10 source of wealth of China’s Billionaires
Posted by Author on November 22, 2010
secretchina.com, Nov 21, 2010 –
In the last 30 years, many people have become billionaires in China. The source of their wealth has mainly been from the power of their family backgrounds and status. These sources are as follows:
1. Attract foreign investments as well as Chinese mainland overseas companies’ funds as foreign investment to invest back into China to earn commissions.
2. Import and bring in complete sets of equipment at prices that are usually 60 per cent to 300 per cent higher than the international market price. Take, for example, an automatic assembly line for making leather boots. The international market sells this assembly system for $US2 million. Guangdong Province and Jiangsu Province brought in the same model and paid $US6 million and $US7.2 million respectively. Equipment that could produce 500,000 tonnes of chemical fertiliser a year for the international market is priced overseas at $US220 million, while it was imported into China and sold for $US400 million in Shandong and Liaoning provinces.
3. Control the local resource and commodity markets, and get exclusive exporting rights to make huge profits.
4. Get land for development, invest in real estate by getting loans from local banks, mortgage the land to borrowing against it and make huge profits without paying any money.
5. Smuggling goods and evading taxes are other sources of income. Every year, the number of Japanese and European cars that are smuggled into China is 30,000 to 40,000.
6. Obtaining loans with unsecured credit through financial institutions, with the funds flowing into personal accounts. This is one of the reasons for bad debts in China’s financial institutions.
7. Monopolising large-scale construction projects.
Eighty-five per cent of the highways were contracted out to private companies. The private contractors were mostly relatives of local officials. For each kilometre of highway construction, they make a profit of 7 million to 11 million Chinese yuan.
8. Get commissions to take away or withdraw the funds to personal accounts, normally through financial institutions or Chinese funded investment companies or banks.
9. Manipulate the stock market. Spread false rumours by being closely involved with financial institutions and media to create panic and make gains.
10. The 12 major real estate developers in Guangzhou Province are all family members of high ranking officials or their relatives. Some of their fathers were ex-political bureau committee members, NPC vice-chairmen, political consultative committee presidents, former governors, etc. Out of the 10 major real estate developers in Shanghai, 9 were related to government officials. Out of the 15 construction companies and contractors, besides the 2 that were government owned, the other 13 were owned by relatives of high ranking officials. Out of the 22 real estate developers in Jiangsu Province and 15 construction companies, all were owned by the families and relatives of local officials. These included deputy province chiefs, province deputy governors, ex-province secretaries, ex-provincial judges, etc.
Billionaires are all over the world. But the billionaires in Western countries depend on their intelligence and business skills. Those in China depend on the influence of their status and power. This is something an average citizen can not compete with.
In today’s China, of the millions of government-owned assets, 960 million square metres of land has become assets in the pockets of those under the “official” system. If they want to use what is in their pockets, they just put their hands in. Those who are in power owns these assets. And thus, they can leave such assets to their families and relatives.
Nowadays, the rich get richer, while the poor get poorer. Although this is not absolute, the practice is there. This raises a question. Mainstream society has called for a market economy for over 20 years; now, it has become the “official economy”. This is really the biggest irony for its citizens. One well-known magazine wrote: “Some foreign things have gone into China and now have a Chinese feature. Other people have democracy; we also have democracy. Our democracy is that you are grass roots and I am the king.”
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This entry was posted on November 22, 2010 at 8:48 pm and is filed under Business, Businessman, China, Economy, News, People, Social, World. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
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