When Wei Zexi, a 21-year-old college student, decided to place his life in the hands of a doctor from a reputable military hospital in China, he had every reason to be confident.
The doctor had assured Wei’s parents that the treatment was developed with a foreign university, and had a 90 percent cure rate. Your son will live for another 20 years, the doctor promised.
Wei Zexi died on April 12, after six months of useless, and possibly fake, treatment that wiped out the family’s life savings.
The Chinese public was quickly engulfed with rage, given the institutions involved: trusted doctors, a major Chinese official hospital (the Second Hospital of the Beijing Armed Police Corps), and the largest search engine, Baidu, which was found to be peddling the hospital’s ads for quack remedies without any review process.
The Wei Zexi incident also exposed another malignant tumor in China: a little-understood clique of businessmen and officials who somehow managed to take over nearly a third of China’s hospitals during the 1990s and 2000s. The details of this syndicate, called the “Putian Network” in Chinese publications, are only now coming to light.
The syndicate appears to have operated as a vast conspiracy involving hospitals, doctors, regulators, high-level officials, and Baidu, systematically fleecing the Chinese people where they’re most vulnerable: their healthcare.
The Putian Network has a history of marketing fake medicine and treatments, including erectile dysfunction treatments that left men impotent, and experimental cancer therapies that gave false hope before delivering death to an unknown number of victims. The group passed off these experimental cancer treatments as legitimate cures, boasting of their efficacy and charging large fees for them.
With the popularization of the internet in China, the syndicate relied heavily on Baidu, China’s largest search engine. It is privately owned but deeply connected with the Party’s censorship and surveillance apparatus. Baidu was the syndicate’s primary channel for drumming up business, and at one point advertising fees from Putian-controlled hospitals constituted a fifth of Baidu’s revenue. Baidu’s U.S.-listed shares dived after these hospitals initiated an advertising boycott last year.
More chilling is what seems to have been a longstanding, key enabling factor behind the scenes. The Putian syndicate metastasized across China during the 1990s under the rule of Jiang Zemin, the former Chinese Communist Party leader, whose healthcare reform policies fostered arrangements like those of Putian; and the group retained one of Jiang’s most trusted lieutenants, Chen Zhili, as their “high-level consultant.”
From Streets to Scientific Labs
As the late 1980s turned into the early 1990s, China desperately needed a round of fiscal reform, cutting away at the state-owned companies that ate into the public purse but put nothing back. Among the targets of reform was the healthcare system, and expenditures in this area were slashed, with both public and private hospitals cut loose.
In 1989, hospitals were told to support themselves financially, and were allowed to generate revenue through selling medical services. Public hospitals were given priority access to the limited state funding available, but by the late 1990s, state financial support accounted for only 6 percent of public hospital’s total revenue, according to a journal article by Hong Kong scholar Wai-keung Tam.
Scrambling for funds, first private hospitals, and then public ones, started accepting payouts from a shady network of self-taught doctors in the city of Putian in eastern Fujian Province.
The Putian Network, a band of “barefoot” doctors led by founder Chen Deliang, had amassed a fortune in the 1980s through swindling rural folk across China, according to numerous accounts in local Chinese media reports over the years. They sold homemade skin and venereal disease medication of questionable efficacy to villagers, then fled with the payment before angry patients came asking for their money back, according to a recent article on Sina, a popular Chinese web portal.
The group used its financial clout to hijack ailing private hospitals through bribery and fraud.
Because hospital directors were poorly paid, all it took was a sum of 600 to 1,000 yuan (about $90 to $150) to bring them into the Putian fold. And since the Chinese health ministry was selling medical licenses at a market price of 200 yuan, many of Putian’s quack doctors became legitimate physicians overnight, according to Sina.
With proper documentation, the Putian Network slowly infiltrated medical departments in public hospitals. It is illegal for private practitioners to be hired by public hospitals, but the syndicate made it possible by seeing that money exchanged hands. A healthcare industry insider told Sina that with the exception of the People’s Armed Police’s main hospital in Beijing, all other branches had outsourced whole hospital departments to the Putian people.
The success of the Putian syndicate can in part be attributed to the culture of corruption that former Party chief Jiang Zemin allowed to take root in China. Using fiscal means to grease the bureaucratic and societal wheels became almost second nature to Party officials and common citizens. The recent anti-corruption drive is Xi Jinping’s main method for reversing the excesses of the Jiang era.
Meanwhile, the quasi-gang from Putian had moved from the streets to scientific laboratories in hospitals in less than a decade, but they never gave up their money-making scams.
In the 1990s, they sold penicillin, which is an old antibiotic, as new, top grade drugs imported from abroad, and developed a type of machine to perform “minimally invasive surgery.” The “treatment” involved making a slight incision on a patient’s skin and sewing up the wound without actually removing any tumors or other diseases.
In early 2000s, the Putian Network leveraged the regime’s marketization of public hospitals to extend its control over them. They also ventured into plastic surgery, and male and female sexual health treatments.
In a 15-month investigative report, freelance journalist R.W. McMorrow found that over a thousand men across China had been rendered impotent by a “Wolman Prostate Gland Treatment System,” developed by hospitals associated with the syndicate.
“Sham penile surgeries are just one part of a much larger system of poorly regulated and corrupt private healthcare in China,” McMorrow writes. “In other instances of medical malfeasance, physicians at private clinics have bargained with patients during surgery, female patients have been tricked into aborting healthy fetuses, and there have been many documented deaths as a result of physician negligence.”
In 2014, when the syndicate incorporated, becoming the Putian Health Industry Association, the true scope of its grip over healthcare in China was revealed: it controlled at least 8,600 private hospitals, or around a third of China’s total.
It was in 2014 that the college student, Wei Zexi, desperate for an alternative and less expensive cancer treatment, turned to Baidu for ideas, and stumbled across the Putian treatment.
‘Abusive and immoral’
When Wei Zexi was searching online for a remedy for synovial sarcoma, a type of soft tissue cancer, many Chinese hospitals, including the most reputable ones, were already promoting a new, sure-fire cancer cure. State media repeated the claims.
DC-CIK is an experimental immunotherapy regimen involving dendritic cells (DC) and cytokine-induced killer cells (CIK). Blood is extracted from a patient and infused with cytokines, a type of protein, to trigger the growth of dendritic and killer cells. This cocktail is injected back into the body, and, in theory, better helps the human body to identify and fight cancer cells. The problem is that there is no proof that the treatment actually works.
The treatment never made it past the clinical trial stage in the United States. There are presently no DC-CIK trials in the United States, according to ClinicalTrials.gov, a U.S. government database that tracks public and private clinical trials of human participants around the world.
But Chinese hospitals advertised DC-CIK as a cutting edge treatment with a very high cancer remission rate that was “FDA approved” and endorsed by state mouthpiece China Central Television, according to a 2014 investigative report by Southern Weekend, a semi-official Chinese publication based in the city of Guangzhou in south China.
The Second Hospital of the Beijing Armed Police Corps, whose Putian Network-ran biology department offered DC-CIK treatment to Wei Zexi, claimed that it had collaborated with Stanford University. But Stanford told the semi-official Beijing Times that it had at no time collaborated with the Second Hospital.
U.S. medical ethicists say the Chinese hospitals’ practice of charging for clinical trials crosses the moral line.
Charles Rosen, president of the Association of Medical Ethics and Clinical Professor of Orthopedic Surgery and Spine Surgeon at the University of California, Irvine, told Epoch Times in a telephone interview that the Chinese hospitals’ practice is “abusive” and “immoral.”
“As president of the Association of Medical Ethics, if what you are saying is true, then that is unethical because it gives patients false hope about what is proven treatment and not. And it also abuses that trust in patients in order to get more of them to come to the hospital so it can make more money,” Rosen said.
Although there are paid clinical trials in the United States, this practice is “frowned upon since the subjects may not understand that they are in an experiment, and not getting a therapy,” said Arthur Caplan, the head of the Division of Medical Ethics at New York University, in an email.
Monetizing experimental trials was made illegal in China in July 2015, but the Chinese healthcare authorities had for the previous six years permitted the charging of patients for clinical trials.
China’s millions are exposed to the Putian Network’s sham treatments because the group has an almost symbiotic relationship with Baidu, China’s top search engine. Over nine-tenths of Baidu’s revenue comes from advertising, and a significant slice of that advertising income comes from Putian.
With the rise of the internet in the 2000s, the medical syndicate pumped billions of yuan into paid advertising on Baidu to gain maximum publicity. According to Liang Jianyong, the former Party secretary of Putian, the city’s private hospitals paid Baidu about 10 billion yuan (about $1.6 billion) in ad dollars in 2014, or about a fifth of Baidu’s total revenue for the fiscal year. 15 to 25 percent of Baidu’s revenue comes from healthcare and medical advertising, according to a 2014 J.P. Morgan estimate.
Having a plethora of advertising on Baidu works to the Putian Network’s advantage because Baidu doesn’t clearly differentiate between paid and unpaid weblinks. Wei Zexi sought out the Putian-linked Second Hospital of the Beijing Armed Police Corps because the search engine ranked the hospital’s paid cancer treatment advertisement high on its results list.
Baidu’s dependence on the quasi-medical gang became clear in a 2015 dispute. In March, Baidu suppressed advertisements from Putian hospitals on grounds that they were peddling fake medical treatments. These hospitals then boycotted Baidu, causing the search engine’s U.S. listed shares to nose dive about 15 percent.
The Putian hospitals, on the other hand, claimed that the boycott was motivated by Baidu jacking up advertising costs, according to Chinese financial magazine Caixin.
The parties did not let the discord interrupt their partnership for long.
In the Chinese communist regime, businesses in sensitive and lucrative industries are only allowed to gain real scale if they have powerful backers in the the Party leadership. The road to riches in China is paved with bribes and high-level connections, experts say.
“It’s very simple: any major company, if they want to operate without trouble from the government, needs to find a political backer,” according to Cheng Xiaonong, CEO of the Center for Modern China Studies and former aide to Party leader Zhao Ziyang, told Epoch Times in an earlier report.
The Putian medical network enjoys the paragon of a political patron.
The chief advisor of the recently established Putian Health Industry Association—the quasi-gang’s corporate face—is Chen Zhili, a Party cadre who once held the culture, education, and health portfolios on the State Council, the Chinese regime’s equivalent of a cabinet.
A scholar in the Shanghai branch of the Chinese Academy of Sciences in the early 1980s, Chen found herself in charge of Shanghai’s propaganda department and a member of the local municipal standing committee in 1988 when Jiang Zemin was Party boss of Shanghai.
Three years later, Chen made deputy Shanghai chief in 1991, and after the death of paramount leader Deng Xiaoping in 1997, was summoned to Beijing and promoted to education minister by Jiang, who was by then the leader of Party. In 2003, Chen moved up to the State Council, and even served in the plum post of vice chair of the 2008 Beijing Olympics organizing committee.
Chen’s swift move up the ranks—her rise is equivalent to the deputy mayor of New York being plucked to serve in the White House Cabinet within a few years—led to speculation in the overseas Chinese press of an unsavory relationship between Jiang and Chen.
At least, her loyalty to Jiang’s political line is staunch: she played a key role in his signature political campaign, the suppression of Falun Gong, beginning in 1999. Jiang promised to promote officials who aggressively heeded his call to arms, and Chen answered the muster. As education minister, she oversaw an intense campaign of political struggle against the traditional spiritual discipline in China’s schools and universities.
At Chen’s instigation, students at all levels joined in Cultural Revolution-style criticism sessions against Falun Gong. Students who didn’t slander the practice in exams couldn’t graduate; in extreme cases, students were expelled and sent to “reform classes” for forced brainwashing if they expressed their belief in the practice. The same fate awaited academic staff, researchers, and teachers who showed sympathy toward the practice, or who admitted to practicing it.
Chen Zhili was promoted to state councilor in 2003, before moving on to her more prestigious post as a main organizer of the 2008 Beijing Olympics, China’s coming-out party.
The Wei Zexi incident, however, comes at a time when the Putian medical network’s political backer, Chen Zhili, and her own patron, Jiang Zemin, are in a shaky position. Official inquiries are being made into Putian’s involvement in scam treatments, state media says, and probes into malfeasance over the last few years have rarely left officials unscathed.
This is unusual, given the context. Even recently, the Party has taken measures to punish those accused of “medical rabble-rousing.” A 2015 law provides a maximum of 43 months prison time for this “crime.” In 2014, riot police in Hubei Province even held an anti-terror drill against would-be “medical rabble-rousers.” There are also several documented recent cases of medical malfeasance being hushed-up in the media, which prevents public opinion from coalescing around individual incidents.
Yet mainland Chinese media were not prevented from reporting and publicizing the Wei Zexi case. It thus quickly took on the proportions of a national scandal—one that has at its center a business conglomerate with ties to China’s former leader.