Cashing In on Communism

Since then, the booming Chinese economy has been one of the biggest stories in the world. Wealth and conspicuous consumption are climbing in a country where the average per-capita income has only just jumped to $145 a month (in Beijing, it's $209 a month). On the mainland, about 175 million, or 13.5 percent, of consumers have become what many Chinese scholars consider to be middle class, earning as much as $30,000 a year, the China Association of Branding Strategy reported recently. These consumers have managed to accumulate significant savings, yet often spend an entire month's salary on a single luxury item: a wallet, a watch or jewelry.

That group is expected to grow within 10 years to nearly 260 million, or 20 percent of the population, said Lu Xueyi, a Chinese Academy of Social Sciences professor. By then, China could be the world's biggest luxury market, analysts predict.

Another 320,000 to 500,000 people report enough income -- about $60,000 a year -- to put them into an upper-middle class. And because most Chinese do not disclose their exact wealth, experts say there are likely to be many more. Many of these Chinese live in gated communities. They pay $385 covers to entertain clients at karaoke clubs such as Shanghai's L.A. Disco. They spend $3,650 to mingle on a yacht at a "diamond bachelor" matchmaking party.

A far smaller, but more visible, group are the super rich. No. 1 on the 2006 Forbes China Rich List is 37-year-old Huang Guangyu, worth $2.3 billion and the owner of a chain of discount electronics stores. Of the top 40 on the list, more than a quarter are younger than 40. Their combined net worth was $38 billion, up 46 percent from $26 billion in 2005. There seems to be no real cutoff, but the minimum asset levels used by a rival rich list, Rupert Hoogewerf's Hurun Report, are telling. In 1999, people on his list had at least 50 million RMB (about $6.4 million) but this year, the lower cutoff had soared 1,600 percent, to 800 million RMB (about $100 million).

Recently, President Hu Jintao has responded to the growing gap between rich and poor by demanding that more attention be paid to a "harmonious society." Authorities have imposed luxury taxes on boats, golf clubs and diamond watches. But this has only encouraged the wealthy to fly to Hong Kong and buy such items there, where the luxury tax is lower. When not shopping, many mainlanders visit a famous 24-karat gold toilet and $3.5 million bathroom, owned by a local jeweler and displayed in a tourist exhibition hall.

The urge to flaunt economic success competes with the desire to keep a low profile. While many Chinese are flattered by the prestige of landing on various "rich lists," they also fear the publicity and the extra scrutiny from tax collectors, who seem to follow no known assessment standards.

Even so, wealth is beginning to bring other privileges. In Jiangsu province, just north of Shanghai, authorities announced last year that "large taxpayer" entrepreneurs who pay the government more than $375,000 a year get to help decide whether an official is dismissed or promoted.

Elsewhere, wealthy entrepreneurs have joined rural peasants, ethnic minorities and parents who were only children in exemption from mandatory one-child-only laws. In some cases, the children of wealthy entrepreneurs are given more points on their senior high school exams.

The rich are envied and resented -- and valued by the government. In the early days of "opening and reform," top officials had hoped that the rich would serve as a model to the poor, inspiring and encouraging them. But with high-profile corruption cases each year, leaders are increasingly worried about being caught in a scandal. They are encouraging "clean wealth" through television programs such as "Win in China," the new reality show based on "The Apprentice," even though corruption and the pursuit of money seem to be rife at every level of society.

In theory, a rising entrepreneurial class, which would mostly benefit from clean government and transparency, could act as a force for reform. But it is hard for those who have attained success to push back against official corruption, since many entrepreneurs broke the rules to get rich in the first place. It is what Chan Kin Man, a sociology professor at the Chinese University of Hong Kong who has studied the emerging upper class, calls "original sin." Some bribed bank officials to obtain loans. In other cases, their "original sin" is more serious -- a developer who plotted with officials to take the homes of poor residents, for example, or a food and grain company chief who cheats customers with poor-quality feed to get his business started.

"They feel insecure because of this original sin," Chan says. "They want to draw a line, pardon all the errors committed in the past. They understand it's too costly to ask for any political change."

It is difficult to separate wealth from power in China. A recent report in the Hong Kong-based Sing Tao Daily said research from China's State Council, the Chinese Academy of Social Sciences and the research office of the Central Party School showed that 90 percent of China's RMB billionaires (people with more than $128.2 million) are the children of senior officials. The rich get nowhere without official connections -- a commodity as valuable as capital and known as guanxi. Top officials themselves are wealthy, though some are more discreet about displaying their wealth than others. Nevertheless, their children study abroad, and they make shopping trips to Hong Kong or own expensive real estate.

The need for guanxi does not stop with the rich. The broader middle class is also dependent on its personal relationship to power. You need connections when the landlord of your luxury apartment decides to charge you extra maintenance payments, or glues your front door shut after you refuse.

Those who can afford their own planes and yachts or 20 luxury cars probably do not get their doors glued shut, or balk at fines for having too many pedigreed dogs, but Chan, the Hong Kong professor who has surveyed hundreds of entrepreneurs, said the rich told him they were exhausted from all the wining and dining of officials they had to do.

That is just the beginning of their anxiety. As these Chinese get richer, they ignore their health and struggle to cope with stress and success, according to surveys published in the state-run media. They have told pollsters of their insecurity and inability to find suitable marriage partners. Some complain of the possibility of losing their wealth overnight because of official corruption, while others said they fear criminals and jealous neighbors.

But mostly what they fear is having their new success snatched away. They are anxious about whether they have made the right connections, just in case their position of privilege turns out to be built on boggy ground.

"The only thing they think about is guanxi," Shi Xiaoyan says. "They use all their money, all their knowledge. They waste their sleeping time and their family's happy time . . . Rich people in China, they're just rich, but they know nothing."

News researcher Li Jie contributed to this report. Maureen Fan is a Beijing correspondent for The Post. She can be reached at fanm@washpost.com.