Xi Jinping, the man in line to be China's next president, warned
officials on a 2004 anti-graft conference call: "Rein in your spouses,
children, relatives, friends and staff, and vow not to use power for
personal gain."
As Xi climbed the Communist Party ranks, his extended family expanded
their business interests to include minerals, real estate and
mobile-phone equipment, according to public documents compiled by
Bloomberg.
Enlarge image
Xi Jinping, vice president of China, visits the China Shipping
terminal at the Port of Los Angeles in Los Angeles, California, U.S.,
on Thursday, Feb. 16, 2012. Source: Bloomberg
Enlarge image
The Belleview Drive property is viewed along with other residential
buildings in Repulse Bay, Hong Kong. Source: Bloomberg
Enlarge image
The Belleview Drive property, bottom second right, is viewed along
with other residential buildings in Repulse Bay, Hong Kong. Source:
Bloomberg
Enlarge image
The entrance to the Belleview Drive property is seen in Repulse Bay,
Hong Kong. Source: Bloomberg
Enlarge image
A screen grab from the website
www.1921.org.cn shows Xi Zhongxun's
family photograph taken in 2000. Front, from left: daughter Xi
Qianping, wife Qi Xin, grandson Mingzheng, Xi Zhongxun, daughter Qi
Qiaoqiao. Second row, from left: grandson Zannong, son-in-law Wu Long,
daughter Qi An'an, son Xi Jinping, son Xi Yuanping, son-in-law Deng
Jiagui, grandson Dongdong. Source:
www.1921.org.cn via Bloomberg
Enlarge image
Qi Qiaoqiao leads Tsinghua University EMBA students in a drum
performance on Sept 18, 2010. Source: Imaginechina
Enlarge image
Hiu Ng, center, attends the Boao Forum for Asia Conference 2011,
'Young Leaders Roundtable: Charting Growth - Include the Excluded', in
Hainan, China, on April 14, 2011. Source: Imaginechina
Enlarge image
Daniel Foa, founder of 51Sim, right, and Chinese actress Li Bingbing
at the Sustainable Innovation Student Competition in Beijing, China,
on Nov. 2, 2009. Source: Imaginechina
Enlarge image
A screen grab shows the website of New Postcom Equipment Co. Source:
www.newpostcom.com via Bloomberg
Enlarge image
A screen grab shows the website of Hiconics Drive Technology Co.
Source:
www.hiconics.com via Bloomberg
Those interests include investments in companies with total assets of
$376 million; an 18 percent indirect stake in a rare- earths company
with $1.73 billion in assets; and a $20.2 million holding in a
publicly traded technology company. The figures don't account for
liabilities and thus don't reflect the family's net worth.
No assets were traced to Xi, who turns 59 this month; his wife Peng
Liyuan, 49, a famous People's Liberation Army singer; or their
daughter, the documents show. There is no indication Xi intervened to
advance his relatives' business transactions, or of any wrongdoing by
Xi or his extended family.
While the investments are obscured from public view by multiple
holding companies, government restrictions on access to company
documents and in some cases online censorship, they are identified in
thousands of pages of regulatory filings.
The trail also leads to a hillside villa overlooking the South China
Sea in Hong Kong, with an estimated value of $31.5 million. The
doorbell ringer dangles from its wires, and neighbors say the house
has been empty for years. The family owns at least six other Hong Kong
properties with a combined estimated value of $24.1 million.
Standing Committee
Xi has risen through the party over the past three decades, holding
leadership positions in several provinces and joining the ruling
Politburo Standing Committee in 2007. Along the way, he built a
reputation for clean government.
He led an anti-graft campaign in the rich coastal province of
Zhejiang, where he issued the "rein in" warning to officials in 2004,
according to a People's Daily publication. In Shanghai, he was brought
in as party chief after a 3.7 billion- yuan ($582 million) scandal.
A 2009 cable from the U.S. Embassy in Beijing cited an acquaintance of
Xi's saying he wasn't corrupt or driven by money. Xi was "repulsed by
the all-encompassing commercialization of Chinese society, with its
attendant nouveau riche, official corruption, loss of values, dignity,
and self- respect," the cable disclosed by Wikileaks said, citing the
friend. Wikileaks publishes secret government documents online.
A U.S. government spokesman declined to comment on the document.
Carving Economy
Increasing resentment over China's most powerful families carving up
the spoils of economic growth poses a challenge for the Communist
Party. The income gap in urban China has widened more than in any
other country in Asia over the past 20 years, according to the
International Monetary Fund.
"The average Chinese person gets angry when he hears about deals where
people make hundreds of millions, or even billions of dollars, by
trading on political influence," said Barry Naughton, professor of
Chinese economy at the University of California, San Diego, who wasn't
referring to the Xi family specifically.
Scrutiny of officials' wealth is intensifying before a
once-in-a-decade transition of power later this year, when Xi and the
next generation of leaders are set to be promoted. The ouster in March
of Bo Xilai as party chief of China's biggest municipality in an
alleged graft and murder scandal fueled public anger over cronyism and
corruption. It also spurred demands that top officials disclose their
wealth in editorials in two Chinese financial publications and from
microbloggers. Bo's family accumulated at least $136 million in
assets, Bloomberg News reported in April.
Revolutionary Leader
Xi and his siblings are the children of the late Xi Zhongxun, a
revolutionary fighter who helped Mao Zedong win control of China in
1949 with a pledge to end centuries of inequality and abuse of power
for personal gain. That makes them "princelings," scions of top
officials and party figures whose lineages can help them wield
influence in politics and business.
Most of the extended Xi family's assets traced by Bloomberg were owned
by Xi's older sister,Qi Qiaoqiao, 63; her husband Deng Jiagui, 61; and
Qi's daughter Zhang Yannan, 33, according to public records compiled
by Bloomberg.
Deng held an indirect 18 percent stake as recently as June 8 in
Jiangxi Rare Earth & Rare Metals Tungsten Group Corp. Prices of the
minerals used in wind turbines and U.S. smart bombs have surged as
China tightened supply.
Yuanwei Group
Qi and Deng's share of the assets of Shenzhen Yuanwei Investment Co.,
a real-estate and diversified holding company, totaled 1.83 billion
yuan ($288 million), a December 2011 filing shows. Other companies in
the Yuanwei group wholly owned by the couple have combined assets of
at least 539.3 million yuan ($84.8 million).
A 3.17 million-yuan investment by Zhang in Beijing-based Hiconics
Drive Technology Co. (300048) has increased 40-fold since 2009 to
128.4 million yuan ($20.2 million) as of yesterday's close in
Shenzhen.
Deng, reached on his mobile phone, said he was retired. When asked
about his wife, Zhang and their businesses across the country, he
said: "It's not convenient for me to talk to you about this too much."
Attempts to reach Qi and Zhang directly or through their companies by
phone and fax, as well as visits to addresses found on filings, were
unsuccessful.
New Postcom
Another brother-in-law of Xi Jinping, Wu Long, ran a
telecommunications company named New Postcom Equipment Co. The company
was owned as of May 28 by relatives three times removed from Wu -- the
family of his younger brother's wife, according to public documents
and an interview with one of the company's registered owners.
New Postcom won hundreds of millions of yuan in contracts from
state-owned China Mobile Communications Corp., the world's biggest
phone company by number of users, according to analysts at BDA China
Ltd., a Beijing-based consulting firm that advises technology
companies.
Dozens of people contacted over the past two months wouldn't comment
about the Xi family on the record because of the sensitivity of the
issue. Details from Web pages profiling one of Xi Jinping's nieces and
her British husband were deleted after the two people were contacted.
The total assets of companies owned by the Xi family gives the breadth
of their businesses and isn't an indication of profitability. Hong
Kong property values were based on recent transactions involving
comparable homes.
Identity Cards
Bloomberg's accounting included only assets, property and
shareholdings in which there was documentation of ownership by a
family member and an amount could be clearly assigned. Assets were
traced using public and business records, interviews with
acquaintances and Hong Kong and Chinese identity-card numbers.
In cases where family members use different names in mainland China
and in Hong Kong, Bloomberg verified identities by speaking to people
who had met them and through multiple company documents that show the
same names together and shared addresses.
Bloomberg provided a list showing the Xi family's holdings to China's
Foreign Ministry. The government declined to comment.
In October 2000, Xi Zhongxun's family gathered on his 87th birthday
for a photograph at a state guest house in Shenzhen, two years before
the patriarch's death. The southern metropolis bordering Hong Kong is
now one of China's richest, thanks in part to the elder Xi. He
persuaded former leader Deng Xiaoping to pioneer China's experiment
with open markets in what was a fishing village.
Family Photo
In the photo, Xi Zhongxun, dressed in a red sweater and holding a
cane, is seated in an overstuffed armchair. To his left sits daughter
Qi Qiaoqiao. On his right, a young grandson perches on doily-covered
armrests next to the elder Xi's wife, Qi Xin. Lined up behind are
Qiaoqiao's husband, Deng Jiagui; her brothers Xi Yuanping and
presidential heir Xi Jinping; and sister Qi An'an alongside her
husband Wu Long.
Xi Zhongxun worked to imbue his children with the revolutionary
spirit, according to accounts in state media that portray him as a
principled and moral leader. Family members have recounted in
interviews how he dressed them in patched hand-me-downs.
He also made Qiaoqiao turn down her top-choice middle school in
Beijing, which offered her a slot despite her falling half a point
short of the required grade, according to a memorial book about him.
Instead, she attended another school under her mother's family name,
Qi, so classmates wouldn't know her background. Qiaoqiao and her
sister An'an also sometimes use their father's family name, Xi.
Party School
In a speech on March 1 this year before about 2,200 cadres at the
central party school in Beijing where members are trained, Xi Jinping
said that some were joining because they believed it was a ticket to
wealth. "It is more difficult, yet more vital than ever to keep the
party pure," he said, according to a transcript of his speech in an
official magazine.
His daughter, Xi Mingze, has avoided the spotlight. She studies at
Harvard University in Cambridge, Massachusetts, under an assumed name.
Xi's elevation to replace Hu Jintao as China's top leader isn't yet
formalized. He must be picked as the Communist Party's general
secretary in a meeting later this year and then be selected by the
country's legislature as president next March.
Deng Xiaoping
Disgruntlement over how members of the ruling elite translate
political power into personal fortunes has existed since Deng
Xiaoping's economic reforms began three decades ago, when he said some
people could get rich first and help others get wealthy later.
The relatives of other top officials have forged business careers.
Premier Wen Jiabao's son co-founded a private-equity company. The son
of Wen's predecessor, Zhu Rongji, heads a Chinese investment bank.
"What I'm really concerned about is the alliance between the rich and
powerful," said Wan Guanghua, principal economist at the Asian
Development Bank. "It makes corruption and inequality self-reinforcing
and persistent."
Public criticism is mounting against ostentatious displays of wealth
by officials. Microbloggers tracking designer labels sported by cadres
expressed disgust last year at a gold Rolex watch worn by a former
customs minister. They castigated the daughter of former Premier Li
Peng for wearing a pink Emilio Pucci suit to the nation's annual
legislative meeting this March. Some complained that the 12,000 yuan
they said it cost would pay for warm clothes for 200 poor children.
'Unequal Access'
"People are angry because there's unequal access to money- making, and
the rewards that get reaped appear to the populace to be undeserved,"
said Perry Link, a China scholar at the University of California,
Riverside. "There's no question in the Chinese public mind that this
is wrong."
Premier Wen told a meeting of China's State Council on March 26 that
power must be exercised "under the sun" to combat corruption.
While officials in China must report their income and assets to
authorities, as well as personal information about their immediate
family, the disclosures aren't public.
The lack of transparency fuels a belief that the route to wealth
depends on what Chinese call "guanxi," a catch-all word for the
connections considered crucial for doing business in the country. It
helps explain why princelings with no official posts wield influence.
Or, as a Chinese proverb puts it: When a man gets power, even his
chickens and dogs rise to heaven.
'Bigwig Relative'
"If you are a sibling of someone who is very important in China,
automatically people will see you as a potential agent of influence
and will treat you well in the hope of gaining guanxi with the bigwig
relative," said Roderick MacFarquhar, a professor of government at
Harvard who focuses on Chinese elite politics.
The link between political power and wealth isn't unique to China.
Lyndon B. Johnson was so poor starting out in life that he borrowed
$75 to enroll in Southwest Texas State Teachers College in 1927,
according to his presidential library. After almost three decades of
elective office, he and his family had media and real-estate holdings
worth $14 million in 1964, his first full year as president, according
to an August 1964 article in Life Magazine.
Orville Schell, director of the Center on U.S.-China Relations at the
Asia Society in New York, said the nexus of power and wealth can be
found in any country. "But there is no country where this is more true
than China," he said. "There's a huge passive advantage to just being
in one of these family trees."
Unfair to Xi
Yao Jianfu, a retired government researcher who has called for greater
disclosure of assets by leaders, said it wouldn't be right to tie Xi
Jinping to the businesses of his family.
"If other members of the family are independent business
representatives, I think it's unfair to describe it as a family clan
and count it as Xi Jinping's," Yao said in a telephone interview.
The lineage of Xi's siblings hasn't always been an advantage. Xi
Zhongxun, the father, was purged by Mao in 1962. Like many other
princelings, the children were scattered to the countryside during the
Cultural Revolution. The 5-yuan payment Qiaoqiao received for working
in a corps with 500 other youths in Inner Mongolia made her feel rich,
she recalled in an interview on the website of Beijing-based Tsinghua
University.
After Mao's death in 1976, the family was rehabilitated and Xi's
sister Qiaoqiao pursued a career with the military and as a director
with the People's Armed Police. She resigned to care for her father,
who had retired in 1990, Qiaoqiao said in the Tsinghua interview.
Property Purchase
A year later, she bought an apartment in what was then the British
colony of Hong Kong for HK$3 million ($387,000) -- at the time,
equivalent to almost 900 times the average Chinese worker's annual
salary. She still owns the property, in the Pacific Palisades complex
in Braemar Hill on Hong Kong island, land registry records show.
By 1997, Qi and Deng had recorded an investment of 15.3 million yuan
in a company that later became Shenzhen Yuanwei Industries Co., a
holding group, documents show. The assets of that company aren't
publicly available. However, one of its subsidiaries, Shenzhen Yuanwei
Investment, had assets of 1.85 billion yuan ($291 million) at the end
of 2010. It is 99 percent owned by the couple, according to a December
2011 filing by a securities firm.
It was after her father's death in 2002 that Qi said she decided to go
into business, according to the Tsinghua interview. She graduated from
Tsinghua's executive master's degree in business administration
program in 2006 and founded its folk-drumming team. It plays in the
style of Shaanxi province, where Xi Zhongxun was born.
Paper Trail
The names Qi Qiaoqiao, Deng Jiagui or Zhang Yannan appear on the
filings of at least 25 companies over the past two decades in China
and Hong Kong, either as shareholders, directors or legal
representatives -- a term that denotes the person responsible for a
company, such as its chairman.
In some filings, Qi used the name Chai Lin-hing. The alias was linked
to her because of biographical details in a Chinese company document
that match those in two published interviews with Qi Qiaoqiao. Chai
Lin-hing has owned multiple companies and a property in Hong Kong with
Deng Jiagui.
In 2005, Zhang Yannan started appearing on Hong Kong documents, when
Qi and Deng transferred to her 99.98 percent of a property-holding
company that owns one apartment, a unit in the Regent on the Park
development with an estimated value of HK$54 million ($6.96 million).
Repulse Bay Villa
Land registry records show Zhang paid HK$150 million ($19 million) in
2009 for the villa on Belleview Drive in Repulse Bay, one of Hong
Kong's most exclusive neighborhoods. Property prices have since jumped
about 60 percent in the area.
Her Hong Kong identity card number, written on one of the sale
documents, matches that found on the company she owns with her mother
and Deng Jiagui, Special Joy Investments Ltd. All three people share
the same Hong Kong address in a May 12 filing.
Zhang owns four other luxury units in the Convention Plaza Apartments
residential tower with panoramic harbor views adjoining the Grand
Hyatt hotel.
Since its 1997 return by Britain to Chinese rule, Hong Kong has been
governed autonomously, with its own legal and banking systems. About a
third of all purchases of new luxury homes in the territory are by
mainland Chinese buyers, according to Centaline Property Agency Ltd.
In mainland China, Qi and Deng's marquee project is a luxury housing
complex called Guanyuan near Beijing's financial district, boasting
manicured gardens and a gray-brick exterior reminiscent of the city's
historic courtyard homes. Financial details on the developer aren't
available because of restrictions on company searches in Beijing.
Beijing Complex
To finance the development, the couple borrowed from friends and
banks, and aimed to attract officials and executives at state-owned
companies, they told V Marketing China magazine in a 2006 interview.
Property prices in the capital rose 79 percent in the following four
years, government data show.
The site's developer -- 70 percent owned by Qi and Deng's Yuanwei
Investment -- acquired more than 10,000 square meters of land for 95.6
million yuan in 2004 to build Guanyuan, according to the Beijing
Municipal Bureau of Land and Resources.
A 189-square-meter (2,034-square-foot) three-bedroom apartment in
Guanyuan listed online in June for 15 million yuan. One square meter
sells for 79,365 yuan -- more than double China's annual per capita
gross domestic product.
Public anger at soaring housing costs has made real estate an
especially sensitive issue for leaders in China. Property prices were
"far from a reasonable level," Premier Wen said in March.
'Playing Field'
The lack of a level playing field and unaffordable home prices mean
"you can be cut out of the China dream," said Joseph Fewsmith,
director of the Center for the Study of Asia at Boston University, who
focuses on Chinese politics. "Is the rise of China going to last if
you build it around these sorts of unequal opportunities?"
Those with the right connections are able to gain access to assets
that are controlled by the government, according to Bo Zhiyue, a
senior research fellow at the National University of Singapore's East
Asian Institute.
"All they need is to get into the game one small step ahead of the
others and they can make a huge gain," he said. Bo wasn't discussing
the specific investments of Xi's family members.
One of Deng's well-timed acquisitions was in a state-owned company
with investments in rare-earth metals.
Rare Earths
Deng's Shanghai Wangchao Investment Co. bought a 30 percent stake in
Jiangxi Rare Earth for 450 million yuan ($71 million) in 2008,
according to a bond prospectus.
Deng owned 60 percent of Shanghai Wangchao. A copy of Deng's Chinese
identity card found in company registry documents matches one found in
filings of a Yuanwei subsidiary. Yuanwei group-linked executives held
the posts of vice chairman and chief financial officer in Jiangxi Rare
Earth, the filings show.
The investment came as China, which has a near monopoly on production
of the metals, was tightening control over production and exports, a
policy that led to a more than fourfold surge in prices for some rare
earths in 2011.
A woman who answered the phone at Jiangxi Rare Earth's head office in
Nanchang said she was unable to provide financial information because
the company wasn't listed on the stock exchange. She declined to
discuss Shanghai Wangchao's investment, saying it was too sensitive.
Hiconics Drive
Qi Qiaoqiao's daughter Zhang made her 3.17 million-yuan investment in
Hiconics in the three years before the Beijing- based manufacturer of
electronic devices sold shares to the public in 2010. Hiconics founder
Liu Jincheng was in the same executive MBA class as Qi Qiaoqiao,
according to his profile on Tsinghua's website.
Wang Dong, the company's board secretary, didn't respond to faxed
questions or phone calls seeking comment.
The business interests of Qi and Deng may be more extensive still: The
names appear as the legal representative of at least 11 companies in
Beijing and Shenzhen, cities where restrictions on access to filings
make it difficult to determine ownership of companies or asset values.
Dalian Wanda
For example, Deng was the legal representative of a Beijing-based
company that bought a 0.8 percent stake in one of China's biggest
developers, Dalian Wanda Commercial Properties Co., for 30 million
yuan in a 2009 private placement. Dalian Wanda Commercial had sales of
95.3 billion yuan ($15 billion) last year.
Dalian Wanda Commercial "doesn't comment on private transactions," it
said in an e-mailed statement.
Deng also served as legal representative of a company that won a
government contract to help build a 1 billion-yuan ($157 million)
bridge in central China's Hubei province, according to an official
website and corporate records.
Complex ownership structures are common in China, according to Victor
Shih, a professor at Northwestern University in Evanston, Illinois,
who studies the link between finance and politics in the country.
Princelings engage people they trust, often members of their extended
families, to open companies on their behalf that bid for contracts
from state-owned enterprises, said Shih, who wasn't referring
specifically to Xi's family.
New Postcom
In the case of Xi Jinping's brother-in-law, Wu Long, he's identified
as chairman of New Postcom in two reports on the website of the
Guangzhou Development District, one in 2009 and the other a year
later.
New Postcom doesn't provide a list of management on its website.
Searches in Chinese on Baidu Inc.'s search engine using the name "Wu
Long" and "New Postcom" trigger a warning, also in Chinese: "The
search results may not be in accordance with relevant laws,
regulations and policies, and cannot display."
New Postcom is owned by two people named Geng Minhua and Hua Feng,
filings show. Their address in the company documents leads to the
ninth floor of a decades-old concrete tower in Beijing where Geng's
elderly mother lives. Tacked to the wall of her living room was the
mobile-phone number of her daughter.
When contacted by phone June 6, Geng confirmed she owned New Postcom
with her son Hua Feng -- and that her daughter was married to Wu Ming,
Wu Long's younger brother. Geng said Wu Long headed the company and
she wasn't involved in the management.
Different Owners
New Postcom identified two different people -- Hong Ying and Ma
Wenbiao -- as its owners in a six-page, June 27 statement and said the
head of the company was a person named Liu Ran. The company didn't
respond to repeated requests to explain the discrepancies. Wu Long and
his wife, Qi An'an, couldn't be reached for comment.
New Postcom was an upstart company that benefited from state
contracts. It specialized in the government-mandated home- grown 3G
mobile-phone standard deployed by China Mobile. In 2007, it won a
share of a tender to supply handsets, beating out more established
competitors such as Motorola Inc., according to BDA China.
"They were an unknown that suddenly appeared," said Duncan Clark,
chairman of BDA. "People were expecting Motorola to get a big part of
that device contract, and then a no-name company just appeared at the
top of the list."
In 2007, the domestic mobile standard was still being developed, and
many of the bigger players were sitting on the sidelines, allowing New
Postcom a bigger share of the market, the company said in the
statement.
Xi Yuanping
William Moss, the Beijing-based spokesman of the Motorola Mobility
unit that was split off from Motorola last year and purchased by
Google Inc. (GOOG), declined to comment on details of any individual
bids. China Mobile "has always insisted on the principle of open,
fair, just and credible bidding" to select vendors, company spokesman
Zhang Xuan said by e-mail.
Xi Jinping's younger brother, Xi Yuanping, is the founding chairman of
an energy advisory body called the International Energy Conservation
Environmental Protection Association. He doesn't play an active role
in the organization, according to an employee who declined to be
identified.
One of Xi's nieces has a higher profile. Hiu Ng, the daughter of Qi
An'an and Wu Long, and her husband Daniel Foa, 35, last year were
listed as speakers at a networking symposium in the Maldives on
sustainable tourism with the likes of the U.K. billionaire Richard
Branson and the actress Daryl Hannah.
Hudson Clean Energy
Ng recently began working with Hudson Clean Energy Partners LP, which
manages a fund of more than $1 billion in the U.S., to help identify
investments in China.
Details about the couple were removed from Internet profiles after
Bloomberg reporters contacted them. Foa said by phone he couldn't
comment about FairKlima Capital, a clean- energy fund they set up in
2007. Ng didn't respond to e-mails asking for an interview.
The two are no longer mentioned on the FairKlima website. A June 3
cache of the "Contact Us" webpage includes short biographies of Ng and
Foa under the headline "Senior Management Team."
A reference on Ng's LinkedIn profile that said on June 8 that she
worked at New Postcom has since been removed, along with her
designation as "Vice Chair Hudson Clean Energy Partners China."
Neil Auerbach, the Teaneck, New Jersey-based private-equity firm's
founder, said he was working with Ng because of her longstanding
passion for sustainability.
"We are aware of her political connections, but her focus is on
sustainable investing, and that's the purpose," he said in a June 13
interview. "We're delighted to be working with her."
To contact Bloomberg News staff for this story: Michael Forsythe in
Beijing at
mforsythe@bloomberg.net; Shai Oster in Hong Kong at
soster@bloomberg.net; Natasha Khan in Hong Kong at
nkhan51@bloomberg.net; Dune Lawrence in New York at
dlawrence6@bloomberg.net
To contact the editors responsible for this story: Amanda Bennett at
abennett6@bloomberg.net; Peter Hirschberg at
phirschberg@bloomberg.net; Ben Richardson at
brichardson8@bloomberg.net
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