Chen turned to real estate in the late 1980s, but her inaugural project wasn’t an apartment complex, or an office building, or a shopping mall. Instead, she built a private club—the first of its kind in Beijing—and then used it to woo the capital’s political and business elite. The ten-story $46 million building boasted fine restaurants, plush lounges with sandalwood furniture, tennis and squash courts, a swimming pool, even a bowling alley, and when it opened in 1995 it quickly became the venue of choice for the city’s new rich to hobnob with the party’s power brokers. Chen built the Chang’an Club not far from Tiananmen Square and the Forbidden City, on the Avenue of Eternal Peace, the boulevard that runs through the heart of Beijing. The state still dominated the real estate industry at the time, and only the most connected private developers could secure the right to build on such a coveted parcel of government land. When I asked her about the project, Chen told me she spent six years lobbying officials for permission to begin construction, and she hinted at her relationship with city leaders. After one sleepless night worrying about her investment, she recalled, she walked to the site at 2 A.M., picked up a shovel, and began breaking the ground herself. “It was a chilly evening, with a strong wind,” she said. “Someone reported me to Vice Mayor Zhang Baifa, and he rushed to the site. When he saw what I was doing, he was worried about me, and pleaded with me to give him the shovel and go inside. He was moved, and he said he would take care of the permits.”
The club was a shrewd investment. Even before it was built, Chen recalled, she recognized its potential as “a gold mine.” Nearly two decades after Mao’s death, the private sector was flourishing and a new class of businessmen had emerged, pragmatic wheeler-dealers who understood the value of access to party officials and were not shy about spending money to impress them. To them, the Chang’an Club was the perfect place to curry favor with a party cadre and strike a deal, and they paid handsomely to use it. But if the club generated a good income for Chen, that was nothing compared with the intangible benefits that flowed from her status as the proprietor. The club gave her a stage to sell herself, an excuse to meet everyone who came in, a chance to hear about every deal going down, a platform to court even the most senior of party officials. It put her closer to the center of the action than any former seamstress might have imagined possible. The vice mayor may have helped her build the club, but Chen was soon linked to Politburo members such as the party chief of Beijing, Chen Xitong, and even a member of the all-powerful Politburo Standing Committee, Li Ruihuan, who was photographed playing tennis at the club with the prime minister of Singapore.
Chen put the headquarters of her company, the Fu Wah International Group, on an upper floor of the Chang’an Club. She served as the chairman of the board, her son as the chief executive officer and her daughter as a board member. In 1999, the company opened its first residential complex, the luxury Lee Garden Service Apartments. Beijing is divided into sixteen districts, each with its own government, and both the club and the apartments were built in Dongcheng District, the downtown area east of Tiananmen Square with a population of more than half a million. Chen cultivated particularly close relationships with the officials in Dongcheng. Some even resigned and joined her company. Such ties at the local level of the party bureaucracy were as important to Chen’s success as her access to senior party leaders, and they were critical to her most ambitious project, Jinbao Avenue, which also ran through Dongcheng District. Chen couldn’t just pick up her phone and call a Politburo member, but she didn’t need to. As long as lower-level officials knew she had clout at the top, she could usually count on getting her way.
On occasion, though, Chen’s ventures ran into obstacles. In 2004, as her company was clearing another old neighborhood in Dongcheng District to make way for a new development, a city agency refused to transfer the land-use rights to her. Residents had been complaining about the demolition of their homes, their case had made headlines in the foreign media, and someone in the bureaucracy decided it would be wise to hold off on the project, at least temporarily. Chen wrote to Li Ruihuan, her contact who had served on the Politburo Standing Committee and was thus one of the most powerful men in the country. A few years later, I saw a copy of the letter. It was handwritten on plain white paper, and instead of letterhead, Chen wrote her company’s name at the top of the page. The text itself was fairly formal, beginning with an expression of gratitude for Li’s support and help over the years, then laying out Chen’s complaint in a businesslike tone. She emphasized that she had followed all the procedures and met all the regulations for the land transfer to be approved, and presented the decision to delay the transfer as inexplicable:
Chairman Li, why did this happen? We really cannot understand. After several years of planning, we have invested hundreds of millions of yuan in the Lishan Plaza project…spending as much as 60 million yuan on resettlement compensation alone. All the preliminary procedures have been completed. We obtained the approval of the various departments and the project was announced as legitimate early on. Why not conduct the land transfer for us according to regulations? This is also very puzzling. Please find attached the documents regarding the preliminary procedures. This is overwhelmingly urgent. I hope you will please take time from your busy schedule to pay attention to this matter and give instructions to the relevant Beijing departments to resolve it.
The letter had an immediate impact. On the same day she sent the letter, Li forwarded it to his successor on the Politburo Standing Committee with a note, “Comrade Jia Qinglin, please examine and coordinate.” Three weeks later, Jia passed the letter on to the mayor of Beijing with an another instruction, “Comrade Qishan, please review and study.” The next day, the mayor, Wang Qishan, added his own note and sent the letter to a deputy mayor, “Zhihua, please review and handle.” The deputy mayor, Liu Zhihua—a man who would be arrested three years later on Olympics-related corruption charges—then forwarded the letter to another subordinate, “Comrade Jiasheng, please review and handle.” Little more than a month after Chen sent the letter, the land transfer was approved and construction began on yet another project that would reshape the city while making her an even wealthier woman.
BEIJING WAS ONCE a marvel of urban design. Positioned on the northern tip of the north China plains, it first served as the national capital nearly one thousand years ago during the Jin Dynasty. But it wasn’t until Mongol invaders razed the city in the thirteenth century and Kublai Khan rebuilt it as his capital that the distinctive hutongs first appeared. Then, during the Ming Dynasty, the city took its modern shape, with an immense wall surrounding a twenty-five-square-mile expanse of streets, lakes, parks, and temples. For a time it may have been the largest city in the world, with the emperor’s palace, the Forbidden City, at the very center. Power and status emanated from the palace along lanes laid out in a nearly symmetrical grid, with the aristocratic elite living closest to the palace, merchants and artisans occupying residences farther out, and most commoners consigned to neighborhoods outside the walls. The majestic design gave the city its form, but it was the hutongs that defined life in old Beijing. The quiet alleyways, no more than thirty feet wide and lined with walled courtyard residences, fostered a traditional sense of community, and they survived hundreds of years, outlasting the Ming emperors, their Qing successors, and the short-lived Republican government.
When the Communists seized power in 1949, a new era of urban planning began. The Soviets advised the government to abandon Beijing’s “feudal” past, and transform the city into a modern industrial capital, with grand boulevards and huge state factories. Some intellectuals objected, urging the party to preserve the city wall and the neighborhoods inside, but Mao had little use for the architectural legacies of imperial rule. The city wall was torn down in the 1950s, and in the 1960s all but a few of the city’s massive gates were destroyed, too. Hundreds of temples were closed, demolished, or converted into offices and factories. The plaza south of the Forbidden City was expanded and
became Tiananmen Square, the largest city square in the world, flanked on both sides by imposing socialist edifices, the Great Hall of the People, and a museum of revolutionary history. Mao moved the party’s headquarters into an imperial compound nearby, and government agencies occupied many of the residences that had once been home to the elite. Over the decades, the city’s population mushroomed as outsiders were brought in to work in new factories, but because Mao’s production-obsessed economic planners gave housing short shrift, serious overcrowding resulted. Conditions deteriorated as courtyard houses originally built for one family were subdivided to accommodate as many as a dozen households. For the most part, however, the hutongs remained.
It was only after Mao’s death that old Beijing was destroyed and replaced with today’s congested sprawl of concrete, steel, and glass. Market reforms fueled the frenzy of destruction and construction, but what really made the city’s transformation possible was the party’s decision to strip homeowners of their property rights. In 1982, the state declared for the first time that it owned all urban land, but it quickly backtracked by letting people keep land-use rights. The distinction opened the door to a genuine real estate market, and because of the chronic housing shortages in Beijing and other cities, land values skyrocketed. Developers sensed a chance to strike it rich. If they could persuade party bureaucrats to sell them land-use rights at a steep discount instead of at market prices, they could make a killing.
More often than not, local officials found a reason to cooperate. Sometimes it was a hefty bribe. Sometimes it was a promise by the developer to build roads, or a municipal building, or apartments for city employees. Sometimes it was just a desire to expedite a project that would look good on their records and help them win promotions. But the most important reason the bureaucrats struck these deals with developers was the desire to privatize the difficult job of evicting and uprooting entire communities. In Beijing, the government held the rights to about two-thirds of the land in the city’s central districts. Private homeowners held the rights to the rest. Any major project would be complicated by two tasks—the payment of compensation to residents in public housing who were being evicted despite the socialist promise of an affordable home, and the acquisition of land rights from private homeowners. By inviting developers to step in, local officials passed these burdens on to them.
In the early years of the real estate boom, one industry insider told me, developers could buy land-use rights in central Beijing from the government for about 10 percent of the final value of the projects that they planned to build. The biggest budget outlay for these projects was not the cost of construction but the expense of evicting residents and demolishing their homes. Naturally, developers sought to boost profits by paying the residents they evicted as little as possible in compensation. Private homeowners presented the biggest problem, because they could demand a market price or even refuse to sell. In reality, though, local officials often approved projects and sold land-use rights to developers without going through the trouble of buying or seizing them from homeowners first. Officials then conspired with developers to pressure owners to give up their land. Developers often hired thugs to intimidate residents while police looked the other way, and local authorities sometimes cut off electricity, water, and heat to the holdouts. If necessary, the government intervened on behalf of developers and ordered a forced eviction on questionable legal grounds. Altogether, between 1991 and 2003, more than a half million families in Beijing were evicted by developers. One Chinese scholar estimated that during the 1990s, private homeowners in Beijing lost at least $4.5 billion in land, and tenants of public housing were cheated out of more than $7 billion in compensation that should have been paid them under government regulations. At the same time, if the city had auctioned off land at market prices instead of making sweetheart deals with developers, it could have made at least $5.5 billion more in revenue. Altogether, developers and local officials in Beijing fleeced the public of more than $17 billion in the 1990s—the equivalent of nearly all the city’s economic output in 1995.
Such brazen collusion between real estate companies and party officials to deprive homeowners of their property did not go unchallenged. Tens of thousands of residents filed lawsuits in Beijing against the city government and developers, and street protests over evictions became a common occurrence. But the party instructed the courts to dismiss the lawsuits and used police to contain and repress the demonstrations. Sometimes the property clashes had fatal consequences. In February 2006, five security guards employed by a developer beat to death a resident who refused to give up his home in a neighborhood slated to be torn down for a new apartment complex. The same month, another group of thugs attacked the owners of a courtyard house on a doomed hutong in western Beijing, killing an elderly woman.
Protests against mass evictions have taken place in almost every major city in China. In Xian, a group of nuns were beaten when they tried to stop developers from seizing a piece of church property. In Nanjing, a desperate homeowner poured gasoline over his body and lit himself on fire inside the eviction office that a developer had set up in his neighborhood. The more stunning the cityscape, the more likely that it was built by developers and party officials who ran roughshod over the rights of ordinary residents. This was the dirty little secret behind the glittering new office towers and apartment buildings that transformed China’s big cities. The evictions and demolitions in Beijing set the tone for the nation, but the worst violations occurred in Shanghai, where party leaders and developers built a new skyline that became the defining image of China’s booming economy. Shanghai likes to present itself as the most modern of China’s cities, but in fact, the authoritarian impulse among officials there is stronger than in much of the rest of the country. The newspapers are on a tighter leash, and the security apparatus is more menacing. More than a million families were evicted in the drive to remake the city, and when large numbers tried to resist, city officials crushed their campaign with little regard for legal niceties. Residents were jailed without charges or committed to mental hospitals. The lawyer who took up the cause of the residents, Zheng Enchong, was sentenced to three years in prison in 2003 for sharing information about the fight with a human rights group in New York. At the same time, party authorities tried to defuse public anger by arresting the city’s most prominent developer, Zhou Zhengyi, who ranked eleventh on the Forbes list of the nation’s richest people. In 2006, Zhou’s patron, the powerful Shanghai party chief Chen Liangyu, was toppled in a purge as well.
The Jinbao Avenue project was typical of the real estate deals in Beijing and other cities. Chen Lihua’s company obtained the land rights on the cheap from the government in 1998, paying about $250 per square meter. In return for the lower price, she agreed to build the new road and a government building for Dongcheng District, and to cover the cost of evicting four thousand to five thousand families, about a third of whom owned their homes. In total, she pledged to invest about $750 million in the project, which would demolish neighborhoods on fifty-five acres of land in the heart of old Beijing and replace them with office towers, a shopping mall, two hotels, a luxury apartment complex, schools, and other facilities. It was the biggest and most ambitious project Chen had ever undertaken. It was also a nearly risk-free venture. Her initial outlay was minimal, because once she obtained the rights to the land, she used it to secure a substantial loan from a state bank. Later, Chen also persuaded local officials to let her raise the height of several of the planned buildings, doubling the floor space of the project—and her potential profits.
In late 2002, two years after her company broke ground on Jinbao Avenue, the new boulevard opened to traffic. The buildings along the avenue were scheduled to be completed before the 2008 Olympic Games. Chen’s company still brags about how smoothly and quickly it was able to oust residents of the old neighborhoods and tear down their homes. “It took us twenty-eight days to demolish the houses of 2,100 families,” Wang Shouyuan, a former city
official whom Chen hired as the general manager of the project, told me. “This was unprecedented at the time. We finished the demolition and relocation work on the street, and it caused a sensation in Beijing. There were no appeals, no negative reaction at all.”
I asked Wang how the company was able to persuade so many people to give up their homes so quickly. “For demolition to proceed quickly, it depends on a combination of strength and force,” he replied. “Strength means giving enough money. Force means the backing of the government. That’s the key.”
OF COURSE, WANG was stretching the truth when he said there had been no negative reaction to the Jinbao Avenue project. Liu Shiru was one of several residents in the demolished neighborhoods who tried to fight back. Many others accepted relocation only reluctantly, because they concluded they couldn’t win against someone as wealthy and connected as Chen. The most prominent opponent of the project was Hua Xinmin, a well-known cultural preservationist in Beijing. Her grandfather had been the city’s chief engineer during the early years of Communist rule, and her father had served as a senior municipal architect and was among those who tried to persuade Mao to protect the old city. The family fled to France during the Cultural Revolution, but Hua returned to Beijing in the 1990s and took up her father’s cause, fighting to prevent developers from tearing down historic courtyard residences and other architectural gems. It was a difficult task, and she lost more battles than she won. Her opposition to the Jinbao Avenue project, however, was more personal: she grew up in a house on one of the hutongs that would be destroyed.
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