CLAREMONT, CALIFORNIA – China’s “princelings” – the offspring of senior Chinese officials who benefit from lavish privileges in education, employment, and business – are coming under scrutiny as never before. Bo Xilai, the son of one of Mao’s comrades and a supposed “immortal” of the revolution, was recently sentenced to life in prison after his conviction on charges of corruption and abuse of power.
Outside China, princelings are feeling the heat as well. Not long ago, the United States Securities and Exchange Commission announced that it was investigating JPMorgan Chase’s hiring of princelings in Hong Kong, who apparently delivered lucrative underwriting deals for the bank.
While recent scandals have put China’s princelings under a harsh media spotlight, they have been hot commodities for Western companies seeking to capitalize on their guanxi (connections) in order to secure multi-billion dollar transactions. The list of financial institutions that have engaged in such hiring practices reads like a who’s who of investment banking.
Of course, it is premature to conclude that JPMorgan violated the US Foreign Corrupt Practices Act by employing children of Chinese officials who oversaw companies that retained the bank to underwrite their stock offerings. Nonetheless, the case highlights a broader trend: the wooing of China’s princelings by prestigious Western educational institutions and businesses for the purpose of advancing their parochial interests in the burgeoning Chinese market.