Zhao Xiao, a doctor of economics, graduated in 1999 from the
Guanghua School of Management, Peking University.
He now works as director of the macroscopic strategy department of
the Research Center at the China Commission for Managing State
Properties. He is also a postdoctoral researcher working for the
China Economic Research Center of Peking University. Zhao has long
been studying the issue of China's super rich business magnates. A
Xinhua reporter recently interviewed him on the charged
tycoons.
Question: How many types of corrupt Chinese business
magnates are there?
Zhao Xiao: I think there are four. The first are those
business people who were charged for tax evasion, like Liu
Xiaoqing, the noted Chinese actress. Regardless if she is found
guilty or not, the practical effect was evident after she was
detained. In 2002, the amount of tax collected from China's private
enterprises increased by 40 percent from 2001. Tax evasion was and
is popular among many magnates and more similar cases will
undoubtedly emerge in the future.
The second sort are those masters of real estate companies who
were charged for "land enclosure", such as Zhou Zhengyi and Yang
Bin. Half of all listed tycoons in the Forbes China’s Rich
List work in real estate, and at the same time, the exchange of
land is the very field with the most corruption cases. Business in
the land market has involved 2,500 billion yuan (US$302
billion)?value of state-owned assets, which exceeds the annual
GDP of the country. In addition, corruption in the land issue
usually involves stock and financial fields, creating a very
complex problem indeed.
The third sort are those who were charged for property right
abuses. Yang Rong is such an example.
The remainder includes Lai Changxing for smuggling and Sun Dawu
who was charged for illegal financing.
Question: Are those charged tycoons suffering from
defects in the current economic system or is that just a
coincidence?
Zhao Xiao: These two causes exist simultaneously. There
was no system in place to regulate this kind of behavior at the
start of China’s economic reform. Certainly though, the reality of
the country being in a period of social transition has determined
an unsound system. Those "troubled magnates" usually emerged
alongside some corrupt officials. However, no one asked them to be
corrupt, and internal reasons would also be one side of the
cause.
Question: Is there a characteristic common to all these
corrupt magnates?
Zhao Xiao: Except for the cause inherent in the system,
they usually managed to reap a profit in a short term by ignoring
existing rules. They have two things in common: first, they would
like to be more profitable in certain fields or markets. Second,
they have an indifferent attitude towards law, mainly because they
lack education.
????????
Question: What is your opinion on how to prevent the
emergence of further "problematic magnates" through constructing a
better system?
Zhao Xiao: I don't think it is possible to lower the
emergence of "problematic magnates" by changing the current system
radically, in a short time. But we can carry out reform in several
main sectors initially. Three aspects could include: one, establish
standard regulations on land exchange; second, strengthen the
financial system; third, speed up government reform. In addition,
it would also be important to improve tax regulations, which
include two aspects: one, to compel entrepreneurs to pay tax and
two, government should provide better public infrastructure and
services to make entrepreneurs more willing to pay.
Question: Can you predict the future paths of China's
magnates?
Zhao Xiao: I am optimistic about their future. I feel
that there are three trends: first, the increase of the magnates'
wealth will continue to be fast and on the rise. The number of
magnates listed in Forbes will continue to go up also.
Second, rich businessmen will appear in a greater variety of
industries, not like today when most are centralized in the real
estate field. Third, China's magnates could follow international
customs and expose their wealth publicly to allow for greater
accountability.
Question: China's magnates, like Russia's, became wealthy
over a short period. What's the similarity between them?
Zhao Xiao: Russia applied shock therapy to her economy
while China applied a policy of gradual reform. So China’s magnates
have been slower in getting rich. However, there are still things
in common, like how some magnates in both countries have
accumulated capital.
Finally, I don't think tycoons can control the government in
China, because China's political power is centralized and the
private sector has a limited space for expansion, so far.
(China.org.cn translated by Wang Zhiyong, October 6, 2003)