Businessweek Archives

For Beijing's Brat Pack, There's Plenty Of Room At The Top


International Business

FOR BEIJING'S BRAT PACK, THERE'S PLENTY OF ROOM AT THE TOP

When Deng Xiaoping makes a rare public appearance, he is sure to bring along his most trusted aides: his kids. On the last day of the 14th Party Congress of China's Communist Party, the 88-year-old, his left hand trembling uncontrollably, was supported by Deng Rong, his daughter and personal assistant. During his highly symbolic visit to freewheeling Guangdong province earlier this year, he was aided by another daughter, Deng Nan. "Deng's daughters now interpret what he says, since no one can understand him," says a Western diplomat in Beijing. "It's difficult to know whether they are relaying their father's words, whether other people are leaning on them, or whether they are setting the agenda."

What is clear is that as China's leaders age, their children are playing increasingly important roles. Whether as budding political stars, provincial leaders, or business kingpins, this brat pack is becoming a major force behind market-oriented reforms. Deng's children hold a wide variety of important posts (table). Overall, by one account, some 3,100 of these taizi, or princelings, as they are called in China, already hold top positions within the party, while many more are key players in business. In Hong Kong alone, there are thousands, if not tens of thousands, who are learning to make money in the capitalist big leagues.

One obstacle to the brat pack's rise is the widespread resentment they evoke among ordinary citizens. Some complain that the taizi are reminiscent of the privileged offspring of the emperors. The creeping power of the taizi was a prime target of the ill-fated student protests in Tiananmen Square in June, 1989. Fear of rekindling such feelings may be one reason only a few of them were elevated to the Central Committee during the October congress.

SILVER SPOONS. But the scripted announcements from the congress don't tell the whole story. For instance, the leaders' children are increasingly found in key positions in China's provinces, where market reforms are roaring ahead. The party secretaries of such key cities as Fuzhou, Chongqing, and Datong are all related to powerful party bosses.

Given their privileged upbringing, with access to drivers, maids, Western goods, and excellent educations, it's no wonder the taizi have little use for the old, Spartan communist way. Take Chen Yuan, the son of old-timer Chen Yun, a proponent of central planning. Chen Yuan graduated from prestigious Qinghua University, the MIT of China, and now regularly attends World Bank meetings. Westerners who have met him say he is articulate and competent and nowhere near as hard-line as his father.

The brat pack's outlook has also been influenced by their having broader horizons than other Chinese. Deng Xiaoping's son, Deng Zhifang, who studied physics at the University of Rochester, now works as assistant general manager for China International Trust & Investment Corp. (CITIC), Beijing's main investment arm. And even Communist Party head Jiang Zemin has a son, Mian Heng Jiang, who received a doctorate in electrical engineering from Drexel University in Philadelphia in 1991. "They have exposure to policymaking, and from living abroad, they have greater sophistication," says a European diplomat in Beijing.

Business may be where the taizi have the greatest influence. Now that the party has put its collective stamp of approval on getting rich, many of the brat packers are eager to do so. Bo Xicheng, son of Bo Yibo, a conservative party elder, is a former director of Beijing's state tourist bureau. Now, he plans to form a hotel-management group with three friends. "With his connections," says one Western official, "if Bo Xicheng came to Hong Kong and offered to open doors, he could raise $50 million overnight."

TAINTED BY CORRUPTION. As it becomes clear that the party is less and less the road to advancement, others are following in Bo's footsteps. No doubt many would like to emulate the success of Larry Yung. His father, Rong Yiren, known as the Red Capitalist, helped establish CITIC. In 1987, Yung took charge of CITIC Hong Kong (Holdings) Ltd., where he has built assets to nearly $4 billion. He has also raised a few eyebrows. In August, Yung was fined $646 after police spotted his Acura weaving in traffic. But that didn't stop Hong Kong Governor Christopher Patten from naming Yung to his new Business Council, an advisory board. Another heavyweight at CITIC Hong Kong is the chairman, Wang Jun, son of Wang Zhen, the former vice-president of the National People's Congress.

The princeling class is suspected of using guanxi--connections--to cut deals. For example, some run companies that sell arms for the People's Liberation Army (PLA). Two such companies, state-owned China North Industries Corp. and Polytechnologies Inc., are known for hiring officials' kids. To make foreign sales, these employees can go straight to the top for approval. In the late 1980s, Western officials suspected that Deng Xiaoping's son-in-law, He Ping, a deputy director of the PLA's Armaments Dept. also arranged some arms sales, including Silkworm missiles to Iraq.

No matter how savvy they are, the taizi are often tainted by corruption. Even Deng's wheelchair-bound son, Deng Pufang, who was crippled after Red Guards threw him out of a window during the Cultural Revolution, was involved in a scandal. Although he denies any wrongdoing, a trading company he ran was shut down for misusing funds. Now, he heads China Welfare Fund for the Handicapped.

Even without controversy, the taizi are a force to be reckoned with in the future. Their parents are making sure of it.WHAT DENG'S FAMILY DOES FOR A LIVING:

DENG LIN, DAUGHTER - President, Eastern Art Exchange Assn.

DENG PUFANG, SON - Chairman, China Welfare Fund for Handicapped

DENG NAN, DAUGHTER - Vice-chairman, State Commission of Science & Technology

DENG RONG, DAUGHTER - Deng's personal secretary

DENG ZHIFANG, SON - Assistant general manager, China International Trust &

Investment Corp.

ZHANG HONG, SON-IN-LAW - Bureau director, Chinese Academy of Science

WU JIANCHANG, SON-IN-LAW - Vice-president, China National Nonferrous Metals

Industry Corp.

HE PING, SON-IN-LAW - Deputy director, Armaments Dept., Chinese army

Joyce Barnathan in Beijing


China's Killer Profits
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus