According to the most recent Global Corruption Index, Communist China ranked 140 out of 198, meaning it is one of the most corrupted countries globally. Notoriously corrupt regimes such as Russia (130/198) and Belarus (131/198) scored higher than China.
While corruption in China is rampant, reports about corruption at the highest level of the Chinese Communist Party (CCP) have been scant since the most senior CCP leaders and their families operate in secrecy. Therefore, a new book, “Red Roulette: An Insider’s Story Of Wealth, Power, Corruption And Vengeance In Today’s China,” has generated much excitement because its author, Chinese businessman Desmond Shum, promised to unveil the CCP’s corruption at the highest level.
Desmond was born in Shanghai. His paternal grandfather was a lawyer who fled to Hong Kong right before the Communist Party took over mainland China in 1949. Desmond’s father was left behind to “look after” family estate and the law office in Shanghai.
After taking over China, the CCP divided Chinese people into “good” and “bad” social and economic classes. Some of the “bad” social classes included “landlords” and “capitalists.” Since Desmond’s father was classified as a “capitalist,” the local government saw nothing wrong with seizing his family’s mansion and shutting down their law office.
But compared to millions of the Chinese people, the Shum family was fortunate. They didn’t suffer inhuman persecutions during China’s “Cultural Revolution,” which was responsible for the deaths of at least two million people, many of whom were of the “bad” social classes.
As soon as the CCP reopened China to the outside world after Communist Party Chairman Mao Zedong’s death, Desmond and his parents migrated to Hong Kong to reunite with his grandfather. Later Desmond attended college in the United States. Upon graduation, he returned to Hong Kong to work for a private equity firm that focused on investing in businesses in mainland China. His work eventually led him to relocate to Beijing in late 1997.
In Communist China, then and now, corruption is a feature, not a bug of the one-party political system. As Desmond wrote, “the CCP has no competition. The party secretary in a county, city or province outranked the county chief, mayor, or provincial governor. Even China’s military, the People’s Liberation Army, was legally not the army of the Chinese state. It was the Party’s army.”
Since the Party controls everything and makes all the rules, the only way for any ordinary Chinese to get ahead economically and politically is through bribing CCP members and their families.
The Red Aristocrats
By the late 1980s, the CCP discontinued classifying the Chinese people by social and economic classes. Yet one particular class has never gone away, even though it’s not officially listed anywhere on the paper. Still, every Chinese understands its existence – the red aristocrats, or the most senior CCP leaders, and their families.
Despite the CCP’s slogans of equality and ruthless campaigns attempting to eliminate wealth gaps, the red aristocrats have always lived a very different life than ordinary Chinese people have. The red aristocrats live in secured compounds, eat food from a supply chain specially prepared for them, and send their children to special K-12 schools. They usually socialize and often marry their offspring within this exclusive social circle. China’s economic reform since the 1980s has provided them ample opportunities to mint money by monetizing their connections and access to the most important decision-makers (often their dads or grandfathers) in China.
Many red aristocrats have become wealthy by controlling businesses in monopoly positions without risking their money because of their political connections. For example, the relatives of Deng Xiaoping, the paramount leader of China from 1978 to 1997, paid next to nothing for the exclusive rights to bottle water in Tibet. Desmond wrote: “From 2008 to 2010, the Ministry of Railways bought two hundred million bottles of the stuff. When the company listed on the Hong Kong Stock Exchange in 2011, its market capitalization was $1.5 billion.”
No senior CCP leaders could claim they were unaware of their families selling access to get rich. Some senior CCP leaders are even actively involved in their families’ business dealings. According to Desmond, Jiang Zemin, the head of China from 1993 to 2003, often “dispatched emissaries to exert influence on behalf of his children and grandkids.”
In Beijing, China’s power center, Desmond met his future wife, Whitney Duan, an ambitious and well-connected Chinese businesswoman. Whitney is not from the red aristocrat class, but she became part of the circle by becoming a close confidant of Auntie Zhang, wife of Wen Jiabao, China’s Premier from 2003 to 2013.
Besides the Wens, Whitney also built connections with a who’s who of the CCP, including Wang Qishan, currently vice-premier of China. Through Whitney and her political ties, Desmond had a front-row seat to the inner working of the CCP at the highest level. He and Whitney reaped a fortune by fully capitalizing on these connections and obtaining business deals that were unavailable to others. The couple became so wealthy that they once dropped $15 million for a diamond ring without thinking twice about it.
Of course, the red aristocrats the couple worked with were even bigger winners. According to Desmond, Auntie Zhang received 30 percent of the profit from whatever the couple made, often without putting up any capital. The 30 percent was the going rate other red aristocrats charged for lending their political connections. Naturally, Desmond and Whitney weren’t the only people to whom the Wens sold their access.
According to a 2012 New York Times report, Auntie Zhang and Wen’s children accumulated a net worth of at least $2.7 billion while Wen was China’s premier. After the Times report came out, Auntie Zhang pressured Whitney to tell the Times that the Wens’ “investments” the Times uncovered were actually Whitney’s. No one really believed Whitney’s claim. The Chinese government blocked the Times’ website. The Wens were never reprimanded for their corruption.
Desmond and Whitney eventually divorced, and Desmond and their son moved to England. In 2017, Whitney mysteriously “disappeared.” Desmond has no doubt that the CCP arrested her, but no one from the Party would confirm it.
The True Nature of the CCP
The real value of this book is not that it revealed anything we didn’t already know. The New York Times reported the Wen family’s corruption back in 2012. Instead, this book confirms what we already knew but with concrete examples.
First, the book confirmed that corruption is a systemic problem in China, and it begins with the senior leadership of the CCP. This explains why no CCP anti-corruption campaign has successfully stamped out corruption. These campaigns have always been more about purging political rivals than addressing the root cause of corruption.
Second, the book confirms the true nature of the CCP: it’s coldblooded, ruthless, and will do anything to remain in control. As Desmond wrote, “The Party has an almost animal instinct toward repression and control. It is one of the foundational tenets of a Leninist system. Anytime the Party can afford to swing toward repression, it will.”
When the CCP launched economic reform in the 1980s, it did so for survival, not because it had an ounce of desire to embrace freedom and democracy. Desmond sees the CCP’s honeymoon with Chinese entrepreneurs “was little more than a Leninist tactic, born in the Bolshevik Revolution, to divide the enemy in order to nihilate it.”
After decades of economic growth, as soon as the Party became confident that its survival was secure, it has again cracked down on private businesses and entrepreneurs and brutally suppressed dissenting voices. According to Desmond, “China was moving in this illiberal direction long before Xi Jinping took power in 2012. Xi has simply accelerated the process.”
Third, the book also confirms that western businesses have been complicit in rampant corruption in China. They offered children and relatives of red aristocrats overpaid positions or invested in firms owned by red aristocrats to land Chinese clients or obtain preferential business deals in China. Driven by greed, western businesses have played a disgraceful role in strengthening a corrupt authoritarian regime.
What This Book Doesn’t Say
This revealing book does have a few shortcomings. Desmond and his ex-wife Whitney became wealthy by getting preferential treatment in their business dealings because of whom they knew. A few of their political connections were eventually sentenced to death on corruption charges. Even if these charges were politically motivated, were Desmond and Whitney truly as innocent as Desmond portrayed?
Desmond said he wanted to write an honest account. Still, he offers no apology and demonstrates no remorse. Had he taken some responsibility for profiting from and strengthening a corrupt dictatorial regime, it would have made his book more trustworthy.
Another shortcoming of the book is that although it promised to tell all, it only named names of those corrupt senior CCP officials that western media already reported about, such as the Wens. Desmond refrained from implicating China’s current leader, Xi Jinping.
As early as 2012, Bloomberg reported about the Xi family’s wealth several months before the New York Times’ report on the Wens. Given Desmond and Whitney’s connections with the senior leaders of CCP in 2012, it’s hard to believe that Desmond didn’t have any inside knowledge of the Xi family’s business. Maybe Desmond refrained from saying anything about the Xis from concern for the safety of his family.
On the eve of the book launch, Desmond said that Whitney, who had gone missing for four years, called him out of the blue, urging him not to publish his book. Whitney warned that the book would “jeopardize lives,” and those who slander the state never end well. Desmond believed Whitney was reading a script provided by the CCP.
Speaking the truth about China is a risky business, and despite the book’s shortcomings, Desmond Shum deserves credit for his willingness to speak up and expose the corruption at the highest level of the CCP. His book and his experiences illustrate how corrupt the CCP really is and the despicable acts it is capable of.