Guanxi: Patron-Client Politics in China
Guanxi is a powerful force in China. In many ways it's the Chinese version of patron-client politics. And since historically politics has controlled so much economic activity, guanxi is also patron-client economics. Transparency makes it difficult to maintain the power of such in-group forces as the following report from Asia Times Online illustrates. The Shanghai Gang is just one of the currently visible facets of guanxi.It is also worth noting that the connections that offered the immunity from prosecution enjoyed by the Shanghai Gang, also offered some freedom for self-determination to high rollers in Shanghai. From one of the early Special Economic Zones to the Pudong New Zone, Shanghai has pursued goals beyond those laid out by economic planners and policy makers in Beijing. The 1989 protests in Tiananmen, which led to the promotion of former Shanghai mayor Jiang Zemin (at right in the photo below), put elements of the Shanghai Gang in charge of China.
What would your students do with this? Look for analogies in other systems: comparisons with camarillas (Mexico) or with prebendalism (Nigeria) or with old school ties (the UK) or with power ministry networks, St. Petersburg connections or with Yeltsin's "family" (Russia) or with Deng Xiaoping's family (China)?
While we're mentioning guanxi in China, how about dynasties in the US: the Kennedys, the Bushes, the Gores, the Chafees, the Dodds, the Tafts, the Byrds, the Longs... (See USA Today's "Members of Congress with family ties".)
Shanghai Gang losing power struggle
"Beijing is waging a whirlwind anti-corruption campaign in Shanghai to shake up the so-called Shanghai Club or Shanghai Gang, headed by former president Jiang Zemin. The group dominated China's political power scene for more than a decade until Jiang began to fade from active political life in late 2002.
"The anti-graft campaign has been launched one year ahead of the all-important 17th Congress of the Chinese Communist Party (CCP) and thus is seen as President Hu Jintao's maneuver to gain full control by eliminating all Jiang's influence...
"Over the past two decades, Shanghai has appeared immune to Beijing's anti-graft campaigns, which have netted senior officials in all other provinces, as if Shanghai were the only 'clean soil' in China.
"And not only did Shanghai officials escape censure, many of them were promoted to key departments in the central government in Beijing. That situation began to change after the CCP's 16th Congress in late 2002, when Jiang finally resigned as the party's general secretary.
"So what was it that allowed all those Shanghai officials to remain so clean in the face of so much temptation in the booming city? Was it because they were all saints, or that the municipality had created a perfect environment to immunize officials against graft-prone temptations? Neither, is the answer.
"As with other parts of mainland China, Shanghai is ruled in the so-called socialistic system with Chinese characteristics under which bureaucrats wield vast power. The evidence points to their using this influence to line their pockets, and the pockets of business associates...
"Quite simply, for many years Shanghai officials had been able to escape scot-free because of the protection given to them by the most powerful man in China - Jiang Zemin. This was especially true after 1989, when Jiang was promoted to CCP general secretary from his post as Shanghai's party chief.
"Under the umbrella of Jiang's administration, corruption scandals involving the Shanghai Gang were swept under the carpet.
"All that has changed. In recent months, the central government has mobilized more than 100 commissioners in Shanghai to rake out the filth..."
The Sunday Times of South Africa has a similar report.
China probes Shanghai scandal
"Chinese President Hu Jintao, secretary general of the ruling Communist Party of China, has urged officials to wipe out what he called 'rampant' corruption in the party.
"The deepening scandal also comes at a critical time in Chinese politics when party leaders are currently engaged in political horse trading ahead of a key party congress in October.
"With Hu expected to consolidate his power at the meeting, Chen's apparent closeness to the case could taint Shanghai politicians, most of who were cultivated under the leadership of Jiang Zemin, the former president.
"'This is a critical stage, (party leaders) are drawing up all types of lists at various levels for endorsement and finally for the 17th party congress,' said Joseph Chen, a political analyst at Hong Kong's City University.
"Since he became president in 2002 Hu has made no attempt to confront Jiang's 'Shanghai gang', but he has slowly strengthened his position through appointments to the central ministries and the military, Chen said."
You can read more about the Pudong New Zone in this profile from the Chinese government's "China in Brief" web site.
Even more information is available at the Pudong New Area web site, and from the web site of Ron Gluckman, an American journalist in an article titled, "21st Century City."
You can read a BBC profile of Jiang Zemin.
There are a couple of wonderful posters in Stefan Landsberger's collection showing how Jiang Zemin connected himself with Deng Xiaoping thus connecting him with the old "second generation" leader.
To read more about guanxi, read "A Bush In Hand Is Worth...A Lot," a 2003 Business Week article about a deal between an American company that "hired a certain Neil Bush... the son of the former President and brother of President George W. Bush," a Taiwan company headed by Winston Wong, son of Taiwan's "most powerful businessman," and a Chinese company headed by Jiang Zemin's son Jiang Mianheng (at right).
Time magazine's feature article, "Thriving in the Middle Kingdom, China's burgeoning middle class holds the key to the future of the country" includes this insight into a downside to guanxi, "But start probing middle-class Chinese and you discover that they, too, harbor resentments and skepticism behind their professed political indifference. Corruption and its euphemistic handmaiden guanxi (connections) have convinced many in the middle class that the playing field is not level, and that merit will only get them so far..."
posted by Ken Wedding @ 7:57 AM
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Speaking of "connections" and resisting controls from Beijing. The San Jose Mercury News reported yesterday on
Mega-projects defy Beijing's control
"FENGZHEN, China - In outlying provinces of China, officials sometimes thumb their noses at edicts from faraway Beijing. If they want a new airport, cement factory or power plant, they call in the bulldozers first and seek approval later.
"That's what happened here in the rolling plains of Inner Mongolia, where local officials ordered up a $365 million power plant two years ago.
"From Day One, the Xinfeng plant had no approval from central government officials in Beijing, but officials here forged ahead anyway. They rounded up investment and began round-the-clock construction, trying to get the 600-megawatt plant up as quickly as possible.
"Across China, local officials are building highways, industrial parks, airports, steel plants and other mega-projects, often to the dismay of authorities in Beijing, who want to slow the country's galloping economic growth, which hit 11.3 percent in the second quarter...
"China is a one-party communist system, but that doesn't necessarily mean that the central government has firm control over the economy. In fact, the center and the provinces tussle constantly over development. As foreign capital pours into the provinces, regional officials call many of the shots on large-scale projects...
"Whether there was a rationale for the project is under debate. Inner Mongolia, which lies near major coal deposits, is known for building power plants without central approval. News reports say the region has more than 10 unauthorized plants with a total of 8,600 megawatts power capacity. Yet the power gets used...
"Song Guoqing, an economist at Peking University's China Center for Economic Research, said... 'This is a high-growth economy...'
"Song said price distortions in China's economy offered huge opportunities for officials to enrich themselves and that bureaucratic spats sometimes hid corruption issues.
"'One explanation is that they didn't give the necessary bribery to the central government. Who knows? That's just one possibility,'' Song said...
"...more than a week after the stop-work order, bulldozers plowed through soil at the Xinfeng plant and hard-hatted welders toiled on the superstructure."
And the results of not having the right connections? Xinhua reported:
Officials penalized for accidents at unauthorized power station
"BEIJING, Aug. 16 -- The Chinese Ministry of Supervision has imposed disciplinary sanctions against Hu'ercha, head of the Inner Mongolia regional development and reform commission, and several other officials for an accident at a construction site of an unauthorized power station that killed six and injured eight others in July last year...
"The construction of the power plant was started in April 2004. It is designed to have two generating units each with a capacity of 300,000 kilowatts and be built at a cost of 2.89 billion yuan, or 366 million U.S. dollars.
"According to a joint investigation by the ministry, the National Development and Reform Commission and seven other central departments, the project was started without following standard procedures in project approval, land acquisition and tendering.
"The probe reveals that the regional and local authorities failed to stop the project from going on even after it was labeled illegal by central authorities...
"The ministry criticized the Inner Mongolia regional government for failing to enforce the central government's macrocontrol policies aimed at slowing down capital investment to prevent the economy from overheating.
"The investigation revealed that unauthorized power stations being built in Inner Mongolia have a combined capacity of 8.6 million kilowatts.
"In related developments, Yang Jing, chairman of north China's Inner Mongolia Autonomous Region, and his two deputies, Yue Fuhong and Zhao Shuanglian, have been ordered to write a letter of self-criticism each to the State Council for failing to stop billions of yuan of investment being poured into unauthorized power stations.
"The decision was made at a Wednesday meeting of the State Council chaired by Chinese Premier Wen Jiabao.
"The trio are the first senior local leaders to be sanctioned by the central government for ignoring its macrocontrol policies."
The Economist in its September 9 issue (pp. 42 and 44) tackles the issue of corruption in Shanghai.
Looting the aged
"A corruption scandal in Shanghai makes political mileage for Hu Jintao
"EVEN if they were well managed, China's social-security funds would find themselves hugely in the red in a few years' time, as a bulge of retired workers start demanding pensions. But recent allegations of massive corruption in the management of Shanghai's fund, involving the illicit use of $400m, reveal just how much officials can worsen the problem.
"For a city that is trying to promote itself as China's sophisticated financial capital, the scandal is a serious blow...
"China's official media have described it as Shanghai's biggest financial scandal in many years. It allegedly involves the misappropriation of one-third of the city's $1.2 billion social-security fund. Since the scandal was uncovered in July, the director of Shanghai's Municipal Labour and Social Security Bureau, Zhu Junyi, and a district government chief, Qin Yu, have been sacked. Mr Qin happens to be a former top aide of the city's party chief, Chen Liangyu, who is also a member of the ruling Politburo...
"Shanghai's case is the latest in a series of big corruption stories reported by the Chinese media in recent weeks... the scandal in Shanghai has aroused particular attention because of widespread public concerns about meagre pensions and unemployment benefits as well as the fast-rising cost of health care..."
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