“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