Jiang Zemin’s Grandson’s Private Equity Company in China


The 28-year-old wears black-framed glasses perched on cheeks still round with youth. A discerning eye might notice the resemblance to his grandfather: former Chinese president and Communist Party leader Jiang Zemin.

Alvin Jiang has a knack for landing lucrative deals in China, the world’s biggest emerging market for private equity. He is a founding partner at Hong Kong-based Boyu Capital, now one of the hottest firms in China. Boyu has attracted high-profile investors such as Asia’s richest man, Li Ka-shing, and Singapore’s sovereign wealth fund, Temasek Holdings Private Limited.

Founded in 2010, Boyu Capital is poised to earn big paydays from two of the most notable initial public offerings to emerge from China in the last 18 months – e-commerce giant Alibaba Group Holding Ltd, and state-backed debt trader China Cinda Asset Management Co. No other China-focused firm with such a short history has found its way into both deals.

Boyu is regarded as among the most professional operators in China private equity, with seasoned executives at its helm. But according to multiple investors, Alibaba and Cinda are not only what lures them to Boyu.

Investors were also impressed with Boyu’s 2011 purchase of a controlling stake in Sunrise Duty Free – which runs all the duty-free stores at Shanghai and Beijing’s international airports. That deal, they believe, provided evidence that Jiang Zemin’s grandson could gain access to a strictly controlled state sector and convert those assets into a highly profitable investment.

The Sunrise investment is expected to earn a substantial exit payout for Jiang, his Boyu colleagues and investors in the firm’s first $1 billion fund, people in the private equity industry say.

Whether the young private equity executive actually uses his personal connections in the way investors attribute to him remains unclear. There is no evidence that Jiang Zemin had a role in helping Boyu win a part in the Sunrise deal or in any other transaction. That hasn’t stopped the belief from spreading that Alvin Jiang is tapping his family connections.

Alvin Jiang and Boyu Capital declined to comment for this story.

PRINCELING INFLUENCE

Alvin Jiang’s Chinese given name is Zhicheng, which means, “with ambition, you can achieve.” He is a “princeling,” the relatives of current or former senior Chinese Communist Party leaders. His father, Jiang Mianheng, is also a princeling. He is the CEO of one of Shanghai’s largest state-owned enterprises and is in charge of China’s push into alternative nuclear energy sources.

The extensive control of China’s Communist Party over almost all aspects of China’s economy and society has often allowed princelings to leverage their political connections to amass wealth. Conflict of interest laws in China are weak and coverage of the business dealings of the political elite is heavily censored in the largely state-controlled media.

Princelings have played central roles in businesses involved in finance, energy, domestic security, telecommunications and the media. Private equity, featuring deals that are often by their nature opaque, has proven to be a natural haven for them.

Within China’s private equity realm, 15 firms identified by Reuters were either founded by a princeling, or have employed princelings in senior roles. Between them, these funds have raised at least $17.5 billion for investment since 1999.

The most powerful investors in private equity funds, known as limited partners, include giant U.S. pension funds and insurance companies; sovereign wealth funds; university endowments; and ultra-high net worth individuals. For some of these big investors, the China game is straightforward: “You just have to know the right people,” said one veteran limited partner. “It’s why you invest with a princeling fund.”

Several limited partners told Reuters that their firms assess princelings on their political connections and ability to convert those ties into business deals.

Alvin Jiang and Boyu Capital, these investors say, rank high on those lists.

AN OUTSTANDING RETURN

In mid-2011, Boyu agreed to pay around $80 million for a 40 percent stake in Sunrise Duty Free, according to three sources with direct knowledge of the deal, valuing Sunrise at $200 million.

The ownership of the remaining 60 per cent of Sunrise has not been made public. Boyu, however, has told investors it has a controlling stake, sources with knowledge of the matter said.

At the time of Boyu’s investment, Sunrise ranked 15th among the top 25 travel retailers in the world, with annual revenue of around $670 million, according to the Moodie Report, which tracks the duty free industry.

By early 2013, Boyu had marked the Sunrise business on its books at a value of around $800 million, two of the sources with direct knowledge of the valuation said. Bankers, however, value Sunrise at twice that amount – at around $1.6 billion – based on 2012 sales figures the company filed with Chinese authorities, which Reuters reviewed.

Based on Boyu’s more conservative valuation of $800 million for Sunrise, Boyu could be sitting on a paper gain of around four times its money in just under three years – an outstanding return in an industry where earning a multiple of two times over five years is considered a success. Boyu has already recovered much of its Sunrise investment through dividend payments, according to three people with knowledge of the matter.

BEHOLD THE SUNRISE

The man who founded, built and then sold Sunrise to Boyu is Fred Kiang, a Chinese-American businessman with close ties to the Jiang family, according to Alvin Jiang’s friends and business associates.

Kiang founded Sunrise in 1999. That was the year the central government under Jiang Zemin opened up the operation of duty free shops to international bidders at the new Pudong International Airport in Shanghai – Jiang’s political power base.

Previously, duty free operations had been a monopoly controlled by state-owned China Duty Free, and foreign firms like Kiang’s were excluded from the business.

Three international companies were selected to operate at Pudong airport, including two established duty free firms: World Duty Free, owned at the time by the British Airport Authority, and Orient King Power, a subsidiary of Hong Kong’s King Power Group. The third tender went to Kiang’s newly formed Sunrise Duty Free, a foreign-owned company with no previous experience in the industry.

Sunrise won a 10-year contract to sell tobacco and alcohol at Shanghai’s Pudong Airport, World Duty Free won a five-year contract to sell perfume and cosmetics, and Orient King Power won the concession to sell luxury goods.

SPECIAL APPROVAL

In 2000, China’s State Council approved a measure that handed control of all duty free businesses – except those in Shanghai – from local governments to state-owned China Duty Free. Foreign companies were banned from setting up joint ventures or directly owning duty free businesses in China.

Yet in 2001 Sunrise Duty Free took over the perfume and cosmetics duty free concession at Pudong airport when World Duty Free pulled out of its contract. Published reports at the time quoted World Duty Free as calling it a “strategic withdrawal” because passenger traffic had not reached forecast levels. Sunrise in time would also take over luxury goods at the airport.

In 2005, Sunrise won a 10-year concession at Beijing International Airport, outbidding China Duty Free and Orient King Power. In 2009, its contract at Pudong was renewed for another decade.

Sunrise was granted “special approval” to operate duty free shops by China’s cabinet, the State Council, despite restrictions against foreign ownership, according to a 2009 report by China Business News, a state-owned media outlet. No other details were given on the Sunrise exemption.

Today, business at Sunrise is booming. According to the company documents seen by Reuters, Sunrise had revenue of $1.08 billion in 2012. The Moodie Report ranks Sunrise just behind state-owned China Duty Free, which controls nearly all of China’s other duty free shops.

KIANG AND THE JIANGS

Why Fred Kiang would sell 40 per cent of a thriving company at what appears to be a discount remains the central puzzle surrounding the Sunrise deal. Apart from Sunrise, Kiang’s mainland business remains unknown. Friends and associates note his taste in expensive cigars, and the little publicity he has received is largely devoted to that passion. In 2009, he hosted an event in Shanghai to smoke the 40th anniversary Cohiba Behike, a limited edition Cuban cigar that sold for $500 apiece.

Kiang, who is in his late 60s, shuttles between Shanghai, Hong Kong and Tucson, Arizona, where he owns properties in areas ranging from gated communities to low-end rentals. Alvin Jiang and Jiang Mianheng have used a Kiang residence address in Arizona for small personal business transactions.

Kiang declined to respond to e-mails and phone calls from Reuters.

Born in China, Kiang claims Shanghai roots, but was raised in the United States. He received his undergraduate and MBA degrees at Massachusetts’ Babson College in 1970 and 1975, respectively, and now sits on the college’s board of trustees.

Kiang first met Jiang Zemin in 1986, when Kiang served as vice-chairman of the San Francisco-Shanghai Sister City Committee, led by then city mayor and now U.S. Senator Dianne Feinstein, according to a person close to Kiang. Kiang and Jiang noted their common surname, which though spelled differently in English, is the same character in Chinese, said the source who is Alvin’s friend and business acquaintance.

In 1989, Jiang Zemin became Communist Party General Secretary; in 1990 Kiang established his base in Shanghai. Kiang was a senior executive at Newbridge, the former name of TPG Capital in Asia, one of the world’s biggest private equity firms, three people with direct knowledge told Reuters.

From the late 1990s to the 2000s, Kiang was an advisor to U.S.-based insurer MetLife Inc as it looked for a joint venture partner to build its business in China, said a source with knowledge of the matter. Kiang negotiated on MetLife’s first mainland license in 2004, the source said, one of the first major Sino-foreign ventures created after China’s 2001 entry into the World Trade Organization.

TPG and MetLife declined to comment.

BOYU’S RISE

In 2010, Alvin Jiang, newly graduated from Harvard with a bachelor’s degree, was just another newbie banker in Hong Kong, working as an analyst at Goldman Sachs private equity unit. Nine months later, he left to launch Boyu. On September 21, 2010, he filed incorporation documents in Hong Kong, listing himself as the company’s sole director.

When Boyu first made news in 2011, it was private equity veteran Mary Ma whose name captured headlines, not Alvin’s.

Ma, the former CFO at Lenovo Group, left a senior role at TPG to help set up Boyu. Additional co-founders soon followed: Louis Cheung, former executive director of Ping An Insurance Group of China, credited with its turnaround from 2000; and Sean Tong, a veteran of U.S. private equity firms Providence Equity Partners and General Atlantic, where he was Alvin Jiang’s boss during a summer internship in 2008.

Ma and Cheung were known in the private equity industry for turning around struggling companies; Tong was a noted dealmaker. Combined, they had 50 years of industry experience.

DILIGENT AND FOCUSED

Two subsequent investments cemented Boyu’s reputation for having the influence to find its way into profitable, high-profile assets. Alvin Jiang played a role negotiating both deals.

In 2012, Alibaba founder Jack Ma found himself face-to-face with Jiang Zemin’s grandson. Boyu had joined a consortium led by China Investment Corp (CIC) to raise some of the $7.1 billion that Ma needed to buy back half of Yahoo! Inc’s 40 percent stake in Alibaba. Some high profile departures had left CIC, China’s giant sovereign wealth fund, short of personnel. That left it up to Boyu to lead the negotiations, with Alvin on Sean Tong’s team, according to two sources directly involved in the negotiations.

Alibaba and CIC declined to comment.

The CIC consortium received a 5.6 percent stake in Alibaba in exchange for raising capital to help buy half of Yahoo!’s shares in China’s giant e-commerce company. Alibaba was valued at around $38 billion then.

Analysts estimate Alibaba is worth at least $140 billion today, which means Boyu’s investment as part of the CIC consortium has increased more than three and a half times in value in 18 months. The e-commerce giant has announced it will list shares on one of the New York exchanges in the third quarter of this year, a deal expected to exceed Facebook’s $16 billion offering in 2012.

Alvin Jiang also brought in Boyu to invest around $50 million in Cinda, created in 1999 to buy bad debts from state-owned banks, said two sources familiar with the deal. Banks and private equity firms were jockeying to get a piece of the $1.6 billion stake that Cinda was offering to strategic investors ahead of its initial public offering.

The consortium of investors that were allowed to make a pre-IPO investment in Cinda included China’s social security fund NSSF, UBS AG, CITIC Capital, Standard Chartered Bank – and two private equity funds, the powerhouse Carlyle Group and Boyu Capital.

Some of Jiang’s friends stress he is more than just a well-connected face. He works through a company’s numbers when negotiating, a skill he picked up during his brief time at Goldman, said one friend and business acquaintance. “Many people from his background would not bother to do that,” the friend said.

“HEADLINE RISK”

Princeling privilege isn’t necessarily permanent in China, even for the grandson of a living former President. The extraordinary fall of former Chongqing governor Bo Xilai in 2012 reinforced that notion for many private equity investors.

Because they work for companies governed by Western laws, some have turned cautious about investing in princeling firms. In private, investors discuss “headline risk,” the fear that a business deal will end up on the front pages of newspapers.

Those worries have risen with President Xi Jinping’s anti-corruption campaign, and the U.S. Securities and Exchange Commission’s investigation into Wall Street’s hiring practices in China.

“Our firm is pretty equally divided on investing with princelings,” said one European investor. “I oppose it, but many of my colleagues are for it. I see princeling funds as a double-edged sword.”

For Boyu, profit and prospects have so far trumped any such anxiety: Alvin Jiang’s firm has swiftly raised $1.5 billion from investors for its second fund, 50 per cent more than its first fund, people with knowledge of the matter said.

Source: Reuters “Special Report: The princeling of private equity”


China: Xi Jinping Far from Assuming Deng Mantle Yet


China's President Xi Jinping (L) looks at Premier Li Keqiang as they attend the opening ceremony of the 11th National Women's Congress at the Great Hall of the People in Beijing October 28, 2013. REUTERS/Jason Lee

China’s President Xi Jinping (L) looks at Premier Li Keqiang as they attend the opening ceremony of the 11th National Women’s Congress at the Great Hall of the People in Beijing October 28, 2013. REUTERS/Jason Lee

China is now ruled by CCP (Chinese Communist Party) Dynasty with a core of leadership like an emperor.

There is detailed description in my book “Tiananmen’s Tremendous Achievements” that the core (emperor) remains Jiang Zemin who like Deng Xiaoping, though retired, has controlled the CCP Politburo Standing Committee through his protégés ever since his retirement.

When Hu Jintao took over, Jiang wanted Hu to succeed him, but Hu proved incompetent especially in dealing with the fierce power struggle for succession between reformists and conservatives launched by Bo Xilai.

Details of the power struggle can be found in Chapter 13 “Fierce Battle for Succession to the Core—Xi Jinping’s Position as Hu Jintao’s Heir Precarious” in the second edition of my book Tiananment’s Tremendous Achievements soon to be released.

On September 28, 2012, Jiang held a Politburo meeting to make a decision on severe punishment for Bo Xilai, but did nothing in dealing with the power struggle.

Xi Jinping proved his mastery of the art for being an emperor by skillfully putting an end to the power struggle. That can be found in the following passages in the section “China Dream Rallies Reformists and Conservatives Around Xi Jinping” in the second edition of my book:

“As elaborated above, Bo Xilai used his sing-red campaign and resurrection of Maoism to rally all conservative around him to form a conservative faction strong enough to counter the reformists. The reformist faction defeated the conservatives not by its overwhelming strength but by depriving them of their leader through finding his crimes. However, the conservatives remain large in number and powerful in strength and Maoism remains popular among quite a few people.

“In carrying out his further thorough economic reform, Xi Jinping will encounter not only the resistance from vested interests, but also fierce opposition from the powerful conservative faction. Not long before the 18th CCP Congress, Li Peng, the arc conservative, published a new book to emphasize the government’s role in regulating the market. Two weeks later on July 12, 2012, CCP’s mouthpiece People’s Daily carried a full-page article to promote Li’s book and denounce mainstream Western economic ideas.

“Obviously, those were conservatives’ efforts to oppose in theory the reformists’ further reform of economic liberalization when they had learned that from the research report by the World Bank and the State Council’s Development Research Center. The conservatives represented by Li Peng oppose economic liberalization. On the contrary, they want intensification of control.

“Blocked by strong resistance from vested interests and the conservatives, the reformists cannot move even a step forward. No wonder Hu Jintao and Wen Jiabao had made no significant progress in that reform.

“‘Where hills bend, streams wind the pathway seems to end, past dark willows and flowers in bloom lies another village.’ Precisely like what is described in the often-cited lines in a famous Chinese poem, Xi Jinping used China dream as a magic key to open a way out.

“The China dream was put forth not by reformists but by conservatives.

“In 2009, under the influence of Maoist sinocentric cosmology, PLA senior colonel Liu Mingfu published his leftist book “China Dream: Great Power Thinking and Strategic Posture in the Post American Era” to reject reformists’ idea of China’s peaceful rise and advocate instead China’s “military rise”. Liu believes that China’s goal shall be to surpass the United States and become world number one militarily. The book was an instant success and soon sold out. However, the reformists under Hu Jintao banned reprinting of the book due to its leftist theory that pursues military hegemony.

“Xi Jinping, however, thinks that he can exploit it to greatly facilitate his reform. He expands Liu Mingfu’s China dream into a dream for the great rejuvenation of the Chinese nation.

“Soon after he came to power, he brought all the Politburo Standing Committee (PSC) members to visit “the Road Toward Renewal” exhibition in Beijing. There, he said that the realization of the great rejuvenation of the Chinese nation was the greatest China dream for the Chinese nation now and wanted people to strive to realize the dream.

“At one stroke, he has rallied around him both the reformists who advocate turning China into an economic power and the conservatives who advocate turning China into a military power. Moreover, the vested interests that opposed further reform due to their interests may also think that they may be benefited when China becomes powerful. That may reduce their opposition.

“The day after November 29 when Xi Jinping talked about China dream, for the first time, Liu Mingfu received a phone call from his publisher that reprinting of his book was allowed.

“In order to win over the conservatives, when Xi Jiping visited Chinese navy on April 11, 2013, he talked about the dream for a militarily powerful China to emphasize that his China dream for a powerful China includes that for a militarily powerful China.”

Xi has thus skillfully gained both reformists’ and conservatives’ support and exploited conservatives’ assistance in fighting against corruption and being divorced from the masses of people, which in fact means that the CCP is being turned into the people’s enemy by local officials’ despotism.

Corruption and people’s enmity are the most important factors that may cause the CCP to collapse.

Xi has proved himself so competent that Jiang has decided to choose Xi as his successor as the core of CCP leadership. That is described in the section “Signs of Jiang Zemin’s Intention to Have Xi Jinping Succeed Him as the Core” near the end of Chapter 16.

We shall be clear that Xi Jinping has been chosen to save CCP Dynasty when it is on the verge of collapse. What he has done and will do aim at maintaining the Dynasty’s survival. Maintainging the survival of the dynasty is the first priority for all the cores of CCP Dynasty and all the emperors of China’s previous hereditary dynasties.

Asking him to introduce multi-party democracy to deprive CCP Dynasty of its power to rule China is like “asking a tiger for its skin”. It is entirely impossible.

Chiang Ching-kuo, emperor of Chiang Dynasty established by his father Chiang Kai Shek, indeed gave up his family dynasty’s monopoly of state power and turned Taiwan into a democracy.

Xi Jinping is not able to do that even if he wants to as CCP Dynasty belongs to CCP the party instead of Xi’s family.

In fact, we cannot be sure whether he will be able to carry out his ambitious reform as according to my formula:

Wise leader + talented scholars = superpower

We have not seen yet whether, like Jiang Zemin, he has found, promoted and established bondage with lots of talented scholars to assist him in carrying out his reform.

Without such assistance, he will not even be able to establish his power base let alone become one of the greatest emperors in Chinese history.

His quick rise reminds me of Emperor Shizong of Zhou, one of the greatest emperors in Chinese history who would have made China the greatest power of his time if he had not died young.

If Xi is assisted by talented scholars and remains the core long after his retirement, he will be able to make China the greatest superpower of his time.

What worries me is that if he has not reformed Chinese political system to prevent the emergence of a tyrant like Mao or to remove an emerging tyrant, not only China but the whole world will be in great danger.

SCMP’s report today “China reform pledges show Xi assuming Deng mantle, analysts say” seems to foretell the rise of Xi to Deng Xiaoping’s status but fails to see that Xi Jinping has not actually succeeded Jiang Zemin and soundly established himself.

US China watchers still do not see the danger the world will be in if Xi Jinping is really as great as Emperor Shizong of Zhou and the US fails to reform to make it as powerful a balance to China when a tyrant like Mao emerges as Xi’s successor.

The following is the full text of SCMP’s report:

By claiming authorship of broad reform pledges after repeated conservative pronouncements, China’s President Xi Jinping is assuming the mantle of Deng Xiaoping, who oversaw both huge economic changes and the Tiananmen crackdown, scholars say.

Days after the conclusion of a key gathering known as the Third Plenum, China’s Communist Party leaders unveiled a list of sweeping changes to economic and social policy.

They included reforms to the country’s land ownership system, loosening controls over state-owned enterprises, relaxing the controversial one-child policy and eventually shuttering forced labour camps.

The 22,000-word document explicitly declared Xi as head of the group charged with its drafting – a marked departure from previous administrations that suggests he is linking his own personal prestige to the planned changes, according to experts.

Xi Jinping seems to think that he can take the current political system and instil it with more discipline, mass supervision and a tough assault on corruption

Barry Naughton

“It was pretty surprising,” said Barry Naughton, a professor at the University of California, San Diego, and an expert on China’s economy. “He said, ‘I was the head of the writing group.’ That’s a very strong and unambiguous thing to say, and there’s also the fact that he said it rather than leaving it unsaid.”

In a story on Tuesday on the way the decision was drawn up, the official Xinhua news agency mentioned Xi 21 times, while Premier Li Keqiang was not named at all.

Like Deng, the man who led China from 1978 to 1992 and launched the country’s boom following the death of Mao Zedong, Xi has made economic reform a top priority, experts say.

Deng is viewed as having steered China politically further towards authoritarianism, but some scholars argue that he actually envisioned greater restructuring of the political system.

Xi’s first year in office has seen a high-profile campaign to tackle graft and a revival of some Mao-era practices such as “self-criticism sessions” for public officials.

“Xi Jinping in a way actually seems to think that he can take the current political system and instil it with a little more discipline and a little more mass supervision and a tough assault on corruption, and I guess combine that with economic reform,” Naughton said.

“So, in a way, that’s more Dengist than Deng, because it’s a more active pursuit of the political side of it.”

But Xi has also presided over a tightening of control over the press and public expression, particularly on China’s social media, and an unknown number of activists, even some campaigning on his signature issue of corruption, have been detained.

Perry Link, a professor at the University of California, Riverside, and a renowned China scholar, cautioned that despite the attention-grabbing nature of the promises issued by the Third Plenum, they amounted to “language only”.

“Just one example: the announcement that the reform-through-labour system will be abolished is designed to make the Chinese people and the world feel better about the party, to give it more ‘legitimacy’.

“But the leaders can easily continue using the same system under a different name, if they like, or under no name at all. Whatever they put in pretty language, the hard fact is that repression has grown much worse in recent months. We need to watch actions, not words.”

The pledges on the market, state enterprises and other aspects of the economy have been largely welcomed by analysts, with ANZ economists even raising the prospect of “a golden decade of sustainable growth and unparalleled prosperity”.

But while the economic reforms pay heed to Deng, Xi’s stamping of his name on the reform document suggests he is seeking to accumulate power, contrary to Deng’s own admonitions, said Willy Lam, a Chinese politics specialist at the Chinese University of Hong Kong.

“Right now, it seems Xi Jinping has gathered more power in his hand than (former president) Jiang Zemin even at the height of his power in his last five years,” Lam said.

“It’s very unusual,” he added. “And I think, presently speaking, it’s of course unhealthy for one individual have amassed so much power.

“It goes against one of the major reforms of Deng Xiaoping, and that is to promote a collective leadership. That was the lesson that everybody learned from the Cultural Revolution.”

Source: Chan Kai Yee “Tiananmen’s Tremendous Achievement” second edition.

Source: SCMP “China reform pledges show Xi assuming Deng mantle, analysts say”


China: Xi Jinping Ends Fierce Power Struggle between Reformists and Conservatives


Evaluation of Mao was one of the two major issues in the fierce power struggle between the reformists lead by Hu Jintao and the conservatives lead by Bo Xilai.

In order to omit Mao Zedong Thought, Hu Jintao introduced the Party jargon that the Party shall act “under the guidance of Deng Xiaoping Theory and the important thought of Three Represents”. In that jargon, Mao Zedong Thought is conspicuously missing.

In the communiqué of the second Plenum of the eighteenth CCP Central Committee, that jargon was repeated, but in that of the third Plenum closed yesterday, the jargon was changed to “under the guidance of Marxism-Leninism, Mao Deng Xiaoping Theory and the important thought of Three Represents”.

I give detailed description of the power struggle in the second edition of my book “Tiananmen’s Tremendous Achievements”. As it is very long, I only give some excerpts below:

Jiang Zeming used his Three Representatives to justify the capitalist road and turn CCP into a party of the whole people that recruited capitalists, the targets of conservatives’ revolution. Conservatives suffered a serious defeat. Their previous argument against reform was that the reform is capitalist in nature. When the The Three Represents has justified the capitalist road and written into CCP constitution, they have lost that major argument for their opposition to the reform.

Hu Jintao who carried on Jiang Zemin’s reform believed that reformists’ victory was not a stable one and that the conservatives could use Mao Zedong Thought to attack the reformists.

He began to Omit Mao Zedong Thought

It was typically reflected in what Hu Jintao said in his 2010 New Year’s message on New Year Eve: “In the upcoming new year, we will unswervingly uphold the great banner of socialism with Chinese characteristics, further implement the Scientific Outlook on Development under the guidance of Deng Xiaoping Theory and the important thought of Three Represents,…”

In CCP’s and China’s constitutions, the guiding ideologies are Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory and the important thought of Three Represents, but here Marxism-Leninism and Mao Zedong Thought were conspicuously missing.

Hu’s words became CCP jargon and was frequently repeated by him and other Chinese leaders and in CCP documents in the last couple of years when Hu was in charge. Premier Wen Jiabao repeated the exact wording in his speech in celebration of the 61st anniversary of the founding of the People’s Republic of China. As CCP continued to urge its members to study Marxism at that time, clearly what Hu wanted was to omit Mao Zedong Thought.

Bo Xilai countered Hu Jintao’s omission by intensification of his sing-red campaign to remind people of Mao era. He often quoted Mao’s words and even sent quotations from Mao’s works as message to all mobile phone users in Chongqing in early 2012. By so doing, he rallied all the conservatives in the nation around him into a powerful conservative faction as the basis for seizing supreme power in CCP.

Evaluation of Mao became the major issue of the recent round of fierce power struggle between conservatives and reformists.

At first Bo Xilai gained the upper hand. His sing-red campaign spread all over the country and even to capitalist Hong Kong while quotations from Mao became popular in Chongqing.

The reformists seized Bo Xilai’s mistakes and exploited his wife’s murder of British businessman Neil Heywood to bring down Bo Xilai. Bo was placed under house arrest. But Bo’s conservative faction was too strong. It was only Jiang Zemin as the core who was able to make the final decision to punish Bo Xilai harshly.

However, Jiang Zemin only made a decision on punishing Bo’s crimes, but has not touched the evaluation of Mao. The issue was left to Xi Jinping to deal with. Xi skillfully applied the art for being an emperor to satisfactorily deal with it.

Xi Jinping has fully displayed his wisdom, vision, tolerance and mastery of the art for being an emperor in dealing with that issue.

Xi Jinping understands the situation very well that both the reformists and conservatives are very strong in China, so that whichever side he takes he will encounter great resistance from the other side. That will make it even more difficult for him to resolve the tricky issues left behind by Hu Jintao and achieve his ambitious goal, which he refers to as his China dream.

First, he is clear that China has no future if further thorough economic reform cannot be carried through. However, he and Li Keqiang are sure that they will encounter fierce resistance from vested interests.

China Dream Rallies Reformists and Conservatives Around Xi Jinping

As elaborated above, Bo Xilai used his sing-red campaign and resurrection of Maoism to rally all conservative around him to form a conservative faction strong enough to counter the reformists. The reformists defeated the conservatives not by its overwhelming strength but by depriving them of their leader through finding his crimes. However, the conservatives remain large in number and powerful in strength and Maoism remains popular among quite a few people.

In carrying out his further thorough economic reform, Xi Jinping will encounter not only the resistance from vested interests, but also fierce opposition from the powerful conservative faction. Not long before the 18th CCP Congress, Li Peng, the arc conservative, published a new book to emphasize the government’s role in regulating the market. Two weeks later on July 12, 2012, CCP’s mouthpiece People’s Daily carried a full-page article to promote Li’s book and denounce mainstream Western economic ideas.

Obviously, those were conservatives’ efforts to oppose in theory the reformists’ further reform of economic liberalization when they had learned that from the research report by the World Bank and the State Council’s Development Research Center. The conservatives represented by Li Peng oppose economic liberalization. On the contrary, they want intensification of control.

Blocked by strong resistance from vested interests and the conservatives, the reformists cannot move even a step forward. No wonder Hu Jintao and Wen Jiabao had made no significant progress in that reform.

“Where hills bend, streams wind the pathway seems to end, past dark willows and flowers in bloom lies another village.” Precisely like what is described in the often-cited lines in a famous Chinese poem, Xi Jinping used China dream as a magic key to open a way out.

The China dream was put forth not by reformists but by conservatives.

In 2009, under the influence of Maoist sinocentric cosmology, PLA senior colonel Liu Mingfu published his leftist book “China Dream: Great Power Thinking and Strategic Posture in the Post American Era” to reject reformists’ idea of China’s peaceful rise and advocate instead China’s “military rise”. Liu believes that China’s goal shall be to surpass the United Statems and become world number one militarily. The book was an instant success and soon sold out. However, the reformists under Hu Jintao banned reprinting of the book due to its leftist theory that pursues military hegemony.

Xi Jinping, however, thinks that he can exploit it to greatly facilitate his reform. He expands Liu Mingfu’s China dream into a dream for the great rejuvenation of the Chinese nation.

Soon after he came to power, he brought all the Politburo Standing Committee (PSC) members to visit “the Road Toward Renewal” exhibition in Beijing. There, he said that the realization of the great rejuvenation of the Chinese nation was the greatest China dream for the Chinese nation now and wanted people to strive to realize the dream.

At one stroke, he has rallied around him both the reformists who advocate turning China into an economic power and the conservatives who advocate turning China into a military power. Moreover, the vested interests that opposed further reform due to their interests may also think that they may be benefited when China becomes powerful. That may reduce their opposition.

The day after November 29 when Xi Jinping talked about China dream, for the first time, Liu Mingfu received a phone call from his publisher that reprining of his book was allowed.

In order to win over the conservatives, when Xi Jiping visited Chinese navy on April 11, 2013, he talked about the dream for a militarily powerful China to emphasize that his China dream for a powerful China includes that for a militarily powerful China.

Now, the new jargon has further pleased the conservatives, who Xi Jinping believes can help Xi overcome vested interests’ resistance.

The reformists are not strong enough to bring down Bo Xilai who had the support of the large and powerful conservative faction. However, there was a second major issue in the power struggle that upset Qiao Shi’s legal and democracy faction and Wu Bangguo, a heavyweight in Shanghai Faction. That was Bo’s protégé Wang Lijun’s persecution of criminal defense lawyer that caused criminal defense lawyers to be persecuted throughout the nation. Wu Bangguo lead the NPC to amend Chian’s criminal procedure law to protect defense lawyer while Qiao Shi’s legal and democracy faction discovered Bo Xilai’s wife’s murder crime and used trick to have Bo involved.

That is too long a story to quote here. Details can be found in the second edition of my book that I am going to release.

Source: Chan Kai Yee “Tiananmen’s Tremendous Achievements”


China: Does Zhu Rongji Implies in His New Book Using Troops on June 4 Unpopular


Former Chinese premier Zhu Rongji's new book is released in Beijing. Photo: Simon Song

Former Chinese premier Zhu Rongji’s new book is released in Beijing. Photo: Simon Song

SCMP says in its report on former Premier Zhu Rongji’s new book “True Records of Zhu Rongji’s Words in Shanghai”, “A book by former premier Zhu Rongji launched with a huge fanfare in Beijing yesterday gives a rare insight into events during his time as mayor of Shanghai between 1987 and 1991.”

Singtao Daily says in its report on the book, “for the first time his policy decision in dealing with the chaos in Shanghai during the June 4 period was disclosed including his complete refraining from mentioning the term “counterrevolutionary riot” and clear assurance to the citizens that Shanghai would not exercise military control (curfew) but would employ pickets of workers to maintain order”

One thing quite special in the book is that from Zhu Rongji’s 3 million characters of speeches, letters and commentaries in the period from 1987 to 1991 when he was in charge of Shanghai, only one tenth, i.e. 106 pieces have been selected, but Zhu’s four speeches in the period of Tiananmen Protests are included in the book.

The four speeches for the first time reveal the above-mentioned Zhu’s policy decision. “He summed up when the period was over: ‘Our clear announcement that there would be no military control has been proved very popular now.’”

The even more important revelation in the book is that at that time he talked with Jiang Zemin who was away in Beijing over the phone everyday and that at the critical moment, Jiang told him to mobilize the masses of people instead of placing his hopes on the use of troops. That was why in Zhu’s TV speech then, Zhu made it very clear that he will not use troops.

Sources: SCMP “Former premier Zhu Rongji lifts lid on talks with CY Leung”, and Singtao Daily “Zhu Rongji says in his new book refraining from military control popular in Shanghai” (summary and excerpts translated from Chinese by Chan Kai Yee)

At the crucial juncture of the establishment of democratic supervision by the masses of people, Zhu publishes those speeches of his, especially the idea that the decision not to use troops is “very popular” and the disclosure that it was Jiang Zemin’s idea to mobilize the masses of people instead of placing hope on using troops. It provides much food for thought:

Do Zhu’s words imply that using troops on June 4 is unpopular?

In my opinion, we have to think about the impact of Tiananmen Massacre on China’s current situation.

Evil Consequences of Tiananmen Massacre
Since Deng Xiaoping removed all the labels of landlords, rich peasants, counterrevolutionaries, rightists and criminals and in addition, Jiang Zemin turned the Chinese Communist Party (CCP) into a party of the whole people including entrepreneurs, the distinction of classes has seemed no longer existent in China. That is not the fact. In the section “CCP’s Tiananmen Syndrome” in Chapter 1 of my book “Tiananmen’s Tremendous Achievements”, I said: Such a syndrome “makes the Party suppress any mass protest whatever in order to prevent such protest from growing into one like the Tiananmen Protests that may threaten CCP’s monopoly of state power.” That causes CCP to classify all those who oppose it as a special class of people to be persecuted. In spite of its desire for the rule of law, in dealing with that specific class, CCP has no scruple in adopting illegal means. That is also a major obstacle to CCP’s implementation of the rule of law.

As a result, since Tiananmen Protests, maintenance of stability has provided corrupt local officials with the pretext to oppress opponents of corruption and has thus caused corruption to grow rampant.

Maintenance of stability has enabled local officials to call in armed police at will to beat up and arrest the masses of people who protested against their malpractices such as the conducting of harmful project or grab of land. It has given police excessive power without restriction so that they can exact fines on common people, protect organized crimes and criminals, control and shield prostitution, gambling, drugs and human traffics. In Chongqing, Bo Xilai’s police even framed up lots of entrepreneurs to confiscate lots of their properties.

The students held Tiananmen Protests against officials’ speculation and corruption. Suppression of Tiananmen Protests gave corrupt officials a sense of security while maintenance of stability provides them with the tools of dictatorship to protect them so that they may do evil deeds at will. As a result, local officials have grown increasingly bolder. As both Hu Jintao and Wen Jiabao were weak, local officials disregarded their ban, established black jails in Beijing, intercepted and detained petitioners who came to Beijing to report their malpractices and seek remedies. The thugs forced petitioners to cease petitioning with torture and imprisoned in labor camp those who did not give in.

Oppression of the student protesters at Tiananmen Square who advocated democracy and opposed corruption was an act of enmity against the people; while local officials’ above-mentioned malpractices were continuance of such an act. It has given rise to the situation of the CCP becoming the enemy of the people, which Xi Jinping euphemistically refers to as being divorced from masses of the people.

Such a situation constitutes a grave threat to CCP’s survival now. Xi Jinping has obtained various elders’ support for resolution of the problems of corruption, being divorced from the masses of people and the four malpractices of formalism, bureaucratism, hedonism and extravagance. The best solution is certainly to rehabilitate Tiananmen Protests, accept students’ proposition against corruption, allow press freedom and freedom of speech and implement democracy so as to empower people to supervise officials, deprive officials of their power to persecute petitioners on the pretext of maintaining stability and forbid them from using police to suppress the masses of people. However, it will certainly damage Deng Xiaoping’s image, which will certainly be firmly opposed by both Jiang Zemin and Hu Jintao as they both regard Deng as their mentor.

Xi Jinping can do so without qualms as Deng has not done him any favor. He can do it smoothly if only he does so entirely on the basis of the facts and restrict his action only to Tiananmen Protests without complete denial of Deng’s contributions to the reform and opening up. However, he has to respect Jiang Zemin and Hu Jintao’s desire to protect Deng Xiaoping’s image. In addition, Xi has not established his own power base and lacks the strength to rehabilitate Tiananmen Protests.

What shall he do?

Xi Jinping’s Democratic Political Reform

Everybody knows that he needs democracy, but students were persecuted due to their fight for democracy. The publication of Zhu Rongji’s speeches though indicates possible change in CCP’s attitude towards Tiananmen Protests, there is still a long way to go for rehabilitation of the Protests.

Hu Jintao’s and Wu Bangguo’s way is to denounce students’ democracy as Western democracy, but seek their own democracy of democratic election, democratic management, democratic decision making and democratic supervision.

Hu has conducted democratic election at grass-root level in rural areas, but the problems of village officials’ malpractices especially corruption remain.

Westerners believe there shall be multi-party democracy in China, but people are imprisoned for advocating multi-party democracy. Xi Jinping is resourceful. With deep insight, Xi Jinping knows that there shall first be democratic supervision. Only when there is democratic supervision can there really be democratic election at grass-root level to ensure that the village officials elected are honest and competent. Only when there is democratic supervision can corruption and official despotism be prevented.

Xi Jinping regards empty talk as harmful and advocates doing practical jobs; therefore, soon after he was elected a the general secretary, he took sudden actions to close all black jails, release all the petitioners imprisoned there and told local officials to pay attention to people’s complaints and resolve their problems.

In spite of Xi’s instruction that complaints shall be resolved at local levels, people swarm to Beijing again as it seems that only the central bureau under Xi’s leadership wants to listen to citizens’ complaints.

Xi Jinping has closed the black jails local governments set up in Beijing, but local corrupt officials set up such jails elsewhere and send thugs to intercept petitioners on the ways leading to the complaint bureau in Beijing.

In order to establish democratic supervision for long-term prevention of official corruption and other malpractices, Xi Jinping began a nationwide mass line campaign for one year. All officials have to examine and admit to the masses of people their mistakes and accept their criticism. The masses of people are told to exercise their rights of democratic supervision in exposing officials’ malpractices and mistakes.

Xi’s mass line campaign is a political reform for democracy, but he refrains from mentioning political reform and democracy to reduce resistance. I admire his ambition and wisdom in giving the instruction that in his campaign the masses of people shall be taught not only their right of democratic supervision but also their responsibility to exercise their right of democratic supervision.

If people are only aware of their rights but have no sense of responsibility to perform their democratic obligations, as pointed out in Moises Naim’s new book “The End of Power”, a Diet Coke culture may develop among the people. Just as people want sweetness without calories, they may want rights without responsibilities, benefits without costs, consumption without savings and a safety net, infrastructure and quality education without taxes.

With such a culture, China may be in difficulties like Greece, Spain and Italy.

Related posts:

  • China: Tang Hui’s victory important in battle for democratic supervision dated July 15, 2013
  • China: The Fight for Democratic Supervision Goes On dated July 3, 2013
  • China: Constitutionalism, the New Power Struggle between Reformists and Conservatives dated June 19, 2013

‘He’s not cool,’ Chinese magazine editorial slams Xi Jinping for lacking ‘wisdom and courage’


Xi Jinping kisses a child at a temporary shelter for quake-affected residents in Lushan County, Sichuan. Photo: Xinhua

Xi Jinping kisses a child at a temporary shelter for quake-affected residents in Lushan County, Sichuan. Photo: Xinhua

A Beijing-based business magazine raised eyebrows this week by running a full-page editorial urging the country’s leaders to pursue further political reforms to ensure future economic prosperity.

In what many consider a rare and bold move, an editorial entitled “Let’s continue to care about politics,” criticised President Xi Jinping for lacking “wisdom and courage” in pushing forward necessary reforms.

Without directly naming Xi, Zhao Li, the weekly’s editor-in-chief wrote,

“It was only until last week when the debate broke out that our new leader’s verbal environment was confirmed – he is not fashionable, and he is far from cool.”

It continued to argue that risk-averse Chinese investors won’t be happy with a society where the distribution of wealth is “stagnant and deformed,” and people’s spending is therefore restricted.

“I know many investors who reminisce about Deng,” he wrote, referring to Deng Xiaoping, China’s reformist leader who after Mao Zedong died in 1976 led the country towards a more market economy “Because the history of 1980s tells us the more the government gives up, the more our society will grow.”

Three generations of leaders since Deng, Zhao argued, only inherited Deng’s political reforms – without inheriting the “wisdom and courage” to solve them.

The author also compared China’s popular social media site Weibo with Peking University’s legendary “Democracy Wall” in the late 1970s. Many consider the wall a symol of China’s freedom of speech during the 1980s, a period of relative freedom in the country’s modern history.

When reached by phone on Friday afternoon, Zhao told SCMP.com that he was surprised by the reaction to his article. He denied that the timing of the editorial had been deliberate. Zhao said he had not yet heard from mainland authorities.

Zhao’s editorial was reposted thousands of times on Weibo, where readers commended him for speaking the truth. Most news web sites who carried the editorial had removed it from their pages by Friday afternoon.

“They would not take any step forward without a kick in the backside,” wrote a micro-blogger.

Others worried about the fate of the outspoken weekly and feared it would be shut down by authorities.

The Investor Journal, which describes itself as a Chinese middle-class investment guide modelled after Barron’s of the US, says on its website that it has about 100,000 readers in top tier Chinese cities.

Some people drew parallels between the weekly with the World Economic Herald, a reformist and outspoken Shanghai-based weekly which operated from 1980 to 1989. It was shut down by then Shanghai party secretary Jiang Zemin amid the political turmoil of the Tiananmen Square protests.

In the past weeks, “constitutionalism” has become a hot topic on China’s social media as liberals debated with conservatives over the urgency to introduce futher political reforms including the rule of law.

Several state-run publications have later issued scathing rebukes for such calls, saying they would lead to chaos and were aimed at copying western models.

In an editorial published by the People’s Daily on Friday, western theories were criticised for “not serving the core interests of the Chinese nation.”


China: ‘Princeling’ firm holds secret stake in giant fund house Cinda


As jostling starts over the stock market float of Cinda Asset Management, details have come to light of two previously unknown stakeholders

With the giant state-owned fund house Cinda Asset Management planning to go public in Hong Kong this year, two behind-the-scenes investors in the company, including a private equity fund co-founded by the grandson of China’s former state head Jiang Zemin, have been pushed into the spotlight.

Three well-placed financial industry sources have told the South China Morning Post that the Carlyle Group and Boyu Capital both made indirect investments to allow them to own minority stakes in Cinda, which was established in 1999 as one of the mainland’s Big Four state debt clearers and is based in Beijing.

In March 2012, Cinda brought in three new so-called strategic investors – UBS, Citic Capital, an investment firm partly owned by China Investment Corp, the mainland’s US$300 billion sovereign wealth fund, and Standard Chartered – in a deal worth around US$1 billion, for a combined stake of less than 10 per cent in the business.

What surprised the financial community more was the discovery later that after that deal, Washington-based private equity firm the Carlyle Group, and Boyu Capital, a billion-dollar private equity firm based in Hong Kong and partly funded by Li Ka-shing, Asia’s richest man, each struck deals to become the ultimate holders of their own stakes in Cinda.

Two of the three sources familiar with the matter told the Post that UBS sold part of its holdings in Cinda, which the Swiss bank obtained through its direct investment in 2012, to Carlyle, one of the world’s largest private equity firms.

Boyu also made a sophisticated financial arrangement with Citic Capital to obtain part of the stake in Cinda originally held by Citic, sources said.

Financial details such as the size of the stakes in Cinda that Carlyle and Boyu indirectly own remain unclear. On the record, UBS, Standard Chartered, and Citic Capital remain as Cinda’s three new shareholders. The rest of Cinda is owned by the Chinese government.

One of the anonymous sources said: “It may be a bit controversial if you just publicly tell everyone that two offshore funds like Boyu and Carlyle made direct investments in a company like Cinda.

“That explains why they chose to make such investments off the record and through indirect channels.”

The indirect investments by Carlyle and Boyu in Cinda were kept secret for some time within a small group of relevant people.

However, earlier this year, when more than a dozen investment banks began to pitch to Cinda over its plan for a US$3 billion listing in Hong Kong, the behind-the-scenes roles of Carlyle and Boyu in Cinda were spotted by some bankers and the word started to spread in Hong Kong’s financial community.

Such behind-the-scenes investments have grown more popular in recent years in the mainland’s fast-growing private equity business, where government relations are often the key to deal-making.

In 2008, Carlyle failed to buy into a major Chinese machinery maker because it could not get government approval: Carlyle’s target was considered by Beijing at the time to be strategically important to the country’s national security.

Boyu said it would not comment on the firm’s specific investments. Carlyle did not reply to the Post’s inquiries.

Cinda is a legacy of Beijing’s efforts to clean up nation’s bad-loan crisis in the 1990s, and it also helped to improve the financial books of the Big Four state-owned banks on the mainland before they went public.

Given Cinda’s strategic importance to the mainland’s financial security, Beijing will usually not welcome foreign private equity firms buying into such state-owned firms.

Jiang Zhicheng, born in Shanghai and educated at Harvard, the grandson of former president Jiang Zemin, is a co-founding member of Boyu.

He started his career at Goldman Sachs as a junior investment banker and later teamed up with big names including Mary Ma, the former chief finance officer of the Chinese computer maker Lenovo, to set up Boyu.

Many sons and daughters of senior Chinese officials, known as “princelings”, studied abroad and later returned to China to launch their own investment firms.

Winston Wen, the son of the former premier Wen Jiabao, studied at the Northwestern University in the US and later returned to China to co-found New Horizon Capital.

Wen junior left the firm some years ago due partly to growing public concern over the conflict between his private equity job and his father’s high position in government.

A source close to the younger Jiang, now in his late 20s and based in Hong Kong, said he was “a very smart and nice young person. Unlike many other princelings, he has tried very hard to keep a low profile”.

Source: SCMP: “Exclusive: ‘Princeling’ firm holds secret stake in giant fund house Cinda”


China’s Leadership Now Dominated by Intellectuals


Reuters publishes a report today titled “Analysis: From builders to managers: educating China’s leadership” that provides lots of facts about Chinese leaders being well educated now. However, as it does no know Jiang Zeming’s coup that has substituted intellectuals’ dominance of the party for uneducated conservatives’ described in my book “Tiananmen’s Tremendous Achievements”, it believes that leaders being well educated has resulted from China’s economic success instead of vice versa. Anyway, the report provides us with valuable information. The following is the full text of the report with my comments in parentheses):

Sun Zhengcai earned his PhD from China Agricultural University in 1997, experimenting with different fertilizers for crop rotation in northern China, according to his doctoral thesis.

For the world’s biggest grain grower and consumer, this type of research is crucial for improving yields. But it was an unlikely qualification for political leadership in China where engineers have traditionally held many of the top posts.

Sun represents one of the more far reaching changes in Chinese politics. Highly educated leaders in a broad range of disciplines are rising to the top of the ruling Communist Party, according to data from Connected China, a Reuters database application that tracks the connections and careers of China’s leaders.

Sun, 49, who joined the Politburo at November’s Communist Party Congress, is one of five PhD holders in a body in which all 25 members have at least a junior college education.

Some education experts explain the rise of this more highly educated leadership class as a product of the increasing complexity of China’s economy and society.

It also reflects an evolution in the Party. A generation of revolutionary soldiers gave way to technocratic engineers who guided the following period of industrialization. The engineers are now handing over to leaders better qualified to run the world’s second-biggest economy.

“As the society matures, it is always beneficial to have a leadership with diverse backgrounds,” said Gong Peng, a Professor at TsinghuaUniversity’s Center for Earth System Science. “They bring different thinking and skills to the administration.”

The data from Connected China shows far more Politburo members now hold PhDs and graduate degrees than earlier leadership generations.

It also shows that education is not necessarily the only path to power: loyalties forged during political posts in the provinces, and family ties to former leaders also matter a great deal.

DR XI AND DR LI (Both of them are the youngest of the new generation of talented scholars with moral integrity emerged during the Cultural Revolution. In my book, I describe them as the scholars who called themselves Eclectics and who studied all kinds of knowledge through self-study. Note: Neither Xi nor Li has received normal secondary-school education due to the Cultural Revolution. China’s poor current school education system cannot turn out such talented intellectuals with moral integrity. That will be the most serious problem for China as there will be few such talented intellectuals to succeed Xi and Li.–Chan Kai Yee, author of “Tiananmen’s Tremendous Achievements”)

The other PhD holders in the current Politburo are party leader and incoming President Xi Jinping, who studied China’s rural markets at TsinghuaUniversity. Li Keqiang, expected to become Premier after the National People’s Congress in March, has a PhD in economics from Peking University. Liu Yandong studied China’s political development at Jilin University, and fellow Politburo member Li Yuanchao explored socialist art and culture in his thesis at the Central Party School.

The current Politburo also features nine members with masters degrees and three with other higher degrees. That stands in stark contrast with members of the 14th Politburo formed in 1992. Only Hu Jintao and Wen Jiabao, who became China’s top leadership duo a decade later, had graduate degrees in that group.

The change in the breadth of education has also been dramatic. Ten years ago, 15 of the 20 college-educated members of the Politburo were trained in engineering or the physical sciences. At the very top of China’s hierarchy, engineers were even more heavily represented.

In the nine-member Politburo Standing Committee appointed in 2002, eight members of the party’s top decision-making body were engineers and one was a geologist. Of these, four were engineering graduates of Tsinghua.

The current Politburo has only four engineers. They are outnumbered by colleagues with training in economics, finance and business management. It also shows a sharp increase in members educated in law, humanities and social sciences. The seven-member Standing Committee has only two engineers; Xi Jinping, who has an undergraduate degree in chemical engineering and Yu Zhengsheng who worked in missile guidance.

For some Chinese educators, the presence of fewer engineers at the top is a welcome development after decades in which technocratic leaders, often Soviet trained, dominated decision-making in Beijing.

“Engineers who do not learn about management may not be good managers and eventually good administrators,” says Tsinghua’s Gong. “I think it will improve the governing quality in China.”

WORLDY LEADERS (In Chinese history, most of the best emperors lived among common people when they were young. They became great as they understood the people’ misery and aspirations from theire personal experience. That is the case with Jiang Zemin, Hu Jintao, and especially with Xi Jinping. It is why they are so worldly. You will be amazed by Xi’s good reign, but he will have the problem of finding a good successor.)

In the early 1980s, then paramount leader Deng Xiaoping directed the party to foster a generation of better educated cadres who could accelerate China’s market reforms.

China’s subsequent rise as a major trading nation and growing military power is also increasing pressure on the party to select better educated and more worldly leaders, political analysts and education experts say.

“Because the country is changing and the world is changing, it requires a more sophisticated understanding of the issues,” says Yu Maochun, an expert on Chinese politics and a professor at the Annapolis, Maryland-based United States Naval Academy.

Some experts question whether academic qualifications are as important as loyalty and family ties in a political system where many senior leaders, including Xi Jinping, are “princelings”, children of senior party veterans.

EXPERIENCE IN PROVINCES (refer to the system of Yao and Shun advocated by China’s new generation of talented scholars with moral integrity in their secret meeting that is described in Chapter 3 of my book. China’s political system now is to some extent a repetition of that system–Chan Kai Yee, author of “Tiananmen’s Tremendous Achievements.)

Data from Connected China shows an increasing emphasis on provincial-level party leadership experience for Politburo members.

In 1992, only nine of 23 Politburo members served as a provincial or municipal-level party chief. In the current Politburo, 19 of the 25 have held or currently hold a provincial post at this level, including Sun Zhengcai who is party secretary in Chongqing.

Many of the engineers who held top posts, including President Hu Jintao, spent long periods working in unrelated fields.

“They are not really engineers in the Western sense,” says Yu. “They are really political hacks. Their career paths were not devoted to science but concentrated on the political system.”

Despite the increasing diversity of education at the upper levels of the party, one feature of China’s leadership remains virtually unchanged since the revolutionary period – the domination of men.

Only two women are in the current Politburo, Liu Yandong and Sun Chunlan, and none are in the Politburo Standing Committee.

Source: Reuters: “Analysis: From builders to managers: educating China’s leadership”


China: Purge of Unqualified Members, a Hard Battle for the Party’s Survival


In 2001, Gordon Chang predicted in his book “The Coming Collapse of China” that China would collapse within ten years. Ten years later China did not collapse, but instead became even more prosperous.

I said in the first edition (writing of the second edition will soon finish) of my book “Tiananmen’s Tremendous Achievements”, “Gordon Chang probed into the fundamentals and had contacts with Chinese people in China for years. His approach was correct and the problems he pointed out in his book were real serious ones very difficult to resolve. He did have a whole picture of the predicament Chinese leaders were in. In addition, no one had ever tried to resolve such problems; therefore, there were no lessons or experience that Chinese leaders could learn from. However, there is a common missing link in all Westerners’ study of China: Due to the Cultural Revolution, all talented scholars with moral integration studied hard and wanted to become politicians to establish scholars’ rule and save the country. China had a large number of talented politicians with moral integrity far superior to those in other countries. Western China-watchers including Gordon Chang failed in their prediction because they underestimated Chinese scholars’ talents.”

I point out in the first edition of my book that Xi Jinping is among the youngest of the new generation of talented scholars that emerged during the Cultural Revolution. In the second edition of my book, I describe how he convinced the powerful elders to give him full support by pointing out to them three serious problems other than the rampant corruption that may cause the party to collapse and the lesson that the party shall learn from the collapse of the Soviet Communist Party.

Xi is wise to be well aware of the indispensability of purge to resolve all the problems and ensure no repetition of the collapse of the Soviet Communist Party. I believe he also knows it is a very difficult job.

SCMP proves that it knows China well by carrying a report on Xi’s purge yesterday and a commentary today titled “Xi Jinping’s campaign to purge Communist Party ‘won’t be easy’”.

I recommended to my readers SCMP’s report in my post yesterday titled “China: Xi Jinping’s Purge Begins in Guangdong”.

In my post yesterday, I said, “A purge is the best way to consolidate a new leader’s power and strike awe among corrupt officials”.

In the first edition of my book, I sum up two formulae from Chinese history:

Wise leader + talented scholars = superpower

Despot + mob = chaos

Xi’s predecessor Hu Jintao has proved that he is wise by putting forth the Scientific Outlook on Development and achieving tremendous economic growth. However, Hu has not obtained the assistance of enough talented scholars to implement his Scientific Outlook on Development. He pointed out the problem of pollution in his Scientific Outlook, but the officials under him have paid no attention to his instruction. As a result he left Xi the problem of very serious pollution.

Xi has proved that he is much wiser than Hu. Hu knew well the problem in China’s letters and calls system, a mechanism to receive and handle people’s petitions. Therefore, a national conference of the officials in charge of letters and calls was held in mid July 2012. Politburo Standing Committee (PSC) member Zhou Yongkang gave a speech stressing the importance of the work of letters and calls and top PSC leaders Hu Jintao, Wen Jiabao, Xi Jinping and Li Keqiang personally attended the conference to show the importance they attached to the work. However, there had been no change in interception, illegal detention, repatriation and torture of petitioners or decrease in mass protests.

Less than three weeks after Xi took over, on December 4, Xi took sweeping thundering actions to close all the black jails set up by local government in Beijing for detention of the petitioners they had rounded up and released all the petitioners detained there. One more week later, a conference of the officials in charge of letters and calls was held to ban interception of petitioners and order local officials to treat petitioners as their family members, the problems reflected by petitioners as their family affairs, and the work to deal with petitions as their family work.

Xi is obviously skillful in mobilizing related officials to take fast and effective actions. However, will he able to purge his huge party of 10 million of its 80 million members?

SCMP cited some analysts’ views on the difficulty to purge the party of unqualified members. It says, “Drive to get rid of ‘unqualified members’ could be turned into a political vendetta, analysts warn, adding the cull should start at the top”.

I believe that the key is whether Xi is able to find and make good use of talent assistants.

When Jiang Zemin took over the reigns, he also faced lots of seemingly insurmountable difficulties, such as the conservatives’ obstinate resistance to the reform and opening up, state-owned enterprises’ huge debts and losses, state banks being on the verge of bankruptcy, etc. But he was able to find and employ talented assistants such as Zhu Rongji, Wu Bangguo, Zeng Qihong, Li Lanqing, Wang Huning, etc. to help him overcome all the difficulties.

Xi has proved himself a wise leader by the initial success of his sweeping thundering actions. I point out in the second edition of my book the sign that Jiang Zemin has been satisfied with Xi’s initial successes and decided to choose Xi as the successor to him as the core of the party leadership.

Obviously, the beginning of the purge may strike awe and give rise to some restraints among corrupt officials. However, we still have to wait and see whether Xi also has the ability to find and employ talented assistants. The tasks Xi faces, including the purge, are not what he can fulfill alone. China is such a vast country with an enormous population of 1.3 billion people. The party is so huge as to have 80 million members. Xi needs quite a few talented assistants, but so far we have not seen any of them.

For details of SCMP’s article today, please visit SCMP website at:

http://www.scmp.com/news/china/article/1154955/xi-jinpings-campaign-purge-communist-party-wont-be-easy


China: Netizens deride Xinhua over Jiang comments


US President Barack Obama being mocked on a recent Weibo post with a famous Chinese saying. On Wednesday, former president Jiang Zemen was ridiculed with the same expression.

US President Barack Obama being mocked on a recent Weibo post with a famous Chinese saying. On Wednesday, former president Jiang Zemen was ridiculed with the same expression.

Reblog of Amy Li’s blog at SCMP

The centuries-old Chinese saying “noble character and sterling integrity” (Gao Feng Liang Jie) got a new meaning when it was used on China’s Sina Weibo in reference to former president Jiang Zemin. Only this time the expression was used sarcastically.

This occurred after Jiang, who stepped down as president over 10 years ago, requested the central committee put his name behind current members of the Communist Party’s Politburo Standing Committee, along with other “senior comrades”, the Xinhua News Agency  reported on Wednesday. Many in China are surprised Jiang would do this after being out of office for so long.

The Xinhua report surfaced after journalists covering the funeral service of General Yang Baibing on Tuesday discovered the wreath bearing Jiang’s name appearing behind the name of President Hu Jintao, party general secretary Xi Jinping and current members of the Politburo Standing Committee.

Xinhua explaining Jiang’s request said: “This reflects the Communist Party member’s noble character and sterling integrity.”

The state news agency’s sycophantic rhetoric was quickly mocked on China’s twitter-like service Sina Weibo, where the phrase “noble character and sterling integrity” has gone viral in hundreds of parody messages posted by netizens.

For instance, bloggers used the expression with a photo of US President Barack Obama at a meeting with colleagues.

“President Obama has requested that he sit in the back row in future meetings. This reflects the Democrat Party member’s noble character and sterling integrity, ” read one cynical post.

But another blogger, in reference to Jiang, asked: “Would Obama even appear on an official list 10 years after he retired?”.


Jiang Zemin slips down a notch in Beijing’s order of seniority


Listing behind Politburo Standing Committee members at funeral may be a sign that former head of state is heading for full retirement

For the first time, the name of former president Jiang Zemin has been officially placed behind those of members of the Communist Party’s current Politburo Standing Committee, prompting speculation that he is set to withdraw from the political stage.

At the funeral service for General Yang Baibing , who died at the age of 93 in Beijing last Tuesday, the wreath placed in Jiang’s name came behind that of President Hu Jintao , party general secretary Xi Jinping and the other members of the Politburo Standing Committee, China Central Television reported on its main 7pm newscast yesterday.

It was the first time that Jiang’s name had been placed behind that of Politburo Standing Committee members other than the party’s general secretary since he retired as general secretary at the party’s 16th national congress in 2002 and stood down from his last official post as chairman of the party’s Central Military Commission in late 2004.

Despite speculation that Jiang would fully retire after the closing of the party’s 18th national congress in mid-November, Jiang’s name appeared behind Hu and Xi but ahead of National People’s Congress chairman Wu Bangguo and Premier Wen Jiabao at the funeral of Bishop Ding Guangxun on November 27, Xinhua reported earlier.

Even after he stepped down as CMC chairman, Jiang was still ranked No2, behind only Hu, and wielded strong political influence within the party.

Jiang, who is 86 years old, was believed to have played a key role in the framing of the new leadership line-up for the party’s 18th national congress, succeeding in getting allies including Zhang Dejiang , Yu Zhengsheng and Zhang Gaoli on to the Politburo Standing Committee.

With the latest ranking suggesting that Jiang will finally retire from politics, attention has now moved on to whether Hu will follow suit and give up his entitlement to the No 2 rank after his full retirement in March from his last post as state president. Hu broke the precedent established by Jiang when he stepped down from the helm of both the party and the CMC in November.

Beijing-based independent political analyst Chen Ziming said he believed Hu was unlikely to be ranked No2 after his retirement, making way for Xi to rule the country. Chen also said, however, that time would tell whether Jiang was willing to give up his political influence.

“Jiang can still exert his power, even if he has no ranking in the top leadership,” Chen said.

Hong Kong-based veteran China watcher Johnny Lau Yui-siu said the ranking did not necessarily mean that Jiang would play no role in Chinese politics from now on.

“On the contrary, I think that his political influence will extend for quite a while at least,” Lau said.

Source: SCMP “Jiang Zemin slips down a notch in Beijing’s order of seniority”


Follow

Get every new post delivered to your Inbox.

Join 78 other followers