Rong Yiren

China's billionaire 'red capitalist'

Rong Yiren, businessman: born Wuxi, China 1 May 1916; manager, Mow Sing Flour Mills 1937-55; vice-president, Foh Sing Flour Mills 1947-55; president, Sung Sing Textile Printing and Dyeing Co 1950-55; Deputy Mayor of Shanghai 1957- 66; Vice-Minister, Ministry of Textile Industry 1959-66; chairman, Citic 1979- 93, president 1979-82; Vice-President of China 1993-98; married 1936 Yang Jinaqing (five children); died Beijing 27 October 2005.

When Mao Zedong and the Red Army took power in China in 1949, Rong Yiren and his family faced a momentous decision: flee the mainland, or stay and help build a new nation under the Communists.

For rich capitalists like the Rongs, this did not seem much of a choice. As the scion of Rong Desheng, a Shanghai textile and flour entrepreneur and one of pre-Mao China's wealthiest men, Rong Yiren could expect few favours from a government that had promised to "eliminate forever" the monopoly capitalist class and establish a dictatorship of the proletariat.

Remarkably, however, Yiren stayed behind, ignoring the pleas of brothers and friends who took their wealth to Taiwan, Hong Kong and the United States. Few decisions have paid off so handsomely. Rong became one of the key figures in China's remarkable transition from a Third World Stalinist backwater to the world's most dynamic economy.

By the end of the century, he was the Rockefeller of the Middle Kingdom, listed by Forbes Magazine as the country's richest man; and he had the political power to match this wealth thanks to a close relationship with Premier Deng Xiaoping. Under Deng's patronage, Rong was Vice-President of China from 1993 to 1998 and his large extended family became one of the main beneficiaries of red capitalism.

Typically for a Chinese success story, though, it wasn't all plain sailing. Rong had a privileged upbringing: educated at Shanghai's élite British-run university, St John's, before taking over the family business. After he surrendered his wealth to the Communists in 1956, he received in return a post as Deputy Mayor of Shanghai, where he first earned the nickname "red capitalist". But, when Mao unleashed the Cultural Revolution (1966-76) in a bid to hang on to power and destroy "capitalist roaders", Rong's background made him an obvious target for "re-education".

Rong was lucky to survive unscathed; and his luck held when Deng took power in 1978, famously rejecting Maoism with the folksy aphorism that he didn't care what colour the cat was "as long as it catches mice". Rong had been the wrong colour for at least a decade, but fewer cats were better qualified to manage China's transition to a free market than a man steeped in two generations of family business. He became one of Deng's closest advisers and set up the China International Trust Investment Company (Citic), effectively the investment arm of the Chinese state.

Rejecting with breathtaking speed the values of the previous era, the company became one of the most voracious and successful of the new breed of post-Mao enterprises, hoovering up interests in telecoms, utilities, infrastructure and airlines, and becoming a sprawling conglomerate with branches all over the world.

A breathless article in Financial Review from the 1990s found the Citic employees "swapping Mao suits for Boss and Chanel" and barking orders into mobile phones. The article said: "With an average age of 35, their language is not of Mao's Little Red Book . . . but more of Adam Smith's Wealth of Nations . . . in Chinese".

The name Rong, like Deng, became synonymous with unabashed money-making, and the target - mainly outside China - of allegations of cronyism, corruption and nepotism. Like Deng Zhifang, Premier Deng's wealthy son, Rong's son Larry Yung prospered with the help of family connections, becoming chairman of the Hong Kong-based Citic Pacific and eventually one of the former colony's richest men. The elder Rong built himself an enormous lakeside villa in his native Jiangsu Province.

The rhetoric, some of which can be found in Rong's obituary in the China Daily (which of course fails to mention his wilderness years in the Cultural Revolution) was that he was a "model capitalist" and patriot striving to increase the power and prestige of the whole country. There is no doubt that Citic has been one of the principal conduits for investment into China since 1980, helping profoundly to reshape the country's business landscape. But few could help being struck by the awesome wealth gap that opened up in the years after Deng's reforms, between men like Rong and the vast, impoverished mass of people in the countryside.

Still, Rong was an official state hero and, in contrast to many of the recently deceased luminaries of the Revolution, he was accorded the honour of an official mention on state television when he died - as a "great Chinese" who with his corporate work had "helped open up a window to the world". But no mention was made of his estimated personal fortune of $1bn, or where it would go.

David McNeill