Sunday, June 06, 2010

The Princelings of China

A Times article describes Chinese state-capitalism. A recent survey by officially sponsored academics claimed that 91% of Chinese citizens worth more than £10m — or 2,932 out of 3,220 people — were the children of senior officials. The 12 largest property companies in China are all said to be controlled by children of high officials. So is 85% of the lucrative business of operating toll motorways. They are the new generation of “junior princelings” who stand to inherit power and wealth from their parents, the new aristocracy. As strikes spread and workers fight for higher pay, public resentment is mounting against this group of privileged insiders. The media are under strict orders not to mention a host of well connected offspring of the party leadership who have grown wealthy.

Top of the list is the son of Wen Jiabao, China’s “man of the people” prime minister. Wen Yunsong, who is known to his American friends as “Winston”, is chairman of New Horizon Capital, which has raised some $1 billion from private equity investors for deals involving state-backed projects.

Then there is Hu Haifeng, the son of Hu Jintao, the ideologically doctrinaire Chinese president. He has suddenly disappeared from public view. The vanishing act followed a scandal in Namibia, where anti-corruption investigators launched an embarrassing inquiry into how Nuctech, a company of which Haifeng was chairman, won a £34m contract from the African nation. The Namibia deal inspired questions on Chinese internet sites about the company’s remarkable success in selling security equipment to Chinese airports. Censors hastily banned search engines from returning queries listing Haifeng’s name, Namibia and the company. He has now taken up an academic post at Qinghua University.

Wan Bao Bao, the American-educated socialite and designer of luxury jewellery, is the daughter of an overseas trade minister and granddaughter of Wan Li, a vice-premier.

Then there is the businesswoman Li Xiaolin, the daughter of Li Peng, the Maoist premier who backed sending the tanks into Tiananmen Square. Twenty-one years after that event Li’s daughter is known as “the queen of China’s electricity industry”. Her father’s pet project was the controversial Three Gorges dam, which remains the biggest hydroelectric project in history. So it may be mere coincidence that Xiaolin has matured into a powerful executive in China as general manager of China Power International Development. She has publicly said that her success has nothing to do with him but is due to her own hard work and tenacity.

Bo Xilai, the party chief in Chongqing, renowned for his clampdown on gangsters and corruption, was able to send his son, Bo Guagua, to Harrow school in England. He is now a student at Oxford.

When President Jiang Zemin ceded power to Hu Jintao, it appeared to have little effect on his son Mianheng’s career as an investor in the state-dominated telecoms market.

Likewise, Zhu Rongji, the former prime minister who once lamented that he had not enough bullets to deal with corrupt officials, watched as his son, Levin Zhu, became a multi-millionaire investment banker for a state- backed firm.

Some critics of the position that Russia and China were state-capitalist economies have previously denied that the bureaucracy constituted a distinct exploitative social class since it was incapable of perpetuating itself - not so - it seems.

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