Friday, December 10, 2010

How China Really Works...

True, I haven't posted for a long time, sorry loyal readers. Anyway, wikileak provided even some fodder for the discussion on elite politics in the form of a cable on how China really works. As seen below, top leaders are close to various business interests, and princelings are powerful. I would say the assessment below is more or less true. Moreover, at the local level, local leaders are close to various real estate companies and construction contractors, who help finance their promotions. Now, we can understand why imposing strict monetary policy that would cut off credit to SOEs and real estate developers may be difficult to do.


WikiLeaks: China's Politburo a cabal of business empires


China's ruling Politburo is a cabal of business empires that puts vested
interests over the needs of the poor and curtails media freedoms to avoiding
having shady business deals exposed in the press, according to a leaked US
government diplomatic cable.

Peter Foster
By Peter Foster, Beijing 9:00PM GMT 06 Dec 2010

The damning description of China's secretive leadership machinations also
described how the descendants of China's Communist revolutionaries - known
as "princelings" - derided officials from less august revolutionary
backgrounds as mere "shopkeepers".

The assessment of what motivates China's opaque top-level decision-makers
was relayed to Washington in July 2009 in one of the 250,000 cables
published by the WikiLeaks website.

"China's top leadership had carved up China's economic 'pie,'" the US
embassy contact said, "creating an ossified system in which 'vested
interests' drove decision-making and impeded reform as leaders maneuvered to
ensure that those interests were not threatened." The US embassy contact
also asserted there were no "reformers" within the top Communist Party
leadership, only competing factions that sought to protect their business
empires from attack by in-coming leaderships.

The source said that it was "well known" that former Chinese premier Li Peng
and his family controlled China's "electric power interests" while the
country's security tsar Zhou Yongkang controlled the state monopoly of the
oil sector.

The wife of China's premier Wen Jiabao, a popular figure in China often
affectionately referred to as "grandpa Wen" for his feelings for the common
man, is said to control China's "precious gems" sector, while Jia Qinglin,
ranked fourth in the Politburo, has "major Beijing real estate

Further down the political food-chain, the desire of local officials to
protect current business interests also explained China's reluctance to rein
in rising inflation and take steps advocated by international economists to
re-orientate its economy more towards domestic consumption.

"They [local officials] always supported fast-growth policies and opposed
reform efforts that might harm their interests," the contact said, adding,
"As a result, the proponents of "growth first" would always be in a stronger
position than those who favored controlling inflation or taking care of the
poor." The assessment also said that economic self-preservation was one of
the key reasons why China's leaders were so resistant to increased media

"Vested interests were especially inclined to oppose media openness, he [the
contact] said, lest someone question the shady deals behind land
transactions." China's reluctance to engage in political reform is to be
highlighted this week when Liu Xiaobo, the dissident author of the Charter
08 petition for greater rights in China, is awarded the Nobel Peace Prize
"in absentia" after being jailed in China for 11 years for challenging state

The perception inside China that the country is run in the interests of a
Party elite is also growing, with an online poll last February by the
state-run China Daily finding that more than 90 per cent of Chinese believed
that the new rich had achieved their wealth through political connections.

The web of commercial interests also forces China's modern rulers to act by
consensus, with the current President Hu Jintao likened to the "Chairman of
the Board or CEO of a big corporation", juggling factional interests, unlike
the autocratic figures of Mao Tse-tung or Deng Xiaoping who could rule by

The man tipped as China's next leader, Xi Jinping, was selected, not for his
leadership qualities but, the contact said, because he "maintained a
non-threatening low profile and had never made enemies" and could be relied
upon not to wage political vendettas through anti-corruption investigations.

"The central feature of leadership politics was the need to protect oneself
and one's family from attack after leaving office. Thus, current leaders
carefully cultivated proteges who would defend their interests once they
stepped down," the contact said.

In the past in-coming Chinese leaders have consolidated their position by
instituting crackdowns, with Jiang Zemin, the former president, shutting
down a number of businesses owned by the associates of his predecessor, Deng
Xiaoping, when he came to power in the early 1990s.

A similar process was observed in 2003 after Hu Jintao took office, with
several high-level figures in Jiang Zemin's Shanghai power-base facing
investigations and purges that analysts said were aimed at curtailing the
power and influence of the Jiang faction.

The contact also outlined the scornful factionalism that divided the scions
of the old 'red' families - those with revolutionary lineage whose fathers
and grandfathers fought to bring the Communists to power in 1949 - and those
who had risen up the Party ranks, so-called "shopkeepers".

China's current leaders, President Hu Jintao and prime minister Wen Jiabao,
both fall into the latter category, while the putative next leader,
57-year-old Xi Jinping, is the son of a revolutionary hero Xi Zhongxun and
often referred to as a 'princeling'.

The US embassy contact said that China's princelings felt they had a "right"
to the fruits of the revolution, recalling one family deriding those without
revolutionary pedigrees by saying: "While my father was bleeding and dying
for China, your father was selling shoelaces".

Related Articles

Comments: Post a Comment

This page is powered by Blogger. Isn't yours?