai whose father, Bo Yibo, was considered one of the ‘immortals’ of the party and a stalwart in the revolutionary struggle. It is reported that Bo Xilai’s elder brother, Bo Xiyong, lived for nine years in Hong Kong under an assumed name, Li Xueming, and was the Executive Director of China Everbright Holdings, a state owned company that controls major Chinese banks and an array of other businesses. His salary was reported to be US$ 1.7 million annually, with stock options worth another $25 million. Bo Xilai’s son, Bo Guagua, lives in a lavish apartment in the United States and drives a Porsche. Similarly, Bo’s wife Gu Kailai’s two sisters, Gu Wangjiang and Gu Wangning, also worked in Hong Kong as directors of several companies and ran a huge business empire. Gu Wangjiang holds shares in Tungkong Security Printing [Jinan] worth $114 million. Gu Kailai’s father is a former PLA general, Gu Jingsheng.

Not to be left behind are the sons of the Chinese President and party General Secretary, Hu Jintao, and of Premier Wen Jiabao. The President’s son, Hu Haifeng, is a leading member of Tsinghua University and one of the companies associated with Tsinghua University, Nutech, of which the younger Hu was the Chairman, was reportedly involved in a ‘deal’ in Namibia that went sour. This news was completely blacked out by the Chinese media. Prime Minister Wen’s only son, Wen Yunsong [Winston], raised nearly $ 1 billion for his equity investment firm, New Horizon Capital, in a rather quick time. Sources indicate that this would be the third and largest private equity fund for New Horizon Capital, which already had about $ 500 million under management since it was established in 2007, with capital commitments from investors including Japan’s Softbank Corp and Singapore’s state investor Temasek Holdings.

Similarly, it is reported that the children of former PMs Li Peng and Zhu Rongji are heading major state run companies. Zhu Rongji’s son, Zhu Yunlai, is the CEO of China International Capital Corporation. Li Peng’s daughter, Li Xiaolin, was named by Fortune magazine in 2008 as one of the fifty most powerful women in China. She heads China Power International Development which was incorporated in Hong Kong in 2004. These are not the only ‘princelings’ that have hugely benefited from their connections within the Chinese state system. There are numerous other examples.

It is interesting to note that almost all ‘princelings’ have studied in top level schools and universities in the United States. Harvard, Sloan Business School/MIT, Kennedy School [International diplomacy] and Kellogg are firm favourites. A few have gone to the UK also. Invariably the funding has been done on the basis of ‘scholarships’, although it is a bit surprising that almost all seem to be so well endowed academically. It is reported that in actual fact the tuition tabs are picked up by others. On return home, most ‘princelings’ have found placements in large Chinese State owned companies; invariably at the top level. Others have achieved this status within a very short time.

Thus, far from being egalitarian, China’s current political and economic system seems to cater only to the well connected and the siblings of those at the top of the party hierarchy. It would give the appearance that it would be very difficult for any outsider to penetrate the system, no matter how brilliant academically. Unlike India, China does not have any ‘Right to Information’ Act [RTI] and therefore most happenings take place behind the ‘bamboo curtain’. With strict censorship in place that is rigorously enforced by the police, there is little that comes to public knowledge.

However, times are changing even in the People’s Republic. The rumour mills in China are extremely active. China has the world’s largest on-line population with about half a billion users. Already about 42 web-sites have been shut down and nearly 200,000 blogs deleted. Nevertheless, Chinese bloggers have found a way out to evade censorship by the extensive use of pseudonyms and historical allegories. Interestingly, some of the bloggers have proved to be unnervingly accurate, leading to the speculation that the ‘leakers’ are well connected but disaffected party officials themselves. News about the shenanigans of the ‘princelings’ also travels fast on the Chinese network. For example, photographs of the ‘princeling’ Bo Guagua holidaying in Tibet with his then girl friend, Chen Xiaodan, another ‘princeling’ and a grand-daughter of the renowned revolutionary, Chen Yun, were widely circulated in the blog media. It is from these blogs that the world learned that they were even provided police cover for their romantic holiday!

As China heads towards the 18th Party Congress where leadership changes are slated to take place, the Bo Xilai revelations have placed the party and government leadership in an acute dilemma. To reveal too much risks bringing the whole ruling elite to open ridicule at their life-style and their ill-gotten wealth. To say too little means that the authorities have no case against Bo Xilai and therefore asking him to step down would seem like a vendetta and a purge of a popular leader. It is probably not the end of the drama. It would seem that China’s political system is now at the cross-roads. Let us see which way it turns.

Originally published by Institute for Defence Studies and Analyses (www.idsa.in) at http://www.idsa.in/idsacomments/TheRedPrincelingsofChina_rskalha_200412

Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA)

Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA)

The Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), is a non-partisan, autonomous body dedicated to objective research and policy relevant studies on all aspects of defence and security. Its mission is to promote national and international security through the generation and dissemination of knowledge on defence and security-related issues. The Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA) was formerly named The Institute for Defence Studies and Analyses (IDSA).

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