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    China Business
     Mar 1, 2007
Page 1 of 2
Resentment builds against China's wealthy
By Kent Ewing

HONG KONG - Back in the good old days, when Deng Xiaoping first signaled that "to be rich is glorious", China's capitalist pioneers went to work in a country dominated by public ownership and shackled by Communist Party bureaucracy.

To attain the wealth that Deng now held up for public admiration, many, if not most, flouted the law. Smuggling, tax evasion, loan fraud and triad (criminal) links were commonplace, as was collusion with local government officials whose palms were



greased to pave the new capitalist road to success.

Now, with China in February quietly marking the 10th anniversary of Deng's death and Beijing's drive against corruption taking center stage, those pioneers may find that their chickens have come home to roost.

A groundswell of resentment against the newly wealthy has been building for some time among ordinary citizens and party cadres who feel the injustice of the country's growing wealth gap and long for the social order of the past. A survey by the Chinese Academy of Social Sciences last year found that nearly half of the 7,063 families polled thought the rich had acquired their wealth illegally, and there is growing public debate about whether they should be called to account.

Several high-profile tycoons have already been netted, and efforts to bring others to justice are picking up steam, leaving China's growing class of entrepreneurs in a decidedly jittery state.

The illicit practices of China's business pioneers are commonly referred to as "original sin" in the media. This suggests that succeeding generations will continue to be tainted by their legacy of corruption.

The question for state leaders is whether to accept this fallen state of the past as China moves toward a future based more on the rule of law or to try to root out the sin at its source. The sinners have even argued that their misdeeds were a "necessary evil" to subvert the old communist economic order, expediting the capitalist reforms that the country increasingly enjoys today.

Indeed, China's transformation to a market economy has been remarkable. Since Deng first lifted a ban on private enterprise in 1978, the private sector has expanded to account for roughly two-thirds of the country's gross domestic product, according to Huang Mengfu, vice chairman of the nation's top political advisory group, the National Committee of the Chinese People's Political Consultative Conference.

Huang told the state-run China Daily in February that private enterprises increased to 4.95 million last year, a 15% rise, and now make up 57% of all enterprises in China. The sector employs 64 million people, Huang said, and is responsible for three-quarters of the jobs in urban areas.

Tellingly, Huang also took pains to calm the fears of high-flying business people who could be brought down by the central government's anti-corruption drive. "The notion of 'original sin' suggests that every single private entrepreneur has a suspicious background," Huang said. "That is unfair."

He was quick to add, however, that those who have breached the law would be punished.

But will Beijing really go after all "original sinners"? Despite Huang's assurances, that seems unlikely.

With the Communist Party's 17th National Congress scheduled to take place this autumn, state media have been told to stress President Hu Jintao's vision of a "harmonious society" and not to report on social divisions and political mistakes of the past. Hu is widely expected to establish himself as China's supreme leader at the congress.

The emphasis on harmony could be good news for China's robber barons.

As with the government's graft-busting drive against public officials, there are simply too many wayward capitalists to catch and too much scandal to reveal. Thus we can expect to see the continued selective prosecution of certain high-profile cases that are intended to appease public resentment while also setting an example of greater probity for business leaders in the future.

In the public realm, last year saw the sacking of Shanghai party secretary Chen Liangyu on corruption charges related to the misuse of 3.45 billion yuan (US$445 million) of the city's pension fund. The nation's chief statistician, Qiu Xiaohua, was also sacked and arrested in connection with the pension-fund scandal.

In another prominent case, Zheng Xiaoyu, former head of the State Food and Drug Administration, was recently detained on suspicion of accepting bribes from Chinese pharmaceutical companies in exchange for approving drug-production licenses.

The private sector has also seen its fair share of big fish reeled in. The Shanghai pension probe snagged former Fuxi Investment 

Continued 1 2 


Is China headed for a social 'red alert'? (Oct 20, '05)

 
 



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