Coming out party

The Bund: site of Zhou’s party

Shanghai LandShanghai has seen some of the biggest increases in property prices in China over the last 20 years. Residents of the country’s financial capital that declined the chance to purchase a flat will rue missing the bull market.

Zhou Zhengyi may have missed the boat too. He controlled a Hong Kong-listed firm called Shanghai Land which owned a portfolio of prime real estate in the city. If the Shanghai native had stayed the course, his company might have grown into one of China’s biggest developers, besting the likes of Vanke, Country Garden and Evergrande. Zhou would have had a shout at topping the rankings of China’s richest people too.

But things turned out differently and Zhou has spent a large part of the last two decades behind bars.

He was first given a three-year sentence in 2004 for fraud and stock market manipulation.

Shortly after his release in 2007, he was rearrested and sentenced to another 16-year term for similar crimes, with a bit of bribery thrown in for good measure.

Hong Kong media reported at the time that Zhou’s case came to light when the Chinese government started to clean up the banking sector. As it turned out Liu Jinbao, the then boss of Bank of China’s Hong Kong unit, was sacked after approving a problematic loan to Zhou’s privately-controlled entity Nongkai Development. Liu later received a suspended death sentence.

It has never been confirmed whether Zhou’s fate was connected to the case of Chen Liangyu, Shanghai’s former Party boss, who was removed from his post a year before Zhou was arrested for the second time. Chen was later given an 18-year jail term too.

Zhou was released from prison again in August last year. After keeping a low profile for months last week he threw himself a glamorous 60th birthday party in a five-star hotel on Shanghai’s Bund, inviting a lot of old friends. Six TV anchors from state-run Shanghai Dragon Television joined the celebrations, much to the annoyance of their employer, which put out a statement saying that the soiree was “incompatible with their status and image”.

In an interview last week with WeChat news site Damo Finance, Zhao then insisted that he had no further interest in a high-flying career in the property sector. “I just don’t want to trouble myself with it any more and I have an uneasy feeling when I look back,” he explained.

Zhou also talked about his financial position. “No one would believe me if I said that I have no money. On the other hand why should I have to tell others how much I have?” he said, adding that it was more important for him to make clear that he had fully repaid “tens of billions [of yuan]” of debt over the years.

Zhou’s comments were credible, reckoned WeChat-based financial blogger New Finance Detective, which pointed out that he would still have benefited from the stellar rise in Shanghai’s real estate prices while he was serving his time in prison. Nongkai is still controlled by Zhou’s family members, it noted, although it’s not clear how active it has been in the Shanghai property market in more recent years.

Instead Zhou said that he would be devoting the next stage of his career to creating a homegrown retail brand. To this end Damo Finance reported that Zhou has taken up an advisory role at Huajie, a start-up that sells cosmetics and skincare products. “While in jail I was thinking that I should do something meaningful in the future. After the Covid-19 outbreak I started to become very interested in retail. I want to support a homegrown brand and work with young people,” he claimed.

Whether the former tycoon can make up for all that lost time – and create a new business empire – remains to be seen. But Zhou still seems influential enough to throw a pretty good party. The guest list at the celebration was also a reminder that the collection of political figures and businesspeople known colloquially as the ‘Shanghai Gang’ may have dwindled in power, but the faction most definitely has not disappeared.

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