Hangzhou Party Boss Investigated For Corruption, Officials Warned About Business Relationships

An investigation into Hangzhou’s Party chief by the CCP’s powerful internal anti-corruption watchdog may be tied to Alibaba’s ongoing political woes. Over the weekend, the Central Commission for Discipline Inspection (CCDI) announced it was looking into Zhou Jiangyong for “serious violations of discipline,” often a euphemism for corruption. Soon after, the CCDI said that 25,000 current and former Party officials in Zhejiang’s provincial capital are performing “self-examinations” to straighten out “conflicts of interest” they might have with local businesses. None of the statements has been confirmed to directly implicate the Hangzhou-headquartered Alibaba, but speculation is rife due to Zhou’s tight-knit relationship with the company. Xi’s anti-corruption drive, now in its ninth year, is still in full swing—netting cadres present, past, and passed. At Bloomberg News, Shiyin Chen and Coco Liu reported on the rumors swirling about Zhou’s stake in Jack Ma-controlled Ant Financial’s abruptly cancelled IPO:

Social media accounts wrote over the weekend that Zhou’s family bought up shares in a fintech company ahead of its initial public offering in November, before the listing plans were scrapped, according to an article from Chnfund that was published in the Paper, part of the state-backed Shanghai United Media Group. The postings, which didn’t name the company, have since been deleted, according to the article.

Ant Group on Sunday denied that certain individuals purchased shares of the company ahead of its planned IPO last year, as “recent online rumors” had suggested. The firm didn’t elaborate on who it was referring to, adding that it had strictly adhered to all relevant laws and regulations through the listing process. Regulators called an abrupt halt to Ant’s record $35 billion IPO days before its debut last year, after its founder publicly criticized financial regulators.

[…] That outsized influence in Hangzhou has fostered a strong relationship with the local government. In 2019, Ma was presented with a “Meritorious Hangzhou citizen” award by none other than Zhou, the local party boss, who feted the billionaire tycoon for his contributions to the city’s economic and social development, according to government statements at the time. Local media have also published photos of Zhou attending Alibaba’s annual Singles’ Day shopping festival in 2019. [Source]

Jack Ma has fallen out of favor with Chinese authorities, as have others among China’s fast-rising tech billionaires. A recent Wall Street Journal profile of Ma reported that Xi Jinping’s displeasure with the Alibaba founder was evident by 2015, when the latter spoke for much longer than the three minutes allotted to him during a Seattle meeting with the Chinese president, who was in the United States for a state visit. In 2020, Xi Jinping personally stopped Ant Group’s IPO. Alibaba has also become a focus of China’s #MeToo movement after a senior manager sexually assaulted his subordinate after binge drinking during a client dinner. In a statement issued in relation to the case, the CCDI said “under-the-table rules” like forced drinking should be replaced with “correct values.”

It seems that all Hangzhou officials are under scrutiny for their ties to local businesses such as Alibaba. At The Financial Times, Tom Mitchell and Sun Yu noted a report, republished by the CCDI, that 25,000 local officials are examining their relationships with unnamed local businesses:

The watchdog said 25,000 local officials and their family members were the focus of “self-examination and self-correction” reviews focused on their relationships with local businesses, including “illegal borrowing”. This will include probing those who have retired within the past three years.

[…] The CCDI added that Hangzhou officials would be held accountable for the business activities of their relatives, even if they were not personally involved.

Under a recent revamp of party and government rules, senior officials are not allowed to regulate industries in which companies managed by their spouses or children also operate. But they can do so if their immediate family members serve in lower level positions or act as corporate “advisers”. [Source]

At The South China Morning Post, Cissy Zhou reported that another Zhejiang official, once deputy Party secretary of Hangzhou, has “surrendered” for likely corruption:

The investigation into Zhou came two days after another official in the province came under a cloud.

On Thursday, Ma Xiaohui, former party secretary of Huzhou “voluntarily surrendered” for suspected “serious violations of discipline and law”, according to state media.

Between 2015 to 2018, Ma was the vice mayor and the deputy party secretary of Hangzhou. Before that, he was the deputy party secretary of Wenzhou. [Source]

University of Michigan scholar Yuen Yuen Ang has argued that endemic corruption is a by-product of China’s “Gilded Age,” borrowing a term from America’s late 19th century history, in an essay for Foreign Affairs. Ang argued that Xi, like the American Progressives of yesteryear, hopes to end crony capitalism in China but, unlike said reformers, has destroyed grassroots efforts at taming graft in favor of ever more centralization of personal power. She concluded her assessment with a quote from an anonymous Chinese official, “It’s like riding a bike. The tighter you grip the handles, the harder it is to balance.” An analyst at Germany’s Mercator Institute for China Studies told The Washington Post that Xi’s new push for wealth redistribution in the name of “common prosperity,” which is being piloted in Hangzhou, may also be a factor in the campaign. Xi has used the term 65 times this year to date, already doubling his total use of the phrase in 2020, a rhetorical indication of the importance Xi places on the reforms he hopes to push through. One such reform just passed by the Standing Committee of the National People’s Congress is the introduction of new guidelines for inspectors at the National Supervisory Commission, an anti-corruption super-agency designed to work in parallel with the CCDI. From Jack Lau at The South China Morning Post:

[…] The law that inspectors must have a clean record and their spouses must not be based outside mainland China – a provision that has previously been applied to state prosecutors, judges, police and senior civil servants.

“We already knew that there would be tighter scrutiny and demands for officials to report on family members overseas,” said Zhu Jiangnan, an associate professor at the University of Hong Kong’s politics and public administration department .

[…] Inspectors attached to government ministries used to be sent by the party’s central discipline and inspection committee, [Zhu] said, but now the preference is for officials with experience of the ministry’s portfolio.

“This is a way that the government hopes to enhance the professional supervision [of] those different policy domains. They probably realise that only those who understand the professional domains can supervise corruption and disciplinary violations in the relevant field,” [Zhu] said. [Source]

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