Wen Jiabao’s Riches and Political Reform in China
Image Credit: World Economic Forum (flickr)

Wen Jiabao’s Riches and Political Reform in China


No doubt about it, David Barboza of the New York Times has achieved a journalistic coup. His deep dive into the financial wherewithal of Chinese Premier Wen Jiabao’s family exposed a total net worth of a staggering $2.7 billion. Other journalists, of course, have investigated the family holdings of Chinese leaders: a team of Bloomberg reporters broke the secrecy barrier with reports on the wealth of Bo Xilai’s family, and last June published an in-depth look into the burgeoning financial holdings—almost $400 million—of soon-to-be Chinese President Xi Jinping’s extended family. Frankly, anyone who spends much time in China knows about the oligarchic nature of the Chinese elite, but the extent and distribution of the Wen family wealth is eye-opening.

The implications of the NYT article, moreover, go well beyond simply another story about the ability of another Chinese leader’s family to profit from political connections. The piece has the potential to significantly influence the broader near-term Chinese political landscape in a couple of respects.

First, the bad news. The political reformers have taken a serious hit. Unless Wen steps forward publicly to declare his family’s financial holdings, open their books to the public, and indicate the willingness of his family to face up to the legal consequences of any financial improprieties, his legacy will be tainted and the opportunity for him to shape future political events severely constrained. This would be a shame since Wen, alone, has been the torchbearer for political reform within the current leadership. Even more devastating, the fall of Wen could harm the political prospects of up-and-coming reformers such as Li Yuanchao and Wang Yang.

Thus far, Wen has reacted like any Western politician: hiring a law firm to fight back against the article’s claims; denying that his mother had personal wealth of $120 million; and arguing that his family’s business is its business, not anyone else’s. This strategy may help preserve Wen’s public face, but it won’t prevent the longer term political fallout within top political circles.

Now, the good news. Shining a bright light on the intricate relationship between wealth and power in China ratchets up the pressure on the new leadership for real change in the political system. There have now been three significant investigations into the wealth of the families of three of the country’s most senior leaders, and certainly there will be more to come. Compounding the problem for the Chinese leadership, the annual 2011 Hurun report on the wealthiest Chinese reveals that the top seventy members of the National People’s Congress are worth a combined total of $89.8 billion; in contrast, the net worth of the top 660 U.S. officials is only $7.5 billion. Anti-corruption campaigns cannot address the political rot within the system—that will require far more fundamental political reform.

Finally, there may also be some implications for U.S.-China relations. The emerging picture of China as an oligarchy—or worse, a kleptocracy—should help put to rest the notion that the United States needs to learn from the current Chinese political model. In recent years, Chinese officials, as well as some Western scholars, have taken to criticizing Western democracy and touting the advantages of the Chinese political system. In discussing the current U.S. election, for example, the Chinese journalist Ding Gang wrote, “History proves that the more mediocre a political system is, the more it relies on votes.” And when I was in Beijing this past summer, a senior Chinese official explained to me that the Chinese model was superior in part because of the absence of money in the political system. Oops. Certainly, the American system of governance has significant shortcomings, but in its current form, “socialism with Chinese characteristics” hardly seems to offer a way forward.

Elizabeth C. Economy is C.V. Starr Senior Fellow and Director for Asia Studies at the Council on Foreign Relations. She is an expert on Chinese domestic and foreign policy and U.S.-China relations and author of the award-winning book, 'The River Runs Black: The Environmental Challenge to China's Future.'  She blogs at Asia Unbound, where this piece originally appeared.

November 2, 2012 at 21:09

According to whom ?? The american ??

November 1, 2012 at 15:38

It's all vicious lies! China needs a new president of modesty and humbleness. Bo Guagua for President! So obviously a product of china…….rofl

November 1, 2012 at 15:30

Right……….70 Chinese members are worth 89.8 BILLION dollars versus 660 US officials worth 7.5 billion. I think the facts are clear John Chan. And why yes I do believe the sky is pink today……..

November 1, 2012 at 11:03

And you are? By the nature of your response you probably sit in an office in Beijing in the political-trolling division. 

Mark Anderson
November 1, 2012 at 08:52

John Chan, your 50 cents are waiting for you.

November 1, 2012 at 07:36

It seems that the comments to this article are flooded with Chinese trolls who are attempting to subvert the credibility of this article and steer debate away from corruption in China. You may think that your negative comments  about the author and western China policy are intelligent or clever diversions to the real debate, but your attempts at manipulation are as clumsy as your government is corrupt.

November 1, 2012 at 05:57

Maybe if the PRC stops paying John Chan to troll, he will take his disinformation elsewhere.

November 1, 2012 at 02:44

I don' see an issue with. The Chinese system is modelled differently from western capitalist democracies where the political leaders are separate from the financial leaders. 
Now what if those were the same people?

John Chan
October 31, 2012 at 10:56

Here is a link for the author to learn how to write a respectable analysis on China issues.
No wonder USA’s China policy is so screwed up and it is so hostile to China, because people with superficial knowledge of China like the author can be called “an expert on Chinese domestic and foreign policy and U.S.-China relations and author of the award-winning book” on China’s future.

Joey Yung
October 31, 2012 at 07:33

Im just baffled that journalist make all these claims about the wealth of Chinese politicians, yet not one of them can provide a single evidence of their wealth, makes you think whether the stories of these journalists are believable.

John Chan
October 31, 2012 at 06:17

Guanxi in English is Connection. One can get connection via old boy’s network or greasing the palms, this is a universal norm. In the West attending Harvard, Yale or marrying with established families is connecting to the old boy’s network. Campaign contributions, jobs for the family at the influential positions, revolving door practice, etc. are the ways to grease palms.
But there is one trick that Chinese does not have to cover their corruption, that is the channels of registered lobbyists, in Washington there are tens of thousands of lobbyists bribing the politicians and officials openly in the name of national interests.   
Actually Chinese is pretty primitive in term of corruption, because everyone of them knows that they are committing crime when they take money; meanwhile the westerners are conducting corruption by legalized the practice so they can conduct it in the broad day light, at the same time they can lecture others shamelessly.

Leonard R.
October 30, 2012 at 16:36

Ding Gang, critic of western-style democracies, currently lives in Bangkok. No word yet on how much money he was able to move out of China. 
Prof. economy mentions the NYT & Bloomberg articles. I think the November 26, 2011 article in the WSJ is a classic. 
The interactive graphic of three generations of Princelings is a real eye-opener. 


October 30, 2012 at 10:53

The heart of this issue is the Chinese cultural aspect of "Guanxi" (http://en.wikipedia.org/wiki/Guanxi), which is in essence official corruption at all levels of society mandated and reinforced by a cultural imperative. Corruption is literally bureaucracy with Chinese characteristics.   

John Chan
October 30, 2012 at 07:24

_Financial wherewithal of Chinese ruling class has been widely known for decades, why hasn’t the western media made a fuzz about anyone of those corrupted guys until now? Only the ignorant will believe the NYT is doing honest journalist work, NYT is the front of a mighty sleight of hand, David Barboza is merely a sockpoppet doing dirty work to keep his job.
Indeed NYT’s coup indicated there is something big going on in China before the curtain of 18th CPC National Congress is lift; perhaps David Barboza is better to watch out his back, the guy gave him the goody is the one to collect the due in according CIA practice.
BTW China National People’s Congress is not a CPC monopoly; perhaps that seventy members of the CNPC are successful entrepreneurs that are not extended families of the China’s ruling class.

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