Chapter Two: Corruption Soars Under Jiang (Part 2)
Using corruption charges to fight against political opponents is a major innovation of Jiang Zemin. The Chen Xitong case mentioned earlier is a typical example, although this doesn’t necessarily mean that Chen was innocent of corruption. The Yuanhua scandal gave Jiang a perfect opportunity. He would attack or protect the implicated officials, depending on their personal ties with him.
One senior Party and state leader involved in a case was Admiral Liu Huaqing, former member of the Politburo Standing Committee and vice chairman of Central Military Commission. Admiral Liu was a strong opponent of Jiang. So, as will be explained in detail below, it should come as no surprise that Liu’s daughter Liu Chaoying and daughter-in-law Zheng Li were both arrested under Yuanhua smuggling charges.
When Deng Xiaoping put Jiang into the position of the General Secretary of the CCP and the chairman of the Central Military Commission, there was concern that Jiang had never served in the military and lacked understanding of military strategy and weaponry. So, Deng had two very senior military officials, Admiral Liu Huaqing and General Zhang Zhen, appointed to be the vice chairman of the CMC, so as to keep a watchful eye on Jiang.
When Jiang Zemin gradually consolidated his power, he began to plant his own people in the military by promoting a number of young officials. He started to get directly involved in military affairs. To express their dissatisfaction with Jiang’s meddling in the military, Admiral Liu Huaqing and General Zhang Zhen repeatedly claimed that the military had to be led by someone who understood the military. It was even said that Liu Huaqing often pointed at Jiang at Politburo meetings and admonished him. Liu felt that he had support from Deng Xiaoping, and took it for granted that he could confront Jiang, who had no experience on the battlefield. He may not have realized that Jiang Zemin was not going to accept criticism, regardless of its merits, and was easily offended.
After the 15th National Congress of the CCP in 1997, Zhang Zhen retired and Deng Xiaoping also passed away. At the same time, Jiang Zemin was expanding his power base in the military. To Jiang, it was the right time to deal with Liu Huaqing. An opportunity to harm Liu arose that Jiang would use.
Although Liu himself was clean, his daughter Liu Chaoying, then a lieutenant colonel and deputy bureau chief of the Intelligence Division under the General Staff Department of the CMC, was involved in a U.S. election campaign contribution scandal.
Liu Chaoying’s immediate boss was Major General Ji Shengde, who held a high post as head of military intelligence for the PLA and was an associate of Lai Changxin, the central figure in the Yuanhua smuggling scandal. But before the Yuanhua scandal became known, Ji had been accused of being the conduit for $300,000 to Liu Chaoying, who offered the money as donations to the 1996 Clinton-Gore reelection campaign. Ji eventually was cleared of the charges against him but was transferred to some nondescript position, most likely because of his involvement in the election scandal.
However, Jiang intensely disliked that Ji had escaped punishment. It was said that Ji had mocked Jiang for never having fired a gun while being the head of the CMC, a humiliation he could not forget. So, Jiang activated the investigation into Ji from the military side to a communist party investigative commission. This time, Ji got caught up in accusations concerning the Yuanhua smuggling scandal. He was tried in October 2000 in a military court but with civilians responsible for prosecuting the case. Ji was the son of CCP senior diplomat Ji Pengfei, who was foreign minister when Nixon visited in 1972, and regarded as a revolutionary hero. Despite his pedigree, General Ji was convicted and sentenced to 15 years’ imprisonment for embezzling 200 million yuan in public funds, according to James Mulvenon, in a 2003 article published by the Hoover Institution. Other sources say he was given the death sentence that was commuted to 20 years jail time. This case shows the tension between corrupt senior PLA officers and the civilian side under Jiang anti-corruption investigators and prosecutors.
Johnny Chung, a Taiwanese American, told the FBI in 1998 that he first met with Liu Chaoying in Hong Kong in June 1996. At the time, Liu was not only a PLA lieutenant colonel, but also a senior manager at China Aerospace International Holdings, Ltd. The company was a large state enterprise that engaged in satellite technology, missile trading, and rocket launch business. Liu was in charge of international trade. Chung admitted that he applied for and obtained the U.S. visa for Liu in July 1996. Later, Liu and Chung purchased a ticket of U.S. $25,000 to attend a fundraising dinner at the White House. That night, Liu met with and took a photo with President Clinton. Liu gave Chung a U.S. $100,000 check as a donation for the Clinton campaign for president.
Liu Chaoying was Liu Huaqing’s youngest daughter. After her arrest, Liu Huaqing could do nothing but personally call Jiang Zemin to ask for leniency. Jiang didn’t say a word and hung up. Zeng Qinghong, Jiang’s right-hand man once told Liu Huaqing: “You oppose President Jiang and we cannot do anything to you. However, we can easily arrest your daughter, wife, and daughter-in-law.” When dealing with the case of Liu Huaqing’s family, Jiang Zemin personally intervened and gave direct orders to the people prosecuting them.
Another case was Cheng Kejie, governor of the Guangxi Autonomous Region.
Cheng was born in Guangxi, and joined the CCP in February 1954, rising to become governor of Guangxi region and vice-chairman of the Standing Committee of the National People’s Congress.
Cheng was found to be involved with Li Ping, his mistress, and was convicted of corruption of over 40 million yuan. In July 2000, Cheng was sentenced to the death penalty for bribery. Cheng immediately went on to appeal the case, and was dismissed by a higher court. In September, 2000, Cheng was executed.
Cheng Kejie was the most senior official to be executed for bribery in the history of communist China. The execution took place within one month and half after the sentence.
In an editorial in the official newspaper on September 21, Cheng Kiejie’s execution was a signal that no one could go above the law no matter how high his official ranking was. The editorial also said, “The sentence of Cheng Kejie shows that the government is walking the walk when fighting against corruption.” It’s worth noting that the amount of money that Cheng looted was only a fraction of what Jiang Zemin’s son Jiang Mianheng received from bribery.
According to sources, the real reason that Cheng Kejie was executed was because he offended Jiang Zemin. Cheng Kejie was known to have shown too much care over the singer Song Zuying, one of Jiang Zemin’s mistresses.
In 1989, Jiang Zemin ascended to the highest official position with little support from within the Party. Deng Xiaoping’s support coming at the time of the crisis at the protests at Tiananmen enabled an unprincipled and conniving character to become party secretary. With the reins of power in his hands, he behaved like a common criminal, corrupting the people around and below him. Eyes were opened to the opportunities to gain at will via corruption. Whomever did not show loyalty could be subject to cruel revenge.
In the absence of moral guidance from the top, the ruling class of the Chinese Communist Party fell into a criminal mentality. Corruption became the adhesive that bonded the ruling bloc together as the old communist ideal of personal sacrifice and patriotism to the nation weakened.
Jiang Zemin brought the Communist Party to a new low state. Within a very short period of time, his corrupt system destroyed the CCP’s cadre system, and brought down the basic ethical standards of the ruling party, and thus undermined the Chinese communists’ legitimacy to lead the country. Conspiring against each other within the party and pursuing personal gain at the expense of the Chinese people, party members were unmotivated to work for the public good.
This deterioration of ethical standards within the Party is Jiang’s legacy. Party members were faced with anomie—a breakdown of morality and affective bonds between members. Thus, a good person, if he were not as bad as members of Jiang’s faction, became powerless to prevent the downward trend of the Party. He would be under pressure from the Party system and people above himself. In Jiang’s world, a good person poses a threat. “I won’t feel safe if you are not bad,” he reportedly said. In a thoroughly corrupt system, every so-called reform policy or measure becomes an opportunity for those in power to grab even more benefits from the general public and improve their positions. This kind of governance was something new for the Chinese Communist Party.
In today’s China, interpersonal relationships are dominated by naked interest. For an individual at the outset of a career, joining the Party and becoming a bureaucrat is usually the most reliable and lucrative path to personal prosperity. For the communist, being resourceful in making personal relationships with superiors and subordinates expands opportunities to enrich oneself. Starting in the 1990s, as the opportunities for illegal gain exploded, the size of the government continued to swell, and the income level of civil servants and bureaucrats grew at a rate significantly higher than positions in the private sector.
Below is a revealing letter written by Xu Qiyao, a mid-level Jiangsu provincial official, to his son. He was later arrested for taking a bribe of 20 million yuan (U.S. $2.9 million). It may seem to the reader rather cynical.
I have received your letter. I am pleased with your performance in college. Continue to do a better job. Since you have chosen your career path to be an official, you will need to bear in mind what I have to say here.
- Do not pursue the truth, do not inquire about the true nature of things.
Let the intellectuals do things such as exploring the truth. Be sure to remember this rule: whatever benefits you is the right thing. Or it can be simplified as this: whatever your superiors advocate is correct.
- Learn to tell lies, and be good at it.
Develop the habit of lying. No, treat lying as your career, and tell the lies to the extent that you yourself also believe them. Prostitutes and officials are the most similar occupations, with the only difference in that an official is selling his mouth. Remember, after becoming an official, your mouth is not just yours. What you can say depends on the needs [of family and allies].
- Get the diploma, but do not really pursue knowledge. Too much learning can be harmful.
With knowledge you will think independently, and independent thinking is taboo in a political career. Despite that many leaders have a master’s or doctor’s degree, they are all fake. Most everyone immediately applies for a civil servant’s position after graduating with a doctor’s degree. The truth must be said that he never wanted to study from the first day, and that he did not learn well or know much. Remember, a real scholar can never become an official.
- What is the purpose of becoming an official? It is for the material benefits.
Do tirelessly grab all kinds of benefits. Someone now calls this corruption. You should not only clearly take it as the purpose of becoming an official to grab all kinds of benefits, but take it as the sole purpose. Your superior promotes you because you can bring him benefits; your subordinates obey you because you can bring them benefits; your friends and colleagues care about you because you can bring them benefits. You don’t have to take your own benefits, but you have to offer benefits to others. Remember, once you are not clear about the purpose of grabbing benefits, you are not far from failing.
- You must put conducting yourself well as your first priority, which is not the same as doing things well.
Don’t misunderstand “conducting yourself and doing things well” as being both virtuous and capable. “Conducting oneself well” here means dealing with interpersonal relations. Doing things, or practical work, doesn’t really matter. Conducting oneself is to put yourself inside a network of interpersonal relations and become part of it. Remember, nowadays the saying that one is capable does not mean that one is able to do things well, but refers to the ability to give the appearance of doing things well. (Emphasis added.)
- No matter how its appearance changes, our society in essence is a peasant society.
The people around us, no matter their appearance, are intrinsically peasants. A typical peasant is short-sighted, paying attention to immediate benefits. So the way you do things must conform to the peasant mentality, and look at near term only. Once you look out to the longer term, you do not belong to this group, and you can imagine the consequences. Learn from the old days and get yourself some sworn brothers.
- Believe that flattering is a high-level art.
Don’t mistake that flattery needs only to be brazen-faced. Many women are shameless but very few can marry well or sell for a good price. Most of them just become nightclub girls. The same is true with flattery. To kiss the ass of your superior is to win his appreciation. In this society, your superior’s appreciation is the only way to promotion. Everything else is just a formality. You cannot ignore this.
- All the laws, regulations, and policies are not necessarily to be strictly abided by.
To be more precise, the implementation can always be flexible. Makers of laws, regulations, and policies aim to constrain others, but not to restrict themselves. But you will have to know that these things are not what anyone can violate. It depends upon the situation as to when to firmly adhere to, and when to secretly violate, or ask someone to violate. Otherwise, being either always strict or lenient is wrong.
All the above are the principles of being an official. Give them careful thought. If you can follow them, you will be successful. If you feel that you cannot live up to them, immediately pick another career.
Whether or not the letter is from Xu’s own hand or even genuine, it may accurately represent the state of morality of China’s government officials from mid-level on up.
Prevalent in today’s Chinese officialdom there is an unspoken “50 percent” rule. As long as the corrupt official can follow the custom of “spitting out half of corruption money and bribing three levels above,” he or she can pull through any political turbulence safe and sound. Ironically, those “stingy guys” and “clean officials” are facing great danger when the anti-corruption campaigns are once again on the march. The “stingy guy” is usually reluctant to bribe his superiors to buy safety. Once he is reported, no one would likely protect him. The “clean officials” are usually ambushed because they make it very difficult for their subordinates to make money, and cut them off from the road to wealth.
In Suzhou City, there was a deputy mayor who was very clean himself. After working as deputy mayor for a few years, his mother was still living in the countryside and was not covered by public health care. When his mother spent more than ten thousand yuan (U.S. $1,450) on medical expenses, the mayor could not afford to pay, and so he had to ask a local township enterprise to pay in advance. Someone reported the mayor, who lost his job and was sentenced to three years.
In December 2011, a Chinese Academy of Social Sciences report titled “Anti-Corruption Blue Book” observed, “The subject of corruption is expanding from isolated individuals to blocs of individuals. The means of corruption is extending from explicit means to more hidden means. The scope of corruption is spreading from areas of economy, politics, and judiciary, to social, cultural, and educational fields; and there has even appeared trans-border ‘export-oriented’ corruption.”
Cynicism regarding ubiquitous corruption can be seen in a comment on the Internet: “Corrupt officials are actually the ones who understand China the best. Despite often shouting anti-corruption slogans, this group of people, who stay in the officialdom and even at a very high level in the hierarchy, have the most in-depth understanding of the root cause of systemic corruption. However, they have come to a realization that the systemic corruption cannot be eliminated even in the short term, much less be fundamentally eliminated at all. Because of this recognition, these people speak aloud against corruption, while at the same time enriching themselves and/or abusing others. So, they never really address the root cause of the corruption.”
As Jiang’s corruption system was formed in a China in transition, the economic reforms naturally acted as a kind of shield and justification for unbridled corruptive practices. During the process of privatization, public power was used by the well-placed few so that the national resources were acquired by officials who oversaw the process of reallocation of the assets. These officials, initially scattered around in various sectors, gradually converged and formed a few interest blocs. In this way, the state resources and wealth accumulated over decades was carved up and fell into the hands of the oligarchs. After the assets were sold off or stolen and certain arrangements made between officials and businessmen, the country could no longer easily restore itself to a more normal state via a new legal and social order, as the moral foundation that guarantees an honest order was undermined by the communists. The party culture took its toll on ordinary Chinese as well; in daily interactions, they became distrustful and calculating.
This corrupt system started from the top level, and went all the way to governments in provinces, cities, and counties, swallowing up public resources at all levels. There were several unique forms.
First, at the top level, the resources were divided into a number of areas, such as media, oil, telecommunications, and electric power. One or several of these areas is underneath a particular Politburo Standing Committee member. Going down, top officials in that area further divide up and grab certain portions of the pie. The process was repeated from the ministry or provincial level all the way to village and township. The system spiderwebbed across the whole nation from the Politburo Standing Vommittee members all the way down, forming gigantic networks connecting officials and businessmen, sucking up the interests of the nation and the people.
Second, although the top guys may not nominally own the national resources, they control the use and allocation of the resources. For example, the major monopoly industries such as oil, telecommunications, and transportation are all under their jurisdiction. Their children and families can own the firms out of the privatization process, or contract businesses with the monopoly sectors. These kinds of informal arrangements were repeated at all levels of government.
In this corrupt system, the national economy was carved up and controlled by special interest groups, while the vast number of Chinese people are left outside it. Those closer to the center of corruption can take more ill-gotten gains.
Peking University Professor Zhang Qianfan said the following:
“The secret of the ‘China model’ is in the combination of the political and economic logic. By inventing measures such as local GDP as officials’ evaluation mechanism, the regime encouraged and condoned the rent-seeking behaviors of the officials. The mobilization of the officials at all levels to engage in ‘reform,’ promote ‘development’ was highly motivated and difficult to stop, and carried [out] with high cost. Everywhere one can see land enclosures and construction project developments, because they formed chains of business that mattered for officials’ promotion and their own pockets. Of course, such projects are usually low quality, wasteful, and polluting, because what they seek is the minimum investment to maximize the output, so as to efficiently convert the public interest into personal interests. These projects and ‘developments’ are simply opportunities to achieve this goal.… Nowadays with so many people engaging in such sabotaging activities, the potential damage is almost boundless.”
Jiang’s corrupt officials used the government to forcibly divide up and appropriate national resources, setting a very bad moral example. In the past two decades, the anomie caused by Jiang’s corruption system has not been confined to the power centers, but has extended into all corners of the government and society. The officials who are entrusted to guard the assets became the thieves themselves! The private business owners and CEOs operate in an environment where the laws and regulations are not applied equally or fairly. China lacks an independent judiciary.
The corrupt system is so entrenched in the governance organization and the fabric of society, it can’t be fixed as long as the Communist Party remains in control. Campaigns to purge the corrupt officials are futile. Jiang used them himself to retaliate against his political enemies.
When the national resources are divided up for the enrichment of the few, there is little room to maneuver for those who want to guard the public interest, like we have in western democracies in which government is accountable to the people. Not only do public officials keep quiet while the pillaging goes on, but any group that shows independence from the state is regarded as threat to stability, and consequently persecuted by the political elite. Civil society groups and individuals, innocent of any wrong doing, such as Falun Gong practitioners, Christians, and human rights lawyers, are targeted by the state.
In order to maintain Jiang’s corruption system and vested interests, Jiang Zemin vowed to, in his words, “eliminate all political instability in the budding state,” which resulted in the distortion of the political system, even by Communist Party standards. Under his reign, the dignity of the law was ruthlessly trampled, unrestricted autocratic power continued to expand, and people’s freedom of press, freedom of speech, freedom of assembly, and freedom of belief were abrogated. Massive national power was brought to bear in order to bring about an immense suppression of freedom.
What does it cost the state in resources to do this?
According to the State Statistical Yearbook, 551.77 billion yuan (U.S. $80 billion) out of the national fiscal expenditure in 2010 was for public security, surpassing the 533.337 billion yuan (U.S. $77 billion) of defense expenditure. Financial Times reported China’s Ministry of Finance announcement of 2011 budget data, in which the public safety (i.e., security) budget was 624 billion yuan (U.S. $90 billion), more than the budget of national defense spending at 602 billion yuan (U.S. $87 billion). The cost for “maintaining stability” was higher than the combined budgets of health care, diplomacy, and finance.
A large portion of China’s twenty years of economic growth was plundered by Jiang’s corrupt ruling bloc.
In May 2007, the 2006 Global Wealth Report issued by the Boston Consulting Group pointed out that 0.4 percent of households in China accounted for 70 percent of national wealth. In Japan, Australia, and other developed countries, usually 5 percent of families control 50–60 percent of the wealth.
China tops the countries in Asia on the percentage of wealth in the country held by millionaires at 40 percent, according to a May 2014 report from the Fung Global Institute. By contrast, South Korea’s millionaires account for 21 percent of wealth in their country and Australia’s number is 19 percent.
According to the 2017 Capgemini Asia-Pacific Wealth Report, by the end of 2016, China had a total of 1.1 million millionaires. An average Chinese millionaire had assets of $5.2 million, higher than regional millionaires’ average of $3.4 million.
A report published by the Chinese government clearly showed who held the majority of the wealth. As of the end of March 2006, 27,310 people in mainland China had private property of more than 50 million yuan (U.S. $7.2 million) and 3,220 people had private property of more than 100 million yuan (U.S. $14.4 million), according to a joint investigation conducted by the Research Office of the State Council, the Research Office of the Central Party School, the Research Office of the Central Propaganda Department, and the Chinese Academy of Social Sciences. Among the highest income with more than 100 million yuan, 2,932 are children of high officials. With total assets of 2,045 billion yuan (U.S. $296.2 billion), they accounted for 91 percent of the people with more than 100 million yuan. The investigation showed that they accumulated their assets mainly due to their family background.
Cheng Xiaonong, a visiting scholar in Princeton University said in an article, “In Western countries, economic growth of 8 percent means high prosperity, while in China, a growth rate of 8 percent may be just the lowest point to avoid a serious recession.” He observed that the low point of Chinese economic growth is much higher than the typical U.S. growth rate. He claims that a 7 percent growth for China is roughly equivalent to 3 percent for U.S. growth. This difference is a salient characteristic of the Chinese economy. Cheng concludes, “China’s macroeconomic equilibrium has been distorted. The economic growth needed to support most Chinese companies’ balance sheet is not 2–3 percent, [typical in] a normal market economy, but 7–8 percent or even higher.”
Understandably, a lot of the 7–8 percent growth is needed to support the costs of corruption.
Jiang Zemin’s corrupt system brought the Chinese Communist Party to a point beyond cure. His regime was different from other communist regimes in that it constantly challenged the morality of Communist Party members by unleashing the devil of corruption. A healthy moral standard is the cornerstone of any society, even a one-party state with a communist ideology. Any political and economic system has to rely on certain basic moral principles if it is to survive and thrive. When morality is constantly challenged and chipped away, the foundation of the social structure will eventually collapse. Massive corruption not only destroys the hopes of the people, but will eventually bury the Chinese Communist system itself.
Chapter 3, The Reality Behind China’s Economic ‘Miracle,’ will be published soon.
To read the Introduction, click here.
To read Chapter 1, Part 1, click here.
To read Chapter 1, Part 2, click here.
To read Chapter 2, Part 1, click here.
 Mulvenon, James. (2003, Spring) To Get Rich Is Unprofessional, Chinese Military Corruption in the Jiang Era. China Leadership Monitor, Hoover Institution. http://media.hoover.org/sites/default/files/documents/clm6_jm.pdf
 Tang, Qing. (2015, June 19) China’s Communist Party Aristocracy Lines Up Behind Xi Jinping. Epoch Times. https://www.theepochtimes.com/uplift/chinas-communist-party-aristocracy-lines-up-behind-xi-jinping_1398499.html
 Fung Global Institute. (2014, May) Managing Asia’s Private Wealth to Serve the Real Sector.http://www.asiaglobalinstitute.hku.hk/en/wp-content/uploads/2015/10/AC-wealthpaper_27_may.pdf
 Capgemini. Asia-Pacific Wealth Report 2017. https://www.worldwealthreport.com/apwr