Super-Rich Chinese Leaders: A Dangerous Development
The New York Times has laid out a portrait of a Chinese billionaire family, and it’s a fairly worrisome one. Premier Wen Jiabao’s extended family, including his brother-in-law, are said to be worth $2.7 billion. Average income in China last year was less than $6,000.
The Wens aren’t alone. Bloomberg previously uncovered hundreds of millions of dollars in assets belonging to the family of incoming Communist Party General Secretary Xi Jinping. The Financial Times documented the financial success of the families of seven top Chinese leaders. The family wealth of the top-Party cadre is both a major impediment to economic reform and fuel for any spark of social unrest.
The economic impediment stems from China’s re-embrace of state-led development. It is slowly being recognized that China started to move away from market-led development well before the financial crisis struck. In fact, the shift back to the state began in late 2002, when the current government of Hu Jintao and economic boss Wen Jiabao (and apparently their families) took over.
For example, China’s economy was balanced between investment and consumption in 2001. That balance has progressively tilted in favor of investment every year since then, a trend that is ultimately unsustainable.