A Chinese 'kiss-and-tell'

Red Roulette: An Insider's Story of Wealth, Power, Corruption and Vengeance in Today's China

Author: Desmond Shum

Publisher: Simon & Schuster

Pages:320

Price: Rs 699

This is a racy, jagged narrative, of China’s political elite through the noughties and the sleaze that surrounds them. Known as the “red aristocracy” — indolent families of the revolutionary immortals of 1949 — they manoeuvre to retain their cocoon of privilege, simultaneously profiting from the globalising forces of private enterprise unleashed by Deng Xiaoping’s 1979 reforms and reinforced in 1992 to counter the residual reactionary forces responsible for the 1989 Tiananmen massacre.

Desmond Shum, the author, and Whitney Duan are from ordinary Chinese families but yearn to do “big things” in and for China. Mr Shum elects to return from the US and work in Hong Kong. Ms Duan escapes the confines of government service —promoting investment into Shandong province — takes her Rolodex with her, and floats her own firm, Great Ocean, with $1 million invested by a friendly state company.

They meet in Beijing in 2002, where Mr Shum, a rookie business executive, is shopping for investment opportunities. It’s a perfect match with both looking to become “rich and glorious”, doing meaningful work at the same time. They succeed spectacularly, raking in more than $2 billion within a decade.

Ms Duan’s skill is in ingratiateing herself and becoming “close” to powerful people, thereby substituting for the guanxi —  connections within the Communist Party system — that neither she nor Mr Shum inherited. 

Mr Shum provides back-office support, at ease with project management and international business networks rather than the machinations of Chinese business or politics. 

Mr Shum is at pains to distinguish, achievers-from-nowhere, like themselves, from the entitled families of “red aristocrats” who lust only for rentier income — stakes in “safe” state regulated monopolies, gains from misusing public assets or acquiring licences. Mr Shum and Ms Duan build real projects — air cargo terminals and city infrastructure — that add to growth and jobs.

Zhang Beili, a “commoner” and a geologist, from poverty-ridden Gansu province, built her guanxi by marrying Wen Jiabao, another “commoner” and mid-level party worker. Thereafter, she manages his non-controversial career, which culminates in his becoming Premier in 2003. Ms Duan relates to the couple’s struggles and success, and values access to their guanxi. She acquires Auntie Zhang as a key mentor, “surrogate mother” and business partner with a 30 per cent stake, which was orally agreed. Her association— apparently without her husband’s consent — helpfully conveys the implicit blessings of the Premier during negotiations with prospective clients and government entities and extends Auntie Zhang’s husband’s implicit “protection” to an obliging official as an ally.

Access to the party’s inner circle brings rich returns. A $1,000 tab for lunch or $100,000 for an aged Moutai becomes routine, as does $200,000 for an exclusive Beijing number plate for Ms Duan’s Rolls. Travel by private jet becomes the norm. Dropping $100 million for a pleasure yacht is doable. From 2009, Mr Shum senses subtle signs of a reassertion of state controls over private enterprise. He suggests to Ms Duan, who controls the money, that they diversify their assets overseas. Unfamiliar with the outside world, comfortable in the protection of her guanxi  and fearful of her centrality under changed circumstances, she refuses.   

Nemesis strikes in 2012. Xi Jinping, due to become the General Secretary of the Party, unleashes a massive anti-corruption campaign. A Standing Committee member and over one million officials are investigated, roiling the harmony of the party system, with a predictable backlash. Bloomberg reports the concealed wealth of the Xi family. The New York Times reports the accumulated wealth of Premier Wen Jiabao’s family at $3 billion.  The embattled party battens down to preserve “face”, rubbishing the reports as attacks by the US on the party leadership to weaken China.

Tied to the Wens by the code of trust — yiqi — Ms Duan agrees to protect Auntie Zhang by acknowledging ownership over shares worth $100 million, traced to Wen Jiabao’s mother, a retired schoolteacher. Other “red families” implicated in corruption buy their freedom by donating their wealth to the party. The partnership with Ms Duan ends and shuts down her networks.

With the business broken, the bond between Mr Shum and Ms Duan withers. He moves out taking their son to the UK. They divorce in 2015. In 2017, Ms Duan suddenly disappears — per the party’s norm for those fallen from grace. No one cares.

This tale is a conditional paean to the Chinese Party system, which is capable of great dynamism — courtesy the synergy across party, government and business — versus a discordant democracy. But seemingly stable, single-party systems are also prone to capture by a winner-takes-all new elite.  Ms Duan learns the hard way, suffering irreversible collateral damage. Is it better to lose all that you have won or never to win at all? You choose, dear reader.