Defying Mao, Rich Chinese Crash the Communist Party

The Wall Street Journal’s James T. Areddy explores the intersection of wealth and power in today’s China: China has been grappling of late with political and social tension over its murky policy-making process and its growing income disparity. The party has been especially sensitive this year during the leadership change about revelations about fortunes amassed by the offspring of political leaders, known as “princelings,” by leaders of state businesses and by other politically connected people. Many ordinary Chinese blame high prices, poor quality food and pollution on guanshang guojie—meaning, roughly, officials in bed with businessmen. […] It is difficult to pinpoint precisely how holding political positions advances the business interests of the wealthy, if at all. They may do better because of their political positions, or, conversely, they may owe their positions to their business success. There are a multitude of reasons for Chinese companies to be on good terms with political leaders. Chinese companies routinely do business with the government, borrow money from state banks, even negotiate their tax bills with local authorities. The web of political power and business interests is mapped in a dense and extensive infographic accompanying the report. Areddy also points to an illustrative series of deals involving former Chongqing Party boss Bo Xilai and Wen Jiabao’s son Wen Yunsong. The transactions began when officials in Chongqing’s government who answered to Mr. Bo sold shares of a state-run grocery and electronics chain to an investment group led by New Horizon Capital LP, a firm founded by Premier Wen’s son, Wen Yunsong. After first buying 25% of the chain-store business, the New Horizon-led group increased its holdings to 39%, according to regulatory filings and government reports. The investment group effectively became a partner of the Chongqing government in the retail business. In October 2009, Chongqing Department ...
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