Connections The Currency For New Rich
The Age
Monday March 31, 2008
China's ostentatious and often shameless wealthy are reviled as much as they are envied.
"ONE thing about me is that I'm not afraid of displaying my wealth," says one of China's newly rich businessmen in China Candid, an unrivalled collection of oral histories by Chinese Australian journalist and historian Sang Ye. "Just take a look at this house of mine. It's over 300 square metres; all of that for just three of us. And we have two cars, a sedan as well as an SUV." In one sense, descriptors such as new rich or self-made or rags-to-riches are redundant in a country that had no serious private wealth 30 years ago. The ranks of China's US-dollar billionaires swelled from 14 in 2006 to 106 last October, according to the Hurun rich list. There was only one billionaire when the list was first compiled in 1999. And getting rich can be a brutal stampede in which the winners take all and never look back. There is little in the way of charity or civil service to leaven the inequities. Modern China is a place of cognac, Bentley cars, hostess bars and a couple of hundred million people living on less than $US2 ($A2.18) a day. It is not hard to see why China's ostentatious and often shameless new rich are reviled as much as they are envied by their countrymen. Many Chinese see wealth as simply the newest manifestation of political power: a currency that is bought, stolen or inherited through guanxi (connections) with the governing elite. Zang Xiaowei, a sociologist at the City University of Hong Kong, argues that public derision of those who succeed in the national game of getting rich has more to do with how the money was earned than how it is spent. The public believes that such individual private fortunes started through a process of primitive capital accumulation during the 1980s and 1990s based on smuggling, bribery, speculation, tax evasion, theft of state assets and illegal business deals, he writes in The New Rich in China: Future Rulers, Present Lives, edited by Professor David Goodman at the University of Technology, Sydney. Zang asks how can the new rich be held in high esteem if their money is considered by the public to be dirty and venally acquired. The first entrepreneurs in the early 1980s had low social status because they lived on the margins of society. They were often ex-convicts who had no official connections and could not get respectable jobs in state-owned enterprise. But those who came later were reviled for the opposite reason: they held prestigious jobs in government agencies or state-owned enterprises, and were seen to improperly exploit them. The first wave of the well-connected new breed arrived with the Government's dual-track pricing system in 1985, says Zang. Managers of state-owned enterprises pocketed government subsidies and sold surplus production on the private market at inflated prices. Their business activities were colloquially referred to as official racketeering: the unscrupulous combination of speculation and political power, writes Zang. A greater source of wealth arrived from the late 1980s: private real estate. Developers had two main requirements, land and bank loans, and both were allocated by officials. The 12 largest real estate developers in Guangdong Province are all reported to be children of high-ranking officials, writes Zang. In Shanghai, these princelings control nine of the top 10 real-estate development companies and 13 of the 15 largest building companies.Public sensitivity about the private exploitation of state land is particularly acute because much of the land was appropriated from peasants without adequate compensation. A third source of private wealth was management buy-outs of state-owned companies in the late 1990s. State-owned companies could be sold cheaply because they were losing money, and they were making losses because they had many redundant worker on their books. Zang describes how managers bought the companies at discount prices, fired excess workers and quickly made huge profits. Businessmen in other industries complain about an endless array of red tape and official approvals that can only be cleared by bribes or connections. It's impossible to get rich in China without official connections, a successful Beijing night club owner said. Still, popular resentment of the wealthy is hard to square with the public obsession with getting rich. If you ask a Chinese person how they are going they will often tell you whether or not they are making money. In Beijing, it is socially acceptable to ask new acquaintances or prospective marriage partners how much they earn and whether or not they have a house or a car. Chinese people wish each other prosperity at Chinese New Year. Many pray for their own prosperity at Buddhist temples. Perhaps, as Zang writes, Chinese attitudes to the rich are mellowing because the zero-sum game of ripping off public assets is coming to an end. Leaders such as President Hu Jintao would hope that class tensions are easing because the country's wealth is beginning to trickle down to peasants and migrant labourers, who have no political connections to exploit. It is also likely that China is not so different from Australia, where public ridicule of the wealthy co-exists with private admiration and aspiration.
© 2008 The Age