The Party: The Secret World of China's Communist Rulers

by Richard Mcgregor

  Many officials have been arrested for taking bribes in return for approving business deals. Of equal concern for the Party, and the organization department, is what is known in the US as ‘pay-for-play’, the thriving trade in official jobs themselves. The positions with the most monetary value are those of party secretary and the head of the organization department, because they ultimately decide who gets which government post. The trade in jobs makes a mockery of the organization department’s mission to find and promote virtuous and competent officials. It means that the department, which shadows the government, has become shadowed itself by an elaborate, underground black market in the very jobs it is meant to control. There are many documented instances of ‘buying and selling official posts’, as the phenomenon is called in China, none as blatant and far-reaching as the Ma De case, in Heilongjiang province.

  Conventional bribery cases usually involve public officials seeking cash in return for favours. The way Ma De and his wife tell the story, he began taking bribes for the opposite reason, because so many people had pressed them on him, without him ever suggesting they needed anything in return. When Ma first took over as one of the vice-mayors of Mudanjiang city, in the far north-east of the country, near the Russian border, his wife said that he sometimes dared not turn on the lights when he returned home, tired out, at the end of the working day. ‘Once the lights were on,’ she said, ‘those gift-bearers would queue up outside.’

  At the beginning of his stint in the city in 1988, Ma and his wife would not open the door to visitors bearing gifts. Later, they were chastised about their behaviour by a colleague. ‘So you don’t eat earthly things or what?’ Ma’s wife said they were asked. ‘If you do not accept the things which are brought to your doorstep, those people will think that you do not trust them. Are you pushing them into the arms of the other people? See how other people eat, drink and take massages. If you are going to become a lone commander, how can you do your work? If you do not accept the gifts, Ma De’s regime will not be stable.’

  The belief that you cannot be successful without being corrupt is commonplace enough to have been the theme of a best-selling novel in 2007, called Director of the Beijing Representative Office. The book, part of a series about the Beijing-based lobbyist for an unnamed city government in north-eastern China, pits a clean official against a corrupt one at a time when they are competing for the vice-mayor’s job in a run-off in the local people’s congress. The work’s author gave the tome an extra level of credibility. It was written by Wang Xiaofang, who served as the political secretary to the vice-mayor of Shenyang, an industrial centre also in the north-east, at a time when the city government was infiltrated by the mafia in the late 1990s.

  The Shenyang vice-mayor took millions of dollars in bribes during this period and also collected huge wads of cash from subordinates, who would compete to give him gifts at Chinese festivals to ingratiate themselves with him. He was caught when the Party’s anti-graft body was cracking down on officials gambling in the former Portuguese enclave of Macau, adjacent to Hong Kong. The vice-mayor was filmed in the high-rollers rooms, where he is estimated to have lost rmb 40 million over a few short months. He was eventually executed in 2001. The Shenyang mayor, who received a suspended death sentence for corruption in the same scandal, died soon after of cancer.

  In Wang’s novel, the first official, Li Weimin, is an upright and principled cadre who cares deeply about the community he is serving. Parachuted into the municipal government, he bristles with integrity and makes sure his family members do not exploit his position for personal gain. Far from endearing himself to his colleagues, Li’s austere lifestyle infuriates them. Drivers and secretaries do not like working for him, because they toil for long hours with no extra benefits thrown in. His colleagues feel embarrassed by his decision to stay living in an old residential building instead of moving into the gleaming new official compound where they are housed, rightly sensing that he has made them look bad in front of ordinary people. And he spurns sumptuous government banquets, opting instead for a simple meal at his desk, forcing his colleagues to follow suit. His behaviour, the narrator says, makes him seem ‘an unreasonable man who has no sympathies for his colleagues’.

  Li’s fictional rival could not be more different. A gambler and a womanizer with connections in the business community and the underworld, Xiao Chaoxuan runs rings around Li in the competition for the post of vice-mayor. While Li abides by the official rules banning campaigning for such elections, remaining aloof from the contest, Xiao operates like a real machine politician, visiting members of the local people’s congress personally, proffering promises and gifts. Xiao gains the enthusiastic support of former colleagues, who have all benefited financially from working with him in the past. ‘Working for Xiao is considered desirable and pleasant, as he likes to share the proceeds of his job,’ the narrator of the book says. Not surprisingly, Xiao wins the election–in which the only voters are other officials–hands down.

  Wang, the novel’s author, worked in the vice-mayoral office in Shenyang for about five years until his boss was arrested. He spent the next three years in the city government with no real work to do, other than to assist the Party and police in the subsequent corruption investigation. ‘I screamed at my boss until I was red in the face at one point about his gambling trips,’ he said. Wang’s experience in government left him deeply disillusioned. ‘The last thirty years have been great on one level. The economy has advanced, but culture, society and politics have not,’ he said. ‘In essence, it is the same old system. People just go up level by level. In the west, a politician might be elected for just a few years. In China, they have a lifelong career. We are stuck with them for life.’

  Wang displays an affectation still common in China, a finely manicured, half-inch-long nail on his little finger, a traditional symbol that once distinguished the scholar from the manual labourer. In his case, it also seems to symbolize his plea that writers and artists be given the respect that society now offers only to officials. Wang is not holding his breath. He compares the elevated position of officials in China to the deference encapsulated by an old saying from the former Soviet Union: ‘Let comrade Lenin go first!’ If a writer, an artist and an official were seated next to each other, ‘then everyone will defer to the official,’ Wang says. ‘Power-worship has become a national religion in China.’ The system of supervision of officials, through the organization department and then the internal elections in the local people’s congress for the mayoral positions, was largely a farce. ‘It is like the granddad supervising his son who then supervises his own son,’ he said. ‘Changing the political system is like asking a warrior to cut off his own arm to stop further bleeding, even when there is a risk he will lose his life.’

  The bribery, corruption, treachery and sheer desperate self-interest that characterizes pay-to-play in China was detailed with dripping sarcasm in remarkably frank internal documents written by the organization department in Jilin, another province in the north-eastern rust-belt. The documents depict the competition for promotions as the ‘four running races’, which all conspire to subvert the department’s own in-house rules to professionalize the process. In ‘sprints’, officials opportunistically grab chances at the moment of leadership reshuffles to intensively lobby superiors for promotion. In the ‘long-distance’ races, they ‘suck up to leaders through all means, and make emotional investments, like providing hospitality, gifts and helping to solve the problems’ of their bosses. The ‘relay’ race requires drumming up ‘multi-layered recommendations from relatives, friends, classmates and people from the same local area’ to get close to leaders. In the ‘hurdles’, officials go over the heads of their immediate bosses, often using retired cadres to put pressure on the organization department on their behalf.

  Ma De himself was initially unpopular in Mudanjiang, and was forced out of the vice-mayor’s job after losing a vote at the people’s congress, much like the fictional character Li had
been in the Director of the Beijing Representative Office.. Ma learnt his lesson in the process. As he was to confess under interrogation after his arrest, he secured the biggest job of his career about a decade later, in 2000, as party secretary of Suihua, in Heilongjiang, after paying a one-off bribe of over $100,000 to the head of the organization department in the province. Ma had honed his craft well by that time. Rather than crudely thrusting the money into the official’s hands in the office, where it might have been rejected, he handed the first tranche to the organization chief in hospital, where she was recuperating from an operation. That way, the money was as much a gift symbolizing his sympathy for her illness as simply a crass bribe.

  When he arrived in Suihua, Ma De performed to a tee the rituals required of party leaders across the country. In October 2000 he gathered municipal officials together to watch a documentary film about a corrupt official from Jiangxi, Cautionary Lessons from the Hu Changqing Case,, distributed by the anti-graft bureau. (Hu, convicted in the late nineties of taking 5 million in bribes, was the first provincial-level leader to be executed since the fifties. Many more have been executed since.) Ma delivered a speech after the film, telling cadres to ‘reflect profoundly…and strictly adhere to the party regulations and the laws of the country’. Ma also made a fetish, in public, of running a transparent and credible appointments system, with all the modern trimmings recommended by the Central Organization Department in Beijing. The numerical benchmarking system, soliciting the opinion of the public on cadres before promotions and open votes within the Standing Committee–all were offered up by Ma as essential for a true ‘responsibility system’ in Suihua. ‘I will never trade power for my private interests and money,’ he said in a speech to the party committee. ‘We must form a good esprit de corps [in the committee], of daring to speak the truth, and weeding outbad tendencies, such as base flattery, behind-the-scenes networkingand fraud.’

  With his purchase of the job, Ma had in fact bought directly into the heart of a long-established, corrupt system, in which all the ills he had been railing against were well entrenched. ‘Three inches of ice do not form from the cold of a single day,’ said Shao Daosheng, a corruption expert at the Beijing party school, in a commentary on the case. The system of selling official posts in the region had begun years earlier under Tian Fengshan, who by 2000 had ascended into the central government in Beijing, as Minister for Land and Resources. All Ma would do was refine the operation, turning it into a complete, all-encompassing system. By the time Ma and scores of others were detained in 2002, prosecutors said that about 265 officials–or about half of all the nomenklatura-level bureaucrats appointed by the local organization department under Suihua’s administration–had either bought or sold positions, trading them as if they were companies on the share market. The Ma family bank account, set up by his son in Beijing, accumulated rmb 20 million in just three years.

  At the lower levels of government in Suihua, there were ‘dozens of little Ma Des’ feeding at the appointments’ trough. They included an official called Li Gang, who paid rmb 300,000 for the job of party secretary of a small county in Suihua, with a population of 330,000. Li Gang’s mostly rural county was poor and getting poorer. Thousands of students could not afford to go to school in the area; tens of thousands of unemployed workers, laid off from bankrupt state enterprises, were milling around the streets, in search of jobs; and about 3,500 households needed welfare funds to stay afloat. In the two years before Li Gang was arrested, the county’s economy contracted, and tax revenues fell by nearly 30 per cent. By collecting money for official appointments during the same period, Li Gang emerged from the recession a rich man. The anti-graft investigators, when totting up his bribes later, would marvel at the successful investment he had made through the purchase of his position. ‘Li Gang paid 300,000, but within two years, netted in 5 million. The return is 1,500 per cent. Is there any other profession as profitable as this under heaven?’ an investigator said.

  Ma De himself owed his life after his arrest to his bitter rival, the mayor of Suihua, Wang Shenyi, who was ranked number two in the Party in the county. Ma and Wang disliked each other intensely. ‘Ma De is cold and rough; he’d bite off meat in huge chunks and gulp down alcohol,’ said one person who knew both men. ‘Wang is delicate, not unlike a woman. Even the money in his wallet is stacked neatly like in the bank.’ The two established a modus vivendi for part of the time, dividing the city in half for a major project to refurbish the main urban centre’s sidewalks with tiles. They then used easily issued administrative orders to extract fees from businesses and residents who worked and lived along the road, a policy that was billed as the ‘unified planning of municipal infrastructure buildings’. Ultimately, they were each other’s saviours when they were arrested for corruption in 2002, as both agreed to inform on the other. In Ma’s case, according to his lawyer, his full confession meant he received a suspended death penalty rather than being executed.

  In detention, a philosophical Ma claimed the appointments system–and the absolute power it placed in the hands of the party bosses–contained in-built incentives for corruption. ‘In practice, in any local region, the party secretary is the representative of the Party and the organization department,’ he said, ‘and as the secretary, has the final say on personnel matters.’ The system which fast-tracks promising officials has the same effect, because the Party is basically announcing in public that everyone else will not rise any further. ‘Those who are left out concentrate on making money. And those who are on the fast-track–once they bump into a leader who’s into money, they would not hesitate to pay up in order to rise up as early as possible.’

  Without changing the system, it didn’t matter who was party secretary, the result would be the same. To test his theory, Ma said, the anti-graft body should conduct an experiment by sending a clean-skin from within their ranks to a local region as party secretary, and leave him or her to their own devices for one year. In the absence of outside controls, Ma said, that person would quickly be taking more money than he himself had ever done.

  In the Ma De case, the foundation of the appointments system was corroded by a vast web of corruption. In recent years, the organization department has discovered that legitimate government businesses can be just as lethal in undermining the Party’s grip. For any official one rung below the nomenklatura level, the battle to secure the next promotion, into the elite ranks of the Party, was once a career-defining moment. It is at this point of an official’s career that one goes from being a mere cadre to being part of the ruling elite, and under the direct control of the organization department. In China’s single-party state, it is the equivalent, in the west, of a budding politician finally winning elective office after years of working the electorate.

  For officials rising through the ranks of state enterprises, a different calculus emerged in the early years of this century. When the state-owned companies sold shares overseas, their executives received stock options. The share market boom that followed suddenly landed many of these executives with a dilemma that none of their predecessors had faced. Do you wait for a promotion into the nomenklatura? In other words, do you decide to become a fully fledged politician, with all the scrutiny and pressure that entails, with little legitimate financial return? Or do you cash in the shares which are legally yours and remain a business executive? Not surprisingly, many in China decided to take the legal cash on offer in their executive jobs. A few years previously, the question would not have arisen, as until the late nineties leading executives at state enterprises would never have had options to exercise.

  Beijing changed tack when it began to push its large state enterprises on to overseas stock markets. With so much riding on the success of the share offerings, it was then that Beijing decided to send a clear message to the market by giving its own executives stock options in the same way that private companies in the west did. That way, they could assert that Chinese executives had the same incentives as western inve
stors to increase profits and lift share prices. In theory, options directly link remuneration to a company’s performance by allowing executives to buy stock at a pre-set price, and then to sell it at a profit later if the share price rises above the buy-in level. The message went down a treat in offshore markets, mainly because Beijing left out an important backstage rider–that the options were never meant to be exercised at all. Rather than a tool to create executive incentives, the Chinese options were a calculated ruse to ensure that the state got the highest price possible from selling the shares offshore. The options were held in the name of the executives, but were supposed to stay the property of the state. ‘At the time, the government did not think too much about what might happen in the future,’ said Li Liming, a journalist from the Economic Observer. ‘They just wanted to solve the problem at the time.’

  At first, not all the Chinese executives learned their lines properly about the options that had been granted to them. A foreign investment banker recalled taking a client from Shanghai Industrial to see Fidelity, the global funds manager, when the city-government-owned firm was issuing new shares in Hong Kong. The Shanghai Industrial shares had listed at about $HK7 in May 1996, and had risen nearly sixfold, landing the Chinese executive a potentially huge windfall at the time, should he exercise his existing options. Weren’t his colleagues who didn’t have options jealous, the Fidelity broker asked? The executive replied that the options were meaningless, as they weren’t really his. The Fidelity broker erupted in anger, the banker recalled, demanding to know if all of the other information attached to the new issue was equally fake. The executive quickly realized his mistake and backpedalled, saying he had donated the money to the state, so as not to cause divisions with his colleagues.