Savvy investors eyeing the next big thing in China should consider cigarettes, nicotine gum and cancer-treatment providers. That is the upshot of a Brookings Institution report that raises burning questions about the family of Li Keqiang.
He has been named China’s next premier at a Communist Party congress that began on Thursday. Li’s brother, Li Keming, is the deputy director at China’s State Tobacco Monopoly Administration, which dominates an industry that some health officials estimate will kill 3.5 million people each year in the country by 2030.
The conflicts of interest Li may carry to the top of Chinese power is a microcosm of what is wrong with the nation. They are endemic to almost every challenge facing China’s next leaders as they confront the weakest economy in 30 years.
Is it really plausible to think China’s second top official, the man charged with public health affairs, will clamp down on an industry in which his brother plays such a pivotal role? To answer “yes” ignores the all-in-the-family dynamic imperiling China’s future. One place where there is a different response is the blogosphere, which keeps referring to China’s “$2.7 billion (R23.5bn) problem”, or “2.7B” to get around government censors frantically trying to prevent people from reading an October 25 New York Times article about Li Keqiang’s predecessor, Wen Jiabao.
Wen’s carefully honed persona is that of a simple man. The government’s favoured depiction is “Grandpa Wen” – a caring, committed and selfless public servant. The Times piece described a darker scenario, in which Wen’s family control assets of at least $2.7bn. China’s response was as quick as it was defensive, dismissing the story as a politically motivated bid to provoke instability. The Wen article followed a June 29 Bloomberg report on the accumulated wealth of the family of Vice-President Xi Jinping, who is likely to be installed as party general secretary this week.
Try as it may, China is having trouble controlling the narrative, especially in cyberspace. Barring Twitter, Facebook and YouTube only energises activists and social-media outlets to beat restrictions on expression and dissent. The thing is, this story is out in the open. Brookings senior fellow Cheng Li (no relation to the brothers) argues that Li’s brother should be removed from his post at China’s tobacco monopoly. The thinking is, if you believe China took a light touch to regulating cigarettes during the past 10 years, just wait until the next 10. That hardly bodes well for the interests, or health, of the people.
Steering China between 2013 and 2023 is arguably the toughest job in the world. Really, if Barack Obama and Mitt Romney think fixing America’s troubles is a tall task, consider what awaits Xi and Li.
But no changes are possible unless China does two things. First, it must sort out how to hand over power to a new generation of elites without the behind-the-scenes infighting that distracts attention from enacting vital reforms. Second, China must tackle the toxic relationship between money and power and the inevitable corruption it breeds.
Few countries, especially those with closed political systems under single-party control, have managed to cut this Gordian Knot. The effects are obvious not only in China, but developing countries around the world that tolerate huge income inequality and growth that passes by the masses. The difference is that China aspires to global primacy.
William Pesek is a Bloomberg columnist.