BEIJING — A few days after the crackdown on the Tiananmen Square protests 25 years ago, the Chinese government filled the airwaves with a list of the 21 most wanted student leaders accused of stirring up an antigovernment rebellion.At the top of the list was a 20-year-old student at Peking University named Wang Dan, who set up an unofficial student union to mobilize his classmates to demand democracy.
There was no public mention then — and there have been very few mentions since — of the head of the official student union of Peking University at that time. His name is Xiao Jianhua. Mr. Xiao never opposed the government, and the events of June 1989 did not make him one of China’s “most wanted.” Instead, they catapulted him into the ranks of its most wealthy.
The rewards were immediate. Just after he graduated, Mr. Xiao stepped into the world of business with direct financial support from Peking University, one of China’s most prestigious institutes. In the quarter-century since, he became the prototype of the politically connected financier. He has assiduously courted the party elite, including the family of its current president, Xi Jinping, becoming something of a banker for the ruling class and a billionaire in his own right.
Now 42 years old, Mr. Xiao controls a sprawling business empire with interests largely in state-dominated industries, including banking, insurance, coal, cement, property and even rare-earth minerals, and largely managed by his holding company, the Tomorrow Group.
Through a series of other investment vehicles, he owns a piece of Ping An, one of China’s largest insurers, as well as portions of Harbin Bank, Huaxia Bank and Industrial Bank. And he has acquired stakes in at least 30 other Chinese financial institutions.
Corporate records reviewed by The New York Times show that a company he co-founded also paid $2.4 million last year to buy shares in an investment firm held by the sister and brother-in-law of Mr. Xi. In 2009, another company he helped control financed a deal that aided a company run by the son-in-law of Jia Qinglin, then a member of China’s powerful Politburo Standing Committee.
Nothing about those deals has been publicly disclosed, and much about Mr. Xiao himself remains mysterious. He declined to be interviewed for this article and, while often talked about in financial circles, he has kept a low profile inside China. But he is also one of the most active players in the frenzied deal-making of the last 10 years, and his personal fortune has been estimated at $2 billion by the Hurun Report, a magazine that prints a list of the richest people in China.
It is a career made possible, in good part, by the 1989 unrest — or, more precisely, by China’s reaction against it. Rather than experiment with greater political openness, as many Chinese intellectuals had hoped in the 1980s, the paramount leader of the time, Deng Xiaoping, pushed faster economic development while tightening the control of the Communist Party.
The formula ultimately produced one of the most astounding economic expansions in history. But it also made those with good political connections the indispensable middlemen of high finance and convinced many ordinary Chinese that the game was rigged.
Corruption, or the appearance of it, was one of the main concerns of students protesting in Tiananmen Square in 1989. But the scale of collusion between business and political elites has increased markedly since that time, with even the party now acknowledging that insider deal-making has become a threat to the legitimacy of the Communist Party.
“There’s now this self-destructive tendency within the party,” Minxin Pei, an expert on China who teaches at Claremont McKenna College in Claremont, Calif., said in an interview. “Many officials regard China’s growing wealth as fair game. And as a result, corruption has morphed into large-scale looting.”
Mr. Xi is now overseeing one of the boldest anticorruption drives in decades. During the last two years, scores of businessmen and high-ranking officials have been detained or stripped of their powers, including a former Politburo member, Zhou Yongkang, whose relatives are suspected of illegally profiting from his oversight of the state oil sector.
The crackdown is putting pressure on businessmen like Mr. Xiao, who know that if they fall out of favor with the top echelon of the party, their business empires could come crashing down.
But his associates insist that his investments are “market-oriented” and that he has engaged in no wrongdoing.
There are signs, though, that he is not taking any chances with the changing political winds in China. Some years ago, after Chinese news reports suggested that some of his companies were involved in privatizing state assets at below-market prices, Mr. Xiao set up a residence in Canada, where he had obtained citizenship. He now spends much of his time working in Hong Kong, which is governed independently.
And when Mr. Xi’s sister and brother-in-law sold their stake last year in a joint venture with a major Chinese bank, the buyer was a Chinese company co-founded by Mr. Xiao. The deal was completed after a June 2012 Bloomberg News article about the family fortune of Mr. Xi’s relatives.
A Boy With Big Dreams
Xiao Jianhua spends much of his time these days at the Four Seasons Hotel in Hong Kong, surrounded by aides who arrange his meetings with bankers and Asian tycoons and female bodyguards who even wipe the sweat from his brow. He owns a private jet and has bought multimillion-dollar properties in the United States and Canada. And yet such trappings belie his humble beginnings.
He grew up in Feicheng, a poor farming village in a mountainous region of the eastern Chinese province of Shandong, one of six children born to a middle school teacher and his wife. At a young age, he was, by most accounts, a voracious reader of history and literature.
“Every morning, he’d get up at 5 a.m. and jog into the hills to study,” recalled Guo Qingtao, a childhood friend from the village and later a Peking University classmate. “He could recite every text from memory. He even read the teacher’s manuals.”
At 14, Mr. Xiao passed the highly competitive national college entrance exam and won admission to Peking University. He arrived in Beijing, friends say, with tattered clothes but ambitions to be a political leader.
“He loved politics,” said Zhou Chunsheng, his college math tutor and now a professor at the Cheung Kong Graduate School of Business in Beijing. “He wanted to be a high official, and he was reading everything — social sciences books, Marxism, the collected works of Mao.”
Mr. Xiao’s path to power was interrupted, though, by the most momentous student protests since 1919. At Peking University, the students were not just swept up in the protests, they were among the leaders of it — the ones who led a march into Tiananmen Square, the city’s axis of political power, to press for political reforms.
At the time, Mr. Xiao was president of the university’s official student union. The duties were largely social, organizing lectures and dances, but the post was coveted because of its ties to the Communist Youth League, a launching pad for future careers in the party.
But in the spring of 1989, students at the university began to march on Tiananmen Square with a list of demands both for university leaders and for the Communist Party at large. Mr. Xiao, as the titular representative of his fellow students, was caught in the middle.
“Xiao tried to tell the government what the students demanded, but some of the activists didn’t like his conservative approach, so they set up their own organization,” says Mr. Guo, his former classmate. “At the time, he was only 17 years old and was put under a lot of pressure. Feeling powerless, he went to the library and buried himself in books.”
The responsibility of pressing the student cause fell to a history major named Wang Dan, who helped set up an alternative student association at the university and organized boycotts, sit-ins and hunger strikes. Mr. Xiao took a new direction.
The First Pot of Gold
Exactly what turned Mr. Xiao toward a career in business is unclear. But his good standing at Peking University, especially at a time when administrators were actively persecuting students involved in the unrest, was a clear benefit from the start.
His first venture, in the early 1990s, was as a computer reseller, marketing Dell, IBM and other personal computer brands near the Peking University campus. He also set up a series of technology companies that were partly funded by the university, which is run by the state, and sought to encourage business ventures by its graduates.
None of the ventures grew particularly large, though there were partnerships with American companies like Microsoft. But last year, in a rare interview with the Chinese news media, Mr. Xiao said that these computer undertakings were how he made his first pot of gold, $150 million.
In the late 1990s, he moved to something even more lucrative: the stock market. Using the Tomorrow Group and other investment firms, he speculated in stocks and began to acquire large stakes in public companies.
Former colleagues say he succeeded, in part, by cultivating his relationships with government officials and then using those connections to set up or move companies to more fertile ground, such as his native Shandong Province and the area near Baotou, Inner Mongolia, where his wife was raised.
“At that time, the capital markets were just starting,” said Mr. Zhou, his former tutor and onetime business partner. “He had political connections and knew a lot, and went to local governments and told them he could help them set up listed companies.”
Over the next decade, he helped set up dozens of investment firms, and often his partners were government agencies, such as the Baotou State-Owned Assets and Supervision Commission.
While shell companies are widely used in China as investment vehicles, securities experts say they can also be employed to hide the ownership stakes of public officials, providing cover for favors distributed by businessmen. Their frequent use by Mr. Xiao has fanned speculation that he gets privileged access to deals involving state assets and that he shares the benefits with the families of the ruling elite.
He has had some brushes with controversy. In 2006, a huge state-run power company called Luneng was taken over by a group of obscure investment firms. After the Chinese business magazine Caijing published an article about the privatization effort, the authorities ordered officials in Shandong Province to repurchase the shares. Records reviewed by The Times show that several firms involved in the privatization were affiliated with Mr. Xiao.
Mr. Xiao was involved as a behind-the-scenes investor again in 2007, when a small brokerage firm called Pacific Securities completed a so-called backdoor listing on the Shanghai Stock Exchange, even though the company had not, as required by regulators, reported profits for three consecutive years.
Through a spokeswoman, Mr. Xiao said the deals were “legal and valid.” He also defended his use of investment vehicles, saying his name is often omitted because he is the “chief strategist,” and not working on the technical details of the deals.
After the Luneng debacle, he began traveling more frequently to the United States and Canada, for extended periods, according to his associates.
“He got disappointed in what was happening in China,” his spokeswoman, Yu Lan, said. “The environment wasn’t good. So he went overseas.”
Relatives at the Table
Mr. Xiao has acknowledged, through his associates, that he is acquainted with many of the children of China’s ruling elite and that he has invested with them. Usually, he says, it is by coincidence. They just happen to be in the same deal.
But a review of corporate registration records has found that on at least three occasions during the last five years, companies affiliated with Mr. Xiao have struck deals that appear to have benefited the relatives of China’s highest-ranking leaders.
In January 2009, for instance, Baotou Tomorrow Technology, a public company that Mr. Xiao has held a big stake in, announced that it would pay about $50 million to acquire a property company in southwest China’s historic city of Lijiang from Zhaode Property in Beijing. The head of Zhaode, Li Botan, is the son-in-law of Jia Qinglin, who until 2012 was the fourth-ranking member of the Communist Party, with a seat on the all-powerful Politburo Standing Committee.
More recently, a company Mr. Xiao co-founded struck a deal with the relatives of the Chinese president, Mr. Xi. In January 2013, a Beijing-based company called Qinchuan Dadi Investment Company sold its 50 percent stake in an investment firm to a company founded by Mr. Xiao for at least $2.4 million, the same value the Xi relatives bought it for, according to a person familiar with the deal.
At the time, Qinchuan was owned, through several other firms, by the Chinese president’s sister, Qi Qiaoqiao, and her husband, Deng Jiagui, according to corporate records. The deal was announced six months after Bloomberg News reported that Mr. Xi’s relatives held assets worth more than $300 million.
And in 2012, when Digital Domain, the Hollywood visual effects studio co-founded by the film director James Cameron, was sold for $30 million to a Chinese film company, the financing came from Mr. Xiao and a Hong Kong company controlled by Che Feng, the son-in-law of China’s former central bank chief, Dai Xianglong, according to people involved in the deal.
Through his spokeswoman, Mr. Xiao acknowledged that companies he had invested in or partly controlled were involved in the deals but said that he was not the decision-maker and only became aware of the deals after they were completed.
While those three deals have never been publicly disclosed, Mr. Xiao did gain some notoriety in China. The magazine Caixin, for instance, reported in late 2012 that Mr. Xiao was working behind the scenes with a Thai conglomerate, the Charoen Pokphand Group, to acquire a $9 billion stake in the Chinese insurer Ping An with financing from several state banks in the north, in possible violation of rules that bar the use of bank loans in acquiring a stake in a Chinese insurance firm.
A spokeswoman said Mr. Xiao eventually decided not to participate in the Ping An deal and expressed frustration that he was portrayed in the news media as a secretive, predatory deal-maker. (Through an affiliate, Mr. Xiao had earlier acquired a stake in Ping An.)
Now, Mr. Xiao, eager to improve his image, has quietly made public his intention to give much of his wealth away.
He has donated more than $50 million to China’s two leading universities, Peking University and Tsinghua University. And recently, he pledged to donate $10 million to Harvard. That is where Wang Dan, who was exiled to the United States after serving a prison term in China, earned his Ph.D.
Correction: June 3, 2014
An earlier version of a home page headline with this article misspelled the name of the square where the Chinese government cracked down on protests 25 years ago. It is Tiananmen, not Tianamen.