finance

China’s Most Dangerous Woman Meets Her Most Dangerous Rival

mtj828 Propaganda and Media , ,

HuShuli  Guowengui

The event of the week is roughly the Chinese equivalence of this: the Huffington Post carries an in-depth story revealing that Donald Trump has built his business empire with the help of corrupt high-level officials at the NSA, who used illegal surveillance methods to crush his business competitors. Trump shoots back with a tweet accusing Arianna Huffington of adultery with his main business competitor and using her website to smear his name for the sake of her lover. He even asserts that Huffington and the man has a son out of wedlock and published the kid’s Social Security Number.

Now, replace the Huffington Post with Caixin Weekly, Arianna Huffington with Hu Shuli, and Donald Trump with Guo Wengui, the billionaire who owns Beijing’s landmark Pangu Plaza, and you get the picture. But to fully comprehend what’s going on, you need to have the mind of a Frank Underwood.

Guo Wengui is a name that was unknown to most people in China until the end of 2014. At that time, a nasty dispute between him and the former CEO of the Beida Founder group regarding top management appointments escalated into a mutual tattling that led to the latter’s arrest a few weeks later. Guo remote-controlled the fight from abroad and had thence forth stayed outside of China. According to Chinese media reports, this fight was a prelude to the downfall of a Deputy National Security Minister, who was a mutual friend of both of them and had used his special power in the security apparatus (a department that deploys China’s secret police) to protect their business interests.

These events put this otherwise low-key billionaire under the spotlight and arouse the interest of daring investigative journalists, including Ms. Hu Shuli’s Caixin team.(See their coverage of Guo Wengui in English)

Caixin Weekly, a leading news magazine in China, is known for its in-depth coverage of the country’s most hefty political and economic issues. Hu Shuli, the founder of Caixin, is considered the “female Godfather” of Chinese journalism and “the most dangerous woman in China.” She treads the fine line between truth-finding and China’s boundaries for freedom of expression, a tricky business of which she is a master. Under her leadership, Caixin has become the go-to place for authoritative reporting of all aspects of the Chinese society. Some also believe that her success so far is in large part due to her personal connections well up to the highest echelon of the Chinese leadership, a network that she cultivated back in the early 90s when she was a reporter for one of China’s earliest business newspapers. One of those contacts is Wang Qishan, then a reform-minded party upstart, and now President Xi’s anti-corruption tsar. (See Evan Osnos’s 2009 profile of Hu for the New Yorker)

Over the past one year or two, along with the intensification of the administration’s anti-corruption campaign, Caixin’s exclusive coverage of those fallen under the campaign’s hammer and anvil has won it applause and also a bit of disdain. Those applauding consider Caixin the standard bearer of journalistic professionalism in China. Those questioning it muse about the extent to which it is being used by one faction of the party against another. Its now legendary coverage of Zhou Yongkang, former member of the Politburo Standing Committee, the highest ranking official being charged so far, exemplifies these competing views. The report (an unprecedented full-volume coverage that amounts to a mini-biography) came out minutes after the official announcement of Zhou’s disgrace. On the one hand, the thoroughness of its investigations (a year-long process) immediately inspired a sense of awed respect among media observers all over the internet (later the lead journalists won awards for this report). But on the other hand, the seemingly unusual access enjoyed by Caixin journalists to sources surrounding one of China’s most sensitive political figures also brought questions regarding Caixin’s “special” role in the anti-corruption campaign.

Such mixed perceptions played out in a very big way last week, when Guo Wengui launched his nasty personal attack on Hu Shuli from abroad. The open letter he released through his company’s Weibo accounts (now deleted) asserts that Hu has ulterior motives in doing the investigative piece about him, namely to smear his name in order to benefit her “lover” the Founder group CEO currently under investigation. Furthermore, the letter goes sensual in detailing the “sexual relationship” between Hu and her lover, their “secret son” and even Hu’s sexual appetite. Besides that, he also accuses Hu of using her magazine as a tool to blackmail other enterprises in exchange of expensive advertisement contracts.

It is interesting that Guo picked Hu as his target, as Caixin was not the only media outlet that did investigative stories about him lately, nor the first to do so. Both Tencent’s Prism, a WeChat-based outlet for in-depth original stories, and Caijing Magazine did similar stories about Guo’s rise from a nobody in rural Shandong province to one of China’s richest business tycoons. All these stories depict Guo as a cunning, ruthless “street fighter” who builds up his wealth by crushing anybody in his way. He has torn down minister-level officials using secretly taped sex videos, and his partnership with high level officials in the national security apparatus was a key to his success.

Knowing Guo’s style, one probably would not be surprised by his move against Hu. After all, if his purpose is to stir up a controversy, Hu proves to be a more suitable target than lesser known journalists. And his tactic to play into voyeurism, the basest instinct on cyberspace, also seems to have paid off. Hu’s sympathizers were upset by how happily netizens are willing to spread the defamatory letter, even with stated “doubts”. Guo also tapped into another dark side of the Chinese cyberspace: its cynical attitude toward truth in general and the resulting disregard for the relative weight of evidence. In other words, many Chinese netizens tend to treat any given information with the same level of (dis)trust. Anything could be true or false, no matter what evidence you present. And this makes a fertile ground for character assassination. In 2012, a prolonged online campaign to discredit popular writer Han Han in effect pushed him out of debates on social affairs, even though the attackers produced no solid evidence to buttress their claims that all his previous writing was done by shadow writers. Hu’s supporters were quick to point out the outrageousness in Guo’s accusations, especially concerning she having a kid with the so-called lover. As a public figure constantly in the spotlight, it is pretty unfathomable that Hu could be pregnant at the age of 50 (based on the identity card information Guo disclosed of the “kid”) without catching the attention of the public. Many Hu’s defenders, among them are prominent editors and journalists, were disheartened by how gleefully even some media operatives spread this piece of junk.

But the apparent ridiculousness of Guo’s accusations led some observers to wonder if a distraction is actually all that he wants. If Guo is indeed a shark fish in China’s muddy water as the media have suggested, why did he present something that is so blatant a lie? Maybe he has a message to send to someone else, one commentator bemuses, and maybe his actual target is not Hu but the person behind her. He is sending a coded warning to her patrons in the leadership that he is in possession of damaging materials not of her, but of them.

This leads some observers into believing that this fight is just the surface of much fiercer power struggles deep underneath. And it is in a way linked to the above-mentioned perception of Hu as being somehow protected or even “fed” by much larger forces that are currently driving the anti-corruption campaign. There are also speculations about who is actually behind Guo. But no matter whether such conjectures are true, one effect of this Guo-Hu feud is the further perpetuation of the public perception that the anti-corruption campaign is merely a factional struggle for power. For the leadership, such a perception can be damaging, as it undermines the legitimacy and moral high ground that the campaign occupies. That’s why until very recently, official media outlets such as the pro-Xi WeChat account under the People’s Daily have been pointedly rebutting claims that the campaign is a selective purge of political rivals. They argue that the campaign has actually indicted Xi’s previous colleagues and subordinates in Fujian and Zhejiang provinces, something that’s overlooked by the Western media, particularly the New York Times. But they never clarify whether the purge is of a different nature, where the line is not drawn along personal connections, but between those “born red” and the “hired hands”. (See Evan Osnos’s most recent article “Born Red” for more details) As long as such doubts are not quenched, the campaign may always be seen by cynical bystanders as a grandiose dog fight.

Hu Shuli never responded to the controversy directly[1]. Her stellar reputation within China’s media establishment ensures that plenty of journalistic heavy weights come to her defense voluntarily either out of personal affection or out of a sense of solidarity. On Mar 30, one day after Guo’s open letter appeared on the internet, she quietly posted on her own Weibo account the links to the original Caixin report, without a single word of comment, as if to say: let the report speaks for itself.

[1] Although Caixin the company did send out a statement on Mar 30 saying they were initiating legal actions against Guo’s company for libel.

The Curious Case of Anbang Insurance

mtj828 Business and Finance , , ,
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“Who is Anbang Insurance?” The Fortune magazine asked when this Chinese company virtually unknown to the West announced its acquisition of the legendary Waldorf Astoria New York in Oct 2014.

Ironically, most people in China had the same question when that piece of news emerged in the Chinese media (the news spread in China with a sense of pride of course). Such a line of inquiry only intensified after Anbang’s other high profile moves in the Chinese capital market raised eyebrows, especially its attempts to become the dominant stakeholder in two of China’s largest privately owned banks, China Merchants and China Minsheng.

The English website of Anbang Insurance is innocuous enough that you would readily mistake it for a small company doing business on Alibaba. Its stated vision is so lame (“help customers to achieve dreams”) to an extent that it almost appears dubious. Yet this is a company that has grown its total asset from 500 million RMB (75 million USD) to 700 billion (110 billion USD) in a mere decade (2004-2014).

And last week, one of China’s most influential newspaper, Southern Weekly, threw national spotlight on the company by publishing a 4-page front page story.(Original report has already been deleted from its official website) It unleashed an ominously curious turn of events that triggered interesting speculations about the clash of forbiddingly powerful forces that are redefining China’s political landscape.

To understand the events described below, you first need to know that China’s seemingly unitary political system is actually made of rival factions of power. These factions are basically extensive patronage webs centered around a few very powerful people. For instance, it is widely believed that former President Jiang is the chief of the “Shanghai Gang”, officials and political operatives who derived their influence and clout from working in Shanghai (where President Jiang’s career was launched). Similarly, former President Hu has his own patron-client network known as the “Youth League Faction”, as most of those involved have gained power through moving up the ranks of the Communist Youth League system, where President Hu served as chief secretary before becoming a political star and heir apparent. The current Chinese President, Xi Jinping, comes from a completely different background. Unlike his two predecessors who came from relatively modest roots, he was the younger son of a former vice premier and right-hand person of the reformist leader Deng Xiaoping. In China, such sons and daughters of former revolutionary leaders are dubbed “princelings.” It is said that they are currently engaged in an intensive power struggle against other factions over the future course of China.

What Southern Weekly revealed last week was nothing short of a little bomb. It first established that Anbang’s president, Wu Xiaohui, was actually the son-in-law of Deng Xiaoping’s beloved daughter Deng Nan. Then, after sifting through complex share-holding records, the journalist further claimed that Anbang’s de facto man in control was Mr. Chen Xiaolu, who happened to be the son of Marshal Chen Yi and son-in-law of General Su Yu (both legendary revolutionary military leaders). The three companies that Chen controls own a collective 51.36% of Anbang’s stakes. Simply put, Anbang is controlled by very powerful “princelings”.

What struck most observers was not the information that Anbang is controlled by princelings. After all, such rumors have been floating around ever since its acquisition of Waldorf Astoria in New York. It was the fact that Southern Weekly managed to print it out as a front page story at such a delicate time that generated a tremendous sense of intrigue. As China’s flagship investigative newspaper in the past decade, Southern Weekly’s precipitous decline of prestige lately is itself a tragic reflection of the demise of China’s once prospering media scene. As a liberal leaning paper that have spearheaded groundbreaking reports triggering far-reaching social changes, it was subject to targeted and harsh censorship in recent years, leading to an exodus of journalistic talents and mediocre reports as a result. It was in this context that last Thursday’s publish of the edgy Anbang report looked refreshing for many.

The timing of this expose couldn’t have been more interesting because almost at the same time, another political scandal unfolded in front of the public’s eye. On the eve of Jan 30, rumors started to spread on China’s social network sites that China Minsheng’s president, Mao Xiaofeng (unrelated to Chairman Mao) had been “taken away” by the Communist Party’s Central Disciplinary Committee. Major media outlets such as the well-connectedCaixin quickly confirmed the news on the next day. The two seemingly unrelated incidents had one important connection: Anbang had been very aggressive in accumulating China Minsheng’s share in the past year and had quickly become it’s No.1 shareholder (22%).

“Coincidentally”, Mao Xiaofeng, China Minsheng’s disgraced president, used to be a rising star within the Communist Youth League system, before he parachuted into China Minsheng at the age of merely 30. He is also widely believed to be closely associated with Ling Jihua, President Hu’s chief of staff who was one of President Xi’s biggest anti-corruption targets last year. Ling accumulated his political capital almost entirely from the Youth League ranks.

A narrative quickly developed in the circles of China’s politico-economic observers: Anbang’s aggressive pursuit of China Minsheng is a struggle for economic dominance of the rival factions. Mao’s arrest was a sign of the disadvantaged Youth League Faction. Southern Weekly’s mysteriously well-timed expose was the Youth League Faction’s desperate attempt to regain the upper hand by tarnishing the names of the princelings (through questioning the legitimacy of their wealth).

But if this conjectured narrative has some validity (there ARE other credible claims that the China Minsheng incident was an isolate case), the Youth League Faction’s fight back quickly seemed doomed. The day after Southern Weekly’s report came out, Chen Xiaolu, who Southern Weekly alleged was Anbang’s de facto man in control, circulated a statement on his WeChat Friend Circle (something equivalent to a Facebook page) saying, jokingly, “I wish I was controlling Anbang.” He claimed that his appearance in Anbang related events were only tokens of friendship with Wu Xiaohui, without any material gains. He also maintained that all of Anbang’s recent acquisitions were legal transactions overseen by the country’s regulatory bodies. As if things weren’t interesting enough, Caixin followed the next day with the “revelation” that Wu Xiaohui had “terminated” his marriage with Deng’s granddaughter. It looked like a coordinated backlash for Southern Weekly was on the way.

Whether Chen’s breezy claims were true matters little now. Southern Weekly capitulated only three days after its applauded report. On Monday Feb 2, it released a formal apology, saying that “it failed to do fact checking on SOME of the facts of its Anbang report.” Just which facts were not checked, it didn’t say.

The apology was read by some as no less of a white flag. And people again started to worry about the fate of this beloved paper of the Chinese liberals.

But there are others who were less sympathetic. Again assuming the validity of the clan rivalry narrative, they saw Southern Weekly as just another puppet used for their masters’ own purpose. So much for editorial independence.

The Chinese likes to use the Go Game metaphor to describe grand political maneuvers hard to be fully grasped by the lay person. “A big game of Go is being played.” They would say. President Xi’s campaign to consolidate power is just such a game. Maybe future chroniclers of China’s modern history would take note and make sense of what actually happened from Jan 30 to Feb 2, 2015.

Originally posted on Feb 7, 2015