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It’s Open Season on Corrupt Officials in China

A campaign against waste has evolved into a corruption crackdown whose aggression and reach is suggestive of a political purge.

by Nicholas Krapels
Apr 9 2014, 3:30pm

Photo by Reuters

Last year, public anger in China over graft and the excessive lifestyles of officials prompted President Xi Jinping to ban government extravagance. He curtailed lavish banquets, prohibited the serving of premium liquor and delicacies like shark fins and bird's nests, and restricted luxury accommodations and the use of public money for personal spending.

But what began as a campaign against waste quickly evolved into a corruption crackdown whose aggression and reach is suggestive of a political purge. Investigations of party officials have been a fixture of state media reports for months. No player is too big to fall prey to the crusade, which Xi said targets "the tigers as well as the flies" — echoing language used by Mao Zedong during a corruption offensive in the 1950s.

On Tuesday, China's Central Commission for Discipline Inspection introduced a new section to its website that invites citizens to report cases of wrongdoing and misconduct. The site will publish the names of officials suspected of violating Communist Party guidelines every Monday.

This promising and unexpected step was countered by the beginning of trials this week against members of the New Citizens' Movement, which has called for Party officials to disclose their assets. Xi is clearly concerned that anti-corruption protests will undermine the Party's authority. His government's persecution of activists that seemingly share the same goals signals its intent to maintain control over the taking down of "tigers."

Former Politburo Standing Committee member Zhou Yongkang. Photo by Reuters.

Last week, Reuters exclusively reported the seizure of at least $14.5 billion worth of assets from Zhou Yongkang and several hundred relatives and associates. Zhou, a recently retired 71-year-old official, enjoyed a career full of cushy Communist Party appointments, including as the head of China's state-owned oil behemoth. As a member of the exclusive Politburo Standing Committee (PSC) from 2007 to 2012, Zhou headed the domestic security bureau — a department with a budget that exceeds that of the People's Liberation Army, the world's largest standing military.

In American terms, the PSC is the equivalent of an autonomous legislative entity that features only the president, vice president, and top Cabinet members. It is a truly elite outfit that exercises enormous power over China's political apparatus. According to traditional Party norms, former PSC members like Zhou are virtually untouchable, so it is exceedingly odd that, according to one account, he has been sequestered under heavy guard somewhere in remote Inner Mongolia.

The spectacle calls to mind the idea of Obama going after former Secretary of State Donald Rumsfeld a year after taking office, shuttering him indefinitely in a prison cell, detaining more than 300 of his family members and associates, and seizing everyone's holdings.

The haul involved a dragon's horde of assets allegedly accumulated through fraud and embezzlement over Zhou's nearly 50 years of Party service: $6 billion in bank deposits, $8.2 billion in stocks and bonds, $274 million in real estate, $161 million in antiques and paintings, and a stream of bling that would make Gucci Mane blush. Also seized were 60 vehicles, a cellar full of rare and expensive liquors, and large amounts of gold, silver, and foreign currency. Most of this property was not registered in Zhou's name.

Meanwhile, trial proceedings have begun in Hubei province against 36 defendants that are accused of running a mafia-style enterprise involved in extortion, murder, gambling, and the trafficking of firearms. The leaders are alleged to be Liu Han, a 48-year old mining tycoon, and his younger brother Liu Wei, an entrepreneur and onetime torchbearer for Beijing's 2008 Olympics.

Liu Han. Photo by Reuters.

Authorities suggest that the Liu brothers used criminal ties to amass controlling stakes in over 70 companies, including four foreign firms. The syndicate's wealth was estimated to exceed $6.5 billion, and included several hundred luxury vehicles such as Ferraris, Rolls-Royces, and Bentleys.

The motivation behind these developments might have something to do with Zhou and Liu's support of Bo Xilai, the disgraced Politburo member who was regarded as a potential contender for China's leadership in 2013. Bo, whose downfall was the preamble to the current crackdown, is now serving life imprisonment for bribery, embezzlement, and abuse of power. His wife was given a suspended death sentence for her role in the murder of British businessman Neil Heywood in 2011.

Corruption has been ingrained in Chinese society for centuries. Before settling into their rule, leaders of communist China have typically engaged in a traditional bout of witch-hunting to dispose of rivals and drum up support, but this has typically had little effect on the prevailing culture. It is generally accepted that the Party's considerable membership is largely due to the opportunities it offers to accumulate wealth.

But the unprecedented scale of the Zhou and Liu cases is threatening to upset a delicate balance and potentially destabilize the Party. According to the Financial Times, former Chinese presidents Jiang Zemin and Hu Jintao, who both tacitly approved of the Zhou purge, have expressed serious misgivings about pushing the campaign much further. Jiang reportedly expressed to Xi that "the footprint of this anti-corruption campaign cannot get too big."

Jiang's perspective is revealing, since some observers believe Xi's purge is targeting his old power base, a faction of affiliates known as the "Shanghai Gang."

Yet Xi, whose own massive wealth is shrouded in mystery, presses on with his desire to add "a bit of chili pepper to make every Party official blush and sweat a little," as he remarked in March. That month, Xu Caihou, a retired general and a former vice chairman of the powerful Central Military Commission, was taken from a hospital sickbed by dozens of police officers. Xu, who is a close former associate of Jiang, was detained and placed under investigation for corruption.

Xi might actually believe that his campaign is necessary for China to eliminate waste and maintain its economic growth, although he could just as plausibly be using it to punish political opposition and consolidate his power. China's old guard is holding out hope that it's the latter — otherwise, the purge won't let up anytime soon.