Many have postulated a theory of convergence regarding Communist China and the United States, that the countries will become more like each other than different. That the interconnectedness of their economies will transform both countries into mirror images. Obviously it is hard to measure some of these phenomena but two things are clearly alike now – the surveillance state and a propensity for the elite of both countries to hide their money offshore.
According to a new report by the International Consortium of Investigative Journalists (ICIJ) the Chinese elite, including members of the Chinese Communist Party, are hiding substantial amounts of their wealth offshore.
The confidential files include details of a real estate company co-owned by current President Xi Jinping’s brother-in-law and British Virgin Islands companies set up by former Premier Wen Jiabao’s son and also by his son-in-law.
Nearly 22,000 offshore clients with addresses in mainland China and Hong Kong appear in the files obtained by the International Consortium of Investigative Journalists. Among them are some of China’s most powerful men and women — including at least 15 of China’s richest, members of the National People’s Congress and executives from state-owned companies entangled in corruption scandals.
Communist tax cheats? Well, at least the Chinese have been adopting the values of American Big Business – that was the point of free trade right?
It seems the Princelings – children of the previous Communist elite – are deeply involved in the tax cheating affair. Yes, Communist China has a new class system with the Princelings occupying high government and business posts and now, apparently, being instruments of hiding money for their relatives.
But don’t worry, American and European business is also cashing in on the underground economy.
PricewaterhouseCoopers, UBS and other Western banks and accounting firms play a key role as middlemen in helping Chinese clients set up trusts and companies in the British Virgin Islands, Samoa and other offshore centers usually associated with hidden wealth, the records show. For instance, Swiss financial giant Credit Suisse helped Wen Jiabao’s son create his BVI company while his father was leading the country.
The problem with having secret holdings of course is the inability for others to know a public official’s conflict of interest. Secret holdings facilitate corruption, already a major problem in China. With all these offshore secret financial holdings how can government procurement maintain integrity?
It seems money in politics might be another problem America and China have in common.