Home' Trinidad and Tobago Guardian : January 30th 2014 Contents BG22 | INTERNATIONAL
BUSINESS GUARDIAN www.guardian.co.tt JANUARY 2014 • WEEK FIVE
For a sense of how President Xi Jinping's anti-
corruption campaign is doing, a recent report
by Xinhua, China's official news agency, is a
good place to start: It said that 56 five-star
hotels in China had asked to be downgraded
last year in order to survive, because local gov-
ernments have been prohibited from using luxury hotels. Chen
Miaolin, chairman of New Century Tourism Group, told Xinhua
that revenues at his group's hotels, mostly five-star, fell by 18
per cent last year.
In big cities business is down at many of the best private
clubs and restaurants. A number of luxury brands have reported
sharp falls in revenues. Remy Cointreau saw sales of its flagship
cognac fall by more than 30 per cent in the last three months
of 2013 over the previous year, owing mostly to falling Chinese
The campaign begun more than a year ago by Xi has been
surprisingly broad and sustained, and is intensifying as it
enters a second year. The Central Commission for Discipline
and Inspection, the party's watchdog, says that 182,000 officials
were punished for disciplinary violations in 2013, an increase
of more than 20,000 over 2012 and of nearly 40,000 over
2011. Thousands of officials have been disciplined for extrav-
agances, such as hosting lavish banquets, weddings and funerals,
spending public funds inappropriately on travel, the improper
use of government vehicles and constructing luxurious gov-
Two recent developments, however, illustrate the difficulty
and sensitivity of the task the party has set itself.
On January 21 a report by a team of media outlets led by
the International Consortium of Investigative Journalists, an
American organisation, revealed the secret offshore holdings
of close relatives of some of China's elite, including Xi's broth-
er-in-law and the son of former Prime Minister Wen Jiabao.
On January 22 authorities in Beijing began criminal trials of
independent anti-corruption activists who had campaigned
for, among other things, public disclosure of official assets.
The message from Xi is that the party, and only the party,
will patrol itself, and is perfectly capable of doing so. However,
the ICIJ report hints at the failures during previous decades
The report is based on a leaked trove of documents of two
offshore-finance firms and identifies nearly 22,000 clients
from mainland China and Hong Kong who have offshore hold-
ings. Such assets are often legitimate -- many Chinese firms
were encouraged to register companies overseas to help with
investing abroad or to list on foreign stock exchanges -- but
their secrecy also can enable China's rich and powerful to
move around their cash and conceal how much they have.
ICIJ found that close relatives of at least five current or
former members of the Politburo's standing committee have
incorporated companies in the Cook Islands or British Virgin
Islands. Executives of Chinese state-owned companies con-
nected to corruption investigations are also among those with
unexplained offshore companies, the report says, as are some
of China's wealthiest entrepreneurs. ICIJ is expected to release
all 37,000 names of people in China, Hong Kong and Taiwan
with offshore holdings, which may lead to more revelations.
Of chief concern to China's leaders will be disclosures about
their extended families. Deng Jiagui, who is married to Xi's
older sister, owns 50 percent of a British Virgin Islands company,
Excellence Effort Property Development, according to the
leaked files. Bloomberg, the financial-news service, reported
in 2012 that Deng has amassed millions of dollars in property
holdings and investments in rare-earth metals.
Wen Yunsong, the son of the former prime minister, set up
a British Virgin Islands company in 2006, when his father
was in office, though it was dissolved in 2008. ICIJ also reports
that another B.V.I.-registered firm, linked by The New York
Times to the former prime minister's daughter, Wen Ruchun,
appears to have been set up so as to obscure her role. The
paper reported in 2012 on the vast wealth of Wen's family,
and recently revealed that American securities regulators are
investigating dealings between Wen Ruchun and J.P. Morgan
Chase as part of an alleged programme to buy influence in
China through the children of the country's leaders.
Chinese authorities have been slow to catch up with the
flow of cash overseas. On Jan. 1, for the first time, they began
requiring the disclosure of offshore holdings. On January 17
Xinhua reported that the party had tightened rules for "naked
officials," those whose spouses or children have moved abroad,
leaving them alone in China, and explicitly barring officials
from promotion if their spouses have moved overseas.
This desire to emigrate is not limited to officials, of course.
A recent survey of China's wealthy by Hurun, a company
which publishes an annual rich list, found that 64 per cent
would like to move abroad.
Meanwhile the campaign for official frugality presses on.
With the approach of the Chinese New Year, a traditional time
for giving "gifts" in red envelopes, the state broadcaster CCTV
announced that it would cut back on screening a number of
official galas, so the people of China will not get to see the
"Power of Rule of Law Gala" and the "Gala for Efficient,
Intensive Use of Land Resources."
The leadership has gained some credibility for its anti-cor-
ruption efforts by prosecuting a number of high-level officials.
However, accusations of corruption also are a convenient way
to attack one's enemies. The ICIJ report, and this week's trials
in Beijing, suggest that a lack of transparency and independent
accountability may continue to undermine the party's efforts.
It has ignored calls, including from reformists within its
own ranks, for broad public disclosure of official assets. For
more than a year it has blocked the Web sites of Bloomberg
and The New York Times in retaliation for their revelations.
Authorities also have continued a crackdown on microblogs,
which Xinhua once hailed as "an inescapable snare for corrupt
Xi has made clear that the only inescapable snare will be
the party's. The question is whether that will be enough.
@2014 The Economist Newspaper Ltd. Distributed by the New
York Times Syndicate
Davos, Switzerland---China's richest man, Wang Jianlin,
says he's looking to do more deals in the UK, noting it's much
easier to do business with the British over the Americans.
Wang's massive conglomerate, Dalian Wanda Group, has
been increasingly expanding outside of China, announcing a
US$1.6 billion deal in June to buy the British yacht maker
Sunseeker, which crafts vessels for James Bond films. The
firm also announced plans to develop a five-star hotel and
apartment complex in a prime London location.
In 2012, Wanda bought American cinema chain AMC Enter-
tainment Holdings in a US$2.6 billion deal.
Now that he's completed a few blockbuster deals, the bil-
lionaire said the US is a good place for business, but it's not
"If we compare [the United States and the European Union],
the US is more open than the EU," he said. "But the UK is
the most open."
Wang, who was speaking at the World Economic Forum in
Davos, Switzerland, said he will be increasing his investments
in the UK.
This comes as British politicians aim to improve trade rela-
tions with the country of 1.4 billion people.
In late 2013, the British Prime Minister David Cameron
went on a trade mission to China, resulting in over £5.6 billion
(US$9.3 billion) in trade deals between the two countries.
"We are determined to do all we can to throw open the
door for British companies to benefit from China's vast and
varied markets," said Cameron when the deals were announced.
But Wang isn't solely focused on international growth.
In late September, his company announced it was investing
US$8.2 billion to develop a massive entertainment complex
in the Chinese city of Qingdao. The facilities will boast film
and television studios, theme parks and hotels.
In September, a report pegged Wang's personal net worth
at US$22 billion, up from US$10.3 billion in 2012.
According to the report, Wang is among 315 China-based
billionaires. Just a decade ago, the country did not have any
billionaires. (CNN Money)
Chipping away at Chinese corruption
China's richest man
prefers UK deals over US
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