Enterprising Wenzhou an ideal haven for corrupt officials

Jiang Qing, the wife of chairman Mao Zedong, used to call Wenzhou 'the tail of capitalism' which had to be cut off.

She was right. Before and during the communist era, the city of about seven million on the southeast coast of Zhejiang province, had been a centre of private enterprise and private capital. The People's Bank of China's estimates put the amount of money in private hands in the city today at more than 300 billion yuan.

The wealth stems from two historical contexts. One is that, for more than a century, Wenzhou has been a place of emigration, leading to thousands of Wenzhou people living abroad, especially in France, Italy and Spain. The emigrants sent millions of dollars to their families at home.

The second is that, because the city faces Taiwan, the government, after 1949, invested almost nothing there and its economy was dependant on private business. A serious handicap during the Maoist era, this became a blessing after 1980, because the city was not burdened by polluting steel and chemical plants with tens of thousands of workers, and its people adapted more quickly to the new market economy spreading throughout China.

It became a centre of light industry, with its shoes, buttons, garments and electrical batteries having flooded China and the world. With the money they earned, city companies have invested across China, in oil in Xinjiang province in the far west, coal in Shanxi province in the centre and property everywhere. This means the Wenzhou government relies more heavily on private capital than any other Chinese city to build schools, roads, railways and other infrastructure.

For a corrupt official such as Yang Xiuzhu, this had two advantages. As head of the planning bureau, her counterparts were private developers and not, as in most Chinese cities, companies owned by the state or with strong official connections, which would have made the kickbacks more perilous. Second, real estate is the favoured destination of Wenzhou's private capital, making its land prices among the most expensive in China. In the city centre, one mu (0.07 hectares) costs 10 million yuan.