Explainer: China’s Crackdown on Big
October 12, 2017
Over the past few years, Chinese companies
have flooded the globe with investments,
buying up everything from real estate to
football clubs and entertainment companies.
As a result, hundreds of billions of dollars
in capital have flowed out of the country,
draining China’s foreign exchange reserves.
But that all has come to a halt this year
with the Communist Party beginning to label
such high-profile transactions a "national
security" risk and bringing some of the
country's biggest dealmakers under scrutiny.
The first in a series of shockwaves came in
January, when Xiao Jianhua, an eccentric and
politically connected wealthy Chinese
billionaire, was seized from his residence
at the Four Seasons Hotel in Hong Kong by
When Xiao was taken away, reports suggested
that he was helping Chinese authorities with
an investigation into the country’s massive
stock market crash of 2015 that saw stocks
lose some $4 trillion in value.
But, it is Xiao’s reported ability to
secretly move massive amounts of money and
his political connections that most have
focused on. In an earlier report, China
analyst Willy Lam told VOA that Xiao is
known as a “white glove” — a broker for
powerful political families that include
those with ties to former President Jiang
The New York Times has described Xiao as a
“banker for the ruling class and in 2013,
the newspaper reported that he paid $2.4
million to buy shares in an investment firm
held by the sister and brother-in-law of
Chinese leader Xi Jinping. Xiao’s legal
status is unclear and while he is believed
to be helping authorities in China with
investigations into the financial industry,
authorities have made no formal statement
about whether he is in custody.
A few months later, as the Communist Party,
accompanied by state media, continued to
hone its message about the financial risks
of heavily-leveraged debt, and overseas
investments started to slow dramatically,
another jolt occurred with the detention of
Wu Xiaohui, the chairman of Chinese
financial and insurance giant Anbang.
One of China’s richest and most powerful
companies, Anbang is known for its
headline-grabbing overseas investments such
as its purchase of New York’s iconic Waldorf
Astoria Hotel and Manhattan’s JW Marriott
Essex House Hotel — and ones that failed —
like its $14 billion bid to purchase
Starwood Hotels and Resorts Worldwide.
Anbang chairman Wu Xiaohui is married to
Zhuo Ran, the granddaughter of former
Chinese leader Deng Xiaoping. In a statement
shortly after he was detained in early June,
Anbang said Wu was temporarily stepping
aside as chairman for “personal reasons.” Wu
has not been seen in public since June.
Soon after Wu's detention came a second and
even broader shock, the ripples of which
continue to be felt. News surfaced that
China’s banking regulator was scrutinizing
the investment and loan guarantees used to
back the big overseas investments of not
only Anbang, but other big dealmakers
including HNA Group, Dalian Wanda Group and
Fosun, whose chairman dubs himself the
Warren Buffett of China.
Many of the companies, such as Dalian Wanda,
have become the international face of China
with their marquee acquisitions in recent
years. Dalian’s shopping spree alone has
been dazzling. Over the past two years, the
company’s purchases have included the
world’s largest cinema chain, a luxury yacht
builder, a Spanish football club as well as
Hollywood’s Legendary Entertainment media
So far, the heads of the four other
companies appear to have avoided anything
beyond scrutiny, and calls to sell off their
assets overseas, but there are no signs that
the pressure is easing.
rumors surfaced online in early August that
police detained Dalian Wanda chairman Wang
Jianlin as he was about to leave China via
private jet for London, the company had to
work hard to stamp out the speculation.
The company called the accusations
“groundless,” and noted that Wang was in
China’s western province of Lanzhou.
Since his company came under scrutiny, Wang
moved quickly and in July sold off 77 hotels
and 13 theme parks to pay off nearly $10
billion in debt. Still, some continue to
believe that he has been barred from leaving
the country. In early September, Wang
traveled to Hong Kong where he met with the
port city’s former chief executive, Tung
Chee-hwa. Pictures from the visit were
posted on Dalian Wanda’s website.
According to Bloomberg, China has asked
Anbang to sell its assets outside of the
country. For now, the company says it has no
plans to sell its overseas acquisitions.