The loud rumbling sound heard from China last week was the result of Chairman Mao Zedong rolling in his grave as the Chinese people, whose per capita income in 2008 was equivalent to $3,180, learned that the likely next President of China has estimated family wealth that may make him richer than Republican presidential candidate Mitt Romney, whose worth is estimated to be $230 million. On Friday, financial news service Bloomberg, using publicly available records, published a long article detailing a list of investments held by the extended family of Chinese Vice President Xi Jinping that added up to $376 million. Xi is widely expected to become the general secretary of the Chinese Communist Party later in 2012, and president of China in 2013.

 

Although the report traced no assets directly to Xi, his wife (famous folk singer Peng Liyuan), or their daughter, and also noted that no evidence of wrongdoing by Xi or his family had been found, the Chinese government blocked Internet access to all of Bloomberg’s sites within hours of its publication. The following day, the government went so far as to block all searches for Xi’s name on the Internet and in microblogs. Of course, not even China’s censors can un-ring a bell, and savvy Chinese readers downloaded the data before their access was terminated so they could share it with friends.

 

The assets discussed in the article belong mainly to Xi’s older sister, Qi Qiaoqiao, her husband Deng Jiagui, and Qi’s daughter Zhang Yannan. Among the assets uncovered are an 18% indirect stake in a rare-earths company with $1.73 billion in assets, a $20.2 million holding in a publicly traded technology company, and a $288 million share of the assets of a real-estate and diversified holding company. These figures, however, don’t account for liabilities and thus cannot reflect the family’s net worth. It is also true that, given the thicket of holding companies obscuring the true ownership of wealth in China, Xi’s family may be worth much more.

 

Ironically Xi, whose father Xi Zhongxun was a revolutionary comrade of Mao who held high posts in the Chinese government, has cultivated an image of honesty and incorruptibility, warning officials during a 2004 anti-graft conference call to “Rein in your spouses, children, relatives, friends and staff, and vow not to use power for personal gain.”

 

The issue goes far beyond Xi, as evidence mounts that relatives of current and former senior Chinese officials–termed “princelings” by the Chinese people–have amassed vast wealth by using their political connections to force their participation in lucrative deals. The downfall of one of them, Bo Xilai, in early 2012 brought unusually open publicity to the high-rolling lifestyles enjoyed by the princelings. The rise of the princelings also provides a sharp counterpoint to growing inequality in supposedly “socialist” China, which now has 1.4 million millionaires, and in fact more closely resembles a capitalist social formation that a socialist one.

-Matt Bewig

 

Xi Jinping Millionaire Relations Reveal Fortunes of Elite (Bloomberg News)

China Blocks Xi Web Searches after Bloomberg Report (Agence France-Presse)

“Princelings” in China Use Family Ties to Gain Riches (by David Barboza and Sharon LaFraniere, New York Times)