The Party: The Secret World of China's Communist Rulers (26 page)

When a wall starts collapsing, 10,000 people rush to push it down, according to an old Chinese saying. Once Chen was in custody, stories of the disgraced party secretary’s serial philandering flooded the official media. On the internet, a number of former alleged mistresses were outed, and goaded into denying their relationships with Chen. When excoriating fallen officials, the propaganda department is always happy to publicize their sexual indiscretions. That way, corruption is presented as a form of individual moral degeneracy rather than as the systemic problem it really is.

The closing episode eight months later, Chen’s trial in March 2008 in Changchun, the former capital of Japanese-controlled Manchuria in the north-east, had a political flavour as well. The Party deliberately chose Changchun for the trial, because it was about as far away as it was possible to get from Shanghai. The authorities knew that the judges in Shanghai owed their jobs to Chen and his supporters and could not be trusted to follow Beijing’s line in cases before them. Chen made only a short statement from the dock after his sentencing to eighteen years in jail. ‘I have let down the Party,’ he said from the dock. ‘I have let down the people of Shanghai and let down my family.’ Chen’s appearance bore the telltale look of all senior officials who emerge from lengthy periods of detention under
shuanggui
for their formal trial. Unable to dye his hair in custody, Chen’s formerly jet-black locks had gone grey.

Chen was locked up in the Qincheng prison, the jail on the outskirts of Beijing used to house important political prisoners since the Party took power in 1949. Like other prisoners, Chen was kept in solitary confinement, and allowed out of his cell for only an hour a day. A special team of guards was assigned to watch him, using observation windows allowing them to peer into both his cell and its toilet. But compared to other Chinese prisons, the conditions at Qincheng were relatively cushy. Chen’s request to supplement his prison diet by using his own money to buy nuts and red wine was rejected, according to a Chinese weekly magazine. But his official daily allowance of $30 for food alone far outstripped an ordinary worker’s wage. Guards at Qincheng are also traditionally deferential to their prisoners, as they have learnt from bitter experience that fallen officials can regain their power once they are let out.

Many Shanghai officials remained bitter at their city’s targeting. All the money that had been diverted from the pension fund was returned. And, they added, corruption in Shanghai was no worse than anywhere else in the country. The city had no choice but to take its medicine anyway. In a final act of public contrition, the city government staged an exhibition featuring filmed confessions of arrested officials, weeping on camera at their crimes. The fall-out from the case spread in many different directions in the immediate aftermath. A new party secretary was eventually appointed, and came from outside the Shanghai clique. Beijing parachuted in an anti-graft chief, also untainted by any previous association with the city. Zhou Zhengyi was re-arrested and sent back to jail, this time for a thumping sixteen years. Soon after Zheng Enchong was released from prison, the lawyer was detained again by vengeful city authorities.

The story of Xu Haiming, the protester who had used Zheng for legal advice, had a happier ending. He secured a better deal for his seized property than had been originally offered, while the chastened district officials who had invested in the development on his land were ordered to dump their shares. ‘We got about one-quarter of the property’s value, but more than we paid for it,’ said Xu. ‘But the officials in Jing’an district were ordered to sell their interest at the price they had paid for it. One of the officials told me that they had been expecting returns of 900 per cent.’

Even Shen Ting’s campaign bore some fruit, with her mother receiving a bigger new apartment than she had at first been offered after being thrown out of the Eight East Blocks. Shen herself, however, remained furious, and channelled her anger into a book about her battles with the city authorities. In November 2007, just before it was published in Hong Kong, she said she received a phone call from a man identifying himself as a Shanghai official, surnamed Wang.

Their exchange, according to Shen, went as follows:

‘If you dare to publish this book, we will show you our true colours. You will never get the Home Return permit [generally available by right to Hong Kong residents to travel to China] again,’ the official said.

‘Hu Jintao said the country should be ruled by law, so I am not afraid of you!’ she replied.

‘Well, then, you can go and find Hu Jintao yourself to get the permit,’ replied Wang. ‘There is only one Communist Party. It is not like supermarket outlets where you can go to one after another.’

The mysterious caller was true to his word. Shen has not been allowed back into China since her book was published. His tart rejoinder–that ‘there is only one Communist Party’–was to the point, though. The scope of the anti-corruption campaign in Shanghai, as happens everywhere in the country, eventually ran up against the Party itself and its monopoly on power, and the investigation was brought to a close. The Party catches and kills–and protects–its own for good political reasons. Exposing its members to investigation by outside bodies would be intolerable, as it would be akin to ceding the Party’s monopoly on power. As officials freely acknowledge in private, an independent anti-corruption campaign, following up leads beyond the Party’s control, could bring the whole edifice tumbling down.

In the
roman-à-clef
about the Chen Xitong case in the mid-nineties, the author quotes a saying to illustrate the ritualistic stages that most corruption investigations pass through. Stern and fearsome when they begin, they invariably peter out later. ‘An anti-corruption campaign is when a tiger makes a report, the fox claps his hands laughing, the fly hums along happily and only the mice run scared in the streets.’

Later in the same book, an unnamed and corrupt Beijing city official gives a more expansive, realpolitik rationale for reining in anti-corruption campaigns, because of the way they threaten the Party’s grip on power. ‘The anti-corruption campaign makes a lot of thunder these days and quite a bit of rain,’ the official says. ‘But rainstorms always come to an end. Once we are past the dangerous part of the storm, there will still be a lot of thunder, but less rain. And then after a while, you won’t hear any thunder at all. Anti-corruption work cannot be done thoroughly, because more than just a few people are involved.’

After mentioning a number of well-known corruption cases, the official continues:

Can we allow the era of opening and reform to remove us from power and replace us with the capitalist classes? That absolutely won’t work. We can’t push the anti-corruption campaign indefinitely. For who else can the regime depend on for support but the great masses of middle-level cadres? If they are not given some advantages, why should they dedicate themselves to the regime? They give their unwavering support to the regime because they get benefits from the system. Corruption makes our political system more stable.

How can Chinese officials compare with Hong Kong officials? Can they compare with Taiwan officials? Or with officials in developed countries? The salaries of public officials in foreign countries are dozens or even more than a hundred times higher than the salaries of Chinese officials. Moreover, a long anti-corruption campaign would expose the dark side of the Communist Party. If many of these things were to be exposed, the masses would lose their faith in the Chinese Communist Party. Who could accept the historic responsibility for doing this?

The Shanghai case had been one of the most highly charged corruption investigations in the history of the people’s republic. By April 2008, about thirty officials and businessmen in all had been jailed. The size of the case and the ruthlessness with which it was executed was directly related to the politics that were at stake. Shanghai officials were surely right to say that their city was no more corrupt than anywhere else. Politically, however, their behaviour had consequences far beyond the city’s borders.

The reasoning laid out by the fictitious official in
Wrath of Heaven
, that the Party could not countenance an anti-corruption system unconstrained by political considerations, still held. Where might an investigation of Jiang Zemin’s family have led, for example? What would an independent inquiry into Jia Qinglin’s history in Fujian, and Wen Jiabao’s wife’s business dealings reveal? Such questions did not bear answering for the Party. Once such threads began to unravel, there was no saying where they would end.

Much the same rationale governed how the Party handled one of the biggest scandals of the last decade, the Sanlu case, in the lead-up to the 2008 Olympics. Sanlu did not involve high-level corruption, in the way that the Shanghai case did. But the attempted cover-up by a city-owned dairy company of the poisoning of tens of thousands of babies had something in common with Shanghai. In both cases, local officials were able to wield extraordinary, unrestrained power, only being pulled up by the centre when it was too late. The decentralized nature of the party and government system has been fundamental to the Chinese economic miracle. When it gets out of control, however, the consequences can be fatal.

The Party and the Regions

It was one week, almost to the minute, ahead of the opening of the Beijing Olympics, when the senior executives of the country’s largest supplier of milk formula were summoned to an emergency meeting. It didn’t take long for the mood in the conference room to turn grim, even panicky.

For years beforehand, China’s senior leaders had meticulously managed the preparations for the games, timed to open at an auspicious moment on the Chinese calendar, at 8.00 p.m. on the eighth day of August 2008. Whole neighbourhoods in Beijing had been cleared to make way for the sports extravaganza. Giant steel factories were moved out of the city and a million cars ordered off the roads just ahead of time to cut pollution. Offshore, the government had tweaked diplomatic policy just enough to throw critics of China’s human rights record temporarily off course. In the final, nervous days ahead of the games, senior leaders had personally intervened to replace the young girl chosen to sing the national anthem at the opening ceremony with someone they deemed more suitable. Nothing was to get in the way of the moment designed to embody China’s rightful return to the ranks of great powers.

The Olympics were preying heavily on the minds of the executives of the Sanlu Dairy Corp. as night fell on 1 August over the sprawling company headquarters in Shijiazhuang, the capital of Hebei province, about ninety minutes’ drive from the capital. Sanlu (‘Three Deers’) had been an enthusiastic sponsor of the pre-games festivities. The day before, the Olympics torch, canonized as a ‘sacred flame’ by the central government, had passed through the city en route to the ceremony in Beijing, carried on its way by a privileged few staff members from the company. Now, Sanlu executives were confronted with a crisis that could turn a time of great national pride into near panic for large swathes of the population and a deep loss of face for the Party. After months of fending off consumer complaints about its milk powder, the company’s top executives had just been handed irrefutable evidence that its best-selling formula was laced with large doses of an industrial chemical. Hundreds of thousands of babies whose sole nourishment was the company’s liquefied powder were slowly being poisoned.

Presiding over the meeting was Tian Wenhua, the Sanlu chairwoman who had built the company from a small city dairy into a famous national brand. Ms Tian allowed debate to rage for hours among the ten or so assembled executives until just before sunrise the next morning, when she finally settled on a course of action. Instead of confessing to its customers about the contamination, she directed that it be covered up. Combining silence with stealth, the meeting resolved to quietly withdraw Sanlu products from warehouses and gradually replace the contaminated milk powder with new, safe batches of formula. Any formula already sold would not be touched, sitting in homes until it was consumed.

Ms Tian, a former vet with school-marmish looks and the plain, unadorned style of many high-ranking women cadres, closed the meeting at 4.00 a.m. with an order that the detailed minutes of the meeting be censored as well, to prevent any leaks. In what would be one of her last acts at the company she had run for two decades, she told her colleagues: ‘This is to control the situation.’ As events transpired, she could not have been more wrong.

When the contamination was made public weeks later in mid-September and the stories of the sick and dying babies became known, the central government in Beijing and the national media rose up in fury. The cover-up had had gruesome consequences. By the time the problem was exposed, long after the Olympics had finished and been declared a rousing success, 290,000 babies had been diagnosed as ill. Many babies–in most cases, the only children that couples were allowed to have under the one-child policy–were left with permanent kidney damage. Six infants had died.

The Sanlu scandal featured many public villains. The institutions of government, the role of regulators, the inefficacies of the legal system, lax food standards, the responsibilities of company executives under corporate law, and profiteering businessmen and women–all were put in the dock in the wake of the cover-up. Ms Tian and other executives of the company were sacked, and then formally arrested and charged soon after the scandal came to light. Scores of middlemen responsible for lacing the milk powder were detained and a number later executed. The reaction was thunderous and the anger genuine, but for anyone tracking the contours of local politics, the uproar had the same slightly unreal quality that pervades public life in China. The debate focused entirely on the front stage of political life, the government and regulatory and legal systems that the citizenry read about in the media and interact with in daily life. Few dared to pull the curtain to peer backstage, to examine how the Party’s opaque powers and skewed structures had enabled the scandal at each twist and turn of its lengthy evolution.

From the outside, power in China often seems to gush like a torrent from Beijing, streaming out from party central to nourish obedient communist officials in provinces, cities and townships throughout the country. This impression is craftily reinforced by grassroots officials themselves. No matter how distant they are from Beijing, local leaders raised in a school system which prizes rote learning above all will recite, for foreign visitors, word-perfect renditions of the latest edicts from the centre. When Jiang Zemin was in office, interviewees would invariably defer solemnly to the then leader’s trademark theory of the ‘three represents’. Likewise, no discussion in China under Hu Jintao proceeds without a genuflection to his model of ‘scientific development’ and the ‘harmonious society’, the leitmotifs of his administration. The unparalleled reach of the propaganda system means that no official can claim they didn’t get the memo when a new policy is promulgated. Most of them are smart enough to learn them by heart.

This description of power holds more or less true for policies which embody the Party’s core political interests. Local officials are careful to stay in lock-step with Beijing on issues touching on sovereignty, like Tibet and Xinjiang. Political campaigns which come with the imprimatur of the very top, like the crackdown on the Falun Gong, the outlawed spiritual movement, are implemented with zeal. Very few officials question the fundamental structure of the system and the need for one-party rule. The everyday reality of economic administration in China, where local financial interests are involved, requires a very different calculus. Far from surging like a single river out of the capital, the transmission of economic management is more akin to a series of locks, in which each locality takes what they want out of the policy waterway. Feigning compliance with the centre, as one China scholar described the process, they then let the policy stream flow downwards to the next level of government.

Beijing frets constantly about the disobedience of local fiefdoms outside the capital. In 2005, Zhang Baoqing, then a vice-minister for education, complained that a precisely worded order issued by Beijing in support of loans for poor students had been flatly ignored by many provinces. ‘The central government’s control does not extend beyond the walls of Zhongnanhai [the central leadership compound, next to the Forbidden City],’ he said, in exasperation. ‘People below just don’t listen.’ What Zhang left unsaid in his critique was any mention of the underlying reason for Beijing’s difficulties, which is the Party itself. The virtual dictatorial power of local officials on the ground is anchored by a fundamental paradox: that a strong, all-powerful Party makes for a weak government and compromised institutions. Freed of the checks and balances provided by democratic government and an open media, the writ of the party chief on the ground in China is as good as law.

The Chinese saying, ‘The mountains are high, and the Emperor is far away’, is often quoted to describe how local officials become more independent the further they are from Beijing. In truth, a local party fiefdom might be just down the road from the capital and still be able to keep the central government in the dark about what is happening in their bailiwick. So self-contained and opaque are party bodies that they have the power to contrive to keep secrets not just from the public, but from each other as well. In the Sanlu case in Shijiazhuang, a short, two-hour drive from the capital, local officials kept Beijing in the dark to protect the city’s most valuable company. But they were also constrained by the centre itself, which had made the success of the Olympics a political task for cadres throughout the country. These two clashing imperatives, of local economic protectionism and a national political campaign, made for a toxic mix.

Before considering the Sanlu case in detail, however, it is worth remembering how disobedient localities have also been one of communist China’s greatest strengths. The central leadership is invariably portrayed as a force for good in the narrative of China’s rise, dragging the recalcitrant, corrupt and backward localities along behind it. It is true that many local leaders will ignore Beijing’s edicts if they can get away with it. In many cases, they may be right to do so, because in a country as large as China, the centre cannot intelligently prescribe policies to fit the widely divergent conditions on the ground. The local locks of power allowed by the Party’s decentralized structure can make for dynamism as well as defiance.

For visitors to Dandong in the north-east, the first thing that jumps out is the vivid contrast between the bustling Chinese city and the moribund scene a few hundred metres away, across the Yalu river in North Korea. The restaurants and karaoke bars in Dandong overflow with customers and the streets are jammed with traffic and commerce. High-rise apartments line the Chinese side of the river where only a decade ago were strips of humble single-storey buildings. The scene on the opposite bank is pre-modern by comparison. In the shadow of tall brick chimneys emitting emaciated wisps of smoke, a few wizened buffalos plough the fields, pursued by under-nourished, bedraggled farmers and ragged small children.

Many Chinese cities have specialized in single products, such as socks, shirts, trousers and leather, and used their strong local position to pursue global sales. In Shijiazhuang, the city government championed Sanlu and the dairy industry. Dandong’s entrepreneurs, distant from China’s heartlands of the Pearl and Yangtze river deltas, had somehow turned the city into one of the country’s biggest exporter of toilet seats, with the entire stock of its largest company going directly to Wal-Mart. The city’s residents are also canny enough to spot a business opportunity in the odd out-of-place westerner they notice roaming the streets. When a colleague and I were wandering near the riverfront area, a local would-be tour guide approached us, asking: ‘Would you like to go to North Korea?’ Within an hour, we had been transported by boat up the river away from the town centre, darting across the water to land controlled by one of the world’s most closed and difficult-to-access countries in the world.

Just as startling as Dandong’s transformation was the reaction of local political and business leaders to my compliments, during a visit in October 2006, on their city’s helter-skelter development. In the eight years since I had last been there, Dandong had been transformed from a sleepy backwater into a bustling, bursting-at-the-seams business centre. Far from celebrating, the locals shook their heads dolefully at their visitor’s praise for their rapid development. ‘We are not growing fast enough,’ they replied. I later checked the official growth figures for the city. Dandong’s economy had expanded by more than 16 per cent that year. The locals were not happy, though, because the nearby port of Yingkou was growing faster, by more than 18 per cent. The pace of expansion of the national economy was of little interest in Dandong. The city benchmarked itself, jealously, against its immediate neighbours.

The narrative of China’s rise usually pits it as a competitor against first-world powers like the US, Europe and Japan, and low-cost manufacturing centres in Southeast Asia, Mexico and in and around India. That is true, as far as it goes. China has obvious competitive advantages in relatively cheap, abundant and ambitious labour and a surplus of low-priced capital. China has also adopted many of the features of other Asian economic success stories. As Japan did for many years, it has kept its currency undervalued to bolster exports. It borrowed the idea of designated economic zones and industrial parks from Taiwan, so it could experiment with the market, before unleashing its force across the rest of the country.

What is obvious for anyone who travels around the country, however, is how much the economy is driven by another factor altogether, a kind of Darwinian internal competition, that pits localities against each other. Much like the school of fish that makes up China Inc., each Chinese province, city, county and village furiously competes to gulp down any economic advantage they can lure their way. Steven Cheung, a Chicago-trained economist who spent years teaching in Hong Kong and dispensing advice on the mainland, took a long time to grasp how China managed to pull off its spectacular economic rise. ‘The Chinese had to deal with corruption, a D-grade judicial system, controls on freedom of speech and beliefs, education and health care which were neither public nor private, exchange controls, inconsistent policies and tens of thousands of riots a year,’ he recounted in a speech at a private conference on economic reform in Beijing in 2008. But the economy still grew at nearly 10 per cent a year for three decades.

How did China pull it off? The key, Cheung realized after many visits to the industrial heartlands of the Pearl and Yangtze deltas, was the cut-throat competition between localities for business. The local party secretary with near-dictatorial powers is a dangerous enemy for anyone who takes him on in the area under his control. He can lock up petitioners and any other activists who challenge him, and prevent rivals from advancing within the local government through control over appointments. When it comes to the economy, however, these same powers make the local party secretary a lethal competitor for any rival business centre in the world, especially the one right next door.