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GSK, corruption and the Byzantine world of Chinese politics

China's congress
Andrew Wong - Getty Images
China's congress

Everything in China is political, even when it might not be.

A series of seemingly unrelated corruption scandals in China all share a common thread that has got the political class in Beijing very excited and boosted speculation that an elite power struggle is under way within the ruling Communist party.

The connections seem tenuous at first but spend enough time in the Byzantine world of Chinese politics and the logic starts to appear compelling.

The speculation revolves around the fact that relatives of Hu Yaobang, former general secretary of the Communist party of China and the man whose death in 1989 sparked the Tiananmen Square uprising, are linked to an investigation into global pharmaceutical giant GlaxoSmithKline as well as to a state-owned conglomerate facing public allegations of corruption.

From the mid-1990s until 2007, the director of GSK's corporate affairs in its Beijing office was Betsy Li Heng, daughter of Hu Yaobang.

(Read more: China blocks Glaxo executive from leaving the country)

In an industry that is riddled with the sort of corruption that GSK is accused of, many observers are wondering why GSK has been singled out as the main target. Industry insiders say the company's practices were no worse than others.

The theory floating around Beijing political circles and in internet postings is that when China's top leaders were deciding which pharmaceutical company to go after, they settled on GSK because they could achieve two goals simultaneously.

Not only have they warned the drug industry to clean up its act; they have also sent a message to the Hu family to pull their necks in.

According to this theory, the real targets of the crackdown on GSK are two of Li's brothers, Hu Deping and Hu Dehua, both of whom have been outspoken advocates of political reform.

In a public academic forum in April, Hu Dehua went beyond calling for political opening and personally criticized China's newly-installed President Xi Jinping in a display of contempt that is almost unheard of among Chinese officials and intellectuals.

Because of the extremely important role their father played in modern Chinese history, Hu Yaobang's children are afforded enormous respect by the country's leaders.

(Read more: China charges disgraced politician Bo Xilai with corruption)

But anything they say is considered highly "sensitive" because their father's purge in 1987 and his death in 1989 were the sparks that ignited massive popular protests that year. He remains a popular mascot for liberal reformers within the party.

"[The bribery investigation into GSK] appears to be an indirect attack on the Hu family - a warning sign for them so they know not to overstep the mark," said one senior party cadre familiar with the thinking of top leaders. "Although Hu Yaobang's daughter left the company in 2007 there is no reason why the investigation couldn't eventually be expanded to cover an earlier time period."

When asked whether GSK believes the ongoing bribery and corruption investigation is related to elite Communist party politics, a spokesperson declined to comment beyond confirming that Li had worked for the company from the mid-1990s until 2007.

(Read more: The long game: Why a China slowdown isn't scary)

Adding to suspicions that an orchestrated smear campaign is targeting the Hu family, a series of anonymous internet postings claiming that Hu Deping owns at least one luxury apartment in central Beijing have also appeared in recent weeks.

Hu has denied that he owns the apartments.

Last week, allegations of "suspected massive corruption" were levelled by a senior state-employed journalist against a major state-owned conglomerate that previously emplod another Hu Yaobang son, Liu He.

Liu was vice-chairman of Hong Kong-listed China Resources Group, the company named in the allegations, until his retirement in 2005. His retirement pre-dates the alleged corruption.

There has been a string of whistle-blowers exposing official corruption in recent months but it remains extremely rare in China for journalists at state media organizations to make such public accusations.

"I personally don't know if these individual investigations were started to put pressure on the Hu family but certainly each of them has been used by their political enemies to blacken their names," said Chen Ziming, a Beijing-based political commentator.

(Read more: Chinese parliament holds 83 billionaires)

Another important factor is that the elder Hu, who was removed from his job at the top of the party in 1987 because he was perceived as too liberal, was a prominent mentor to recently retired Premier Wen Jiabao and President Hu Jintao.

There is a long history in China of newly-anointed party leaders using crackdowns and investigations to attack proxies of their predecessors to ensure that retired leaders don't interfere in politics.

While the theory that elite power struggles are driving the China Resources revelations and the investigation into GSK remains little more than a conspiratorial suggestion, the fact that so many serious people within the party believe it is significant in itself.

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According to academics and political activists, the apparent targeting of people as powerful as the Hu family has had a chilling effect on other advocates of political reform in China.

These people point out that such high-profile cases involving large state-owned and multinational companies would have to have been approved at a very senior level within the party.

That is because in the murky, top-down Chinese system, no police official or journalist would ever risk their career by independently pursuing such a big catch as GSK or China Resources, especially when they had previously employed powerful Hu family members.

The implication for the many multinational companies that employ family members of senior Communist party officials in China is that this practice can potentially harm your business as much as it can help to win contracts and provide official protection.

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