{"id":50004054,"date":"2015-11-25T14:09:45","date_gmt":"2015-11-25T14:09:45","guid":{"rendered":"https:\/\/stage.dialogochino.net\/?p=4054"},"modified":"2023-02-14T16:32:55","modified_gmt":"2023-02-14T16:32:55","slug":"4054-wang-jings-canal-dream-and-the-people-behind-it","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/business\/4054-wang-jings-canal-dream-and-the-people-behind-it\/","title":{"rendered":"Wang Jing’s canal dream and the people behind it"},"content":{"rendered":"

Wang Jing, the publicity-shy Chinese businessman, reportedly lost 85 percent of his fortune in the Shanghai stock market crash. What does his roller coaster career tell us about who might be backing his controversial plan to build a US$50 billion shipping canal across Nicaragua, and why? \u00a0<\/strong><\/p>\n

For a man who claims to be heading up one of the 21st<\/sup> century\u2019s more ambitious infrastructure projects, Wang Jing is notably publicity shy. He insists that he is just an “ordinary billionaire”, and has revealed few details of his early life and career.<\/p>\n

Since June 15 2013, when he shot to global attention with the Nicaraguan president and former revolutionary Daniel Ortega\u2019s announcement of Wang\u2019s plan to build a shipping canal across Nicaragua, the Hong Kong-based investor has faced persistent but largely unanswered questions about his credentials and the viability of the project.<\/p>\n

Wang\u2019s US$ 50 billion canal would be 171 miles (273 kilometres) long and bisect the Western hemisphere\u2019s second most impoverished country, costing roughly five times Nicaragua\u2019s annual GDP. It would displace tens of thousands of Nicaraguans, require an unprecedented dredging operation in Lake Nicaragua<\/a> and would hand hundreds of square miles of land to Wang\u2019s Hong Kong Nicaragua Development Corporation<\/a> (HKND) as part of the concession.<\/p>\n

Despite the Nicaraguan government having acknowledged<\/a> the potentially disastrous ecological impacts of the canal project, it has granted HKND a permit<\/a> to proceed with construction on environmental grounds. But problems persist.<\/p>\n

\"Wang
Wang lost a reported 85 percent of his wealth in July’s stock market crash (image: Aaron Goodman<\/a>).<\/figcaption><\/figure>\n

China\u2019s recent stock market crash wiped out an estimated 85 percent of Wang\u2019s personal fortune, according to Bloomberg\u2019s billionaire index<\/a>, which tracks the wealth of world\u2019s 400 richest people. Wang is no longer among them.<\/p>\n

Even before the crash, international media reported with a certain skepticism the idea that this enigmatic figure could partly fund and wholly execute a Nicaraguan dream that dated back centuries: Wang Jing\u2019s plan is the 72nd proposal since the Spanish conquistadores first thought of the idea in the 1500s. The project languished after the US completed the rival canal across Panama in 1914.<\/p>\n

Wang does not seem a likely progenitor for the project. His resume was strong on military communications but notably light on engineering experience when he registered HKND in the Cayman Islands, just a few months before he appeared with Ortega for the first time. Wang claims that the canal idea came to him a year before the announcement.<\/p>\n

He denies that he has strong links to, or the backing of, the Chinese government, but his fortune had grown almost as rapidly as it diminished, when he was catapulted from middling prosperity to billionaire status. His rise came with the dramatic upturn in fortunes of his main resource \u2013 a largely domestic and relatively unknown telecoms company called Xinwei.\u00a0 A closer look at his business interests and military connections suggests there may be more to the rise of this \u201cordinary billionaire\u201d than he has publicly admitted.<\/p>\n

It all began rather modestly, according to the sparse details Wang Jing has supplied in the few interviews he has given. Wang told Matthew Miller of Reuters <\/a>that his father, an office worker, died in 2010, that he lives with his mother and that he has a daughter. He himself, he says, was born in December 1972, and studied at Jiangxi University of Traditional Chinese Medicine, but dropped out to go into business. In the late 1990s, he went to Hong Kong to \u201clearn about international finance and investment,\u201d returning to Beijing in 1998 to found Dingfu Investment Consulting Co, followed in 2001 by Hong Kong Divine (Dingfu) Investment Group Ltd. He was later involved in mining gold and precious stones in Cambodia, and opened a small construction company in Beijing.<\/p>\n

Thus far, it is an unremarkable, if sketchy account.<\/p>\n

Wang\u2019s relationship with Xinwei began at an unpromising moment in the company\u2019s fortunes. Beijing Xinwei was set up in 1995 as a joint venture between the China Academy of Telecommunication Technology and Cwill Telecommunications<\/a>, a US-registered company founded by the former Beijing Xinwei president, Chen Wei. Its ambition was to develop indigenous Chinese telecoms technologies to challenge the Western dominance. But by 2009, the year Wang took over, Xinwei was struggling to commercialise its proprietary 3G technology, even in China.<\/p>\n

Yet by September this year, Xinwei\u2019s assets were estimated at 16 billion RMB<\/a> (US$2.5 billion). The company claims to have sealed big telecoms deals in 20 countries and to possess \u201csublime eminence in the global communications industry\u201d. \u00a0Xinwei had also notched up significant signs of high level government support in the form of visits to its offices by the Party chairman and China\u2019s president, Xi Jinping, and the prime minister, Li Keqiang, and had reportedly been granted, among many other official favours, a US$2 billion line of credit from the China Development Bank<\/a>. Wang Jing, who had entered the Forbes list of the top 400 Chinese billionaires at 94th place in 2013, shot up to 12th place on the back of Xinwei\u2019s record-breaking 2013 backdoor listing on the Shanghai Stock Exchange. At its apogee in June 2015, his personal fortune was estimated at US$10.2 billion<\/a>. How had Wang achieved such a remarkable turnaround?<\/p>\n

“…he converted the business model into the military, into defence,”<\/strong><\/span><\/h1>\n

Peter Liu, venture capitalist<\/strong><\/span><\/h1>\n

 <\/p>\n

Peter Liu is a veteran Chinese venture capitalist who in 1996 was a US$4 million original investor in Cwill Telecommunications, the company that would provide Xinwei with its technology. Liu retained a 42 percent shareholding until Wang\u2019s take over. His explanation of Wang\u2019s sudden success is straightforward.<\/p>\n

\u201cWhen Wang took over Xinwei he converted the business model into the military, into defence,\u2019\u2019 he said. This charted a new course for the struggling telecoms company, and although Wang Jing seems reluctant to acknowledge Xinwei\u2019s military connections, the company website has been less shy about this line of business in the past. One web page, archived in 2010, laid out Wang Jing\u2019s military loyalties.<\/p>\n

\u201cUnder the solemn national flag, the chairman (Wang Jing) issued a sonorous oath of serving the country,\u2019\u2019 it reads. \u201cThe chairman requested that with a sense of urgency we expand our global views, to align Xinwei more closely with our nation’s strategy and development. Xinwei Chongqing will begin producing military products. This is a glorious and arduous task, which we are proud to conduct. We clearly recognise that the quality requirements of military products and civilian products are different. Civilian quality only affects the company’s market share, sales revenue and the company’s survival; but the quality of military products is related to the warrior’s life, the outcome of war. It’s related to national defence and security.\u2019\u2019<\/p>\n

\"(image:
Xinwei provides satellite technology to China’s military (image: Jack Zallum<\/a>).<\/figcaption><\/figure>\n

Wang Jing\u2019s military strategy transformed Xinwei\u2019s fortunes. In late 2013, Beijing Xinwei Telecommunications became the first private-sector company to be allowed to participate in China\u2019s satellite navigation system, which aims to end China\u2019s reliance on the GPS system run by the US military.<\/p>\n

In February 2014, the 61-year old General Zhang Jixiang, who had overseen the modernisation of the military\u2019s secure battlefield communications and had recently retired from the post of deputy commander of Beijing Military District’s Zhurihe Training Base, became Vice President of Beijing Xinwei. Xi Jinping personally awarded Zhang a high level medal in November that year.<\/p>\n

Xinwei\u2019s Lunar New Year pageants have been notable for ostentatious displays of the company\u2019s military ties and Party-centred patriotism, in which Wang has personally performed on stage, accompanied by ranks of men in military uniform and in front of a screen showing pictures of army trucks mounted with guns. As recently as the February 2015 New Year celebrations, Wang honoured the company\u2019s major client with a dance show featuring \u201cvaliant and heroic\u2019\u2019 female soldiers, revolutionary poetry from the company\u2019s in-house communist party committee and a rousing rendition from Wang himself of \u201cTill That Day Comes,\u2019\u2019 a military morale booster made famous by Peng Liyuan, the wife of president Xi. The performance signaled his loyalty to Xi, singing a song that was written to answer China\u2019s Propaganda Department\u2019s call for songs that would help in \u201cpreparations for military conflict, to cultivate the fighting spirit of troops.\u2019\u2019 The giant flag that was projected onto the stage was that of the Party, not the nation.<\/p>\n

The Web of Connections<\/strong><\/p>\n

For investors, governments and civil society outside China, untangling the connections between power and business matters. China\u2019s growing investments overseas are well documented, but while in the past these were spearheaded by China\u2019s state owned enterprises, today private companies like Wang Jing\u2019s Xinwei play an increasingly prominent role, often with financial backing from government-linked entities. While some operate as private concerns, many have close and, in some cases, concealed links to the Chinese state.<\/p>\n

China\u2019s limited disclosure and the cult of state secrecy make teasing out the links between private capital, the Chinese state and the Communist Party difficult.<\/p>\n

\u201cThose entrepreneurs are not fools; they know very well the kind of investments that get government backing,\u2019\u2019<\/span><\/h1>\n

Juan Pablo Cardenal, author<\/span><\/h1>\n

 <\/p>\n

\u201cPrivate companies are looking for opportunities abroad and are willing to make profits for the company as well as becoming global players, but coincidentally many of their investments and projects also serve the \u2018national interest\u2019,” said Juan Pablo Cardenal, co-author of\u00a0 \u2018China\u2019s Silent Army\u2019, a study of the impact of the country\u2019s expansion on overseas institutions. \u201cThose entrepreneurs are not fools; they know very well the kind of investments that get government backing,\u2019\u2019 he said.<\/p>\n

Connections between the private sector and Party power holders benefit both sides and Wang has built his fortune by serving the strategic priorities of the Party and the government, often in fields of activity in which he had no track record.<\/p>\n

Wang Jing\u2019s Nicaragua canal announcement was dramatic: a relatively obscure Chinese businessman with no engineering experience had landed the rights to develop the world\u2019s biggest infrastructure project. The project also implicitly challenged US strategic interests in what it has long regarded as its own back yard.<\/p>\n

Wang\u2019s main known asset remains his 36.97 percent stake in Beijing Xinwei, now a government-backed developer of China’s wireless communications standard, specialising in mobile network development and products. He controls the Hong Kong Nicaragua Development Company through a China mainland-registered company called Beijing Interoceanic Canal Investment Management Company, according to filings with the Shanghai Stock Exchange and Hong Kong Companies Registry.<\/p>\n

Wang also reports full ownership of several offshore subsidiaries, including seven recently registered Netherlands firms that appear to be related to the Nicaragua project; a British Virgin Islands-registered aircraft investment company, and media and sports entities, all of them registered within the last year (he also owns Southeast Asia [Cambodia] Agriculture Development Group Inc, which was registered in Cambodia in September 2009, according to Shanghai Stock Exchange filings).<\/p>\n

Three people who have worked with him, and who spoke on condition of anonymity, say Wang Jing saw an opportunity to make money by tying his interests to those of the state. Some reports describe him as a relative of Wang Zhen, the veteran Red Army warrior who was purged in the Cultural Revolution, rehabilitated by Deng Xiaoping and went on to play an important role in the growth of China\u2019s military-industrial complex.<\/p>\n

For overseas consumption, however, Wang Jing plays down any links. \u201cI am only in charge of a company, I have no authority to represent [the government] or assess the canal\u2019s significance for the nation,\u2019\u2019 he told Patrick Boehler of the South China Morning Pos<\/em>t<\/a>.<\/p>\n

Wang has, however played a lucrative role in the development of Nicaragua\u2019s telecoms.<\/p>\n

The Deal<\/strong><\/p>\n

The entourage that accompanied Wang Jing as he disembarked in Managua in June 2013 was large: two secretaries, a translator and Li Wenjie, Wang\u2019s right-hand woman at HKND, along with a phalanx of lawyers, public relations advisers and consultants to the canal projects, including \u00a0Bill Wild, now listed as Chief Project Advisor to HKND, a former COO of\u00a0Leighton Holdings Limited<\/a>, a man with a 40-year career in infrastructure projects; Ronald MacLean Abaroa, four times mayor of\u00a0 Bolivia\u2019s capital La Paz, and an authority on sustainable development; and David MacArthur, Americas’ CEO of the British environmental consultancy ERM<\/a>, who undertook the project\u2019s environmental and social impact assessment<\/a>.<\/p>\n