Cronyism with Chinese Characteristics

30 November 2010


The princelings now prefer investment deals over revolutionary fervor.

It is as true now as it ever was — and perhaps more true today — that it is not what you know, but who you know. Access and availability, influence and intimacy, are the currency of politics today as they were the currency of politics since the establishment of the first states in the late neolithic period. As much as we have a right to be outraged over corruption and cronyism in the developed industrialized nation-states, it is much worse elsewhere in the world.

No self-identifying communist regime, despite the rhetoric of expropriating the expropriators and enfranchising the proletariat, ever escaped the brute political fact of entrenched wealth and personal influence. It is true that one class of persons was often dispossessed of their wealth and influence so that it could be handed over to another class of persons, but an elite by any other name is still an elite. Call them the nomenklatura or the Red Directors or the princelings — it is all the same. Every state in the history of world, regardless of its ideology, has had a privileged elite.

Two stories are relevant here. When Mao was in control of China, he was called the Red Emperor, and, despite precipitating the Cultural Revolution, he was widely admired for his traditional calligraphic skills, and even the beauty of his descriptions of the Long March were admired. To get a feeling for how communist regimes can both appeal to traditional culture while claiming to destroy traditional socio-economic arrangements, I strongly encourage the reader to watch the film Indochine, in which the female lead is called “The Red Princess.” Even the communists have their royalty, which brings us to Stalin. There is a story that when Stalin visited his mother he told her that he was the General Secretary of the Communist Party. He asked her if she knew what that meant. She said she did not, to which Stalin is said to have responded, “It is a lot like being the Tsar.”

And this discussion of hypocritical influence and affluence, obviously, brings us to the princelings. Recently, the Financial Times devoted an entire page to reporting on the activities and influence of the children of the upper echelons of the CPC: “The courting of China’s powerful princelings.” The “princelings” in question are the descendants of the founders of the PRC. Because of their family connections, they have guanxi” (关系), which the FT defines as, “the concept of personal relationships and reciprocal favours that underpin all deals.” The Wikipedia article helpfully elaborates: “Closely related concepts include that of gǎnqíng (感情), a measure which reflects the depth of feeling within an interpersonal relationship, rénqíng (人情), the moral obligation to maintain the relationship, and the idea of “face”, meaning social status, propriety, prestige, or more realistically a combination of all three.” (I also recommend the discussion of these forms of “harmony” at Chinesehour Blog.)

The Financial Times’ story on the princelings, while acknowledging, “the popular resentment that can be directed towards the children of serving officials who use their parents’ positions to get ahead,” makes the influence of the CPC’s Red Royalty sound unexceptional, and almost uninteresting. It is emphasized that they mostly keep a low profile. But a much more colorful and detailed characterization of their activities can be found in one of the diplomatic cables recently made public on Wikileaks.

In a cable of 10 January 2010 from the Consulate in Shenyang, identified as 10SHENYANG5, and classified as “SECRET,” we find this illuminating discussion:

“XXXXXXXXXXXX also reported that the children of high-ranking DPRK and Chinese officials hijack deals and aid projects for their own aggrandizement.”

I notice that the diplomat in question has not given this the forgiving treatment of the Financial Times, that couches the activities of princelings in terms of charitable work and low profile living, but in terms of “aggrandizement.” I am sure that this does not go unnoticed in the PRC and DPRK. And later in more detail in the same cable:

“According to XXXXXXXXXXXX, the children of high-ranking North Korean and Chinese officials hijack the most favorable investment and aid deals for their own enrichment. When the child of a high-ranking official hears of a Chinese aid proposal to North Korea, he will travel to North Korea to convince the relevant official to follow his instructions for implementing the aid project. He will then use his connections to request proposals from Chinese companies to develop the project, returning to North Korea to convince the relevant official to select the favored company. At each step, money changes hands, and the well-connected Chinese go-between pockets a tidy sum. For the offspring of officials in the DPRK, there are also ample opportunities to work in China. In a typical situation, a DPRK official will alert another official to an opportunity for the second official’s child to work in China for a DPRK-Chinese joint venture. After signing a contract, according to XXXXXXXXXXXX it is a cheap, easy process to obtain the necessary permit from the Chinese provincial Bureau of Labor and Social Security.”

It seems that even impoverished and immiserated North Korea has its Red Royalty. But the most interesting insight in the cable (and one not connected to the princelings) is this statement:

“XXXXXXXXXXXX has seen a number of similarities between the DPRK and China since his first visit in 1998. He compared the impact of the famine on North Koreans to the impact the Great Leap Forward (GLF) had on Chinese in the countryside. Both incidents forced individuals to lose faith in the government’s ability to provide a basic standard of living and created a sharp instinct for self-preservation. He also sees similarities between the GLF and current plans in the DPRK to become a strong country by 2012.”

With the name redacted it is difficult to tell whether the source of the intelligence was a US source or a Chinese or North Korean source, but the reference to a “first visit” in 1998 suggests a US source, perhaps of Chinese or Korean ancestry, who has returned to their ethnic origins for purposes of business (perhaps even a source under non-official cover). Given the degree of understanding and insight of the intelligence, one suspects that the source speaks Chinese or Korean as a first language, and was probably raised in a Chinese or Korean cultural context, i.e., within an ethnically homogeneous community in the US.

In any case, this observation is both interesting and odd. I hope to return to the oddness in the future if I can locate some related sources that I read in the past (and have since lost track of) what can shed some light on this. Even though the release of these diplomatic cables has given us an incredible window onto a world usually closed to the public, we cannot fully understand them without understanding the intellectual context in which they are written, and the implicit references contained within them. Most of us cannot reconstruct enough of this context to get the full meaning, though I strongly suspect that someone with regional expertise could do so without much difficulty. So, for the moment, I will pass over the oddness, and consider only the interest.

What might this “sharp instinct for self-preservation” recently discovered among the North Koreans portend for the future? And consider this in the context of the other diplomatic cable that has received much more attention, that Chinese officials have frankly discussed the unification of Korea under ROK leadership: self-preservation along with the removal, for all practical purposes, of North Korea’s only powerful sponsor, and the outlook for the current leadership of North Korea, its Red Royalty, is not good. If any of this is to be taken seriously, one would look for the Chinese princelings involved in North Korea to look beyond the immediate regime and be studying their options for profit in a unified Korea, cutting out the North Korean princelings in the process: they now seem to be lame ducks.

The cronyism, or, if you prefer, nepotism, of the CPC’s corrupt network of influence that runs the country is not unlike client-patron networks throughout history. It is important not to mistake client-patron networks for simply tyranny. While a client-patron network is not democratic, it is a reciprocal relationship in which the officially disenfranchised members of society have a voice through their patrons. Patrons become more influential the more effective they are seen to be in securing favors for their clients. Happy clients make happy patrons, and vice versa. The system can obviously degrade into something tyrannical and unhappy for all, as it did in the later Roman Empire, but under favorable conditions it can serve the interests of a society effectively.

Only time can tell for sure whether the princelings will evolve into effective patrons for extensive client networks, or whether, as is the tradition of privileged elites, they will dissipate themselves to the point of scandal and the loss of influence. History demonstrates that both examples are to be expected. The question, then, is whether the better part of them will be effective or will exhaust their resources (including their soft power resources) through dissipation. And here, I think, we can invoke Chinese traditions of fealty, family honor, and social harmony to make an educated guess that the better part of the princelings will be effective patrons. This was also implied by the Financial Times article, though not in this language.

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2 Responses to “Cronyism with Chinese Characteristics”

  1. YT said

    Re: “It is not what you know, but who you know.”

    Well, ain’t it always? Regardless of ethnic or cultural background.

    • geopolicraticus said

      Yes, and that is why I began by saying, “It is as true now as it ever was.” And I think that it bears repeating in the interest of honesty. Those who have benefited from who they know often attempt to conceal the source of their “success,” and the popular press usually goes along with this.

      Best wishes,


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