China's Corruption Crackdown, New Bank Backing, and Release of PR Activists

In case there was any doubt about China's determination to stamp out corruption, the April 2015 arrest of Zhou Yongkang, former head of the domestic secret police and the most senior member of the Chinese Communist Party to face corruption charges, should dispel that notion. Assets from Zhou's family members and associates totaling $14.5 billion were seized, and 300 of his relatives and allies have been  taken into custody or questioned. Zhou, and earlier Bo Xilai, were believed to have been investigated by the special investigation team composed of cross-agency law enforcement officials that can only be authorized by Beijing's senior leadership to investigate high ranking Communist Party members.

     In the book, The Little Red Guard, mentioned in the earlier blog post, "See the World," model workers of older Chinese generations felt betrayed by a new corrupt system that rewarded friends and relatives of Communist Party officials with promotions and raises. Although President Xi Jinping was said to be worried that the extent of corruption revealed at a trial of Zhou would undermine public faith in China's Communist Party and alienate other high level party members who fear their own corruption charges, Zhou was sentenced to life in prison in June, 2015. China also has added Wang Tianpu, president of Sinopec, China's state-owned Petroleum & Chemical Corporation, to its list of corruption suspects. In October, 2015, Sam Pa, who heads the Queensway group in Hong Kong and who has ties to China's intelligence service, was detained in Beijing. Queensway is an active deal maker in Africa and North Korea. In March, 2016, HSBC froze $87 million of Sam Pa's assets.

     Following the explosion of the Rui Hai International Logistics's chemical warehouse that killed over 100 and damaged 17,000 homes in Tianjin, ten Chinese officials were detained on suspicion of safety violations. Two Rui Hai executives admitted using political connections to get waivers that allowed the warehouse to be build closer to a residential area than allowed by law, and the warehouse had been cited for safety violations in the past.

     China's corruption crackdown already has put politician and powerful Chongqing party boss, Bo Xilai, in prison for life and given his wife, Gu Kailai, a suspended death sentence for poisoning British businessman, Neil Heywood, who may have been murdered for wanting too big a cut for helping get the family funds of Bo and Gu out of China. On July 28, 2015, when Man Mingan, the Chinese prosecutor in Gu's murder trial, was found hanged in his Anhui province apartment, police launched an investigation into the circumstances. In another strange development, China uncovered a fake anti-corruption unit that had its own interrogation room.

     The anti-corruption campaign has caused China's big rollers to flee Macau's casinos for Cambodia, where, as described in the earlier post, "Let's Visit China," they hope to do their gambling under the radar of investigators. Consequently, Macau's investors, who have seen their revenue drop, have decided to follow the Las Vegas model and give the island a more family-friendly image by adding a $2.3 billion theme park to a new casino.

     Meanwhile, a new Chinese-backed Asian Infrastructure Investment Bank (AIIB), which has won the approval of the World Bank, has been founded. The bank's president, Jin Liqun, was among the world's 100 Most Influential People selected by TIME magazine in 2016.  AIIB attracted 57 prospective founding members, including Singapore, India, Thailand, and even the UK (but not Japan, Australia, South Korea and the US, the more developed countries that control the rival Asian Development Bank.) Hoping the UK can cash in on billions of trade deals with China, British Prime Minister Cameron gave Chinese President Xi the royal treatment, including a ride in a horse-driven carriage, when he visited the UK in October, 2015. Although President Obama cautioned the UK about developing close ties with China and initially opposed Britain's participation in the AIIB, he eventually suggested the bank may have a positive impact on emerging markets. By 2017, the AIIB had 80 member nations including Britain ad Australia. The Asian Development Bank now works with AIIB to fund energy, transport, and infrastructure projects.

     The July, 2015 purchase of the former Milan headquarters of Italian bank, UniCredit, by the Chinese Fosun group headed by Guo Guangchang was just the latest in a series of recent Chinese investments in Italy, including Italian banks and companies, such as tire maker Pirelli and luxury goods manufacturer, Caruso.

     After being held for a month, China released five women's rights advocates who have a flair for gaining public attention. They were arrested in March when they prepared to distribute posters and stickers protesting domestic violence. Earlier, they had gained attention for the same cause by parading through the streets in bloody wedding gowns. The women who were charged with creating a disturbance could still be sentenced up to three years in prison, if they fail to report their movements to police and to make themselves available for questioning at any time.