Geopolitics

A Different China? The Extra-Large Ambitions Of Mr. Xi

One year after rising to power, Chinese President Xi Jinping shows no signs of turning back on major reforms...or sweeping purges.

Chinese President Xi Jinping and his wife Peng Liyuan in 2013
Chinese President Xi Jinping and his wife Peng Liyuan in 2013
Brice Pedroletti

BEIJING — Xi Jinping’s arrival at the head of the Communist Party of China, in November 2012, and of the country, in March 2013, triggered great commotion. It would be an understatement to say that the new 60-year-old "red emperor" is determined to make the decade-long dual mandate of his predecessor, Hu Jintao, seem like a waste of time.

In fact, it is this tacit agreement of radical action against the stalemate of the Hu years — through various coalitions and power struggles within the Party — that brought this “royal son,” filled with revolutionary legitimacy, to the apex of power.

Concerning style, the time for Hu Jintao-like depersonalized politics is over. After one year in power, the new Chinese leader has pulled out all the stops: He seems to have borrowed from both Gary Locke, the U.S. ambassador to Beijing who just stepped down from his position and whose simplicity had won over Chinese Internet users, as well as from Bo Xilai, the rival sentenced to life in prison in September 2013, who had revealed the unsuspected popularity resources of the good old Maoist methods.

Even the strict protocol of the People’s Republic of China has been disrupted: The First Lady, Peng Liyuan, is now being put forth for diplomatic missions of “soft power,” such as receiving Michelle Obama in Beijing on March 21. Peng, a famous and neatly-dressed singer, has admittedly more assets cut out for that role than her predecessors.

The friendship tinged with admiration Xi Jinping has for Vladimir Putin is a secret for no one: The Chinese president, who was a guest of honor in Sochi, and his Russian counterpart, seem to share an obvious contempt for those “bored foreigners, with full stomachs, who have nothing better to do than point fingers at China,” Xi had declared in Mexico in 2009.

Xi Jinping with BRICS leaders at the 2013 G20 in Saint Petersburg — Photo: Roberto Stuckert Filho/PR

The two also share an instinctive distrust towards anything related to “civil society.” Even the foreign press in China is bearing the consequences of this, as several foreign media sources have had difficulties renewing their visas for 2014.

A spiritual son

In the pantheon of tutelary figures, the Chinese leader has made space for his father, Xi Zhongxun, who died in 2002. This former deputy prime minister, rehabilitated by Deng Xiaoping after he was dismissed under Mao in 1962, was the subject of an unprecedented commemoration, in October 2013, for the centenary of his birth. He played a key role in the economic reforms in the Guangdong province and was seen as close to the politically reformist branches within the Party.

His son, however, seems to have little interest in the “liberal” part of his father’s political legacy, to the great displeasure of Chinese intellectuals on the lookout for any sign of a potential democratization to come. By insisting on the uprightness and the temperance of the former senior figure, Xi Jinping has revealed his own nostalgia for these “rectification” campaigns with the kind of self-criticism that was very popular in the 1950s. He has imposed it at every level of the provinces.

“Xi is indeed Zhongxun’s biological son, but he is Mao’s spiritual son,” the exiled essayist Yu Jie says in his radical pamphlet entitled “Chinese Godfather Xi Jinping.” This book, the third volume of his Trilogy of Chinese Dictators, was released on March 24 in Hong Kong.

Leading the new values promoted by Xi Jinping is frugality, which has become a strict obligation for senior officials who are forbidden from going to banquets and private clubs. For instance, “Xi Dada”, or “Uncle Xi,” as some Internet users like to call him, went to a cheap restaurant in Beijing in December, ordering only 21 yuan (around $3.40) worth of fritters, to the great surprise of the other customers. A gesture that was confidently inspired by Gary Locke, nicknamed the “ambassador of the people”, who had brought the American Vice President Joe Biden to a similar restaurant while he was visiting China.

An “unprecedented” evolution

Another priority is the air pollution, which, for a long time, the American embassy was the only one to continuously measure. Not only did China set up a vast network for small particles measurement, but the president wished to show the Pekinese himself that they breathed the same air by going to a working-class neighborhood in February, on a day of persistent smog.

Other projects launched by Xi make one’s head spin. The new team has committed itself to liberalize the financial system — a bold gamble — and to dismantle the two institutions that drew the most resentment: labor camps and the one-child policy. This is it for the opening, positivity, reforms, in short, the Yang.

But all this does have its Yin, its dark side, in this icy wind that a relentless purge at the top of the Party is blowing through the corridors of power.

In Beijing, human rights defenders refuse to stay silent over the death of Cao Shunli, a 54-year-old activist who died on March 14, after she was refused treatment by the detention center in which she had been held for six months, after she was arrested at the Beijing airport. Cao Shunli had been about to embark for Geneva to take part in training workshops on human rights.

“Fear is an effective instrument of power and Xi considers it necessary. The ultimate principal that seems to guide him is that the Party needs a maximum of discretionary power in order to be able to successfully complete its economic and bureaucratic reform program,” says Nicholas Bequelin from Human Rights Watch in Hong Kong. “Any constraint to the exercise of this discretionary power — whether it is reinforcement of the legal system, a greater role for press or a more active civil society — threatens both the reforms and the political system. There is a thin difference between discretionary and arbitrary power.”

Since Deng Xiaoping, no Chinese leader had dared to step so far out of the collective governance ideals of the post-Maoism era. Xi Jinping’s innovations have taken the shape of five “standing committees,” which have all been revealed over the last few months. The list — grim in appearance — masks an unprecedented recentralization of power: All are led by one single man, Xi Jinping.

The most recent one, announced mid-March, is the National Defense Reform Standing Committee. Last month, the Internet Security and Computerizing Standing Committee was created. Xi still leads the Economic and Financial Reforms Committee as well as the new National Security Commission, which coordinates the actions of the police forces against terrorist threats, but also … ideological threats. Finally, a general reforms committee manages the whole of the current projects.

“These five precisely designed groups must be closely monitored. Everything that happens in China in the next 10 years will come from them. For me, this evolution is unprecedented,” says the editor-in-chief of a Chinese news source who chose to remain anonymous.

Xi Jinping, he adds, has also put an end to the traditional sharing of roles between the president and the prime minister: From now on, only his voice counts — the one that represents power.

A new face

This small palace revolution is justified, officially, with pragmatism. Xi had decided to tackle the “interest groups” that are opposed to the reforms, those clans of corrupt leaders and semi-mafia networks that are said to be dominating certain regions or entire business sectors. In order to do this, the Party has launched an anti-corruption campaign that exceeds all those from the previous years in intensity and in stature. Its latest target was General Xu Caihou, the former No. 2 figure in the army. He was arrested on March 15 while he was being hospitalized for terminal cancer. A few months earlier, a top police official was taken away by the anti-corruption police.

Several provincial chief executives, heads of the oil industry, a senior planning officer, a flamboyant mogul of the mining industry and several moviemakers have also fallen. The networks of the supposed accomplices of Zhou Yongkang, a former éminence grise of the Chinese security apparatus.

“The anti-corruption campaigns have always led to political struggles in China. This one has all the characteristics of those movements that targeted Mao’s rivals, for a pretext or another,” the economist Hu Xingdou explains. “Xi Jinping needs to be transparent. In China, corruption is inherent to the system. In order to fight it, we need to target this system following principles such as disclosure of assets or budgetary expenditures, more supervision from the media or at least signs that we are heading this way!”

But these keys to liberalization may not materialize. “Freeing the media does not benefit its governance,” the aforementioned editor-in-chief says. “But I am convinced it will give a new face to China. A this point, I cannot say if it will be for better or for worse.”

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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