The US investigation into JP Morgan Chase having hired the children of well-connected officials in China is one of those events that threatens to up-end a business practice that is long-established and widespread, yet hard to justify when it is placed under a harsh spotlight.
The problem is at least as much for China itself as for the Wall Street banks and financial institutions that have followed the local practice by trying to get themselves some good connections. It speaks to the justified resentment of many Chinese at the way the elite “princeling” class accrues wealth.
As it happens, the investigation has emerged in the same week that Bo Xilai goes on formal trial on charges of bribery, corruption and abuse of power. Mr Bo’s downfall was a catalyst in exposing the extreme internal strains within the Chinese leadership caused by such issues. Read more