Technically, the news that many rich people in China have personal ties to China’s top leaders is not really news anymore. Nor is it news that many rich Chinese have placed their assets in offshore accounts or even that many rich people in China get that way through peddling influence or corruption. After all, the top fifty members of China’s National People’s Congress boast a combined wealth of $94.7 billion, making their American congressional cousins across the Pacific – whose top fifty members are worth only $1.6 billion – look positively poverty stricken. The link between politics and money in China is well-established.
So why all the excitement over the recent release of a report from the International Consortium of Investigative Journalists (ICIJ) that 22,000 (out of 1.3 billion) people in China have established offshore companies to hold – or hide – their wealth? Certainly there is the titillation factor. There is always a market for information about the super-rich: how they got their money and how they spend it – particularly when some of the rich are the sons and daughters of senior officials. There is also the issue of the “offshore” accounts in the British Virgin Islands, which to a layperson immediately sound suspicious. Even though every news article on the topic carefully mentions the fact that there is nothing necessarily illegal about these offshore tax havens, guilt is already established in the minds of many. (And, of course, there is some reason for this: a number of senior Chinese officials have already been tried in court and found guilty of using these accounts to hide millions of dollars in embezzled funds.) In addition, amassing personal wealth in China has always been a source of political vulnerability. Despite the obvious attraction of making money for many Chinese, the country’s ideological underpinnings have never fully supported it: it was denigrated by Confucianism and reviled by Communism. During the first decades of Communist rule, to be labeled a “capitalist running dog” meant a life of ongoing vicious political reprisals. Even Beijing’s more recent campaign against several politically outspoken billionaire bloggers carried a whiff of this same witch hunt mentality: questioning the political loyalty of those with money.
What could be seen as surprising, however, is that the Chinese government has gone to such extraordinary lengths to shut down any mention of the report’s findings. Beijing’s much ballyhooed anti-corruption campaign is the signature policy of an otherwise fairly anemic political reform effort by the new leadership. A report that lays bare 22,000 potential corruption cases should be celebrated, not censored. Part of the problem is that President Xi Jinping, himself, is likely unhappy that the face of his brother-in-law has been plastered in the pages of the ICIJ report as one of those with significant offshore holdings. But even beyond any personal considerations, the real challenge for Beijing is that the report represents a substantial loss of power for the Chinese leadership. With transparency comes knowledge – not just for the seven men in the Standing Committee of the Politburo but for the 1.3 billion people they govern. The report offers the Chinese public the opportunity to hold Beijing directly accountable; when the Chinese leadership pronounces the guilt of one official, the Chinese people can ask about one hundred others. By censoring the list, China’s leaders are trying to control who is found guilty and when.
In the end, it is in the interest of both China’s wealthiest citizens and the Chinese government to promote transparency and publication of the list. How else to disentangle the influence peddling inherent in traditional guanxi from meaningful corruption? How else to promote the rule of law and ensure that these 22,000 wealthy Chinese with offshore holdings do not become fodder for politically motivated attacks? And above all, how else to ensure that the Chinese people believe their leaders are holding themselves to the same standards to which they seek to hold everyone else?
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.