You say princelings, I say elite corps of investment bankers
A key part of the fascinating story of Bo Xilai’s fall from power is the opaque economic dealings of China’s ruling class. Or more specifically, of its so-called princelings, the oddly lyrical and wonderfully infantilizing term used for the now powerful descendants of former party leaders.
The New York Times has a great look at how princelings use their dynastic political and social power for economic gain. The son of former President Jiang Zemin, for instance, has brokered deals giving Dreamworks, Microsoft, and Nokia access to the China and also manages numerous state-funded investments. His behavior is quite typical. Princelings, we are told, “often [play] central roles in businesses closely entwined with the state”, “[serving] as middlemen to a host of global companies and wealthy tycoons eager to do business in China” and have a Zelig-like ability to be “everywhere, as long as the industry is profitable”.
Thinking about this behavior in a slightly different context, aren’t princelings just really good bankers?
M&A advisory, principal investing, securities trading, access to public and private capital, regulatory capture and arbitrage, strong relationships and deep conflicts of interest — the whole spectrum of modern investment banking, good and bad, is there. If sheer complexity and scope of financial dealings are how you score a banker’s talent, Bo’s family seems to be pretty good.
And, if the business of an investment bank is, at least euphemistically, to bring together “people, capital and ideas”, this shouldn’t be surprising. Just as clients not only put up with their banker’s conflicts, but actually value those conflicts, Western banks and companies looking to do business in China seek out princelings for the same reasons.
All of which raises an obvious question, of the billions undoubtedly pocketed by the princelings of the second-largest economy in the world: are they a symptom of exorbitant graft? Or are they a bargain-basement price to pay, compared to the profits that America annually remits to its own investment-banking behemoths?