Xiao Jianhua

Tycoon Xiao Jianhua’s return to mainland a political power play, analysts say

Xiao Jianhua is seen as a pawn in Beijing’s effort to ensure a smooth leadership transition this autumn

PUBLISHED : Monday, 06 February, 2017, 8:53pm
UPDATED : Tuesday, 07 February, 2017, 4:17pm

The investigation that netted a mainland billionaire who took sanctuary in Hong Kong likely stems from Beijing’s desire to ensure a smooth leadership transition in a politically sensitive year, sources and analysts said.

The curious circumstances surrounding how Xiao Jianhua, a well-connected mainland tycoon, vanished from a Hong Kong luxury hotel on the eve of the Lunar New Year has sparked speculation.

Hong Kong police later confirmed that Xiao returned to the mainland legally through border checkpoints. Sources said Xiao was now assisting the authorities in investigations, including ones covering bribery and stock market manipulation.

Analysts and people familiar with the matter said the timing of the investigation showed that Beijing was trying to avoid any surprises ahead of a key party congress later this year, and was stepping up control of tycoons like Xiao who could reveal inside deals or cause market swings. At the same time, the questioning of Xiao, who reportedly did business with family members of China’s state leaders, would send a signal that Beijing would not tolerate businessmen who pursued fishy deals by involving well-connected partners, analysts said.

Zhuang Deshui, a specialist on corruption at Peking University, said private businessmen were not prime targets of the anti-graft crackdown, which focused on party members.

“But to find breakthroughs in graft probes against officials, investigators often start with the businessmen around them in search of useful evidence,” Zhuang said.

“Sometimes the businessmen will be given preferential treatment, such as exemption from prosecution or a lighter sentence if they cooperate and help with the investigations,” he added.

Zhuang said the party would further tighten control on political discipline in the lead-up to the congress to avoid “unnecessary disturbances” during the leadership reshuffle.

Xiao was on the mainland “assisting” authorities with investigations after agreeing to return to there, and was still able to make phone calls to manage his business empire, sources told the South China Morning Post earlier.

Billionaire in exile Guo Wengui, who once toppled Beijing vice mayor with sex tape, targets China’s deputy police chief

The disappearance of Xiao came a day after Guo Wengui, a Chinese tycoon in self-exile, broke his silence in an hour-long video interview with an overseas Chinese media organisation, alleging that China’s deputy public security minister Fu Zhenghua had accepted bribes and overseen torture.

As China’s leadership prepares for its reshuffle this autumn, the authorities are doing everything possible to ensure “a stable environment” for the 19th party congress – as demanded by Chinese President Xi Jinping at a top-level meeting last month.

People with real or perceived undue influence – such as Guo and Xiao, who had business dealings with family members of the nation’s leaders – had to be brought under control to prevent them from making headline-grabbing revelations, analysts said.

“Bringing Xiao back to the mainland was a precautionary measure to prevent incidents like Guo’s from occurring again, because this kind of disclosure was too deadly [for the leadership],” said Zhang Lifan, a political commentator in Beijing.

“Xiao may have served more [leaders’] families and know more than Guo does ... with Xiao in their hands, they can order him to reveal things according to their needs,” he said.

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Both Guo and Xiao are well-connected in China’s money and power networks. Guo had business ties to Ma Jian, a former deputy minister of China’s state security ministry, who has been detained for suspected graft. In bidding for a landmark property project near the Olympic stadium in Beijing, Guo claimed he obtained a sex tape of former Beijing vice-mayor Liu Zhihua, and was responsible for sending Liu to prison.

Xiao was reportedly involved in several business dealings with families of some retired state leaders. He co-funded the purchase of Hollywood visual effects studio Digital Domain in 2012 with Che Feng, the son-in-law of Dai Xianglong, China’s former central bank chief, according to The New York Times.

Chen Daoyin, a professor at the Shanghai University of Political Science and Law, said leaking sensitive information about high-ranking leaders had long been a tactic to undermine rival political factions during the intense political jockeying ahead of power reshuffles.

Xi’s opponents might be seeking compromises from him on personnel appointments and other important decisions at the 19th party congress, Chen said.

Mainland tycoon has history of doing deals with big wheels

“They may resort to spoiling Xi’s political image and tarnishing his legitimacy, to prevent him from having his way in orchestrating all decisions according to his will, so that he will have to make compromises,” Chen said.

China’s leadership reshuffles often rippleacross the business sphere.

When Xi disciplined officials in the coal-rich province of Shanxi and the southern province of Jiangxi in 2014, the Four Seasons Hotel in Hong Kong, where Xiao stayed for the past four years, gained many new clients from both provinces, according to a report by news portal Tencent.

The year leading into power changes in Beijing is often a period of heightened political gossip and rumourmongering, with Hong Kong an important hub of information.

In the lead-up to the last leadership transition at the 18th party congress in 2012, plentiful whispers, gossip and rumours made their way from the power corridors of Zhongnanhai – the compound where the top leaders live and work in Beijing – to overseas media outlets.

In ‘core leader’ Xi Jinping’s China, discipline trumps corruption when it comes to reform

However, Chen, the professor in Shanghai, said that the situation now differed greatly from five years ago. In the four years since Xi took the helm of the party, he has rapidly consolidated power, eliminated enemies, and anointed himself the “core” of the party’s leadership – a status his predecessor, Hu Jintao, never won.

Xi has demanded political discipline, loyalty and tightened control on various fronts at a level unseen in decades. Just two days before the party’s sixth plenum – the most important plenary meeting before the next party congress – People’s Tribune, a magazine affiliated with the party mouthpiece People’s Daily, chastised officials for gathering and leaking information.

The article urged leaders to “severely discipline” party insiders who provide such information and “weed out” informants.

Despite Xi’s power and hard line approach, analysts expect the political infighting that foreshadowed previous power reshuffles to continue as usual this fall.