NYT: Inside the Princeling “Spoils System”

The New York Times dives into the upper echelons of China’s political elite, where relatives of party officials have enriched themselves within an “ecosystem of crony capitalism” that “poses a fundamental challenge to the legitimacy of the Communist Party”:

As the scandal over Bo Xilai continues to reverberate, the authorities here are eager to paint Mr. Bo, a fallen leader who was one of 25 members of China’s ruling Politburo, as a rogue operator who abused his power, even as his family members accumulated a substantial fortune.

But evidence is mounting that the relatives of other current and former senior officials have also amassed vast wealth, often playing central roles in businesses closely entwined with the state, including those involved in finance, energy, domestic security, telecommunications and entertainment. Many of these so-called princelings also serve as middlemen to a host of global companies and wealthy tycoons eager to do business in China.

“Whenever there is something profitable that emerges in the economy, they’ll be at the front of the queue,” said Minxin Pei, an expert on China’s leadership and professor of government at Claremont McKenna College in California. “They’ve gotten into private equity, state-owned enterprises, natural resources — you name it.”

For example, Wen Yunsong, the son of Prime Minister Wen Jiabao, heads a state-owned company that boasts that it will soon be Asia’s largest satellite communications operator. President Hu Jintao’s son, Hu Haifeng, once managed a state-controlled firm that held a monopoly on security scanners used in China’s airports, shipping ports and subway stations. And in 2006, Feng Shaodong, the son-in-law of Wu Bangguo, the party’s second-ranking official, helped Merrill Lynch win a deal to arrange the $22 billion public listing of the giant state-run bank I.C.B.C., in what became the world’s largest initial public stock offering.

The foreign press has been reporting on China’s princelings and the challenge they pose to the CCP since well before the Bo Xilai scandal erupted, with a number of China’s incoming generation of top leaders (including president-in-waiting Xi Jinping) descending from Communist Party elite. Still, the Bo scandal turned the princeling issue into a “U.S. media phenomenon,” especially in light of already existing reports of son Bo Guagua’s lavish and conspicuous lifestyle, writes Jay Newton-Small for TIME’s Global Spin blog:

China has changed in the years since the revolution when everyone was expected to live simply. Bo Guagua and his contemporaries are everything the Communist Party stalwarts have sought not to be: frivolous, glittering, pampered, privileged. And while Bo Guagua has dropped off the map, abandoning his $3,000-a-month Boston luxury apartment for something in an undisclosed location, there is no shortage of princelings to focus on. There are hundreds if not thousands of them in the U.S. alone. “The reality is [there is] a very large number of Chinese officials, not only of highest levels but throughout the system, who send their children abroad whenever they can,” says Lieberthal.

The American media aren’t the only ones to find the princelings fascinating. Indeed, it is a much more crucial development that Chinese blogs were onto Bo Guagua even before the scandal enveloped his parents. They were the first to track his glitzy existence, for example, writing about Bo Guagua allegedly using his red Ferrari to pick up the daughter of former U.S. ambassador to China Jon Huntsman for an event. The same blogs follow former People’s Liberation Army marshal Ye Jianying’s granddaughter Ye Mingzi’s latest fashion design or former Vice Premier Wang Li’s granddaughter Wan Baobao’s jewelry designs. They also traffic in unsubstantiated speculation (like whether the daughter of a prominent Chinese leader, attending Harvard under an assumed name, dated basketball phenom Jeremy Lin).

Singling out Bo Guagua may be the regime’s shot across the bow to other young princelings: keep a low profile or you could end up like him. But surely Bo Guagua is only the first installment in what promises to be a long and dramatic soap opera. It’s hard to imagine that none of the princelings want to be the Paris Hilton of China. As the story unfolds, the test will be how the Communist Party handles it. The trouble is that money and what it can flaunt is central to Chinese society nowadays. “China itself is very much focused on making money as a core goal of people throughout that system,” says Lieberthal. “In fact, there are complaints in China all the time that people are worried that the focus is so strong that it isn’t properly balanced by ethical considerations. The ethic is making money. And if that ethic isn’t tempered, you may have a rapidly growing economy but you’ve got real problems.”