Via Beijing Today: “Malipo County in Yunnan Province has been on the poverty list for decades. The county spent 300 million yuan building a university campus in the valley to attract students. But none have ever attended.”

Our friends at Beijing Today swing by now and then to introduce art and culture in the city.

The China Dream is in trouble according to a recent report by The Mirror. The investigative report, published on February 7, said the number of impoverished counties in China rose from 331 in 1985 to 592 in 2012.

This purported slide into poverty runs contrary to three decades of explosive economic growth and seriously clashes with the government’s official reporting of 98.9 million people in poverty nationwide.

But rather than unmasking a hidden class of impoverished citizens, The Mirror’s reporters may have stumbled up one of the nation’s most audacious channels for corruption.

In 1985, the central government put forward a policy that would replace handouts with generous funding for projects intended to “develop the local economy” in China’s poorest counties. The incentive was designed to bring the countryside in line with the nation’s greater market reforms.

Initially, “poor counties” were defined as those where the average annual household income was less than 150 yuan: $51 at the time, or $110 in today’s money.

The nationwide average, by comparison, was 858 yuan per household.

The number of listed counties has grown slowly in the years since. In most years, about 30 counties graduate from the list to be replaced by new developing regions.

On the surface, the policy appeared to be working. In 2012, the government revised the policy and bumped the baseline average household income to less than 2,300 yuan per year.

But the poverty list is based on self-reporting rather than census data, and local officials have a strong incentive to present their communities as ailing to tap into the vast cash reserves of the central government.

Many “poor counties,” especially those along the eastern coast, applied for poverty status to win subsidy money for bogus projects.

An increasing trend in corruption over the last decade resulted in billions of yuan earmarked for good causes to pour into the pockets of county officials.

Hailun County in Heilongjiang province, Lixin County in Anhui province, and Taiqian County and Fengqiu County in Henan province are among the most heinous examples of fund abuse, having directly used poverty relief funds to purchase promotions, erect gaudy government offices and construct lavish homes for local officials.

Little evidence exists that any subsidy money was used as intended.

Taiqian County was awarded an annual budget of more than 80 million yuan in 2011 – a year when its average annual income was 7,200 yuan in the cities and 2,650 yuan in the countryside.

As government officials built themselves luxury apartments and a new massive administrative complex, more than 600 students were left packed into one small dormitory. Their classrooms had no windows to shield them from the elements.

When reporters asked school officials why the classrooms did not have windows, they were told the school could not afford them.

The school was located next to the new government complex.

Wang Jingbo, deputy director of the Chinese Law School, said that the central government is revising its poverty targets to move more wealthy counties off the list in hopes that the funds go where they are truly needed.

“We have to focus our spending on real projects that push development in the right direction,” he said. “This phenomenon can’t be allowed to persist.”

This post originally appeared in Beijing Today.

A jet-black Audi A6 with government plates rolls down the streets of Beijing and stops at a school, mall or restaurant. Out steps a teenage girl, backpack in tow, who surely can’t be a government official — but just might be the daughter of one. Secretly, every pedestrian scoffs and/or hisses.

If last November’s Communist Party announcement about the procurement and use of government cars actually pans out — eliminating all but a select number (取消一般公车) — familiar scenes like the above may no longer dominate urban Chinese landscapes. Part of the wider move for good governance and eliminating waste, the misuse of government cars (公车私用, gongche siyong) is so damaging to the government because it is so obvious.

It’s tempting to consider gongche siyong a recent problem, since China’s car boom is a phenomenon of only the past thirty years. But the misuse of public vehicles predates the establishment of the People’s Republic of China. Looking into the history of private abuse of public vehicles actually makes recent reform measures seem more significant — and at the same time making it doubtful that a solution exists.

The automobile spread quickly around the world in the 1920s and 1930s, remaking urban landscapes and rhythms of daily life. China was no exception. As The New York Times noted in September 1936, Guomindang officials in Nanjing were “acutely traffic-conscious” because “they face[d] the twin tasks of making the population traffic-wise and of educating the thousands of new chauffeurs in the rules of safe driving.”

Safety, though, was just one problem.

By the mid-1930s, the misuse of government cars drained official resources and threatened the prestige and reputation of the government. According to statistics compiled by the Public Works Bureau of the Nanjing Municipal Government, more than 500 of the nearly 1,500 motor vehicles in the city belonged to the government. The authorities owned 259, 65 trucks, 16 buses, 36 motorcycles, 135 bikes and 45 rickshaws, according to research by Hsieh Kuan-Yi, published in the 1935 paper “The Use of Control of Motor-Cars in Central Government Organs.”¹

There were rules for how to use these cars, but they were “grossly neglected in all but a very few government organs.”* Bicycles, for example, were used largely to transport messages while police and health bureaus also used them to carry out routine business as well as inspections. Rickshaws generally served officials venturing out to make purchases and were not used by high-ranking officials.

Cars themselves fell into three categories: specially reserved, office service and general. The heads of all government offices had access to specially reserved cars and this group accounted for more than half the total number of cars in the government’s fleet. Some higher-level bureaucrats had use of office cars for commuting to work. General service cars were for official business errands, but this final service gave “rise to considerable difficulties in matters of distribution and control, due to the limited number of cars.”*

Despite the a number of regulations already on the books, the misuse of official cars for private purposes was relatively easy. In order to get access to a general-use car, an official had to fill out a request form, obtain approval from his superior and send it to the Miscellaneous Affairs Section of whatever government department he happened to work in, which had control over the vehicles.*

In theory, after the journey, the chauffeur had to fill out a detailed report concerning the destination, the route and the length of the journey. This form had to be signed by the official in his role as passenger in the vehicle. In theory, complaints “such as the prevalent one against the use of public motor cars by officials for private purposes should not exist.” But, as anyone could see, the “display of Government cars in front of cinemas and restaurants and speeding along highways and at scenic places on Sunday’s are sufficient testimony to the prevalence of such abuse.”* That sounds familiar.

Chauffeur salary and behavior were also problems. According to estimates, it cost $150 to maintain a government car for one month: $90 for gas, $45 for driver wages and $15 for repair and miscellaneous expenses.* Perhaps these drivers got paid too much: sometimes more than government officials, and always much more than others employed in the menial but necessary positions that kept a government bureau functioning.

Beyond a high salary and reckless driving, chauffeurs stood at the center of another important abuse: stealing. Theft of gasoline was “an open secret” and had “become a sort of recognized vice… one of the of the chief causes for the high gasoline consumption in various organs.” Each government car consumed on average 100 gallons of gasoline a month, with 50 gallons considered quite frugal and 200 viewed as wasteful. Since drivers were charged with requisitioning supplies for their cars, they freely asked for supplies from the Miscellaneous Affairs of each bureau and, “owing to laxity of inspection,” the chauffeurs were “very largely uncontrolled.”*

There was one predictable and one surprising proposal to combat the abuse of public vehicles problem in the 1930s. The traditional bureaucratic answer stressed implementing a stronger system of control. These reforms needed to start with better knowledge of cars themselves. The theory was that if the person in charge of administering cars in each bureau actually knew something about cars, it would be easier to spot skullduggery. The ideal system would have been to centralize the purchase, repair and use of automobiles across all layers of government, but there was doubt whether the adoption of such an arrangement in China was “practicable, at least at present.”*

Instead, the best answer was shrinking the government fleet. Horses would work as well as cars — and were also cheaper. Though the initial outlay for each horse and carriage ran between $300 and $400, the maintenance costs would be three to four times less than motor vehicle. The speed of the carriage — “ample for ordinary government business” — made this a solution that “should be considered as a remedy for the wastefulness for the motor service.”*

The solutions proposed in the 1930s and in 2014 — minus the horses! — really aren’t that different. Eliminate gongche siyong by shrinking the government fleet and give bureaucrats fewer opportunities to misuse, then centralize control over the remaining fleet. If the proposed reforms do eliminate or at least significantly lessen the abuse of public vehicles, they will represent a major step toward eliminating a problem that transcends differences between the CCP and KMT: the private use of government property simply because officials think it’s one of the perks of the job.

Austin Dean is a PhD candidate in Chinese History soon to be based in Beijing. He blogs at The Licentiate’s Ledger and tweets @TheLicentiate.

¹ Hsieh Kuan-Yi, “The Use of Control of Motor-Cars in Central Government Organs,” The Chinese Administrator, Volume I, Number 2 (1935): 229-230.

* Ibid.

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It took a manager in a Chinese state-owned enterprise asking me to help double-team his mistress in a Shanghai hotel for me to realize why The Wolf of Wall Street was my favorite film of 2013.

I was watching the movie for a second time – still puzzling as to why my initial viewing so enthralled me – when a random manager (or someone claiming to be such) added me on WeChat, China’s red-hot mobile messaging app. As I gazed upon Leonardo DiCaprio’s character enjoying a three-way, I fended off the manager’s requests for explicit photos to prove I was man enough to do the same. Finally, I made the connection: in spirit, if not quite in the details, The Wolf of Wall Street embodies the hidden, hedonistic thrill that drives so much of China’s official corruption.

The Wolf of Wall Street tells the story of how unscrupulous stock broker Jordan Belfort and his firm Stratton Oakmont made fortunes selling penny stocks to clueless investors, painting one of the most vivid portraits of materialistic debauchery ever committed to film. The movie confronts American viewers with the self-indulgent thrill of these crooks’ Bacchanalian lifestyles, daring them to identify with and even covet it, before taking a late, darker turn.

If only we had such a cinematic argument in China! Alas, while the government here has made fighting official decadence a priority, it still finds the subject (self-incriminating as it is) a little too sensitive to permit Wolf’s bare-all approach. China’s state-controlled film and television industry is too often tasked instead with damage control, parading a series of airbrushed imagery that casts most officials as nobly dull – not dissimilar from the sterile commercial for Belfort’s firm that opens Wolf.  But Stratton Oakmont’s sanitized image of humdrum, competent worker bees is just a two-minute prelude to 178 more minutes of felonies, sex, drugs, and record-setting vulgarity laying bare the demented amoral attraction of Wall Street. In China, the bland façade is all there is.

Which is too bad, because in China we would have so much material to work with. The “wild, hyper vulgar exuberance” and “essential vitality” that critics and fans alike see in Wolf’s Wall Street crew courses through the corrupted members of the Chinese elite as well – but we can only infer it from tantalizing glimpses of the their decadence: a crashed sports car here, grainy photos of an orgy there, and everywhere rumors about the accumulation of luxury, finery, mistresses, and houses.

A Chinese The Wolf of Wall Street could actually dovetail nicely with the government’s ongoing anti-corruption campaign. Imagine a film that first revels in this simple premise: that China is an authoritarian-capitalist nation whose economic pie is growing so fast that an official can gorge himself on the proceeds with little fear of his subjects or superiors noticing; that legitimate opposition to such an official’s continued enrichment can be demonized as a threat to “stability” to be snuffed out with state resources; that here a cascade of material and carnal pleasure is filling the gap of a traditional value system decimated by years of Communism. And that all of this together is – like Jordan Belfort’s morphine – fucking awesome.

That would be the seductive message of the film’s first two-thirds, in which a young man enters the government with naïve hopes of Serving the People, only to have them dismissed by a mentor figure played by the Chinese version of Matthew McConaughey. Our official learns that China’s masses are perfectly capable of taking care of themselves, leaving his main task as extracting the greatest benefits from his official perks while learning how to arrange infrastructure and land deals to maximize the potential for GDP growth. (And taking bribes.) These would be the go-go years after the financial crisis, when China’s epic stimulus package unleashed an all-you-can-eat buffet of corruption on local governments. Sybaritic pleasures follow: banquets overflowing with endangered species and lubricated with a biblical flood of rice wine; drunken nights at karaoke parlors-cum-brothels; a mountain of luxury goods given as gifts; a pretty wife followed by a harem of underage mistresses hidden away in a growing collection of illicitly purchased apartments and villas.

(Eventually our protagonist would find himself at risk of being entangled in the Party’s anti-corruption drag net, and would seek to squirrel away his ill-gotten gains in a safe haven abroad.  Canada being such a popular choice for corrupt officials on the run, perhaps we can call in Jean Dujardin to repeat his role from Wolf, this time as a banker in Quebec?)

Putting all that hedonistic excess up on the screen will be an explosively cathartic exercise for hundreds of millions of Chinese more often asked to pretend that such impulses are under control (or don’t exist). Going further, a successful Chinese Wolf could lure its audience into empathizing with and eventually envying its protagonists, until an about face near the end that hints at the shattered lives and neglected nation that are left in their wake. A final shot that echoes Wolf could be priceless, settling on a slack-jawed crowd of young civil service exam takers, lusting for the perks of official life while oblivious to their collective contribution to dragging the country into a Nationalist-style corruption meltdown. Played right, it could scare any audience straight by making people think twice about getting into government for the wrong reasons.

A Chinese The Wolf of Wall Street would need a new name. We’ll swap Wolf for Tiger, in deference to President Xi Jinping’s desire to rid the Party of “Tigers and Flies” (high-level corrupt officials and their small fry brethren). As for Wall Street, we’ll need to exchange America’s avenue of avarice for something with Chinese characteristics. Zhongnanhai — the Beijing compound where all the central party leaders live and work — could be a good candidate, but going after central government bigwigs is all too often still a no-no — some tigers are too big to go down. Chongqing could be an alternative. In the wake of the Bo Xilai scandal, the city in its 2007-2012 incarnation has gained a reputation as China’s high church of official corruption. The film wouldn’t necessarily have to be about Bo himself — that story is too well known and specific.  But perhaps there is a self-indulgent acolyte of Bo’s (a tiger cub, if you will) whose story we could embellish to fit a three-hour film.  Anyway, that would give us the name: The Tiger of Chongqing.

China’s government and its media watchdog SARFT would never let this movie happen. But what a world if it did?

Warner Brown studies real estate trends in Shanghai, but personality tests say he should have been a film critic.

Unfortunately for the Chinese Communist Party, this story just isn’t going away. What has been a constant spectre mocking the Party’s exhortations that they are clamping down on corruption and “ill-gotten gains” has been the investigations into the immense wealth accumulated by the Chinese elite and their relatives. Yesterday, more revelations came out which revealed how the relatives of China’s top officials have utilised offshore tax havens – the British Virgin Islands are the favourite “holiday” destination – in an attempt to shield their accumulation of wealth.

What of recriminations, of visa denials, or journalistic intimidation? The New York Times and Bloomberg don’t have their fingerprints on this one. This story was broken by the International Consortium of Investigative Journalists – I hadn’t heard of them either – and their findings included the immense assets – primarily, listed companies and consultancies – controlled and owned by the “red nobility” of relatives of the Politburo Standing Committee. Given that the NY Times and Bloomberg had probably pushed their hand as far as possible, it was time for someone else to wade through the swathes of paperwork that masked the entrepreneurial achievements of these genetically blessed cadres.

Predictably, the International Consortium of Investigative Journalists is now blocked in China. If you’re the cheeky kind though, you’d do well to pass this amongst your politically and socially aware friends:

Unblockable link to the @ICIJorg report in Chinese about the wealth of China’s elite https://t.co/wWBk63G3PI pls RT

— GreatFire.org (@GreatFireChina) January 23, 2014

There’s certainly a lesson here in breaking news stories that will receive the ire of the Party:

1. Best to break them in January, right after receiving one’s visa renewal – which typically occurs in either November or December. You’ll have the better part of a year to plan for the non-renewal.

2. The experience of The New Citizens Movement indicates that while “illegal assembly,” “gathering crowds to disturb public order” and “using a cult to undermine implementation of the law” are big no-nos, consortiums haven’t caught the ire of the authorities… yet.

Eventually, in the evolution of Western reporting on the accumulation of elite affluence, paparazzi will sift through Chinese dumpsters – “Look where he’s been shopping!” — to find the dirt, but right now, they don’t need to. If Party officials were so keen on clamping down on graft and corruption, maybe they should first try harder to hide their own.

Follow Lincoln Daw @linkydaw.

Illustration by Tim Meko

1. Between $1 trillion and $4 trillion in untraced assets have left the country since 2000.

2. It’s kind of our fault. Pricewaterhouse Coopers, UBS, and Credit Suisse are some of the key agents in this transaction. Foreign investors also “imposed” this because of their ” general discomfort with Chinese rules and regulations.”

3. Several prominent Chinese leaders are actually 2 dimensional cartoon people. Either that or in their exhaustive individual reporting on offshore assets of China’s princelings, they used artistic representations to avoid using photos that belong to others.

4. 40% of offshore trading comes from China and other Asian nations.

5. ICIJ sorted through a cache of 2.5 million leaked files and got help from more than 50 reporting partners throughout the world in releasing this info.

Read the full report

English version

Chinese version

As reported last month, former security chief Zhou Yongkang, now retired, has been the target of high-level corruption probes since at least late August. “How far and high is [Xi Jinping] willing to go to clean up China’s political elite?” the New York Times’s Chris Buckley asked in a September 25 article.

Now we kind of know. The South China Morning Post reported today, citing unnamed sources, that Xi Jinping is overseeing a “special unit” to investigate Zhou, “bypassing the Communist Party’s internal disciplinary apparatus.”

Beijing police chief Fu Zhenghua will report directly to Xi, according to police and graft watchdog sources. Fu is the first person in the party’s history to also hold the concurrent posts of head of Beijing’s armed police, the Standing Committee member of the party’s Beijing municipal committee and deputy minister of public security.

This news was partially confirmed by none other than CCTV News’s Twitter account at around 5:30 pm.

RT @cctvnews: President Xi Jinping has set up a special unit to investigate corruption allegations against the retired leader Zhou Yongkang.

— tania branigan (@taniabranigan) October 21, 2013

And then, predictably, it was unconfirmed, as the tweet was deleted — just as Western journalists were spitting out Coca-Colas* en masse onto their keyboards.

Now you see it, now you don't: @cctvnews has deleted Zhou tweet

— tania branigan (@taniabranigan) October 21, 2013

*We figure 5:30 is pretty late for coffee or tea.

“Why deletion?” is probably the less interesting of the two questions we can ask. There seem to be many good ways to break a story about an unprecedented investigative unit for a former Chinese leader who happened to be of the most powerful and divisive figures on the Politburo Standing Committee; Twitter is not one of them.

How did the tweet ever get sent?

So @cctvnews has deleted and de-confirmed the tweet on Zhou Yongkang being investigated. Was the tweet the mistake of an intern?

— Jeremy Goldkorn 金玉米 (@goldkorn) October 21, 2013

What if @cctvnews was tweeting the Zhou Yongkang info from a 内参?

— Edward Wong (@comradewong) October 21, 2013

(内参 refers to internal — and confidential — government documents.)

It’s unlikely we’ll find out. But this seems like a reasonable bet:

Safe prediction: @cctvnews will be the most aggressively boring twitter account for the foreseeable future.

— Gady Epstein (@gadyepstein) October 21, 2013

Although you should probably start following the Twitter accounts of state media anyway, just in case. There must be a whole bunch of interns there, always a click away from making news.

(Above image via George Chen)

UDPATE, 10/22, 10:09 am: CCTV News says it was “targeted.”

CCTVNEWS Statement pic.twitter.com/B0iinrjXvt

— CCTVNEWS (@cctvnews) October 22, 2013

Yang Dacai, dubbed the “smiling official” after he was pictured grinning ear-to-ear at the scene of a horrific traffic accident last August, has been sentenced to 14 years in jail for accepting bribes. He smiled. As Wall Street Journal notes, he looked “oddly beatific.”

Maybe the guy is naturally disposed to smile? He’s like a cat. Could it be that we were all wrong to cast aspersions at him following this picture?

Eh. Let’s put it at “maybe.”

Prosecutors said Mr. Yang, also referred to online as “Brother Watch,” failed to explain the origin of more than 5 million yuan ($802,000) in family assets, according to the China News Service (in Chinese). An investigation found he had accepted bribes totaling 250,000 yuan from an unnamed company that needed help passing a safety inspection.

After confessing to having fallen into the “abyss of criminality,” according to the report, Mr. Yang said it was “too late for regrets,” adding: “In admitting my guilt and showing repentance, my fervent wish is that the court will give me the opportunity to once again be an upright person.”

In addition to the prison time, Mr. Yang will be fined 50,000 yuan and forfeit all of his family’s ill-gotten assets, state media said.

Yang is called “Brother Watch” because microbloggers posted five photos of him wearing luxury watches. It kick-started a corruption investigation that eventually brought him down.

‘Brother Watch’ Oddly Beatific in Face of 14-Year Prison Term (WSJ)

If you listen really carefully, you can hear the world smallest violin playing for all the corrupt officials in the People’s Republic – the campaign against corruption and wasteful spending means they’re no longer allowed to splash out on 8,888 yuan on bottles of fine tiger penis wine or whatever they drink.

However, there’s always the law of unintended consequences (or rather, supply and demand): since the campaign started last year, a number of companies that cater to the needs of the rich and the powerful are now feeling the pinch.

Around Christmas it was reported that Maotai, the brand of choice for the drinker in want of some conspicuous consumption, was hit hard by the campaign.

Likewise, Compagnie Financière Richemont, which owns the Montblanc and Catier brands, has seen its sales slowing. It doesn’t take a Benedict Cumberbatch to see why: according to one luxury goods insider, “As much as 60% of expensive watches in China are gifted to officials.”

Meanwhile, corrupt officials have been rushing to sell luxury properties and move their assets abroad. According to a leaked goverment corruption report, a whopping $1 trillion was smuggled out of China in 2012 alone. (To put it in perspective, that’s about three billion bottles of Maotai).

A bit closer to home, the average turnover of high-end eateries in Beijing is reported to have fallen 35%, according to National Business Daily. (Being a respectable newspaper, NBD refrained from mentioning similar figures for escort services or top-notch brothels, but we’re all able to read between the lines.)

The paper mentions Beijing Xiangeqing, an upmarket chain of restaurants, is revamping its entire business model in the wake of the government anti-corruption campaign. Dishes that cost more than 200 yuan are going to be taken off the menu. There are also rumors that the chain will axe one third of its staff.

Mistresses all over China are no doubt shedding bitter tears over the rapidly declining dining options, but don’t worry, we’ll look into starting a charity foundation that will aid them in these difficult times.

We’re still waiting to see how the anti-corruption drive will affect Audi sales.