1 Political rumors about Hui Ka Yan aim at Xi
Political rumors concerning Hui Ka Yan and Xi’s associates
Oct. 4
Political rumors about China Evergrande’s Hui Ka Yan and three former Party secretaries of Guangdong Province (Li Xi, Wang Yang, and Hu Chunhua) began circulating on overseas Chinese language media and social media platforms.
Some noteworthy rumors include:
- Hui Ka Yan’s biggest problem (for the Xi leadership) is his corruption of senior CCP officials, including his bribery of three former Guangdong Party secretaries.
- Hui allegedly paid over one billion yuan in bribes to former Guangdong Party secretaries Li Xi, Wang Yang, and Hu Chunhua, as well as their respective families. Wang’s family allegedly took 4.7 billion yuan and Hu Chunhua’s family took 2.9 billion yuan from Hui. Hui’s wife Ding Yumei also allegedly directly bribed the wives of Wang Yang and Hu Chunhua.
- Hui allegedly helped Wang Yang make a bid for the premiership (i.e. lobbying current or retired members of the Politburo Standing Committee to have Wang succeed Li Keqiang as PRC premier, and other political operations), spending more than one billion yuan on the effort.
- The Xi leadership went after Hui after the PRC National Audit Office reportedly completed its audit of the latter. Zhang Yiqian, head of the Central Commission for Discipline Inspection and National Supervisory Commission teams stationed in the CCP General Office, has allegedly been placed in charge of investigating Wang Yang. Xiu Xiaobo, a vice ministerial-level inspector and deputy leader of the CCDI team stationed in the Chinese People’s Political Consultative Conference, has allegedly been placed in charge of investigating Hu Chunhua.
- Xi Jinping allegedly asked Li Xi to take the initiative and come clean about his problem (i.e. taking bribes from Hui Ka Yan), and Li reportedly did a self-examination during a democratic life meeting (民主生活會, i.e. self-criticism session) before the PRC National Day.
Radical leftist urges Beijing to take extreme actions over Evergrande crisis
Oct. 1
Zhang Hongliang, a leading radical leftist (毛左) in China, published an article on the mainland radical leftist website Fuxing titled, “China Must Freeze the Assets of Private Companies Immediately. Every Second of Delay Adds Up to Huge Damage” (中國必須立刻凍結私企財產，每延遲一分一秒都會增加巨大損害). Private entrepreneurs later expressed strong dissatisfaction towards the article, and it was subsequently blocked and removed.
Zhang argued in his piece that the exposure of the “Evergrande model” and the “Country Garden model” has shown China’s thousands of private enterprise owners how to “transform company assets into personal assets, transform Chinese assets into foreign assets, and the ways and means of getting rid of bank liabilities for good.” Therefore, an increasing number of private entrepreneurs will “race against time to transfer assets overseas,” Zhang wrote.
Zhang continued, “Now the prominent bosses of private enterprises are beginning a life-and-death race with the state’s financial regulatory authorities [over assets]. If the Chinese regulatory authorities freeze private assets early, China will lose a lot less wealth. Freezing assets a day later will result in the loss of a lot more wealth. If there is no freeze, then the level of wealth loss will exceed what China can bear, and this could eventually push the entire country into a pit of fire.”
Zhang previously published on Aug. 10, 2023 an article titled, “The Most Important Lesson of the Fall of the Ming Dynasty is Regarding the Landlords and the Rich as the People and Excluding the Real People” (明朝滅亡最重要的教訓就是把地主富豪看成是民，而把真正的人民排除在外). In that piece, Zhang argued that the Ming Dynasty collapsed because the imperial rulers allowed for “the state to retreat while the private sector advances” (國退民進) and “developed the private economy.”
In his “Ming Dynasty fall” piece, Zhang also likened Evergrande’s Hui Ka Yan to the large landowners and nobles of the Ming who “emptied the treasury.” He then compared the United States, Europe, and other foreign countries to the Manchus (whom he claimed had consolidated their “financial foundation” after confiscating the wealth of large landowners and rich people after invading Ming territory), and accused those foreign countries of ganging up against China and tapping the immense wealth of Chinese private entrepreneurs to resolve financial crises in the U.S. and Europe.
▌Our take
The developments above hint at the increasingly complex and troublesome political environment that Xi Jinping has to navigate at this time:
1. The political rumor that Li Xi, Wang Yang, and Hu Chunhua are in trouble for being corrupted by Hui Ka Yan when they were serving as Guangdong Party secretary does not sound credible in considering the dynamics of patron-client relations in the CCP, who was in charge when China Evergrande grew in prominence, as well as the political norms of Xi Jinping’s tenure.
Based on our research, the Xi leadership has yet to formally investigate officials at the sub-national leader level and above who are not opposed to him (i.e. demonstrates acceptable levels of public loyalty towards Xi, not belonging to the Jiang Zemin faction or other rival factions, etc.) and have not displayed a level of corruption that undermines Xi’s political agendas. Li Xi (Xi camp), Wang Yang (Hu camp/“tuanpai”), and Hu Chunhua (Hu camp/“tuanpai”) are all relatively sound on the political allegiance front and none of them appear to have engaged in egregious corruption. Of course, Xi Jinping not having broken this political norm thus far in his tenure does not mean that he will never do so. But Xi will greatly heighten political instability in the CCP elite, and by extension, his own political risk levels, by turning the anti-corruption campaign against senior officials at the sub-national level and above who are not disloyal to him.
Meanwhile, the idea that Hui Ka Yan had to bribe Li Xi, Wang Yang, and Hu Chunhua to ensure Evergrande’s success and escape scrutiny from the Xi leadership does not stack with how politics and big business work in the CCP regime. For one, Wang Yang (Guangdong Party boss from 2007 to 2012), Hu Chunhua (Guangdong Party boss from 2012 to 2017), and Li Xi (Guangdong Party boss from 2017 to 2022) served as Party secretary of Guangdong only after Evergrande had already become a leading real estate developer in China. This meant that Wang, Hu, and Li would only have needed to maintain good relations with Hui and Evergrande to see that Guangdong Province performed well and secure political achievements to advance their respective careers. And instead of bribing the Guangdong Party secretary to get ahead, Hui would have wanted to ingratiate himself with more senior and powerful CCP elites to ensure Evergrande’s continued success nationwide, including officials at the sub-national level and above, as well as current and former members of the Politburo Standing Committee.
We previously wrote that Hui is known to have close associations with de facto Jiang faction head Zeng Qinghong and is likely to have connections with Jiang faction member and former Guangdong Party secretary Zhang Dejiang. A review of Evergrande’s growing profile and the careers of Zhang and Zeng shows an overlap:
2002 to 2007 (Zeng was a Politburo Standing Committee member, Zhang was Guangdong Party boss)
- 2003: Evergrande became the first-ranked real estate company in Guangdong by competitiveness.
- 2004: Evergrande ranked among the top 10 real estate companies in China for the first time.
- 2006: Evergrande began expanding nationwide
2007 to 2012 (Zeng was a Party elder, Zhang was PRC vice premier)
- Evergrande’s internationalization strategy became a model for Chinese property developers, particularly after the company was listed on the Hong Kong Stock Exchange in 2009.
2012 – 2017 (Zeng was a Party elder, Zhang was a Politburo Standing Committee member)
- 2013: Evergrande’s sales exceeded 100 billion yuan for the first time.
- 2016: Evergrande made the Fortune 500 list (rank 496th).
- 2017: Evergrande became one of the fastest-improving companies on the Fortune 500 list by climbing to 338th.
- 2017: Xi Jinping’s anti-corruption campaign began to target the financial sector. Wanda’s Wang Jianlin was an early victim of the campaign, with news at the time claiming that he was placed under house arrest and his subsequent sale of assets to pay off debts. In contrast, Evergrande expanded even further and issued U.S. dollar bonds in Hong Kong.
It is suspicious that the latest political rumors about Hui Ka Yan and corruption identified officials whom Hui technically did not need to bribe to secure Evergrande’s political leverage and facilitate the company’s national growth. It is also suspicious that all three of the officials having fingers pointed at them are in the Xi camp or allied with the Xi camp, while no Jiang faction official stands accused in the rumors. In considering who the political rumors benefit and hurt, we believe that it is likely that the rumors could have originated from Jiang faction sources as a means to muddy the waters about the anti-corruption probe into Hui, guide public opinion towards accepting the notion of Xi turning against his allies, and ultimately preserve Jiang faction officials.
2. The political rumor that Hui Ka Yan supported Wang Yang in making a bid for the premiership inadvertently hints that Hui’s true political backers are far more senior Party elites than Wang.
We believe that this political rumor likely also originated from the Jiang faction to cover the tracks of faction members associated with Hui like Zeng Qinghong, Zhang Dejiang, and Jia Qinglin. But in the event that the rumors came from Hui and his underlings, then it is possible that Hui is making an indirect appeal to senior members of the Jiang faction to save him.
3. The political rumor about Xi Jinping asking Li Xi to “take initiative” in explaining his “problem” with Hui Ka Yan is the least credible of the recent batch of rumors.
Li took over as Guangdong Party secretary at a time when Evergrande was already very well established in the province and nationally. As such, Li would not be the official that Hui would need to corrupt to prevent an anti-corruption investigation into him or Evergrande because the Guangdong Party secretary lacks the ability to influence or stall a national-level probe. And even if Li did accept bribes (perhaps to give “face” to the Zeng clan and not alarm the Jiang faction, or in going along with political norms of the CCP officialdom), it is very unlikely that Xi would sacrifice him over it unless Li was found to be disloyal to Xi or badly undermined Xi’s political agenda through his corruption.
Xi is counting on Li, the head of the CCDI and a longtime political ally, to run his anti-corruption campaign. If Li is being investigated or has to make a self-criticism, then Xi’s anti-corruption campaign and achievements will suffer a huge reputational blow. This is something that Xi’s enemies would be counting on if they were behind the political rumors.
4. Radical leftist Zhang Hongliang is clearly taking advantage of the Hui Ka Yan arrest to encourage Beijing to extend the crackdown on “bureaucratic monopoly capitalism” to all private enterprises in China. Zhang’s article, however, was eventually censored because it did not conform with the Xi leadership’s push in July to promote the development and growth of the private economy.
Zhang Hongliang was previously an important political advocate of Bo Xilai’s when the latter was running his “singing red, striking black” (唱紅打黑) campaign in Chongqing. Zhang not seemingly being affected by the Bo Xilai incident suggests that the Xi leadership is still reluctant to entirely clamp down on radical leftists in the PRC and reject their political ideals. Beijing’s continued tolerance of radical leftists will only increase the fears and speculation of private entrepreneurs regarding Xi Jinping’s Maoist sympathies and dictatorial tendencies, and further damage business confidence and the business environment in China.
