Cor­rup­tion Case Breaks ‘Shang­hai Taboo’

Fall of City Leader Re­flects Chi­nese Pres­i­dent’s Drive to Ce­ment His Power, Vi­sion

The Washington Post Sunday - - World News - By Ed­ward Cody

SHANG­HAI — Long a proud show­case for eco­nomic de­vel­op­ment, Shang­hai has re­cently be­come the stage for a high-stakes drama of cor­rup­tion, vice and po­lit­i­cal in­trigue with far-reach­ing con­se­quences for the Chi­nese Com­mu­nist Party.

The scan­dal, which has brought down one of China’s se­nior lead­ers, has its ori­gins in large-scale graft in the lo­cal party ap­pa­ra­tus. But more broadly, it re­flects a po­lit­i­cal de­ci­sion by Pres­i­dent Hu Jin­tao to flex his lead­er­ship mus­cles against en­trenched party of­fi­cials known as the Shang­hai fac­tion, loosely grouped around for­mer pres­i­dent Jiang Zemin and his pro­teges from this coastal boom­town.

The ar­rests in Shang­hai were part of Hu’s cau­tious but re­lent­less drive to ce­ment his power as party leader and en­sure faith­ful­ness to his vi­sion up and down the hi­er­ar­chy. That ef­fort, for­eign and Chi­nese spe­cial­ists said, will reach a high point at the 17th Party Congress in the fall, when Hu and his lieu­tenants are ex­pected to stack the party’s rul­ing bod­ies, the Polit­buro and its Stand­ing Com­mit­tee, with Hu loy­al­ists.

“The po­lit­i­cal as­pect here is much more im­por­tant than the law en­force­ment as­pect,” one Chi­nese cor­rup­tion ex­pert said, speak­ing on con­di­tion of anonymity be­cause of the sen­si­tiv­ity of in­ner-party pol­i­tics. “The in­ter­est­ing point here is that be­fore, no­body could touch Shang­hai, and now you can. Hu wanted to break the Shang­hai taboo.”

The latest turn in the case came last month when the of­fi­cial New China News Agency an­nounced that Xi Jin­ping, 53, will be the new party sec­re­tary for Shang­hai, mov­ing from a sim­i­lar job in neigh­bor­ing Zhe­jiang prov­ince. He re­placed Chen Liangyu, 60, who was fired and placed un­der in­ves­ti­ga­tion in Septem­ber for al­legedly us­ing a gov­ern­ment pen­sion fund to make more than $400 mil­lion in loans to a cor­rupt busi­ness­man.

Chen’s fall was an im­por­tant marker in Chi­nese pol­i­tics. Not only was he sec­re­tary of the Shang­hai Com­mu­nist Party — the most pow­er­ful man in China’s big­gest and rich­est city — but he was also a mem­ber of the 24-man na­tional Polit­buro that sets the course for China’s 1.3 bil­lion peo­ple.

Only two other Polit­buro mem­bers have been dis­missed and pros­e­cuted for cor­rup­tion since the party came to power in 1949. Chen Xi­tong, mayor of Bei­jing, was jailed in 1995, and Cheng Ke­jie, deputy chair­man of the Na­tional Peo­ple’s Congress Stand­ing Com­mit­tee, was ex­e­cuted in 2000.

In ad­di­tion, Chen was known as a po­lit­i­cal heir of for­mer pres­i­dent Jiang, whose base was in Shang­hai, and as an out­spo­ken cham­pion of Shang­hai’s role in na­tional af­fairs. In par­tic­u­lar, he was re­ported to have ques­tioned ef­forts by Hu and Pre­mier Wen Ji­abao to bal­ance eco­nomic growth by fa­vor­ing poorer cen­tral re­gions over the boom­ing coastal cities epit­o­mized by Shangahi.

A doc­u­ment pur­ported to be a clas­si­fied re­port by the New China News Agency quoted Chen as be­lit­tling Hu and Wen and ac­cus­ing them of tak­ing a sim­ple-minded approach. “De­vel­op­ment can never be ab­so­lutely bal­anced,” the doc­u­ment quoted Chen as say­ing. “To make a slo­gan of some­thing that is im­pos­si­ble may have the tem­po­rary ef­fect of boost­ing peo­ple’s morale. But to re­gard it as true is to fool one­self and to fool the masses.”

The chal­lenge to Hu’s author­ity and his trade­mark pol­icy played a big part in the de­ci­sion to in­ves­ti­gate cor­rup­tion in Shang­hai, ac­cord­ing to Cheng Li, a China scholar at the Brook­ings In­sti­tu­tion who has re­searched the case.

Chen’s Shang­hai op­er­a­tions had long been re­garded as cor­rupt, ac­cord­ing to sev­eral spe­cial­ists. But Hu, who be­came party leader in 2002 and pres­i­dent the fol­low­ing year, feared at first that it would be im­pru­dent to crack down on such a se­nior of­fi­cial with clear ties to Jiang, they said.

When the de­ci­sion to oust Chen was fi­nally made in 2005, how­ever, Jiang and his fol­low­ers stood aside, the spe­cial­ists said. This was in line with other signs that Hu and Jiang loy­al­ists have in­creas­ingly co­op­er­ated as Hu so­lid­i­fies his po­si­tion. Hu’s work­ing re­la­tion­ship with Vice Pres­i­dent Zeng Qinghong, an­other Jiang pro­tege and Shang­hai vet­eran, has been de­scribed as un­ex­pect­edly smooth.

Jock­ey­ing be­tween the two groups is more about plac­ing fa­vorites in key po­si­tions than ide­o­log­i­cal clashes, noted a diplo­mat with long Asian ex­pe­ri­ence. The camps agree that China must push for­ward with mar­ket re­forms, he said, but per­haps dif­fer slightly on how much em­pha­sis to put on pro­tect­ing those left be­hind by the changes.

Xi Jin­ping, Chen’s re­place­ment, came from out­side Shang­hai but is re­garded as a cham­pion of Shang­hai-style mar­ket re­form. Cheng Li, the Brook­ings scholar, said Xi is also re­garded as a pro­tege of Jiang and, es­pe­cially, Zeng, mean­ing that Hu took care to pre­serve re­la­tions with the Shang­hai vet­er­ans.

Jiang him­self took an ex­tended trip to dis­tant Shan­dong prov­ince around the time in­ves­ti­ga­tors were dig­ging through Chen’s records in Shang­hai, Shan­dong of­fi­cials said, re­mov­ing him­self from any ef­fort to de­fend Chen.

In­ves­ti­ga­tors from the party’s Cen­tral Com­mis­sion for Dis­ci­pline In­spec­tion, dis­patched from other ar­eas of China, worked for months in se­cret on Chen’s case. They amassed in­for­ma­tion on a se­ries of loans from the pen­sion fund that, ac­cord­ing to re­ports from the in­ves­ti­ga­tion, went mainly to fi­nance road build­ing and other in­vest­ments by a po­lit­i­cally con­nected busi­ness­man, Zhang Rongkun, who is un­der in­ves­ti­ga­tion.

As they fol­lowed leads up the hi­er­ar­chy, the in­ves­ti­ga­tors out­lined Chen’s role in the loans and also be­gan to tar­get Huang Ju, a Shang­hai vet­eran who un­der Jiang’s pa­tron­age had risen to be­come vice pre­mier and a mem­ber of the Polit­buro’s Stand­ing Com­mit­tee in charge of eco­nomic re­form, the cor­rup­tion spe­cial­ist said. But se­nior of­fi­cials in Bei­jing made it clear that the in­ves­ti­ga­tion was to stop at Chen’s level, he added, and the probe of Huang’s role was dropped.

Huang, who is re­ported to have can­cer, has largely aban­doned his of­fi­cial ac­tiv­i­ties. Sev­eral an­a­lysts have pre­dicted he will be re­moved from the Polit­buro and its Stand­ing Com­mit­tee for health rea­sons dur- ing the party congress in the fall.

Soon af­ter Chen’s dis­grace was made pub­lic in Septem­ber, a half­dozen quickie books were pub­lished pur­port­ing to pro­vide de­tails of his cor­rupt ac­tiv­i­ties and in­dul­gent lifestyle. Al­though the books’ au­then­tic­ity was never con­firmed, sales were brisk, and tales of mul­ti­ple mis­tresses and high-rent love nests tit­il­lated Shang­hai for months.

Like Chi­nese in other cities, many Shang­hai res­i­dents were more than ready to be­lieve that the mu­nic­i­pal gov­ern­ment was cor­rupt. But they also un­der­stood the na­tional po­lit­i­cal im­pli­ca­tions of Hu’s move against a well-known Jiang pro­tege who was re­fus­ing to get with the pro­gram.

“Chen was fired be­cause he would not do what Hu told him to,” com­mented a jolly man shin­ing shoes at the en­trance to a lit­tle down­town park.

The gov­ern­ment an­nounced last month that nine of­fi­cials had been ex­pelled from the party so far in con­nec­tion with Chen’s case, in­clud­ing his for­mer sec­re­tary. In past cases, such an­nounce­ments have sig­naled that party in­ves­ti­ga­tors were ready to turn their files over to the courts for crim­i­nal pros­e­cu­tion.

But noth­ing has been an­nounced about Chen’s own fate. Al­though he re­mains out of sight, pre­sum­ably un­der house ar­rest here, he was still listed as “Comrade Chen” on a ros­ter of Shang­hai del­e­gates to the re­cently con­cluded leg­isla­tive ses­sion in Bei­jing.


In al­low­ing the graft probe, Chi­nese Pres­i­dent Hu Jin­tao flexed his lead­er­ship mus­cles against en­trenched party of­fi­cials known as the Shang­hai fac­tion.


Chen Liangyu, fired as sec­re­tary of the Shang­hai Com­mu­nist Party, was a po­lit­i­cal heir of for­mer pres­i­dent Jiang Zemin, whose base was in Shang­hai.

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