Wang Jing, the publicity-shy Chinese businessman, reportedly lost 85 percent of his fortune in the Shanghai stock market crash. What does his roller coaster career tell us about who might be backing his controversial plan to build a US$50 billion shipping canal across Nicaragua, and why?
For a man who claims to be heading up one of the 21st century’s more ambitious infrastructure projects, Wang Jing is notably publicity shy. He insists that he is just an "ordinary billionaire", and has revealed few details of his early life and career.
Since June 15 2013, when he shot to global attention with the Nicaraguan president and former revolutionary Daniel Ortega’s announcement of Wang’s plan to build a shipping canal across Nicaragua, the Hong Kong-based investor has faced persistent but largely unanswered questions about his credentials and the viability of the project.
Wang’s US$ 50 billion canal would be 171 miles (273 kilometres) long and bisect the Western hemisphere’s second most impoverished country, costing roughly five times Nicaragua’s annual GDP. It would displace tens of thousands of Nicaraguans, require an unprecedented dredging operation in Lake Nicaragua and would hand hundreds of square miles of land to Wang’s Hong Kong Nicaragua Development Corporation (HKND) as part of the concession.
Despite the Nicaraguan government having acknowledged the potentially disastrous ecological impacts of the canal project, it has granted HKND a permit to proceed with construction on environmental grounds. But problems persist.
China’s recent stock market crash wiped out an estimated 85 percent of Wang’s personal fortune, according to Bloomberg’s billionaire index, which tracks the wealth of world’s 400 richest people. Wang is no longer among them.
Even before the crash, international media reported with a certain skepticism the idea that this enigmatic figure could partly fund and wholly execute a Nicaraguan dream that dated back centuries: Wang Jing’s plan is the 72nd proposal since the Spanish conquistadores first thought of the idea in the 1500s. The project languished after the US completed the rival canal across Panama in 1914.
Wang does not seem a likely progenitor for the project. His resume was strong on military communications but notably light on engineering experience when he registered HKND in the Cayman Islands, just a few months before he appeared with Ortega for the first time. Wang claims that the canal idea came to him a year before the announcement.
He denies that he has strong links to, or the backing of, the Chinese government, but his fortune had grown almost as rapidly as it diminished, when he was catapulted from middling prosperity to billionaire status. His rise came with the dramatic upturn in fortunes of his main resource – a largely domestic and relatively unknown telecoms company called Xinwei. A closer look at his business interests and military connections suggests there may be more to the rise of this “ordinary billionaire” than he has publicly admitted.
It all began rather modestly, according to the sparse details Wang Jing has supplied in the few interviews he has given. Wang told Matthew Miller of Reuters that his father, an office worker, died in 2010, that he lives with his mother and that he has a daughter. He himself, he says, was born in December 1972, and studied at Jiangxi University of Traditional Chinese Medicine, but dropped out to go into business. In the late 1990s, he went to Hong Kong to “learn about international finance and investment,” returning to Beijing in 1998 to found Dingfu Investment Consulting Co, followed in 2001 by Hong Kong Divine (Dingfu) Investment Group Ltd. He was later involved in mining gold and precious stones in Cambodia, and opened a small construction company in Beijing.
Thus far, it is an unremarkable, if sketchy account.
Wang’s relationship with Xinwei began at an unpromising moment in the company’s fortunes. Beijing Xinwei was set up in 1995 as a joint venture between the China Academy of Telecommunication Technology and Cwill Telecommunications, a US-registered company founded by the former Beijing Xinwei president, Chen Wei. Its ambition was to develop indigenous Chinese telecoms technologies to challenge the Western dominance. But by 2009, the year Wang took over, Xinwei was struggling to commercialise its proprietary 3G technology, even in China.
Yet by September this year, Xinwei’s assets were estimated at 16 billion RMB (US$2.5 billion). The company claims to have sealed big telecoms deals in 20 countries and to possess “sublime eminence in the global communications industry”. Xinwei had also notched up significant signs of high level government support in the form of visits to its offices by the Party chairman and China’s president, Xi Jinping, and the prime minister, Li Keqiang, and had reportedly been granted, among many other official favours, a US$2 billion line of credit from the China Development Bank. Wang Jing, who had entered the Forbes list of the top 400 Chinese billionaires at 94th place in 2013, shot up to 12th place on the back of Xinwei’s record-breaking 2013 backdoor listing on the Shanghai Stock Exchange. At its apogee in June 2015, his personal fortune was estimated at US$10.2 billion. How had Wang achieved such a remarkable turnaround?
"...he converted the business model into the military, into defence,"
Peter Liu, venture capitalist
Peter Liu is a veteran Chinese venture capitalist who in 1996 was a US$4 million original investor in Cwill Telecommunications, the company that would provide Xinwei with its technology. Liu retained a 42 percent shareholding until Wang’s take over. His explanation of Wang’s sudden success is straightforward.
“When Wang took over Xinwei he converted the business model into the military, into defence,’’ he said. This charted a new course for the struggling telecoms company, and although Wang Jing seems reluctant to acknowledge Xinwei’s military connections, the company website has been less shy about this line of business in the past. One web page, archived in 2010, laid out Wang Jing’s military loyalties.
“Under the solemn national flag, the chairman (Wang Jing) issued a sonorous oath of serving the country,’’ it reads. “The chairman requested that with a sense of urgency we expand our global views, to align Xinwei more closely with our nation's strategy and development. Xinwei Chongqing will begin producing military products. This is a glorious and arduous task, which we are proud to conduct. We clearly recognise that the quality requirements of military products and civilian products are different. Civilian quality only affects the company's market share, sales revenue and the company's survival; but the quality of military products is related to the warrior's life, the outcome of war. It's related to national defence and security.’’
Wang Jing’s military strategy transformed Xinwei’s fortunes. In late 2013, Beijing Xinwei Telecommunications became the first private-sector company to be allowed to participate in China’s satellite navigation system, which aims to end China’s reliance on the GPS system run by the US military.
In February 2014, the 61-year old General Zhang Jixiang, who had overseen the modernisation of the military’s secure battlefield communications and had recently retired from the post of deputy commander of Beijing Military District's Zhurihe Training Base, became Vice President of Beijing Xinwei. Xi Jinping personally awarded Zhang a high level medal in November that year.
Xinwei’s Lunar New Year pageants have been notable for ostentatious displays of the company’s military ties and Party-centred patriotism, in which Wang has personally performed on stage, accompanied by ranks of men in military uniform and in front of a screen showing pictures of army trucks mounted with guns. As recently as the February 2015 New Year celebrations, Wang honoured the company’s major client with a dance show featuring “valiant and heroic’’ female soldiers, revolutionary poetry from the company’s in-house communist party committee and a rousing rendition from Wang himself of “Till That Day Comes,’’ a military morale booster made famous by Peng Liyuan, the wife of president Xi. The performance signaled his loyalty to Xi, singing a song that was written to answer China’s Propaganda Department’s call for songs that would help in “preparations for military conflict, to cultivate the fighting spirit of troops.’’ The giant flag that was projected onto the stage was that of the Party, not the nation.
The Web of Connections
For investors, governments and civil society outside China, untangling the connections between power and business matters. China’s growing investments overseas are well documented, but while in the past these were spearheaded by China’s state owned enterprises, today private companies like Wang Jing’s Xinwei play an increasingly prominent role, often with financial backing from government-linked entities. While some operate as private concerns, many have close and, in some cases, concealed links to the Chinese state.
China’s limited disclosure and the cult of state secrecy make teasing out the links between private capital, the Chinese state and the Communist Party difficult.
“Those entrepreneurs are not fools; they know very well the kind of investments that get government backing,’’
Juan Pablo Cardenal, author
“Private companies are looking for opportunities abroad and are willing to make profits for the company as well as becoming global players, but coincidentally many of their investments and projects also serve the ‘national interest’," said Juan Pablo Cardenal, co-author of ‘China’s Silent Army’, a study of the impact of the country’s expansion on overseas institutions. “Those entrepreneurs are not fools; they know very well the kind of investments that get government backing,’’ he said.
Connections between the private sector and Party power holders benefit both sides and Wang has built his fortune by serving the strategic priorities of the Party and the government, often in fields of activity in which he had no track record.
Wang Jing’s Nicaragua canal announcement was dramatic: a relatively obscure Chinese businessman with no engineering experience had landed the rights to develop the world’s biggest infrastructure project. The project also implicitly challenged US strategic interests in what it has long regarded as its own back yard.
Wang’s main known asset remains his 36.97 percent stake in Beijing Xinwei, now a government-backed developer of China's wireless communications standard, specialising in mobile network development and products. He controls the Hong Kong Nicaragua Development Company through a China mainland-registered company called Beijing Interoceanic Canal Investment Management Company, according to filings with the Shanghai Stock Exchange and Hong Kong Companies Registry.
Wang also reports full ownership of several offshore subsidiaries, including seven recently registered Netherlands firms that appear to be related to the Nicaragua project; a British Virgin Islands-registered aircraft investment company, and media and sports entities, all of them registered within the last year (he also owns Southeast Asia [Cambodia] Agriculture Development Group Inc, which was registered in Cambodia in September 2009, according to Shanghai Stock Exchange filings).
Three people who have worked with him, and who spoke on condition of anonymity, say Wang Jing saw an opportunity to make money by tying his interests to those of the state. Some reports describe him as a relative of Wang Zhen, the veteran Red Army warrior who was purged in the Cultural Revolution, rehabilitated by Deng Xiaoping and went on to play an important role in the growth of China’s military-industrial complex.
For overseas consumption, however, Wang Jing plays down any links. “I am only in charge of a company, I have no authority to represent [the government] or assess the canal’s significance for the nation,’’ he told Patrick Boehler of the South China Morning Post.
Wang has, however played a lucrative role in the development of Nicaragua’s telecoms.
The entourage that accompanied Wang Jing as he disembarked in Managua in June 2013 was large: two secretaries, a translator and Li Wenjie, Wang’s right-hand woman at HKND, along with a phalanx of lawyers, public relations advisers and consultants to the canal projects, including Bill Wild, now listed as Chief Project Advisor to HKND, a former COO of Leighton Holdings Limited, a man with a 40-year career in infrastructure projects; Ronald MacLean Abaroa, four times mayor of Bolivia’s capital La Paz, and an authority on sustainable development; and David MacArthur, Americas' CEO of the British environmental consultancy ERM, who undertook the project’s environmental and social impact assessment.
The impacts along proposed route of the Nicaragua Canal. To view the map full screen click here.
Other members of the delegation that day – including the telecoms executive, Eugenio Candi, were associated with Wang Jing’s other, less closely scrutinised ambitions. Eugenio Candi was the China representative for Eutelsat, the France-based satellite operator that beams more than 3,000 television channels around the world.
According to the transcript of a telephone call with an unnamed Eutelsat employee, published by Reporters without Borders, Eutelsat had done the Chinese government several favours. CEO Giuliano Berretta had promoted two Chinese channels to a prime slot next to the BBC and CNN; the company had removed the banned spiritual movement Falungong’s TV broadcasts from the satellite and had nominated the Party-controlled Xinhua TV news for a best news channel prize at a company event in Venice in 2011. The following year, China Investment Corp., the Chinese government’s sovereign wealth fund, paid US$490 million for a 7 percent stake in Eutelsat.
The Eutelsat official complained that the Chinese government had been slow to recognise other helpful moves, especially in aerospace.
In 2000, under its Beidou (Big Dipper) programme, aimed at ending China’s dependence on the US global positioning system, China launched an experimental pair of positioning satellites. It plans to launch 35 satellites by 2020, to give China global GPS coverage for civilian and military use.
Today China’s satellite and space industries offer both commercial and military services, including launching third party satellites (until congressional security concerns restricted the relationship during the Clinton administration, these included US satellites). Great Wall Industry, a unit of China Aerospace Science and Technology Corp, which traces its origins back to the Fifth Research Academy of China's Ministry of National Defence, launched Eutelsat’s WC3 satellite in 2008, and describes itself as the only company authorised by the government to launch and operate commercial satellites and to foster international collaboration in space industries.
It is also a company with which Wang Jing’s Xinwei has cemented close ties. The two signed a cooperation agreement in May 2011 and Xinwei’s website records two follow-up meetings in April 2012 in which the leaders of the two companies declared their desire “to inject new vitality into the Chinese aerospace and telecommunications industry.’’
Great Wall has also developed a business, selling satellites to developing nations with the help of low cost state funding. Venezuela bought its first satellite in 2008, an event President Hugo Chavez described as “an act of independence’’ to end “the domination of space’’ by big international players and Bolivia signed a deal with Great Wall in 2010 that was almost entirely financed by China Development Bank.
In the now notorious telephone call, Eutelsat’s employee reminded his counterpart that the company’s use of Long March rockets to launch its satellites had given China Aerospace a significant marketing boost.
Nicaragua, too, has satellite ambitions. In June 2012, Laureano Ortega, the president’s eldest son, an adviser to the Nicaraguan government’s investment promotion arm ProNicaragua, announced that Nicaragua was negotiating the purchase of a US$ 300 million communications satellite. In September, Great Wall’s vice president He Xing visited Managua, where he presented the Nicaraguan telecoms minister Orlando Castillo with a model of a satellite that he called Nicasat-1.
Wang Jing and Eugenio Candi were also quietly involved in the project. Mr Candi now describes himself as a consultant, and as of October 15, 2014, has been listed as one of two “class A’’ administrators of a company called the Luxembourg Space Telecommunication company, set up in March 2014. The second “class A” administrator is Wang Jing himself.
Shortly after it was set up, Luxembourg Space Telecommunication advertised for an administrator fluent in Spanish, French and English, to deal with “external parties’’. Shortly thereafter, it was offering new career opportunities for “several satellite engineers’’, provided they had at least 15 years of industry experience. Candidates were asked to apply through a local law firm: the company did not appear to have its own website, and shares its listed address with several other companies.
Wang Jing’s recruitment drive in Luxembourg, a global centre of excellence in the space industry, is consonant with his announced strategic push into the satellite business and his military relationships back home.
In November 2014, the Chinese State Council announced that China’s telecommunications infrastructure, including positioning and navigation services, would be opened to private investors. The same week, Wang Jing announced that Xinwei Telecom Enterprise Group had launched a low-earth orbit satellite in Inner Mongolia the previous month, in a joint venture with Tsinghua University to design a low-orbital satellite using Xinwei technology.
Xinwei had become the first non-state player to be permitted a part in the Beidou satellite navigation programme, which is co-led by Great Wall Industry. Wang announced that he planned to launch 32 further satellites "ahead of the 70th anniversary of the founding of the People's Republic of China" in 2019, to provide low cost mobile communication services in China, all for reasons of patriotism.
"I made the decision because it was useful for the country,” Wang told a Beijing press conference.
Laureano Ortega, the man who cemented the connection between Wang Jing and the Nicaraguan projects, is one of the presidential couple’s three children. All of the siblings and six further half siblings are in business and several own television channels in Nicaragua.
Daniel Ortega himself, formerly a leader of the Sandinista revolution, recently had the Nicaraguan constitution amended to enable him to stand for re-election indefinitely, a move that prompted a warning from the Roman Catholic episcopal conference against “the perpetuation of a long-term absolute power”.
Wang first made contact with the Ortegas in 2012 when Laureano accompanied a delegation of Nicaraguan officials to China, despite the fact that no diplomatic relations exist between the two countries (Nicaragua is one of the few remaining countries to maintain full diplomatic relations with the Republic of China, Taiwan).
In the course of the visit, the Nicaraguans were invited to meet a group of high-level Party officials, one of whom was Wang Jing. After a private session with Wang, Laureano explained that Wang had given him a message to deliver to his father. Wang Jing visited Nicaragua the following year, and Daniel Ortega signed the Memorandum of Understanding (MOU) for the canal concession.
The canal development formalities were dealt with in two laws: Law 800, approved on July 3 2012 and Law 840 approved a year later. Neither was open for extensive debate.
Bidding for the US$ 700 million national wireless network contract followed on quickly from the canal MOU. By early 2013, Wang Jing had won the right to build and operate wireless voice and data networks in Nicaragua, a business in which Xinwei had little track record, despite the company’s claims of worldwide contracts. The contract, according to Nicaraguan sources, was tailored to ensure that Xinwei was the sole bidder and was granted the concession for US $20 million, well below the initial asking price, reportedly US$ 90 million. Great Wall’s promised Nicasat-1, the US$346 million multiuse earth orbiter that promises to make Nicaragua the first country in Central America with its own telecom satellite for cellular communications, TV and data transmission and internet access, is scheduled for launch in 2016.
Work on the telecoms network was due to start in 2014, but as with several other Xinwei projects around the world, there has been little sign of progress. That did not prevent Xinwei winning a 10-year license in September 2014 to provide TV via IP services, and a license to provide broadband, data, fixed and mobile telephony services. These services have yet to be delivered.
Meanwhile, Wang Jing pledged that the canal, along with two ports, an international airport, a pipeline and railroad tracks, would be open for shipping in five years, half the time it took to build the Panama Canal. To date, the finance remains unconfirmed and the environmental impact assessment has cast doubt on the timetable.
This article was produced with the support of the Pulitzer Center on Crisis Reporting.