By Clay Chandler
June 17, 2017

I’ve been in India the past few days with intermittent Internet access but even from this side of the Himalayas it’s clear the week’s big China story is the abrupt disappearance of Anbang Insurance Group chairman Wu Xiaohui. A great deal has been written about the high-flying billionaire both before and after he vanished. But what strikes me is how little we really know about Wu despite his apparent wealth and prominence as a global dealmaker.

What we do know is plenty strange: that Wu rose from obscurity from Pingyan County on China’s eastern coast; that he somehow managed to marry the grand-daughter of Deng Xiaoping; that in little more than a decade he parlayed a small auto insurance business into a global financial conglomerate claiming assets of $300 billion. We know that Anbang vaulted onto the global stage in 2014 by plunking down nearly $2 billion for New York’s iconic Waldorf Astoria Hotel; that Wu became pals with Blackstone’s Stephen Schwarzman; that last year Anbang offered $13 billion to purchase Starwood Hotels and Resorts, only to abandon its bid following media scrutiny of its ownership structure. We also know that last November Wu met with Trump son-in-law and senior adviser Jared Kushner to discuss acquiring a stake in a Manhattan office building partly owned by a Kushner family company–and that in March that deal, too, was scuttled after the press started raising questions about conflicts of interest for Kushner, whose White House duties include oversight of China.

And, as of this week, we know that Wu is missing. Caijing, a prominent Chinese business magazine, reported that Wu had been hauled off by police last Friday. As of this writing, Beijing has issued no statement to confirm that Wu is under arrest or investigation. But on Tuesday, Anbang posted a notice its website stating that Wu is “for personal reasons no longer able to perform his duties.”

If Wu has been detained (and it certainly looks that way), we don’t know why. Was it for moving money out of China illegally? For falsifying financial records? For breaching domestic insurance regulations? All of the above? Or is he simply a pawn in a larger political game ahead of this year’s all-important Communist Party gathering to choose its next generation of leaders?

We also don’t know the extent of Anbang’s exposure to other Chinese lenders and whether troubles at Anbang could create broader risks for China’s financial system. Chinese regulators have told banks to reduce their dealings with Anbang and many have curtailed or ceased marketing Anbang products. A report in the Wall Street Journal warns that a government clampdown on Anbang could have “knock-on effects on the Chinese financial system” that might “deepen the drama.”

Nor do we know whether Anbang founder’s detention is a one-off or a sign that president Xi Jinping’s anti-corruption drive is shifting into higher gear. Over the past several years, a slew of rich and powerful Chinese have gone missing only to resurface as detainees, and later be convicted on corruption charges. (The LA Times lists some of them here.) For those remaining, the key question has to be: Wu’s next?

Clay Chandler


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