Xi Jinping’s corruption purge is pitting China’s state-owned giants against each other

CCTV is trying to take Bank of China to pieces.
CCTV is trying to take Bank of China to pieces.
Image: Reuters/Alex Lee
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The Chinese broadcaster CCTV, one of China’s oldest and most prominent government-controlled institutions, turned on one of its siblings this week, accusing the state-owned commercial lender Bank of China of helping wealthy Chinese funnel billions of dollars out of the country. Now, China’s central bank is stepping in to the fray and looking into allegations made by CCTV, according to state media today.

CCTV, best known as the mouthpiece for China’s communist party, has published scathing reports on foreign firms like Apple, McDonald’s and Carrefour over the past few years but has rarely targeted domestic firms. The attack on Bank of China, the country’s fourth-largest lender, along with the central bank investigation, is the latest sign that president and party secretary Xi Jinping’s corruption crackdown is now reaching into the country’s financial sector.

Xi’s corruption campaign, which some observers see as more of a way to purge rivals, has gone from issuing new rules against lavish banquets and perks for officials to audits exposing $1 billion in funds that were allegedly misued by state-owned firms in the oil, mining, and utility sectors. Finance appears to be the latest target. A separate investigation into insider traders (known as as ”rat traders”) on China’s stock markets has prompted more than a hundred fund managers to leave their jobs this year (paywall).

CCTV’s investigative report was on the Bank of China’s pilot program in Guangzhou called Youhuitong, (literally, “preferential transfer channel”), aimed at helping Chinese nationals move cash offshore for investment emigration programs beyond the legal cap of $50,000. CCTV claims the bank extended the program across the country.

Given CCTV’s close ties with the party, it’s likely officials knew of the report before it ran. Xi has been targeting “naked officials,” those who send their family and often wealth outside of the country, specifically in Guangzhou. Today, an official, without naming Bank of China, said that regulators were “verifying related facts“ regarding the CCTV report.