China's rich fleeing the country—with their fortunes

More than half of China's millionaires are considering emigrating or have already taken steps to move overseas

By Robert Frank

It's one of the largest and most rapid wealth migrations of our time: hundreds of billions of dollars, and waves of millionaires flowing out of China to overseas destinations.
According to WealthInsight, the Chinese wealthy now have about $658 billion stashed in offshore assets. Boston Consulting Group puts the number lower, at around $450 billion, but says offshore investments are expected to double in the next three years.
A study from Bain Consulting found that half of China's ultrawealthy—those with $16 million or more in wealth—now have investments overseas.
And it's not just the money that's exiting the country. 

The wealthy are increasingly following their money overseas.
A study by Hurun and Bank of China found that more than half of China's millionaires are considering emigrating or have already taken steps to move overseas.
Many experts say that the wealthy are moving to protect their wealth, their health and their families. 

With China increasingly cracking down on ill-gotten gains and corruption, many of the politically connected wealthy are looking for safer havens abroad.
They are also looking for better environments for their children—with better schools and cleaner air.
"Whether it is the perceived political instability or perhaps lack of educational opportunities, or pollution in the urban environments there, when you put those altogether ... and you mix that with the wealth that's present in China now, it really makes sense that there are folks there looking to explore these opportunities," said Peter Joseph of the Association to Invest in the USA, which represents investor-visa programs in the U.S.

Some say the capital flight and millionaire migration are normal consequences of rising wealth. 

Oliver Williams, of WealthInsight, said that the Chinese wealthy have about 13 percent of their wealth overseas—below the global average of 20 percent to 30 percent.
Still, much of China's offshore wealth is moved illegally or in the shadow economy. 

China maintains a closed capital account and Chinese citizens are generally not permitted to move more than $50,000 out of the country. 

So reliable data on exactly how much money is moving out remains unclear.
But the global buying spree by wealthy Chinese suggests the numbers may be far higher than reported. Wealthy Chinese buyers purchased more than $8 billion worth of residential real estate in the U.S. in the 12 months ended in March, according to the National Association of Realtors. 

China's share of foreign-purchased residential real estate has jumped 50 percent since 2011.
One of China's richest women, Zhang Xin of developer SOHO China, recently bought a townhouse in Manhattan for $26 million, according to reports.
China's wealthy also are pouring money into collectibles and art. 

Billionaire Wang Jianlin and his company Dalian Wanda last month bought a Picasso at a Christie's auction for $28 million. 

Bidding from Chinese buyers was strong throughout the auctions, according to dealers and gallerists.
It's also going to wine and diamonds. 

Diamond dealers say more than half of today's collectible diamonds are going to Chinese buyers. 

And on Saturday, the world's most expensive case of wine—1978 Romanée-Conti—sold in Hong Kong for $476,000.

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Chinese leaders control media, academics to shape the perception of China

How Chinese officials shape and limit what Americans learn about China.

By Fred Hiatt

Paramilitary policemen stand in formation as they pay tribute to the Monument to the People's Heroes on Tiananmen Square in Beijing, November 17, 2013. China's new national security commission will enable the government to speak with a single voice when it comes to dealing with crises at home and abroad, state media cited President Xi Jinping as saying.

It’s well known that Chinese censors shape and limit the news and history their people can learn. 

What may be more surprising is how Chinese officials shape and limit what Americans learn about China.
Last month, a cultural attache in the Chinese embassy in Washington invited Perry Link to attend a Forum of Overseas Sinologists in Beijing in December.
Given that Link is one of America’s eminent China scholars, this might not be surprising — except that he had not received a visa to enter China since 1996 for reasons the Chinese have never explained.
Link replied that he would be interested in attending, but would he receive a visa?
Absolutely, he was told.
You’re sure? Link e-mailed back.
Of course, the attache replied. 

Just send your passport, “and I can help you to finish the visa application.”
Link sent his passport and application, and on Nov. 8 received the following message: “After review, I’d like to inform you that you will not be invited to the forum.”
The Lucy-and-the-football quality of this exchange is striking, but Link is far from the only foreign scholar to be blacklisted. 

In 2011, 13 respected academics who had contributed chapters to a book on Xinjiang, a province of western China that is home to a restive Muslim minority, found themselves banned.
Link, who has forged a distinguished career at Princeton and the University of California at Riverside can survive a visa ban. 

But for a young anthropologist seeking tenure, the inability to do field research could be terminal. 

And because China never explains its refusals or spells out what kind of scholarship is disqualifying, the result is a kind of self-censorship and narrowing of research topics that is damaging even if impossible to quantify.
“The costs to the American public,” Link told me, “are serious and not well appreciated... It is deeply systematic and accepted as normal among China scholars to sidestep Beijing demands by using codes and indirections. One does not use the term ‘Taiwan independence,’ for example. It is ‘cross-strait relations.’ One does not mention Liu Xiaobo, the Nobel Peace Prize winner who sits in prison... Even the word ‘liberation’ to refer to 1949 is accepted as normal.”
Academics understand the code, he added, “but when scholars write and speak to the public in this code, the public gets the impression that 1949 really was a liberation, that Taiwan independence really isn’t much of an issue, that a Nobel Prize winner in prison really is not worth mentioning.”
Increasingly, foreign journalists are subject to similar pressure. 

Paul Mooney, a veteran Asia journalist for Reuters, recently was denied a visa, with no reason given, according to the agency. 

Knowledgeable China hands for Bloomberg News, the New York Times and The Washington Post have met similar fates.
Bloomberg provides a telling case. 

Last year it published groundbreaking investigations on the wealth that China’s elites are accumulating. Corruption is a sensitive issue for Communist Party leaders, and, given Bloomberg’s business interests in China, the journalism took courage.
After the reports, Bloomberg’s Web site was blocked to Chinese viewers, and journalists were denied visas. Recently, according to the New York Times, Bloomberg spiked an investigative report about a billionaire’s connection to Chinese leaders, with its editor in chief arguing that it was important to maintain his reporters’ access to the country.
The editor denied the report, telling the Times that the stories remain “active and not spiked.” 

Until they appear, Chinese officials are emboldened to believe that their hardball tactics can succeed in shaping what Americans read — and don’t read — about their country.
Visa denials are only one way the Communist Party attempts to influence how China is depicted. 

American universities increasingly depend on money-making campuses in China and on Chinese students paying full tuition here. 

Hollywood rewrites scripts to ensure access to China’s screens.
As Sarah Cook of Freedom House writes in her recent 67-page report, “The Long Shadow of Chinese Censorship: How the Communist Party’s Media Restrictions Affect News Outlets Around the World”:
“In many cases, Chinese officials directly impede independent reporting by media based abroad. However, more prevalent — and often more effective — are methods of control that subtly induce self-censorship...”
Many Chinese-language newspapers outside China have become more pliant because of pressure on advertisers or threats to relatives of journalists still inside China.
But what the Communist Party sees as propaganda success may not help the country in the long run, for at least three reasons.
Debates overseas on the most contentious issues — Tibet, Taiwan, the one-child policy — are waged by the sharpest partisans, while China scholars who might bring more nuance to the discussions stay silent.
The leaders’ desire to have China be seen as a confident new power on the world stage is undermined by their apparent fear of honest scrutiny.
And stifling scholarship and journalism doesn’t just harm Americans’ ability to understand the complexities of the world’s most populous country, it also limits information and analysis for China’s decision makers. 

In the end, that can’t be an advantage.

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The High Price of Digging Up Dirt in China

Two analysts for a hedge fund were arrested in China for their research into a mining outfit with a powerful local presence. Their scary tale casts doubt on just who's guilty. 
By BILL ALPERT and LESLIE P. NORTON

Haizhang "Michael" Wei, a colleague of Kun Huang, escaped to London.







Researcher Kun Huang is in a Chinese jail awaiting a trial verdict. 

Canadian stock analyst Kun Huang has been locked in a Luoyang, China, jail for more than a year, charged with defaming a Canadian company whose shares trade on the New York and Toronto exchanges.
In 2011, a report circulated by Huang's hedge-fund employer alleged that ore samples from a mine run by Silvercorp Metals

tested low for silver content.
Unluckily for Huang, Silvercorp's mine is a prominent enterprise in Luoyang, the city in the central province of Henan where prosecutors have charged that he not only defamed the company but used an illegal camera to shoot video of its operations.
After a one-day trial on Sept. 10, the analyst, 36, now waits to hear whether a judge will find him guilty and sentence him to three more years in prison.
A Canadian consul described the Luoyang jail as "atrocious." Few trials in China end in acquittal.
The researcher is one of hundreds that Chinese media say have been rounded up since May 2012 for helping foreign investors check out U.S.-listed Chinese companies, or for conducting the due diligence required of multinational corporations by their home countries' antibribery laws.
Most of those arrested are Chinese nationals, but public attention tends to focus on the foreigners.
Chinese television recently broadcast the handcuffed image of well-known fraud investigator Peter Humphrey, a Brit accused with his American wife of accessing state records in the course of background checks performed by their Shanghai-based firm, ChinaWhys, on dozens of Chinese businesses -- including Silvercorp (ticker: SVM).
The researchers' arrests may be a response to the plunging popularity of Chinese shares that trade on U.S. exchanges.
Investigators like Huang and Humphrey helped expose unflattering evidence on companies listed here via the back-door maneuver known as a "reverse takeover" -- inspiring a wave of short-selling, delistings, and fraud charges by U.S. regulators.
China stocks generally haven't done well in the past couple of years, and the flow of Chinese initial public offerings in the U.S. has virtually stopped -- just one company came public here in 2013.
Chinese executives were understandably dismayed when American investors turned a cold shoulder, yet Beijing also seems to have taken umbrage. 
An editorial last year by the state-run news agency Xinhua growled that critiques of Chinese firms by U.S. short sellers were malicious acts seeking to "poison reputations of Chinese start-ups for profit" and fueling foreign prejudices against Chinese business.
With the imminent verdict on Huang, the Silvercorp saga has gone the furthest of China's research crackdowns.
It is also the best documented, due to a small mountain of written and audio-visual records surreptitiously collected by Huang and his colleagues over the course of their pursuit by Luoyang cops.
Huang's hedge-fund boss Jon Carnes shared these recordings with Barron's, as well as with regulators and law-enforcement officials in Vancouver, where Carnes' investment firm and Silvercorp are based.
Carnes says Canadian authorities have opened a bribery probe based on his allegations that Silvercorp directed and paid for Luoyang's prosecution of Silvercorp's critics.
Among the documents Carnes shared are some that he says show police expenses paid by the Silvercorp mine, one of the biggest employers and taxpayers in the city.
The company and the local police have denied any corrupt relationship.
At the least, China's clampdown on business research means that investors will have to place their China bets with less information.
The type of research Huang was conducting is akin to that used in the West, part of the "tire-kicking" that responsible stockpickers do before buying or selling short a stock.
"I cannot change the way we do investment research in China," says Carnes.
"We have to perform on-the-ground research if we want to find out the truth. Our research activities have broken no laws in China or abroad."
"I deeply believe [that] Huang is innocent," said his colleague Haizhang "Michael" Wei in an affidavit he sent to the Luoyang court, after escaping from China to London.
Wei took photos and videos that he says show Silvercorp payment receipts piled on the desk of his police interrogator.
Silvercorp's "payoffs" made Luoyang police into the company's "tool," said Wei in the August affidavit. Although Silvercorp wouldn't talk to Barron's, it has said the receipts must have been forged by the hedge-fund group.
Chinese prosecutors told Huang that they weren't persuaded by his allegations of corruption.
Wei struck an optimistic tone in his affidavit: "Paper can't cover up fire, and the truth eventually will surface."
Before escaping, Wei avoided incarceration by feigning cooperation with Luoyang policemen like Yi Feng, the lead investigator on the case.
In one of several conversations with the policeman that Wei recorded, Yi Feng said that the unrepentant Huang would be punished for defaming the police and Silvercorp -- even if the police had to make up charges.
"If you're under the foreign economic system or within the context of financial markets," the policeman told Wei in the recording, "freedom of speech is probably OK. But within China, this is inappropriate.
They actually broke some laws of our country."
"Huang's good days are numbered," he said.
Barron's verified the contents of the recording with two Mandarin speakers.
Yi Feng told Barron's last week that neither he nor his police colleagues were authorized to speak to foreign reporters.
He suggested that the U.S. Consulate could submit our questions to China's Ministry of Foreign Affairs—a ministry that Barron's had already queried, to no avail.
Silvercorp spokesman Lorne Waldman also declined to answer our questions about China's prosecution of his Canadian company's critics, saying the matter was "the subject of ongoing litigation."
Whatever the verdict in Luoyang, Huang and his colleagues seem justified in their skepticism of Silvercorp's mining.
Over the past few years, Silvercorp has steadily revised downward the grade quality it claims for its silver resources, to a level that's now just a third of its initial claims.
Earlier this month, Silvercorp seemingly validated the hedge fund's findings, when Silvercorp told shareholders that its ore grade had fallen because its contractors had adulterated the Henan mine's output by adding "waste rock" to the ore to increase their transport payments and mining fees.
Since the fiscal year that ended in March 2011, Silvercorp's annual earnings have fallen from 40 cents a share to 16 cents a share.
Its New York Stock Exchange-listed shares have slid from their 2011 high of $16 to a recent $3.27.

ANALYST HUANG ARRIVED at the Vancouver hedge-fund firm EOS Holdings in 2006, after finishing accounting and finance degrees at the University of British Columbia.
EOS director Carnes had been an early investor in the small companies of China, where he gained a reputation for diligent research.
When his on-the-ground research convinced him that a U.S.-listed China stock was much less than it seemed, Carnes didn't mind selling it short.
Carnes started publishing his short ideas directly on the Internet, but ran his reports under the pseudonym Alfredlittle.com, fearing that EOS researchers in China would suffer retaliation.
In September 2011, an Alfredlittle.com report raised concerns about Silvercorp's business, and described lab tests of samples that the report said had fallen off mining trucks in Luoyang.
As Silvercorp's stock dropped by 20%, its chief executive Rui Feng fought back against what he called a "false and fraudulent" short attack.
The company put lengthy rebuttals on its Website and said some parts of its financials had been checked by forensic accountants at KPMG.
Silvercorp also filed a "John Doe" defamation suit in New York against its anonymous detractors and called upon the Royal Canadian Mounted Police to search for the alleged fraudsters.
Faster answers came from the Economic Crimes Investigation Unit of Luoyang's Public Security Bureau. Wei says he was told later that the cops found a surveillance photo of a local researcher bringing ore samples to the lab for testing, then discovered that he'd stayed at a hotel near the mine.
He gave up the names of Huang and Wei, who were working for the hedge fund in the cities of Chengdu and Xi'an, respectively.
Luoyang police arrested Wei on Dec. 20, 2011, releasing him only after he promised to cooperate and paid them the equivalent of about $16,000, which a police receipt called a "return of illicitly obtained funds."
A week later, police arrested Huang at the Beijing airport.
They strip-searched him, confiscated his Canadian passport and laptop computers, then drove him to Luoyang, where Huang has said he was released after paying about $32,000.
Carnes has copies of the booking records, whose witness signatures include the name of a Silvercorp executive.
Over the following months, Wei says Luoyang police tried to get the analysts to sign prewritten confessions that said the analysts had fraudulently run their chemical analyses on roadside rocks instead of Silvercorp ore.
The Canadian Huang refused to sign what he said were false statements.
But Wei, 33, was a Chinese citizen who couldn't hope that a foreign government would come to his aid.
Wei led police to believe he would testify against his colleagues, and he signed confessions that -- now that he has escaped to London -- he says were false and coerced.
"If I didn't say what they want," Wei tells Barron's, "I will be put in jail."
The unyielding Huang was jailed on July 22, 2012, a few days after a New York Times article aired the suspicions of EOS boss Carnes -- denied by Silvercorp -- that China's police were doing Silvercorp's bidding.
In the New York court hosting Silvercorp's defamation case, Carnes argued in an affidavit that a list of EOS phone numbers and addresses mentioned in a Silvercorp discovery request could only have come from the contact list on a laptop that Chinese police had seized from Huang.
The lists from Silvercorp and the laptop had the same typos, said Carnes in his affidavit, and one phone number was actually a Carnes family frequent-flier account number.
After denying that the information had come from China's cops, Silvercorp withdrew its discovery request. When Judge Carol Edmead dismissed the suit in August 2012, she said that Silvercorp hadn't identified any false statements in the Alfredlittle.com reports, which she ruled were also protected expressions of opinion. Silvercorp didn't appeal her ruling.
In September 2012, the Canadian newspaper Globe and Mail reported Carnes' claims that Silvercorp was funding the Luoyang investigation.
Before his incarceration, Huang had given the newspaper copies of what he said were hotel receipts that police officer Yi Feng billed to a Silvercorp mining subsidiary, as Yi Feng had Huang accompany him on several investigative trips.
The Globe and Mail said that its checks with hotels and local tax bureaus supported the authenticity of the receipts.
Silvercorp told the paper that Carnes must have forged the documents.

Haizhang "Michael" Wei photographed receipts, above, that he says prove a Canadian company funded a police probe of the two.

But Carnes has other evidence he says supports his claim that Luoyang police took Silvercorp's money.
On May 8, 2012, still free while under investigation, Wei visited Luoyang's police headquarters in an attempt to recover his passport, on the pretext that he needed it to register for the Chartered Financial Analyst exam. He came away empty-handed, but he did make a recording of his police visit.
When police officers left him unattended for a few minutes, Wei crept around their desk, which the shaky video recording shows piled with papers.
It shows him snapping away with his iPhone at what he says are travel receipts that coincide with the policemen's trips to interrogate the hedge-fund researchers.
The payer shown on the documents is Silvercorp's 78%-owned Chinese subsidiary, Henan Found Mining.
In other parts of Wei's covert recording, Yi Feng warns Wei that he'd better give trial testimony or he'd fare even worse than his "stupid" colleague Huang.
The policeman can be identified on Wei's video, because Carnes has a photocopy of what he says is the policeman's official ID card.
The recorded cop acknowledges that some of the companies shorted by the hedge fund had probably been flawed.
"But now you messed with Silvercorp, and the issue is elevated," he said.
"Now they have some central government leaders' support. So you just have to be punished."
"What happens if we can't find anything in the criminal code? Then we make a new interpretation," Yi Feng continued.
"I'll even fabricate a charge on you."
Wei was under house arrest and continuing to feign cooperation in April of this year, when he walked into another town's police station and pretended that his passport had been lost.
Unaware of events in Luoyang, these police arranged a rush delivery of a passport, which enabled Wei to fly to Cambodia.
With Carnes' help, Wei made it to London where he's waiting to see if Canada will let him go to work for Carnes in Vancouver.
He says he even phoned Yi Feng, who pleaded and threatened that if Wei didn't return to testify against Huang, he'd never be allowed back.

HUANG'S STORY IS MORE GRIM.
In July 2012, police locked him in a 300-square-foot cell with 24 other prisoners.
He has lost 40 pounds.
According to people familiar with the Luoyang jail, prisoners are forced to work unpaid in a shop, assembling things like Christmas lights whose 110-volt format suggests a North American customer.
Don Davies, the member of parliament who represents the Vancouver region where Huang's father lives, suggests the Canadian government may be dragging its feet.
The administration of Prime Minister Stephen Harper, he notes, has fervidly pursued China's investment and trade.
When contacted by Barron's, a spokesperson for Canada's Foreign Affairs Ministry, said, "We are in contact with local authorities and are monitoring the situation closely."

Carnes says his fund is short about 130,000 shares of Silvercorp.
After making $2.5 million from shorting Silvercorp shares, he has spent most of it defending Huang, Wei, and himself.
On Sept. 10, Huang was tried on charges of criminally defaming Silvercorp and using an illegal spy camera to video the company's mine.
Wei didn't return to testify against him.
Only Huang's two lawyers and a lawyer from Silvercorp were allowed to attend the proceedings.
According to notes that the defense lawyers passed along to Carnes, police officer Yi Feng said that the desk and travel receipts shown in Wei's video were not Yi Feng's.
When defense lawyers asked Yi Feng about his recorded comments, they say he had no answer.
Carnes argues that jailing investment researchers is the wrong way to try lifting China's stock valuations. "Corruption just makes investors lose trust," he said, "which is the most important factor influencing investment decisions in foreign equities."

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A wave of repression in China

The Washington Post

A CHINESE blogger named Wu Dong became an Internet star last year by tracking and reporting on the luxury watches worn by the country’s senior officials. 

One of the Communist Party bosses he singled out was arrested and sentenced to prison this month. 

But Mr. Wu himself was reported to be under arrest Tuesday — the latest victim in a mounting crackdown by China’s new leaders on those who advocate political reform or speak out on social media.
Xi Jinping, who took over as party chief last November, has tried to bolster his popularity by waging a campaign against corruption and adopting some of the rhetoric of Maoist leftists. 

But as a slowdown in growth exposes deep-rooted problems with China’s economic model, the new leader increasingly is turning to repression to silence real and potential opponents. 

Human rights groups say more than 50 activists have been jailed since Mr. Xi assumed the presidency in March, including businessmen, academics and journalists.
Many are people whom Mr. Xi could and should have regarded as allies in an effort to open the political system. 

One is Wang Gongquan, a well-known businessman and member of the New Citizens Movement, a campaign to promote the rule of law and citizens’ rights. 

He was arrested Friday and charged with “organizing a mob to disturb public order” — which is the regime’s way of describing a small demonstration in Beijing that called for senior officials to disclose their assets. 

Mr. Wang was the third leader of the New Citizens Movement to be arrested since July, including founder Xu Zhiyong.
Authorities are, meanwhile, engaged in a campaign to stifle free speech on the Internet. 

A judicial ruling last week stipulated that bloggers could be sentenced to three years in prison for “spreading rumors” if their reports are reposted more than 500 times or viewed by more than 5,000 people. 

On Sunday, state television broadcast a chilling video of a Chinese American businessman renouncing postings on the Chinese version of Twitter that had gained him 12 million followers. 

The blogger, Charles Xue, was arrested on charges of soliciting a prostitute; his meek confession and self-criticism echoed the public humiliation of intellectuals during the Cultural Revolution.
The wave of repression is counterproductive in more ways than one. 

In addition to advocating incremental and peaceful reforms to the political system, the activists being targeted have been instrumental in calling attention to corruption and other abuses the Communist Party must address to avoid more serious unrest. 

It’s not just luxury watches: microbloggers have helped to force action on food safety and air pollution, among other issues.
Mr. Xi’s turn to repression has gone almost entirely unremarked upon by the Obama administration, which has concentrated on cultivating relations with the new leader. 

This, too, is shortsighted. 

It’s in the interest of the United States that China continue on a path of stable development, and intensified repression is more likely to crack open an increasingly restless society than to contain it. 

As Mr. Wang told The Post’s Simon Denyer recently, “If the government does not open society, it will cause more hurt and more violence, which is not in the government’s interest, either.” 

President Obama should be making that point to Mr. Xi — and letting the country’s reformers know the United States is on their side.

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Why taste for luxury fuels China corruption

By Yuwen Wu
Mooncakes can be simple and tasty - or encrusted with jewels

On the Chinese lunar calendar this year, 19 September marks the Mid-Autumn festival, the second most important holiday in China (after the Chinese New Year). 

The moon is supposed to be the roundest and brightest on this day, and there is moon-worshipping, family reunion and, of course, mooncake eating.
Throughout history, people have given each other mooncakes as presents, but as with many things in China, corruption has crept in and the "giving" has spurred a dubious industry.
Typical mooncakes are round pastries with a filling of lotus seed paste, sometimes with a salted egg yolk -- but there are many varieties.
A deluxe box of mooncakes made with shark's fin, bird's nest or abalone cost up to 2,000 yuan ($326), and those made of gold and silver can set you back by 160,000 yuan ($26,120) -- and everybody knows you don't buy these for an ordinary relative or friend.
President Xi Jinping has made anti-corruption one of his top priorities since taking office and there have been many party decrees warning members against the temptation of taking bribes.
As part of this campaign to root out corruption in public life and clean up the party's image, the Communist Party banned giving mooncakes as presents with public money and lavish banquets. 

As a result, group purchasing of mooncakes is down dramatically and gift boxes costing around 200 yuan ($33) have become the most popular among shoppers.
According to a report by the Chinese Economic Weekly, a magazine run by the People's Daily, the gift industry is huge in China, worth an estimated 800bn yuan ($130bn) annually.
Apart from mooncakes, what is this huge amount of money spent on? 

What are the most popular gifts/bribes? 

Here is a non-exhaustive list, in no particular order.

Many different varieties of mooncakes exist to tempt consumers

1. Expensive alcohol:
Alcohol has always been popular as a gift, and no brand carries as much prestige as Maotai, which is highly sought after. 

The price shot through the roof in 2011, such that a 500ml bottle with 53% alcoholic content would sell for 2,300 yuan ($375) in some places.
As the popular saying goes, "those who buy Maotai don't drink it, and those who drink Maotai don't buy it". 

In other words, Maotai is mainly used at dinner parties or as a "gift".

Giving Maotai is a traditional way of showing appreciation

2. Luxury watches

The so called "smiling official" Yang Dacai, recently sentenced to 14 years for corruption, is not the first Chinese official to be in trouble because of the luxury watches he wears.
In 2008, Zhou Zuogeng, director of housing in a district in Nanjing, was exposed on the internet smoking very expensive cigarettes and wearing several expensive watches, including a Vacheron Constantin and a Rolex.
A Vacheron Constantin watch costs around 100,000 yuan ($16,320), and Zhou's annual salary was estimated to be around 40,000 to 60,000 yuan ($6,529 -$9,793). 

Eventually, Zhou was sentenced to 11 years for taking bribes.

3. Deluxe brands
Similar to luxury watches, brands such as Louis Vuitton, Chanel and Gucci are given top billing by the new rich in China, and have become favourite "presents" for officials.
According to a 2012 study by Bain and Company, a leading global business consulting firm, Chinese consumers are now the top spenders in luxury worldwide -- 25% of luxury purchases globally are now made by Chinese shoppers. 

It also points out that 25% of luxury spending in China is dedicated to personal and business gifts.

4. Houses and land
In August 2013, Cui Aiguo, a Beijing district official in charge of civic defence, was on trial for accepting three houses worth 3m yuan ($489,700) plus more than 1.04m yuan ($16,9763) in cash. 

The houses were given to him by a woman who he had helped in her bid for housing projects.
Besides houses, the whole chain of land appropriation, construction, sales, interior design and related services is ripe for corruption. 

One developer in Hainan Province was quoted as saying that if officials allowed him to buy land cheaply so he can make a profit of 50m yuan ($8.1 million), he was willing to use 20m yuan ($3.2m) or more as a bribe.
Another developer in Anhui Province admitted to having to bribe 19 officials before he could go ahead with his housing projects; they included those in charge of planning, pricing, construction and more. 

The cost was then passed on to people who bought the properties. 

It was estimated that corruption accounts for 4% of housing prices.

Some opt for cold hard cash when trying to buy influence or advantage

5. Cash or credit card
Cash is still one of the easiest ways to bribe people. 

At his recent trial, politician Bo Xilai was accused of receiving bribes of more than 21m yuan ($3.4m) from two businessmen; the "smiling official" Yang Dacai was accused of taking 250,000 yuan ($40,850) during his trial.
A more discreet way to give money is by prepaid credit cards.

The card comes with certain amount of credit and can be used in restaurants, department stores, fitness clubs and many other outlets.
These are used so widely that the People's Bank of China and some watchdog organisations issued instructions in 2011 asking the issuers of these cards to register the names of those who purchased them, especially those who purchased cards with credit exceeding 10,000 yuan ($1,634), in an effort to crack down on bribes.
Equally telling are the statistics carried by People's Daily: in 2011, 40,000 party officials handed in cash or gift vouchers worth 386m yuan ($63m). 

On average, every one of them received 9,650 yuan ($1,575).

6. Electronics, antiques and paintings
From cameras, videocams to ebooks and iPads -- electronic products are handy, chic and useful. 

High-tech company Hanvon admits that 60% of their products are for gifts, and people born in the 1950s and 1960s are their main targets. 

These people would be in their 50s and 60s, occupying positions of responsibility.
But an official from the Beijing Municipality Disciplinary Committee told Chinese Economic Weekly that their investigation of corrupt officials in the past few years revealed that the most valuable items of bribery found were antiques and historic paintings; these items were exquisite, low key and are a much better way of bribing somebody than giving money.
The unnamed official also said that the higher ranking the officials were, the higher proportion of antiques they took as a bribe.
One example is a former police chief in the city of Wenzhou in East China, Wang Tianyi, arrested in 2000 for corruption. 

Wang was found in the possession of 195 paintings by famous artists, 23 porcelains, four Western art objects, 495 old coins, 220 ancient potteries and many other valuable items -- enough to fill a museum.
"In this day and age, anti-corruption officials need to be knowledgeable about art," goes a popular saying.
A more roundabout way of bribing someone is through art auctions. 

You give the person you want to bribe a piece of art work, which might be fake and not worth much. 

He or she puts this for auction. 

You pretend it is authentic and precious, and buy it with big money -- and the original recipient ends up with the cash.
In recent years, art auctions have also become a hotbed for money laundering. 

Many fake paintings and art objects have been sold for high prices. 

It is believed that the buyers are not ignorant or stupid; they simply use this to launder money.
As these examples show, bribery permeates into everyday life in China, where power and money mixes with ease. 

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