Inside Story

How Xi’s crackdown became a backlash

The Chinese president is finally meeting resistance, not least among disgruntled officials

Richard McGregor 1 October 2019 2653 words

Chinese president Xi Jinping at a dinner in the Great Hall of the People yesterday marking the seventieth anniversary of the founding of the People’s Republic of China. Andy Wong/AP Photo

Senior Chinese leaders of all stripes have long talked a big game on anti-corruption. Until Xi Jinping, however, no one had followed through. His anti-corruption campaign was audacious and risky on many levels. He didn’t just take down millions of local officials who, until the moment they were detained, lived lives of power and privilege and in many cases enjoyed wealth wildly out of step with their public service positions. He took on hundreds of senior officials in the elite nomenklatura as well. All of them, from the top to the bottom of the system, were in effect power centres in their own right — in the capital, provinces, cities and villages, and in state industries and private corporate empires. Each official anchored the wealth of multiple families and loyalists. In other words, in cracking down on corruption, Xi might have won popular support but he also earned himself a bucketload of bitter enemies, all itching for revenge.

Superficially, Xi’s campaign had little in common with the other great upheavals of Chinese politics since 1949. But the Anti-Rightist Movement, the Great Leap Forward, the Cultural Revolution and the mass purge that followed the 1989 military suppression of pro-democracy demonstrators were also in one way or another a product of top-level power struggles that resulted in individual leaders deciding that they needed to shake up the party. Those campaigns all left scars in the system, which decades later still linger, largely unresolved. There is no reason to think the impact of Xi’s campaign will be any different.

In the decade before Xi came to power, corruption in China worked almost like a transaction tax that greased the wheels of commerce and business. Many senior officials turned a blind eye to the problem, either because they were corrupt themselves or because they saw the kickbacks as a way to spread the system’s benefits and give poorly paid officials a greater stake in the government. “For who else can the regime depend upon for support but the great masses of middle-level cadres?” says the narrator in the mid-1990s book Wrath of Heaven, a sensational roman à clef about the then Beijing mayor. “If they are not given some advantages, why should they dedicate themselves to the regime?” Corruption, the book’s narrator concludes, “makes our political system more stable.”

By the time Xi arrived, corruption, far from making the system more stable, was threatening to hollow out the Chinese state as it had done in Suharto’s Indonesia and numerous African nations. Failing to fight graft, Xi said, could lead to “the collapse of the party and the downfall of the state.” Legal scholars had long complained about the Central Commission for Discipline Inspection’s extrajudicial powers, according to which officials can be detained for months and subject to endless interrogations without access to a lawyer. But Xi had little tolerance for such complaints. On the contrary, the executive power wielded by the commission offered just the weapon that Xi needed to shake up the party. The party newspapers described the system’s fearsome qualities with approval, as a kind of net that covered the sky, “an eye that can see thousands of miles and an ear that hears everything the wind blows its way.”

Controversial long before Xi came to power, the commission sits above the courts, the police and the law. That is why, when officials are toppled, the wrongdoings listed in the official media often include offences that are not crimes of themselves, such as leading a debauched lifestyle and taking on mistresses. “Party discipline,” as the collection of rules governing cadres’ behaviour is called, is stricter than the law, and officials are in theory held to higher standards than mere members of the public.

For Xi and his advisers, the anti-corruption campaign had multiple uses. It acted as a kind of magic weapon that, all at once, could stop the cancer of graft from spreading and hollowing out the bureaucracy and the military, as well as keep cadres loyal to Xi and help manage the economy. Other leaders might have failed to use the body’s powers. An anxious Xi was not about to make that mistake himself. Not only did he make full use of the existing system, he also extended it.

In early 2018, the National People’s Congress created a new super agency, the National Supervision Commission, which took in the operations of the party’s anti-corruption body. The same powers that the existing body employed to manage senior party members were now to be applied to all civil servants, whether they were senior party members or not. As outlined by Chinese vice-president Wang Qishan, the party needed to tighten control over all aspects of public life, which meant strengthening supervision over “all public servants who exercise public power.” In other words, the commission’s fearsome extrajudicial powers would effectively become the legal standard for large swathes of the working bureaucracy.

As a politically supervised body, the commission has naturally always been open to political manipulation. Jiang Zemin, for example, had the Beijing mayor, Chen Xitong, a political rival, arrested for corruption in 1995. Likewise, Hu Jintao’s biggest scalp in his decade in office was the Shanghai party secretary, Chen Liangyu, who had defied the Beijing leadership over economic policy, and who was dismissed in 2006. In both cases, the Chens (no relation) were easily pinned for corruption, expelled from the party, tried and convicted in the courts, and then jailed. But their crimes were as much due to losing internal power struggles with the central government as breaking any law.

Xi and Wang had specific targets in their campaign: the top rungs of the military, the oil industry (or the “petroleum gang,” as the power clique is known) and the finance sector, along with some provinces, especially Shaanxi, a coal industry hub. Some sectors were targeted because of their association with big fish like Zhou Yongkang, who, before he took over as China’s state security tsar, held sway atop the energy sector. Others were caught up as investigators probed vulnerable cadres and followed the family and money that trailed behind them.

A number of the targets appeared blatantly political. Sun Zhengcai, party secretary of the city-province of Chongqing, was abruptly removed from office in July 2017. It was just months ahead of the party and national people’s congresses, which would both confirm Xi for a second term in office and dispense with any time limits on his ever stepping down. Before he was toppled, Sun was considered a potential rival to Xi. In an instant, he was gone. The following year, in 2018, he was sentenced to life imprisonment. By and large, it is hard to make the case that the prime purpose of Xi’s anti-corruption campaign was to remove his political enemies. But Sun’s detention was a reminder that, when necessary, rivals could be targeted as well. It also reinforced a lesson that most officials had already taken on board, that Xi would not allow any competition at the top of the party.

In the military, for example, the anti-corruption campaign was aligned with Xi’s larger aim, to make senior party members “red and professional” (politically reliable and competent) and clean, or at least cleaner. Two of the senior generals removed, Xu Caihou and Zhang Yang, were reported, among other things, to have been selling commissions. The problem of senior military officers, and government officials, selling promotions to underlings has long been acknowledged as corrosive to the notions of meritocracy that the party prides itself on, let alone military capabilities.

The anti-corruption campaign was also a tool of economic management. The boom spawned by the huge stimulus that Beijing engineered to lift the economy out of its slump during the global financial crisis in 2008 had a number of effects beyond resuscitating output. Local officials became addicted to big-spending infrastructure projects, which helped them meet growth targets and allowed them and their cronies to pocket huge windfall profits along the way. But they also left a mountain of debt that the state, in one form or another, would have to clean up. In recent years, Beijing’s technocrats have tried to push policies that encourage consumption and pull the economy off the old mainstays of investment and infrastructure. China wants to cut debt, not create more. In that respect, the anti-corruption campaign was a lever of fiscal policy as well. If local officials felt able to ignore central diktats in the Hu Jintao era, they were much more circumspect with Xi’s anti-corruption brigade breathing down their necks.

Xi and Wang vowed to go after both “tigers and flies,” which is to say, officials of all ranks, no matter how big or small. The phrase “tigers and flies,” heavily publicised by the Chinese media at the outset of the campaign in January 2013, has its origins in a campaign against financial corruption in Shanghai in 1948, a year before the founding of the People’s Republic of China.

The so-called “tiger-beating teams” under the then Nationalist/Kuomintang leader Chiang Kaishek targeted speculators and hoarders, including the criminal gangs that held sway over the port city. The name came from their chant: “We beat tigers; we do not swat flies.” Xi and Wang, however, targeted both categories.

Outwardly, Xi is a leader is a figure of rectitude, with no known vices apart from once being a smoker. He has also reportedly issued the standard warnings that Chinese leaders deliver about ensuring officials’ families don’t benefit from his power. “Rein in your spouses, children, relatives, friends, and staff, and vow not to use power for personal gain,” he told officials during a 2004 conference call, according to one report. It was advice that Xi’s own family clearly did not heed.

In June 2012, Bloomberg published an extensively documented account of the wealth accumulated by Xi’s close relatives, notably his sister and brother-in-law. In 2014, the New York Times published a report related to the same topic, this time detailing how Xi’s family had begun unloading hundreds of millions of dollars of their investments. This remarkable story was anchored by an on-the-record confirmation from a Hong Kong–based Chinese financier, Xiao Jianhua, who had bought some of the assets. He said Xi’s sister and her husband were selling their stakes “for the family.” Xiao knew a great deal about senior Chinese leaders’ financial affairs, maybe too much. In January 2017, he was abducted from his apartment at the Four Seasons, overlooking Hong Kong harbour, and transported back to China. He has not been heard from since.

Members of Xi’s family, however, have never been detained by the authorities. Neither have members of former Chinese prime minister Wen Jiabao’s family. Wen’s family wealth was detailed in an earlier New York Times report, in late 2012. His wife and son had long been the subject of complaints about their business dealings, including during Wen’s ten years in power as premier under Hu Jintao. In the early years of the Xi administration, rumours circulated that members of the Wen family were under investigation, but no action was ever taken against them. In retrospect, the speculation looked like a ploy to keep Wen in a box, an unsubtle reminder that if the former premier spoke up against Xi or opposed his policies, he and his family could be taken down for their business dealings.

To get a full measure of the anti-corruption campaign and why it will be felt in Chinese politics for years to come, it is important to count not just the 400-odd senior officials and military officers felled directly. In each of those cases, the investigation doesn’t just hit the individual official who has been targeted and detained. Literally hundreds of people who are tied into and rely on that single person for their livelihood are effectively swept up with them. The elite patronage networks include direct and distant family members, and clusters of people working alongside and under them, in state companies, in party and government offices, in ministries and the military.

In many cases, the networks also include the scores of people who profit from the official’s financial dealings through the investment vehicles that are spun out of and sustained by their ill-gotten wealth. Pull down one person and you destroy hundreds if not thousands of people along with them. Their livelihoods, and all that they have invested in clawing their way through the system, can evaporate with the stroke of a pen. Some members of the patronage networks are often arrested themselves.

Hundreds of thousands of powerful and privileged members of China’s elite have had their careers, status, and in many cases their wealth, taken from them almost overnight. Xi has made enemies of them all. “Xi has destroyed millions of people in the elite who now all hold a personal grudge against him,” said a China-based business figure, who asked not to be named. “These people are not a bunch of uneducated peasants from the sticks in Henan. They had skin in the game.”

In its initial stages, the intensity of the anti-corruption campaign was often explained away by Xi supporters. They described it as something of a one-off house-cleaning exercise that, once completed, would lay the ground for further reforms advancing the rule of law. This explanation was in line with many early views that Xi was, in Chinese political terms, “turning left so that he could turn right.” In other words, he was shoring up the conservative base of the party, the “left” in China, before shifting to the “right,” or pushing for more market-based, liberal reforms.

In fact, Xi did the opposite. With the establishment of the new National Supervision Commission in 2018, he extended the extrajudicial reach of the party with the result that he also alienated large slabs of the intelligentsia. His decision infuriated the country’s legal scholars, who had worked valiantly for years, not always with success, to advance the rule of law and build an independent court system. In August 2017, a group of fifty-nine Chinese lawyers and legal scholars issued a joint letter to the National People’s Congress saying that the rule of law “faced a crisis.” Anyone under investigation who had rights under the criminal law, they said, would find those same rights extinguished under the new supervision commission. The misuse of power, they added, was inevitable.

Such complaints had little impact. With Xi bearing down upon them, the priority for officials was not to question his leadership but to implement his policy. In 2017, when the new rules were being gradually rolled out in select areas, provinces began competing to implement Xi’s edict. In Zhejiang, a wealthy coastal province, the leaders of the local anti-corruption commission announced that their remit now extended to more than 700,000 civil servants, an increase of 83 per cent. In Hainan, the number of people subject to the new strictures jumped more than tenfold. Some scholars defended the new commission, depicting it as the inevitable product of the party absorbing the state. Deng had been “misunderstood” on the need to separate the party and state, said one scholar. “We should insist on the party’s core leadership in coordinating everything,” said Zhang Rongcheng, of the Central Party School.

Xi himself quoted one of China’s most famous philosophers, Han Fei, the patron saint of the “legalist” school of philosophy over two millennia ago. “When those who uphold the law are strong, the law is strong; when those who uphold the law are weak, the law is weak.” Put another way, the ruler sits above the law and commands it as an instrument of power. For Xi, it was the essence of legal reform. For many under him, it was the opposite. •

This is an edited extract from Xi Jinping: The Backlash, a Lowy Institute Paper published by Penguin.