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China’s billionaires have captured its government

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The truth is finally out: China is a plutocracy. With 83 billionaires among them, the top legislative body of the People's Republic is the world's richest parliament. The analysis of the wealthy members of China's National People's Congress emerges from the Hurun Global Rich List, an annual report which ranks the 1,453 dollar billionaires worldwide and reveals that China's super-rich like to give something back – by serving time as a lawmaker.

Among the ranks of dark suits and improbably jet-black hairdos in the Great Hall of the People you will find Zong Qinghou, founder of the drinks company, Wahaha with a personal fortune of $13-billion (U.S.) who is on his third five-year term as an NPC deputy. Tencent's Pony Ma Huateng comes in second with $7.5-billion. The South China Morning Post this week dubbed China's lawmaking body the world richest political club in response to the report, which would be an embarassment to the Chinese Communist Party had the organisation not already been captured by capital.

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The wealth of the individuals who make up the U.S. Congress, reckoned to be about $7-billion, is eclipsed by the billionaires in China's legislature, who together control assets close to $100-billion. The rise to political power of China's business elite was a strategy pushed by China's former president, Jiang Zemin, who encouraged them to become deputies. But it is a moot point whether the Communist Party has co-opted the businessmen or vice versa. The People's Congress is not really a law-making body – rather, it's merely a rubber-stamp for Communist Party policy – but the political intimacy enjoyed by the tycoons who rub shoulders with Party officials can only be good for their businesses.

The Chinese strategy of quietly absorbing businessmen into the political structure is in contrast to Russia, another former Communist state where business tycoons have had an uneasy relationship with the former KGB spies who run politics and administration in the Kremlin. Mikhail Khodorkovsky, the former boss of Yukos – once Russia's biggest oil company – was jailed and his company bankrupted when he dared to fund a political opposition to President Putin in the Duma (Russia's parliament). The less subtle Russian model is to ensure that the levers of economic power are firmly at the beck and call of political power. Thus, heading the board of Rosneft, which is currently Russia's top oil company, you will find Igor Sechin. Until recently, Sechin was deputy prime minister and is a long-term political ally of the President.

Neither of these models can ensure continuing political stability, and not only because of the immense disparities of wealth between rich and poor which make a mockery of the stated political aims of the leadership. What has enabled Western democracies to achieve long-term political consensus is not, as is generally assumed, the periodic election of leaders, but the independence of the judiciary and a free press. It is the power of independent courts and prosecutors that prevents capital from capturing the political process and vice versa. It was the courts and the press that ultimately broke up Standard Oil and prevented the American capitalist system from becoming utterly corrupt. It is the lack of an independent judicial system that threatens both Russia and China and, unfortunately, there is no sign that the leadership of either country has any intention to bring about judicial reform.

Carl Mortished is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights.

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About the Author

Carl Mortished is a Canadian financial journalist and freelance consultant based in the U.K. With a career spanning investment banking, journalism and consulting for global companies, he was for many years a financial writer and columnist for The Times of London. More

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