China’s Elite Moving Wealth Abroad to Protect Assets From ‘CCP Exploitation,’ Says Princeling

Descendants of veteran high-ranking Chinese Communist Party (CCP) officials are scrambling to move their assets out of China amid tensions among political factions, according to members of prominent families.

Opting to use an alias for fear of reprisals, Fang Ming, a CCP princeling now living in New York, told the Chinese language edition of The Epoch Times on Oct. 25 that Party head Xi Jinping’s anti-corruption campaign is encroaching on the interests of the Party’s privileged descendants, raising concerns about safeguarding the substantial wealth they’ve amassed in China.

“We are trying to move money out of China to prevent our assets from falling prey to CCP exploitation,” Mr. Fang said.

“Red princelings,” “red heirs,” or the “second red generation” refer to the offspring and subsequent generations of the CCP’s top leaders. These families enjoy greater privileges and hold influential positions within state agencies and state-owned entities across various sectors, including military, technology, and finance.

Power Struggle

Mr. Xi follows the principles of Maoism, seeking to emulate the first CCP leader, Mao Zedong, who maintained China’s economic isolation from the world. This approach diverges from the “reform and opening up” policy—initially introduced by the second CCP leader, Deng Xiaoping, and subsequently advanced under the leadership of Jiang Zemin and Hu Jintao—which emphasizes international trade and engagement.

Two prominent and interconnected factions have emerged under the “reform and opening up”: princelings, who represent the interests of entrepreneurs and the emerging elite and wealthy class, and the “tuanpai” or Youth League faction, whose members are moderate reformists primarily from grassroots backgrounds. Former top officials Hu Yaobang, Zhao Ziyang, Hu Jintao, and the recently deceased former Premier Li Keqiang were associated with the tuanpai. Descendants of the tuanpai would also be considered princelings.

Since taking office in 2012, Mr. Xi has undertaken a series of political purges within the CCP to eliminate adversaries and solidify his control over the Party. Princelings and tuanpai members are afraid of becoming targets of Mr. Xi’s purges despite their efforts to extend the rule of the CCP regime.

Defense Minister Li Shangfu is a recent example of a princeling who has fallen out of favor with Mr. Xi, who is also chairman of the Central Military Commission. Gen. Li’s removal from the defense ministry’s top post was officially announced by Chinese state media CCTV on Oct. 24. His father, Li Shaozhu, was a former deputy commander of the Southwest Command of the Railway Troops of the People’s Liberation Army (PLA).

Gen. Li was allegedly implicated in an anti-corruption probe into the equipment procurement system and suspected of leaking military secrets involving the Rocket Force, according to Yao Cheng, a former lieutenant colonel in China’s Navy Command now living in exile in the United States.

The Rocket Force has undergone significant leadership changes, with its commander and deputy commander under investigation. PLA Daily warned on Sept. 4 that the Chinese military exhibited signs of “slackness, fatigue, and boredom on war preparedness,” describing it as an indication of disloyalty to Mr. Xi and the CCP.

Moreover, former Gen. Liu Yazhou—the son-in-law of Li Xiannian, one of the “eight revolutionary Party elders” and a princeling—was rumored in March to have engaged in a significant corruption offense. Reports suggested he might receive a harsh sentence after disappearing from public view in 2021.

Last month, former CCP head Deng Xiaoping’s eldest son, Deng Pufang, suddenly stepped down after 30 years of heading the China Disabled Persons Federation and was succeeded by Yang Xiaodu, a close confidant of Mr. Xi.

Mr. Yao told The Epoch Times that the recent shake-up of the political and military leadership indicates that Mr. Xi felt his hold on power was unstable. “Xi Jinping is very afraid of a coup,” he noted.

Mr. Xi’s purge has undermined the confidence of the descendants of the red hierarchy in the CCP, Mr. Fang said, adding that he believes that most princelings disagree with the Xi regime’s decision to support Russia despite the global backlash against its invasion of Ukraine and Iran amid the Israel-Hamas war.

In recent years, Mr. Xi’s crackdown on private enterprises, such as off-campus tutoring and tech giants, and draconian COVID-19 pandemic measures have contributed to the economic downturn. This goes against the expectations of princelings, who were hoping for a leader to protect the wealth and influence of the privileged class within the Party.

However, “the princelings can’t compete with Xi Jinping, the central power figure of the CCP,” said Zhuge Mingyang, a China observer and contributor to the Chinese language edition of The Epoch Times.

“For them, the only way out is to take their money and run,” he added.

Channels for Transferring Funds Overseas

The transfer of funds overseas by the powerful CCP families has fueled the clandestine financial channels, as China enforces a yearly cap of $50,000 per person on wire transfers.

Zhao Wei (pseudonym), a princeling, said he and other members of the second red generation are concerned with preserving their assets to avoid potential confiscation by the Xi regime.

“We all fear the looming threat of Xi’s administration. Once our assets in China are frozen, we’ll lose everything,” he emphasized.

According to Mr. Zhao, the most active period for withdrawing funds occurred between 2018 and 2020. Another significant year was 2022, when Shanghai, a financial hub, was under lockdown. “During that period, we [princelings] believed that the zero-COVID measures would lead the country to decline, so we contemplated withdrawing our funds,” he said.

Mr. Zhao disclosed the methods used by the powerful and wealthy to move funds from domestic to foreign accounts. He explained that different transfer approaches are employed based on the sum of money involved.

For example, he explained that for sums up to 1 million yuan (about $130,000), the transferor sends the money to the designated account of an intermediary responsible for the funds’ transfer. The recipient promptly converts the foreign currency into the designated account or directly withdraws it in cash.

For funds ranging from 1 million yuan to 10 million yuan (about $130,000–$1.3 million), a company account is utilized for the transfer. These companies are typically anonymous, with the legal entity being essentially non-existent, and they do not pay taxes, resembling shell companies.

“You can get someone to register such a company for 5,000 yuan [about $680] in China, then the company will be deregistered shortly after the company’s account was used to transfer money several times,” he said.

Transferring sums exceeding 10 million yuan (about $1.3 million) involves using a particular channel: the bank’s telegraphic transfer system. “This system is not available to the general public. This cross-border system is typically employed by individuals engaged in high-value international trade and operates separately from the system available to the general public,” Mr. Zhao said.

Besides the CCP princelings, other tycoons and the middle class are fleeing China, taking hundreds of millions in assets to foreign shores. China experts and observers warn that this capital outflow could expedite China’s economic downturn.

Other Purged CCP Princelings

In 2016, the authorities seized control of the reformist magazine Yanhuang Chunqiu, which was overseen by Hu Deping, the eldest son of former CCP leader Hu Yaobang.

In September 2020, Ren Zhiqiang, a prominent princeling and real estate tycoon, was sentenced to 18 years on charges of alleged corruption, bribery, and embezzlement of public funds. Mr. Ren is known for openly expressing his grievances about real estate policies and for his sharp criticisms of the CCP and Mr. Xi.

In July 2019, Wu Xiaohui, chairman of Anbang Insurance Group, was sentenced to 18 years for alleged fundraising fraud and embezzlement. Mr. Wu is the former grandson-in-law of Deng Xiaoping.

-Input from The Epoch Times