New York Times Wen Exposé Makes Waves

David Barboza’s investigation of the wealth built by Wen Jiabao’s extended family has dominated China news since its publication by The New York Times early on Friday. While the basic fact that wealth and power go hand in hand may surprise few—China Daily Show joked that anthropologists had discovered one man in a remote Chinese village who was shocked by the revelation—the sheer scale of the family’s business dealings has taken some aback. Besides, as Bloomberg’s Mike Forsythe tweeted, “there is a HUGE difference between ‘knowing’ and DOCUMENTING which NYT did!

In a short follow-up article at The New York Times, Barboza explained how he had obtained these documents:

Thirty years of economic reform — and government policies aimed at attracting foreign investment — have created a set of government agencies that keep records on private corporations and their major shareholders, including copies of resumes and government-issued identity cards.

It is this system that allows news organizations, including The New York Times, to request and review corporate records. Although ordinary citizens are not allowed access to the records, they can hire a lawyer or consulting firm to request documents for a fee of $100 to $200 per company. The Times used this process in obtaining thousands of pages of corporate documents to review the business networks controlled by the relatives of Prime Minister Wen Jiabao.

More details on the year-long investigation came from the Times’ public editor, Margaret Sullivan, who revealed that the newspaper had discussed the article with Chinese officials. The warning this provided may have contributed to the unusual speed with which censors pounced in the early hours of Friday morning.

Joseph Kahn, the foreign editor, told me that he knew when the reporting on this story began – about a year ago – that it would be a “threshold issue” for the Chinese government.

“I expected it to test the limits of what they would tolerate from the foreign media,” he said. (In speaking with me, he emphasized that Mr. Barboza’s direct editor on the story was Dean Murphy, a deputy business editor.)

“For us, this is just classic New York Times investigative journalism,” Mr. Kahn said. “It’s what reporters do. For them, this is not what reporters do. This is what reporters are banned from doing.” He said he believed that, by various means, the story is still getting out in China and that “it has done nothing to diminish the reputation of our journalism.”

Mr. Kahn said that as recently as Wednesday, Mr. Sulzberger and the executive editor, Jill Abramson, met with Chinese government representatives at The Times. But the focus of that conversation was not about the journalism – it was about a political and cultural differences.

In short, Chinese officials were making the case that The Times not publish the article.

From some angles, this case must have looked persuasive. As Sullivan noted, the Times is now exiled from China just months after investing heavily in a Chinese-language site. It faces irate advertisers—who were not forewarned of the article and its likely consequences—at a time when ad revenues are already dropping sharply. But at The Guardian, Michael Wolff argued that the moral victory is well worth the immediate financial cost:

The Times’ story, by David Barboza, is the type of journalism that not only catches the powerful in flagrante delicto, but that revivifies the paper’s reason for being. This has not been a kind few years for the Times, with its management, its journalism, and its prospects, under constant and more often than not unflattering scrutiny. But a story like this is something of an instant brand turnaround.

The New York Times took on China and, in the first round, won. This being China, the Times will, surely, be engaged in a constant battle going forward – even, perhaps, a confrontation that defines the sides in some new international press battle. That will, no doubt, be to its short term economic disadvantage. But that is good news for the Times, too.

[…] The Times released dismal earnings yesterday and its stock dropped by more than 20%. But its real value took an incalculable leap today.

Reactions were not uniformly rapturous, however. The Chinese government voiced its displeasure through both heavy online censorship and its Foreign Ministry spokesman. From the BBC:

“Some reports smear China and have ulterior motives,” Foreign Ministry spokesman Hong Lei said when asked about the story in a daily press briefing. On the blocking, he said the internet was managed “in accordance with laws”.

[…] The BBC has also been affected, with the BBC World News channel blocked when a correspondent was asked about the story during a report, and the BBC News website blocked later on Friday.

Regarding this censorship, Graham Webster explained on his Transpacifica blog “what it means when we say NYT is ‘blocked in China’“, while Max Fisher at The Washington Post discussed the risk that restricting access to such a prominent site might simply draw attention to Barboza’s report: 此地无银三百两.

Tea Leaf Nation’s Rachel Lu reported suggestions on Sina Weibo—similar to one source’s suspicion expressed in the article itself—that the Times had recently been fed its information by Wen’s enemies, and become a “puppet” in the political manoeuvring ahead of the 18th Congress in November. (Bear in mind Barboza and Sullivan’s statements that work on the article began in late 2011.)

Just three days before the article’s publications, overseas Chinese media reported that a portfolio of documents on Wen had been delivered to various foreign media outlets. As Wen presents himself as a champion of China’s liberals and reformers, many assumed that the dirt on Wen was given to foreign media by Wen’s enemies or supporters of former Chongqing Party Secretary Bo Xilai, the fallen symbol of the conservative camp who yearned for a return to Communist or Maoist orthodoxy.

“What position is the New York Times taking? Have they been bought out by the supporters of Mao?” asked one user. “All sides are making their final moves and positioning their pieces–that is what I think about the NYT’s headline today,” commented another. Some believe the newspaper is being used as a pawn in the power struggle, “This time NYT really does not understand China–too much of a puppet.”

[…] No matter what happens to Wen and the line-up at the 18th Party Congress, Wen’s political legacy and historical image are likely to be forever tainted by the revelations in the article. One social media user has no sympathy: “A giant when he talks, but a dwarf when he acts. Fare thee well.”

At Reuters’ Breaking Views, John Foley anticipated gentler repercussions for Wen, arguing that the explosive details would be dampened by the familiarity of the general theme.

Fix one problem, and along comes another. On the day China expelled disgraced politician Bo Xilai from its parliament, a New York Times investigation alleged that Premier Wen Jiabao’s family controls financial assets worth $2.7 billion. The suggestion is explosive, particularly of a leader who has spoken out about inequality. But it is also mundane, and won’t much change the calculus for investors in the People’s Republic.

With only around three weeks until Wen steps down from his party post, the risk that this becomes a social hot potato is slight. China’s censorship machine works as efficiently as ever: visits to the New York Times website were swiftly blocked. Blog users discussed the story, but only in euphemism, referring to Wen by names like “Wo Jia Baobao” – “My baby”. Though the details are juicy, the idea that China’s elite are very rich is hardly surprising.

[…] Consider this year’s civil service examinations, which are on course to attract a record number of applicants – in some cases with 9000 applications for a single post. That power breeds money is China’s worst kept secret.

Isabel Hilton elaborated at The Guardian:

In 1992 the late Deng Xiaoping, the Chinese former leader and father of “socialism with Chinese characteristics”, said: “Let a part of the population get rich first.” He did not explicitly assign that leading role to the Chinese Communist party, but the party, which continues to insist on its exclusive right to rule and its vanguard role in Chinese politics and society, took Deng’s instructions to heart.

[…] The symbiosis of politics and money extends to China’s parliament, the National People’s Congress which, as the annual Hurun report on China’s rich has shown, is now a billionaires’ club: the wealthiest 70 members enjoy a combined net worth of $85bn. By way of comparison, the estimated combined net worth of 660 top US officials, including the president, reportedly adds up to a mere $7.5bn.

The extent of the NPC members’ combined wealth was originally dug out of Hurun’s figures by Michael Forsythe at Bloomberg in February. 

This enormous accumulation of wealth threatens the view that, as The Financial Times’ Jamil Anderlini put it early this month, “while there may be corruption and wrongdoing at lower levels, the system is governed by clean and selfless elites who live only to serve the masses.” Barboza’s article does not implicate Wen himself of corruption, but any discussion of the wealth surrounding the pinnacle of Chinese power is deeply sensitive, particularly before a leadership transition already shaken by the fall of the now scapegoated Bo Xilai. From The Economist:

Mr Wen and his fellow leaders would prefer any public attention to the business dealings of the powerful to be focused on the family of Bo Xilai, the former party chief of Chongqing region in the south-west. Coincidentally, just after publication of the New York Times story, it was announced that Mr Bo had been expelled from the NPC. This was hardly a shock given that he had already been stripped of every other title, including last month his membership of the party. It prepares the way, however, for Mr Bo to be put on trial (NPC membership confers a token immunity from prosecution). This event will likely be staged some time in the next few months and will be the most sensational of its kind involving a deposed Chinese leader since the trial of the “Gang of Four” in 1980. Managing news coverage of it will be a huge challenge to the “collective leadership”. It will want to convince the public that Mr Bo and family members were engaged in egregious corruption (not least in order to block any possibility of a political comeback by the ambitious Mr Bo). But it will not want gossip to spread about the business affairs of other ruling families (squirrelling money abroad appears a national pastime, as we explain in our China section this week).

The man all but certain to succeed Mr Wen next March, his deputy, Li Keqiang, will be among those squirming. In a powerful report just published, Cheng Li of the Brookings Institution in Washington, DC, has exposed the prominent role of Li Keqiang’s younger brother, Li Keming, in the tobacco industry—even as Li Keqiang has been overseeing reform of the health sector. Airing such conflicts of interest is taboo in the Chinese press.

While the authorities scuttled to cover up the New York Times exposé, The New Yorker’s Evan Osnos diagnosed transparency:

The most substantive measure [the government] might take would be to require public officials to declare their assets, an idea that has been gaining favor among Chinese commentators in recent years. China had nearly ten million public servants, but local experiments to make them own up to what they own have failed. “No experiment that discloses the assets of junior officials but allows senior officials to continue keeping their assets secret can really expect to gain enough credibility and support to be sustainable,” Yiyi Lu, an expert on Chinese civil society, wrote recently. “If the party is genuinely prepared to embrace reform and openness, then disclosure of officials’ assets must start from those in the most senior positions.”

The Party is running out of time not because corruption is a drag on the economy—it can outrun that effect—but because the public is losing confidence. Last year, when two trains crashed on a stretch of China’s new railways, citizens were not inclined to see it as an example of the inevitable problems that accompany an ambitious new improvement to public transportation. Instead, they circulated an anonymous message that read, in part: “When a country is so corrupt that one lightning strike can cause a train crash … none of us are exempt. China today is a train rushing through a lightning storm…. We are all passengers.”