ICBC's Former Vice President Case: Hidden Power Struggles Among Beijing Elites | China Truths

Welcome to China Truths. In this episode, we will bring you the following story. ICBC's Former Vice President Zhang Hongli Case – Hidden Power Struggles Among Beijing Elites Now, let's dive into the details. It's all covered in today's China Truths. ICBC's Former Vice President Zhang Hongli Case – Hidden Power Struggles Among Beijing Elites On November 14, Zhang Hongli, the former vice president of the Industrial and Commercial Bank of China, ICBC, stood trial in Hangzhou. On the same day, foreign media revealed the behind-the-scenes collaboration between Zhang Hongli and Fang Fenglei, chairman of Hopu Investment Management Company, as well as Goldman Sachs, with former Chinese vice president Wang Qishan playing a key role. Official Chinese reports on Zhang's case have indirectly pointed to the scandal involving foreign investment banks recruiting princelings, or children of high-ranking officials, to gain advantages. On November 14, Chinese authorities released details indicating that between 2011 and 2022, Zhang Hongli abused his position as a member of ICBC's party committee and vice president to offer assistance in loans, financing, and job placements, illegally accepting bribes totaling over 177 million yuan, or about US$24.4 million. Zhang was investigated and removed from his position in November of the previous year. The charges outlined by the Central Commission for Discipline Inspection, CCDI, included using private jets for personal use, obtaining a fraudulent doctorate degree, and engaging in corrupt practices such as using public power for personal gains and accepting improper appointments after leaving ICBC. He was also accused of being obsessed with power, building political connections, and engaging in mutually beneficial exchanges, as well as nepotism in recruitments and promotions. As for the alleged improper post-ICBC employment, it is believed that this refers to Zhang's move in 2018 to become a partner and co-chairman at Hopu Investment, a private equity fund. Zhang Hongli, 59, is a native of Heilongjiang Province. Early in his career, he worked at Schroeder's International Merchant Bank's China Investment Banking Division and later became Goldman Sachs' chief representative in China. He joined Deutsche Bank in 2001, where he served for nearly a decade, eventually becoming the chairman of Deutsche Bank, China, and the head of its investment banking operations in the Asia-Pacific region. In 2010, Zhang joined ICBC as vice president, overseeing international operations and investment banking. After leaving ICBC in 2018, he became a partner and co-chairman at Hopu Investment. On November 14, the Financial Times reported on Zhang Hongli's ties with Fang Fenglei, chairman of Hopu Investment, and Fang's connections with Wang Qishan. According to the report, Wang Qishan was an early mentor to Fang and helped him establish China International Capital Corporation, CICC, China's first joint venture investment bank. The report further disclosed that Goldman Sachs leveraged Fang Fenglei's high-level connections in a complex joint venture to gain market access. However, Goldman Sachs realized that the costs of gaining full control were much higher than expected, with economic benefits flowing primarily to Fang, which led Goldman to seek to unwind the deal. Fang Fenglei, born in 1952 in Hunan, held various senior roles, including vice president at CICC, CEO at Bank of China International Holdings, and chairman at Goldman Sachs' Gaohua Securities. In 2007, he co-founded Hopu Investment. The Financial Times also reported that Zhang Hongli, after leaving ICBC, briefly joined Hopu at Fang Fenglei's invitation, but internal conflicts soon erupted, and Zhang left. Not long after, he was placed under investigation. Zhang's trial and the media's revelations about his connections with Fang Fenglei, as well as Fang's ties to Wang Qishan, have attracted significant attention. Professor Sun Guoxiang of the International Affairs and Business Department at Nanhuai University, Taiwan, commented that such reports will exacerbate factional tensions within the Chinese government, potentially triggering a larger internal purge. However, continued factional struggles may also destabilize China's financial system. Sun suggested that the timing of these revelations, with increasing financial pressure in China and foreign capital accelerating its withdrawal, could further undermine international confidence in China's markets. Wang He, a China affairs expert, pointed out that foreign media usually receives this kind of insider information through leaks from within the Chinese government, which often signals infighting and factional struggles. Gong Xiangchen, a former researcher at Taiwan's National Defense and Security Research Institute, added that this report highlights that Wang Qishan and his faction are recent targets of investigations, but Wang himself may not face consequences due to his historical support for President Xi Jinping. Independent commentator Kai Shenkun stated that Zhang Hongli's primary offense was laundering money and transferring assets for a large number of high-ranking Chinese government officials. Zhang is being prosecuted, yet these elite families remain untouched, indicating that Xi Jinping's anti-corruption campaign has had little impact on the true powerhouses within the government. Kai suggested that Xi Jinping has enough leverage over these elite families to ensure their cooperation for his continued leadership. Kai further noted that Wang Qishan's close associate, Fang Fenglei, continues to thrive in the capital markets, showing that Wang Qishan has not been fully defeated by Xi Jinping and still retains significant influence. Since Wang Qishan transitioned to vice president of China in 2018 and retired last year, at least two key figures from the financial sector who were close to him have been investigated. However, Wang has recently been appointed as honorary chairman of Tsinghua University's Business School Advisory Board and has made public appearances at social events. The Central Commission for Discipline Inspection statement also notably mentioned Zhang Hongli's nepotism in recruiting and promoting officials. In 2019, foreign media reported that Deutsche Bank hired dozens of unqualified but politically connected princelings in China and Hong Kong, including the sons and daughters of powerful figures like Liu Yunshan, Wang Yang, and Li Jiangxu, to secure orders for the bank. Zhang Hongli was reportedly the key figure behind this initiative, which involved paying bribes to senior government officials like Jiang Zemin, Wen Jiabao, and Wang Qishan. In recent years, the Chinese government has escalated its crackdown on financial sector officials, with the number of investigations increasing annually. Wang commented that Beijing is well aware of the connections between princelings and foreign entities and that Zhang Hongli was likely a mere frontman or proxy for more powerful figures. Beijing may be using Jiang's case as a warning to others, signaling that while major players may be left untouched for now, they are being watched closely. Qishan Cohen concluded that Zhang Hongli, despite being a loyal servant to the powerful elites, ended up in prison, illustrating the ruthless nature of Beijing's internal power struggles.