Why It Matters

Panama Papers and China's elite

At least eight current and former top Chinese leaders have been linked through their relatives to offshore firms, making China possibly the state with the most number of ruling elite named in documents leaked from a Panamanian law firm.

For the Chinese Communist Party (CCP), such links, even though indirect, are politically sensitive as they could fuel allegations that top leaders have used offshore holdings to increase or hide ill-gotten wealth.

But for now, the impact of the latest expose is hard to gauge. Some think it would be at most an embarrassment to the current leadership under President Xi Jinping, who is among those named.

 

First, it is not news to the Chinese public that many officials and their families have been using offshore firms, among other tools at their disposal, to amass and hide assets.

Second, most details revealed in the files leaked from Mossack Fonseca are not new. For instance, details on the offshore holdings of Mr Deng Jiagui, Mr Xi's brother-in-law, were first revealed in 2012.

 

Also, many offshore firms are used legally for overseas corporate deals and for cost reduction. Not all involve corruption or crimes.

Most importantly, news of the leak is heavily censored in China, which means most people won't hear about it.

 

But some say the media blackout shows top leaders fear the political impact as CCP members are barred from owning overseas investments and helping relatives to do so.

The revelations could thus hurt the current leadership's authority and the credibility of its anti-graft drive, especially if the family members have registered or continued running offshore holdings after Mr Xi took power in late 2012.

There may be ramifications if the leaks are used by rival factions in the lead-up to next year's leadership change, and if more damning details on the leadership surface.

A version of this article appeared in the print edition of The Straits Times on April 11, 2016, with the headline 'Panama Papers and China's elite'. Print Edition | Subscribe