Chinese success story has a twist
By David J. Lynch, USA TODAY
SHENYANG, China — It was natural that North Korean dictator Kim Jong Il would look to China for tips on reforming a Stalinist economy that produces little but shortages and famines. After all, the Chinese performed their own communist-to-capitalist miracle starting in 1979 with just a handful of coastal free-market enclaves.
A dutch-style windmill at tycoon Yang Bin's Holland Village in China.
Frederic J. Brown, AFP
So, on Sept. 24, when Kim tapped eccentric Chinese businessman Yang Bin to govern a new free-trade zone in Sinuiju, a bleak backwater near the Chinese border, it seemed to make sense. Yang was a controversial figure known for his political connections and his quixotic project to transform a gritty corner of China into a bizarre replica of Old Europe. But China's second-richest man had thrived in the country's transition to a market economy, so surely he could choreograph a little capitalist magic for hermetic North Korea.
It hasn't worked out that way. On Oct. 4, as Yang prepared to leave for North Korea, Chinese authorities placed the plump 39-year-old tulip magnate under house arrest. No charges have been filed, but published reports say he is suspected of tax evasion, falsifying company reports and violating local land-use laws.
North Korea was looking to Yang as a capitalist model at the very moment China decided too many of its newly minted rich were crooks. Now with China just weeks from a Communist Party congress expected to usher in new leadership, the Yang case illustrates a gathering campaign by Beijing against affluent citizens suspected of cutting corners on their way to wealth. In June, the country's top film star, Liu Xiaoqing, was jailed after officials accused her of owing more than $1.2 million in back taxes. Then, Yang Rong, the founder of Brilliance China Automotive Holdings and no relation to Yang Bin, fled to the United States after officials began investigating him.
AFP
Entrepreneur Yang Bin, right, answers questions at a press conference Sept. 30.
Yang, the tulip king, is "not unique," says Chien-min Chao of National Chengchi University in Taiwan. "He's very representative of people who come to great wealth not because of legitimate businesses, but most likely because of some illegitimate connections or methods."
With official corruption a leading public complaint, the party's crackdown has important political overtones. That's doubly true with next month's Communist Party congress scheduled to grant party membership for the first time private business people, once the bane of Marxists everywhere. Chinese officials have clamped a tight lid on discussion of Yang's case in the state-controlled press. Tuesday, a high-level government delegation from Pyongyang arrived in Beijing for previously scheduled talks that now may include Yang Bin's fate.
Before he was taken into custody, Yang conceded publicly that he owed more than $1 million in back taxes and promised to pay by Oct. 12. Yet, with a Foreign Ministry spokeswoman saying he is suspected of "various illegal activities," his troubles go beyond overdue taxes. Chinese securities regulators say Yang inflated revenue of his Euro-Asia Agricultural Holdings in order to secure a listing on Hong Kong's stock exchange last year, says Money Times, a Hong Kong publication. And other analysts say Chinese authorities also are investigating Yang's acquisition of a 544-acre land parcel outside this industrial city, China's fifth largest.
Euro-Asia's shares have plunged 80% this year. Last week, Euro-Asia said it — and not its jailed chairman — should be held responsible for any overdue taxes. "By holding Yang Bin personally responsible for the actions of companies from the Euro Asia Group ... the Chinese authorities are obviously confusing the responsibilities of the individual companies and the private individual Yang Bin," it said.
The Hong Kong exchange suspended trading in Euro-Asia shares at the end of September after the company failed to satisfy regulators' concerns about Yang's activities. The move came shortly before regulators disclosed that Yang in recent months had sold 81 million shares of Euro-Asia, reducing his stake to below 50%.
The sales into a plummeting market were perhaps intended to raise money for the development of Holland Village, the Dutch-style theme park and residential development Yang planted here amid the ruins of China's rust belt. Beginning in 1999, Euro-Asia poured more than $217 million into constructing full-size replicas of the Amsterdam train station and the International Court of Justice at The Hague, along with 1/25th-scale miniatures of Dutch city life.
Yang had planned to add a rain forest, beach and wave pool — in the shadow of smokestacks and high-tension wires — to make Holland Village "a heaven of vacation," according to the company's promotional literature.
Today, with authorities investigating its visionary leader, there is little activity. The concrete fountain outside the tycoon's headquarters is dry. Rust dots the light poles, and the roof shingles on the faux European buildings are beginning to loosen and slide.
Inside the headquarters of a Euro-Asia subsidiary, a receptionist makes personal phone calls while visitors wait in an unheated, dimly lit lobby. Overhead, imitation Renaissance murals of cavorting nymphs in pastel shades stare down on the scene. A female employee says company managers have not come to work.
If the idle construction cranes truly signal the end of Yang's grandiose dream, it will cap a genuine rags-to-riches tale.
Yang rose from modest origins to a fortune estimated by Forbes at $900 million. Born in 1963 in Nanjing, Yang was raised by his grandmother from the age of 5 after the deaths of both parents. He was educated at a naval artillery school along China's northeastern coast, but he bridled at the regimen and eventually entered Leiden University in Holland, the start of his fascination with all things Dutch.
By the time he returned to China as a Dutch citizen in 1992, he already had made his first millions selling Chinese toys and textiles in the newly opened markets of Eastern Europe. He drove a black Rolls-Royce and hobnobbed with the likes of international financier George Soros.
Though Yang enjoyed his wealth, he reportedly remained clear-eyed about his new life, telling one Chinese journalist that "no matter how rich you are, you can only have three meals a day and you still have to sleep."
His most audacious plan, for the 544-acre Holland Village development, was hatched during the reign of Shenyang's notoriously corrupt municipal leaders. Authorities are investigating whether Yang's political ties allowed him to skirt normal procedures to secure the land, which was zoned for agricultural uses. "He was granted very, very special treatment," says Dali Yang, a China-watcher at the University of Chicago.
Amid a major scandal two years ago, Shenyang's vice mayor was executed for corruption. The mayor, terminally ill with lung cancer, was sentenced to life in prison, where he later died.
Now, as North Korea reportedly interviews candidates to replace Yang, the question is whether he will follow his political patrons to prison.
--------------------------------------------------------------------------------
Find this article at:
usatoday.com |
