China’s Communist Party will block promotion to senior officials whose wives or children hold significant assets in foreign countries as part of a Chinese effort to prevent Beijing’s senior officials in advance from being affected by sanctions now directed against Russia.
The ban, which appears in an internal statement issued by the party, may play a role in Chinese leader Xi Jinping’s efforts to increase his influence, at a conference on the identity of the leadership that takes place once a decade and is expected to take place this year.
The new provision prohibits daughters and spouses as well as children of ministerial or higher officials from holding – directly or indirectly – real estate assets or shares in foreign countries. They will also be prohibited from setting up accounts in foreign financial institutions unless they have a legitimate reason to do so Or work – so according to the sources.
It is unclear whether these rules will be applied retroactively, but family members of some of the senior officials have already sold shares in foreign companies in order to comply with a directive issued during March.
The order was given because President Shai wants to minimize the geopolitical risks to the Communist Party, fearing that senior officials who have financial exposure in foreign countries could become a weakness if the US and other Western countries impose sanctions on Chinese leaders and their families, similar to what has been done Russia’s invasion of Ukraine, the people said.
“Leading officials must take care of family discipline and ethics,” Shai told the party’s leading disciplinary enforcement agency in January. “Officials must lead by example in the conduct of their children and spouses properly, be responsible people and do things in a clean way,” the president said.
The senior staff must sign a declaration
Now senior members of the bureaucratic and partisan staff must sign a declaration pledging to abide by the new rules – a demand that will give Shai more power over the political elites ahead of the party’s 20th National Congress, which is expected to take place later this year. The statements will give Shai leverage to put pressure on any official who improves the rules for holding assets in foreign countries, because then the wayward official will be convicted of serious offenses such as infidelity and dishonesty towards the party.
Shai is expected to secure another five-year term as party leader in Congress, and to include in his cabinet associates he more trusts in an effort to bolster his status as the most powerful Chinese leader in decades.
Since coming to power in 2012, Shai has waged a high-profile struggle to fight corruption and end the ostentatious lifestyle of officials, saying the party is in an existential war against moral decay in its ranks.
In 2014, the party announced that it had discovered about 3,200 officials, who sent the couple and their children to foreign countries and hid assets there. The party demoted about a third of them, citing their seniority level and refusing to let their families return to China. Beijing even tried to capture assets related to economic wanted individuals, as part of the “Fox Hunt” and “Sky Network” operations against white-collar criminals and corrupt senior officials.
The party demands more financial revelations from its senior officials in recent decades, though they are only observed by internal controllers. These requirements do not yet reach the level of the “Sunlight” law, which is supported by some researchers. Under such a law, public officials will be forced to publicly publicize the scope of their personal assets. In 1995, the party introduced rules requiring senior members to report their income, and has since added regulations requiring depositors to disclose additional financial and personal information, including details about the spouses’ and children’s employment, as well as holdings in real estate and investments.
At the beginning of the previous decade, the public debate on the capital adequacy requirements of officials developed into a series of demonstrations by activists demanding more transparency regarding the family assets of senior officials. Authorities later arrested many of the activists.
A relative of Mao Zedong
Rising tensions between China and the West have raised concerns that any financial exposure to senior Chinese officials in foreign countries could serve as leverage against Beijing, especially after seeing US and European governments impose widespread sanctions on Russia after invading Ukraine, some people said.
China does not prohibit its citizens from setting up or investing in foreign companies, which may have legitimate purposes, but at the same time have also been used in the past to evade taxes and transfer illegal funds to foreign countries. Relatives of party officials are known to have used straw companies to hold their assets.
In 2016, the International Consortium of Investigative Journalists published a report linking the relatives of two senior party leaders – both of whom have since retired – to commercial activity in a foreign country, conducted through the law firm Mossack Fonseca & Co .. The report relied on “Panama Papers”.
The consortium reported the names of family members in the party’s elite families identified as directors or shareholders in foreign companies, including President Xi’s brother-in-law, as well as relatives of Mao Zedong, the party’s former leader. The report did not accuse any individual or organization of improper action.
“What exactly should we be afraid of?”
The U.S. has imposed sanctions on several Chinese officials in recent years, including freezing all assets in the U.S. that may be under their control, and noted the role of officials in violating human rights in the northwestern province of Xinjiang and oppressing human rights in Hong Kong. The targets included two members of the party’s 25-member Politburo, most notably Wang Chen, a senior official in the Chinese Legislature, and Chen Kuanguu, the party’s leader in Xinjiang between 2016 and 2021.
In April, U.S. Deputy Secretary of State Wendy Sherman said she “hopes Beijing has drawn the right conclusions from the crisis between Russia and Ukraine,” hinting that the West could impose severe sanctions on China if it uses military force against the island of Taiwan that enjoys democracy and autonomy, and Beijing Ying says it should become part of China. Chinese Deputy Foreign Minister Le Yucheng insisted that “China is not bothered by the threat of sanctions similar to those imposed on Russia.”
“What kind of storms have we not experienced in more than 70 years since the founding of ‘New China,'” he told her. “Not only has China not collapsed, but it is thriving and developing at a rapid pace. What exactly should we be afraid of?”