Showing posts with label China. Show all posts
Showing posts with label China. Show all posts

Sunday

While we obsess over Trump, China is making history

While news and analysis in the United States continue to be obsessed with President Trump’s daily antics and insults, halfway around the world, something truly historic just happened. China signaled that it now sees itself as the world’s other superpower, positioning itself as the alternative, if not rival, to the United States. 

This is not my opinion based on reading the tea leaves of Chinese politics. It is the clearly articulated view of China’s supreme leader, Xi Jinping. In his speech last week to the 19th Communist Party Congress , Xi declared that China is at a “historic juncture,” entering a “new era” that will be marked by the country becoming a “mighty force” in the world and a role model for political and economic development. He asserted that China’s “political system . . . is a great creation” that offers “a new choice for other countries.” And he insisted that the country will defend its interests zealously while also becoming a global leader on issues such as climate change and trade.

Ever since China abandoned its Maoist isolation in the 1970s, its guiding philosophy was set by Deng Xiaoping. At that time, China needed to learn from the West, especially the United States, and integrate itself into the existing international order. According to Deng, it should be humble and modest in its foreign policy, “hide its light under a bushel,” and “bide its time.” But the time has now come, in Xi’s view, and he said the Middle Kingdom is ready to “take center stage in the world.”

Xi’s speech is important because this party congress made clear that he is no ordinary leader. He ascended to a second term in office without naming any obvious successors from the next generation of party officials, thus maintaining a grip on power far more secure than his immediate predecessors. More important, the party enshrined his thoughts in the constitution, an honor previously accorded only to Mao Zedong in his lifetime. (Deng’s thoughts were added, but only posthumously.) This means that for the rest of his life, Xi and his ideas will dominate the Communist Party of China.

In a recent issue of the New York Review of Books, Andrew Nathan noted that Western policy toward Beijing has generally assumed that, over time, as China modernized its economy, it would become more pluralistic at home and more cooperative abroad. Nathan added, however, that a few writers and journalists, such as James Mann, worried that China instead would stay authoritarian and provide support for other anti-democratic countries.

The reality is not quite as extreme as Mann predicted. China has remained resolutely authoritarian — in fact, even more so in recent years. But on issues such as climate change, trade and North Korea, it has in fact become more cooperative. While Beijing has tried to set up a few alternative international institutions of its own, it is also the third-largest funder of the United Nations and the second-largest contributor to the international body’s peacekeeping budget. China seeks a revision of the international system to accommodate its own rising power, not a revolution and wholesale replacement of the Western-built international order.

In part, China’s new stance toward the world, and the way it has been received, are a result of the continued strength of the Chinese economy and the growing political confidence of the party under Xi. But these changes are also occurring against the backdrop of the total collapse of political and moral authority of the United States in the world. A recent Pew Research Center survey charts a 14-point drop in those who view the United States favorably across the more than 30 countries polled.

Countries such as Australia, the Netherlands and Canada now all have a more favorable view of China than of the United States. Many of the countries surveyed — including Germany, Chile and Indonesia — have greater confidence in the leadership of Xi than that of Trump. China has aggressively sought to improve its image in the world, spending billions on foreign aid, promising trade and investment, and opening Confucius Institutes to promote Chinese culture.
Meanwhile, consider how the United States must look now to the rest of the world. It is politically paralyzed, unable to make major decisions. Amidst a ballooning debt, its investments in education, infrastructure, and science and technology are seriously lacking.

Politics has become a branch of reality TV, with daily insults, comebacks and color commentary. America’s historical leadership role in the world has been replaced by a narrow and cramped ideology. Foreign policy has become a partisan game, with Washington breaking agreements, shifting course and reversing policy almost entirely to score political points at home.

The shift in reputation that we are witnessing around the world is not so much about the rise of China but rather the decline of the United States.

Saturday

Chinese man wins 'gay conversion' case

Clinic ordered to compensate man who sued it for administering electric shocks intended to make him heterosexual.

Source:Al Jazeera 

A Chinese psychological clinic has been ordered to pay compensation to a gay man who sued it for administering electric shocks intended to make him heterosexual, in what is believed to be China's first case involving so-called conversion therapy.

Lawyer Li Duilong said the Haidian District People's Court in Beijing on Friday ordered the clinic to pay $560 to compensate Yang Teng for costs incurred in the therapy.

Li said the court also ruled that there was no need to administer shocks because homosexuality did not require treatment. A suit against search engine giant Baidu for advertising the Xinyu Piaoxiang clinic in the western city of Chongqing was dismissed.

Homosexuality is finding increasing acceptance in China but many openly gay men face pressure to undergo sexuality "treatment" or marry a partner of the opposite sex.

Yang told the Associated Press he was "very satisfied with the results, which I didn't expect. The court sided with me, and it has supported that homosexuality is not a mental disease that requires treatment".

Yang said the therapy included hypnosis and electric shocks that harmed him both physically and emotionally.

He said he voluntarily underwent the therapy in February following pressure from his parents to marry and have a child.

Homosexuality was de-classified as a mental disorder in the country in 2001 although no laws outlaw discrimination against sexual minorities and same-sex partnerships are not recognised.

Conversion therapy has more than a century of history around the world, but has fallen out of favour with medical authorities.

Nonetheless the lucrative industry persists in countries from Singapore to Britain and the United States - where reports of electro-shock use have added to momentum for a ban.

Is democracy wrong for China? (Video)

Mehdi Hasan challenges Chinese scholar Dr Zhang Weiwei on whether China can afford Western-style democracy.
   
Source:Al Jazeera
"Liberal democracy may be great or less great for the West, but it would be miserably wrong for a country like China," argues Dr Zhang Weiwei, the author of the controversial book The China Wave and outspoken defender of the Chinese political model.

If others think our model is good, you can learn from us. If you think our model is not good, we don’t care.
But is a lack of human rights and freedom of expression really the unavoidable cost of China's development? And will China's rise as a superpower change the world as we know it?

In this episode of Head to Head, Mehdi Hasan challenges the public intellectual Dr Zhang Weiwei on the trends, myths and realities of modern-day China, and asks why he thinks a meritocratic one-party system is the only way forward.

Joining this discussion are Dr Diane Wei Liang, a business professor and novelist who participated in the student protests at Tiananmen Square in 1989; Dr Martin Jacques, the author of the bestselling book When China Rules the World and co-founder of the think-tank Demos; and Professor Stephen Chan, a professor of International Relations at SOAS in London and former international civil servant.

Monday

China will not dominate the world



Original posted by Aarhus University
China is an a roll. But what will happen when some day economic growth slows down?
Professor Francis Fukuyama discusses the influence and aspirations of China.

Wednesday

25 years ago today, the 1989 Tiananmen Square protests (Video Link)

 On June 5, 1989, one day after the Chinese army's deadly crushing of the 1989 Tiananmen Square protests in Beijing, a single, unarmed young man stood his ground before a column of tanks on the Avenue of Eternal Peace. Captured on film and video by Western journalists, this extraordinary confrontation became an icon of the struggle for freedom around the world.

Watch the Full Program Onlie (FRONTLINE) 

Seventeen years later, veteran filmmaker Antony Thomas goes to China in search of "The Tank Man." Who was he? What was his fate? And what does he mean for a China that today has become a global economic powerhouse?

Drawing on interviews with Chinese and Western eyewitnesses, Thomas recounts the amazing events of the spring of 1989, when a student protest that began in Tiananmen Square, the symbolic central space of the nation, spread throughout much of the rest of China. Several weeks later, when the government sent in the army to end the demonstrations, the citizens of Beijing poured into the streets in support of the students. "You had a million people on the street, minimum. ... That was unprecedented, definitely in modern Chinese post-revolutionary history," says John Pomfret, who was in Beijing at the time, reporting for the Associated Press.

The demonstrations ended in a massacre on the night of June 3-4, when the government sent the troops into the city with orders to clear Tiananmen Square. Eyewitnesses recount what happened -- from the first shots fired in the city's outskirts, to the students' withdrawal from the square in the early hours of June 4, to the Tank Man's courageous stand the following day.

From there, Thomas looks at what the Tank Man's life might be like in today's China. China observers and scholars, including Orville Schell, talk about the turning point the nationwide unrest of 1989 represented. "After the massacre of 1989, [Chinese leader Deng Xiaoping] in effect said, 'We will not stop economic reform; [but] we will, in effect, halt political reform.'"

Almost two decades later, the educated elite who led the protests of 1989 have benefited handsomely from China's rapid economic growth, but many Chinese workers still face brutal working conditions and low wages. "A lot of factories do not even have one day off," says labor expert Dr. Anita Chan who has been researching working conditions inside China for 15 years. "That means seven days a week, 13 hours a day."

In fact, some experts see the emergence of two Chinas: one modern, wealthy and urban; the other rural, poor and disenfranchised. There is evidence that unrest among workers and peasants is growing; in 2005, there were more than 87,000 "civil disturbances" in the country.

"China is on a knife's edge," says Dr. Nicholas Bequelin of Human Rights Watch. "If we in the West are not aware of this, the leaders in Beijing are very much so, and this is their top concern. They know that the stability is very fragile."

The Chinese government has responded to this threat by cracking down on dissent, and on the media. The regime has managed to erase the Tank Man's image, famous throughout the world, from Chinese memory. Thomas shows the iconic picture to undergraduates at Beijing University, the nerve center of the 1989 protests; none of them recognize it. Central to the regime's struggle to control information is its filtering of the Internet, a complex undertaking that raises serious issues about the role of Western IT companies in China's censorship strategy.

In the face of official silence about 1989 and the Tank Man, the program concludes with Thomas' quest to find out what became of the Tank Man and who he was. In the end, his identity remains a mystery, but the symbolism of his act of defiance continues to have power. "That story ... is not getting weaker because of time. Because we don't know who he is, it's actually getting stronger," says Xiao Qiang of the China Internet Project at the University of California at Berkeley. "In the long frame of history ... human freedom, courage, dignity will stay and prevail, and that's what that picture will testify [to] forever."

Sunday

Martin Jacques: Understanding the rise of China



 Source : TED
  The world is changing with really remarkable speed. If you look at the chart at the top here, you'll see that in 2025, these Goldman Sachs projections suggest that the Chinese economy will be almost the same size as the American economy. And if you look at the chart for 2050, it's projected that the Chinese economy will be twice the size of the American economy, and the Indian economy will be almost the same size as the American economy. And we should bear in mind here that these projections were drawn up before the Western financial crisis.
 
   A couple of weeks ago, I was looking at the latest projection by BNP Paribas for when China will have a larger economy than the United States. Goldman Sachs projected 2027. The post-crisis projection is 2020. That's just a decade away. China is going to change the world in two fundamental respects. First of all, it's a huge developing country with a population of 1.3 billion people, which has been growing for over 30 years at around 10 percent a year.
 
  And within a decade, it will have the largest economy in the world. Never before in the modern era has the largest economy in the world been that of a developing country, rather than a developed country. Secondly, for the first time in the modern era, the dominant country in the world -- which I think is what China will become -- will be not from the West and from very, very different civilizational roots.

  Now, I know it's a widespread assumption in the West that as countries modernize, they also westernize. This is an illusion. It's an assumption that modernity is a product simply of competition, markets and technology. It is not. It is also shaped equally by history and culture. China is not like the West, and it will not become like the West. It will remain in very fundamental respects very different. Now the big question here is obviously, how do we make sense of China? How do we try to understand what China is? And the problem we have in the West at the moment, by and large, is that the conventional approach is that we understand it really in Western terms, using Western ideas. We can't. Now I want to offer you three building blocks for trying to understand what China is like, just as a beginning.

  The first is this: that China is not really a nation-state. Okay, it's called itself a nation-state for the last hundred years, but everyone who knows anything about China knows it's a lot older than this. This was what China looked like with the victory of the Qin Dynasty in 221 B.C. at the end of the warring-state period -- the birth of modern China. And you can see it against the boundaries of modern China. Or immediately afterward, the Han Dynasty, still 2,000 years ago. And you can see already it occupies most of what we now know as Eastern China, which is where the vast majority of Chinese lived then and live now.

  Now what is extraordinary about this is, what gives China its sense of being China, what gives the Chinese the sense of what it is to be Chinese, comes not from the last hundred years, not from the nation-state period, which is what happened in the West, but from the period, if you like, of the civilization-state. I'm thinking here, for example, of customs like ancestral worship, of a very distinctive notion of the state, likewise, a very distinctive notion of the family, social relationships like guanxi, Confucian values and so on. These are all things that come from the period of the civilization-state. In other words, China, unlike the Western states and most countries in the world, is shaped by its sense of civilization, its existence as a civilization-state, rather than as a nation-state. And there's one other thing to add to this, and that is this: Of course we know China's big, huge, demographically and geographically, with a population of 1.3 billion people. What we often aren't really aware of is the fact that China is extremely diverse and very pluralistic, and in many ways very decentralized. You can't run a place on this scale simply from Beijing, even though we think this to be the case. It's never been the case.

  So this is China, a civilization-state, rather than a nation-state. And what does it mean? Well, I think it has all sorts of profound implications. I'll give you two quick ones. The first is that the most important political value for the Chinese is unity, is the maintenance of Chinese civilization. You know, 2,000 years ago, Europe: breakdown -- the fragmentation of the Holy Roman Empire. It divided, and it's remained divided ever since. China, over the same time period, went in exactly the opposite direction, very painfully holding this huge civilization, civilization-state, together.
5:54 The second is maybe more prosaic, which is Hong Kong. Do you remember the handover of Hong Kong by Britain to China in 1997? You may remember what the Chinese constitutional proposition was. One country, two systems. And I'll lay a wager that barely anyone in the West believed them. "Window dressing. When China gets its hands on Hong Kong, that won't be the case." Thirteen years on, the political and legal system in Hong Kong is as different now as it was in 1997. We were wrong. Why were we wrong? We were wrong because we thought, naturally enough, in nation-state ways. Think of German unification, 1990. What happened? Well, basically the East was swallowed by the West. One nation, one system. That is the nation-state mentality. But you can't run a country like China, a civilization-state, on the basis of one civilization, one system. It doesn't work. So actually the response of China to the question of Hong Kong -- as it will be to the question of Taiwan -- was a natural response: one civilization, many systems.

   Let me offer you another building block to try and understand China -- maybe not sort of a comfortable one. The Chinese have a very, very different conception of race to most other countries. Do you know, of the 1.3 billion Chinese, over 90 percent of them think they belong to the same race, the Han? Now, this is completely different from the world's [other] most populous countries. India, the United States, Indonesia, Brazil -- all of them are multiracial. The Chinese don't feel like that. China is only multiracial really at the margins. So the question is, why? Well the reason, I think, essentially is, again, back to the civilization-state. A history of at least 2,000 years, a history of conquest, occupation, absorption, assimilation and so on, led to the process by which, over time, this notion of the Han emerged -- of course, nurtured by a growing and very powerful sense of cultural identity.

  Now the great advantage of this historical experience has been that, without the Han, China could never have held together. The Han identity has been the cement which has held this country together. The great disadvantage of it is that the Han have a very weak conception of cultural difference. They really believe in their own superiority, and they are disrespectful of those who are not. Hence their attitude, for example, to the Uyghurs and to the Tibetans.

  Or let me give you my third building block, the Chinese state. Now the relationship between the state and society in China is very different from that in the West. Now we in the West overwhelmingly seem to think -- in these days at least -- that the authority and legitimacy of the state is a function of democracy. The problem with this proposition is that the Chinese state enjoys more legitimacy and more authority amongst the Chinese than is true with any Western state. And the reason for this is because -- well, there are two reasons, I think. And it's obviously got nothing to do with democracy, because in our terms the Chinese certainly don't have a democracy. And the reason for this is, firstly, because the state in China is given a very special -- it enjoys a very special significance as the representative, the embodiment and the guardian of Chinese civilization, of the civilization-state. This is as close as China gets to a kind of spiritual role.

  And the second reason is because, whereas in Europe and North America, the state's power is continuously challenged -- I mean in the European tradition, historically against the church, against other sectors of the aristocracy, against merchants and so on -- for 1,000 years, the power of the Chinese state has not been challenged. It's had no serious rivals. So you can see that the way in which power has been constructed in China is very different from our experience in Western history. The result, by the way, is that the Chinese have a very different view of the state. Whereas we tend to view it as an intruder, a stranger, certainly an organ whose powers need to be limited or defined and constrained, the Chinese don't see the state like that at all. The Chinese view the state as an intimate -- not just as an intimate actually, as a member of the family -- not just in fact as a member of the family, but as the head of the family, the patriarch of the family. This is the Chinese view of the state -- very, very different to ours. It's embedded in society in a different kind of way to what is the case in the West.

  And I would suggest to you that actually what we are dealing with here, in the Chinese context, is a new kind of paradigm, which is different from anything we've had to think about in the past. Know that China believes in the market and the state. I mean, Adam Smith, already writing in the late 18th century, said, "The Chinese market is larger and more developed and more sophisticated than anything in Europe." And, apart from the Mao period, that has remained more or less the case ever since. But this is combined with an extremely strong and ubiquitous state. The state is everywhere in China. I mean, it's leading firms -- many of them are still publicly owned. Private firms, however large they are, like Lenovo, depend in many ways on state patronage. Targets for the economy and so on are set by the state. And the state, of course, its authority flows into lots of other areas -- as we are familiar with -- with something like the one-child policy.
12:45 Moreover, this is a very old state tradition, a very old tradition of statecraft. I mean, if you want an illustration of this, the Great Wall is one. But this is another, this is the Grand Canal, which was constructed in the first instance in the fifth century B.C. and was finally completed in the seventh century A.D. It went for 1,114 miles, linking Beijing with Hangzhou and Shanghai. So there's a long history of extraordinary state infrastructural projects in China, which I suppose helps us to explain what we see today, which is something like the Three Gorges Dam and many other expressions of state competence within China. So there we have three building blocks for trying to understand the difference that is China -- the civilization-state, the notion of race and the nature of the state and its relationship to society.
13:48 And yet we still insist, by and large, in thinking that we can understand China by simply drawing on Western experience, looking at it through Western eyes, using Western concepts. If you want to know why we unerringly seem to get China wrong -- our predictions about what's going to happen to China are incorrect -- this is the reason. Unfortunately, I think, I have to say that I think attitude towards China is that of a kind of little Westerner mentality. It's kind of arrogant. It's arrogant in the sense that we think that we are best, and therefore we have the universal measure. And secondly, it's ignorant. We refuse to really address the issue of difference. You know, there's a very interesting passage in a book by Paul Cohen, the American historian. And Paul Cohen argues that the West thinks of itself as probably the most cosmopolitan of all cultures. But it's not. In many ways, it's the most parochial, because for 200 years, the West has been so dominant in the world that it's not really needed to understand other cultures, other civilizations. Because, at the end of the day, it could, if necessary by force, get its own way. Whereas those cultures -- virtually the rest of the world, in fact, which have been in a far weaker position, vis-a-vis the West -- have been thereby forced to understand the West, because of the West's presence in those societies. And therefore, they are, as a result, more cosmopolitan in many ways than the West.
15:44 I mean, take the question of East Asia. East Asia: Japan, Korea, China, etc. -- a third of the world's population lives there. Now the largest economic region in the world. And I'll tell you now, that East Asianers, people from East Asia, are far more knowledgeable about the West than the West is about East Asia. Now this point is very germane, I'm afraid, to the present. Because what's happening? Back to that chart at the beginning, the Goldman Sachs chart. What is happening is that, very rapidly in historical terms, the world is being driven and shaped, not by the old developed countries, but by the developing world. We've seen this in terms of the G20 usurping very rapidly the position of the G7, or the G8. And there are two consequences of this. First, the West is rapidly losing its influence in the world. There was a dramatic illustration of this actually a year ago -- Copenhagen, climate change conference. Europe was not at the final negotiating table. When did that last happen? I would wager it was probably about 200 years ago. And that is what is going to happen in the future.
17:04 And the second implication is that the world will inevitably, as a consequence, become increasingly unfamiliar to us, because it'll be shaped by cultures and experiences and histories that we are not really familiar with, or conversant with. And at last, I'm afraid -- take Europe; America is slightly different -- but Europeans by and large, I have to say, are ignorant, are unaware about the way the world is changing. Some people -- I've got an English friend in China, and he said, "The continent is sleepwalking into oblivion." Well, maybe that's true, maybe that's an exaggeration. But there's another problem which goes along with this -- that Europe is increasingly out of touch with the world -- and that is a sort of loss of a sense of the future. I mean, Europe once, of course, once commanded the future in its confidence. Take the 19th century, for example. But this, alas, is no longer true.
18:10 If you want to feel the future, if you want to taste the future, try China -- there's old Confucius. This is a railway station the likes of which you've never seen before. It doesn't even look like a railway station. This is the new Guangzhou railway station for the high-speed trains. China already has a bigger network than any other country in the world and will soon have more than all the rest of the world put together. Or take this: now this is an idea, but it's an idea to be tried out shortly in a suburb of Beijing. Here you have a megabus, on the upper deck carries about 2,000 people. It travels on rails down a suburban road, and the cars travel underneath it. And it does speeds of up to about 100 miles an hour. Now this is the way things are going to move, because China has a very specific problem, which is different from Europe and different from the United States: China has huge numbers of people and no space. So this is a solution to a situation where China's going to have many, many, many cities over 20 million people.
19:17 Okay, so how would I like to finish? Well, what should our attitude be towards this world that we see very rapidly developing before us? I think there will be good things about it and there will be bad things about it. But I want to argue, above all, a big-picture positive for this world. For 200 years, the world was essentially governed by a fragment of the human population. That's what Europe and North America represented. The arrival of countries like China and India -- between them 38 percent of the world's population -- and others like Indonesia and Brazil and so on, represent the most important single act of democratization in the last 200 years. Civilizations and cultures, which had been ignored, which had no voice, which were not listened to, which were not known about, will have a different sort of representation in this world. As humanists, we must welcome, surely, this transformation, and we will have to learn about these civilizations.
20:38 This big ship here was the one sailed in by Zheng He in the early 15th century on his great voyages around the South China Sea, the East China Sea and across the Indian Ocean to East Africa. The little boat in front of it was the one in which, 80 years later, Christopher Columbus crossed the Atlantic. (Laughter) Or, look carefully at this silk scroll made by ZhuZhou in 1368. I think they're playing golf. Christ, the Chinese even invented golf.
21:19 Welcome to the future. Thank you.
21:22 (Applause)

Monday

How Much Does Xi Make a Year? The Surprising Answer

By Rachel Lu 
Source: Tea Leaf Nation

On March 5 at the National People’s Congress, an annual meeting of China’s legislature, Beijing announced it plans to spend $2.45 trillion in 2014. While it’s unknown how much of that goes to salaries (the budget is broken down by industries), the amount for top officials is likely surprisingly low.

Based on available information, if Chinese President Xi Jinping were to decide to buy a 100-square-meter (about 1,080-square-foot) two-bedroom apartment in central Beijing, it would set him back almost $1 million at current prices. That means Xi, who by all appearances draws a nominal annual salary of about $20,000, would have to toil for 50 years as China’s top leader to afford this modest property — assuming, that is, that he and his family didn’t pay for any other living expenses during that time. By contrast, if U.S. President Barack Obama were to do the same in the swankiest bits of Washington, D.C., he would have to pay about the same sum, but one amounting to a little over twice his annual salary of $400,000.

Of course, Xi would never need to worry about purchasing an apartment on his salary alone. He and his family live in the sprawling Zhongnanhai compound in the heart of Beijing. As a high-ranking official in China, his food, transport, and medical care are also covered by the state. And a Jan. 21 report by the International Consortium of Investigative Journalists shows Xi’s relatives have held corporate entities offshore in the Cook Islands or British Virgin Islands. That’s not illegal, but it’s a move that the entities’ owners often make to store or protect assets. Xi’s family is not exactly hurting.

The salaries of China’s top leaders are not public information, so details about them reaches the public in unintentional dribs and inferred drabs. In June 2011, while speaking to university students at a public event, Yu Zhengsheng, a member of China’s ultra-powerful Politburo, made the rare disclosure that his basic salary was approximately $1,700 a month based on salary standards for Politburo members, and he claimed that he had to “pay for his own cigarettes” and “buy clothes at market prices.” Since Xi is also a Politburo member, Yu’s statement is a good baseline to gauge Xi’s salary. In April 2013, state-owned weekly magazine China Newsweek reached a similar number through deduction, calculating that the basic salary for China’s top leader was likely around $1,600 a month by examining the salary slips of ordinary civil servants and noting the incremental increase at each promotion.

If that’s correct, and Xi had to survive in Beijing on his basic salary — approximately twice the average salary of $850 per month in the city — he would not only be unable to afford an apartment, but he’d have to scrimp just to make ends meet. A popular infographic that made the rounds in October 2013 on Sina Weibo, China’s popular microblogging platform, calculates that someone living in Beijing on a salary just shy of Xi’s would be left with savings of $50 each month after deducting reasonable expenses, including approximately $500 a month for rent and $250 a month for food.

On March 5, 2014, China’s ambassador to the United States, Cui Tiankai, reportedly said at a public forum that newcomers filling slots in the foreign ministry — one of the most coveted jobs for new graduates in China — could not afford to rent an apartment in Beijing. But luckily for them, Chinese civil servants have long benefited from generous government subsidies to supplement their modest official incomes, and can sometimes count on gray income or even outright bribery. That’s one reason that over the past 10 years, the number of young Chinese college graduates taking the civil service exam has surged from approximately 120,000 in 2003 to more than 1.5 million in 2013, roughly an elevenfold increase. As housing prices in China’s major cities rose drastically in the first decade of the millennium, graduates and their parents began to favor the housing subsidies, retirement benefits, and other tangible perks that come with a civil servant position over nominally high salaries in the private sector that lack the same safety net. This preference has become controversial: Economist and Nobel laureate Edmund Phelps reportedly slammed the “frenzy” of competition for Chinese government posts as a “waste of talent.”

The fever may now be cooling a little. As part of a crackdown on corruption, endemic in party ranks, Xi introduced the so-called “Eight Point Regulation” in December 2012 to rein in perks and gray income for civil servants. According to domestic media reports, junior civil servants were disproportionately affected, while their seniors largely carried on as before. The results of an anonymous survey of public servants by liberal outlet Beijing News, released Jan. 9, showed that 92 percent of participants reported that their “income from outside of work” had fallen over the past year. In 2014, wealthy Zhejiang province counted 25 percent fewer applicants to its civil service positions than in an analogous period the year before.

Top leaders like Xi will never have to worry about paying the bills, even as they spearhead crackdowns on nonessential perks. But civil servants in China, who likely make far less than the president, may want to start looking into more modest homes in Beijing’s vast suburbs.

Sunday

American History, Through Chinese Eyes

By David Caragliano
Source:Tea Leaf Nation

White male privilege, genocide against Native Americans, slavery and subsequent racial oppression, exploitation of immigrants and laborers, repression of women and homosexuals, and environmental destruction — teaching American cultural history through a post-modern lens is hardly the most obvious way to promote positive feelings toward the United States. Yet that is precisely what Amy Werbel did during her Fulbright year in China.

“We were not going to China to make the United States look better than it is — but rather to share what it feels like to be in a classroom in which everyone is free to scrutinize history without fear,” explains Werbel. A professor of Art History at the State University of New York, Werbel taught courses on American culture from the Civil War to World War I and on America in the 1960s at Guangdong Foreign Studies University between August 2011 and July 2012.

Werbel’s new book Lessons from China: America in the Hearts and Minds of the World’s Most Important Rising Generation chronicles her experiences in and out of the classroom. The book captures Werbel’s Chinese students in their own words as they grapple with America’s tragic and transcendent past and, in doing so, inevitably reflect upon their own country’s past, present, and future.

Teaching critical thinking is no small feat in any cultural context, but China poses particular challenges. The life-altering college entrance examination (gaokao) epitomizes a systematic emphasis on memorization. (The test is virtually the sole determinant of a student’s university placement and subsequent professional opportunities, and it provokes anxieties that have led to cheating scandals and even alleged attacks on exam proctors.) According to Werbel, many of her students had never read primary sources in a history class. Their previous assignments had apparently consisted of regurgitating scholarship from sources vetted by the state’s education bureaucracy.

Werbel is frank about the challenges and limitations in reaching her students. In a unit on American westward expansion, Chinese student perspectives mirrored the attitudes of most 19th Century Americans. It was possible to get students to empathize with Native Americans but more difficult to see both native and settler communities as equally “civilized” and deserving of a self-defined future.

Chinese ethnic minorities have chafed under their government’s campaign to develop the country’s Western provinces in part through settlement of Han Chinese. During the American westward expansion unit and other periods covered in Werbel’s courses, there is an unmistakable sense of déjà vu. It would be nice to think that certain aspects of the U.S. experience could serve as a cautionary tale. But for those of us who may think that mere access to information can undo China’s social contradictions — such as the persistent Han-Uyghur divide — this book provides a healthy dose of humility.

Some of the most profound “lessons” of the book come when Werbel’s students teach their professor (and the reader) to view American history in a new light. In their analysis of Fredrick Douglass’ autobiography, for example, many students shared the assumption that a person could not be whole without the identity that comes from family and place. One student wrote in English that removal of a slave child from his or her family “is more serious than the segregation or even the genocide because it avoids the cultural links, the inner spiritual essence, be instilled into the new generation [sic].” Only after Werbel visits a family temple in an outlying village during the Spring Festival holiday does she realize how keenly her students empathize with Douglass, who never had the opportunity to know his ancestral home.

The course unit covering America’s conflict in Vietnam and the Anti-War Movement challenged students. They tended to expect democracy to produce “virtuous” policy outcomes, and when it did not, they strained to understand how this could be possible. One student’s written response managed to capture the complexity of the time with the following insight:

The majority of American people considered antiwar protestors as unpatriotic or even traitorous because for them it seemed that if you loved your country enough you should have faith in your mother country and in what it was doing…. But to those antiwar protestors, whose number increased as the war proceeded, patriotism meant fighting for the good of the country and stretching out for justice. They saw their loss in the Vietnam War and wanted to put an end to it, which, to my understanding, is a more rational kind of patriotism.

This nuanced view of patriotism — historically rare in the Chinese context and still highly controversial — has begun to creep into mainstream discourse. In a similar vein, on Sina Weibo, China’s Twitter, lawyer and activist Yuan Yulai (@袁裕来律师) recently tweeted:
Some netizens ask me: ‘You are always criticizing the Chinese government and society, but you never criticize America. Is American really that perfect?’ I answer: I couldn’t say whether America is perfect. I am a Chinese citizen, so it’s my responsibility to criticize the Chinese government and society. This kind of criticism is based upon a profound love of my country. I am not CCTV or the Global Times. I do not have this kind of love for America, nor do I have this responsibility to criticize America.

Yuan’s tweet went viral with more than 35 thousand retweets, ten thousand comments, and 4,753 thumbs up. Today, China’s blogosphere can provide a platform for conversation and exchange of ideas not altogether unlike Professor Werbel’s classroom.

Of course, the Web is no substitute for face-to-face engagement. Upon completing Lessons from China, the reader is left with an appreciation for the value of international exchange programs like Fulbright. In introducing the fellowship that bears his name, Senator William Fulbright suggested that regular and ongoing intellectual exchange would “continue the process of humanizing mankind to the point, we would hope, that men can learn to live in peace — eventually even in cooperation in constructive activities rather than compete in a mindless contest of mutual destruction.”

While Professor Werbel does not claim to have ended the world’s “mindless contests,” both she and her students gained a bit more mutual empathy and exercised their abilities to see the world as others see it. This kind of emotional intelligence will be critical if both countries are to operate successfully in this interconnected century.

Wednesday

Secrecy for Sale: Inside the Global Offshore Money Maze

Leaked Records Reveal Offshore Holdings of China’s Elite


  • Government officials and their families and associates in ChinaAzerbaijan, Russia, Canada, Pakistan, the Philippines, Thailand, Mongolia and other countries have embraced the use of covert companies and bank accounts.
  • The mega-rich use complex offshore structures to own mansions, yachts, art masterpieces and other assets, gaining tax advantages and anonymity not available to average people.
  • Many of the world’s top’s banks – including UBS, Credit Suisse and Deutsche Bank – have aggressively worked to provide their customers with secrecy-cloaked companies in the British Virgin Islands and other offshore hideaways.
  • A well-paid industry of accountants, middlemen and other operatives has helped offshore patrons shroud their identities and business interests, providing shelter in many cases to money laundering or other misconduct.
  • Ponzi schemers and other large-scale fraudsters routinely use offshore havens to pull off their shell games and move their ill-gotten gains.
Source: The Center for Public Integrity
 
Files shed light on nearly 22,000 tax haven clients from Hong Kong and mainland China.

Note: A Chinese version of this story is available here

Close relatives of China’s top leaders have held secretive offshore companies in tax havens that helped shroud the Communist elite’s wealth, a leaked cache of documents reveals.
The confidential files include details of a real estate company co-owned by current President Xi Jinping’s brother-in-law and British Virgin Islands companies set up by former Premier Wen Jiabao’s son and also by his son-in-law.

Nearly 22,000 offshore clients with addresses in mainland China and Hong Kong appear in the files obtained by the International Consortium of Investigative Journalists.  Among them are some of China’s most powerful men and women — including at least 15 of China’s richest, members of the National People’s Congress and executives from state-owned companies entangled in corruption scandals.

PricewaterhouseCoopers, UBS and other Western banks and accounting firms play a key role as middlemen in helping Chinese clients set up trusts and companies in the British Virgin Islands, Samoa and other offshore centers usually associated with hidden wealth, the records show. For instance, Swiss financial giant Credit Suisse helped Wen Jiabao’s son create his BVI company while his father was leading the country.

The files come from two offshore firms — Singapore-based Portcullis TrustNet and BVI-based Commonwealth Trust Limited — that help clients create offshore companies, trusts and bank accounts. They are part of a cache of 2.5 million leaked files that ICIJ has sifted through with help from more than 50 reporting partners in Europe, North America, Asia and other regions.

Since last April, ICIJ’s stories have triggered official inquiries, high-profile resignations and policy changes around the world.

Until now, the details on China and Hong Kong had not been disclosed.

The data illustrates the outsized dependency of the world’s second largest economy on tiny islands thousands of miles away.  As the country has moved from an insular communist system to a socialist/capitalist hybrid, China has become a leading market for offshore havens that peddle secrecy, tax shelters and streamlined international deal making.
Every corner of China’s economy, from oil to green energy and from mining to arms trading, appears in the ICIJ data.

Chinese officials aren’t required to disclose their assets publicly and until now citizens have remained largely in the dark about the parallel economy that can allow the powerful and well-connected to avoid taxes and keep their dealings secret. By some estimates, between $1 trillion and $4 trillion in untraced assets have left the country since 2000.

The growing onshore and offshore wealth of China’s elites “may not be strictly illegal,” but it is often tied to “conflict of interest and covert use of government power,” said Minxin Pei, a political scientist at Claremont McKenna College in California. “If there is real transparency, then the Chinese people will have a much better idea of how corrupt the system is [and] how much wealth has been amassed by government officials through illegal means.”

Top-level corruption is a politically sensitive issue in China as the country's economy cools and its wealth gap continues to widen.  The country’s leadership has cracked down on journalists who have exposed the hidden wealth of top officials and their families as well as citizens who have demanded that government officials disclose their personal assets.

In November, a mainland Chinese news organization that was working with ICIJ to analyze the offshore data withdrew from the reporting partnership, explaining that authorities had warned it not to publish anything about the material.

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READ: HOW WE WORKED TO REPORT THIS STORY SECURELY IN CHINA
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ICIJ is keeping the identity of the news outlet confidential to protect journalists from government retaliation. Other partners in the investigation include the Hong Kong newspaper Ming Pao, the Taiwanese magazine CommonWealth and the German newspaper Süddeutsche Zeitung.

The ICIJ team spent months sifting through the files and the leaked lists of offshore users. In most cases, names were registered in Romanized form, not Chinese characters, making matching extremely difficult. Many offshore users had provided a passport as well as an address when they set up their companies, which made it possible to confirm identities in many but not all cases. Some suspected princelings and officials in the files could not be confirmed and have not been included in this story.

Along with the China and Hong Kong names, ICIJ’s files also include the names of roughly 16,000 offshore clients from Taiwan. ICIJ will continue to publish stories with its partners in the next few days and will release the Greater China names on its Offshore Leaks Database on Jan. 23.

Princelings go offshore

China's Politburo Standing Committee is the all-powerful group of seven (formerly nine) men who run the Communist Party and the country. The records obtained by ICIJ show that relatives of at least five current or former members of this small circle have incorporated companies in the Cook Islands or British Virgin Islands.

China’s “red nobility” — elites tied by blood or marriage to the current leadership or Party elders — are also popularly known as “princelings.” Ordinary Chinese have grown increasingly angry over their vast wealth and what many see as the hypocrisy of officials who tout “people-first” ideals but look the other way while their families peddle power and influence for personal gain.

The leaked offshore records include details of a BVI company 50 percent owned by President Xi’s brother-in-law Deng Jiagui. The husband of Xi’s older sister, Deng is a multimillionaire real estate developer and an investor in metals used in cell phones and other electronics. The records show the other half of Excellence Effort Property Development was owned by yet another BVI company belonging to Li Wa and Li Xiaoping, property tycoons who made news in July by winning a $2 billion bid to purchase commercial real estate in Shenzhen.

Since taking over as the Communist Party’s top official in 2012, Xi has sought to burnish his image with an aggressive anti-graft campaign, promising to go after official corruption involving both low-level “flies” and high-level “tigers.” Yet he has crushed a grassroots movement that called for government officials to publicly declare their assets.
Wen Jiabao, who stepped down as premier in 2013 after a decade-long tenure, also styled himself as a reformer, cultivating an image of grandfatherly concern for China’s poor.

The ICIJ offshore files reveal that Wen’s son Wen Yunsong set up a BVI-registered company, Trend Gold Consultants, with help from the Hong Kong office of Credit Suisse in 2006. Wen Yunsong was the lone director and shareholder of the firm, which appears to have been dissolved in 2008.

Bare-bones company structures are often created to open bank accounts in the offshore firm’s name, helping obscure the relationship to the real account owner. It isn’t immediately clear from the documents what Trend Gold Consultants was used for. A U.S.-educated venture capitalist, Wen Yunsong co-founded a China-focused private equity firm and in 2012 became chairman of China’s Satellite Communications Co., a state-owned firm that aspires to be Asia’s largest satellite operator.

ICIJ made repeated attempts to reach Wen Yunsong and other individuals named in this story. Only a few responded. Wen was among those who did not. Citing confidentiality rules, a Credit Suisse spokesman said the bank is “unable to comment on this matter.”

The ICIJ files also shed light on the BVI’s previously unreported role in a burgeoning scandal involving Wen Jiabao’s daughter, Wen Ruchun, also known as Lily Chang. The New York Times has reported that JPMorgan Chase & Co. paid a firm that she ran, Fullmark Consultants, $1.8 million in consulting fees. U.S. securities regulators are investigating the relationship as part of a probe into the bank’s alleged use of princelings to increase its influence in China.

Fullmark Consultants appears to have been set up in a manner that obscured Wen Ruchun’s relationship to the firm, the ICIJ files indicate. Her name does not show up in any of the incorporation documents in the ICIJ data, though a 'Lily Chang' is CC’d in one August, 2009 email correspondence about the company. Her husband Liu Chunhang, a former Morgan Stanley finance guru, created Fullmark Consultants in the BVI in 2004 and was the sole director and shareholder of the firm until 2006, the same year he took a government job at the agency that regulates China’s banking industry.

Liu transferred control of the company, the ICIJ files show, to a Wen family friend, Zhang Yuhong, a wealthy businesswoman and colleague of Wen Jiabao’s brother. The Times reported that Zhang also helped control other Wen family assets including diamond and jewelry ventures.  

The ICIJ files show that offshore provider Portcullis TrustNet billed UBS AG for a certificate of good standing for Fullmark Consultants in October 2005, indicating a business relationship between Fullmark and the Swiss bank. In response to ICIJ’s questions, UBS issued a statement saying its “know-your-client” policies as well as procedures to deal with politically-sensitive clients are among “the strictest in the industry.” Liu and Zhang did not respond to ICIJ's requests for comment.

A 2007 U.S. Department of State cable passed along a source’s tip that Premier Wen was “disgusted with his family’s activities,” and that “Wen’s wife and children all have a reputation as people who can ‘get things done’ for the right price.” The cable, part of the Wikileaks document dump, reported that Wen’s kin “did not necessarily take bribes, [but] they are amenable to receiving exorbitant ‘consulting fees.’ ”

The records also include incorporations by relatives of Deng Xiaoping, former Premier Li Peng, and former President Hu Jintao.

China experts say that the growing wealth and business interests of the princelings, including offshore holdings, are a dangerous liability for the ruling Communist Party but that people in leadership positions are too involved to stop it.

“What’s the point of running the Communist Party if you can’t get a couple billion for your family?” said Steve Dickinson, a China-based American lawyer who has investigated fraud cases involving BVI companies. “The issue is enormous and has tremendous significance for China, and the fact that everybody dances around it and doesn’t want to talk about it is understandable but scandalous.” 

China embraces offshore

The story of China’s involvement with the offshore world begins with paramount leader Deng Xiaoping’s deepening of economic reforms in the early 1990s. 

Laws reorganizing China’s economy drove many Chinese offshore because they were written with state-owned enterprises in mind, not fledgling ventures like the entrepreneur trying to “market the latest iPhone app,” according to Don Clarke, a China specialist at the George Washington University Law School in Washington, D.C.

Western bankers, accountants and investors wary of doing business on strictly Chinese terms also pushed the offshore model.

“It was us, the foreigners, that imposed this,” said Rocky Lee, head of the Greater China corporate law practice of Cadwalader, Wickersham & Taft. “It had to do with the foreign investors’ general discomfort with Chinese rules and regulations.”

Other factors — including tightened capital controls within China as a result of the 1990s Asian debt crisis — also nudged Chinese offshore. Many had flocked to Hong Kong, then still a British territory, to incorporate businesses. As the 1997 handover back to China approached, though, Hong Kong itself began to look risky and many companies sought more far-flung offshore destinations.

The British Virgin Islands became a favorite haven for Chinese wanting to move businesses and cash offshore.

China’s tax regime favored foreign investment, helping fuel the push to incorporate in the BVI and other offshore centers. Some Chinese manufacturers, for example, reduced their taxes by a maneuver known as “round-tripping” — setting up subsidiaries outside the country, then selling their products at low cost to the subsidiaries, allowing the parent companies to avoid taxes by showing little or no profits inside China. The offshore entities in turn resold the goods at profitable markup — then slipped the profits back to the parents as untaxed “foreign investment” from the BVI or Hong Kong.

Today 40 percent of the BVI’s offshore business comes from China and other Asian nations, according to BVI authorities.


Every corner of China’s economy, from oil to green energy and from mining to arms trading, appears in the ICIJ data
 

Frank Savage, the BVI’s governor from 1998 to 2002, says the islands helped cultivate the relationship by persuading Chinese authorities that they were a “well-regulated territory with a robust and sound legal system.”

Critics of the offshore system, though, see the BVI in a different light — as a “no-questions-asked” haven for shadowy dealings. Tax Justice Network, an advocacy group, says BVI offshore entities have been linked to “scandal after scandal after scandal” — the result of a corporate secrecy regime that creates an “effective carte blanche for BVI companies to hide and facilitate all manner of crimes and abuses.”

Among the important Chinese who went offshore in the late 1990s was Fu Liang, the son of Peng Zhen, one of the “Eight Elders” of the Communist Party and a top leader of the National People’s Congress in the 1980s.

Offshore Leaks records show Fu — who has invested in yachting clubs and golf courses on the mainland — controlled at least five offshore companies established in the BVI between 1997 and 2000. He used one of them, South Port Development Limited, to acquire a Philippines hotel in 2000.

TrustNet, the offshore services provider, helped Fu set up some of his offshore companies. By 2000, Trustnet was among the offshore services firms that were making an all-out drive to sign up clients from China, doing marketing meetings at the Shanghai offices of what were then known as the “Big 5” accounting firms: KPMG, Ernst & Young, Pricewaterhouse, Deloitte & Touche, and Arthur Andersen.

The audit firm now known as PricewaterhouseCoopers helped incorporate more than 400 offshore entities through TrustNet for clients from the mainland, Hong Kong and Taiwan, the ICIJ records show. Swiss banking giant UBS helped set up more than 1,000 offshore structures via TrustNet for clients from those three markets.

UBS Hong Kong helped Yang Huiyan, China's richest woman, with an estimated net worth of US$ 8.3 billion, establish a BVI company in 2006. Yang, who inherited a real estate fortune from her father, did not respond to questions about her offshore company, Joy House Enterprises Limited.

The following year the Swiss bank referred another Chinese real estate billionaire, Zhang Xin, to TrustNet. Zhang, founder of Soho China, a company that has reshaped much of the Beijing skyline, recently made headlines by buying a $26 million Manhattan townhouse.  Through a representative, Zhang declined to answer questions about her BVI company Commune Investment Ltd., a name similar to that of her exclusive boutique hotel outside Beijing, the Commune by the Great Wall.

Li Jinyuan, a business tycoon and philanthropist with a net worth estimated at $1.2 billion in 2011, was director of seven BVI companies that PricewaterhouseCoopers helped incorporate between 2004 and 2008. According to the ICIJ files, the BVI companies appear to be connected to his Tiens Group conglomerate, which has interests in biotechnology, tourism, e-commerce and real estate.


In a 2005 marketing memo marked “strictly private and confidential,” TrustNet staffers were encouraged to improve ties with Credit Suisse in Hong Kong. They courted Credit Suisse and UBS with wine and cheese sessions. On the mainland, where foreign banks were restricted, they took a different tack: “In Shanghai, we will target international law firms and accounting firms,” the 2005 memo says.

The marketing campaign paid off. The number of companies TrustNet set up for clients in China, Hong Kong and Taiwan tripled from 1,500 to 4,800 between 2003 and 2007.

The TrustNet clients who incorporated companies during this period include two current delegates to the National People's Congress, China's legislature.

Wei Jianghong, who represents Anhui province in the legislature while serving as chairman of state-owned Tongling Nonferrous Metals, was a director of Tong Guan Resources Holdings, a BVI company set up in 2006. Tongling used Tong Guan to invest $10 million in a $50 million copper processing project in Chile in 2007.

Another delegate with offshore holdings is Ma Huateng, the founder of China's leading online chat company, Tencent. Ma is worth $10 billion and is ranked No. 5 on Forbes’ list of billionaires in China. In 2007, he became director of TCH Pi Limited in the BVI with fellow Tencent founder Zhang Zhidong.

A spokeswoman for Ma said TCH Pi is a Tencent company that “has nothing to do with [Ma or Zhang] personally,” but the firm doesn't show up in Tencent corporate filings, and its purpose isn't clear.

Profits and corruption

Things have changed dramatically for China since it first dipped its toe into the offshore world. The country is wealthier and offshore centers serve increasingly as channels not only for capital that “round-trips” out of the country and back again, but also for overseas investment and accessing markets for metals, minerals and other resources.
Defenders of China’s offshore push say the offshore system has helped boost the country’s economy.

“I think we should face the reality, which is that Chinese capital is flowing out. I think it’s actually a beneficial thing,” said Mei Xinyu, a researcher at China’s Commerce Ministry. “Of course I support the idea that a company should incorporate in its host country. But if the host country can't provide the right environment, then incorporating the company in an offshore center is actually a practical choice.”

With markets in China often hamstrung by red tape and government intervention, incorporating offshore can smooth the way to do business, said William Vlcek, author of Offshore Finance and Small States: Sovereignty, Size and Money.

There’s also evidence, though, that many Chinese companies and individuals have used offshore entities to engage in illicit or illegal behavior.

In September Zhang Shuguang, a former high-level Chinese railway executive, pleaded guilty to criminal charges in the wake of allegations that he’d funneled $2.8 billion into offshore accounts. An internal government report released by the Bank of China revealed that public officials — including executives at state-owned companies — had embezzled more than $120 billion out of China since the mid-1980s, some of it funneled through the BVI.

Portcullis TrustNet helped state-run shipping giant Cosco incorporate a BVI company in 2000. Among the numerous directors of Cosco Information Technology Limited were current Cosco Group chairman Ma Zehua and Song Jun, an executive who would stand trial in 2011 for embezzlement and bribery. After Cosco sent Song to help oversee a Qingdao subsidiary in 2001, he set up a fake BVI joint venture partner and used it to siphon millions from the building of Qingdao’s gleaming Cosco Plaza, prosecutors said.
State news service Xinhua said he embezzled $6 million, took $1 million in bribes from a Taiwanese business partner and purchased 37 apartments in Beijing, Tianjin and Qingdao with his ill-gotten earnings. His trial was adjourned but no verdict was publicly announced.

China’s corruption-plagued oil industry — which recently has been the target of criminal investigations that have led to the suspension of key oil executives — is a big player in the offshore world. China’s three big state-owned oil companies, which are counted among the largest companies in the world, are linked to dozens of BVI firms that show up in the ICIJ data.

Former PetroChina executive Li Hualin, who was dismissed in August after coming under investigation for alleged “serious violations of discipline”, often a party shorthand for corruption, was the director of two BVI companies, the ICIJ files reveal.

While some of these offshore firms are disclosed in corporate filings, several others linked to individual executives — including Zhang Bowen of PetroChina’s natural gas distribution arm Kunlun Energy and Yang Hua of China National Offshore Oil Corporation — appear to operate in the dark, and their purpose is not clear. PetroChina and CNOOC did not respond to ICIJ’s repeated requests for comment.

Other scandal-tainted Chinese who have used the BVI to do business include Huang Guangyu, once China’s richest man. The ICIJ records show that he and his wife Du Juan set up a maze of at least 31 BVI companies between 2001 and 2008 as they built the largest consumer electronics retail chain in China.

The husband, Huang, was sentenced to 14 years in prison in 2010 after Chinese courts convicted him of insider trading, bribery and stock price manipulation. Du Juan was convicted of related charges but was released from prison in 2010 after serving a brief time.

While Huang is in prison and many of his assets are frozen, his business empire survives through his offshore network of companies. In 2011, one of his BVI firms, Eagle Vantage Assets Management, made a bid for a retired British aircraft carrier that Huang wanted to turn into a luxury shopping mall (the Brits in the end decided to scrap the ship).

He still owns more than 30 percent of Gome, his electronics retailer, via two companies in the BVI, Shining Crown Holdings and Shine Group.

Offshore’s future

As concerns grow about the wealth of corporate oligarchs, government officials and their families, some Chinese have braved the government’s anger by raising questions about corruption.

A grassroots group, the New Citizens Movement, uses the Internet and small demonstrations to press for greater transparency. “How can you fight corruption if you don’t even dare to disclose your personal assets?” the group’s founder, legal advocate and activist Xu Zhiyong, wrote last spring.

The government’s response has been swift. It has arrested Xu and detained more than 20 other members of the group, indicting some for “disturbing public order” or “illegal assembly,” charges frequently used to silence dissidents.

The government has also cracked down on foreign media that have focused attention on the gap between wealth and poverty in China. After The New York Times and Bloomberg News reported on the onshore assets of China’s princelings, the government blocked their websites and delayed approving visas for their journalists.

After years of inaction, the U.S., the U.K. and international organizations have begun pushing reforms that, they say, would reduce offshore abuses. China has been less aggressive in pressing for changes in the offshore system.

Big loopholes in tax laws have allowed Chinese individuals to operate with relative freedom offshore. They weren’t required to report their foreign holdings.
“Chinese policy makers didn’t envision individuals absconding with that much money,” Lee, the Beijing-based corporate lawyer, said.

Now mainland authorities are moving to get a handle on the flow of private wealth offshore. New rules that went into effect Jan. 1 require Chinese to report their overseas assets.

How aggressively China joins global efforts to reshape the offshore system may have a big impact on the current push for reform. Just as China has become an increasingly important player in the global economy, it has also become more important as a supplier of clients to the market for offshore accounts and companies.

A 2013 industry-sponsored poll of 200-plus bankers and other offshore professionals found that “China-related demand” is the key driver in the offshore market’s growth. The chief of a BVI offshore services firm said in the survey: “China is the most important location for client origination for business in the next five years.”