90% of China's billionaires are kids of high-ranking officials

http://chinesepolitics.blogspot.com/2009/07/interesting-article-on-princeling.html

by cwan • 17 years ago

57 46 17 years ago

chinesepolitics.blogspot.com

cwan2• 17 years ago

The news is from 2006, but it's a reminder following a recent scandal and but it's also a reminder of the difficulties outsiders (both inside and outside of the country) face in trying to become successful in China.

rbanffy2• 17 years ago

This is the unavoidable consequence of China's political/economic system. It's not surprising at all.

What makes me worry is that the Chinese government has a far larger influence on Chinese companies than most other countries and that makes economic reliance on China a very dangerous move.

It also makes people used to totalitarian regimes to the point of making them tolerable. They shouldn't be. Chinese people deserve better.

jbarciauskas• 17 years ago

I don't think it's unavoidable, but centralization will tend to have these sorts of effects without other controls and institutional checks, yes.

One could imagine a benevolant, meritocratic oligarchy, in which the hiring and promotion process had a strong process of only advancing those up the chain who had demonstrated a certain level of competence, e.g., many successful large engineering organizations.

garply4• 17 years ago

'Chinese people deserve better.'

Really, what business is this of yours? I feel like Westerners are always looking down their noses at the Chinese political situation but people don't seem to take into account China's historical context. China IS getting better (and rather rapidly). Less than 100 years ago, China still had an Emperor. With that in mind, how many centuries has Western democracy had to mature?

My personal belief is that democracy develops very gradually, sometimes punctuated by sharp periods of rapid change (e.g., revolutions, foreign colonization).

rbanffy2• 17 years ago

"Really, what business is this of yours?"

Every human being deserves better, Chinese or not. We are all on the same boat after all.

And yes. China is making some progress, but, still, it has a long way to go. Switching from an imperial totalitarian state to a communist one (also an unavoidable consequence of the past couple thousand years of Chinese history) makes for not that much of a change after all. At least not much when you consider the human condition.

And it is my business as it shifts the "Overton window" towards a position more on the totalitarian end of the spectrum. While recognizing China made a lot of progress in the past century (making up for the couple thousand years before) it is still unacceptable. Mind you my children will have to live in a world where a totalitarian state ruled with iron fist by a political aristocracy is a major commercial partner of just about every other country. And this arrangement may start putting ideas into some minds that would be better if left empty.

At least for me it's not acceptable.

netsp• 17 years ago

I understand your frustration, but.

China worries a lot of people because of the force they are becoming, culturally, militarily politically. I think people associate 'democracy' with all sorts of things that are not directly derivative, but the general idea is reasonable.

China does not have even the pretence of many institutions that are considered essential by many westerners. Democracy is one. Rule of law is another one that is usually lumped together (incorrectly, in my opinion) with democracy. A certain form of system neutrality is an important new world institution.

Another institution or value doesn't seem to have the right word. Libertarianism would be close but it carries far to much excess baggage, mostly US-specific. Basically, the idea that states should limit their involvement in certain areas.

People are worried that China's ascent means that 'rule of law' (or at least, a certain interpretation of this) is optional in the 21st century.

olihb• 17 years ago

As many things in life, often it's not what you know but who you know.

And I guess that if you know the big cheese, it's easier to get all the permits, gov. contracts and financing.

jacquesm7• 17 years ago

I don't see anything different in this respect in China than I do in many western societies. Having a leg up is definitely a pre, anywhere. It may differ in degree but certainly not in principle.

rdouble4• 17 years ago

In which western countries are 90% of the billionaires children of government officials?

jacquesm7• 17 years ago

errm... I said 'degree' didn't I ?

I meant that in any society the number of people that will make it big that have connections will outnumber those that do not.

It's very hard to 'make it on your own', in any society and China is (unsurprisingly) no exception.

News would have been 90% of Chinese billionaires (or millionaires or some other metric) had no family or other connection to power.

On another note, there are only 9 Chinese billionaires in all (10 if you count HK); see http://www.forbes.com/lists/2007/10/07billionaires_The-World...

joe_the_user• 17 years ago

One interesting thing about the article is pointed to a specific, one-way path. Sons of high government official became wealthy entrepreneurs. They didn't and apparently couldn't become high government officials themselves. Their offspring perhaps also cannot become high official. Moroever, they will eventually have to compete with the sons of new high officials, since the high officials themselves are apparently drawn from all over.

An interesting trend and perhaps more interesting than just the simple concentration of power - though power often likes to concentrate.

jacquesm7• 17 years ago

To all those that feel the need to mod this down if you do not agree with me then feel free to write why you don't agree.

Do you think that having a leg up is somehow detrimental to your progress ? Is it a coincidence that people with connections (or party affiliations) have an easier time of amassing wealth in China ? Is that same coincidence at work when the son of a politician makes a fortune or becomes a politician himself in a western society ?

psranga• 17 years ago

This is impedence mismatch between you and the community.

Your readings and experiences have caused you to form some opinions about how the world works (i.e., connections are very important), but most people here think that connections don't matter as much as you think.

I'm not that surprised that people here think that way since most of us here hope to make something brilliant and rock the world (and thereby make tons of money).

My two cents: In mature industries (e.g., telecom, entertainment, construction, banking, automobiles, healthcare, pharma) connections are almost the only thing that matters (both in China and in the US), but in dynamic sectors such as computers connections are much less important.

DanielBMarkham3• 17 years ago

I didn't mod you down, but I read you plea for critiques and am happy to give you one.

"Getting a leg up" is a broad phrase that could mean anything from knowing people at the local country club to paying off government officials for special treatment.

In western societies, the idea is that governments change on a regular basis. This prevents, in theory, high-ranking government officials from getting into bed on a permanent basis with companies. Note that corruption doesn't magically go away: what probably happens is that you trade off one set of crooks for another. But -- and this is a very important but -- it changes.

Some types of getting a leg up are certainly fine. Some aren't. It's a really important distinction to make, because it lets some systems flex and adapt and leaves others incapable of it.

jacquesm7• 17 years ago

I think the common element is that the people around you are the key to your lot in life. In western societies that is being born into some money or knowing people that have some, in China it means the party.

Neither of those are a guarantee, but statistically speaking you'd expect people with connections or with parents in high places to do better than those without.

Rags-to-riches stories exist, but for every pauper that 'made it' there are hundreds if not thousands or more that don't stand a chance.

In a fair society everybody has equal chances at birth, but such a society does not exist (or at least I'm not aware of one). China is 'unfair' because it apparently gives the children of the party bosses extreme advantages, the west is unfair because if your parents have money you're likely to leverage that.

Oh, and I absolutely agree that this is the kind of 'leg up' that should be illegal, it's cronyism pure and simple. But then again, so is the 'Bush dynasty'. Or is there a gene for politics ?

jhancock• 17 years ago

In practice, I'm not sure that Chinese "incumbency rates" are too different from U.S. http://en.wikipedia.org/wiki/Congressional_stagnation_in_the...

China has had major shifts in power about ever 10 to 20 years for the last 4 years. I don't think the U.S. is doing much better.

vaksel2• 17 years ago

That's because its harder to bribe people in China compared to the USA. There you need to do a shady deal and pay a ton of money, so family gets the inside track.

In the USA, all it takes is a 100K at election time, and its completely legal.

garply4• 17 years ago

I can't imagine that it's harder to bribe people in China than in the USA. In fact, I think much, much more bribery per capita happens in China than in the US. The Chinese legal system is very weak.

vaksel2• 17 years ago

not harder per se, but there its done as a backroom deal. In USA, we just call it lobbying and campaign contributions.

newy• 17 years ago

"Guanxi" is a huge factor in dealings involving the Chinese government, and even in day to day Chinese business. One difference between the Chinese and American system of connections and favors may be that Chinese put a heavy emphasis on family relations, which doesn't seem overly prevalent here. Well, save for certain notable exceptions.

On another note, the problem of "guanxi" extends to the microlending arena. China's lending capital for microloans is small, and even then, the funds are generally directed to those with connections to the government. I'm working with a nonprofit called Wokai (http://www.wokai.org), and we're working to raise loan capital from people around the world for microloans to Chinese farmers. We operate pretty similarly to Kiva, except that due to Chinese regulations we can't return money to lenders - therefore, we solicit contributions that turn into perpetual loan capital.

baguasquirrel2• 17 years ago

I don't think outsiders grasp how much of an impact the emphasis on "guanxi" and family relations has on everyday life in China. On one hand, you can see this as 90% of Chinese billionaires are the kids of high ranking officials.

Bot on the other hand, you can see this as 90% of Chinese kids of high ranking officials are expected to marry someone who is successful/will make them look good. Anyone who's dated an Chinese girl whose parents are relatively successful (especially if they are East Asian themselves) will probably tell you a thing or two about having to measure up to standards.

In Chinese society, people use their relationships to leverage life (and by extension, business and politics) to the full. Thus, it's not acceptable to marry below you because if you do, you may be forced to hire the relatives of your lowly mate. It is shameful if your family is not doing well, and it is shameful if your close relatives don't have a job. This is the cost of sticking together, having strong friendship and family bonds-- you do not want any relationships that are too one-sided or unsustainable.

While modernization has weakened this system nontrivially, it does feel that it is still the norm, and we have reason to believe it will continue (at least to a greater extent than here in the West). The reason is that China has too many people, too many mouths to feed. China produces many more engineering students than does the US. But most of them aren't hireable. There's a reason why we're still "better".

Finding the right talent in China is even more formidable than it is here, and it always has been, thanks to the fact that China has 3x more people per acre of arable land than the average country (cited from Stratfor but I can't find the link).

Now I'm not saying that the system is fair or even efficient compared to the Western system, but using the family to extend one's goals is a byproduct of Chinese society.

I would argue there is some wisdom in what they do. Here in the West, our HR departments often prefer to hire people who are referrals. There's an implicit understanding that good workers like to hang out with other people who are good workers. In this light, the Chinese are merely extending that wisdom beyond the workplace.

bwd• 17 years ago

There may be some wisdom, but not a whole lot. Hiring on referrals is based on the idea that people will not refer idiots to you for fear of depleting their social capital, providing you with a fairly strong selection mechanism for talented candidates. Being forced to hire the relatives of your mate regardless of their skills does not strike me as very beneficial.

0_o• 17 years ago

The link is blocked by GFW, I think, I can not open it here in China.

garply4• 17 years ago

All of blogspot is blocked by the firewall, and has been for some time.

cwan2• 17 years ago

This is what I use while I'm in China: http://www.witopia.net/welcome.php - Highly recommended given how much China is blocking these days. On other US/European sites that aren't blocked, I often find it is faster on the VPN than it is direct as well. Because I'm generally in Canada I can now also access Hulu.

sown• 17 years ago

Executive Summary: "Hi, I'm George. My dad works in the whitehouse. Let me show you around."

pegobry• 17 years ago

What's even more "interesting" is the exception to that rule, Huang Gyangyu, up until recently the richest man in China, its "Sam Walton", who was arrested and is still being held for "insider trading", when arresting someone in China for insider trading is sort of like a character on The Sopranos getting arrested for saying fuck. With no formal education or family ties to speak of, he started his business at 16. Of China's billionaires, Wang was the only one who was 1- a Christian and 2- not a member of the Communist Party. And now he's in prison.

90% of China's billionaires are kids of high-ranking officials

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