A Death in the Lucky Holiday Hotel (34 page)

Even though Zhou was allowed to retire peacefully, his power base diminished after he had lost the opportunity to install an ally as his replacement. Barely a month after he retired, the new party leadership under Xi Jinping opened an investigation into one of Zhou’s protégés, Li Chuncheng, the deputy party chief of Sichuan province. Li was said to have brokered several transactions in oil and real estate businesses for Zhou’s son in Sichuan. The current investigation, related to charges of embezzlement and selling government and party positions, is seen as part of a broader plan by the new leadership to weed out Zhou loyalists from key party positions and further erode his influence.

More important, at the 18th Party Congress, the status of the Central Politics and Law Commission was downgraded, and the head of the commission no longer holds a spot on the Politburo Standing Committee. The move could somewhat restrict the expansive power of this gigantic state machine, leaving more space for future reforms to improve judicial independence and alleviate social tension. However, until real political reforms are initiated, Zhou and his menacing legacy
will continue to loom large in China, further aggravating social and political problems that will eventually, if left unchecked, topple the Communist Party.

B
ILLIONAIRE BUSINESSMAN Xu Ming sensed catastrophe when he heard on February 2, 2012, that Wang Lijun had been sacked from his police chief’s position. Xu, a close friend of Bo Xilai’s, immediately flew from Dalian to Chongqing.

Xu had just visited Chongqing a week before, at the request of Wang Lijun, who had sought his help to broker peace between Wang and Gu Kailai. Xu was unsuccessful. Then, on January 28, Wang went directly to Bo and complained about his wife, Gu Kailai. Afterward, he told Xu that the conversation with Bo went well. After Xu returned to Dalian, he heard of the subsequent meeting and face slap. Xu contacted Wang immediately and urged the police chief to apologize and reconcile with Bo. Wang agreed. But Xu did not anticipate how dramatically things would deteriorate in the next days.

Radio France International, quoting a friend of Xu’s, reported that the Dialan businessman spent an hour at Bo Xilai’s office, persuading Bo to reconsider his decision, but Bo refused to back down. Xu then went over to Wang’s apartment, advising him not to do anything rash. Wang, still smarting from the face slap and dismissal, remained defiant.

Knowing that the Bo–Wang conflict could lead to disastrous consequences affecting everyone around them, Xu, who had been involved in the plotting of Heywood’s death, became overwhelmed with fear. He tried to connect with Bo Xilai again over the next three days. When his last-ditch efforts failed, Xu boarded his private jet on the night of February 5 and journeyed south, in the direction of Australia, where he holds residency status. Many top businessmen in China have foreign residency permits as a form of insurance against government policy changes.

The drama that unfolded in the following weeks, with Wang Lijun’s visit to the US Consulate and the revelation of Neil Heywood’s murder, justified Xu’s initial concern.

BORN IN 1971, Xu Ming grew up in a small village outside Dalian. For years, his family lived inside a fifteen-square-meter mud hut. Known among his friends as “Fatty Xu,” an endearing nickname reflecting his stocky build, Xu was remembered by a fellow villager as a timid and shy boy with a shrewd business sense.
Southern Weekend
reported that Xu would buy different types of stationery and snacks from a wholesaler and resell them to his high school classmates. He used the profit to supplement his pocket money. His friends said when it came to girls, he was relentless. He pursued a classmate, a pretty girl who knew how to play the piano, for five years before she consented to marry him in 1993.

After high school, Xu claimed that he had attended Shenyang Aerospace University in the provincial capital of Shenyang, but a college friend pointed out that he had actually attended the university’s three-year adult extension program, for which the government offered no tuition subsidies and graduates had to find jobs on their own. Xu’s first job after college was with a cold-storage firm that specialized in frozen shrimp exports to Japan. As the company’s representative, he had an office in Dalian to handle requests from Japanese customers and coordinate the shipping. In his spare time, he would hang out inside a dance hall with his cell phone, then a novel device in China that helped attract many girls to his side.

A year later Xu quit the shrimp export company, rented an office space inside a hotel in Dalian, and started his own shrimp export business. In those days, the government imposed restrictions on raw shrimp, but not cooked ones. Xu took advantage of the policy loophole to export frozen cooked shrimp. His friends recalled that his business was a total failure; he did not complete a single transaction. Disappointed, he returned to his native village and set up a small factory to make circuit boards for a South Korean company.

In early 1992, he became restless and went back to Dalian. A profile in a Chinese magazine said he began to wear a suit and would practice his Mandarin for hours to conquer his local village accent. He was determined to learn a foreign language, improve his calligraphy skills, and learn to drive. Of the three things, he accomplished only one: driving.

It was in Dalian that he was introduced to Gu Kailai, wife of the then acting mayor of Dalian. The connection with Gu Kailai and her husband, Bo Xilai, paid off handsomely.

In the 1990s, the government offered preferential treatment to Chinese joint ventures with foreign entities. Many took advantage by simply enlisting a foreigner’s name in their company directory with a fake joint-venture contract. Xu traveled to Macau and met three Macau businesspeople, who agreed to let him use their names in return for a stake in future profit. Xu took them out to dinner after the contract was signed and on the way back from the restaurant, the intoxicated driver, who was one of Xu’s business partners, lost control of the car and got into a serious accident. All of Xu’s business partners were killed. Xu was the only survivor in the car, with a few broken ribs.

Undeterred by the freaky accident, Xu continued with his plan upon his return and set up a foreign trade company in his county, and he appointed himself general manager and legal representative. Though his foreign partners were dead, Xu Ming used his joint-venture contract to obtain a large loan from the China Agricultural Bank and purchased an office building, which would later become his company headquarters.

In 1993, the city of Dalian under Bo Xilai initiated a series of large-scale public construction projects. Xu smelled opportunity. He teamed up with a Hong Kong businessman, who purchased used excavation equipment from Japan and the US. They formed Shide Machinery Industrial Limited and, with Gu Kailai’s help, Xu received his first government contract: digging a large pit for the foundations of the city’s Victory Square. He earned 3 million yuan from the project. When Bo Xilai decided to construct Asia’s largest public square near the Xinghai Bay, Xu’s new company was contracted to
undertake a land reclamation project that required the filling of 600,000 cubic meters using concrete and mud excavated from other parts of the city. During Bo Xilai’s reign as mayor of Dalian, Xu was awarded more than thirty such construction projects.

Xu’s business hit another milestone in 1994. As part of his “Greening Dalian, Brightening Dalian, and Beautifying Dalian” program, Bo Xilai ordered commercial and residential buildings along Dalian’s main roads and highways, as well as residential complexes, to install plastic steel window and door frames, which he believed were decorative, sturdy, and environmentally friendly. (Plastic steel is a composite plastic that’s as strong as steel but lighter and transparent.) Xu was one of the two bidders on the project. He took a trip to Europe, where he studied the most advanced methods of plastic steel manufacturing and found a German partner. They jointly established the Shide Plastic Steel Industrial Ltd. With 120 million yuan (US $19 million), Xu built twelve door and window frame assembly lines. Official records show Xu took out a loan of 30 million yuan to form the Dalian Shide Plastic Steel Door and Window Factory, the only one of its kind in Dalian.

Orders from Bo Xilai’s municipal government poured in. City officials went all out promoting the use of plastic steel door and windows. For residents who could not afford the installation, the government provided subsidies. Within a short time, Xu’s products could be seen all over the city; the majority of the government and commercial buildings in downtown were fitted with plastic steel windows and doors. So were newly built residential buildings.

In 1998, Shide Plastic Steel Industry Ltd. produced four tons of plastic steel a year and by 2001, the company’s annual production capacity reached forty tons, serving clients all over China and South Korean, Japan, the US, Canada, and the EU. Company assets exceeded 2 billion yuan (US $320 million).

Xu’s fortune rose with Bo Xilai’s soaring political career. With continued support from Bo, Xu expanded his business and entered into hot-water heaters, electric appliances, and real estate. At the urging of Bo, who saw Dalian’s nationally known soccer team as an “attractive business card” for the city, Xu invested 60 million yuan (US $ 9.6 million) in the city’s club in February 1999 and became its sole owner a
year later, changing its name to Dalian Shide Football Club. Xu admitted he was clueless about soccer. Before taking over the club, he had seen a total of twenty minutes of a live match. “In the first year, Xu did not come for a single match,” a player said to Ji Weiren of
The Enigma of the Bo Xilai Scandal
. “When we issued invitations to him to attend matches, Xu turned us down every single time.”

At the beginning of Xu’s takeover of the soccer club, Bo and other municipal leaders never missed a home match. Xu enthusiastically invested time and money, making sure his team won. He was determined to turn the sport into a real business. In 2000, Xu initiated a structural change for the club. Many veteran players and coaches under the previous ownership retired and resigned. Xu formed a complete new team. In 2001 and 2002, Xu gradually built a soccer empire with the purchase of six additional clubs in China. In all, he had seven teams in two major leagues. An avid gambler, Xu allegedly engaged in match-fixing schemes—if one of Shide’s star teams needed to win a match, the other teams would have to let it happen. If one team was required to win certain games to stay in the league, others, including star teams, would conveniently lose. In the aftermath of the Bo scandal, many fans in Sichuan province blamed Xu for ruining their professional team, which was bought by Xu and was riddled with match-fixing scandals. “It’s time to settle scores with Xu Ming,” wrote one fan in his blog.

In recent years, the government launched a crackdown on match-fixing schemes in response to public outcry. Two senior officials at the Chinese Football Association received more than ten years in jail. Xu’s close ties with Bo and Zhou Yongkang gained him a reprieve.

In addition to soccer, Xu also entered the realm of real estate. In 2001, when Chinese banks tightened lending policies, the Shide Group was on the blacklist of many banks, which were concerned that Xu had too many risky investments and that a collapse of his company could trigger a severe crisis. Again, with the help of his friends in the government, Xu weathered the storm through a windfall in the real estate market and other capital investments.

In that year, Xu sold a factory, along with equipment and land, to a large chemical company for 256 million yuan (US $41 million). Soon
after, an insider told Xu that the government was planning to purchase the land for a development project. He quickly bought up a majority of the shares in the chemical company to control its management and moved the land back to his company at a much cheaper price. As expected, when he sold the land to the government, he netted a profit of 230 million yuan (US $37 million). After the land transaction was completed, Xu sold out his stocks in the chemical company and made an additional 14.6 million yuan.

One of Xu’s childhood friends told
Southern Weekend
that Xu had an insatiable desire for money. In 2002, his excessive drinking—a prevalent practice for businesspeople who have to spend lavishly on drinks and dinners for clients and government officials—led to cirrhosis of the liver. He was on the brink of death. His friends were told that a bear’s gallbladder, when dried, ground into powder, and mixed with herbs, could save his liver. They searched around China for the cure and finally found one in Hong Kong, where a bear in the zoo was dying. Xu’s friends immediately flew over and obtained the gallbladder at a hefty price.

Xu Ming gradually recovered—whether by luck, Western medicine, or the death of a bear is not clear. His friends assumed that the near-death experience would give him a new perspective on life. On the contrary, Xu was greedier than ever. “I need to earn more money,” he was quoted as saying. “In this way, I can afford to buy a healthy bear and kill it to get its gallbladder, rather than having to wait for it to die.”

He quickly returned to his desk and started several ventures in 2002, including forming a life insurance company, and buying stakes in three banks. In 2004, when Bo was minister of commerce, Xu obtained a license to build a petrochemical company in Dalian, but the plan never took off.

By 2005, Xu owned three public companies, three commercial banks, two insurance companies, and a hedge fund, as well as more than ten enterprises, covering seven industries, including plastic steel, automaking, petrochemicals, and pharmaceuticals. In 2011, Shide Group ranked as the sixty-sixth-largest privately owned firm in China,
with annual revenue of 1.2 billion yuan (US $190 million). Curiously, Xu dropped on the
Forbes
China Rich List from 8th in 2005 to 253rd in 2011, leading many to speculate that Xu was following the path of discretion, as most businessmen in China do, hiding his assets to avoid being the target of a government probe, which had toppled a majority of those on the
Forbes
list. Others believe his business shrank significantly after Bo Xilai moved out of Dalian.