Book Review – Red Roulette by Desmond Shum

The book review is written by Jeet Chetan Shah


Red Roulette: An Insider’s Story of Wealth, Power, Corruption and Vengeance in Today’s China

The book is an enthrallingly tragic memoir by Desmond Shum that outlines the working of the Chinese political system and its control over business dealings in the country. Desmond and his wife, Whitney Duan, took advantage of this system by forming relationships with members of the upper echelons of China’s Communist Party. These personal connections, guanxi, are necessary to function in China’s current political and financial structure; however, cultivating the wrong relationships will directly affect one’s financial and personal security.

Desmond Shum decided to write this ‘exposé’ and break the ubiquitous code of omertà after his ex-wife Whitney Duan was made to disappear by the Party and was forced to be incommunicado for four years (shuanggui, as it is called in China – literally translating to indefinite detention). She only got to speak to her son after the Chinese government asked her to tell her husband not to publish this book.

The book is a must-read to understand why China is such a volatile marketplace; all of its economic instruments are under the Party’s control which can change its policies on the whim of a single person. This makes it frustratingly hard to conduct any meaningfully large venture without guanxi and luck. Desmond also narrates the stark changes that the country has gone through over the years and how the current structure is only benefitting the corrupt ‘nobility’ while the Party’s official goal is one of ‘common prosperity.’

China was riding a tidal wave of economic success after more than a decade of double-digit growth during the 2000s. One of the greatest accumulations of wealth in human history created a stampede of freshly-made billionaires. Shum and his politically connected wife embodied the dramatic rise, making about three billion USD by “wining and dining” (traditionally with Moutai; even China is not immune to the clutches of westernisation) their way into lucrative Chinese stock IPOs and developing a vast real estate network, including one of Beijing’s most lavish hotels and the largest air cargo facility in China.

There was so much money floating around that when the couple flew to Paris on a jaunt with three other Communist Party elites and their wives in 2011, they took not one but three private jets. The group decided it might be fun to play cards on the trip on the runway, so they all piled into one jet, and the two other private planes flew to Europe empty. “But having that much wealth in China can be extremely dangerous, particularly if you fall out of favour with the Communist Party,” Mr. Shum said.

Flaunting wealth is an established strategy to form guanxi; one needs to spend needlessly on exorbitant luxuries while meeting with potential connections to ensure that your ‘face is saved.’ The appearance of one’s credibility, reputation and dignity are the most important asset to cultivate in China.

The book’s timeline allows us to pull back the veneer of Chinese propaganda and allows you, as a reader, to understand the direction China is headed towards. Shum repeatedly declares that China is regressing to a “one-man dictatorship” under Xi Jinping, who has shrewdly removed his successors and changed the Constitution to allow him to be premier for life. There is a lot to learn about political friction and rivalries in China through this book while shedding light on the widening divide between the ‘princelings with red aristocratic blood’ and officials with humbler roots. One would be at an obvious disadvantage if they did not have a strong connection with a ‘red aristocrat.’ Dum puts it succinctly in the book: “Red aristocrats got a prison sentence; commoners got a bullet in the head.” This juxtaposition is obvious when the disgraced airport manager Li Peiying was sentenced to death while only a jail term was sentenced to the son of a red aristocrat.

The red aristocrats got the sweetest of all deals, including access to monopoly business: While Deng Xiaoping’s relatives landed billion-dollar exclusive contracts with the Ministry of Railways with the snap of a finger, Wen, in theory, number three in the party hierarchy from 2002 to 2012 but lacking CCP lineage, “couldn’t be relied on to step in” even if his family’s deals went south.

As Whitney Duan’s business unravelled, it became clear that the political cover offered by Wen, her patron, only “had shock value on paper.” Duan self-deprecatingly referred to herself as the “infantry slugging it out in the trenches” for the Wen family as she hustled to expand Wen’s wife’s (“Auntie Zhang’s”) sphere of business practices. But when rivals closed in on their foot soldiers, the Wen family could do little to help. Instead, Wen’s wife and children were forced to “donate” all their assets to the state in exchange for the tacit guarantee that they would not be prosecuted.

As Shum documented in the book, the dramatic fall of Whitney Duan also followed the pattern of other financiers to China’s ruling elite, most notably Xiao Jianhua. Duan’s fate was a harbinger of the sweeping crackdowns that would engulf other tycoons who had leveraged political connections for lucrative business opportunities. A former guest on Duan’s private jet, Xu Jiayin, is battling to save his debt-mired real-estate conglomerate. Jack Ma’s coterie of political allies in Beijing’s top decision-making echelons is also backfiring, as layers of opaque investment vehicles have been peeled back to reveal beneficiaries linked to former President Jiang Zemin and former Politburo Standing Committee member Jia Qinglin – both are considered potential political challengers to Xi Jinping.

Desmond Shum does not shy away from talking about the guanxi he developed throughout his life to survive as a capitalist in a country bathed in red. His rise in wealth and standing is inspiring and brutally honest; the book’s scope is constrained by the author’s experiences of China and is by no means a comprehensive account of China’s power-money dynamic, but it does make the book a riveting critique of the Chinese Communist Party.


Important terms to note in the book

wine-and-dine -> moutai
personal connections -> guanxi
important element of forming guanxi and sharing moutai -> saving face
silence -> omertà
indefinite detention -> shuanggui
positions of power due to their familial ties -> red aristocrats
dirt emperors -> tuhuangdi
high-ranking officals -> gaogan
a Chinese representative of a US firm -> meiguo maiban


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