China's Elite: Tom Tugendhat MP in conversation with Desmond Shum
This is a complete transcript of our recent podcast: Tom Tugendhat in conversation with Desmond Shum.
Tom Tugendhat MP
Well, welcome. Welcome to this afternoon's conversation with the China Research Group. Differently from most of our sessions, this is actually just a conversation between me and Desmond Shum. Now, for those of you who don't know, Desmond has just been writing an extraordinary book, a very, very powerful book about his own experience of life in and around the Communist Party of China. Desmond, why don't you introduce yourself just briefly and say, how you started and where you got to before you left China?
Desmond Shum
Well, I am born in Shanghai, how I left, I left China when I was 10. And I grew up in Hong Kong going to school in Hong Kong, and teenage. And I went to school in the States. And then after graduation, I went back to Hong Kong for a few years. And 1997, I went to live in Beijing, I was with a US investment firm. They sent me to the Beijing to run their office there. So I've been and then I left them. And I was in Beijing until about 2015/16.
Tom Tugendhat MP
And so when you came to the UK, why did you come?
Desmond Shum
It was, it was like Xi Jinping came into power in 2012. And I was watching that. And I, you know, obviously I think you know, and the book I also mentioned after 2000, after 2008, after the financial crisis, I really sense things are changing. And, you know, I was wondering, you know, what's going on in the new administration in town, what they gonna bring, and after two, three years of him, and I was like, you know, this thing is not gonna go well. Let's decamp.
Tom Tugendhat MP
And so tell me about Chairman Xi, what, what is it about his central control of the party or the country that that so concerned you?
Desmond Shum
Oh, I think, you know, 2008, around in 2008, I have, at that time, I had run a company as a joint venture with a state owned enterprise, the Beijing Airport, and, you know, 2008 or so then they have, they asked, and we have to set up Party cells in the company, and then I, they were assigning a party secretary to my company, and then and then you saw things, you know, on a micro level or my own level, things are starting to change.
And then on a macro level, you're already starting to see the state owned enterprises as a sector is pushing forward, marching forward, marching on and, and the private sectors kind of retracting back a bit. And then with him coming in that, that pace, it definitely seems to quicken. You know, I was, I sat on the Beijing, you know, this Political Consultative Conference, and then you have people come in the officials, senior officials of the Party come in and give us talks, and indirectly they say, you know, we are not going to go the Western route of democracy.
You know, in the past, you know, there was a sense that the Political Consultative Conference is becoming almost like the upper house, and then they have written that People's Congress which is becoming almost like a lower house. And they specifically said, that is not going to be the case. And and so multiple things changing, and then you see Xi Jinping start, you know, have this massive movement of "anti corruption drive". And you see, I sense that, you know, this is extraordinary. I mean, the first he said, well, okay, this is good, then it's not that the country probably could do with some cleansing, because it is, I mean, getting rampant with corruption. But then then the with the massive arrests, and then some of the people he has taken down, it's obviously political targeting.
Tom Tugendhat MP
You touch there on on the corruption that really forms the heart of your book, you talk about the financial chicanery at the heart of the state. And just tell me, what did it touch? Or what does it touch perhaps a better way of putting it?
Desmond Shum
What do you mean, what does it touch?
Tom Tugendhat MP
Well, I mean, does it touch, does it touch politics? Does it touch business? Does it touch education?
Desmond Shum
Everything, everything, everything. I mean, you know, obviously, the number now it's after his 10 years of administration, about 4 point - over 4 million CCP members - I'm just talking to CCP members - bureaucrats have been arrested or punished: 4.2 million over the last 10 years. And that's touching all sectors. And then you have all different private sector interacting with - you know, China is a political and you know, as I noted in the book, political power is everything. Anybody want to do business, you're associated with political power at some level. And so that obviously has an aspect that affects everything you do.
Tom Tugendhat
And so, as part of that, how important is Chairman Xi at the heart of it?
Desmond Shum
He is, he's the heartbeat of the whole of this, there's this whole movement.
Tom Tugendhat MP
So when you when he talks about the anti-corruption drive, do you not believe he's serious about it? Or do you think that he's using it in a different way.
[Bell ringing]. Forgive me that bell is a sign that democracy is starting in London.
Desmond Shum
I think when he first started, I mean, he first started almost about like a half a year before he assumed office, which is very, very unusual, because usually people don't do that. Because, essentially you are slapping the previous administration; just like look at how bad you run things. And that's very unusual. And after about a year after he is in office, I talk to people, you know, sort of in the circle and outside, where is this going?
They say, well, no, you know, they say it's gonna stop very soon. Because when you arrested that many people, at first people who say: yes, you are arresting corrupt officials. But if you go on like that, you are indicting the entire system. Because you arrest at that time, you're talking about tens of thouands of people already, and you're indicting the entire system, are you going to do something about a system? And if you're not going to do something about a system, then then then what? So that's the question, really serious question, that gets raised, where is it going?
Tom Tugendhat MP
And so, I mean, a lot of the a lot of the emphasis has been on political rivals. And of course, we saw in the early days, Bo Xilai. How important was that as a way of securing his own base?
Desmond Shum
I think that early basis, almost, I mean, not even early basis. I think it's an ongoing process. It's very important. I mean Bo Xilai obviously, I mean, the book I touch on three person, right?
One is Bo Xilai - obviously, that's another princeling which is directly challenging; he possibly challenges power. The other one I talked about is Sun Zhengcai, which is the party secretary of Chongqing, which is a city of 30 million people. That guy is designated to be a successor. Supposedly if he wasn't arrested on "corruption charges", he's gonna assume office either number one, and then number two guys, next year. And then the other one he took out was Ling Jihua, who was supposed to assume the Politburo member and then was designated as actually a powerbroker for Hu Jintao. So those three person on corruption charges, and then taking down those three person I will say, changed course of history for China.
Tom Tugendhat MP
And so, I mean, when you when you talk about those three, they were not just individuals, of course, but they were the heads of their own power centres.
Desmond Shum
Yes.
Tom Tugendhat MP
So how much of these arrests have actually destabilised the Chinese Communist Party itself? They have they caused any discontent within it?
Desmond Shum
I think it's obviously - I think one of the things, you know, in China is, as you just mentioned, everybody is you know, runs their own pyramid. So if you're a county officer, you get promoted to the municipal level, you make sure in the county you got your own people replacing your county, and you want to run the other three counties too. And then so as you rise up the the chain of command you build pyramid: you build a bigger mega bigger pyramid.
So, when when you arrest three persons like that you are taking down you know, you try to take down entire pyramid, not just the three guys. You want to cleanse the system of their supporters and then their associates. So when you arrest you know, 4 million people and then you know, including two Vice Chairmen of the Central Military Commission, you are taking down a lot of pyramids. Even you know, you say you know one person has five associates, you are talking about 20 million people within the system has some grudge holding against you.
So, at that time and even in 2014/2015; with that kind of massive arrest, that's no way he can retire. Because the backlash is going to be so strong, it will overwhelm him.
Tom Tugendhat
His danger is is losing power, losing control, and the revenge that that would bring.
Desmond Shum
Yes, and then in China's case, as you can see, you know, if you lose power, and then the backlash come, it's not just against you, it's against you, your family, your supporters, your associates, which enriches what he had been doing, you know, trying to take down the entire, you know, the entire clan, so to speak.
Tom Tugendhat MP
Now, unless Chairman Xi has achieved something that nobody else has, he's not going to live forever. So how do you see the transfer of power in China in the next 20 or so years?
Desmond Shum
I think that's one of the things I've been many people, whether it's government or major corporation, or anybody who have major stakes in China, you really need to look at in the situation. Xi Jinping now has systematically take it out any legitimate successor.
So as of now, there's nobody who that anybody, you know, 90 million members of the CCP can point to say - well, if something happened, this is Xi two, Xi Jinping, this is the guy who was going to lead us; there's no party. He intentionally made sure of that. And that's a major risk. You know, whether it's, somebody gave him a bullet in the head, a heart attack, a major health issue, taking him out or incapacitated him for a lengthy period of time, then what happens?
That's many people will say, I have a claim to the front as many as much as the next guy. And the other thing is this, China, I know before Xi Jinping for 20 something years, that is no brutal cleansing. If you get taken out of power, there is no like, pursuit of you personally, and your personal interests in a ruthless way. The system has gotten complacent. But in the last 10 years, through this cleansing, which is ruthless, people in the system experiencing that. The next five for a top job, if Xi Jinping, has something happened to Xi Jinping will be brutal, because people say, well look at it, you know, if I don't get this job, I know what's going to come to me. I better fight it to the bitter end. And that is a very, very dangerous situation, not just for China, for anybody with a stake in China. And that's something really, I think people should need to study that. Put an intense, you know, contingency plan around it, and keep looking at that situation.
Tom Tugendhat MP
Can I just go over that again, for a minute, Desmond? Because you you raised an important question there, effectively you've said, there's two kinds of short termism that have been injected into the Chinese political system. The first is right at the top where clearly there's no 40 year vision, if the transfer of power from this leader to the next is so chaotic. I mean, kings and emperors around the world have spent, I mean, there's hundreds of years of history written about how they always want sons in order to achieve a peaceful succession. And you're saying that what Chairman xi is doing, literally the reverse, he's killing those who could be considered sons in order to make sure that there is no possible succession too early. But you're saying that that actually feeds through it into every level. So that actually puts a fracture as sort of a deep instability at everything from provincial to municipal party governance, is that right?
Desmond Shum
No, I'm saying - I think I'm saying two things. One, is he systematically he makes sure there's no succession because the moment you name a successor, power can start shifting, people planning stop, you know, people start planning for the day after. So that's what he has been doing. This is a short termism. You just mentioned a first case. The second case I'm talking about is if something happened to him, that for whatever reason, he is kept incapacitated for an extended period of time, the fight will be intense and brutal and ruthless.
Tom Tugendhat MP
Right. So it'll trigger a form of internal conflict that could could be very difficult to manage
Desmond Shum
Very difficult. And nobody can manage that actually.
Tom Tugendhat MP
Now that sadly, puts a short term into a very important structural relationship that most of the world needs. Do you see a way of getting beyond that? Or is it only Chairman Xi who can do that?
Desmond Shum
Can do what? To make sure there is some kind of succession?
Tom Tugendhat MP
Exactly. To make sure that the continuity is possible.
Desmond Shum
The moment I mean he, you know, he is the one one he is the one who have been doing systematic and allow over the last decade, making sure that's no such a thing.
Tom Tugendhat MP
Yeah, okay. Now, I'm interested as well, when we look at the way in which the party under Chairman Xi has been controlling elements, it's Interesting that he's made various decisions in recent months in particular, over some of the tech companies. And the most obvious one is Jack Ma, but actually there have been many others, the way in which Ant Group has been brought to heel, do you see that as part of the anti-corruption drive? Or is that something else?
Desmond Shum
I actually, I think I see it as something else. I think, in my view, the wake-up call for them is the US presidential election, the last one, you know, the seeing how Facebook, Google, Microsoft, or Bloomberg, or they all could gang up and silence a President. And that's something that for a CCP, it's a serious, serious threat. And and that is, I think that's the trigger point. They said, well, we need to take them down, we need to bring them back into the system, our system of control. I think that was a trigger point.
Tom Tugendhat MP
I mean, that that suggests that there are there are many more threats beyond beyond the sort of long term stability question. And what do you see as the greatest potential threat to Chairman Xi today?
Desmond Shum
I think you know, I think that that is the biggest threat is the classic rule to all dictatorship, is you're blinded, because people are singing to your tune, everybody trying to sing to your tune, and they're guessing what's your tune, and they try to sing before you even name it. And then you, you get blinded. And then in that, you know, it's classic; through our history, it's proven, that kind of situation. Many very often, the dictator makes catastrophic decisions, because of they're blinded from the reality.
Tom Tugendhat MP
And some people say that Wuhan was an example of that, that are often the secrecy is not deliberate in the sense that it's not ordered, but it's the consequence of a regime in which fear is the dominant factor.
Desmond Shum
Very much so, I agree.
Tom Tugendhat MP
Okay, and I'm just interested as well, in the emphasis that the state has had on entrepreneurs and on innovation in recent years. Do you think that this interference is going to grow? Or will entrepreneurs find a way around it?
Desmond Shum
If you're looking from a long term perspective, you know, I've been I was there for almost 20 years, we always we as an entrepreneur as a group, always, in general, try to avoid long term investment. We do short term things, and you know, everything needs to come back and give me a return in, you know, start giving me a return in three years. We're not going to invest in something like, you know, what, like Tesla does, you know, you don't see a return like, decade, that decade. And that is a situation China, you know, any system long term, you cannot succeed, with that kind of entrepreneur holding that kind of mentality. And then with what's happening in the last, you know, over the last 10 years, Xi Jinping and intensely over the last few years, I mean, entrepreneur that are all scaring back. Everybody basically want to take chips off the table. Everybody want to ship money outside, move capital outside. And then well, let me that's why you see wave of high profile tech CEO all resigning, right, all resigning. So where are we I'm done. I'm gonna take a backseat now.
Tom Tugendhat MP
And so, I mean, the interesting thing about that is some people have said that this is a very astute move by Beijing, to rebalance the Chinese economy, to slow down some of the high levels of growth, to sort of ease off on some of the indebtedness that many businesses have got. You don't buy that?
Desmond Shum
I don't buy that at all. I think a lot of people have some kind of blind faith in China's system because of the growth over the last three decades.
Tom Tugendhat MP
Yeah. Now, is there such a thing as a successful company at the moment in China that has separated its influence from that of the CCP, or is there not?
Desmond Shum
It's no such effect. CCP basically sees that every company is a company: I give you a license to operate. I can take your license away, I can take your business away. Every companies belongs to me. To talk about like that's a private sector versus state sector. The private sector is independent from the state; just completely, you know, blinded to the facts on the ground.
Tom Tugendhat MP
So for a long time, we heard how, for example, Huawei was an independent company and we should deal with as an independent company, you don't buy that.
Desmond Shum
There's no such a thing.
Tom Tugendhat MP
Okay, it's pretty clear. Okay. Now, I'm also interested because you had such a long time in Hong Kong, I mean, many of us, who've got a deep affection for Hong Kong, and indeed, for China, see, the erosion of rights of Chinese citizens in Hong Kong was great sadness. Do you think those Chinese citizens are going to have their rights restored? Or is that one of those moments where, sadly, the world has turned and it won't turn back?
Desmond Shum
They won't turn back. They won't come back. I think the way that the way the situation is this. China first do this, Hong Kong, you know, one, One Country Two System really deals with the mind of using as an example for Taiwan. And obviously, that Taiwan, the boat has sailed, you know, over the last 10 years, they have, they are charting their own course.
And then, so the, the function of the Hong Kong being example, for Taiwan has already gone. And the next thing is, then they say, well, OK, this is a region, which is systematically different from the system we are running, and I need to assault that into the system. And then and then over time, then every level of bureaucrat dealing with Hong Kong, they try to mould it in the way they want to mould it, and enriches the usual way, the CCP runs in an area. And it comes to a breaking point in Chinese, you know, that the Hong Kong people say, well, you know, we don't want we kind of go along and, you know, 2019 major protests, and then after the CCP, just, you know, speed up that the dial, in terms of absorbing Hong Kong into a complete CCP control region.
Tom Tugendhat MP
And so, let's just talk about Hong Kong today, then is it is it really definitely dominated by the CCP, there's no independent you don't you don't argue there's an independent judiciary anymore. Really, there's not an independent law and legal body.
Desmond Shum
I mean, even even about 6, 7, 8 years ago, one of my classmates in my secondary school is a High Court judge. You know, we get along; one time he talked to me about how the CCP operated. So they assign a CCP operative, almost like intelligence officer, to every High Court judge.
Tom Tugendhat MP
Every judge has a CCP minder?
Desmond Shum
Every one of them has is has been assigned one, that guy will talk to him from time to time, you know, and then get, you know, his, you know, what's his fault, and then you know, what's happening around him and all that.
And I was listening to that I was I, you know, there's no way. I mean, it's very simple that they what they need to do is, every Hong Kong people have families, relatives, associates going to China. What they will do is that if you have a let's say, you have a court judge ruling to tomorrow, or next week or whatever, then they say that's important, they're not even going to tell you say, Well, I want you to rule a certain way. When your parents or your wife or children crossing the border into China, or suddenly you're stopped the border, and they take you in the small room, don't even need to talk to you, they put you in a small room for five hours. And the next thing they let you go.
And if you're a judge, you immediately know why, why that person is taken. Right? Who can sustain that kind of pressure? Who? Nobody. because everyone have they have relatives and friends and you know, family going to China crossing the border all the time. That's, you know, I'm just giving examples, a very simple thing they do. No judge, no independent judiciary, people can sustain that kind of pressure from China.
Tom Tugendhat MP
So the lesson for us then in the UK, is that people who have family in China or in Hong Kong, could be under pressure, even though they're in the UK - because the jurisdiction isn't what matters is where the leverage points are.
Desmond Shum
Yes, yes. The CCP is very clear. And they have demonstrated, you know, throughout time.
Tom Tugendhat MP
And to you of course, you've paid a very heavy price. Yes. And may I just ask what contact have you had with your your ex wife in the last few years?
Desmond Shum
Well, maybe she got disappeared September 5, 2017. And I published a book. I you know, I picked the publishing day on the fourth one year anniversary of her disappearance. And then over there for years should never been charged. Nobody heard from her from her from. Nobody had seen her. She just like, you know, vanished. And including her parents. Nobody know. Until two days before my book publishing, she reports on reappear, gave me a call and then say well asked me to stop the book.
Tom Tugendhat MP
It's quite an indictment on the absence of legal protections for Chinese citizens.
Desmond Shum
It's all whatever is convenient for for the ruling CCP.
Tom Tugendhat MP
To the sounds, I mean, the description that you're making makes it sound like a new imperial class.
Desmond Shum
It is and they were one of the one of the things I want to point it out in the book is, there is this class of people I call them 'red aristocrats', you know, the father, the grandfather, sort of founding senior member of the CCP. And they just inherited you know, and they have their privilege to you know, they basically owns the country.
One of these examples is the centennial of the party celebration, which was a few months ago. There were seven busloads of people that went on the Tiananmen Square. And then besides Xi Jinping, overlooking the parade in front of them. Who are they? They are ordinary citizens, no specific title, no specific contribution you can talk about to the society or to the country. The only reason they can have such privilege is because the [inaudible]. And this is, this is the way the system is, and this is what they actually own. You know, we talk about CCP like, you know, is run by people, owned by people at the top. And these are the people; they're the actual owners of CCP.
Tom Tugendhat MP
So we're now in the communist dynasty.
Desmond Shum
They are definitely a Communist member dynasty. They are I mean, they, they live a different way; they go to different school, they have a different medical system, even their food are supplied by a specific farm, only farming for them.
Tom Tugendhat MP
It's a very, very different form of equality. Well look, Desmond, thank you very much indeed, for your time this afternoon, and particularly thank you for your extraordinary courage. And for those who haven't read it, can I strongly recommend Red Roulette: An Insider Story of Wealth, Power, Corruption and Vengeance in today's China. Desmond has written an extraordinarily powerful book, and really has paid the price for speaking out and for his extraordinary courage in braving this rather brutal regime. I have to say, I'm very grateful for your courage today, as well as speaking to us but I'm also very grateful for your courage and in writing what is very, very powerful book. Thank you very much for joining us here on the China Research Group.
Desmond Shum
Thank you, Tom.