Friday, November 21, 2014

Fallen Tiger, Shaken Dragon

CLAREMONT, CALIFORNIA – Less than 18 months after becoming General Secretary of the Chinese Communist Party, Xi Jinping is poised to cage the biggest political “tiger” – a corrupt top official – in the history of the People’s Republic. Although rumors of the imminent fall of former internal security chief Zhou Yongkang have been swirling for months, many observers remained unsure whether Xi would prosecute Zhou and thus break the party’s long-established unwritten rule of immunity for sitting or retired members of the Politburo Standing Committee.

But doubts about Zhou’s fate have now been dispelled by a recent flurry of uncensored news stories in the Chinese media that revealed shocking details of corruption involving Zhou’s family and former subordinates. One newspaper reported that the authorities recently searched the homes of Zhou’s two brothers. Though these stories have yet to implicate Zhou directly, it will be only a matter of time before the Chinese government officially charges him with corruption.

Whispered reports are even more lurid. Zhou is said to have plotted to murder his first wife, and there are rumors that at the height of last year’s scandal involving disgraced former Chongqing party boss Bo Xilai, he attempted to assassinate Xi in the leadership compound at Zhongnanhai.

Based on what the Chinese press has disclosed thus far, it is clear that the Zhou case will be the ugliest and most sensational scandal involving a senior party leader that the country has ever seen. It will make Bo, an ally of Zhou and a former Politburo member who was sentenced to life imprisonment for corruption, look like a petty thief.

Apparently, the Chinese government is meticulously building a case against Zhou by pursuing two critical leads. The first one targets his son, Zhou Bin, a businessman who has amassed a huge fortune through shady deals and possibly criminal activities.

With so many officials and private businessmen eager to curry favor with his father, Zhou Bin had no difficulty cashing in. His business activities include brokering sales of oil-field equipment to Iraq (causing huge losses for Chinese state-owned oil companies); construction of hydroelectric power stations in Sichuan (where his father was the provincial party boss from 1997 to 2002); providing information technology for 8,000 state-owned gas stations; and investments in real estate, oil exploration, and toll roads.

The most damaging revelation so far concerns Zhou Bin’s friendship with a billionaire mafia boss, Liu Han, who is now standing trial for organized crime and murder. Liu made his fortune with Zhou Bin’s help. In one case, the younger Zhou allegedly used his political connections to help Liu sell two hydroelectric power stations to a state-owned power company for a profit of ¥2.2 billion ($330 million).

The second lead centers on Zhou Yongkang’s former lieutenants. A tactic favored by Chinese anti-corruption investigators is to detain junior officials who have worked closely with their primary target. Typically, these minions are threatened with long prison sentences, or even the death penalty, unless they cooperate.

In this case, a dozen officials who worked for Zhou in the energy sector in Sichuan and in the Ministry of Public Security (where Zhou was Minister from 2003 to 2008) have been arrested. Most ominously for Zhou, the officials include two of his former executive assistants, who presumably have intimate knowledge of Zhou’s activities.

When the Chinese government formally announces Zhou’s arrest – probably after the conclusion of the annual session of the National People’s Congress in mid-March – the revelations of the rot within the Chinese party-state will stun even the most jaded observers. What Zhou, his family, and their cronies have done can be described only as insatiable looting and blatant gangsterism.

More important, the Zhou scandal will almost certainly implicate a record number of senior officials. As of now, one minister, two provincial vice governors, one vice minister, and several senior executives in state-owned oil companies have been detained. More officials are expected to fall in the coming year.

For Xi, ensnaring Zhou in his anti-corruption net will likely provide a boost in his popular standing. He can show a skeptical Chinese public that he has the political will to take down one of the country’s most powerful politicians. Moreover, vanquishing a once-untouchable politician will leave no doubt about Xi’s personal authority.

For the rest of the world, the unfolding Zhou scandal reconfirms a profoundly worrisome fact: the Middle Kingdom remains deeply corrupt. Caging a tiger will not destroy a vampire.

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    1. CommentedJeff GE

      Why did the author assume that the rest of the world would be worrisome about the corruption? Did JP Morgan and the like profited from such corruption by actively hiring the children of high ranking officials?

    2. Commentedj. von Hettlingen

      In order to burnish the image of China's Communist Party, President Xi Jinping had, since taking office, launched an anti-corruption campaign, which he said would target both "tigers and flies" - high and low ranking officials in the government. Zhou Yongkang is no doubt a tiger.
      Historically a dragon is the symbol of the Chinese emperor. Is Xi supposed to be the "shaken dragon", who doesn't feel confident enough to break the unwritten rule that China's top leaders - including those who have retired - shall not be investigated?

      It's unknown why Zhou Yongkang was sacked in 2000, when he was minister, whose Land and Resources department oversaw land use and building permits. Then he was appointed Public Security Minister, thus a member of the politburo in 2003. His priority was to maintain law and order in the country and his policemen ddidn't hesitate to strike hard.
      As China's top policeman Zhou was much feared. Yet it was his background as engineer specialising in exploration, that made him and his siblings rich. He had been general manager of the China National Petroleum Corporation, the country's largest oil and gas producer. While being minister of Land and Resources, he also helped Chinese companies seek investment in Zimbabwe.
      He began to lose his grip of power as the Bo Xilai scandal unravelled. Seen as Bo's mentor, there was rumour of a coup in March 2012 - an alleged attempt by Zhou - to remove Hu Jintao and Wen Jiabao from office. Later he was said to be sidelined because Bo confessed that he has received support from Zhou, who helped him to make contact with various central party departments. Zhou saw his own downfall in the wake of Bo's sacking and was replaced in November 2012. Since then he and his business and political associates have become targets of Xi's anti-corruption drive.

    3. CommentedS. Bait

      At this point, it is more important to strip Zhou of support than building a case. Xi need to be sure Zhou's relationship/connection won't do too much harm to Xi's own people when the main thrust towards Zhou is launched. Therefore, removing influential people around Zhou will make Zhou a toothless tiger by the time Xi move against himself.