587.3 billion yuan, the largest asset has a "next home", and the three trillion yuan will usher in the end of tomorrow

The Four Seasons Hotel Hong Kong, known as the "Wangbei Tower", is located next to the 412-metre-tall Two International Finance Centre (IFC) Tower, and many of its rooms have 180-degree views of Victoria Harbour. Source: Visual China

Author | Wen Shijun  

 Edit | Chen Fuye

Produced by | Prism Tencent Xiaoman Studio

On November 8, Ruizhong Life Insurance was officially approved to take over Huaxia Life Insurance - the former has the industry's highest registered capital of 56.5 billion yuan, and the latter is the largest asset of Tomorrow Department, with an asset scale of 587.3 billion yuan before being taken over.

At this time, it has been nearly seven years since Xiao Jianhua was arrested.

At 3 a.m. on January 27, 2017, Chinese New Year's Eve, Xiao Jianhua, who claimed to be "recuperating abroad", was calmly taken away from Hong Kong's famous "Wangbei Tower" luxury apartment "Four Seasons Hui" with a large suitcase.

On the 2016 Hurun Report released three months ago, Xiao Jianhua and his wife ranked 32nd. But the helmsman of the Tomorrow Department has been unusually low-key before, he uses the code name "X" for hotel consumption, does not use his real name, and uses 1,000 Hong Kong dollars every time, without change.

Xiao Jianhua's age is also confusing. Born in 1971, the Financial Times and other media reported that he holds a diplomatic passport from the Caribbean island nation of Antigua and Barbuda (he calls himself a "patriotic overseas Chinese" and also holds a Canadian passport), and his birthday is January 13, 1972. Times Weekly reporters went to his hometown of Nanxiahui Village, Anjiazhuang Town, Feicheng City, Tai'an, Shandong Province to investigate, and the old people in the village said, "Xiao Jianhua belongs to the sheep" and was born in 1967.

On August 19, 2022, the Shanghai No. 1 Intermediate People's Court ruled that Tomorrow Holdings and Xiao Jianhua were convicted of illegally absorbing public deposits and offering bribes by units, and sentenced Tomorrow Holdings to RMB 55.03 billion, while Xiao Jianhua was sentenced to 13 years in prison and fined RMB 6.5 million. The court said that Xiao Jianhua "surrendered, pleaded guilty and accepted punishment, and cooperated in the recovery of stolen goods and losses."

According to the calculation of his birth in 1967, Xiao Jianhua was admitted to the Law Department of Peking University at the age of 19, established "Beijing Peking University Tomorrow Resources Technology Co., Ltd." at the age of 26 and entered the business world, and was imprisoned at the age of 50. In the "wild period" of the market economy, he made a fortune through the restructuring of state-owned enterprises, the operation of listed companies, and then relied on dozens of financial licenses to manipulate three trillion assets, turning clouds and rain in the capital market.

The tall buildings and the buildings collapsed, and Xiao Jianhua behind the high walls left behind the huge risk assets accumulated by the Tomorrow Department.

On July 17, 2020, the (former) China Banking and Insurance Regulatory Commission (CBIRC) announced the takeover of Tian'an Property Insurance, China Life Insurance, Tianan Life Insurance, Yi'an Property Insurance, New Era Trust and Xinhua Trust. On the same day, the China Securities Regulatory Commission took over New Era Securities, Guosheng Securities, and Guosheng Futures, which are controlled by the Tomorrow Department.

What is the outcome of these risky assets today? After all, tomorrow is a "bomb disposal," which is much more complicated than trying Xiao Jianhua.

BYD "picked up" the car insurance license

Let's first look at the four insurance licenses with a huge merger scale: the data of 2019 before being managed, the asset scale of Huaxia Life Insurance is 587.3 billion yuan, the asset scale of Tianan Life Insurance is 203.6 billion yuan, the asset scale of Tianan Property Insurance is 61.13 billion yuan, and the asset scale of Yi'an Property Insurance is 1.312 billion yuan.

The more assets there are, the greater the risk and difficulty of "defusing bombs".

Yi'an P&C Insurance is the smallest and has a very smooth turnaround. In July 2022, Yi'an Property Insurance, which had just ended its custody, issued an announcement on the recruitment of strategic investors for its reorganization. On May 9, 2023, the official website of the China Banking and Insurance Regulatory Commission (CBIRC) announced its approval, agreeing to the transfer of 100% shares of Yi'an Property Insurance by BYD Automobile Industry Co., Ltd., and on May 17, Shenzhen Speed changed its name to Shenzhen BYD Property Insurance Co., Ltd.

BYD's "indigenous" veteran, vice president and chief financial officer, Zhou Yalin, became the chairman of BYD P&C Insurance.

Not long ago, on November 8, the State Administration of Financial Supervision and Administration issued an approval again, agreeing to BYD Property Insurance to add "motor vehicle insurance, including compulsory motor vehicle traffic accident liability insurance and motor vehicle commercial insurance" business.

As a result, BYD became the first car company in China to wholly own a property insurance company. According to the previous reorganization plan, BYD only paid 554 million yuan for this purpose (excluding BYD's capital increase to BYD Property Insurance in the later stage). Compared with the hope that this news has brought to BYD investors, and the consequent share price, this is almost a "pick-up" license.

Although the institution to undertake Tianan property insurance has not yet been publicly determined, market expectations have been clear.

On September 19, 2023, the website of the State Administration of Financial Supervision announced that Shenergy Property Insurance was approved for construction. Shenergy P&C Insurance has a registered capital of 10 billion yuan, and as the name suggests, the eight initiating companies are led by Shenergy Group, all of which have Shanghai state-owned backgrounds. The outside world generally believes that what Shenergy Property Insurance wants to load is Tian'an Property Insurance of the Tomorrow Department.

Shenergy is not the first time to get involved in a financial license, it is the largest shareholder of Orient Securities with a stake of 26.63%, and it is also the second largest shareholder of China Pacific Insurance with a stake of 14.05%. Gong Dexiong, who is proposed to be the chairman of Shenergy Property Insurance, is the secretary of the Party Committee of Orient Securities.

Insurance Circle Partnership took over China Life Insurance

Life insurance institutions with a volume of 100 billion yuan need the national team to take action.

On June 28, 2023, the State Administration of Financial Supervision and Administration issued a consent to the opening of Zhonghui Life Insurance, which undertook the Tianan Life Insurance of Tomorrow.

Zhonghui Life Insurance has a registered capital of 33.2 billion yuan, which is 80% owned by Central Huijin and 20% held by China Insurance Security Fund. The name "Zhonghui" comes from Central Huijin.

Naturally, the senior management team also comes from the Central Huijin system: Ren Xiaobing, the proposed chairman, was the vice president of China Re (China Reinsurance) Group, and Li Yuan, the proposed president, was the vice president of Xinhua Insurance. So far, the number of Central Huijin insurance companies has increased to four: China Re Group, New China Insurance, Zhonghui Life Insurance, and China Export & Credit Insurance.

On September 28, 2023, Tianan Life's insurance business and corresponding assets and liabilities were officially transferred to Zhonghui Life. Tianan Life Insurance, once ranked among the top 500 private enterprises in China, has come to an end in its 23-year history.

For the larger China Life Insurance, the pace is slightly different.

Since its establishment in 2006, China Life Insurance has been the core financial asset of Tomorrow Group. As of the end of September 2023, China Life's cumulative total premiums were RMB229.26 billion, ranking third in the market.

On July 3, 2023, the State Financial Regulatory Administration issued a document approving the opening of Ruizhong Life. The registered capital of Ruizhong Life Insurance is as high as 56.5 billion yuan, surpassing PICC Group and China Re Group, ranking first in the industry. What Ruizhong Life wants to undertake is the giant Huaxia Life Insurance.   

There are two shareholders: Kyushu Qihang (Beijing) Equity Investment Fund (Limited Partnership) invested 33.9 billion yuan, holding 60% of the shares, and China Insurance Security Fund invested 22.6 billion yuan, holding 40% of the shares.

Kyushu Qihang adopts a limited partnership model in the equity investment industry, but the LP list is extraordinarily luxurious - including five state-owned life insurance: Chinese Life, Taibao Life Insurance, Taiping Life Insurance, PICC Life Insurance, China Merchants Renhe Life Insurance; and six state-owned bank-based life insurance companies: ICBC AXA Life Insurance, CCB Life Insurance, ABC Life Insurance, BOC Samsung Life Insurance, BOCOM Life Insurance, and China Post Life Insurance.

The scale is huge, and the "insurance circle" collectively invests in it.

On November 8, the Beijing Supervision Bureau of the State Administration of Financial Supervision and Administration officially approved the risk mitigation plan: it agreed to the overall transfer of Huaxia Life Insurance business and the corresponding assets and liabilities of Ruizhong Life.

The era of the Rush is over

The brokerage license was the first to find the next one.

New Era Securities used to be the main position of tomorrow's capital operation. Liu Rujun, the former chairman of New Era Securities, was also in charge of mergers and acquisitions in the Department of Tomorrow, and was the deputy director of the Listed Company Supervision Department of the China Securities Regulatory Commission.

In December 2021, China Chengtong Holding Group Co., Ltd., a state-owned enterprise under the SASAC system, acquired 98.24% of the equity of New Era Securities at a transaction price of 13.135 billion yuan. Chengtong is a state-owned capital operation platform, and it is undoubtedly "convenient" to get this brokerage license.   

On May 27, 2022, the China Securities Regulatory Commission (CSRC) announced the end of its nearly two-year takeover of New Era Securities. In June, New Era Securities changed its name to Chengtong Securities and officially became a subsidiary of a central enterprise. At the same time, 10 directors, supervisors and senior executives of the original New Era Securities withdrew, and 9 new faces entered the list of senior executives of Chengtong Securities.

The domain name (xsdzq.cn) of Chengtong Securities is one of the few shadows of the past.

Guosheng Securities (Guosheng Futures is its subsidiary) followed, and the receiver came from Jiangxi State-owned Assets, which has a deep relationship with it. Just as New Era Securities was born out of New Era Trust, the establishment of Guosheng Securities in 2002 also originated from the securities sector of several Jiangxi trusts such as Jiangxi International Trust and Investment Company.

From 2010 to 2012, a number of companies in the Tomorrow Department "strategically invested" and actually controlled Jiangxi International Trust, and Guosheng Securities was included in the capital territory of the Tomorrow Department as a subsidiary. In 2012, Jiangxi International Trust changed its name to Zhongjiang Trust (in 2018, Tomorrow sold Zhongjiang Trust to Cedar and changed its name to Cedar Trust, and Cedar Trust still holds 16.11% of Guosheng Financial Holdings' equity today).

In 2015, with the help of its front desk "white gloves", the "most mysterious post-80s bosses" and "Phoenix Department" Du Li and Zhang Wei, who were quite concerned by the market at that time, operated Guosheng Securities to log in to A-shares through backdoor Huasheng shares, and turned into "Guosheng Financial Holdings" - the equity of Guosheng Securities held by Jiangxi state-owned assets was diluted to only about 20%.

On July 15, 2022, shortly after New Era Securities changed its name to Chengtong Securities, Guosheng Financial Holding announced that five state-owned assets in Jiangxi formed a consortium to acquire 50.43% of Guosheng Financial Holding's equity at a price of 8.879 billion yuan. These shares come from the five companies that previously belonged to the Tomorrow Department, and just more than half of the shares represent the absolute control of the Tomorrow Department.   

Some people in the market believe that Jiangxi state-owned assets have filled the vacancy of securities licenses, but in fact, Jiangxi state-owned assets have killed a horseman. The story of the prodigal son's return to his mother's arms, divided and combined, reflects the shadow of China's financial policy and market in the past two decades.

In other words, the era of the financial industry's rapid growth is over.

One less scarce trust license

Banking, insurance, trust, and securities are the four core sectors of the financial industry. However, the number of trust licenses is the most scarce, with no new approvals since 2007, only 68.

The Tomorrow Department once accounted for three and a half shares: Xinhua Trust, New Era Trust, Zhongjiang Trust, and a stake in Beijing Trust. The first two are on the list of nine financial institutions to be taken over by the regulator tomorrow, and the cedar trust (Zhongjiang Trust), which has been sold, is now in jeopardy.

On May 26, 2023, the Chongqing Municipal People's Court issued an announcement stating that Xinhua Trust "cannot pay off its debts due and its assets are insufficient to pay off all its debts, in line with the legal provisions for declaring bankruptcy", and ruled to declare Xinhua Trust Co., Ltd. bankrupt.

Burdened with the heavy burden of debt ratio and non-performing rate brought about by the large-scale credit expansion of the tomorrow era, although there were rumors of China Merchants "taking over", Xinhua Trust finally came to an end.   

In fact, this is the first bankruptcy of a trust company since the implementation of the Trust Law in October 2001, and the first bankruptcy of a trust company since the implementation of the Enterprise Bankruptcy Law in June 2007.

The number of domestic trust licenses was reduced to 67.

The predecessor of New Era Trust was Baotou Trust and Investment Company. Baotou is where Xiao Jianhua's wife, Zhou Hongwen (a classmate of Peking University and a 1987 class of information management with Robin Li), grew up, and it is also the most important stronghold of the Department of Tomorrow outside of Beijing. Therefore, similar to the situation of Baoshang Bank, which was the first to be "defused" by the Tomorrow Department, the New Era Trust is also a descendant of the Tomorrow Department.

However, compared with Xinhua Trust, New Era Trust has temporarily escaped the fate of extinction. Because the underlying asset is more reliable - although it is discounted, it is paid.

On June 2, 2022, the New Era Trust, which is in a state of receivership, issued a redemption plan: individual investors below 3 million can get back 8 costs, 7 percent of 3 million yuan-6 million yuan, 6 percent of 6 million yuan-10 million yuan, and only 5 percent of more than 10 million yuan.

Less than a month later, on June 29 of that year, New Era Trust announced that 99.5% of investors had completed the signing. For investors who have been tormented by the "thunderstorm" for a long time, this is already a "surprise".

Protecting small investors as much as possible, avoiding stakeholders as much as possible, and ensuring the rights and interests of natural person investors as much as possible are the lowest requirements of supervision for risk finance, both now and in the future.   

Subsequently, in July 2022, the trusteeship period of New Era Trust ended, and Wang Fei, the former deputy head of the trusteeship group, became the president. In September of that year, 6 billion shares (100% equity) of New Era Trust were publicly listed for transfer at a price of 2.314 billion yuan.

Rumors soon spread in the market that Zheshang Bank was interested in undertaking it. However, at the time of the low tide of the trust industry, superimposed on the historical imprint of the tomorrow system, this trust license that can be bought for 2.3 billion yuan is still famous today.

The so-called "big guys" are all footnotes of the times

History is sometimes full of deliberate coincidences.

Xinhua Insurance, which is now under Central Huijin, also has a lot of roots with Tomorrow. In 1996, Xinhua Insurance was established, and the largest shareholder of 37% of the shares was the "New Industry Department" composed of several companies such as New Industry Investment Co., Ltd. Li Fuchen, the first chairman of Xinhua Insurance, was also appointed by the "New Industry Department".

The new industry system has a close relationship with the Tomorrow Department, and the Tomorrow Department is considered to be an "important investor" of the new industry system, and it is even alleged that it once directly controlled the investment in the new industry.

The bankrupt Xinhua Trust was established in 1998 under the leadership of New Industry Investment, which once held 71.92% of Xinhua Trust's shares. From 2008 to 2013, Weng Xianding, the actual controller of the new industry department, also served as the chairman of Xinhua Trust.   

During his tenure, Xinhua Trust once cooperated with the China Aviation Industry Fund and other institutions to lead the International Leasing Finance Corporation (ILFC), the world's largest aircraft lessor. Although the acquisition was later terminated, its private background and the price tag of $4.23 billion made headlines as China's second-largest overseas investment in 2012, after CNOOC's acquisition of Petro-Canada Nexen.

Unlike Weng Xianding, who is active in front of the stage, Xiao Jianhua has always been invisible. He often does not appear directly in front of the stage of the Tomorrow Department, and stays on the sidelines, controlling trillions of assets with an invisible hand through a group of loyal agents, mesh equity nesting, strict confidentiality system, and "generous" benefit distribution means.

Xiao Jianhua himself has repeatedly said that "Tomorrow Group's investment in financial institutions is a financial investment". Looking at it today, the starting point may be like this, but things often go to the other end: major shareholders often can't help but "reach out and take money" from the controlled institutions, and eventually become non-performing assets that the institutions can see and touch.

In May 2013, Xiao Jianhua was interviewed by the media and denied that he was behind the scenes of Thailand's CP Group's HK$72.736 billion acquisition of Ping An's H-share shares. This is Xiao Jianhua's first time, and it is also one of the few people who directly faced the media, he said: "People who sit in the village generally can't get out, and they really sit in the village."