China: Chen Xiwo banned book published in English
06 Oct 2014
From left to right: Harvey Tomlinson from MakeDo Publishing, Chen Xiwo and translator, Nicky Harman at Free Word. (Pic: Aimée Hamilton)

From left to right: Harvey Tomlinson from MakeDo Publishing, Chen Xiwo and translator, Nicky Harman at English PEN. (Photo: Aimée Hamilton)

Chen Xiwo, described as “one of China’s most outspoken voices on freedom of expression for writers” by Asia Sentinel, has spoken about how he challenged the Chinese government’s decision to censor his latest book ahead of its launch in English.

The Book of Sins is a collection of seven novellas exploring controversial topics including rape, incest and S&M and examine the links between sexual and political deviance.

A heavily censored version of the book was published in China, in which parts of the text, including an entire novella, were removed.

Xiwo launched a case to sue China’s customs agency in an attempt to find out why his book, which was published in full in Taiwan, had been confiscated when it arrived in China in 2007. He was originally told that it was its dark and pornographic nature that had led to it being banned in its complete form.

In an unprecedented move, Xiwo took the customs office to court. He said in the history of the People’s Republic of China, since 1949, there has never been a case of a writer suing for not being allowed to publish a book.

Originally when the court hearings got underway the domestic news outlets were able to report on the progress until the propaganda ministry sent out an order forbidding further coverage.

During a meeting today run by English PEN at the Free Word Centre in London, Xiwo said: “These days these kind of orders are usually just made by phone call, so they won’t send an email where there’ll be a record, they do it by phone.

“This makes it even harder to get to the bottom of who’s banning what and why they’re doing it, because there’s no record.”

Chen Xiwo (Pic: Aimée Hamilton)

Chen Xiwo (Photo: Aimée Hamilton)

Eventually the court ruled that Xiwo’s case was a matter of national security, which ended further questions on the topic.  In a blog entry for Free Word, Xiwo writes: “The Book of Sins had been impounded because it was deemed a threat to ‘national security’. In fact, they completely dropped the charge of obscenity. That meant they did not have to divulge any further information, or even say who had made the final decision.”

Xiwo’s book has now been translated into English by prolific translator Nicky Harman, who said: “Chen is a highly moral writer in my view.  The sex and the small amount of violence, it’s never gratuitous.  He really focuses on feelings, he has a good attitude towards women, he’s not misogynistic.”

One of the most provocative stories within the book, I Love My Mum, is about a disabled man who strikes up an incestuous relationship with his mother which ultimately ends in him murdering her. The novella is metaphorical of Chinese society and remains banned in the country.

When asked if he would challenge the banning of his books again, Xiwo said that it is inevitable future books of his will be banned, but he cannot launch a case for every one of them.

Although Chen Xiwo has written 10 books, he says only six or seven of these have been published in their complete form. The Book of Sins has won an English PEN award. Chen Xiwo will be launching the English translation of the book at Waterstones Piccadilly, tomorrow 7 October, at 7pm.

This article was posted on 6 October 2014 at

One response to “China: Chen Xiwo banned book published in English”

  1. China’s economy is riddled with vested interests, while free speech is suppressed. No wonder the regime is cracking down on. But it won’t be easy to maintain the current political model or to reform it. And failure to do either could knock the economy off its extraordinary trajectory. Xi Jinping declares anticorruption efforts should target low-ranking flies as well as powerful tigers.

    Inequality is high and rising. If this inequality were merely a reflection of the market, the fact that some Chinese are more talented and hard-working than others, it could be motivational. But a lot is also a result of economic goodies being grabbed by insiders, sometimes via corruption and in other cases by excluding outsiders from opportunities. Populations can grow restless when they think rulers and their cronies are enriching themselves unfairly.

    In China, the class system operates on several levels. At the top of the socio-economic scale are the princelings, children of important party officials, who have become multimillionaires by trading on their contacts. Then there are bureaucrats, who enjoy attractive lifestyles funded by the people’s taxes and bribes. State-owned enterprises, meanwhile, benefit from monopolies or oligopolies and pay minimal dividends. The fruits of their economic activity are therefore largely enjoyed by those who run them.

    Xi Jinping is himself a princeling, as a descendant of a revolutionary fighter and vice premier, and so are most members of the ruling Politburo Standing Committee. Xi’s extended family has amassed total assets of two billion euros.

    Most Chinese think political corruption is the biggest problem of China. Sinokleptocrat Wen Jiabao’s relatives have accumulated three billion euros. Most of this wealth has been accumulated in areas of the economy over which Wen had direct authority. Wen family’s investments span several sectors. Ping An, an insurance company, had benefited from reforms enacted in 2004 by a state body over which Wen had oversight. A growing wealth gap is causing public discontent, as are the frequent corruption scandals involving government officials.

    All top officers of the People’s army have huge offshore accounts! The procedure is very tricky. A big part of money budgeted for purchasing guns is channeled through creative accounting and the help of princelings to derivatives trading! God forbids of a war, there wouldn’t be enough guns around!

    There is also the hukou system which prevents rural migrants from participating fully in China’s economic miracle. The country has at least 150 million people who come from the villages but work in the cities. The snag is that they don’t have the right to be resident, so often live in dormitories, and their children don’t get the same access to schooling as local residents, so usually stay in the villages with their grandparents. The cities want these workers but don’t want to be swamped by the need to house them and pay for the education and health care of their families. The result is a potentially unstable two-class society.

    China uses a classic mixture of carrot and stick. The carrot has been growth. Even if the benefits of growth haven’t been equally distributed, hundreds of millions of people have still been taken out of poverty. Meanwhile, the stick has been to crack down on anybody who is perceived to be stepping out of line.

    One Chinese torture survivor said: The police used an electric baton on my face – it’s a kind of torture the police call bengbao popcorn, because your face splits open and looks like popped corn. It smelled horrible, the smell of burning skin.

    The problem is that both the carrot and the stick are becoming harder to wield. Economic growth is going to slow down in the coming decade. It then won’t be as easy to buy off potential dissent. Meanwhile, mobile communications and the Internet are mutating in ways that Beijing will find increasingly difficult to control.

    What’s more, there’s a connection between political rights and economic advancement. This was not apparent in the past three decades, when the Chinese model was based on low-value manufacturing. Millions of people could be stuck in factories and told to get on with the job. But it will become apparent as Beijing tries to switch to a new model based on services and high-value manufacturing. If this transition is to be successful, people will have to think for themselves more. They will also have to harness the full power of modern communications. It will then be virtually impossible to keep a lid on free speech.

    To promote its standing in China, JPMorgan Chase turned to a seemingly obscure consulting firm run by a 32-year-old executive named Lily Chang. Ms. Chang’s firm, which received a $75,000-a-month contract from JPMorgan, appeared to have only two employees. And on the surface, Ms. Chang lacked the influence and public name recognition needed to unlock business for the bank.

    What was known to JPMorgan executives, and some executives at other major companies, was that Lily Chang was not her real name. It was an alias for Wen Ruchun, the only daughter of Wen Jiabao, who at the time was China’s prime minister, with oversight of the economy and its financial institutions. There is a broader strategy for accumulating influence in China: Put the relatives of the nation’s ruling elite on the payroll.

    After Ms. Wen’s father joined the inner circle of China’s rulers as vice prime minister in 1998, the family amassed a secret fortune through a series of partnerships and investment vehicles. JPMorgan swapped contracts and jobs for business deals with state-owned Chinese companies.

    The investigation began with an examination of the bank’s decision to hire the daughter of a Chinese railway official and the son of a former banking regulator who is now the chairman of a state-controlled financial conglomerate. The contract with the consulting firm of Ms. Wen, 40, indicates that the bank’s hiring practices also touched the highest rungs of political power in China. Her father was prime minister from 2003 until earlier this year. Her mother has served as a government official with oversight of the nation’s gem and diamond industry. And since 2006, Ms. Wen’s husband has been an official at the China Banking Regulatory Commission.

    For Ms. Wen’s consulting firm, Fullmark Consultants, the JPMorgan deal was lucrative. While many Hong Kong investment bankers were earning as much as $250,000 a year, JPMorgan paid Ms. Wen’s firm $900,000 annually from 2006 to 2008 for a total of $1.8 million.

    Fullmark claimed in a confidential letter to the bank that it introduced and secured business for JPMorgan from the state-run China Railway Group, a construction company that builds railways for the Chinese government. The bank was an underwriter in the company’s 2007 initial public offering, which raised about $5 billion. Ms. Wen’s father, Wen Jiabao, played a key role in that deal. As prime minister, he had ultimate responsibility for state-owned companies and their regulators.

    JPMorgan disclosed that authorities are examining its business relationships with certain related clients in the Asia Pacific region and its engagement of consultants. There is a concrete link between the bank’s decision to hire children of Chinese officials and its ability to secure coveted business deals, a connection that violated anti-bribery laws.

    Underpinning their investigation is the Foreign Corrupt Practices Act, which effectively bars United States companies from giving anything of value to foreign officials to obtain an improper advantage in retaining business. In recent years, the S.E.C. and the Justice Department have stepped up their enforcement of the 1977 law, which is violated if a company acts with corrupt intent, or with an expectation of offering a job in exchange for government business.

    JPMorgan had many such upfront agreements. The bank did keep documents that tied some of its well-connected hires in China to revenue it earned from deals with Chinese state-owned companies.

    The investigation comes at a difficult time for the bank, which is already under scrutiny from a number of agencies in Washington and abroad. JPMorgan recently reached a tentative deal with the Justice Department to pay a record $13 billion over its sale of troubled mortgage securities. It is also facing an investigation into its role as Bernard L. Madoff’s primary bank. The bribery investigation could take years. The S.E.C. and prosecutors have expanded their focus to other Asian countries, including Singapore and South Korea, looking at whether hiring practices that have become commonplace on Wall Street crossed a line at JPMorgan.

    For the last two decades, Wall Street banks and multinational corporations operating in China have sought out princelings as employees, consultants or partners in major Chinese business deals. Many banks talk freely about the ability of princelings to open doors and offer insights into government policies and regulations.

    JPMorgan has established a program, called Sons and Daughters, in order to hire princelings. The children of China’s ruling elite have occasionally used government-approved aliases to protect their privacy while studying or traveling abroad. Ms. Wen used her alias for both schooling and business. Ms. Wen holds two national identity cards with matching birth dates, one issued in Beijing under the name Wen Ruchun and a second issued in the northeastern city of Dalian, as Chang Lily.

    Lily Chang was the name she used while studying for an M.B.A. at the University of Delaware, where she graduated in 1998, and also when she lived in Trump Place, the luxury apartment complex overlooking the Hudson River in Manhattan.

    Like the children of other senior Chinese leaders, she was courted by Wall Street. After securing her M.B.A., regulatory records show, she worked at Lehman Brothers and later Credit Suisse First Boston as Lily Chang. Separately, she held a stake in several private companies.

    Ms. Wen’s work for JPMorgan was tied to her company, Fullmark Consulting. Fullmark is located on the ninth floor of Tower C2 at Oriental Plaza, a high-end retail and office complex in central Beijing.

    Over the last decade, the location also housed private companies that were either controlled by or affiliated with the Wen family. Some of those companies have held indirect stakes in Baidu, China’s biggest Internet search engine, and Ping An Insurance, the financial services giant.

    Ms. Wen’s apparent partner at Fullmark, and a signatory to the JPMorgan consulting agreements, was a woman named Zhang Yuhong, a longtime Wen family friend and business partner who at one time held a large personal stake in Ping An. She also helped control Wen family assets in other industries, including diamond and jewelry ventures.

    During her two-year consulting stint, JPMorgan executives struck a series of deals with Chinese companies closely affiliated with Ms. Wen and her family. Like other big banks, JPMorgan held a stake in New Horizon Capital, a private equity firm co-founded by her brother, Wen Yunsong.

    JPMorgan also invested its clients’ money in Ping An and served as an adviser to the giant company. Today, on behalf of clients, JPMorgan owns nearly $1 billion worth of the company’s shares. At the time of JPMorgan’s initial investment for clients, members of the Wen family held a large, hidden stake in Ping An through a complex network of Chinese investment vehicles, a stake that in 2007 was worth more than $2 billion.

    JPMorgan also won an assignment in 2009 to help underwrite an initial public offering of BBMG, a large Chinese building materials company. BBMG’s largest shareholders included New Horizon Capital, the private equity firm of Ms. Wen’s brother, and Beijing Taihong, an investment vehicle controlled by a longtime business associate of the Wen family. After the shares rose after the company’s I.P.O., Ms. Wen became the largest shareholder in Beijing Taihong.

    Close relatives of China’s top leaders have held secretive offshore companies in tax havens that helped shroud the Communist elite’s wealth, a leaked cache of documents reveals.

    There is a huge 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 fifty thousand offshore clients come from mainland China and Hong Kong. Among them are some of China’s most powerful men and women — including twenty of China’s richest, members of the National People’s Congress and executives from state-owned companies entangled in corruption scandals.

    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. For instance, Swiss financial giant Credit Suisse helped Wen Jiabao’s son create his BVI company while his father was leading the country.

    China is bewildered by its outsized dependency on tiny islands thousands of miles away. As China has moved from an insular communist system to a socialist/capitalist hybrid, China has become a leading market for offshore havens that peddle secrecy, tax shelters, and streamline international deal making. Every corner of China’s economy, from oil to green energy and from mining to arms trading, is corrupt.

    Chinese citizens have remained largely in the dark about the parallel economy that can allow the powerful and well-connected to avoid taxes and keep their dealings secret. Five trillion euros in untraced assets have left China since 2000.

    The growing onshore and offshore wealth of China’s elites is tied to conflict of interest and covert use of government power. If there is real transparency, then the Chinese people will have a much better idea of how corrupt the system is and how much wealth has been amassed by government officials through illegal means.

    Top-level corruption is a politically sensitive issue in China as the country’s economy cools and its wealth gap continues to widen. The country’s leadership has cracked down on journalists and bloggers who have exposed the hidden wealth of top officials and their families as well as citizens who have demanded that government officials disclose their personal assets. Many offshore users had provided a passport as well as an address when they set up their companies, which made it possible to confirm identities in many cases.


    Deng Jiagui, Brother-in-law of President Xi Jinping
    Wen Yunsong, Son of former Premier Wen Jiabao
    Liu Chunhang, Son-in-law of former Premier Wen Jiabao
    Hu Yishi, First cousin of former President Hu Jintao
    Li Xiaolin, Daughter of former Premier Li Peng
    Wu Jianchang, Son-in-law of paramount leader Deng Xiaoping
    Che Feng, Son-in-law of a former central bank governor
    Wang Zhi, Son of a former vice president
    Wang Jun, Son of a former vice president
    Fu Liang, Son of one of Eight Elders of the Communist Party
    Yeh Shuen-ji, Nephew of one of PRC’s founders
    Wang Jingjing, Grandaughter of a former vice president
    Su Zhijun, Grandson of one of best-known PLA commanders
    Ma Huateng, Co-founder of Internet giant Tencent
    Yang Huiyan, China’s richest woman
    Zhang Xin, Co-founder of property developer SOHO China
    Zhang Zhidong, Co-founder of Internet giant Tencent
    Shen Guojun, Chairman of Yintai Group
    Jia Yueting, Chairman of web video giant Leshi
    Huang Guangyu, Founder of GOME appliances chain
    Du Juan, GOME executive and wife of founder
    Lu Zhiqiang, Chairman of Oceanwide
    Li Jinyuan, Chairman of Tiens Group
    Dai Zhikang, Founder of Zendai Investment Group
    Du Shuanghua, Chairman of Rizhao Holding Group
    Ma Jianrong, Chairman of Shenzhou International
    Wen Yibo, Founder of Sound Global
    Shi Zhengrong, Founder of solar-panel maker Suntech
    Zhou Zhengyi, Jailed Shanghai property developer

    China’s Politburo Standing Committee is the all-powerful group of seven (formerly nine) men who run the Communist Party and the country. All their relatives of current or former members of this small circle have incorporated companies in the Cook Islands or British Virgin Islands, BVI.

    China’s red nobility — elites tied by blood or marriage to the current leadership or Party elders — are also popularly known as princelings. Ordinary Chinese have grown increasingly angry over their vast wealth and the hypocrisy of officials who tout people-first ideals but look the other way while their families peddle power and influence for personal gain.

    A BVI company is 50 percent owned by President Xi’s brother-in-law Deng Jiagui. The husband of Xi’s older sister, Deng is a multimillionaire real estate developer and an investor in metals used in cell phones and other electronics. The other half of Excellence Effort Property Development is owned by yet another BVI company belonging to Li Wa and Li Xiaoping, property tycoons who made news in July by winning a $2 billion bid to purchase commercial real estate in Shenzhen.

    Since taking over as the Communist Party’s top official in 2012, Xi has sought to burnish his image with an aggressive anti-graft campaign, promising to go after official corruption involving both low-level flies and high-level tigers. Yet he has crushed a grassroots movement that called for government officials to publicly declare their assets. Wen Jiabao, who stepped down as premier in 2013 after a decade-long tenure, also styled himself as a reformer, cultivating an image of grandfatherly concern for China’s poor.

    Wen’s son Wen Yunsong set up a BVI-registered company, Trend Gold Consultants, with help from the Hong Kong office of Credit Suisse in 2006. Wen Yunsong was the lone director and shareholder of the firm, which appears to have been dissolved in 2008.

    Bare-bones company structures are often created to open bank accounts in the offshore firm’s name, helping obscure the relationship to the real account owner. A U.S.-educated venture capitalist, Wen Yunsong co-founded a China-focused private equity firm and in 2012 became chairman of China’s Satellite Communications Co., a state-owned firm that aspires to be Asia’s largest satellite operator.

    BVI was involved in a burgeoning scandal involving Wen Jiabao’s daughter, Wen Ruchun, also known as Lily Chang. JPMorgan Chase & Co. paid a firm that she ran, Fullmark Consultants, $1.8 million in consulting fees. U.S. securities regulators are investigating the relationship as part of a probe into the bank’s use of princelings to increase its influence in China.

    Fullmark Consultants has been set up in a manner that obscured Wen Ruchun’s relationship to the firm. Her name does not show up in any of the incorporation documents in the ICIJ data, though a Lily Chang is CC’d in one August, 2009 email correspondence about the company. Her husband Liu Chunhang, a former Morgan Stanley finance guru, created Fullmark Consultants in the BVI in 2004 and was the sole director and shareholder of the firm until 2006, the same year he took a government job at the agency that regulates China’s banking industry.

    Liu transferred control of the company to a Wen family friend, Zhang Yuhong, a wealthy businesswoman and colleague of Wen Jiabao’s brother. Zhang also helped control other Wen family assets including diamond and jewelry ventures.

    Offshore provider Portcullis TrustNet billed UBS AG for a certificate of good standing for Fullmark Consultants, indicating a business relationship between Fullmark and the Swiss bank.

    A 2007 U.S. Department of State cable passed along a source’s tip that Premier Wen was disgusted with his family’s activities, and that Wen’s wife and children all have a reputation as people who can get things done for the right price. The cable, part of the Wikileaks document dump, reported that Wen’s kin are amenable to receiving exorbitant consulting fees. The records also include incorporations by relatives of Deng Xiaoping, former Premier Li Peng, and former President Hu Jintao.

    The growing wealth and business interests of the princelings, including offshore holdings, are a dangerous liability for the ruling Communist Party but that people in leadership positions are too involved to stop it. What’s the point of running the Communist Party if you can’t get a couple billion euros for your family? The issue is enormous and has tremendous significance for China, and the fact that everybody dances around it and doesn’t want to talk about it is understandable but scandalous.

    The story of China’s involvement with the offshore world begins with paramount leader Deng Xiaoping’s deepening of economic reforms in the early 1990s. Laws reorganizing China’s economy drove many Chinese offshore because they were written with state-owned enterprises in mind, not fledgling ventures like the entrepreneur trying to market the latest iPhone app.

    Western bankers, accountants and investors wary of doing business on strictly Chinese terms also pushed the offshore model. It was us, the Occidentals that imposed this. It had to do with the foreign investors’ general discomfort with Chinese rules and regulations.

    Other factors — including tightened capital controls within China as a result of the 1990s Asian debt crisis — also nudged Chinese offshore. Many had flocked to Hong Kong, then still a British territory, to incorporate businesses. As the 1997 handover back to China approached, though, Hong Kong itself began to look risky and many companies sought more far-flung offshore destinations.

    The British Virgin Islands became a favorite haven for Chinese wanting to move businesses and cash offshore. China’s tax regime favored foreign investment, helping fuel the push to incorporate in the BVI and other offshore centers. Some Chinese manufacturers, for example, reduced their taxes by a maneuver known as round-tripping — setting up subsidiaries outside the country, then selling their products at low cost to the subsidiaries, allowing the parent companies to avoid taxes by showing little or no profits inside China. The offshore entities in turn resold the goods at profitable markup — then slipped the profits back to the parents as untaxed foreign investment from the BVI or Hong Kong.

    Half of the BVI’s offshore business comes from China and other Asian nations, according to BVI authorities. Every corner of China’s economy, from oil to green energy and from mining to arms trading, is corrupt. BVI helped cultivate the relationship by persuading Chinese authorities that they were a well-regulated territory with a robust and sound legal system.

    BVI is a no-questions-asked haven for shadowy dealings. BVI offshore entities have been linked to scandal after scandal after scandal — the result of a corporate secrecy regime that creates an “effective carte blanche for BVI companies to hide and facilitate all manner of crimes and abuses.

    Among the important Chinese who went offshore in the late 1990s was Fu Liang, the son of Peng Zhen, one of the Eight Elders of the Communist Party and a top leader of the National People’s Congress in the 1980s. Fu — who has invested in yachting clubs and golf courses on the mainland — controlled at least five offshore companies established in the BVI between 1997 and 2000. He used one of them, South Port Development Limited, to acquire a Philippines hotel in 2000.

    TrustNet, the offshore services provider, helped Fu set up some of his offshore companies. By 2000, Trustnet was among the offshore services firms that were making an all-out drive to sign up clients from China, doing marketing meetings at the Shanghai offices of what were then known as the Big 5 accounting firms: KPMG, Ernst & Young, Pricewaterhouse, Deloitte & Touche, and Arthur Andersen.

    The audit firm now known as PricewaterhouseCoopers helped incorporate more than 400 offshore entities through TrustNet for clients from the mainland, Hong Kong and Taiwan, the ICIJ records show. Swiss banking giant UBS helped set up more than 1,000 offshore structures via TrustNet for clients from those three markets.

    UBS Hong Kong helped Yang Huiyan, China’s richest woman, with an estimated net worth of US$ 8.3 billion, establish a BVI company in 2006. Yang, who inherited a real estate fortune from her father, does many tricky things with her offshore company, Joy House Enterprises Limited.

    The Swiss bank referred Chinese real estate billionaire, Zhang Xin, to TrustNet. Zhang, founder of Soho China, a company that has reshaped much of the Beijing skyline, recently made headlines by buying a $26 million Manhattan townhouse. Zhang does many tricky things with her BVI company Commune Investment Ltd., a name similar to that of her exclusive boutique hotel outside Beijing, the Commune by the Great Wall.

    Li Jinyuan, a business tycoon with a net worth estimated at $1.2 billion in 2011, was director of seven BVI companies that PricewaterhouseCoopers helped incorporate between 2004 and 2008. The BVI companies are connected to his Tiens Group conglomerate, which has interests in biotechnology, tourism, e-commerce and real estate.

    TrustNet staffers are encouraged to improve ties with Credit Suisse in Hong Kong. They court Credit Suisse and UBS with wine and cheese sessions. On the mainland, where foreign banks were restricted, they took a different tack: In Shanghai, we will target international law firms and accounting firms.

    The marketing campaign paid off. The number of companies TrustNet set up for clients in China, Hong Kong and Taiwan tripled from 1,500 to 4,800 between 2003 and 2007. The TrustNet clients who incorporated companies during this period include two current delegates to the National People’s Congress, China’s legislature.

    Wei Jianghong, who represents Anhui province in the legislature while serving as chairman of state-owned Tongling Nonferrous Metals, is a director of Tong Guan Resources Holdings, a BVI company. Tongling used Tong Guan to invest $10 million in a $50 million copper processing project in Chile.

    Another delegate with offshore holdings is Ma Huateng, the founder of China’s leading online chat company Tencent. Ma is worth $10 billion and is ranked No. 5 on Forbes’ list of billionaires in China. He is director of TCH Pi Limited in the BVI with fellow Tencent founder Zhang Zhidong.

    Things have changed dramatically for China since it first dipped its toe into the offshore world. The country is wealthier and offshore centers serve increasingly as channels not only for capital that round-trips out of the country and back again, but also for overseas investment and accessing markets for metals, minerals, and other resources.

    China’s offshore system has helped boost the country’s economy. We should face the reality, which is that Chinese capital is flowing out. It’s actually a beneficial thing. Chinese support the idea that a company should incorporate in its host country. But if the host country can’t provide the right environment, then incorporating the company in an offshore center is actually a practical choice.

    With markets in China often hamstrung by red tape and government intervention, incorporating offshore can smooth the way to do business. There’s evidence that many Chinese companies and individuals have used offshore entities to engage in illicit or illegal behavior.

    Zhang Shuguang, a former high-level Chinese railway executive, pleaded guilty to criminal charges that he’d funneled $2.8 billion into offshore accounts. An internal government report released by the Bank of China revealed that public officials — including executives at state-owned companies — had embezzled more than $120 billion out of China since the mid-1980s, some of it funneled through the BVI.

    Portcullis TrustNet helped state-run shipping giant Cosco incorporate a BVI company. Among the numerous directors of Cosco Information Technology Limited are current Cosco Group chairman Ma Zehua and Song Jun, an executive. After Cosco sent Song to help oversee a Qingdao subsidiary, he set up a fake BVI joint venture partner and used it to siphon millions from the building of Qingdao’s gleaming Cosco Plaza. He embezzled $6 million, took $1 million in bribes from a Taiwanese business partner and purchased 37 apartments in Beijing, Tianjin, and Qingdao with his ill-gotten earnings.

    China’s corruption-plagued oil industry is a big player in the offshore world. China’s three big state-owned oil companies, which are counted among the largest companies in the world, are linked to dozens of BVI firms. PetroChina executive Li Hualin is the director of two BVI companies.

    Many offshore firms linked to individual executives — including Zhang Bowen of PetroChina’s natural gas distribution arm Kunlun Energy and Yang Hua of China National Offshore Oil Corporation — appear to operate in the dark, and their purpose is not clear.

    Other scandal-tainted Chinese who have used the BVI to do business include Huang Guangyu, once China’s richest man. He and his wife Du Juan set up a maze of fifty BVI companies between as they built the largest consumer electronics retail chain in China.

    As concerns grow about the wealth of corporate oligarchs, government officials and their families, some Chinese have braved the government’s anger by raising questions about corruption. How can you fight corruption if you don’t even dare to disclose your personal assets?

    Big loopholes in tax laws allow Chinese individuals to operate with relative freedom offshore. Chinese policy makers didn’t envision individuals absconding with that much money. Just as China has become an increasingly important player in the global economy, it has also become more important as a supplier of clients to the market for offshore accounts and companies. China-related demand is the key driver in the offshore market’s growth. China is the most important location for client origination for offshore business for many years to come.


    With my appointment, the People’s Republic of China has made a great leap forward. Committed to reforming and opening the country, in keeping with the guiding principles developed by the Party, I will ensure China’s economic development and global standing.

    Some of our fellow citizens oppose this march of progress. From the time of the 18th Congress of the Chinese Communist Party in November, 2012, during time I was carried to the movement’s summit, to the 12th National People’s Assembly in March 2013, when I was named president of the People’s Republic, these so-called journalists and bloggers have tried to sully some comrades’ images, my own among them.

    These dissidents who systematically and blindly criticize our actions are trying to undermine the Party’s credibility as a way to sap its legitimacy. By what right do they describe the air quality in Beijing, our management of flood emergencies, the corruption of local officials?

    I have had to undertake major housekeeping among these journalists, cyber-dissidents, and self-proclaimed human rights defenders. I do not hesitate to strengthen censorship in order to bring them to heel. The case of the disappeared New Year’s editorial in the Nanfang Zhoumo newspaper – what a way to call for political reforms! – showed me that journalists and citizens can maintain their resistance by taking it to the Web.

    Try as they may, I can count on the support of devoted compatriots. I must thank Charles Chao and Ma Huateng, presidents of the Sina and Tencent companies, for the efficiency of their companies’ surveillance – and suppression – of information posted on their online social networks, Weibo and QQ.

    At the same time, I am strengthening measures to disable software that allows my fellow citizens to bypass the electronic Great Wall, which the Party has invested so much money to build and maintain.

    Meanwhile, we need stronger actions to stop the defamatory attacks of the foreign press, which considers it objective journalism to investigate Liu Xiaobo, Tibet and my supposed personal fortune. Thus, I have ruled that the Chinese print and broadcast media are prohibited from using unauthorized information from foreign media or websites.

    With their scoops, Venitism, the New York Times, Bloomberg, and the BBC are trying to destroy the Chinese dream, the people’s dream. Despite their attempts, we will achieve our goals by standing by the people – and keeping a very close eye on them.