China’s Communist party cadres launch property fire sale
As China’s new leaders intensify a campaign to root out corruption, thousands of Communist party officials have been panicked into a fire sale of their illicit properties while billions of pounds have been smuggled overseas.
Luxury properties are being dumped on the market in Beijing, Shanghai and Guangzhou for anyone able to pay in cash as crooked officials try to cover their tracks.
A report by the Communist Party’s powerful anti-corruption unit, the Central Commission for Discipline Inspection (CDIC), said “a wave of luxury home sales began last November and has accelerated since December”.
It said the volume of deals had intensified by “a hundred times” after Xi Jinping, the incoming Chinese president, warned that corruption could kill the Party and put one of the country’s most vigorous and resolute politicians, Wang Qishan, in charge of stamping out graft.
Fu Zongmo, an estate agent in Sanya, Hainan, said his colleagues had sold two houses recently for government officials. In recent years, the tropical beaches and golf courses of Sanya have attracted plenty of speculators but recently the market has stalled.
“They never register the houses in their own names and they use a string of agents to do the deals,” said Mr Fu. He said one company had bribed an official by buying him a property at the Mountain Water International Complex. “The property was put in the name of the official’s relative. After six months, it was sold for two million yuan (£200,000), around the same amount it cost. Then the official could cash out.
“The officials often use a special mobile number and when the deal closes they invite us for dinner to end the relationship. Then they throw away the number so we cannot contact them,” he added.
The CDIC report, which was obtained by the Economic Observer newspaper, suggested that nearly 10,000 luxury homes had been sold by government officials in Guangzhou and Shanghai alone last year.
It also claimed that an astonishing $1 trillion (£630 billion), equivalent to 40 per cent of Britain’s annual GDP, had been smuggled out of China illegally in 2012.
Economists and experts cast doubt on the figure, but said the flow of money from China was dramatic. Li Chengyan, a professor at Peking University, suggested that a total of roughly 10,000 officials had absconded from China with as much as £100 billion.
Marco Pearman-Parish at Corporation China, a consultancy in Beijing that helps register companies, said one of his clients had several government officials looking for foreign homes in the Cayman Islands.
“In Beijing, half of that company’s clients are government officials,” he said. “Nine out of ten claim to be businessmen, but it emerges over the course of the deal that they have government jobs. What they are looking for is resident permits abroad so that if anything happens they can escape easily.”
The CDIC said 1,100 government officials had fled China during last year’s national holidays in October and that 714 had been successful in getting away.
In the United States, the National Association of Realtors said that more than $7 billion of properties had been bought by Chinese in the US last year. Some high-end homes are now specifically built for rich Chinese with ponds for koi carp and a second kitchen for pungent cooking.
Jiang Ming’an, professor at Peking University Law School and one of a select group of advisers called in to see Wang Qishan when he took over the anti-corruption brief, said it was important for the Party to force officials to publish their property holdings.
“The government has been setting up a housing registration system, which I think is a very good system, and that may have scared some of the officials with too many houses.
“The Party should deal with this seriously. People will not take to the streets now because the economy is good. But when it slows down in the future, as the old saying goes, the fire cannot be covered with paper forever”.
Additional reporting by Valentina Luo