From property boom to AI: China’s next corruption risk

(Edited and refined by Candice Chan, with the assistance of AI translation.)

Former Chinese Communist Party (CCP) Politburo member Ma Xingrui, previously in charge of Shenzhen, Guangdong and Xinjiang, was officially expelled from both the CCP and public office last week. Among the allegations against him, that of economic misconduct has attracted particular attention.

The disciplinary notice stated that Ma had “indulged and condoned relatives in exploiting the influence of his official position to obtain enormous illicit benefits, engaging in family-based corruption”. It accused him of turning public power into a tool for personal gain, alleging that he had “used the convenience of his office to secure benefits for others in business operations, project contracting and official appointments, while personally, or in collusion with relatives and other closely connected individuals, illegally accepting enormous sums of money and valuables”.

The case of Ma Xingrui

The allegations suggest that rent-seeking does not necessarily take the form of senior officials directly exchanging favours with business owners. Instead, illicit benefits may be channelled discreetly through relatives, trusted intermediaries (“white gloves”), and intricate commercial networks.

Soon afterwards, Caixin published a lengthy investigative report on the government-business network behind Ma’s corruption, mapping out a complex web comprising private property developers, central state-owned enterprise (SOE) platforms, local state-owned assets and financial capital. The report describes a profit-making model characteristic of China’s property boom years, in which property development, equity arrangements, financing partnerships and local resource allocation became deeply intertwined.

Now 67, Ma spent eight years working in Guangdong between 2013 and 2021. During that period, he served as deputy party secretary of Guangdong, party secretary of Shenzhen and governor of Guangdong. He stepped down as party secretary of Xinjiang in July 2025, before his investigation was officially announced in April 2026.

According to reports, shortly after Ma came under investigation, Hu Donghai, former party secretary and chairman of CITIC Real Estate, a subsidiary of the state-owned CITIC Group, was suddenly taken away for investigation around May this year. Reports alleged that Hu had exploited CITIC’s status as a central SOE to acquire urban renewal projects in Shenzhen before reselling them to major property developers such as Evergrande and Vanke for enormous profits. The transactions allegedly involved the mysterious property developer Wang Zhanjiang, local resource networks and business links to Ma’s younger brother, Ma Xingquan. This reportedly became a key breakthrough in uncovering Ma’s economic misconduct.

Although the details of the case remain subject to confirmation through judicial proceedings, it has highlighted how, during China’s property boom, businesses became closely intertwined with public resources, creating fertile ground for distorted government-business relations and illicit transfers of benefits.

Government-business interaction

For years, China’s local governments and businesses have operated within a highly interactive model of economic development.

Local governments rely on businesses to invest, create jobs and drive urban development, while businesses depend on strong government support in planning, infrastructure and industrial development. This symbiotic relationship became especially pronounced during the property boom, when land development, urban renewal and construction emerged as key engines of growth. At the same time, local governments, through their control over land supply, planning approvals and project permits, were able to capture enormous value from rising land prices and development premiums.

This model has helped to fuel China’s rapid urbanisation and economic expansion, but as business competition becomes increasingly dependent on access to projects, resources and favourable policies, normal cooperation between officials and businesses would inevitably evolve into opportunities for rent-seeking.

However, the nature of government-business interaction may be undergoing a significant transformation. During the property era, the relationship centred on land, development projects, construction and regulatory approvals. In the emerging era of artificial intelligence (AI), semiconductors, new energy vehicles, robotics and biotechnology, interactions are increasingly focused on technological infrastructure, talent concentration and innovation ecosystems.

AI as an example

Take the AI industry. What start-ups need from local governments is no longer access to a particular project, but rather an inclusive and efficient innovation infrastructure.

iFlytek chairman Liu Qingfeng has repeatedly argued that AI development must be integrated with practical industry applications, promoting its adoption across sectors such as education, healthcare and manufacturing. Likewise, Unitree Robotics founder Wang Xingxing has noted that the development of AI technologies, including robotics, requires vast computing resources and strong engineering support.

Hangzhou’s AI development in recent years is one example. The city has invested heavily in computing power, data infrastructure, open-source ecosystems and application scenarios. Its AI ecosystem did not emerge overnight, but has been built upon its long-established internet industry, deep talent pool and extensive corporate networks. Unlike in the property era, where government-business ties revolved around land and project resources, interactions in the new industrial era are increasingly founded on infrastructure development and ecosystem building.

In this new industrial era, local governments will continue to play a pivotal role, and it is unrealistic to expect government-business relations to become entirely detached from one another. What businesses increasingly require, however, is a stable policy environment, open application scenarios and a mature industrial ecosystem. As the nature of industrial competition changes, long-term business success will be increasingly founded upon technology, products and market competitiveness, rather than excessive reliance on personal connections to secure resources.

Shifting resource needs

Yet, having a different form of resources does not address the fundamental question of how public resources should be allocated fairly. If land and project approvals were the scarce resources of the old economy, then computing power, data, industrial investment funds and talent have become the strategic resources of the AI era. As China enters a new cycle of industrial transformation, the overlap between government and business is unlikely to diminish; indeed, it may become even more deeply integrated at a higher level.

The broader significance of the Ma Xingrui case lies not merely in the rare downfall of a former Politburo member, but in what it reveals about the longstanding structural weaknesses in China’s government-business relationship. Whenever public authority retains control over the allocation of critical resources, there will be the temptation of rent-seeking and the risk of illicit transfers of benefit.

So, the key challenge in China’s transition from old to new growth drivers is how to preserve the government’s role in guiding industrial development while building institutions that prevent emerging strategic resources from becoming new channels for hidden vested interests. How can government-business interactions be grounded more firmly in the rule of law, transparency and fair competition, rather than political power and special relationships? This is probably one of the key questions that China cannot avoid in its economic transformation.

This article was first published in Lianhe Zaobao as “马兴瑞落马折射出的政商新考验”.

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