Briefs on How China Keeps Business Online

To build a logistics center next to Beijing’s main airport, Desmond Shum spent three years collecting 150 official seals from China’s mu...


To build a logistics center next to Beijing’s main airport, Desmond Shum spent three years collecting 150 official seals from China’s multilevel bureaucracy.

To obtain these seals of approval, he obtained favors from government officials. The airport customs chief, for example, demanded that he construct a new office building at the agency with indoor basketball and badminton courts, a 200-seat theater and a karaoke bar.

“If you don’t give us that,” the chef told Mr. Shum with a big smile over dinner, “we’re not going to let you build.

Mr. Shum recounts the conversation in a memoir that shows how the Communist Party keeps business online – and what happens when businessmen overstep. Released this month, “Red Roulette: An Insider’s Story of Wealth, Power, Corruption and Vengeance in Today’s China” shows how government officials keep the rules unclear and the threat of pervasive repression, limiting their role in the development of the country. country.

“In order to achieve anything in China, you have to wade through the gray areas,” Mr Shum said in a telephone interview from his home in Britain. “We were all licking blood off the blade.”

Many of the events described in the book cannot be independently verified, but Mr. Shum’s leading view of the interplay between money and Chinese politics is not in question.

He was once married to Duan Weihong, who was close to the family of former Chinese Premier Wen Jiabao. Ms Duan, also known as Whitney, was a central figure in a 2012 investigation by The New York Times into the enormous hidden wealth controlled by Mr. Wen’s relatives.

Mrs. Duan faded away in September 2017, although Mr Shum said she reached out shortly before the book’s release to urge him to stop.

Some readers might find it hard to sympathize with the former power couple and wealthy Chinese business leaders like them. The book describes the wealth they amassed by dealing with powerful government officials, who used their influence to strike deals. And, of course, the combination of money and politics breeds corruption all over the world.

But Mr. Shum’s book came out as the future of Chinese entrepreneurs is uncertain. The government has cracked down on the most successful private companies, including the Alibaba group, the e-commerce giant, and Didi, the ridesharing company. He condemned business leaders who dared criticize the government to long prison sentences.

China’s Supreme Leader Xi Jinping urged the tycoons to share their wealth with the rest of the country in a bid to continue “common prosperity“, which raises fears that the state will stifle the private sector and give the Communist Party even more influence in everyday life.

“The party has an almost animal instinct towards repression and control,” Mr. Shum wrote in the book. “This is one of the fundamental principles of a Leninist system. Whenever the party can afford to switch to repression, it will. “

Despite their flaws, mistakes and crimes, Chinese companies have played an important role in lifting the country out of poverty and making it the world’s second-largest economy, which the Communist Party is reluctant to admit.

Instead, the party is forcing business owners to remain loyal to the state. They must follow written and unwritten rules. Even ties to Mr. Wen didn’t help when a mid-level bureaucrat wanted something.

“In China, power is everything, while wealth is not much,” Mr. Shum said in the interview. “The business class is also a class suppressed under the party. “

Responding to a request for comment, China’s Foreign Ministry said the book is full of defamatory and baseless claims about China.

Mr. Shum and Ms. Duan operated businesses during China’s heyday of the 1990s and 2000s, when the party loosened its control over the company to strengthen its legitimacy and economic good faith after the crackdown on it. 1989 in Tiananmen against the pro-democracy demonstrators. At the time, the party often tried to co-opt business leaders rather than powerful business leaders, both to keep affairs under its control and to help it claim credit for the Chinese economic miracle. This meant convincing them to become party members and join the ranks of lawmakers and political advisers in the country.

It worked. Many businessmen believed they could shape a liberalizing China. They sought protection of property, an independent judiciary, and more transparent government decision-making to better protect people – rich and otherwise – from party power. Some have raised serious issues during parliamentary sessions of the government. Others have supported non-governmental organizations, educational institutions and investigative media.

This period was short-lived.

“It is only in times of crisis that the party loosens its grip, allowing more free enterprise and more freedom,” Mr. Shum wrote. “China’s economic growth has given the party an opportunity to reassert its dominance. “

According to Mr. Shum, the tightening process began after the 2008 financial crisis, but accelerated after Mr. Xi took over as party leader in late 2012.

“The economy was the first order of the day,” he said. “Since Xi, there is no doubt that politics has become the driving force behind everything. “

Xi set the tone that government-business relations should be “friendly and clean.” Government officials should not hesitate to interact with and help private companies, he said.

But years of crackdown on lawyers, journalists and civil society activists under Xi has left fewer checks and balances. Power imbalances between government and business have only worsened.

Mr. Shum believes that the majority of the business class are aware of the problems with the system, but few are ready to speak out because the cost is too high.

Many businessmen have managed to move at least some of their assets overseas, he said. Few make long term investments because they are too risky and difficult. “Only idiots plan for the long haul,” he said.

Mr. Shum’s observations match what others are saying. A Beijing-based businesswoman told me that “Red Roulette” had cut a hole in the black box of government-business dynamics in China. Two real estate moguls told me about their humiliating experiences of having to sit in front of a bureaucrat’s desk for hours on end to get approvals for their projects.

To get the green light for the airport’s logistics hub, Mr. Shum dined with officials almost every day for a few years, drinking a bottle of Moutai, the famous Chinese liquor, with every meal. Its employees brought fine teas to officials, did their shopping, and looked after the needs of their wives and children.

One employee accompanied so many people on so many sauna trips that his skin began to peel off, he wrote.

The main officials of the airport and the local district changed three times during the life of the project. Each time, Mr. Shum’s team had to start the appeasement process all over again.

“A lot of people thought that with the protection of the Wens,” he said, referring to the family of the former prime minister, “we would be counting money without having to get up in the morning. The truth. is that it was exhausting.

While Ms Duan and Mr Shum had to overcome all kinds of obstacles to move their plans forward, other companies without their political ties have to endure a lot more to make things happen.

Mr Shum said he started writing the book in 2018, in part because their then 8-year-old son started searching for his mother’s name online. He thought it would be better if he could give his account of her and their marriage, which ended in divorce in 2015.

Then, just before the book’s scheduled publication earlier this month, he said, Ms. Duan called him, trying to persuade him to remove the book. He doesn’t know if she was speaking for herself or if she was conveying a message from the Chinese authorities. But she sure wouldn’t be happy with the book.

“This is who she is,” he said. “She never wants to come out of the shadows.”

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Newsrust - US Top News: Briefs on How China Keeps Business Online
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