Saturday, 18 February 2017

Abduction of Billionaire Xiao Jianhua and Corruption in China

       Chinese billionaire business tycoon Xiao Jianhua is no ordinary run of the mill businessman. That Xiao was “abducted” from his luxury flat from Hong Kong by Chinese State Security officials and taken to the Mainland, immediately raised antennas about the persona of Xiao Jianhua. Interestingly, Xiao is presently a Canadian citizen and carries a diplomatic passport of Antigua and Barbuda and probably never imagined that he would be whisked away from Hong Kong. That the Chinese state security officials would go to such lengths shows the importance of the man. He is reportedly the person who has over the years been identified as the “front-man” for business dealings of elite Chinese politicians, party hacks and senior government officials. Fairly young at 46 years old, Xiao was a student leader during the Tiananmen crack-down in 1989 and who sided with the government. He has never looked back since then and is presently reportedly worth US$5.8 billion; which makes him the thirty-second wealthiest Chinese tycoon businessman. His companies have shares in banks, insurance, coal, cement and are amalgamated under the banner of “Tomorrow Group” and are listed on the Chinese stock market.

    That this was no ordinary abduction, but perhaps something more, is bolstered by the fact that in 2012,  a company co-owned by Xiao, bought shares worth US$ 2.4 million from Qi Qiaoqiao and Deng Jiagui; the sister and brother-in –law of the Chinese President Xi Jinping. Later he admitted to NYT that he had “helped” the family of Xi Jinping. He also reportedly helped Zeng Wei, the son of the Chinese Communist Party [CCP] Vice Chairman Zeng Qinghong, to acquire Shandong Luneng, a State power company that was subsequently privatized. CCP Vice- Chairman Zeng is reportedly politically close to the former Chinese President, Jiang Zemin.

   The abduction of Xiao Jianhua raises a larger question. Is China’s anti- graft drive, so assiduously pursued by President Xi Jinping, merely a cover for getting rid of political opponents or is it actually a drive to eliminate graft from the Chinese system? Very early on in his innings as President beginning 2012, Xi Jinping had made the elimination of corruption from the Chinese political system as one of his important policy imperatives. The feeling was that corruption was slowly eroding the Communist State system, with a concomitant threat to the very existence of the Chinese Communist Party [CCP]. As it is the CCP Central Discipline and Inspection Commission reported that in 2016 about 11,000 corrupt officials were prosecuted, but significantly this figure represented a drop of about 20 per cent from those that were prosecuted in 2015.  This fall in the number prosecuted was seen as representing a winding down of the anti-corruption movement, just prior to the forthcoming Party Congress later this autumn, where Xi is expected to be confirmed for a second term and a new standing committee of the politburo nominated. In fact only President Xi Jinping and the Premier Li Keqiang are expected to retain their respective positions, out of the existing seven standing committee politburo members. It may be recalled that the real rulers of China are the seven standing committee members of the politburo. The significance of the choice being made now lies in the fact that the next CCP leader to replace Xi Jinping at the next party congress in in 1922, would also be expected to be identified from within the new standing committee members of the politburo now nominated.

    Could the abduction therefore of Xiao Jianhua be linked to murky maneuverings that are taking place within the ruling CCP leadership groups, as to who would be the eventual successor to Xi Jinping as President?  One of the easiest methods to eliminate a potential rival would be to paint him with the tar of corruption. In China the Chinese Academy of Social Sciences has estimated that the liquid assets of State Owned Enterprises [SOEs] and cash generated by land sales of the Chinese state to be about US$ 4 trillion. It is not difficult to envisage that important officials, holding extensive power, are able to easily access this cash. Even those Chinese officials, who are under investigation, continue to serve and often are even promoted. At present the Chinese judicial system is rather weak and subject to CCP guidelines and therefore cannot be considered to be independent. Without a free press, it is the word of the CCP Central Discipline and Investigation Commission that counts as the ultimate arbiter of the fate of a “corrupt” official. And the Central Commission is fully under the control of who- ever is the Party leader; in this case President Xi Jinping who operates through Wang Qishan, the politburo standing committee member in charge of anti-corruption.

     Within Chinese ruling circles the need for “stability” to the run up to the 19th Party Congress later this autumn is seen as a paramount requirement. Thus even Xie Zhenjiang was removed from his post of Chairman of the Beijing based Securities Daily, as he was seen as to close to Xiao Jianhua. The charge against Xie was that he had the potential to create “instability” in the Chinese Stock market in conjunction with the extensive holdings of Xiao’s companies listed on the stock exchange. The Chinese political system cannot sustain the melt down of the stock exchange as had happened earlier. It would be a severe indictment of the present ruling group.

  Therefore the main beneficiary of the arrest and abduction of Xiao Jianhua is likely to be Wang Qishan, the standing committee member of the politburo in charge of the Central Discipline and Investigation Commission and who is a very close political associate of President Xi Jinping. In fact speculation abounds that if Wang is able to ensure “stability” in the run up to the 19th Party Congress, then his chances for promotion are considerably brightened. The question therefore still remains moot whether the abduction of Xiao Jianhua from Hong Kong was linked to an anti-corruption drive, or was it linked to the political maneuverings that are going on in Chinese political system just prior to the CCP Congress? 

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