Money & Politics

The integration of money and politics has been a hot topic all over the world for a long time. The oligarchs run Russia. The PAC’s run the U.S. And, of course, the Lords have long run Great Britain.

China describes itself as a socialist country with Chinese characteristics. Despite the crusade that President Xi Jinping has launched against government corruption at the highest levels, one might assume that the integration of politics and wealth, therefore, is less pronounced here than elsewhere.

That would be, on paper at least, a false assumption.

In fact, just the opposite is true, and it is critically important because as I have noted on many occasions, while little civil unrest is truly political in the end (and I include the Umbrella Movement of Hong Kong in this generalization) it is monetary, and to the extent that the two are connected – politics and wealth – they will play a pivotal role in the future stability of China.

As noted in a post earlier this year, there are two legislative bodies in China – the National People’s Congress (NPC), and the Chinese People’s Political Consultative Conference (CPPCC). Given the complicated acronyms, much less the names, however, most Chinese simply refer to them as the ‘two sessions.’ Each convenes annually for a 10-day plenary session.

Together the two sessions are attended by more than 5,000 deputies and members from all walks of life, including artists, movie stars, and sports stars. (Yao Ming attended this year.) All 56 ethnic groups are represented as well and many wear the elaborate traditional clothing and headwear of their ethnic group, giving the meetings an air of traditional Chinese formality and visual richness.

Many Chinese themselves are confused about the intent of these meetings, so the state news agency, Xinhua, provided a helpful Q&A to clear up some of the confusion during the last ‘two sessions’ held earlier this year.

The NPC is China’s top legislative body but Xinhua suggests it is much more than that as it has many functions and powers, including the enforcement of the Chinese Constitution and it officially appoints key positions including the chief justice and chief prosecutor.

Township and county level deputies are appointed through direct elections, while the deputies at the prefecture, provincial, and national levels are elected by the lower level deputies. None are paid, although subsidies are provided to those with no other fixed income.

The CPPCC is a political advisory body that pre-dates the People’s Republic of China, the result of negotiations between the Communist Party of China and the Kuomintang in 1945. It is not to be confused with the National People’s Congress or the National Congress of the Communist Party of China. It includes all political parties, various other organizations, and independent members.

From 1949 until 1955 the CPPCC served as the de facto legislature of the newly created PRC before that role was officially transferred by the Constitution to the National People’s Congress. Today its role has been referred to as a legislative advisory body analogous to a legislative upper house.

With that as background, consider these astounding facts as reported by Christina Sterbenz in Business Insider.

In the US, Representative Darrell Issa, a Republican from California and Chairman of the House Oversight and Government Reform Committee, is the wealthiest politician in any of the thee branches of the US government, with a net worth of nearly half a billion US dollars. Among the members of the ‘two committees’ of China, however, he would rank only 166th.

Eighteen of China’s delegates on the ‘two committees’ have a net worth greater than the entire personal wealth of the US Congress (House of Representatives and the Senate), the nine Supreme Court Justices, and President Obama’s cabinet combined. While the median wealth of American politicians was just over $1 million USD in 2013, 18 times the earnings power of the typical American household, the 50 richest members of the US Congress held $1.6 billion in wealth while the 50 wealthiest NPC members controlled $94.7 billion, according to The Economist.

This obviously begs the question as to how you level the economic playing field – the literal battleground for the CPC’s grip on power – given the immense wealth controlled by the very government that would have to enact such policy change?

A couple of observations:

– While certainly not just ceremonial, the NPC and the CPPCC seldom author critical legislation. During their annual 10-day plenary sessions their primary role is to receive the work reports of the various offices, all controlled by the CPC, who do the legislative heavy-lifting.

– The wealth-political connection in China is no surprise given that nearly all wealth in China has been historically created through government relationships given that it was, and largely still remains, a centrally-controlled economy. It would be difficult, if not impossible, to amass great fortune without some government involvement. (Many Americans, it should be noted, have also amassed large fortunes at government expense through outright subsidies, special tax breaks, and the breath-taking expenditures of the American military and security forces.)

– Most wealth in China has been amassed through coal or real estate. Coal, of course, is on a downward trend in value due to its impact on the environment. And real estate, particularly when there is no such thing as private land, is one of the most volatile assets classes there is and not really controlled by the private market.

– President Xi Jinping is in the midst of one of the most serious crackdowns on corruption since the founding of the PRC. The result is that while money will buy you far less influence than it once might have, the very appearance of potential corruption may be a far bigger handicap in influencing future political events.

– The Chinese worldview is far more collectivist than the individualist worldview of the US. While few wealthy Chinese are likely to voluntarily give the money back, I would expect far less push back from this class of Chinese than I would from their US counterparts (with notable exceptions such as Warren Buffett and Bill Gates) were the government to make an earnest attempt to separate politics and personal wealth. (Turning China into a democracy modeled after the US is obviously not the answer.)

– The Chinese are, by nature, pragmatists. They know that the current polarization of wealth is unsustainable. The wealthy of the US, however, may continue to delude themselves into thinking that if the average American believes that he/she, too, has the opportunity to earn great wealth, they will tolerate the inequity, as they have from the birth of the country. The difference is, however, that the hope of that myth is dissolving amidst today’s political and economic realities.

The “too big to fail” doctrine did not help the US wealthy in the long term during the financial crisis of 2008. Many poor people would have been hurt badly if the government had not taken that position. But, as the old Chinese I talk to would surely say, ‘we all would have felt the same pain.’ Consistency, consistency, consistency.

I don’t personally believe, therefore, that wealth will be a major impediment to political reform in China. Few Chinese will stand by and watch the deterioration of what China has achieved over the last generation.

It is the US, I fear, that will face the far bigger challenge of decoupling personal and corporate wealth in order to define a national political agenda that truly is in the interest of the average American.

Wealthy American capitalists have long sold their good fortune on the basis of equal opportunity although that cases is becoming harder and harder to sell.  The collectivist Chinese, on the other hand, will  not long tolerate the former without proof of the latter.
Wealthy American capitalists have long sold their good fortune on the basis of equal opportunity although that case is becoming harder and harder to make. The collectivist Chinese, on the other hand, will not long tolerate the former without proof of the latter.

View the author’s literary work written under the pen name of Avam Hale. Both books are available at Amazon and most major online retailers in both electronic and print formats.

Copyright © 2015 Glassmaker in China

Notice:  The views expressed in this post are strictly those of the writer acting in a personal capacity.  They are not in any way endorsed or sanctioned by his employer or any other individual with which he may be personally or professionally affiliated.

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