The disappearance of the “model” village of China, where money and communism collide

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Huaxi (China) (AFP)

It was a breathtaking gift to Communist propaganda: a village run by a Party visionary who turned farmers into millionaires while moving closer to China’s collectivist ideals.

But Huaxi’s success story took a turn for the worse, cast by a pernicious mix of nepotism and political patronage that experts say could contain broader lessons about the pitfalls of “Chinese-style capitalism” in a country where power emanates from the Communist Party.

Village chief Wu Renbao transformed Huaxi, hours outside Shanghai, from a rural backwater into a wealthy collective, riding China’s economic reforms for more than four decades as the impoverished nation grew into a superpower.

From textiles to steel and real estate, Wu created the “Huaxi Group”, a village conglomerate of more than a hundred companies.

These generated great wealth and won praise from village leaders for a pioneering approach of returning profits to residents of China’s so-called “richest village” via large dividends.

In 2004, the average annual income of villagers is said to have reached over 122,000 yuan ($ 19,000) – forty times that of most farmers – while Huaxi’s status as the winner of the Chinese Party’s march against poverty shone in the rows of villas, garish hotels, foreign diplomas and generous social protection schemes.

“Communists should seek happiness for the majority of the people,” Wu said, quoted by the state-run Xinhua News Agency.

When he died in 2013 at the age of 84, a procession of 20 vehicles carried his coffin as a huge photograph honored the village boss, surrounded by wreaths of paper flowers sent by China’s top leaders .

But eight years later, the village’s economic take-off seems to have landed in disaster.

Viral videos shared in February showed residents lining up at ATMs frantically trying to withdraw their savings as hard times hit the village of plenty.

Local media reported that the bank rush was caused by a dividend collapse from 30% of the conglomerate’s profits to just 0.5%, with village debt reaching 38.9 billion yuan ($ 6 billion). .

Authorities confirmed the footage of the race at an ATM, but denied rumors the city was bankrupt.

It is impossible to present oneself freely in Huaxi – AFP was accompanied by six government assistants when she arrived, a sign of the sensitivity of the reputation of the village.

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But it’s clear that Wu’s family still dominates Huaxi, showing that the network, connections, and loyalty to the Communist Party – which celebrates its 100th anniversary on July 1 – remains the elixir of business success in modern China.

Huaxi’s story is “essentially a horrible story of despotism,” said Valarie Tan, an analyst at the Mercator Institute for Chinese Studies in Germany.

“How does a party secretary and his family in China whose power has not been controlled for a very, very long time, and this has really led to mismanagement of funds, excessive leverage, very bad decisions about investment and very bad bets. “

– Everything that shines… –

Faded decorations hang from rusty lampposts in empty streets, a sad legacy of the village’s fiftieth anniversary celebrations that took place ten years ago.

This event was marked by the inauguration of a 328-meter tower housing a five-star hotel, a giant aquarium, presidential suites and a golden bull statue.

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The skyscraper cost the village three billion yuan. But there were few clients on a recent AFP visit.

An empty 72nd floor – which once housed a revolving restaurant with North Korean dancers – overlooks rows of villas that seemed mostly empty, with disused swimming pools full of muddy water.

“A lot of tourists came to Huaxi,” a taxi driver told AFP, as many of them requested anonymity in the presence of foreign journalists. “Things have changed.”

Despite its much-vaunted collectivism, the Huaxi Group is “very much a single-family business,” says Larry Ong, of US company SinoInsider and author of a report on the village.

Key positions in the group and in the village’s political hierarchy are held by the Wu family, according to documents seen by AFP.

Eighteen of Wu’s parents are on the village Party Committee.

His eldest son and son-in-law both served as vice chairman of the Huaxi group.

Wu Xie’en, who succeeded his father as village chief and chairman of the Huaxi Group, told state media in 2018 that the long-term management of the village conglomerate is in good hands.

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“We are engaged in high-tech research and development,” he said. “In a few years, everyone will see that it is effective.

– ‘Modern-day Potemkin Village’ –

But last year, the group, once among China’s biggest companies, dropped from the top 500.

Ong says branding as a “model” Communist village has always overshadowed a clear social hierarchy, which has seen the concentration of wealth dilute with every mile of downtown.

At Huaxi’s “World Park” – an expanse of replicas of monuments from the Arc de Triomphe to the Statue of Liberty – the lost glow of wealth can be seen in the peeling paint and empty walkways.

Still, experts say Huaxi’s enduring propaganda value means Beijing is unlikely to let the village go to the wall – especially during its centenary.

“Huaxi is a kind of modern-day Potemkin village that the CCP supports to justify its continued adherence to a failed ideology,” Ong said.


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