China’s most famous actress, Fan Bingbing (left), disappeared in July without a trace. What ensued was probably one of the biggest dramas Fan Bingbing has played in. Her social media fell silent and multiple theories on her disappearance emerged. Re-appearing three months later, she was fined around 880 million RMB (AU$179 million), and delivered a public statement apologising for tax evasion. Fan Bingbing’s story, though prominent, is not unique. Her story serves only to showcase the complexity of the Chinese Communist Party and coercive tools used to suppress others to maintain power.
To understand the Fan Bingbing story, one needs to take a step back and grasp the relationship between the Party and corruption. In China, financial/economic crimes such as “corruption” have always been serious offences. It amounts to corrupting government’s assets – the Party’s assets, that is, which can only be used by the Party. The problem is: who can represent the Party? Today, someone can legally use the Party’s assets, but tomorrow, this same person could become the sacrifice in a power struggle. So immediately they can become someone whose “corruption” has adversely affected the Party. This is the only way the Party can “legally” take back those assets.
But there is no formal mechanism to target corruption amongst Party officials. Corruption is also an unavoidable driver used for the country’s economic growth. It gives officials an incentive to grow the economy. So how does one become accused of corruption?
For government officials, corruption allegations are used to punish officials who “do not listen” or are “sidelined” with the wrong faction. For common people (those who are not part of the government system), it is a fast way for the Party to “get back” their funds. Fan Bingbing’s case falls in the second category. There is huge plasticity in China’s law which is used only as a tool to drive the Party’s agenda. There is no such thing as equality before the law.
In China, prior to 2009, tax evasion or fraud over 100,000 RMB ($20,000 AUD) was considered a severe crime. Government officials or entrepreneurs who had lost their value to the Party would be severely punished under the premise of tax evasion. And if the amount was more than 100 million RMB, it could cost them their lives. However, actors/entertainers have been exempt from these laws because the entertainment industry is the Party’s propaganda tool. Without good actors, the Party would lose a valuable cog in its propaganda machine.
In 2009, the Party changed one law in order for the government to get their money and not remain in a passive position bound by the law. On February 28, 2009, the 11th Congress of the National People’s Congress (at the 7th committee meeting) passed a law called the “Criminal legislation No.7” amendment. The 201st clause—related to the penalisation for tax evasion—was amended and the threshold that constituted tax evasion was removed. Moreover, the original term “tax evasion” was changed to “avoiding tax payments”. There was an additional exemption from criminal penalisation clause which says “exemption from punishment will be made after the tax and late fees have been paid upon notification by tax authorities, those who have been punished by administrative penalties will be exempted from criminal punishment.”
Closing the net on China’s entertainment industry
Plundering funds is not a new phenomenon in China’s entertainment industry. Cases where prominent Chinese movie stars use dual-contracts to earn huge fees and avoid tax is a feat that is almost always completed with the co-operation by local governments. So one can say that a large amount of Party assets have been “reserved” within the entertainment circles.
But in recent years, Xi Jinping has brought various sectors into line. Quite a number of other financial players have been brought down, with the Party confiscating large amounts of “illegal funds”. Starting this year, the Party started to close their net on the entertainment circles.
In May, a very famous Beijing TV host, Cui Yongyuan, exposed the dual-contract saga, an open secret that everyone knew existed (he did it out of personal revenge, as there was a movie containing some malicious innuendo towards him). So it can be said that the Chinese government had set the stage, and Cui Yongyuan simply pulled the trigger. It seems China’s biggest star, Fan Bingbing, simply got caught in the cross-fire. China’s big movie stars all have powerful backgrounds and support in high places, with many having strong military connections; unless one party is backed by a government-sponsored campaign, the powerful cannot move against each other. So it can be said that the law is only a device for dealing with ordinary people.
Fan Bingbing, the scapegoat?
On October 3, after Fan Bingbing’s penalty was made public, the Party announced an “exemption” notification: entertainment companies and related parties who voluntarily pay their tax shortfalls prior to December 31, 2018, will be exempt from administrative penalties and fines; those who do not will be put on trial and inevitably punished. What this means is that Fan Bingbing, even with undeniably close Party patrons, has been used as a scapegoat. This is intended to bring fear to the entertainment industry and this fear will make sure everyone pays their tax shortfalls so that the government can effortlessly, through manipulating public opinion, rake in up to trillions of RMB before year end.
If a Western movie star had been accused of such large tax fraud, the case would affect many public servants and departments. It would take a few years to investigate, require many hearings, evidence to be compiled, as well as public reports and news articles letting the wider public understand the details. The person under investigation would also have the right to speak publicly. The wider society will also have discussions about the case, from all angles. Eventually there will be a final verdict. Once the Western legal process begins, no matter who the accused is, everything must follow legal processes.
China is different. When Fan Bingbing was detained, there was no need for legal processes. Apart from those who made the arrest, no one knew any details. Once released, she will definitely not reveal the predicament of her detention because it’s a national secret. Anything she says afterwards cannot be her true thoughts or feelings because the whole thing is a stage-managed show by the government.
Since apologising, Fan Bingbing has not been seen in public. If the government needs her to be seen, she will be seen. She will not be allowed to go overseas unless the Chinese government does not care whether she reveals the details of her detention period. Will it affect her future acting career? I don’t think so. She will be used as a propaganda tool to show other entertainers that “leniency will be given as long as you pay up your dues.”
The Chinese public has always had a favourable opinion of Fan Bingbing. She has a lot of money, so the public will not sympathise over the fine. The Chinese public will not care much whether she is avoiding tax because they know the biggest tax frauds are highest-level Party officials.
The Chinese media is controlled by the Chinese government, hence any hot topics or what would be hot news in any Western nation go either unnoticed or capture the public’s attention, depending on the will of the government. Xi is in a tight spot in today’s China-US conflict. To divert attention the government will try its best to blow out the Fan Bingbing story so people can focus their attention on her and other entertainers, and not on China-US relations.
This brings me to Meng Hongwei and his story, a more intricate interplay of Party politics.
In 2016, in Xi Jingping’s term, Meng Hongwei was elected as chair of Interpol. But last month he was detained by Xi Jinping. Whether or not he broke the law is not important. The critical point is he was possibly discovered to be not as loyal as Xi would like. (Meng’s career elevation was ultimately due to the recommendation of Zhou Yongkang, the former head of China’s security and law enforcement)
The China-US conflict has brought interplay of power struggles amongst the top level Party officials and instability for Xi. No matter how high your political status within the Party, all those who are seen as disloyal may face suppression. After Meng Hongwei was arrested, his wife’s high profile reporting of his disappearance shows that Xi did not arrest him without reason.
Yan Xia is the chief editor of Australia’s Vision China Times, and a long time China watcher, especially on social and political issues.