Origins and Powers of the New Rich

Abstract

Nearly thirty years after the beginning of China's eco- nomic opening-up, the fruits of the reforms launched by Deng Xiaoping are becoming apparent among the people themselves: China now has a significant number of very rich people, who regularly make headlines in the Chi- nese and overseas press. Every year, in China and abroad, new assessments and studies are published on this new social class that, thirty years before, hardly existed at all within the Chinese social system, and had no political legitimacy.Who are they? How have they become so rich, so quickly? What power do they really exercise within society? What commitments do they have? Those are the questions being raised by the Chinese press, which is at the same time fas- cinated by, and critical of this section of the population. The new rich are the product of economic development, reflect- ing the most conspicuous aspects of growth and its most per- verse and obscure aspects as well.The rise of the private sectorChinese journalists seem of one mind in linking wealth with the rise of the private sector. Deng's reforms enabled private enterprises to proliferate and flourish in a now favourable en- vironment. As The People's Daily reminds its readers, in the nineteen seventies the word "private" was still taboo, being considered as tainted with capitalism. And yet, gradu- ally, the attitude towards the private sector has evolved, to the point of being completely reversed. In the official docu- ments of the Chinese Communist Party (CCP), the private sector was seen at first as "a supplement to the state sector", then as "an important part of the economy" and finally as "a basic element in the economic system". So the private sec- tor has now acquired real legitimacy: the Party and conse- quently the government can no longer ignore the private sec- tor's contribution to growth, among the clearest signs of which was Jiang Zemin's "Theory of the Three Repre- sents," first enunciated in 2001.The greatest number of Chinese businessmen to have made their fortunes are to be found in the key sectors of Chinese development. Finance, property, foreign trade and construc- tion have been particularly profitable.From this burgeoning private sector, a number of individuals have clawed their way upwards; a class of wealthy people has gradually emerged, seeking to make its voice heard on the political stage. It is a class that has become an essential and influential element within society and the political class.Top leaders ' childrenYet, while the private sector has enabled some to make their fortunes, the Hong Kong newspaper Singtao Dailyreveals that actually, few are self-made men. Indeed, the paper has pub- lished a survey carried out by agencies within the Research Centre of the State Council, the Research Centre of the Party School and the Chinese Academy of Social Sciences (CASS). The survey concludes that, of the thousands of rich Chinese people, 90% are the offspring of senior officials.More specifically, The International Manager has pub- lished a report showing that, in March 2006, 27,310 peo- ple had capital assets worth over 50 million yuan, and that 3,220 people had amassed fortunes worth over 100 million yuan. Of the latter, 2,932 are the children of senior gov- ernment officials.These wealthy people live mainly in the eight most flour- ishing Chinese provinces, among them Canton (1,566 people), Shanghai (225 people), Peking (195 people), Jiangsu (172 people), Shandong (141 people) and Liaon- ing (79 people).Not only have the new rich amassed a total capital of nearly 200 billion yuan but they also occupy the top cor- porate jobs in the key sectors of China's burgeoning econ- omy: finance, real estate, construction and foreign trade. Furthermore, the survey reveals that the biggest enterprises in the country are managed by the children of top officials. For example, in Canton, the 20 leading real estate compa- nies belong to the offspring of government officials. …