Outgoing New York mayor Michael Bloomberg made his billions selling information. However, when it comes to publishing news on how Wang Jianlin, one of China’s biggest overseas investors, became the country’s richest man through government connections, then apparently the story can wait.
Bloomberg News has made headlines of the unwanted kind in recent days due to the suspension and now seemingly involuntary departure of reporter Michael Forsythe after leaks about the agency spiking a story on shady relationships between a Chinese billionaire and senior government officials. The leaks alleged that Bloomberg Editor-in-Chief Matthew Winkler had suppressed the story by the award-winning investigative journalist for fears that, “If we run the story, we’ll be kicked out of China.”
Wang meanwhile has starred in business news and the tabloids after buying US theatre chain AMC for $2.6 billion in 2012, splurging $514 million on the UK’s Sunseeker yacht company in June, and picking up a Picasso this month for $28.2 million.
Similar to last year’s report about Xi’s family holdings, Forsythe’s unpublished story was said to reveal the behind-the-scenes financial links between a Chinese billionaire and the families of some of China’s top government officials. However, according to a report in the Financial Times, in this case the story outlines the relationship between Wang and some of the country’s top leaders.
Giving Bloomberg Reason to Hide
While Bloomberg’s Winkler has claimed in an email seen by the New York Times that, “The stories are active and not spiked,” they apparently were abruptly suspended after a year of development in cooperation with senior level editors and after approval by the news agency’s lawyers.
Bloomberg’s fears are based on hard experience about reporting on China’s thin-skinned and all-powerful leadership.
In June 2012, Hong Kong-based Forsythe, along with colleague Shai Oster, had written a ground-breaking investigative report for the agency on the wealth of Xi Jinping’s family – Xi is now China’s president. The story detailed how, as Xi rose through the country’s political ranks, his family members also managed to build a portfolio of $376 million in holdings.
While the article won praise internationally for revealing how wealth and government worked together in China, it brought Bloomberg attention of a more negative kind from Chinese authorities, where leaders of the one-party state are not accustomed to tolerating reports that could be perceived as criticism.
Following publication of the story on Xi’s family, Bloomberg found that not only were their websites blocked, but sales of the company’s lucrative business information terminals slowed markedly. While Xi’s government has vowed to stamp out corruption, it has also blocked the visas of foreign journalists who report on government misdeeds and moved aggressively to mutes voices of dissent within the country.
Wang Jianlin Quickly Moving His Billions Overseas
While the story of Bloomberg’s self-censorship has now been widely reported, up to now little attention has been focused on the identity of the billionaire who had profited from his relationships with top government leaders.
Now that the tycoon in question has been revealed as Wang Jianlin, Dalian Wanda’s high profile overseas investments can also be seen as a reinvestment of profits made from connections with government officials into assets that may be easier to protect should a new batch of officials later come to power who enjoy a less cozy relationship with Wang and his company.
Through the growth of Dalian Wanda, Wang as its chairman has become China’s richest man, according to a recent Forbes study.
In addition to Dalian Wanda’s more flamboyant investments in theatres, yachts and artwork, the privately-owned real estate developer has made a number of other moves recently to move it’s billions overseas, including building a global hotel chain. The first two projects in the hotel chain were announced in June this year when Wanda first made a $1 billion investment into a London real estate project, and then later the same month committed $1 billion to a hotel project in New York.
Wang has said that Wanda is also currently working with two US investment banks to acquire a global hotel brand and plans to build five-star hotels at a rate of 15 per year. He also declared that the company intends to invest several billion dollars a year overseas for the next five years.
Wanda has 40 hotels in China, as well as a chain of Wanda Plaza shopping malls. In September this year the company launched an $8 billion dollar cinema theme park in Qingdao with a gala opening event attended by John Travolta and Leonardo DiCaprio.
The Link Between Government and Money in China
If Forsythe’s now-spiked story is correct, however, the engine behind these high profile investments and starry headlines is not so much entrepreneurial zeal, as the ability of business leaders to secure access to deals through connections to top government officials and their families.
This link between government and business is not unique to China, however, noted economists such as Andy Xie have pointed out that the influence of government in building wealth is particularly strong in a country where the majority of the economy is still controlled by the state.
To paraphrase Xie’s analysis of China’s economy, while some people make money from B2B, and others from B2C, most of the profit comes from G2Me. In other words, if you have gotten rich in China, then in most cases it’s from your ability to use “G” – for government – for your personal gain.
And in no industry is this ability to turn public assets and government connections into personal profit more evident than in China’s real estate sector. Developers get land from the government, who take it from the current residents at a price they set, and then can borrow money from government banks to build housing or offices that they sell on to consumers terrified of getting locked out of a chance to own a home.
Revealing the details of these how this system works, especially naming names, showing how much money they made, and which government leaders they have worked with, apparently is enough to make a bold leader like Michael Bloomberg hide some of his team’s best work for fear of reprisals from Chinese authorities.