Shanghai's Dark Side
This article originally appeared in the February 1994 issue of ASIA, INC.
Some 44 years after a revolution cleaned up China's "paradise for adventurers," army and police officers are once again in league with vice.
Triads? Prostitution? Chinese officialdom involved in vice? In the People's Republic? Wasn't China's bloody revolution, especially in Shanghai, expressly intended to sweep away all such plagues? "Goodbye to all that," wrote Edgar Snow , Mao Zedong's Western journalist friend in 1960, a decade after revolutionaries had allegedly purged this "paradise for adventurers" of its notorious excesses. "Goodbye to all the night life: the gilded singing girl in her enameled hair-do, her stage makeup, her tight-fitting gown with its slit skirt breaking at the silk-clad hip . . . the hundred dance halls and the thousands of taxi dollars; the opium dens and gambling halls . . . the sailors in their smelly bars and friendly brothels on Sichuan Road; the myriad short-time whores and pimps busily darting in and out of the alleyways . . . gone the wickedest and most colorful city of the old Orient: goodbye to all that."
But Snow spoke too soon. Nowadays visitors to Siping Road, in Shanghai's northeast quarter, will come to a blue glass, neon-crowned tower called Shanghai Taiwan City. Here the decadence, rapacity, the crowing vulgarity of old Shanghai has been reborn: high-slit cheongsam dresses, dimly lit karaoke rooms, male and female masseuses, higher-slit cheongsams, scarlet bathtubs built for two, taxi girls, drinks girls too young to know the characters for cheongsam but available for 580 renminbi ($ 100) or more a night.
"Pre-liberation behavior has returned," smiles a wealthy tai zi (or "princeling," a term for cadre's sons), sipping whiskey and smiling from the depths of a plush sofa at a disco elsewhere in the city owned by Hong Kong's Sun Yee On (New Righteousness and Peace) triad. Vice is back with a vengeance in Shanghai, perhaps without the style but with all the invincible swagger of the 1920s. Prostitution, bribery, gambling, extortion have all resurfaced. Old Shanghai's red-light district of Fuzhou Road has reappeared on Maoming Road, 30 blocks to the southwest. The thuggery of Blood Alley (the sailors' haunt mentioned by Snow) has moved 15 blocks west to chrome-drenched Zhapu Road. Bathhouses are popping up on Shanghai Dainty Delicacies Street (a most precise translation). It's difficult to find an opium den -- though they're said to exist -- but easy to buy opium and a silver pipe to smoke it in.
Re-emerging, too, are the powerful old alliances among organized crime, the law and the government. As in the days when Du Yuesheng, chief of Shanghai's Qing Bang (Green Gang), ran narcotics, gambling and prostitution rackets from his desk at the Opium Suppression Bureau (see box, page 32), police, PLA and party members are opening their own nightclubs and brothels and signing joint-venture agreements, often with criminal organizations from overseas.
For companies doing business in China, all this may seem a harmless enough repetition of the after-hours scene in any Asian city. But despite its current obsession with markets in all their forms, China's political system has puritan-messianic origins. The purge of old Shanghai was widely welcomed for reasons perhaps best known to Snow's "gilded singing girl." The return of capitalism's excesses strengthens those arguments and invites the return of people who are ferociously anti-business -- China's many remaining communist diehards.
Nonetheless, the rot continues. "The money to be made through illegal rackets has proven irresistible to many (military and police officers)," observes a Western diplomat whose department tracks Shanghai's corruption. "For the Hong Kong and Taiwanese triads and Japanese yakuza, this is a chance to launder money and cozy up to the mainland government. If the PLA is a partner in your brothel, or the PSB shares the girls from your karaoke bar, who's going to crack down on you?"
No one, from the looks of the action on a recent Shanghai weekend. Some snapshots of the city after dark:
"You have to have the women here," says Yan. "Look, I have a policy. The first time such a woman comes in, I treat her as a guest. The second time, if she behaves legally, I leave her alone. If she behaves illegally, I try to persuade her to leave. The third time, if she behaves illegally, I make her leave." What defines illegal behavior? "Well, doing P.R. work for herself is okay, but she should not overly harass my customers. Public Security wants this to look like a cultural place, not a red-light zone."
Asia, Inc. has learned that all PLA business in Shanghai, both over and under-the-table, is controlled by the Guard Army of Shanghai Garrison Headquarters (Shanghai Kan Shou Jingbei Si Ling Bu), headed by Senior Colonel Gu Siren. His men control the wholly owned PLA clubs as well as the joint venture operations and collect rent from every vice operation in the city. The only other military group believed to share in the vice income is the well-connected Nanjing Military District Office, which reportedly collects commissions on under-the-table arms shipments and goods smuggled in and out of Shanghai ports.
Shanghai's corruption problem stems in part from Beijing's directive that government agencies should become more financially self-sufficient. An aide to Colonel Gu readily confirmed in a phone interview that the PLA owns Shanghai clubs, restaurants and other commercial ventures. "Of course we earn a lot of money," he said. "With this money we can treat the army better."
The PLA's myriad commercial enterprises -- from publishing to manufacturing to organizing exhibitions -- added some $ 27 billion to its $ 57 billion 1993 budget, according to John Frankenstein, senior lecturer at Hong Kong University and author of a recent study on Chinese defense production. He believes the PLA splits its profits between commercial ventures, infrastructure upgrades, offshore investments and the purchase of high-tech hardware. Says Frankenstein: "They've realized since the Gulf War that they need to upgrade their technology. And the budget allocated to them by the government isn't enough to cover the purchases they're looking at." The military's costly shopping list, and the desperation of the less-entrepreneurial PSB, means any profitable business is good business. And karaoke brothels are great business -- customers consistently drop from $ 5,000 to upwards of $ 25,000 a night for whisky, women and watermelon.
The PSB concentrates mainly on small and medium-sized brothels, opening them in obscure locations ranging from the Shanghai Province No. 9 Shop of 100 Things to the Public Security Reporting Station on Yanan Road. They've opened just two exclusive brothels, the Moon Club and the Huashan Bao Mi. The PLA and the city government, on the other hand, operate at the high end of the price scale. They prefer joint-venture partnerships with Hong Kong's Sun Yee On triad and Taiwan's Four Seas and Bamboo Gang triads. While the PLA plays an active role in providing management and security, the PSB tends to favor so-called "flip over" companies. For these, the city government donates the land, "flips over," or transfers, its privileges and claims half the revenue.
"Joint ventures allow the PLA and the state to make money in clubs they couldn't possibly afford to build. At the same time, it makes them feel in control of vice operations," notes the diplomatic source. "What do the triads get out of it? Well, a relationship with the forces that control Shanghai. And a foothold within the People's Republic before China takes over Hong Kong in 1997, with a chance to recruit members from the police and party cadre ranks."
The Sun Yee On has set up a number of nightclubs with the PLA on the stretch of Yanan Road approaching Hongqiao Airport; on Beijing Road in the area of the Portman Shangri-La Hotel and on Nanjing Road near People's Park. Taiwanese triads have so far confined themselves to the "Taiwan ghetto" area of Siping Road in Hongkou. Siping Road's rebirth as a dodgy area is credited to the Taiwan-based Bamboo Gang.
The ge ti hu (small businessmen) running independent bars and restaurants claim that financial squeezing by the PSB, PLA and triads have them coughing up 40 to 60 percent of their profits. Tom Yang, owner of Tom's Famous Grouse Bar behind the Hilton Hotel, complains that aside from their monthly kickback, the PSB now arbitrarily issues fines. "They'll come and say, 'Oh, your light is too dim today, needs to be very bright, 50 renminbi fine,' " he grumbles. "The next day they say, 'Oh, your light too bright today, 75 renminbi fine.' They can't be satisfied anymore."
Tommi Chan, manager of the Galaxy Entertainment Club, says he's getting it from all sides. Chan and seven other people, including disc jockey Ali Wong, were brought over from Hong Kong last year to staff the $ 2 million club. Chan says the PSB is a partner in the club. But although the police still collect their share of the profits, they stopped giving the club protection after being paid off by wealthy Hong Kong gangsters, who took a liking to it. Without protection, the club is up for grabs.
Says Chan: "We have a big security problem. Local (Chinese) street gangs come and ask for a discount, free drinks and threaten trouble. Then the Taiwanese gangs come and say, 'Hey, you have trouble, pay us to fix it.' " Now, Wong adds, pacing angrily about and stamping his silver-tipped boots, the PLA wants money to ignore the prostitutes who come in. "And recently I see the same triad gangs I saw in Hong Kong. They come in with choppers and guns and act the way they do in the clubs they control in Kowloon. They're the most scary."
The bartender at another PSB joint-venture nightclub concurs. "Chinese gangs are dangerous, but most trouble is coming from outside (Hong Kong and Taiwan) gangs," he explains. "The rule is, anyone who is not your partner is probably going to give you trouble because everyone is trying to expand their area of control. So you would be foolish to open a club without PSB, PLA, city government or a strong gang as a partner."
Foolish and, according to some Shanghai sources, needlessly moralistic. "Really, it's a knee-jerk Western reaction to gasp in horror at the whole thing, " complains a long-time Western resident of Shanghai. "First, kickbacks are a part of life in China. Second, if you're going to have vice, who better to run and control it than the police? This allows the government to monitor triads moving into China."
But others hold that the triads control the mainlanders, blinding them with cash. One notable example occurred in 1991, when the Hong Kong film industry's triad-controlled sector raised millions of dollars for victims of China's floods. "Taking the money to Beijing gave triads a heaven-sent opportunity to make guanxi," says a Hong Kong-based intelligence source. In a startling admission at a Beijing conference last April, Public Security Minister Tao Siju revealed that a Hong Kong triad group "dispatched 800 of its members to guard our state leader against danger," a reference to an unidentified top cadre's overseas trip. The revelation that Siju met repeatedly with key Sun Yee On members in China last year -- followed by his startling comments about Beijing's willingness to work with Hong Kong-based "patriotic triads"-- struck fear in those who expect criminal societies to gain in power after 1997. "At this point I'm sure there are top people in each branch of the (Hong Kong) government tied to triads," observes the intelligence source.
Such social deterioration in Shanghai, however, means that China once again risks alienating the city's poor and the intelligentsia. Our diplomatic source suggests that growing vice and corruption put the working classes in a 1989 state of mind: "It's the same sort of anger and frustration that fed Tiananmen. Continuing corruption could lead to an economic situation that would lead to a people's rebellion that could cause a central crackdown."
In a recent essay in The Economist, Singapore Senior Minister Lee Kuan Yew predicted a time could come when "freer economic and social conditions in the coastal provinces" could cause "much disorder." The result could be a political reaction, in which "Beijing reasserted its central authority and conducted a blitz."
The current Shanghai situation, echoes the diplomat, puts Beijing's hard-liners, who have blamed corruption in China on triad infiltration and entrepreneurship within the party and police, in a 1949 state of mind: "If Deng were to pass away, and a hard-liner -- someone who feels the principles of socialism are being betrayed -- were to establish a power base, then yes, I think the city would become the focal point of reform policy. Shanghai could become an example again."
© 1997 by Asia Inc. Ltd.