China's capitalist gangster

The prosecution of a Communist Party official who used military equipment to run mafia-style operations highlights China's newest challenge to its monopoly of violence, Jody Ray Bennett writes for ISN Security Watch.

In the People's Republic of China, the state maintains strict control over gun sales: Private ownership and sale of arms is strictly forbidden. In 1996, the Chinese state modernized and tightened its gun control policy, banning the private manufacturing and transportation of ammunition, firearms and even their replicas.

Thus, it should easy to conclude that in China, gun crimes are rare. In the same vein, it should be difficult to imagine the development of a mafia-styled gang lord who amassed a large stock of heavy artillery, firearms, ammunition and armored vehicles in a small, rural Chinese province.

But in a country where such an enterprise would be an outrageous violation of law, a former member of the Chinese People's Political Consultative Conference, the country's political advisory board, for the northern city of Tangshan succeeded.
 
Chinese mafia boss Yang Shukuan is now serving a life sentence after having been convicted of operating a criminal gang, intimidation, fraud, robbery, extortion, inciting violence, fighting in public and general disorder. What is most intriguing about Shukuan is not so much that he was convicted of organized crime, but that his operation represents what could be considered China's first private military company (PMC).

'Gangster' straddled two worlds

During the trial, it was reported that in 1998, Shukuan set up Huayun Industrial Group Co Ltd, which would serve as a front company for the purchase of guns, ammunition and other large firearms over the next nine years. At the time of his arrest, Shukuan had accumulated assets worth over 100 million yuan (US$14 million), including four armored cars that had been refitted as military-style attack vehicles, 38 firearms, hundreds of rounds of ammunition, tear gas grenades, illegal explosives, 20 luxury automobiles and a Rolls Royce.

Shukuan had at least 40 men working for him, mostly former convicts and unemployed locals from Tangshan. The men patrolled the small city and forced other businesses to grant working contracts for Shukuan's company, provide him with small loans (that were never paid back), invest in Huayun or sell him other private assets below market price such as some of Tangshan's local mining sites. Between 2005 and 2006, Shukuan was able to swindle over 60 million yuan from the Zhongli Company, a machinery manufacturing firm in Tangshan.

The external pageTelegraph reported that Shukuan's special position as an official government advisor allowed him to mix easily with and bribe police and other government officials, allowing him to maintain his mafia-style operations in Tangshan. According to Chinese external pagestate media, this led prosecutors to title Shukuan as the "Chinese gangster capitalist."

State versus nonstate force

While Shukuan's company did not resemble the types of adventurous profiteering operations that were carried out by other notorious PMCs like Executive Outcomes, the case does highlight an interesting development regarding the role of the state monopoly of violence being challenged by smaller, nonstate entities. This is an especially interesting development in a country like China, where it is assumed that strict state control over public life would not have allowed Shukuan's operations to materialize.

In Chinese, the phenomenon of organized, underground criminal socities is called heishehui zuzhi, most commonly used to refer to traditional Chinese mafia groups like the Triad. According to external pageresearch conducted this year, a 1992 report from the Chinese Ministry of Public Security found there were "more than 1,830 [underground] organizations, gangs and associations bearing the character of secret societies."

The report further stated that while smaller organizations might include just a few dozen members, larger criminal societies "may have 5,000 to 30,000 members with trans-regional branch organizations existing throughout the country." Shukuan's force remains somewhere in between.

Still, Shukuan's private force represents a different form of organized crime in that he was a local party official. Kathy L Walker of Temple University in Philadelphia identifies how groups like Shukuan's have proliferated into the governmental sector, resulting in officially sanctioned criminal violence. Walker notes that in the early 1990s, "local governments first began to resort to underworld or thug violence when collecting taxes and fees and for ransacking peasants' grain stores if they refused to pay their taxes. But as land seizures and peasants' resistance to them intensified, and as the influence of gangsters, bandits and the criminal underworld became more pronounced in various arenas, including the economy and public life, the routinization of officially sanctioned criminal violence became more widespread."

Combining this with the Chinese concept of external pageguanxi, a critical social tradition that demands individuals make stringent personal and business networks to succeed, some believe it was inevitable that public officials became involved.

"The guanxi system is both a bane and bonus for the ruling Chinese Communist Party (CCP). While the CCP is trying to stamp out corruption to improve its image both inside China and to the world, it itself is one of the prime culprits. Joining the CCP is the ultimate boost to your guanxi, and if you want to [succeed], you have to be a member, regardless of whether one is a Marxist or Maoist. There you can meet other members who will do you favors and further your interests. Not all CCP members represent the interests of the CCP: they are out for themselves," external pageS Philip Sen, a journalist specializing in Asian affairs, told ISN Security Watch.

"Thus, private mafias may be an extension of the guanxi system - protecting your network and interests against interfering officialdom."

These two phenomena have resulted in what Chinese economist He Qinglian has referred to as "officially sanctioned crime" in China, a slight difference to the more common heishehui zuzhi, which public officials are not as often - or easily - associated with. Qinglian external pagenotes, "An alliance between gangsters and local officials has led to the increase in officially sanctioned crime, especially at the grassroots administrative level. In many localities, criminal organizations protected by local officials have taken over control of certain government functions and key sectors of the economy. They are so powerful that local people refer to them as a 'second government.'"

Qinglian also stated that since the late 1990s, notably the same time Shukuan began Huayun Industrial Group, local governments in China have "used criminal organizations as goon squads to force urban residents from their homes and seize farmers' land." In Shukuan's case, it was to capitalize on the profits of local businesses in a small rural province ignored by or inaccessible to the central government.

Beijing's short reach

However, the fact that Shukuan was arrested and convicted of his crimes might illustrate that his company's operations went too far, prompting authorities to act, or that Beijing is making an honest attempt to enforce the rule of law and maintain its monopoly of violence If the latter, then one must be curious as to why Shukuan was able to operate for almost a decade with no reprimand. If China really does have the political will, then perhaps the state does not have the resources to effectively enforce its domestic policies.

"The fact is that the central Beijing CCP's reach into the provinces is limited. Much of China remains underdeveloped, and state power doesn't have the means to access certain areas. Even if it does, [one] can often pay off [an] official with a bribe. Thus, CCP members tend to run their own fiefdoms in many places, which can understandably [irritate] those who are not invited to the Party as well as the 'good guys' who are trying to ensure the rule of law and stamp out corruption," Sen told ISN Security Watch.

It is still unclear what the Tangshan story means for the future of China's monopoly of violence. As Shukuan serves a life sentence, the CCP will have to find new ways of enforcing its laws, either by developing resources to access rural villages or by changing its internal guanxi behavior, or both. While the latter seems much less hopeful than the former, rural Chinese businesses and farmers await the next gangster capitalist.

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