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A Tycoon Rises and Falls With a Chinese Leader

Posted Date: Saturday, 23-Jun-2012

From her penthouse apartment in the English seaside resort of Bournemouth, Gu Kailai, wife of the now-fallen Chinese leader Bo Xilai, looked out at a hot-air balloon that gave tourists a panoramic view. She decided that Dalian, the Chinese city then run by her husband, needed a similar attraction.
Ms. Gu approached the balloon's owners and asked how to get one. Then she put them in touch with Xu Ming, a businessman back in Dalian. Mr. Xu forked over the money to buy a balloon in early 2000, and later that year was photographed taking a ride in the one in Bournemouth with Ms. Gu.

Indulging the whims of the first family of Dalian appears to have paid off handsomely for Mr. Xu, who built a fortune in the city while Mr. Bo was mayor there from 1993 to 2001. Mr. Xu, as chairman of a company called Dalian Shide Group, was ranked a few years later as China's eighth-richest man.

Now he is in trouble. Mr. Xu has been missing since late March, when he was detained soon after Chinese authorities sacked Mr. Bo as Communist Party chief in Chongqing city, according to people familiar with the matter. The people said it is their understanding investigators are scrutinizing Mr. Xu's links to the Bo family, especially his business ties to Ms. Gu and his role in helping arrange the overseas education of her son, Bo Guagua.

Ms. Gu herself is in detention as a suspect in the death of a British businessman found dead in Chongqing last fall. She, her husband and Mr. Xu are all unreachable, their whereabouts unknown.

Mr. Xu's detention underscores a broader dynamic at the heart of the Bo scandal: the intersection of money and power under China's system of state capitalism.

Many business leaders in China rely on close relationships with party officials, who have sweeping powers to set policy, allocate government contracts, distribute credit from state banks and control the police, media and courts. The business leaders often nurture these relationships with various gifts and favors.

Such relationships rarely are exposed, under a system in which the party forbids public scrutiny of its affairs. Business ties are often hidden through shell companies and offshore vehicles.

The close relationship of a businessman with a political leader "was not anything unique to Bo Xilai," said Victor Shih, an expert on Chinese politics at Northwestern University. "It happens at every level of government. Find me a Chinese mayor who doesn't have these special relationships."

Sourced: online.wsj

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