The Fires spewed by the Dragon – How Tradition Lives on in China

Notes on the China book by Desmond Shum (Red Roulette: An Insider’s Story of Wealth, Power, Corruption, and Vengeance in Today’s China)

From rags to riches: in the past three decades, China has witnessed the rise of a broad stratum of communist nouveau riche whose addiction to consumption still exceeds what was previously known of Western capitalists. In his youth, Desmond Shum (沈棟) had to share a bedroom with his parents, but at the height of his career he could afford to fly to Paris on three private jets and spend more than 100,000 euros on wine alone at the best Paris restaurant on the Champs Elysées for himself and two family friends.*1* Because – this too is part of the best capitalist tradition – a person is only what he or she appears to be. Shum drove the most expensive sports cars – sold in China five times more expensive than in the West – and it was natural that he and his wife lived only in “sinfully” expensive apartments.*2* Furthermore, it went without saying that they acquired a license plate for their cars, which allowed them to use reserved lanes in defiance of traffic regulations, as was otherwise only permitted to the police or the highest Party bosses.*3* Successful Chinese had to show their compatriots that they are bigger, better and richer.*4* This addiction to success extends into education and schooling. Desmond Shum reports that although he topped his class early on, he never heard a single word of praise from his parents. On the contrary, his father beat him mercilessly, because supposedly this is the only way to get children to strive higher and higher.*4a*

The communist system has unleashed a competition that was the norm in Europe only at the beginning of the fossil-fuel industrial revolution. Even state-owned enterprises constantly ambush each other. Bureaucrats use paid thugs to secure rights to developable properties. Rival bus companies use equally criminal practices to eliminate their rivals.*5* We Chinese, says Desmond Shum, are drilled from an early age to compete against each other in a merciless struggle for survival.*6* It goes without saying that the Chinese are similarly ruthless in their dealings with the West. For several decades already, China has unquestioningly appropriated the intellectual property of other countries and corporations.*7* 

But these extremely rough mores go hand in hand with an overwhelming optimism – the entire country is filled with a spirit of optimism the likes of which we have not seen in the West for quite a long time.*8* People live in the expectation that nearly everything can be achieved, as long as one knows how to use one’s own strengths purposefully. This is how a man like Desmond Shum, who until then had only known airports by sight, was able to become the successful builder of the largest airport in Beijing – one of the most modern in the world. Ever since Deng Xiaoping proclaimed that there was nothing wrong with acquiring wealth, the thousand-year-old dragon has opened its jaws wide again and is now spitting fire just like in the old days.

It is quite astonishing to see the most elementary capitalist practices now being applied in communist China. Here, too, a familiar dilemma becomes apparent. Those who can contribute ideas and assertiveness do not necessarily also have money. A man like Desmond Shum, who built Beijing’s airport and the capital’s most modern and then largest hotel, did it all with borrowed money.*10* However, reliance on other people’s money resembles a va-banque game that at any time may end in a complete crash. Two-thirds of the hundred richest Chinese no longer appear as such in the following year.*11* 

Despite Mao’s radical cure, the Middle Kingdom has not shaken off its past – tradition has long since resurfaced. I must therefore contradict the businessman Shum when he claims that the communist party has destroyed all traditional values and traditions. *11a* Indeed, this is much less the case than he believes. For two thousand years, China was ruled by literati – Voltaire had admiringly called them “philosophers” – who brought nothing more to their administrative work in the many provinces of the huge empire than knowledge of the extremely difficult Chinese script and the classics, most of which they knew by heart. In other words, these people were schooled in matters of life advice and morality. The governors, schooled in philosophical writings, gave direction, while forces with local knowledge had to implement their ideas in a more down-to-earth technical way.

The literati no longer exist; it is the communist Party that has taken their place – and the Party is even far more powerful than the literati ever were. Just look at the public sessions of the People’s Congress, where everything is imbued with lofty morality. What matters is the right attitude – everything else is believed to follow of its own accord. Just as for two thousand years the students and later officials in the state Hanlin academies sweated over the classical writings, the delegates of the People’s Congress in the “Great Hall of the People” sit with bowed heads in front of their desks and dutifully enter the decreed wisdoms of chairman into Xi their notebooks (Max Weber had already thought that China was one big educational institute). Meanwhile, all of China has been turned into a giant classroom where the Great Schoolmaster monitors all citizens 24 hours a day with millions of eyes (cameras) and then gives them grades for good or bad behavior.

A strange peculiarity of today’s China (but in the meantime also of the Western world) is that the highest faith in science is quite compatible with abstruse superstition and the most adventurous esotericism. China’s rise to superpower status is due to the unquestioned adoption of Western natural sciences. As a result, China is the only country in the world that has succeeded in fighting the Corona pandemic strictly according to the rules of scientific epidemiology (even if it remains an open question whether strict quarantine will help against Omicron). Yet despite this unwavering faith in science, crass superstition flourishes and proliferates in today’s China. If Shum is to be believed, even leading politicians rarely make their decisions without first asking fortune tellers and horoscopes for advice.*12* 

Because the Party monopolizes power, all other social institutions live at its mercy. In every major company, at every university, in every region, municipality, and province, Party officials watch over ideological loyalty and can force decisions at any time.*13* It is therefore extremely dangerous to visibly emphasize one’s own strength or independence. Shum and his wife Whitney have experienced this bitterly enough, as have many new, newly rich multibillionaires. If it pleases the apparatus, a Croesus of yesterday becomes a miserable convict in a remote provincial prison tomorrow, suffering a “life sentence” on the basis of an arbitrarily invented guilt.*14* Except, of course, for the many cases where the Party decides to make the suddenly disgraced person disappear altogether.*15*  The number of existences inexplicably destroyed in this way can hardly be estimated – from one day to the next, this fate also befell the author’s wife, who until then had been one of the richest and most respected women in China.*16* The Party – that is, the Politburo, consisting of 25 men – has the last word in all matters. If it pleases the bigwigs at the top of the state, individual capitalists are allowed to launch the world’s largest companies, such as Alibaba and a thousand others. But as soon as their growing power appears threatening to the leadership, their directors are hauled before the courts – or even eliminated, like Whitney Duan, the author’s wife.*17*

For two thousand years, China did not fare badly under the rule of the literati. Until the eighteenth century, the Far Eastern empire was the most prosperous state on earth. The literati ensured the continuity of rule. Under them, the economy was allowed to develop freely, but only as long as it served the general public and not just its protagonists and did not endanger the existing power pyramid, i.e. the rule of the philosopher-literates. The late successor to this system – the communist Party – behaves in exactly the same way today. Economic growth is encouraged as long as it does not develop a life of its own and private forces outside the Party threaten to challenge its supremacy. At present, a development is taking place in China that favors the welfare of the masses to an extent that has never happened before. Large segments of a population that until two decades ago was desperately poor have been lifted out of their misery. That alone is a breathtaking story and tremendous achievement – and this explains why the regime, which is so ruthless in many respects, can still rely on an overwhelming majority.

It does so despite the fact that corruption is rampant in China – as it was among the literati in the past, so it is today within the Communist Party. No one in China rises to the top with special ability alone; relationships – guanxi – govern life, especially relationships with the Party.*18* Those who can demonstrate these relationships hardly need to abide by the rules.*19* And that’s not all: It is precisely relationships with the powerful that allow corruption to flourish, because in China agreements are rarely written down and are therefore hardly ever transparent or verifiable. Everything is done on the basis of trust with people with whom one has established special relationships.*20* This is true even for a visit to the doctor. If the doctor rejects a red envelope filled with cash, it is better not to hope for a cure.*21*

Relationships take precedence over written rights. After all, these can at any time be declared null and void and annulled by the Party – usually with retroactive effect into the past.*22* Since the Party embodies the law, the result is not lawlessness but fundamental legal uncertainty – as in all authoritarian regimes. With regard to the past, Max Weber had argued that “rational” capitalism could never emerge in China because of this fundamental uncertainty. British anthropologist David Graeber agrees with him. *23*

Uncertainty of legal status applies especially to women. China is still a classic patriarchy, where the high position of men allows them to keep one or more mistresses.*24* A popular way among men to establish mutual trust is to share the same room and night with several willing women.*25* Similar practices of patriarchal fraternization can already be found in ancient China, as the literary historian knows from the “Dream of the Red Chamber”. But of course they are not a Chinese invention..

Within the Party there are great differences of social power and position. The highest place is occupied by the “Red Aristocracy,” consisting of the now very old people who still fought under Mao, together with their offspring. These veterans and heirs of the revolution still hold most of the key positions and enjoy privileges of all kinds that the people can only dream of.*26*

Yes, Xi Jinping has set up an official agency to combat the pervasive corruption. But Desmond Shum is not the only one who sees their real purpose in getting rid of troublesome rivals and dissidents.*27*. He believes this view is reinforced by the fact that Western values such as freedom of expression and an independent judiciary are coming under increasing pressure under Xi.*28* It fits into this picture that private companies have recently been increasingly weakened, while state-owned companies are on the rise.*29* China’s elite is convinced that the West is in decline and that the future will belong to the Chinese model of economy and society.*30

Dissident Desmond Shum does, of course, disagree. He considers it a crime that people like him are allowed to come up in the first place, only to have their wings clipped in the end. But he should have known that people like him can become a danger not only to a dictatorially ruling single Party but also to democratically elected governments. If they could, said no less a figure than U.S. President Woodrow Wilson, the richest in the country would usurp the government. *31* And President Eisenhower famously viewed the rise of the industrial-military complex in his country with great concern.

Will China determine the world’s future? That seems quite possible, if the regime continues to succeed in lifting the mass of the population out of poverty. I know, Western intellectuals would like to believe otherwise, but most people do not ask for freedom of speech when they have the opportunity to improve their situation spectacularly within a few years through extensive freedom of action – freedom in the economy. There is no doubt that the Chinese Party has achieved amazing social progress since Deng Xiaoping. Despite corruption and privileges of the red aristocracy, the latter has helped the masses to a noticeably better life. I therefore cannot agree with Desmond Shum’s opinion that the Communist Party’s claim to put general welfare above individual welfare is nothing more than a lie.*32* The red princes would have been swept away long ago had they not enriched the people as well as themselves. In classical China too, the literati had submitted to this obligation – this is the reason why their rule lasted for two thousand years. Whether the Party’s rule will prove equally unshakable in the future is an entirely different question. It is by no means certain that it would survive a severe economic downturn.

(Those who demand an unambiguous for or against, black or white, will find this article unsatisfactory. But political and social systems as well as people are rarely unambiguous. This is true only for bloody monsters like Hitler or Stalin, but for Putin only since his invasion of Ukraine; until then he was quite popular with both the right- and left-wing camps and was elected man of the year several times – even by American magazines, e.g. Time 2007).

1 The wines alone ran more than $100,000 and we ate and drank for hours. Yes, this was conspicuous consumption, but for Whitney and me it was conspicuous with a purpose.

2 We were living together in an outrageously expensive apartment and driving a car that in China cost five times what it would cost overseas. We were buying the most expensive things.

3 … having high-status plates was a must. With the right plates, you could cruise down the bus-only lane, drive on sidewalks, make an illegal U-turn, run a red light, and park in a no-parking zone near a favored restaurant.

4 I had my sports cars and wine, but Whitney always had a larger appetite. She had this deep desire to show the largeness of her life to people around her, a desire that grew as her wealth increased. She needed to convince people that she was bigger than they were, better than they were, superior in every way.

*4a*  So, at home, I grew up in an environment of degradation and punishment… Perhaps this is common among kids from China, where expectations are high and criticism constant, and where parents believe that children learn by failure, not through success… I was one of the first in my class let into the Little Red Guard, a selective children’s organization sanctioned by the Chinese Communist Party. I’d been appointed a class proctor and recognized as a natural leader. But my dad didn’t care. He beat me anyway.

5 Competing state-owned phone companies ripped out one another’s lines, even though, technically, they were all owned by the state. Bureaucrats deployed thugs to battle other thugs over the rights to develop property. Rival bus manufacturers sent gangs across provincial lines to kidnap their foes.

6 From an early age, we Chinese are pitted against one another in a rat race and told that only the strong survive.

7 China was the intellectual property rip-off capital of the world.

8 … it wasn’t just people like Whitney and me in the upper crust who felt this way. The whole society shared our optimism.

9 I had no idea what I was doing. I’d never built anything before, much less a logistics hub at a big urban airport that needed a strict delineation between tariff-free imports and those subject to tax. There were security concerns as well. I reached out to airports around Asia and the world.

10 If you weren’t fully leveraged, you were falling behind… Given the multitude of investment opportunities during the boom-boom days of China’s economic rise, all of us were leveraged to the hilt.

11 Two-thirds of the people on China’s one hundred wealthiest list would be replaced every year due to poor business decisions, criminality, and/or politically motivated prosecutions…

*11a*  In its seventy years in power, the Party had destroyed traditional Chinese values… 

12 Getting one’s fortune told was all the rage among China’s elite. People at the top of China’s pyramid hired soothsayers, qigong masters, and purveyors of all sorts of hocus-pocus… In its seventy years in power, the Party had destroyed traditional Chinese values and had essentially outlawed religion. In the vacuum, superstition took hold.

13 Every university in China is run by the Chinese Communist Party and all universities, just like all K–12 schools, have Party secretaries who are usually far more powerful than school presidents, deans, or principals. The same is true for China’s political system, where the Party general secretary outranks the premier; … 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.

14 In China, the Communist Party can fabricate evidence, force confessions, and level whatever charges it chooses, untethered to the facts.

15 Unexplained disappearances occur regularly in China, where the Communist Party holds a monopoly on power… people who’d been educated in the West were murdered by the thousands for the crime of favoring Western ideas like science, democracy, and freedom.

16 ON SEPTEMBER 5, 2017, WHITNEY DUAN, age fifty, disappeared from the streets of Beijing. She was last seen the day before in her sprawling office at Genesis Beijing, a development project she and I had built worth more than $2.5 billion.

17 Private entrepreneurs, who had saved China’s economy just a few years before, were now painted as a fifth column of Western influence.

18 The marriage of know-how with political backing became a template for China’s march into the future and a way for ambitious men and women.

19 I quickly learned that in China all rules were bendable as long as you had what we Chinese called guanxi, or a connection into the system.

20 Nothing was on paper; it was all done on trust.

21 In China, if a doctor didn’t accept your “red envelope” stuffed with cash, you immediately grew concerned.

22 When the Chinese government passes a law it invariably makes it retroactive, so events that occurred years ago that had been unregulated could become crimes today.

23 However, without making reference to Max Weber. Graeber: “The Confucian state may have been the world’s greatest and most enduring bureaucracy, but it actively promoted markets, and as a result, commercial life in China soon became far more sophisticated, and markets more developed, than anywhere else in the world. This even though Confucian orthodoxy was overtly hostile to merchants and even the profit motive itself. Commercial profit was seen as legitimate only as compen­sation for the labor that merchants expended in transporting goods from one place to another, but never as fruits of speculation. What this meant in practice was that they were pro-market but anti-capitalist… From this perspective, China was for most of its history the ultimate anti-capitalist market state /my italics. We could also say: an undemocratic social market economy (if one can speak of such in societies where an overwhelming majority consisted of largely lawless peasants – which was true for all populous states before the industrial revolution)/ … merchants were driven by greed and basically immoral; yet if kept under careful administrative supervision, they could be made to serve the public good. Whatever one might think of the principles, the results are hard to deny. For most of its history, China maintained the highest standard of living in the world – even England only really overtook it in perhaps the 1820s, well past the time of the Industrial Revolution.”

24 Male officials had mistresses, sometimes by the dozen. But it was rare to hear of women keeping men.

25 He noted that a particularly effective way to bond with a Party official was to share a room with him and several girls at once.

26 Those people had access to duty-free shopping concessions and, often, exclusive contracts that were licenses to print money.

27 As Xi’s corruption campaign played out, I finally concluded that it was more about burying potential rivals than about stamping out malfeasance.

28 Document Number 9 warned that dangerous Western values, such as freedom of speech and judicial independence.

29 Who are these capitalists trying to privatize part of what should have been a state-owned facility? This type of attitude wasn’t confined to our project; it infected the entire economy. “State-owned enterprises march forward, private firms retreat” became the new buzzwords, signaling a shift at the top of the Party.

30 The negative changes began to accelerate in 2008 during the second administration of Party chief Hu Jintao and Premier Wen Jiabao. A main catalyst was the global financial crisis. The crisis validated a belief inside the Party about the superiority of China’s political and economic system to that of the West… Startled at the liberal tendencies of my fellow capitalists, the Chinese Communist Party, starting in the mid 2000s, moved to weaken the moneyed class, uproot the sprouts of civil society that we’d planted, and reassert the Party’s ideological and economic control of Chinese society.

31 In his book of 1913 The New Freedom Wilson wrote: “If monopoly persists, monopoly will always sit at the helm of the government. I do not expect to see monopoly restrain itself… If there are men in this country big enough to own the government of the United States, they are going to own it.”

32 There’s a lie perpetrated by the Chinese Communist Party that it prioritizes the collective over the selfish interests of the individual.