Home > Razvoj družbe > Desmond Shum: Red Roulette: An Insider’s Story to Wealth, Power, Corruption and Vengeance in Today’s China

Desmond Shum: Red Roulette: An Insider’s Story to Wealth, Power, Corruption and Vengeance in Today’s China


Unexplained disappearances occur regularly in China, where the Communist Party holds a monopoly on power.

Chapter One

I wasn’t born into the red aristocracy — the offspring of the leaders of the elite group of Communists who seized power in China in 1949.

I was born in Shanghai in November 1968 into a family split between those who’d been persecuted after China’s Communists came to power and those who hadn’t.

The Communists took over his company and assigned him a job as a rickshaw driver at one of the factories he’d owned. The Communists were masters at that kind of treatment, designed to destroy a man’s most prized possessions — his dignity and self-respect.

Growing up an only child in a society where at the time everyone had siblings, I spent a lot of time alone. So, I read.

My elementary school was located near the Jinjiang Hotel, one of Shanghai’s most famous pre-1949 landmarks and, at the time, one of only two hotels in the city that accommodated foreign travelers.

The Chinese Communist Party divided the world into enemies and allies and, to win support internationally, aggressively cultivated “foreign friends” such as left-wing intellectuals, journalists, and politicians.

Swimming contributed enormously to who I am today. It taught me self-confidence, perseverance, and the joy of a purposeful endeavor. Through swimming, I met people far outside my normal social circle. I still feel its imprint.

Then on September 9, 1976, Mao died. My eight-year-old classmates and I had little understanding of what it meant. When the school announced it, our teachers began crying, so we started crying, too.

About a year later, a senior Chinese leader named Deng Xiaoping returned to power after years in internal exile. Deng masterminded the arrest of the Gang of Four, a group of ultra-leftists who’d gathered around Mao. And in 1979 he launched historic reforms that would transform China into the economic power it is today.

Chapter Two

Following the end of the Cultural Revolution in 1976, China again looked to overseas Chinese for the capital needed to save its economy.

Hong Kong’s culture differed significantly from that of China. In Shanghai, my buddies and I always had our arms over one another’s shoulders and we were always into each other’s business. The whole concept of privacy didn’t really exist on the mainland. In the 1970s and 1980s, boys, even men, thought nothing of walking down the street holding hands. Hong Kong was another world. I remember the first time I tried to put my arm around a Hong Kong kid my age. He was a schoolmate who lived in the same housing development. I thought since we were buddies, it would be only natural for me to drape my arm across his back. He jumped like he’d been electrocuted. “What are you doing?” he screeched. I was really surprised. That was the first time it dawned on me that people associated with one another differently in Hong Kong.

From my father’s experience at Tyson, I first learned about the vagaries of US-China relations. The Arkansas chicken pipeline into China was hostage to politics. Anytime you had tension with the United States, the Chinese government would suddenly up the required quarantine period for chicken feet from two days to two weeks. Faced with losing tons of product to spoilage, my dad had to conjure ways to get around the regulations and get the stuff into China. He was such a magician that Tyson named my father “salesman of the century.”

In Hong Kong, business was pretty much the only career path. We didn’t have politicians and the civil service didn’t interest me. You couldn’t afford to become an artist; the colony was a cultural desert anyway. In Hong Kong’s hypercompetitive environment where people were primed to get ahead, business was the main avenue to prove oneself.

In Shanghai, I stayed with an uncle who’d suffered during the Cultural Revolution. One evening as he and I watched the TV news, tears came to his eyes. “It’s not going to end well for these youngsters,” he predicted. “They don’t understand,” he said. “The Communist Party rose to power by manipulating protests, ginning up mass movements, and then suppressing them ferociously once they’d served their purposes. “A newborn calf doesn’t fear a tiger,” he said. “You cannot beat the Communists this way.”

On the night of June 3, the Communist Party declared war on China’s people across the country. In Beijing, army troops massacred hundreds of students and other demonstrators as they expelled the protesters from Tiananmen Square. Demonstrations in Shanghai were suppressed peacefully, earning Jiang Zemin, Shanghai’s Communist Party boss, a promotion to the Party’s top position nationwide after the Tiananmen Square massacre.

Chapter Three

My experience in the United States changed me profoundly. In Hong Kong and China, I already stood out because of my height and the way I dressed. But time in America made me even more individualistic and more comfortable being me. My parents didn’t like that.

ChinaVest had been founded in 1981 by Bob Theleen, a smooth-talking former CIA officer; his wife, Jenny, who was raised in Singapore and educated in France; and two other Americans. My hiring was directly connected to changes unfolding inside China. The years between 1989 and 1992 had been bad ones for China. Following the Tiananmen Square crackdown in 1989, a reactionary wing of the Chinese Communist Party, led by Premier Li Peng, had rolled back market-oriented reforms, cracked down on private businesses, and poured money into the inefficient state-owned sector. China’s economy slowed dramatically. But in 1992, China’s paramount leader, Deng Xiaoping, impatient with the conservatives, left Beijing and traveled to the southern city of Shenzhen on Hong Kong’s border to urge a resumption of market-oriented changes.

I became the firm’s representative to Tait Asia, which held the accounts for Heineken beer and Marlboro cigarettes. The appetite for these goods in China was extraordinary. In the space of a few years, Heineken’s sales in China went from zero to $ 40 million, and Tait Asia had the distribution rights.

I quickly learned that in China all rules were bendable as long as you had what we Chinese called guanxi, or a connection into the system. And given that the state changed the rules all the time, no one gave the rules much weight. A lot of Western businesses in China adopted a similar, don’t-ask-don’t-tell business model.

Theleen was a master at wowing Westerners with his knowledge of Asia. In the fall of 1994, ChinaVest held a meeting with its key investors in Beijing. We put our visitors up in the Diaoyutai State Guesthouse where Richard Nixon and Henry Kissinger had stayed during Nixon’s famous first trip to China in 1972. Each time we hit the road; our drivers would switch on their sirens to clear the route. Our guests were floored by the experience.

One, the scion of a wealthy family from Ohio, turned to me and declared, “This is another world.” Theleen had learned this trick from the Chinese, who are masters at shock-and-awe hospitality. In so doing, Bob achieved his goal of making China seem like a riddle that only ChinaVest could solve.

China was so poor that none of its nascent private businesses had high-enough revenue to be investment targets. Still, I could feel the energy, suppressed for decades by Communism, waiting to be unleashed.

The first private mainland Chinese technology company ChinaVest took a stake in was AsiaInfo, a firm that was building the backbone of China’s Internet.

The Internet came to China in 1994. By the end of that year, thirty thousand people were online.

Getting to know some of the participants in the AsiaInfo deal gave me a taste of the recipe China would follow as it powered its way into the future — one centered on marrying entrepreneurial talent with political connections.

The marriage of know-how with political backing became a template for China’s march into the future and a way for ambitious men and women like me to make something of our lives.

The AsiaInfo deal also showed that foreign firms could play this game as well. They were just as interested in using the sons and daughters of high-ranking Chinese officials to curry favor inside the system.

The inner workings of a political system that mouthed Communist slogans while the families of senior officials gorged themselves at the trough of economic reforms. These sons and daughters functioned like an aristocracy; they intermarried, lived lives disconnected from those of average Chinese, and made fortunes selling access to their parents, inside information, and regulatory approvals that were keys to wealth.

Chapter Four

TRANSFERRED TO BEIJING IN LATE 1997, I discovered a new China. Since Deng Xiaoping had resumed reforms in 1992, the economy had doubled, and it would double again by 2004.

The Party encouraged consumption and, in effect, offered the people an unwritten social contract encapsulated in Deng’s formulation: “To get rich is glorious.” Basically, the Party said, give us your freedom and we’ll let you make money. That was the trade.

The Communist system of central control and economic planning struggled to adapt to the changing China. Old laws no longer had relevance. But when the Party wrote the new laws, the ministries intentionally included vast gray areas so that if the authorities wanted to target anyone for prosecution, they always could.

I arrived in Beijing as a case against the capital’s mayor was wending its way through the courts. Mayor Chen Xitong had been accused of embezzling millions of dollars in a scheme to build vacation homes for the Party elite. His real “crime” was that he led the “Beijing clique,” a Party faction that opposed the “Shanghai clique,” overseen by Party chieftain Jiang Zemin.

In late 1999, I met an entrepreneur and son of a general in the People’s Liberation Army named Lan Hai. Lan was a visionary in the telecommunications industry and had been a major software provider when paging was all the rage. In the mid-1990s, pagers were a status symbol in a changing China, like they’d once been in the West. By the late 1990s, close to 100 million Chinese had pagers. Then another disruptive technology — mobile telephones — arrived with messaging capabilities built in, and paging began to lose out. Lan’s firm, PalmInfo, attempted to give these call centers a new lease on life, offering secretarial and banking services. ChinaVest was interested in PalmInfo and we ultimately helped Lan raise $ 4 million. In late 1999, Lan offered me a job, spurring another big change in my life.

I joined PalmInfo as its CEO in the beginning of 2000 and Lan moved over to become our chairman. We poached senior staff from Motorola’s operation in China and made one hundred additional hires. At PalmInfo , our results left something to be desired. Our burn rate was extraordinary and our revenues were feeble. We couldn’t convince Chinese banks to buy our service.

In the late spring of 2001, eighteen months into the venture, it was obvious we needed a change. We downscaled to a smaller office. We fired our new hires. It was obvious that I, too, was redundant. So, I quit.

My father’s career was going in the opposite direction of mine. He’d grown Tyson’s business in China from nothing to more than $ 100 million a year. He was so successful that Tyson decided to open an office on the mainland and send my dad back to Shanghai as its chief representative.

He was returning to China as what his friends called a meiguo maiban, an American comprador, the pre–Communist era term for the Chinese rep of a US firm.

On a trip to Beijing in the winter of 2001, we visited Great Ocean’s offices in the Oriental Plaza next door to the iconic Beijing Hotel. There I met someone who was introduced to me as Duan Zong, or “The Lady Chairman Whitney Duan.”

Whitney gave the impression of having gained access to the engine of China’s growth. For me, she was the first one who lifted the hood. She knew the officials whom I’d only read about in newspapers.

Communist China had spent decades repressing the desires — material and sexual — of its people. Now they were erupting at the same time. “Even the air in Beijing contains hormones” went an expression at the time.

Chapter Five

Shandong taught Whitney a valuable lesson, similar to one that I learned in Hong Kong. She discovered that the only ones who truly succeeded in China were people with guanxi, connections into the system.

At the time, the People’s Liberation Army was into all sorts of businesses, including food production, pharmaceuticals, wineries, and weapons, all of which constituted a commercial empire worth billions of dollars.

The corruption engendered by the PLA’s businesses was legendary and was eroding China’s ability to fight. I’d witnessed military corruption, too, when that firm I was assigned to liaise with on ChinaVest’s behalf, Tait Asia, was approached by a Chinese naval officer offering the nation’s battleships to smuggle beer. In 1996, Whitney set out on her own and founded a company, which in English she called Great Ocean. A year later, China’s Party chief Jiang Zemin ordered the military to divest itself of its commercial holdings.

Like Edward Tian at AsiaInfo, Whitney discovered that to unlock the door to success in China she needed two keys. One was political heft. In China, entrepreneurs only succeeded if they pandered to the interests of the Communist Party. Whether it be a shopkeeper in a corner store or a tech genius in China’s Silicon Valley, everyone needed sponsors inside the system. The second requirement was the ability to execute once an opportunity arose.

In the nineteenth century, Chinese scholar-officials had advocated the theory that Chinese learning should remain the core of China’s march into the future while Western learning should be employed for practical use. The scholars called this zhongxue wei ti, xixue wei yong. Whitney epitomized Chinese learning, or zhongxue, and I stood for xixue, or Western education.

Chapter Six

That Auntie Zhang was Zhang Beili, the wife of one of China’s then vice-premiers, Wen Jiabao. It was an open secret that Wen was going to succeed Zhu Rongji as China’s next premier in 2003. Wen would soon become the head of China’s government and the second most powerful man in the Chinese Communist Party. And Whitney was friends with his wife. I was floored.

After a stint as deputy minister of geology, in 1985 Wen got a huge promotion to deputy director of the General Office of the Central Committee of the Chinese Communist Party. The General Office is the main gatekeeper of all Party functions, somewhat akin to the office of the White House chief of staff.

The director of the Party’s General Office is known colloquially as China’s “chief eunuch,” a throwback reference to China’s imperial past.

In 1986, Wen became the “chief eunuch.” He’d direct the General Office for the next seven years, serving not one but three “emperors”: Communist Party general secretaries Hu Yaobang, Zhao Ziyang, and, finally, Jiang Zemin.

On Tiananmen Square, tanks flattened the Goddess of Democracy, a Statue of Liberty look-alike that art students had hoisted opposite the giant portrait of Chairman Mao. Zhao would spend the next fifteen years under house arrest until his death on January 17, 2005.

The first time Wen appeared in Western attire was 1998, after China’s then premier Zhu Rongji moved Wen from his Party post to a top government position as a deputy premier.

As premier, Wen cultivated a man-of-the-people image. When a massive earthquake rocked Sichuan Province in 2008, Wen sped to the scene wearing a rumpled jacket and track shoes. Chinese people took to calling him Grandpa Wen.

Chapter Seven

Whitney needed to know all the players in Auntie Zhang’s life. She met the couple’s two children — Wen Yunsong, known as Winston Wen, and Wen Ruchun, who went by Lily Chang.

Singapore’s state-owned investment funds were masters at cozying up to a group known as “the princelings,” the sons (and daughters) of Communist Party bigwigs. Various firms associated with the Singaporean government invested money in Winston’s firm as well as funds associated with the grandson of Party General Secretary Jiang Zemin, and others.

The financial success of Wen Jiabao’s wife and kids is summed up in the Chinese proverb: “When a man attains enlightenment [or in this case the premiership], even his pets ascend to heaven.”

In Beijing, the Party owns hundreds of properties that are doled out to senior Party officials who live in these homes until they die. The houses are often inherited by their children. This creates a headache for the Beijing mayor’s office which needs to acquire more of the dwindling supply of courtyard homes to quarter China’s political elite.

Chapter Eight

The wives of other Chinese leaders were also interested in dabbling in power games and being players. We called them the Taitai Bang, or the Gang of Wives.

The Party’s top dog, Jiang Zemin, dispatched emissaries to exert influence on behalf of his children and his grandkids, too.

Whitney and Auntie Zhang had a verbal agreement that Auntie Zhang would get 30 percent of any profit from our joint enterprises and we and any other partners would share the remaining 70 percent.

Nothing was on paper; it was all done on trust. The arrangement generally followed the “industry standard.” Other families of high-ranking Party members extracted a similar percentage in exchange for their political influence.

Neither Whitney nor I felt much discomfort spending more than a thousand dollars on lunch. To me, it was just the cost of doing business in China in the 2000s.

The American investment bank Goldman Sachs, which had bought 10 percent of Ping An for $ 35 million in 1993, had tried to sell its stake at about the same time but found no takers. (Instead, Goldman dumped its shares in a little-known firm named Alibaba, which ended up as the biggest online shopping site in the world. If Goldman had held on to those shares, it could have made, literally, tens of billions of dollars.)

Two-thirds of the people on China’s one hundred wealthiest list would be replaced every year due to poor business decisions, criminality, and/or politically motivated prosecutions, or because they’d mistakenly aligned themselves with a Party faction that had lost its pull.

Wen Jiabao was in theory number two in the Party hierarchy, but his lack of Communist lineage and his somewhat passive disposition made him less of a player than others at his level. Wen’s comrades at the Party’s heights routinely marshaled the entire judicial system of the nation for their personal benefit, employing corruption and other criminal probes to dispose of political opponents. Wen either couldn’t or wouldn’t engage in that kind of chicanery.

Chapter Nine

In the West, a wedding such as ours would have been an event, a chance for people to see and be seen. But in China, where information is tightly held and fear permeates the system, we had to be careful. In China, connections constitute the foundation of life; we didn’t want to divulge ours to potential competitors or the public at large.

Li Peiying was a legend at the airport. As the top honcho at so many airports, Peiying controlled access to monopoly businesses. He sliced them like cake, doling them out to the relatives of top government officials. He helped the family of China’s president Jiang Zemin secure a license to sell duty-free products in Beijing via a firm called Sunrise. This was a model for the type of business the red aristocracy liked. Sunrise shared the duty-free business at the Beijing airport with a state-owned firm, China Duty Free Group. These duopolies were an emblem of China’s economy, with a red family controlling one firm and a state-run entity controlling the other.

Peiying had a gambling habit. In fourteen trips to the old Portuguese colony of Macao, a spit of land off China’s southern underbelly, he reportedly lost $ 6 million of state money playing baccarat.

Promotion to vice-minister would also mean that Peiying would enter the ranks of the gaogan. So, Peiying was motivated to work with us, meet Auntie Zhang, and strike a deal with Shunyi.

Unlike Peiying, Shunyi’s chief, Li Ping, didn’t crave a promotion. Li Ping’s interests differed from those of Peiying. He wanted to cement a legacy that would garner him respect in his golden years as a local worthy, a tuhuangdi or “dirt emperor” in the parlance of the day.

Whitney proposed the idea of forming a joint venture, called Airport City Logistics Park, that would include a stake for the airport, the Shunyi District, and Whitney’s firm, Great Ocean. We offered to take 40 percent, with the airport getting 45 percent, and the remaining 15 percent going to Shunyi.

To construct Beijing’s Airport City, we needed seven different ministries to sign off on almost anything we planned.

In the past in China, different customs zones had been established for single purposes, one for soybeans and another for computers. But in the comprehensive tariff-free zone that we were planning, all kinds of products could flow through the zone in either direction.

We prepared a report linking our project with the reforms of China’s customs authority that followed China’s 2001 accession to the Word Trade Organization.

In some ways, China was little different from the rest of the world. Money, sex, and power drove people.

But even when we thought we’d smoothed things over with the bigwigs, we’d still confront problems at lower levels. Section chiefs, bureau chiefs, and division chiefs ran their departments like personal fiefdoms. They could give you a thousand reasons why an approval had been held up. They’d never refuse outright; they’d just tell you to wait. They wielded so much power that they were known throughout the Chinese system as the Bureau Chief Gang or the Chuzhang Bang.

Chapter Ten

When Whitney and I started the logistics hub, China had 120 airports. By the time we sold it, there were 180.

Forging personal ties and establishing guanxi was the most difficult part. Guanxi wasn’t a contractual relationship per se: it was a human-to-human connection, built painstakingly over time. You had to show genuine concern for the person. The tough part was that I had so many relationships that needed managing, but I also had a project on my back with a deadline.

Having airport boss Li Peiying as the chairman of our joint venture gave us access to a huge pool of capital. The Beijing Capital International Airport Group opened up a line of credit for our project. Banks approved loans for us at an interest rate set for state-owned enterprises, which was at least two points lower than the rate set for private ventures. China’s economic system had always been geared to benefit state-run firms over private ones.

The state – owned bureaucracy had a cardinal rule. Under the regulations set by the state-owned Assets Supervision and Administration Commission, which was responsible for all of China’s state-owned companies, each firm was supposed to generate a 6 percent return on equity every year.

Li went incommunicado for months. On January 26, 2007, the Civil Aviation Administration announced that Peiying was no longer the general manager of the Beijing Capital International Airport Group, but bizarrely he retained his position as chairman of our joint venture. That meant we still needed his signature to move our project along. But we couldn’t find him. And no official authority would tell us where he was.

Right in the middle of all this, in November 2006, Li Ping, Shunyi’s district chief, was transferred, severing a key connection to the local government.

Two breakthroughs saved us. On March 1, 2007, Ping An listed on the Shanghai Stock Exchange, opening up the possibility that we could sell our shares and use more of our own capital to save the airport project.

Still, after Li Ping’s departure, I needed a new way into the Shunyi government. I found one in, of all places, Los Angeles. In April 2008, I hosted a group of officials from Shunyi and the airport on a “study tour” to the United States. On the trip was a deputy district leader named Li Yousheng. He was integral to what we wanted to do. Still, I never imagined how much saving his life would change things.

To convince someone to venture into the gray zone with you, you first had to convince him or her to trust you. Only then could you take the leap together. To do that the two of you would research each other’s background, like Whitney had with Auntie Zhang. You’d talk to former colleagues and you’d spend hours cultivating each other so you could understand who each other really was.

In late spring of 2008, the airport finally acknowledged that the ex–general manager Li Peiying was under investigation. He’d been held for a year and a half without charges. That announcement opened the way for the appointment of a new airport general manager who could sign for the joint venture’s loans.

Chapter Eleven

In China, if a doctor didn’t accept your “red envelope” stuffed with cash, you immediately grew concerned.

I’d grown enormously, thanks to Whitney. She’d taught me how to act and prosper within the Chinese system. She’d helped me learn the rules of the road. As I evolved, I gained self-confidence.

After the Ping An deal, COSCO’s CEO, Wei Jiafu, tried to leverage his relationship with Whitney and Auntie Zhang to secure a promotion to minister of transport.

The Ping An investment was the biggest deal that the Wen family would ever participate in. Its success solidified our relationship with Auntie Zhang. We became something like honorary members of the clan.

Chapter Twelve

As early as July 1, 2001, the Party had officially changed its policy on capitalists when then Party boss Jiang Zemin made a speech that welcomed all leading Chinese, including entrepreneurs, into the Party’s ranks.

China’s founder, Mao Zedong, had relegated capitalists like those in my father’s family to the bottom rung of society. Deng Xiaoping had given them a leg up by acknowledging that with economic reforms a small group would “get rich first.” Now, a generation later, Jiang Zemin was inviting entrepreneurs to join the Party and enter at least the margins of political power. It was enough to make you dizzy.

For decades, Wang Qishan stood at the center of China’s economic reforms. Wang was a longtime follower of Zhu Rongji, the reformist-minded architect of China’s economic boom from 1993 to 2003. Whitney met Wang at a dinner hosted at the Beijing Hotel by Auntie Zhang in 2006 while he was mayor of Beijing.

Although Wang Qishan was Beijing’s mayor, he was in line for a promotion to vice-premier under Premier Wen.

Wang appreciated Whitney’s cleverness. To hear Whitney tell it, the pair discussed everything from world history, to political thought, to the direction of politics in China and the world. Wang predicted that China’s state-owned enterprises would one day be sold off and advised Whitney to put aside capital so that when the time came we could invest. Wang also shared some of the paranoid delusions particular to China’s ruling elite. He was, for example, a huge fan of a 2007 best seller, Currency Wars, written by a financial pundit named Song Hongbing.

All pretenders to China’s throne needed time out in the provinces, running a mini-empire, before they took on the grand task of running all of China themselves.

In China, officials never reveal their ambitions in public. Biding one’s time is a key tenant of Sun Tzu’s Art of War. But behind closed doors, Sun moved aggressively. He paid special attention to one contender, an official named Hu Chunhua. In November 2012, Sun along with Hu ascended to the Politburo, becoming two of the twenty-five most powerful officials in China. Soon after, Sun was appointed Party chief of Chongqing, China’s World War II – era capital, while Hu got the top Party post in Guangdong. Their stars were rising.

Along with the Gang of Wives and the Bureau Chiefs Gang, the Assistants Gang — or Mishu Bang — constitutes a third pillar of power in China.

Every university in China is run by the Chinese Communist Party and all universities, just like all K – 12 schools, have Party secretaries who are usually far more powerful than school presidents, deans, or principals. The same is true for China’s political system, where the Party general secretary outranks the premier; in China’s schools, state-owned enterprises, and research institutions, Party secretaries call the shots.

Chapter Thirteen

IN RETROSPECT, THE DISAPPEARANCE OF airport manager Li Peiying in 2006 and his subsequent arrest on corruption charges should have raised alarm bells that broader changes were afoot. I ignored them, partially because I was so busy dealing with the fallout of his arrest and trying to keep the airport project afloat.

After Li disappeared into the custody of the Party, the authorities appointed a new general manager. One-man rule was over, replaced by “collective decision-making.” We started having to deal not simply with the GM but with his underlings. We were told that we needed to go through committees.

Entrepreneurs had been the engines of China’s growth, but we were never trusted. The Communist Party seemed increasingly threatened by entrepreneurs. A segment of society with means was getting more independent. Entrepreneurs like us were pushing for more freedom, more free speech, and in a direction that was less under the Party’s control. The Party was very uncomfortable with us wading into waters that it controlled.

Soon the Party would be passing laws such as national security legislation that obligated all companies in China, if directed, to spy for the state. The negative changes began to accelerate in 2008 during the second administration of Party chief Hu Jintao and Premier Wen Jiabao. A main catalyst was the global financial crisis.

When Deng Xiaoping took over the mantle of leadership in China in the late 1970s, the state was effectively bankrupt. The economic changes Deng ushered in were driven not by any belief in the tenets of free-market capitalism but by necessity. To survive, the Party needed to loosen its grip on the economy. Even under Jiang Zemin in the 1990s, China’s state-owned firms were losing buckets of money, so private entrepreneurs like Whitney and me were still crucial to keep the economy afloat and unemployment down. But after the first term of Hu Jintao and Wen Jiabao ended in 2008 – 2009, and decades of double-digit growth, state-run firms stabilized and the Party no longer needed the private sector like it had in the past.

After losing an appeal and despite returning most of the money, Li was executed on August 7, 2009.

Just a month before Li took a bullet to the back of the head in August 2009, another official, Chen Tonghai, the former chairman of the China Petroleum and Chemical Corporation, was convicted of corruption involving $ 28 million — almost twice Li’s alleged haul. Except Chen wasn’t executed.

This vastly different treatment of two corrupt officials was a telltale sign of how things were being run. Red aristocrats got a prison sentence; commoners got a bullet in the head.

In 2010, we opened negotiations with several companies to sell our stake. Two of the firms were Chinese state-owned enterprises. The third was Prologis, an international real estate investment trust that was one of the firms that had presented me with a lowball offer at the start of the airport odyssey. In January 2011, Prologis bought out our share of the joint venture, giving us a profit of close to $ 200 million.

In 2008, Auntie Zhang arranged a meal with an up-and-coming Chinese official named Xi Jinping. He’d just been appointed China’s vice-president.

In 2007, Xi Jinping got his big break in an affair that revealed much about China’s political system. A year earlier the Party secretary of Shanghai, Chen Liangyu, had been removed from his post as part of a corruption investigation involving the misuse of hundreds of millions of dollars from the city’s public pension fund. Chen had been a major player in what was known as the Shanghai Gang, led by Hu’s predecessor Jiang Zemin.

So, in 2006, when Hu’s loyalists saw an opportunity to take down Chen Liangyu, a prominent Jiang loyalist, they struck.

Xi Jinping would prove to be a savvy and cold-blooded political infighter and become China’s most powerful Party boss in a generation.

Chapter Fourteen

At the time it seemed like everyone with money wanted to own a private club and they sprouted like weeds across Beijing, Shanghai, and Guangzhou. Discretion was one goal; in a private establishment, you could cut political and business deals and nobody would know whom you were meeting and they wouldn’t be able to listen in. Also, Communist Party royalty were shy about flaunting their riches in public but enjoyed doing so among trusted friends. A private club allowed them to be ostentatious behind closed doors. And finally, in many cases, the best thing about a private club was that you could open the club on state-owned property, harnessing a government-owned asset for personal gain. Talk about low overhead.

In China, politics is the key to riches, not the other way around, and David Li was wired into the system politically. Whitney and I were there to make a connection.

During the trip, our gang expressed little curiosity about Europe’s history or culture. My companions were part of the first generation of China’s wealthy: up-from-the-bootstraps entrepreneurs, like Xu; hard-nosed developers, like Little Ningbo; and members of the Communist aristocracy, like David Li. Daring was rewarded. Jail time was an occupational hazard. Education wasn’t a requirement.

It’s a peculiarity of China’s system that the Party bans most retired senior leaders from leaving the country.

Chapter Sixteen

ON OCTOBER 26, 2012, THE New York Times published a front-page article detailing the immense wealth belonging to the family of Wen Jiabao. Based on corporate records, the exposé estimated that the Wen family was worth close to $ 3 billion. At the beginning of the twentieth paragraph was Whitney’s name. Talk about a blow to the skeleton of our relationship.

She’d also embraced what we Chinese called yiqi, the code of brotherhood, the same code I adhered to with my buddies in Shanghai. She willingly became the fall girl to prove that Auntie Zhang had been right to trust her for all these years.

The piece marked the second time that year that a Western news agency had detailed the wealth of a leading Communist family. Several months earlier, in June 2012, the Bloomberg news agency had run a similar story about the fortune held by relatives of Vice-President — and soon to be Party chief — Xi Jinping. If the story on Xi’s family hadn’t run, the Party might have reacted differently and Wen could have been targeted.

In private, Wen Jiabao was livid at the revelations about the business activities of his family members. Our relationship with the Wen family changed. Auntie Zhang informed us that the family was no longer interested in taking 30 percent of our projects.

Following the Times exposé, Whitney shut down her networking activity.

Auntie Zhang said that she believed her husband’s reputation had become collateral damage in a life- and-death power struggle inside the Party. The struggle pitted Xi Jinping against an official named Bo Xilai. Both were sons of Communist “immortals,” veterans of Mao’s revolution. And both owed their careers to a Party decision made in 1981 and pushed by a high-ranking Communist named Chen Yun to establish a special office in the Party’s personnel department called the Young Cadres Section. That section’s purpose was to ensure that the sons and daughters of senior Party members were given good positions in the government and the Party. “If our sons and daughters succeed us,” Chen Yun declared, “they won’t dig up our graves.”

Xi’s father, Xi Zhongxun, was a hero of the Party’s civil war against Chiang Kai-shek’s Nationalist forces in the 1930s and 1940s.

Bo Xilai was the son of Bo Yibo, another of Chairman Mao’s lieutenants. Bo’s ambition brought him down. His fall began on November 15, 2011, when the body of British businessman Neil Heywood was found in room 1605 of the Lucky Holiday Hotel, a threadbare guesthouse in Chongqing. Heywood had been a longtime business partner of Bo’s glamorous second wife, Gu Kailai. Bo was dismissed from his post as Chongqing Party boss. On April 10, he was kicked off the Party’s Central Committee and out of the Politburo. In September, a Chinese court sentenced him to life in prison. And on November 15 of that year, Xi Jinping became general secretary of the Chinese Communist Party.

Auntie Zhang believed that her husband’s support for the investigation and his participation in the public shaming of Bo Xilai put him on a collision course with Bo’s allies, some of whom were in China’s security services.

In 2013, about a year after Xi Jinping had launched his anti-corruption campaign and a year after the Times story on the Wen family wealth, Auntie Zhang told us that she and her kids had “donated” all of their assets to the state in exchange for a guarantee that they wouldn’t be prosecuted.

Chapter Seventeen

By 2020, China’s authorities had investigated more than 2.7 million officials for corruption and punished more than 1.5 million, including seven national-level leaders and two dozen generals.

In China, the Communist Party can fabricate evidence, force confessions, and level whatever charges it chooses, untethered to the facts.

It’s like China’s economic growth rate. The Party sets a target and every year China miraculously hits the bull’s-eye, down to the decimal point. Everybody mouths the same lie, including foreigners, because the Party is so adept at concealing the truth and silencing dissenting voices. It’s almost impossible to separate fact from fiction.

If Ling Jihua and Sun Zhengcai hadn’t been purged, they’d both be on the Standing Committee of the Politburo today. The Chinese Communist Party would have maintained the idea of a collective leadership that was instituted by Deng Xiaoping in the 1980s.

Chapter Eighteen

That give-no-quarter feature is a function of the Communist system. From an early age, we Chinese are pitted against one another in a rat race and told that only the strong survive. We’re not taught to cooperate, or to be team players. Rather, we learn how to divide the world into enemies and allies — and that alliances are temporary and allies expendable. We’re prepared to inform on our parents, teachers, and friends if the Party tells us to. And we’re instructed that the only thing that matters is winning and that only suckers suffer moral qualms. This is the guiding philosophy that has kept the Party in power since 1949. Machiavelli would have been at home in China because from birth we learn that the end justifies the means. China under the Party is a coldhearted place.

The sons and daughters of China’s leaders were a species unto themselves. They lived by different rules and inhabited what seemed at times like a different dimension, cut off from the rest of China.

Thanks to Whitney, I came across these people with great regularity and got to know them. There was Liu Shilai. He was the grandson of Gu Mu, a veteran of China’s revolution and an ally of Deng Xiaoping. Another redblood was a friend I’ll call Wolfgang. His grandfather was one of the top leaders of the Chinese Communist Party in the 1930s and 1940s. Wolfgang grew up in Beijing as a member of the red aristocracy . He attended the elite Jinshan Elementary School with the rest of the children of high-ranking Party members.

The more I saw of Wolfgang and others like him, the more I viewed them as highly competent enablers of an increasingly toxic affliction, Chinese Communism. In exchange for a pot of gold, they’d sold their souls.

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