Two criminal trials in China – one in open court in Changchun, the capital of Jilin province, nearly 1,000 km from Beijing, and the other under wraps in Shanghai – appear to be tools in President Xi Jinping’s power struggle against his rivals to ensure he gets a third term this autumn.

The first concerns former Public Security Vice Minister Sun Lijun (above), who pleaded guilty to accepting bribes, manipulating the Chinese securities market, and illegal possession of firearms at the Intermediate People’s Court in Changchun, Jilin on July 8, according to Chinese state media. Sun, who was formerly the most senior Chinese police official overseeing Hong Kong, was charged with accepting bribes totaling RMB646 million (US$96.3 million) and illegally possessing two guns. State prosecutors said that in 2018, Sun manipulated stocks by instructing allies to trade shares, which is a serious offense. Sun was tried in an open court, reported Chinese state media.

By contrast, Canadian officials were barred from attending the Shanghai trial of former billionaire Xiao Jianhua, who was born in China and holds Canadian citizenship and became connected to some of the most powerful people in the country before his downfall, according to media reports. The tycoon’s trial began on July 4, according to the Canadian embassy in Beijing. Till now, there has been virtually no mention of Xiao’s court hearing in Chinese state media.

By trying Xiao now, it clears the way for Xi’s election to a third term, Andre Wheeler, chief executive officer of Asia Pacific Connex, an Australian consulting firm, told Asia Sentinel.

“It is eliminating any integrity questions that may cloud the reputation of Xi. After all, Xi and his acolytes can point to a Chinese court that has found Xiao, and by association others in this network, guilty,” Wheeler said.

Sun’s trial in open court is “sending a clear message to political enemies (of Xi) that the Chinese government has information and will use it if any more political adversaries step out of line,” an investigator told Asia Sentinel.

To fulfill his “extremely bloated political ambition,” Sun was said to have groomed rebels within the Chinese Communist Party and seriously undermined the unity of the party, according to the anti-corruption agencies, the Central Commission of Discipline Inspection and National Supervisory Commission, Asia Sentinel reported on October 2, 2021.

Xi is expected to seek a third term at the 20th party congress in October or November. If he succeeds, it will break the two-term limit on Chinese presidents laid down by the late Chinese leader Deng Xiaoping. The Shanghai Faction, also called the Shanghai Gang, led by former Chinese President Jiang Zemin and his former Vice President Zeng Qinghong as well as princelings (descendants of first-generation Chinese Communist leaders) oppose Xi’s bid for an extra term, reported Asia Sentinel on January 27.

There is a fairly high chance of a struggle within the corridors of power in Beijing in the next three months, a risk consultant told Asia Sentinel.

“Xi’s enemies have to go for a desperate high-stakes power struggle in the next three months. They are running out of time,” said the risk consultant, who declined to be named.

A China observer told Asia Sentinel, “Sun’s is a more clear-cut case of defiance against Xi’s supposed absolute hold on power, what with Sun’s attempt to build and maintain an independent clique within the Ministry of Public Security, with at least tacit backing of the Jiang faction. So of the two cases, Sun’s is being publicly conducted and made into an open warning to the Jiang faction ahead of the 20th party congress to not make any untoward move that would upset Xi’s continuance in power thereafter.”

Xiao’s case is more complicated, as it involved fund transfers and proxy holding of assets on behalf of prominent families including that of Xi himself, said the China observer who declined to be named. “So a public trial would risk inadvertent disclosure of detail that could be embarrassing to any or all sides.”

Wheeler said, “Essentially when a trial is held behind closed doors in China, it indicates there is information that needs to be suppressed in order for the party to save face. The other important element is that Xiao is a Canadian citizen, so a public hearing would give him access to Canadian consular and legal assistance that would make it more likely that any embarrassing information would make it into the public arena.”

On June 5, 2014, the New York Times published a statement by Xiao’s company Tomorrow Group, which admitted Kanghai Tianda, a company co-founded by Xiao, paid US$2.4 million in January 2013 to buy a 50 percent stake held by Xi’s sister and brother-in-law in CCB International Yuanwei Fund Management, a joint venture with China Construction Bank, a Chinese state-owned bank.

The Tomorrow Group said there was nothing unusual about the deal. Xi’s relatives ''voluntarily quit their legitimately operating business, bringing them a huge loss. Thus the family didn't make any extra profits on their family clout,'' said the Tomorrow Group’s statement.

Xi’s sister and brother-in-law divested their stake in the joint venture in January 2013, around the time when Xi, who was then newly appointed president, began his anti-corruption campaign which has netted over 100 “tigers” (senior officials).

A financial crocodile

On January 28, 2017, Xiao was abducted by Chinese agents from the Four Seasons hotel in Hong Kong to mainland China, which his female bodyguards failed to prevent. He was held for five and a half years before going to trial because authorities were milking information from him, such as who he was laundering money for, said the risk consultant. Xiao’s personal wealth is estimated at US$5 billion, but he was laundering 10 to 20 times more than that, estimated the risk consultant. “He was creating a systemic risk that was creating a financial contagion risk. He was playing with Chinese people’s money in banks, by putting their money in investment vehicles with high potential of losing money.”

In China, Xiao is known as “a big crocodile”, a nickname for a very wealthy person who is capable of wreaking havoc on the country’s financial system through dubious dealings.

“They are going after the network of people he was laundering money for. Many corrupt politicians he was laundering money for are sweating because he definitely gave information on them to the authorities,” the risk consultant explained.

If Xiao refused to divulge information to the Chinese authorities, he was likely to face execution, the risk consultant said. Some former senior Chinese officials and possibly some current senior Chinese officials will be implicated by Xiao’s testimony, the risk consultant predicted.

“It takes years to unravel a fraud of such magnitude and clearly Xiao had many co-conspirators and corrupt officials who allowed a fraud of this size to happen,” said the investigator who declined to be named. “Xiao corrupted many government officials and was able to defraud approximately $55 billion through a succession of banks with the assistance of corrupt officials. The magnitude of Xiao’s fraud and corruption was capable of bringing down China’s economic system due to its sheer size of the fraud.”

There remain tens of billions of dollars missing from Xiao’s business empire, with much of it parked in Canada, the investigator disclosed. This is one of the reasons Beijing is unhappy with Canada in addition to the detention of Sabrina Meng Wanzhou, the chief financial officer of Huawei, a leading Chinese technology firm, in Canada from December 2018 to September 2021, he added.

China still wants to recover billions of dollars from Xiao’s businesses and with such a large network involved, Beijing will not want to expose too much that would allow other co-conspirators to destroy evidence or hide unlawfully obtained funds, the investigator explained.