The Panama Papers and China’s Power Elite

by Brian Hioe

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Photo Credit: Baycrest/WikiCommons/CC

THE TALK OF the world these days would seem to be the recent leak of the Panama Papers, 11.5 million files leaked from the world’s fourth biggest offshore law firm, Mossack Fonseca. The papers have been processed by the International Consortium of Investigative Journalists (ICIJ), which organized over 400 journalists belonging to 107 media organizations in 80 countries. Mossack Fonseca is a law firm which specializes in creating shell companies for the individuals to hide their wealth. Shell companies are not strictly illegal, but often serve as a means for tax evasion money laundering.

Although western coverage has largely zoomed in on the connection of Russian president Vladimir Putin to shell companies, relatives of Chinese president and Chinese Communist Party chairman Xi Jinping, as well as eight other current or former members of the Standing Committee of the Politburo, have been implicated. A business partner of Bo Xilai’s wife Gu Kailai, was also linked. China has, as a result, sought to crack down online discussion of the Panama Papers within China, with any search terms related to “Panama” and other related terms being banned. Notably, no Chinese reporters were involved in the investigations, although three Taiwanese reporters were involved and a number of reporters from other countries who were involved have surnames that seem to be Chinese surnames. Reportedly, China was Mossack Fonseca’s biggest market.

Bo Xilai. Photo credit: VOA

What the Panama Papers would pose a challenge for is China’s current ongoing anti-corruption campaign. In the name of rooting out corruption, Xi Jinping has pursued the deposing of numerous powerful CCP leaders. Although it had been long rumored that the Xi family had substantial wealth of its own, Xi was aided in this by a reputation for being incorruptible, and some were willing to take Xi as being a genuine reformer.

Certainly, the Panama Paper revelations would deal a blow to the credibility of Xi’s anti-corruption campaign. As the campaign became more and more widespread, with no-one seeming to be off limits, many who first welcomed the campaign as a way to clean up China’s deep-rooted corruption are now much more wary. This is because of the crackdowns of free speech and Cultural Revolution-style targeting of individuals that have taken place in the name of anti-corruption.

Many began to take the view that the anti-corruption campaign was not aimed at anti-corruption at all, but rather eliminating potential threats to Xi’s power. The rise and fall of Bo Xilai would be one case in point, Bo himself having acquired a reputation for cleaning up corruption in the city of Chongqing he oversaw, but then later being accused of embezzling, corruption, and abuse of power. Xi may have deposed Bo as a potential rival for power. And the Bo Xilai incident might presage present events, seeing as Xi subsequently took up many of the policies previously associated with Bo, particularly in regards Bo’s rooting out corruption. But also reminiscent of Bo, Xi now has also subsequently become implicated in a scandal which suggests corruption on Xi’s part.

Yet could this lead to backlash against Xi? As the president of China, chairman of the CCP, and China’s “paramount leader,” it seems unlikely that Xi would fall from grace in the same way as Bo, although Xi’s political rivals within the CCP may leverage on the Panama Papers to damage Xi’s credibility. Outside of the CCP’s internal politics, other political tendencies within China, such as the Liberals, may also leverage on the Panama Paper revelations. Namely, although Chinese censors have cracked down on mentions of the Panama Papers online within China, it is impossible to stop news spreading in the globalized Internet age. Although, we will not likely see widespread protest in response to revelations on the level of Iceland, say, even if censors succeed in making sure that the Panama Paper revelations do not become widely known in China itself, information will almost certainly filter in from abroad.

Nevertheless, we perhaps see the true nature of the Chinese party-state through the reactions of official state media. State media has denied the Panama Papers as being “groundless” and the attempt of western powers to discredit the elites of non-western countries as an act of information warfare. So much, then, for a nation-state which claims to be socialist and anti-capitalist in nature. We see here that the Chinese state reflexively acting in defense of elites, by accusing western powers of trying sow discord and undermine non-western countries.

This is particularly ironic when Xi Jinping’s administration deliberately harkens back to to the Mao period in its rhetoric and attempts to fan up nationalism for its own purposes by claiming to act in the name of the people. Nevertheless, this has not prevented Chinese nationalists or pro-unification Leftists in Taiwan and Hong Kong from reflexively defending China by echoing this charge that ICIJ is acting on the behest of western powers. Evidently, Chinese nationalism comes before leftism in such cases. And we see quite clearly the means by which Leftist rhetoric is the garb by which contemporary Chinese state capitalism dresses itself in with the denial of wrongdoing by Chinese elites through the use of old anti-imperialist tropes to dismiss the Panama Papers. Indeed, it takes much cognitive dissonance to believe that the Chinese state acts in the name of anti-capitalism these days, but some manage to find a way to believe otherwise.

The term “Zhao family,” which comes from Lu Xun’s “The True Story of Ah Q,” has come to be a term which stands in for China’s power elite in recent times. In regards to cases in which the state claims to speak for the Chinese people, but is in fact defending its own interest, political scientist Qiao Mu commented, “[A]ll you need to do is replace ‘the people’ with ‘the Zhao family,’ and everything becomes clear all at once.” We can say this of present circumstances as well.