原文： Bloomberg
Xi Jinping, the man in line
to be China’s next president, warned officials on a 2004 anti-graft conference
call: “Rein in your spouses, children, relatives, friends and staff, and vow
not to use power for personal gain.”
As
Xi climbed the Communist Party ranks, his extended family expanded their
business interests to include minerals, real estate and mobile-phone equipment,
according to public documents compiled by Bloomberg.
Those
interests include investments in companies with total assets of $376 million;
an 18 percent indirect stake in a rare- earths company with $1.73 billion in
assets; and a $20.2 million holding in a publicly traded technology company.
The figures don’t account for liabilities and thus don’t reflect the family’s
net worth.
No
assets were traced to Xi, who turns 59 this month; his wife Peng Liyuan, 49, a famous
People’s Liberation Army singer; or their daughter, the documents show.
There is no indication Xi intervened to advance his relatives’ business
transactions, or of any wrongdoing by Xi or his extended family.
While
the investments are obscured from public view by multiple holding companies,
government restrictions on access to company documents and in some cases online
censorship, they are identified in thousands of pages of regulatory filings.
The
trail also leads to a hillside villa overlooking the South China Sea in Hong Kong, with an estimated
value of $31.5 million. The doorbell ringer dangles from its wires, and
neighbors say the house has been empty for years. The family owns at least six
other Hong Kong properties with a combined estimated value of $24.1 million.
Standing
Committee
Xi
has risen through the party over the past three decades, holding leadership
positions in several provinces and joining the ruling Politburo
Standing Committee in 2007. Along the way, he built a reputation for clean
government.
He
led an anti-graft campaign in the rich coastal province of Zhejiang, where he
issued the “rein in” warning to officials in 2004, according to a People’s
Daily publication. In Shanghai, he was brought in as party chief after a 3.7
billion- yuan ($582 million)
scandal.
A 2009 cable
from the U.S. Embassy in Beijing cited an acquaintance of Xi’s saying he wasn’t
corrupt or driven by money. Xi was “repulsed by the all-encompassing
commercialization of Chinese society, with its attendant nouveau riche,
official corruption, loss of values, dignity, and self- respect,” the cable
disclosed by Wikileaks said, citing the friend. Wikileaks publishes secret
government documents online.
A
U.S. government spokesman declined to comment on the document.
Carving
Economy
Increasing
resentment over China’s most powerful families carving up the spoils of economic growth poses a
challenge for the Communist Party. The income gap in urban China has widened
more than in any other country in Asia over the past 20 years, according to the
International
Monetary Fund.
“The
average Chinese person gets angry when he hears about deals where people make
hundreds of millions, or even billions of dollars, by trading on political
influence,” said Barry Naughton, professor of Chinese economy at the University of
California, San Diego, who wasn’t referring to the Xi family specifically.
Scrutiny
of officials’ wealth is intensifying before a once-in-a-decade transition of
power later this year, when Xi and the next generation of leaders are set to be
promoted. The ouster in March of Bo Xilai as party chief of China’s biggest
municipality in an alleged graft and murder scandal fueled public anger over
cronyism and corruption. It also spurred demands that top officials disclose
their wealth in editorials
in two Chinese financial publications and from microbloggers. Bo’s family
accumulated at least $136 million in assets, Bloomberg News reported
in April.
Revolutionary
Leader
Xi
and his siblings are the children of the late Xi Zhongxun, a revolutionary
fighter who helped Mao Zedong win control of China in 1949 with a pledge to end
centuries of inequality and abuse of power for personal gain. That makes them
“princelings,” scions of top officials and party figures whose lineages can
help them wield influence in politics and business.
Most
of the extended Xi family’s assets traced by Bloomberg were owned by Xi’s older
sister,Qi Qiaoqiao, 63; her husband Deng Jiagui, 61; and Qi’s daughter Zhang
Yannan, 33, according to public records compiled by Bloomberg.
Deng
held an indirect 18 percent stake as recently as June 8 in Jiangxi Rare Earth
& Rare Metals Tungsten Group Corp. Prices of the minerals used in wind turbines and U.S.
smart bombs have surged as China tightened supply.
Yuanwei
Group
Qi
and Deng’s share of the assets of Shenzhen Yuanwei Investment Co., a
real-estate and diversified holding company, totaled 1.83 billion yuan ($288
million), a December 2011 filing shows. Other companies in the Yuanwei group
wholly owned by the couple have combined assets of at least 539.3 million yuan
($84.8 million).
A
3.17 million-yuan investment by Zhang in Beijing-based Hiconics Drive Technology Co.
(300048) has increased 40-fold since 2009 to 128.4 million yuan ($20.2
million) as of yesterday’s close in Shenzhen.
Deng,
reached on his mobile phone, said he was retired. When asked about his wife,
Zhang and their businesses across the country, he said: “It’s not convenient
for me to talk to you about this too much.” Attempts to reach Qi and Zhang
directly or through their companies by phone and fax, as well as visits to
addresses found on filings, were unsuccessful.
New
Postcom
Another
brother-in-law of Xi Jinping, Wu Long, ran a telecommunications company named New Postcom Equipment Co. The
company was owned as of May 28 by relatives three times removed from Wu -- the
family of his younger brother’s wife, according to public documents and an
interview with one of the company’s registered owners.
New
Postcom won hundreds of millions of yuan in contracts from state-owned China
Mobile Communications Corp., the world’s biggest phone company by number of
users, according to analysts at BDA China Ltd., a Beijing-based consulting firm
that advises technology companies.
Dozens
of people contacted over the past two months wouldn’t comment about the Xi
family on the record because of the sensitivity of the issue. Details from Web
pages profiling one of Xi Jinping’s nieces and her British husband were deleted
after the two people were contacted.
The
total assets of companies owned by the Xi family gives the breadth of their
businesses and isn’t an indication of profitability. Hong Kong property values
were based on recent transactions involving comparable homes.
Identity
Cards
Bloomberg’s
accounting included only assets, property and shareholdings in which there was
documentation of ownership by a family member and an amount could be clearly
assigned. Assets were traced using public and business records, interviews with
acquaintances and Hong Kong and Chinese identity-card numbers.
In
cases where family members use different names in mainland China and in Hong
Kong, Bloomberg verified identities by speaking to people who had met them and
through multiple company documents that show the same names together and shared
addresses.
Bloomberg
provided a list showing the Xi family’s holdings to China’s Foreign Ministry.
The government declined to comment.
In
October 2000, Xi Zhongxun’s family gathered on his 87th birthday for a
photograph at a state guest house in Shenzhen, two years before the patriarch’s
death. The southern metropolis bordering Hong Kong is now one of China’s
richest, thanks in part to the elder Xi. He persuaded
former leader Deng
Xiaoping to pioneer China’s experiment with open markets in what was a
fishing village.
Family
Photo
In
the photo,
Xi Zhongxun, dressed in a red sweater and holding a cane, is seated in an
overstuffed armchair. To his left sits daughter Qi Qiaoqiao. On his right, a
young grandson perches on doily-covered armrests next to the elder Xi’s wife,
Qi Xin. Lined up behind are Qiaoqiao’s husband, Deng Jiagui; her brothers Xi
Yuanping and presidential heir Xi Jinping; and sister Qi An’an alongside her
husband Wu Long.
Xi
Zhongxun worked to imbue his children with the revolutionary spirit, according
to accounts in state media that portray him as a principled and moral leader.
Family members have recounted in interviews
how he dressed them in patched hand-me-downs.
He
also made Qiaoqiao turn down her top-choice middle school in Beijing, which
offered her a slot despite her falling half a point short of the required
grade, according to a memorial book about him. Instead, she attended another
school under her mother’s family name, Qi, so classmates wouldn’t know her
background. Qiaoqiao and her sister An’an also sometimes use their father’s
family name, Xi.
Party
School
In a
speech on March 1 this year before about 2,200 cadres at the central party
school in Beijing where members are trained, Xi Jinping said that some were
joining because they believed it was a ticket to wealth. “It is more difficult,
yet more vital than ever to keep the party pure,” he said, according to a
transcript of his speech in an official magazine.
His
daughter, Xi Mingze, has avoided the spotlight. She studies at Harvard University
in Cambridge, Massachusetts, under an assumed name.
Xi’s
elevation to replace Hu Jintao as China’s top leader isn’t yet formalized. He
must be picked as the Communist Party’s general secretary in a meeting later
this year and then be selected by the country’s legislature as president next
March.
Deng
Xiaoping
Disgruntlement
over how members of the ruling elite translate political power into personal
fortunes has existed since Deng Xiaoping’s economic reforms began three decades
ago, when he said some people could get rich first and help others get wealthy
later.
The
relatives of other top officials have forged business careers. Premier Wen Jiabao’s son co-founded
a private-equity company. The son of Wen’s predecessor, Zhu Rongji, heads a
Chinese investment bank.
“What
I’m really concerned about is the alliance between the rich and powerful,” said
Wan Guanghua, principal economist at the Asian Development
Bank. “It makes corruption and inequality self-reinforcing and persistent.”
Public
criticism is mounting against ostentatious displays of wealth by officials.
Microbloggers tracking designer labels sported by cadres expressed disgust last
year at a gold Rolex watch
worn by a former customs minister. They castigated the daughter of former
Premier Li Peng for wearing
a pink Emilio
Pucci suit to the nation’s annual legislative meeting this March. Some
complained that the 12,000 yuan they said it cost would pay for warm clothes
for 200 poor children.
‘Unequal
Access’
“People
are angry because there’s unequal access to money- making, and the rewards that
get reaped appear to the populace to be undeserved,” said Perry Link, a China
scholar at the University of California, Riverside. “There’s no question in the
Chinese public mind that this is wrong.”
Premier
Wen told a meeting of China’s State Council on March 26 that power must be
exercised “under the sun” to combat corruption.
While
officials in China must report their income and assets to authorities, as well
as personal information about their immediate family, the disclosures aren’t
public.
The
lack of transparency fuels a belief that the route to wealth depends on what
Chinese call “guanxi,” a catch-all word for the connections considered crucial
for doing business in the country. It helps explain why princelings with no
official posts wield influence. Or, as a Chinese proverb puts it: When a man
gets power, even his chickens and dogs rise to heaven.
‘Bigwig
Relative’
“If
you are a sibling of someone who is very important in China, automatically
people will see you as a potential agent of influence and will treat you well
in the hope of gaining guanxi with the bigwig relative,” said Roderick
MacFarquhar, a professor of government at Harvard who focuses on Chinese elite
politics.
The
link between political power and wealth isn’t unique to China. Lyndon B. Johnson was
so poor starting out in life that he borrowed $75 to enroll in Southwest Texas
State Teachers College in 1927, according to his presidential library. After
almost three decades of elective office, he and his family had media and
real-estate holdings worth $14 million in 1964, his first full year as
president, according to an August 1964 article
in Life Magazine.
Orville
Schell, director of the Center on U.S.-China Relations at the Asia Society in
New York, said the nexus of power and wealth can be found in any country. “But
there is no country where this is more true than China,” he said. “There’s a
huge passive advantage to just being in one of these family trees.”
Unfair
to Xi
Yao
Jianfu, a retired government researcher who has called for greater disclosure
of assets by leaders, said it wouldn’t be right to tie Xi Jinping to the
businesses of his family.
“If
other members of the family are independent business representatives, I think
it’s unfair to describe it as a family clan and count it as Xi Jinping’s,” Yao
said in a telephone interview.
The
lineage of Xi’s siblings hasn’t always been an advantage. Xi Zhongxun, the
father, was purged by Mao in 1962. Like many other princelings, the children
were scattered to the countryside during the Cultural Revolution. The 5-yuan
payment Qiaoqiao received for working in a corps with 500 other youths in Inner
Mongolia made her feel rich, she recalled in an interview
on the website of Beijing-based Tsinghua University.
After
Mao’s death in 1976, the family was rehabilitated and Xi’s sister Qiaoqiao
pursued a career with the military and as a director with the People’s Armed
Police. She resigned to care for her father, who had retired in 1990, Qiaoqiao
said in the Tsinghua interview.
Property
Purchase
A
year later, she bought an apartment in what was then the British colony of Hong
Kong for HK$3 million ($387,000) -- at the time, equivalent to almost 900 times
the average Chinese worker’s annual salary. She still owns the property, in the
Pacific Palisades complex in Braemar Hill on Hong Kong island, land registry
records show.
By
1997, Qi and Deng had recorded an investment of 15.3 million yuan in a company
that later became Shenzhen Yuanwei Industries Co., a holding group, documents
show. The assets of that company aren’t publicly available. However, one of its
subsidiaries, Shenzhen Yuanwei Investment, had assets of 1.85 billion yuan
($291 million) at the end of 2010. It is 99 percent owned by the couple,
according to a December 2011 filing by a securities firm.
It
was after her father’s death in 2002 that Qi said she decided to go into
business, according to the Tsinghua interview. She graduated from Tsinghua’s
executive master’s degree in business administration program in 2006 and
founded its folk-drumming team. It plays in the style of Shaanxi province,
where Xi Zhongxun was born.
Paper
Trail
The
names Qi Qiaoqiao, Deng Jiagui or Zhang Yannan appear on the filings of at
least 25 companies over the past two decades in China and Hong Kong, either as
shareholders, directors or legal representatives -- a term that denotes the
person responsible for a company, such as its chairman.
In
some filings, Qi used the name Chai Lin-hing. The alias was linked to
her because of biographical details in a Chinese company document that match
those in two published interviews with Qi Qiaoqiao. Chai Lin-hing has owned
multiple companies and a property in Hong Kong with Deng Jiagui.
In
2005, Zhang Yannan started appearing on Hong Kong documents, when Qi and Deng
transferred to her 99.98 percent of a property-holding company that owns one
apartment, a unit in the Regent on the Park development with an estimated value
of HK$54 million ($6.96 million).
Repulse
Bay Villa
Land
registry records show Zhang paid HK$150 million ($19 million) in 2009 for the
villa on Belleview Drive in Repulse Bay, one of Hong Kong’s most exclusive
neighborhoods. Property prices have since jumped about 60 percent in the area.
Her
Hong Kong identity card number, written on one of the sale documents, matches
that found on the company she owns with her mother and Deng Jiagui, Special Joy
Investments Ltd. All three people share the same Hong Kong address in a May 12
filing.
Zhang
owns four other luxury units in the Convention Plaza Apartments residential
tower with panoramic harbor views adjoining the Grand Hyatt hotel.
Since
its 1997 return by Britain to Chinese rule, Hong Kong has been governed
autonomously, with its own legal and banking systems. About a third of all
purchases of new luxury homes in the territory are by mainland Chinese buyers,
according to Centaline Property Agency Ltd.
In
mainland China, Qi and Deng’s marquee project is a luxury housing complex
called Guanyuan near Beijing’s financial district, boasting manicured gardens
and a gray-brick exterior reminiscent of the city’s historic courtyard homes.
Financial details on the developer aren’t available because of restrictions on
company searches in Beijing.
Beijing
Complex
To
finance the development, the couple borrowed from friends and banks, and aimed
to attract officials and executives at state-owned companies, they told V
Marketing China magazine in a 2006 interview. Property prices in the capital
rose 79 percent in the following four years, government data show.
The
site’s developer -- 70 percent owned by Qi and Deng’s Yuanwei Investment --
acquired more than 10,000 square meters of land for 95.6 million yuan in 2004
to build Guanyuan, according to the Beijing Municipal Bureau of Land and
Resources.
A
189-square-meter (2,034-square-foot) three-bedroom apartment in Guanyuan listed
online in June for 15 million yuan. One square meter sells for 79,365 yuan --
more than double China’s annual per capita gross domestic product.
Public
anger at soaring housing costs has made real estate an especially sensitive
issue for leaders in China. Property prices were “far from a reasonable level,”
Premier Wen said in March.
‘Playing
Field’
The
lack of a level playing field and unaffordable home prices mean “you can
be cut out of the China dream,” said Joseph Fewsmith, director of the Center
for the Study of Asia at Boston University, who focuses on Chinese politics.
“Is the rise of China going to last if you build it around these sorts of unequal
opportunities?”
Those
with the right connections are able to gain access to assets that are
controlled by the government, according to Bo Zhiyue, a senior research fellow
at the National University of Singapore’s East Asian Institute.
“All
they need is to get into the game one small step ahead of the others and they
can make a huge gain,” he said. Bo wasn’t discussing the specific investments
of Xi’s family members.
One
of Deng’s well-timed acquisitions was in a state-owned company with investments
in rare-earth metals.
Rare
Earths
Deng’s
Shanghai Wangchao Investment Co. bought a 30 percent stake in Jiangxi Rare
Earth for 450 million yuan ($71 million) in 2008, according to a bond
prospectus.
Deng
owned 60 percent of Shanghai Wangchao. A copy of Deng’s Chinese identity card
found in company registry documents matches one found in filings of a Yuanwei
subsidiary. Yuanwei group-linked executives held the posts of vice chairman and
chief financial officer in Jiangxi Rare Earth, the filings show.
The
investment came as China, which has a near monopoly on production of the
metals, was tightening control over production and exports, a policy that led
to a more than fourfold surge in prices for some rare earths in 2011.
A
woman who answered the phone at Jiangxi Rare Earth’s head office in Nanchang
said she was unable to provide financial information because the company wasn’t
listed on the stock exchange. She declined to discuss Shanghai Wangchao’s
investment, saying it was too sensitive.
Hiconics
Drive
Qi
Qiaoqiao’s daughter Zhang made her 3.17 million-yuan investment in Hiconics in
the three years before the Beijing- based manufacturer of electronic devices
sold shares to the
public in 2010. Hiconics founder Liu Jincheng was in the same executive MBA
class as Qi Qiaoqiao, according to his profile on Tsinghua’s website.
Wang
Dong, the company’s board secretary, didn’t respond to faxed questions or phone
calls seeking comment.
The
business interests of Qi and Deng may be more extensive still: The names appear
as the legal representative of at least 11 companies in Beijing and Shenzhen,
cities where restrictions on access to filings make it difficult to determine
ownership of companies or asset values.
Dalian
Wanda
For
example, Deng was the legal representative of a Beijing-based company that
bought a 0.8 percent stake in one of China’s biggest developers, Dalian Wanda
Commercial Properties Co., for 30 million yuan in a 2009 private placement.
Dalian Wanda Commercial had sales of 95.3 billion yuan ($15 billion) last year.
Dalian
Wanda Commercial “doesn’t comment on private transactions,” it said in an
e-mailed statement.
Deng
also served as legal representative of a company that won a government contract
to help build a 1 billion-yuan ($157 million) bridge in central China’s Hubei
province, according to an official website and corporate records.
Complex
ownership structures are common in China, according to Victor Shih, a professor
at Northwestern University in Evanston, Illinois, who studies the link between
finance and politics in the country. Princelings engage people they trust,
often members of their extended families, to open companies on their behalf
that bid for contracts from state-owned enterprises, said Shih, who wasn’t
referring specifically to Xi’s family.
New
Postcom
In
the case of Xi Jinping’s brother-in-law, Wu Long, he’s identified as chairman
of New Postcom in two reports on the website of the Guangzhou Development
District, one in 2009 and the other a year later.
New
Postcom doesn’t provide a list of management on its website. Searches in
Chinese on Baidu Inc.’s search engine using the name “Wu Long” and “New
Postcom” trigger a warning, also in Chinese: “The search results may not be in
accordance with relevant laws, regulations and policies, and cannot display.”
New
Postcom is owned by two people named Geng Minhua and Hua Feng, filings show.
Their address in the company documents leads to the ninth floor of a
decades-old concrete tower in Beijing where Geng’s elderly mother lives. Tacked
to the wall of her living room was the mobile-phone number of her daughter.
When
contacted by phone June 6, Geng confirmed she owned New Postcom with her son
Hua Feng -- and that her daughter was married to Wu Ming, Wu Long’s younger
brother. Geng said Wu Long headed the company and she wasn’t involved in the
management.
Different
Owners
New
Postcom identified two different people -- Hong Ying and Ma Wenbiao -- as its
owners in a six-page, June 27 statement and said the head of the company was a
person named Liu Ran. The company didn’t respond to repeated requests to
explain the discrepancies. Wu Long and his wife, Qi An’an, couldn’t be reached
for comment.
New
Postcom was an upstart company that benefited from state contracts. It
specialized in the government-mandated home- grown 3G mobile-phone standard
deployed by China Mobile. In 2007, it won a share of a tender to supply
handsets, beating out more established competitors such as Motorola Inc.,
according to BDA China.
“They
were an unknown that suddenly appeared,” said Duncan Clark, chairman of
BDA. “People were expecting Motorola to get a big part of that device contract,
and then a no-name company just appeared at the top of the list.”
In
2007, the domestic mobile standard was still being developed, and many of the
bigger players were sitting on the sidelines, allowing New Postcom a bigger
share of the market, the company said in the statement.
Xi
Yuanping
William
Moss, the Beijing-based spokesman of the Motorola Mobility unit that was split
off from Motorola last year and purchased by Google Inc. (GOOG), declined
to comment on details of any individual bids. China Mobile “has always insisted
on the principle of open, fair, just and credible bidding” to select vendors,
company spokesman Zhang Xuan said by e-mail.
Xi
Jinping’s younger brother, Xi Yuanping, is the founding chairman of an energy
advisory body called the International Energy Conservation Environmental
Protection Association. He doesn’t play an active role in the organization,
according to an employee who declined to be identified.
One
of Xi’s nieces has a higher profile. Hiu Ng, the daughter of Qi An’an and Wu
Long, and her husband Daniel Foa, 35, last year were listed as speakers at a
networking symposium in the Maldives on sustainable tourism with the likes of
the U.K. billionaire Richard
Branson and the actress Daryl
Hannah.
Hudson
Clean Energy
Ng
recently began working with Hudson Clean Energy Partners LP, which manages a
fund of more than $1 billion in the U.S., to help identify investments in
China.
Details
about the couple were removed from Internet profiles after Bloomberg reporters
contacted them. Foa said by phone he couldn’t comment about FairKlima Capital, a
clean- energy fund they set up in 2007. Ng didn’t respond to e-mails asking for
an interview.
The
two are no longer mentioned on the FairKlima website. A June 3 cache of the
“Contact Us” webpage includes short biographies of Ng and Foa under the
headline “Senior Management Team.”
A
reference on Ng’s LinkedIn profile that said on June 8 that she worked at New
Postcom has since been removed, along with her designation as “Vice Chair
Hudson Clean Energy Partners China.”
Neil
Auerbach, the Teaneck, New Jersey-based private-equity firm’s founder, said he
was working with Ng because of her longstanding passion for sustainability.
“We
are aware of her political connections, but her focus is on sustainable
investing, and that’s the purpose,” he said in a June 13 interview. “We’re
delighted to be working with her.”
To contact Bloomberg News staff for this story: Michael
Forsythe in Beijing at mforsythe@bloomberg.net;
Shai Oster in Hong Kong at soster@bloomberg.net;
Natasha Khan in Hong Kong at nkhan51@bloomberg.net;
Dune Lawrence in New York at dlawrence6@bloomberg.net
To contact the editors responsible for this story:
Amanda Bennett at abennett6@bloomberg.net;
Peter Hirschberg at phirschberg@bloomberg.net;
Ben Richardson at brichardson8@bloomberg.net
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