Hans Christian Andersen’s vain emperor is alive and well and running China.
Like his medieval European counterpart, Chinese President Xi Jinping (習近平) believes he can root out anyone unfit for their position by wearing a bright new outfit and, accordingly, he has draped himself in an anticorruption cape he promises will reveal both “tigers” and “flies.”
However, it is not a young child shouting that the emperor is wearing no clothes. Instead, it is average Chinese, such as New Citizens founder Xu Zhiyong (許志永), who was put on trial this week in Beijing because he dared demand that officials declare their assets, and the International Consortium of Investigative Journalists (ICIJ), which this week released the results of a two-year probe into the use of secretive financial structures in the British Virgin Islands by dozens of relatives of top Chinese political and military leaders, and by prominent businesspeople.
The ability of the Chinese elite to use offshore structures to move money overseas or to avoid taxes makes a mockery of Beijing’s efforts to promote transparency and accountability. As the Guardian newspaper’s report on the ICIJ’s “Offshore Secrets” project notes, it is believed that anywhere between US$1 trillion and US$4 trillion in untraced assets have left China since 2000. That kind of money can buy a lot of clothes — or, in this case, help Western banks and accountants to keep the ever-expanding inflow of riches hidden from oversight.
Setting up and owning offshore companies is legal in most countries, and there are many legitimate reasons for corporations or businesspeople to do so. However, questions should be raised when it is the brother-in-law or cousin of a nation’s president; the son, son-in-law or daughter of a premier; or the son-in-law of a former “paramount leader.”
Would such people have had the access to, or the ability to collect vast sums that need offshore protection if they were not related to leading members of the Chinese Communist Party (CCP)?
Huang Guangyu (黃光裕), the founder and chairman of GOME Electrical Appliances Holdings, was once the richest man in China. The ICIJ records show he and his wife had more than 30 companies in the British Virgin Islands. Huang is not related to anyone in the top ranks of the CCP, which goes a long way toward explaining why he ended up behind bars in 2010 for bribery and insider trading. He might have been a “tiger” at one time, but he obviously lacked the claws to avoid prosecution.
The reaction of Xi, the CCP and Beijing to the ICIJ’s revelations has been unsurprising. China has tried to quash any mention of the ICIJ’s findings even though the Chinese Ministry of Foreign Affairs said on Wednesday that the reports were “unconvincing.” The China Digital Times reports an order was issued to “immediately find and remove the foreign media report China’s Secret Offshore Tax Havens and related content… Related images and accusatory comments about leaders and the system must be deleted without exception.”
The Guardian, the ICIJ and six other Web sites that linked to the offshore assets investigation have reportedly been blocked, just as the New York Times and Bloomberg Web sites have been blocked for more than a year for their previous stories linking Chinese leaders’ families and huge wealth. While some analysts say Xi, in office for not quite one year, should be given more time to consolidate his power and impose his ideas before being expected to make real changes to the CCP’s ruling style, that is just public relations fluff. It is a con — just like the claims that economic advancement will lead to democratic development in China. Xi can drape himself with as many anticorruption crusader capes as he likes, but he is still naked underneath. The emperor has no clothes.