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Thursday, Nov. 1, 2012

EDITORIAL

Wealth and power in China

The New York Times has reported that the family of Chinese Premier Wen Jiabao controls assets worth $2.7 billion. In response, access to The New York Times in China is now blocked and every mention of the story in the media and on microblogs is being censured. The story is a reminder of the problems generated by China's incredible growth and the fragility of the Beijing government's legitimacy. These are always sensitive subjects, but their importance is magnified during a government transition and the scandal surrounding former strongman and candidate for the supreme leadership, Mr. Bo Xilai. Indeed, there is a good chance that the revelations are tied to the Bo affair.

As premier, Mr. Wen is responsible for the administration of the Chinese economy. He has cultivated the image of a simple man, who is close to the people and is often first on the scene of a disaster, earning him the sobriquet of "Grandpa Wen." At a time when income disparities in China approached some of the highest levels in the world, he offered reassurance to ordinary people that their concerns were considered at the highest levels of government.

That image was undermined last week when The New York Times reported that members of Mr. Wen's family controlled economic assets — companies or shares therein — worth billions of dollars, a claim that the Wen family disputes. Chinese law requires strict disclosure of the wealth of senior party officials and that of their immediate family. More distant relatives are less encumbered: They are free to exploit their contacts and many do. Mr. Wen's mother, for example, is reckoned to have made $120 million by investing in companies prior to going public that fall under the prime minister's jurisdiction. The Times also reported that a company controlled by Mr. Wen's brother made $30 million in government contracts and subsidies to handle wastewater treatment and medical waste disposal.

Sadly, such tales are common in China; and to be fair, they are not unique to China. But China has few mechanisms to deal with corruption by party officials and their families. As the ultimate source of authority in the country, the Chinese Communist Party (CCP) polices itself and the need to clean house is constantly balanced by fear of undermining of the legitimacy and authority of the CCP. Some observers even argue that such enrichment is a good thing because it gives officials a reason to pursue liberalization of the economy and market-oriented reforms. That may make sense in theory, but when government officials and their families enrich themselves at the expense of less connected individuals, it erodes the party's authority and credibility.

The timing of these revelations also raises questions. China is entering a period of transition as the fifth generation of leadership is scheduled to take office in November at the National Party Congress. This process has been in train for years, yet all that careful planning was nearly derailed by the scandal surrounding Mr. Bo, former head of the city of Chongqing and a contender for a seat on the Standing Committee of the Politburo, the pinnacle of power in China. After being arrested months ago, Mr. Bo was finally charged with abusing his power in relation to the murder of a British businessman, which his wife was convicted of, and the taking of massive bribes during his many years in office.

Many observers believe that Mr. Bo's behavior was well known among party officials and the real offense was his readiness to challenge the succession process and publicly promote himself for the top leadership post. This, more than abuse of power, is what crossed the line as far as the party is concerned and earned him censure. It is suspected that either Mr. Bo or his supporters helped disseminate the information about Mr. Wen in an attempt to take revenge.

The extraordinary sensitivity surrounding the report is evident by the news blackout that followed its publication. Since the story broke, Internet access to The New York Times has been blocked, and censors have assiduously deleted all mention of key terms in China's popular blogosphere. This behavior is not without precedent: This summer Bloomberg News reported that the family of Mr. Xi Jinping, who is slated to take over as president of the country in November, had accumulated wealth in excess of $350 million. In response, all access to Bloomberg News in China has been blocked and continues to be blocked to this day.

These overreactions speak volumes about Chinese politics and the relationship between the leadership and the people. While most attention is devoted to the many uncertainties attending to China's extraordinary growth, the most intriguing and important questions concern the weakness of the state in China, not its strength. A government that must keep its citizens from knowing the truth and is afraid of enforcing its own laws against corruption is a government with shaky foundations.



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