Hangzhou drinking party scandal casts shadow over city’s image

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

The hottest topic in China over the past couple of days — apart from the film Niu Lai, which has become notorious for all the wrong reasons — has to be a drinking party in Hangzhou, Zhejiang.

Citing people familiar with the matter, Yicai reported on 17 August that Zhao Haifeng, general manager of the Zhejiang unit of state-owned property developer China Merchants Shekou, had been removed from his post and was under investigation by the relevant authorities. What landed Zhao in police custody was a drinking party held in Hangzhou in late July, at which he allegedly assaulted a woman.

Before mainstream media reported the case, snippets of the drinking party had already surfaced on some self-media accounts. But a 17 August article published on WeChat account Yi Dichan (壹地产, One Property) went viral, bringing the incident into the spotlight.

The Hangzhou drinking party incident

The article, which has since been deleted, attempted to reconstruct what happened at the drinking party, as well as the intricate market manoeuvring and power games within the property sector. Some of its details may be difficult to verify, but taken together with reports in the Chinese media, they provide a rough picture of what happened that evening. A female employee of property developer C&D was instructed by her superior to join the gathering. She was made to drink a lot of baijiu before being taken to a private room at a karaoke lounge where she was molested and assaulted.

The drinking party at the centre of the scandal was reportedly a celebratory dinner. Amid China’s generally depressed property market, China Merchants Shekou recently splashed out more than 6 billion RMB (about US$890 million) to beat more than ten other developers in securing a prime plot in Hangzhou’s Binjiang district, home to technology companies including Alibaba and Unitree Robotics. Xiamen-based state-owned developer C&D was also roped in to participate.

Besides senior executives from centrally and locally administered state-owned property companies, another important figure attended the celebratory dinner: Yu Tingdong, deputy chief of Hangzhou’s Binjiang district, who wielded approval authority over key domains, including urban development and property. According to an official Hangzhou statement on 18 August, Zhao and Yu forcibly molested the woman, causing second-degree minor injuries. Both have since been placed under criminal detention and been removed from their posts.

All about networking

Meals and drinks between officials and business people go back a long way in Chinese officialdom. The rounds of toasts at the table are about more than eating, drinking and socialising: they are also a means of cultivating relationships and conducting under-the-table dealings, facilitating the exchange of information, resources, power and money. Such dinners and drinking parties often involve pressured or forced drinking, while sometimes there is unwanted touching, bullying, assault and other behaviour that crosses boundaries or even breaks the law.

After the Chinese Communist Party (CCP)’s 18th National Congress in 2012, the authorities launched a sweeping anti-corruption drive, with the “eight-point regulations” targeting official extravagance in dining and drinking. Corruption at the dining table, misconduct in private clubs and collusion between officials and business people at banquets were curbed to some extent, but never completely stamped out.

Last year, the CCP launched a party-wide campaign to study and implement the spirit of the eight-point regulations, triggering a crackdown on inappropriate dining and drinking. Against such a political backdrop, it was astonishing that executives of centrally and locally administered state-owned enterprises would dine in a private room with public officials with whom they had potential conflicts of interest, and that the gathering would culminate in the serious assault of a female subordinate.

After the Hangzhou drinking party scandal came to light, some commentators noted that the Yi Dichan article’s description of a “sacrifice at a drinking party” had brought into the open “what is tacitly understood in that male-dominated circle”. At such meals, women, facing inequalities of gender and power, are often treated as “lubricants” for the exchange of interests. The fact is, it is also very common for male subordinates to be compelled to drink and entertain guests at such gatherings.

The egregious incident in Hangzhou has reignited condemnation in China of drinking culture, while the internet has been awash with anger at the unchecked exercise of power. One person familiar with the property market lamented that when the sector was booming, business dinners of this sort took place every few days. The person said it was striking that although the industry’s glory days are now long gone, the unspoken rules governing these drinking parties have not changed at all.

No more illusions about Hangzhou?

Even more disheartening is that the incident did not take place in one of China’s inland provinces, but in Zhejiang, an economically developed coastal province, and specifically in Hangzhou, regarded as a model city in its handling of government-business relations. According to Chinese journalist Li Wei’ao, this is the second scandal in Hangzhou within months involving government officials attending a dinner at which a woman was assaulted. The previous case allegedly involved Deng Fuguo, deputy director of Zhejiang’s provincial financial affairs office. Legal blogger “Zhang San Tongxue” (张三同学, Classmate Zhang San) went so far as to lament on Weibo: “My rose-tinted view of Hangzhou has been completely shattered.”

Hangzhou, which nurtured technology companies such as Alibaba and the so-called “Six Little Dragons”, has in recent years been widely praised for fostering “close but clean” relations between government and business. Its Zheliban (浙里办) app allows entrepreneurs to settle administrative matters with “at most one visit”; its business environment is promoted on the principle that the government will not bother businesses unnecessarily, but will respond to all calls for assistance; and its entrepreneurial culture promises an experience that does not involve favours, pulling strings, or alcohol. All this has been the envy of many, and it is particularly jarring that such an egregious scandal should emerge in a model city like Hangzhou.

Perhaps this was just a few individuals making low-level mistakes, and we cannot tar everyone with the same brush. Still, the flip side of Hangzhou’s government-business environment that has been exposed by the drinking party has to some extent tarnished the city’s reputation. Certain realities have also been brought to the surface: the supposedly “close but clean” relationship between government and business still has red lines that have not been adequately defended; greater efficiency does not make power disappear; and as long as traditional power structures remain intact, opportunities for rent-seeking may persist.

Those implicated in the drinking party have been detained, and the investigation may well uncover further wrongdoing. What interests bound this group of people together and brought them into the same private room? Were there other irregularities surrounding the tender for the plot whose acquisition they were celebrating? This scandal in Hangzhou has sounded the alarm over government-business relations in China: if such things can happen even in Zhejiang, an economically developed province that ranks among the country’s best for its business environment, what might the situation be like elsewhere?

This article was first published in Lianhe Zaobao as “一场酒局打碎杭州滤镜？”.

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